Contract between a Proprietor of Business and Promoter of a Company

Contract between a Proprietor of Business and Promoter of a Company

An agreement made this ……………… day of ……………… 1999 between …………… son of ……………… residing at ……………… in the District of …………… by caste ……………… by occupation …………… and …………… son of …………… residing at …………… by caste ……………… by occupation ………………… hereinafter collectively referred to as the Agents and Trustees of ……………… a private limited company intended to be incorporated under the Indian Companies Act (Act VII of 1956) of the one part and …………… son of ………………… residing at ………………………… in the District of …………………… hereinafter referred to as the proprietor of the other part:

Whereas the proprietor has been carrying on business at No. ………… under the name and style of …………… and whereas the agents and trustees intend to register a Company having similar objects by their own initiatives and efforts with a capital of Rs. ……………… divided into …………… ordinary shares of Rs. ……………… each and whereas the proprietor intends to amalgamate and merge his said concern with the said company as and when registered and whereas at the treaty for such incorporation it was agreed by and between the parties that the trustees and agents shall accommodate the proprietor to the extent of Rs. …………… to pay up its immediately payable debts and liabilities fully mentioned and described in Schedule “A” hereto to be adjusted, liquidated and reimbursed as hereinafter appearing and to be treated as loan advanced to the company for acquisition of the said concern now it is hereby agreed and declared as follows:

1. A company shall forthwith be formed at the costs and expenses of the agents and trustees and duly incorporated under the Indian Companies Act as a private company limited by shares of Rs. ……………… having as one of its objects the acquisition and management and working of the concern of the proprietor.

2. The proprietor shall sell and the said company shall purchase.

(i) All that the goodwill of the said ………… (with the exclusive right to use the name of …………………… & Co. as part of the name of the company and represent the company as carrying on such business in continuation of the proprietor or in succession thereto) and all trade and property marks connected therewith.

(ii) All the plant, machinery, office furniture, patents, licences, wagons, carts, lorries, implements and utensils to which the proprietor is entitled in connection with the said business.

(iii) All the book debts and other debts and actionable rights and claims due to the proprietor in connection with the said business and the full benefits of all securities for such debts and claims.

(iv) The full benefit of all pending contracts and engagements to which the proprietor is entitled to in connection with the said business.

(v) All bills, cheques and notes of the proprietor in connection with the said business.

(vi) All other property and benefits and advantages to which the proprietor is entitled in connection with the said business including the benefits of all insurance policies and other contracts.

An abstract list is set out in the Schedule “B” hereto.

3. The consideration money for which purchase shall be Rs. …………… to be paid and satisfied by allotment of …………… fully paid-up shares.

4. The sum or sums so spent by the agents and trustees for the repayments of the debts and liabilities of the concern as well as for preliminary and other expenses in connection with the incorporation of the company shall be treated as contributions by them towards the share capital and shall be adjusted by allotment of fully paid-up shares of the company when incorporated.

5. The parties hereto shall each subscribe the Memorandum of Association of the company for …………… share in all. The other subscribers may be such persons as the parties hereto shall mutually agree upon.

6. The Memorandum and Articles of Association of the company shall provide that the directors of the company shall enter into an agreement for purchase of the business of the proprietor a draft whereof has been prepared and signed by the parties hereto for the purpose of identification and the parties shall use their best endeavors to enable the company to enter into and carry out such agreement in terms of the agreement. Subject to what are herein before stated the company shall be a private limited company to all intents and purposes.

7. The parties hereto shall be the first directors of the company. They shall continue as permanent directors except in case of fraud, lunacy, criminal conviction or any other offence, insolvency, moral turpitude.

8. The parties hereto shall not, during their respective lives, transfer any share of the company to be allotted to them without the previous consent in writing of the other parties.

9. The purchase shall be completed by the …………… day of …………… when possession of the office and all its equipment shall, as far as practicable be given to the company together with all books, papers and writings, and the consideration aforesaid shall be paid and satisfied subject to the provisions of this agreement  and thereupon the proprietor and all other necessary parties, if any, shall at the expenses of the company execute and do all assurances and things for transferring and/or vesting the said concern in the …………………… company and giving to it the full benefit of this agreement as shall be reasonably required.

10. If from any cause whatsoever other than the wilful default of the proprietor the purchase shall not be completed by the said day of ………………………… the proprietor shall pay interest on the said sum of Rs. ……………..…… at the rate of ………… per cent per annum and as interim security thereof he will execute a hundi in favour of the agents and trustees.

11. Save as aforesaid the proprietor shall pay and discharge all other debts and liabilities in connection with the said business as on the ……… day of ……………… and shall indemnify the company and the agents and trustees against all proceedings, claims and demands in respect thereof.

12. If the company is not formed and does not adopt these presents on or before the 5th day of May 2000, any of the parties may by notice in writing to the other parties determine this agreement.

13. Upon adoption of this agreement by the company as aforesaid, the agents and trustees shall be freed and discharged from all liabilities created by these presents and the hundi shall stand cancelled and discharged.

In witness whereof the parties hereto have hereunto set and subscribed their respective hands and seals the day, month and year first above-written.

Signed, sealed and delivered                                             Proprietor

at ……………………………                                 Agents & Trustees of Company

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