This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
This agreement made at---------, this --------- day of ---------, 19-, by and between the creditors of C. D., whose names are subscribed hereto, parties of the first part, and C. D., of---------, party of the second part, Witnesses:
That whereas, said C. D. is indebted to said parties of the first part in the several amounts set opposite their respective signatures below, which debts said C. D. is now unable to pay in cash, and
Whereas, the stock in trade and other assets of said C. D. being sufficient to pay said debts, providing time be given to convert the same into money, the said parties of the first part have mutually agreed to permit the said C. D. to conduct his business under the supervision of a committee appointed by said parties of the first part, for a period of---------years from the date hereof;
Now, therefore, said parties of the first part, in consideration of the agreements of one another and of said party of the second part herein, hereby give and grant unto the said C. D. full liberty and license to conduct his business of
---------and to convert into money all his stock in trade and other assets under the supervision of said committee as hereinafter specified, for said period of ---------from and after the date hereof, and said parties of the first part severally promise and agree that, during said time, they will not institute any suits, actions or legal proceedings of any nature against C. D., or otherwise molest him in his assets and property.
Said parties of the first part hereby appoint L. M. and N. R. their said committee and agents to represent said parties of the first part in the performance of this agreement, which said appointment is hereby consented to by said C. D.
In consideration of the promises and agreements of said parties of the first part herein contained, said party of the second part hereby promises and agrees:
1. to make and render unto said committee on or before ---------, 19-, a true, just and full inventory of all his assets and property, both real and per-sonal, with a statement of all incumbrances and liens thereon, or affecting the same; and also a true and complete list of all creditors of said C. D. with the amount due each; said inventory and list of creditors to be verified by the affidavit of said C. D.;
2. to give his entire time and attention, during said period of---------years, to the conduct and management of said business, and to the rendering profitable of the same; and that he will not engage in any other business during' said time without the consent in writing of all members of said committee;
3. that he will diligently endeavor to collect all outstanding accounts, credits and choses in action, and that he will not release any debt due him except on full payment, without the consent of said committee;
4. that he will not encumber his property or assets, until all of said debts have been paid in full, and that he will not permit any creditor to obtain any security or preference;
5. that he will not make any sales or other disposition of his said stock in trade or other property or assets, excepting sales in the usual course of (retail) business, without the consent in writing of the members of the said committee;
6. that he will deposit each day in the --------- bank of ---------, all moneys received from sales, and from the collection of accounts and choses in action; said deposit not to be drawn except for the purposes hereinafter mentioned, and by check signed by both C. D. and by one member of said committee;
7. to keep complete, just and accurate books of account, showing all moneys received and paid out, and of all other matters and transactions relating to his said business; to preserve all letters received, and to make and keep copies of all letters written and sent, pertaining to said business; all of which books, letters and other documents shall be open to the inspection of said committee;
8. that he will make and render to said committee, on the first day of each and every month during said period of---------years, a general statement of the business transacted during the month next preceding, showing all receipts and payments, and all other matters and transactions relating to said business;
9. that he will not pledge his credit in any manner as surety, guarantor or ' endorser on any obligation whatsoever; and that he will not incur any new indebtedness, excepting in the usual course of said business, and with the consent of said committee as herein provided;
10. that he will pay to each and every of the parties of the first part the full amount of the several debts due to them in the manner herein provided.
It is mutually agreed by and between all the parties hereto, on the considerations aforesaid:
1. that said business shall be carried on under the control and supervision of said committee, who shall determine the number of clerks and other employes, the replenishment of stock, and the other expenses to be incurred in its operation. If, in the opinion of said committee, at any time during said period, it will be to the best interests of all the parties that said business be discontinued, or sold as a going concern, they are authorized to take such action thereto, as in their discretion is advisable;
2. that out of said moneys received from stock and assets sold, and choses in action collected, said committee shall pay the costs of preparing this agreement, the running expenses of said business, including the sum of $--------- per month to said C. D. for living expenses; and after such payments, to pay all small debts owing by said C. D. which do not exceed the sum of $---------; and, from time to time whenever there shall be a sufficient sum on hand to pay a dividend of---------per cent. to the parties of the first part, said committee shall distribute and pay said sum among said parties of the first part, pro rata; provided, however, that specific liens heretofore secured by any creditor shall be paid and satisfied out of the property bound by such lien;
3. that said committee shall be entitled, as compensation for their services hereunder, to a sum equal to --------- per cent. of the moneys received and disbursed by them; that, if the debts due to said parties of the first part are paid in full in the manner herein provided, said compensation shall be paid from the surplus moneys over and above the total amounts of said debts. If the assets and property of said C. D. shall prove insufficient to pay all of his said debts, then said compensation shall be deducted from the dividends due said parties of the first part as herein provided;
4. that after payment of all such debts, expenses, costs and compensation of said committee as herebefore provided, the surplus moneys, if any, shall be paid unto said C. D.;
5. that if all of said debts and expenses be paid in full before the expiration of said period of --------- years, then this agreement shall terminate, and said C. D. shall be restored to the full and complete control of his said business, assets and property;
6. that if, at the expiration of said period of -- years, all of said debts be not paid in full, said committee, in their discretion, are authorized and empowered, without further authority from said parties of the first part, to extend said period for a further term or period of--------- months, by endorsement on this agreement;
7. that if. at the expiration of said period, or said extension thereof, the debts due to said parties of the first part shall not have been paid in full, said C. D. hereby agrees to convey and transfer to said committee by proper instruments of conveyance, all of his assets and property then remaining unsold and undisposed of, for the benefit of said parties of the first part; and upon said instruments of conveyance being duly executed to the satisfaction of said committee, said parties of the first part hereby severally agree to execute proper releases and discharges of their several claims, and to surrender all promissory notes and evidences of debt, at the request of said C. D.;
8. that this agreement shall not be binding on any of the parties hereto unless the same has been duly executed on or before---------, 19-, by all creditors of said C. D., whose debts exceed the sum of $---------;
9. that if the said C. D. shall die before the expiration of said period, or the extension thereof, or if said C. D. shall fail to faithfully perform the agreements on his part to be performed hereunder to the satisfaction of said committee, then this agreement shall be void, and said parties of the first part may resort to legal remedies for the protection of their rights.
In witness whereof, etc.
See references under Sec. 3884.