Preliminary Agreement to Takeover Business

Updated at:March 2010
 
FREE EXCERPT

AGREEMENT 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;

WHEREAS -

  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 said property.

  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.

    NOW IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS:

  6. 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.

  7. 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 Companies.

  8. The authorised or nominal capital of the Company will be Rs.... divided into... equity shares of Rs. 100/- each.

  9. 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...

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