"From Sole Proprietorship to Private Company: A Seamless Business Takeover Guide"

This Agreement is made at Ahmedabad on this __________ day of __________, between Mr. _____________________________________, the proprietor of M/S. _____________________________________, conducting business at _____________________________________, India (hereinafter referred to as "the Vendor"), of the one part, and Mr. _____________________________________ and Ms. _____________________________________, the directors of M/S. _____________________________________, conducting business at _____________________________________ (hereinafter referred to as "the Promoters"), of the other part.

WHEREAS:

1.      The Vendor is carrying on business as the sole proprietor of M/S. _____________________________________, located at _____________________________________, as described in the First Schedule herein (hereinafter referred to as "the said services").

2.      The Vendor operates the business at _____________________________________, comprising a complex and other related structures, detailed in the Second Schedule herein.

3.      An inventory of machinery, tools, equipment, and other articles at the said complex is provided in the Third Schedule herein.

4.      The Vendor aims to expand the business within a new corporate environment and achieve global growth. The Promoters have proposed forming and registering a private company limited by shares under the Companies Act, 2013. This company will take over the Vendor's business and assets under the terms and conditions agreed upon by both parties.

NOW 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, 2013, and they will be the first subscribers to the Memorandum & Articles of Association of the Company.

2.      The Company's name will be M/S. _____________________________________, subject to approval by the Registrar of Companies at Ahmedabad. If the name is not approved, an alternative acceptable to the Vendor and approved by the Registrar will be selected.

3.      The authorised or nominal capital of the Company will be Rs. ____________________, divided into _______ equity shares of Rs. ____ each.

4.      The final Memorandum & Articles of Association of the Company, approved by both parties, outlines the main objective of taking over the Vendor's business as a going concern, together with the assets listed in the Second and Third Schedules, and carrying on the business of _____________________________________. Other objectives are detailed in the final Memorandum of Association.

5.      The Vendor's business, along with its assets and goodwill valued at Rs. ____________, will be transferred. This sum will be paid by the Promoters, either in cash or by allotting equity shares of equivalent face value in the Company.

6.      The Vendor will notify the Bank, holding the business account of the proprietorship firm, about the business conversion.

7.      The costs of and incidental to the registration of the Company will initially be borne by the Promoters and reimbursed from the Company's funds post-registration.

8.      Upon registration, the Vendor will transfer the business and assets described in the Second and Third Schedules, including all stock-in-trade, in consideration of Rs. ___________ (Amount in words: ______________________________________________________), partly in cash and partly by share allotment. The Vendor will execute all necessary documents as advised by the Promoters' legal counsel. The Vendor will bear any capital gains tax and indemnify the Promoters and the Company against such liability.

9.      All expenses related to the transfer documents, including stamp duty and registration charges, will be borne by the Company.

10. The Promoters and the Vendor will be the first directors of the Company, with one promoter serving as Chairman of the Board of Directors.

11. The Vendor will manage the Company's business, providing all necessary know-how and technical expertise, for which they will be remunerated as decided by the Board, but not less than Rs. ___________ (Amount in words: ___________________________________).

12. Upon registration, the Directors shall allot shares of Rs. ___________ (Amount in words: ______________________________________) to the Vendor and shares of Rs. ___________ (Amount in words: ______________________________________) to each Promoter, payable in cash.

13. Upon registration, the Board of Directors will adopt this agreement, making it binding on the Company, Promoters, and Vendor.

14. The Vendor agrees not to start a similar business or share know-how and technical expertise with others as long as they are a shareholder and director of the Company.

15. The Promoters and the Vendor, as Company directors, will not be required to retire by rotation, but will adhere to the Articles of Association and Companies Act provisions.

16. The Vendor will bear all liabilities, including income tax, sales tax, and other taxes outstanding as of the transfer date, indemnifying the Promoters and the Company against such liabilities.

SCHEDULES REFERRED TO:

·         First Schedule: _________________________________________________

·         Second Schedule: _________________________________________________

·         Third Schedule: _________________________________________________

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first hereinabove written.

Signed and delivered by the within named Vendor Mr. _____________________________________ in the presence of:

Signed and delivered by the within named Promoters: Mr. _____________________________________ Ms. _____________________________________