Agreement to Takeover Business
is made at... this... day of... between Mr. A carrying on business at....
hereinafter referred to as 'the Vendor' of the One Part and Mr. X, Mr. Y and
Mr. Z all carrying on business at... hereinafter referred to as 'the Promoters'
of the Other Part;
1. The Vendor is
carrying on business as sole proprietor of manufacturing some products
mentioned in the First Schedule hereunder written hereinafter referred to as
'the said products.'
2. The Vendor is
carrying on the manufacture of the said products at his factory premises at...
and which premises consist of a plot of land with a factory shed and other
incidental structures thereon and which are more particularly described in the
Second Schedule hereunder written.
3. A detail inventory of
the machinery, tools, equipment and other articles and things in the said
factory is given in the Third Schedule hereunder written.
4. The Vendor has
represented and hereby declares that the said factory premises, machinery etc.
are mortgaged to the Bank of... to secure a term loan of Rs.... with interest
at... per cent per annum but: except that there is no other encumbrance on the
5. The Vendor is
handicapped with shortage of funds and knowing this the Promoters have
approached the Vendor with a proposal that the Promoters will form and register
a private company limited by shares under the Companies Act, 1956, and the
Company will take over the said business of the Vendor together with all the
assets belonging thereto on the following terms and conditions to which the
Vendor has agreed.
IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS:
1. The Promoters shall
form and register a private company limited by shares under the Companies Act,
1956 and they will be the first subscribers to the Memorandum & Articles of
Association of the Company.
2. The name of the
Company will be... being the name in which the Vendor is carrying on his said
business, subject to the same being approved by the Registrar of Companies
at... If the said name is not approved, such other name will be given to the
Company as will be acceptable to the Vendor and approved by the Registrar of
3. The authorised or
nominal capital of the Company will be Rs.... divided into... equity shares of
Rs. 100/- each.
4. The draft of the
Memorandum & Articles of Association of the said Company has been kept
ready and approved by the parties hereto. The main object of the said Company
will be to take over the said business of the Vendor as a going concern together
with the assets mentioned in the Second and Third Schedule hereunder written
but subject to the said mortgage created in favour of the said Bank of... and
to carry on the business of manufacturing the said products. The incidental and
other objects of the said Company will be as set out in the said draft
Memorandum of Association.
5. The said business of
the Vendor together with the said assets and the goodwill thereof but subject
to the said mortgage are valued at Rs.... Out of the said amount a sum of Rs.__
has been paid by the Promoters for and on behalf of and for the benefit of the
said proposed company, to the Vendors, as earnest and out of the balance a sum
of Rs.... will be paid to the Vendor in cash and the remaining amount of Rs....
will be paid and deemed to be paid by allotting equity shares of the face value
of Rs.... each in the capital of the said Company.
6. The Vendor will
obtain the consent of the said Bank to the transfer of the said business with
assets to the proposed company and to the company taking over the liability of
the said mortgage on such terms as the Bank may stipulate.
7. The costs of and
incidental to the registration of the said Company will be initially spent by
the Promoters and after registration of the Company, they will be reimbursed
out of the funds of the Company.
8. On the registration
of the Company the Vendor shall transfer the said business together with the
assets thereof described in the Second and Third Schedule hereunder written
together with all stock-in trade, in consideration of the said sum of Rs.... to
be paid to the Vendor partly in cash and partly by allotment of shares as
aforesaid and he will execute all necessary documents of transfer as will be
required under the legal advice of the lawyers to be appointed by the
Promoters. The capital gains tax if any payable on the transfer of such assets
will be paid by the Vendor and the Vendor will indemnify and keep indemnified
the Promoters as well as the said Company against any such liability.
9. All the expenses of
and incidental to such documents of transfer including stamp duty and
registration charges will be borne by the said Company.
10. The Promoters and the
Vendor will be the first directors of the said company and one of the promoters
will be the Chairman of the Board of Directors.
11. The Vendor will be in
charge of the business of the Company and will make available to the Company
all the know-how and technical expertise. The Vendor will be paid remuneration
as may be decided by the Board but it will not be less than Rs.... per month.
12. On the registration
of the Company the Directors shall allot the said shares of the face value of
Rs.... to the Vendor as aforesaid and shall also allot shares of the face value
of Rs.... to each of the said Promoters and which will be payable in cash.
13. On registration of
the Company the Board of Directors constituted as aforesaid will adopt this
agreement so as to be binding on the Company and the Company as well as the
Promoters and the Vendor will also execute such document or documents in favour
of the said Bank as may be necessary for taking over the said mortgage
liability by the said Company.
14. If the Bank for any
reason refuses to give its consent to the transfer of the said business and the
assets to the company, this agreement will be treated as cancelled. Such
consent will be obtained by the Vendor before the registration of the Company.
15. The Vendor agrees and
undertakes that so long as he will be the share holder and director of the
Company he will not start any similar business alone or in collaboration with
any other person or make the know-how and technical expertise available to any
16. The Promoters and the
Vendor as directors of the Company or any of them will not be liable to retire
by rotation. Subject to this, they will be bound by the Articles of Association
and the provisions of the Companies Act.
17. Except as aforesaid,
all liabilities outstanding on the date of transfer, in respect of the said
business, if any, and the liabilities by way of income tax, sales tax and other
taxes of the Vendor will be borne and paid by the Vendor and he shall hold the
Promoters and the Company indemnified against the same.
FIRST SCHEDULE ABOVE REFERRED TO:
x x x
SECOND SCHEDULE ABOVE REFERRED TO:
x x x
THIRD SCHEDULE ABOVE REFERRED TO:
x x x
WITNESS WHEREOF the parties have put their hands the day and year first
Signed and delivered by the
withinnamed Vendor Mr. B in
the presence of...
Signed and delivered by the
withinnamed Promoters X, Y &
Z in the presence of