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 contract made this --------- day of ---------, 19-, between the X. Y.
Company, a corporation organized under the laws of the State of ---------, with its principal office and place of business in the City of---------, County of--------and State of ---------, hereinafter for convenience referred to as "Company," party of the first part; A. B. and other undersigned holders of the capital stock of said Company in the amount set opposite their respective signatures, hereinafter for convenience referred to as "Stockholders," parties of the second part; the undersigned creditors of said Company hereinafter for convenience referred to as "Creditors/' parties of the third part; and L. M., P. R. and 6. T., who have been selected by the creditors of said Company as trustees as herein provided, hereinafter for convenience referred to as "Committee," parties of the fourth part.
Whereas, said Company is largely indebted and its assets are such as that it is difficult for said Company to realize reasonable prices therefor unless an extension of time be granted in which to pay its existing indebtedness, and unless further moneys be raised to aid in carrying on the business of said Company;
WITNESSETH, it is agreed by and between the parties hereto each agreeing with the other parties of the same part who sign this agreement, and with the parties of the other several parts, in consideration of the mutual promises, covenants and agreements of the parties hereto and other valuable considerations, the receipt whereof is hereby acknowledged, as follows:
1. Each of the Creditors hereby constitutes the Committee his, its or their attorney irrevocable, during the life of this agreement, for the collection of their respective claims against the Company, subject to the provisions hereinafter contained respecting the determination of the amount of any disputed claim, and agree with the Committee and with each other not to institute during the life of this agreement any legal proceedings whatsoever against the Company, unless thereunto first authorized or requested by the Committee so to do, except in the manner hereinafter provided in paragraph three (3), subdivision (c), in order to establish his, its or their claim. Each Creditor agrees to forthwith send to the Committee in care of L. M., at ---------, an itemized statement of his, its or their claims, and to furnish the Committee at any time or from time to time with any information and proof respecting it which may be asked.
2. The Stockholders will deposit with the X. Y. Bank of Columbus, Ohio, hereinafter referred to as the Depositary, their certificates for a majority of the voting shares of the capital stock of the Company properly endorsed for transfer or accompanied by transfers or powers to transfer the same, sufficient to enable the Committee to transfer the title to said shares into their names as such Committee or into the name or names of such person or persons as they may designate, from time to time, and thereby confer upon the Committee as at any time constituted, or such transferees, all the powers of stockholders in the Company.
3. The Committee shall have power:
(a) To transfer to themselves as a Committee hereunder, or from time to time to any other person designated by them, the shares of the Company deposited as aforesaid, and to control, so far as the ownership of said shares confers such control, all the business of said corporation for the benefit of the parties hereto, subject, however, to the provisions hereof. The Committee is directed to transfer the shares of stock so received from said Stockholders to themselves or to such persons as they may direct.
(b) To cause to be borrowed from time to time, on the credit of the Company, or to request the Company to borrow from time to time whatever sums thay shall deem in their discretion to be necessary, and to request the Company to pledge any assets of the Company as security, for such loans, or to agree in any other manner that any sums so borrowed may have a lien and claim upon the Company and its assets prior and superior to the claims of any creditors, becoming a party hereto.
(c) To adjust, compromise and settle, by themselves or by arbitration, or to disallow claims against the company, whether said claims are or are not the claims of a party hereto; provided, however, that if any claim of any party hereto is not allowed for the full amount claimed, such party shall have the right to institute legal proceedings against the Company for the determination of the amount of his claim notwithstanding anything herein contained to the contrary (but shall not have the right to place any attachment or lien on the property of the Company), and when the amount of his claim is so determined, it shall be recognized by the Committee as a valid claim hereunder, but shall not be enforced by any proceedings against the Company or its property except in conformity to this agreement.
(e) To wind up the Company in case they deem it expedient, through bankruptcy, or by other legal proceedings, or to apply for or to assent to appointment of temporary or permanent receiver or receivers.
(f) To prepare and present to the parties hereto any plan for reorganization of the Company.
(g) To take any and all measures necessary to enable them immediately to control the actual management of the business and the property of the Company, to supervise and direct the conduct of its affairs, to carry on the business of the Company in such manner and for such length of time as it may deem fit, or to refrain from time to time from operating the business.
(h) To agree from time to time with any other holders of shares of stock in the Company, or with any committee or committees representing such shareholders respecting the continuation of the business of the Company, or its reorganization, or the liquidation of its assets.