Exhibit 2.5
CONTRACT FOR SALE OF ASSETS
THIS AGREEMENT is made and entered effective the 31st day of
December, 1996, and is an agreement being by and between XXXXXXX X. XXXXXXXXX,
P.C., a North Dakota professional corporation, which maintains its principal
place of business at 109 North 4th Street, Bismarck, North Dakota, (hereinafter
CLEVELAND); and BNC NATIONAL BANK, a federally chartered banking institution,
which maintains its principal place of business at 322 East Main, Bismarck,
North Dakota (hereinafter BNC).
RECITALS:
WHEREAS, CLEVELAND is the owner of assets and goodwill through
the operation of his accounting firm operating from its facilities in Bismarck,
North Dakota.
WHEREAS, CLEVELAND desires to sell, transfer and assign to BNC
and BNC desires to acquire from CLEVELAND, all of CLEVELAND's right, title and
interest in and to all of those assets set forth and further described in the
Exhibits which are attached hereto, said acquisition to be free from all
liability and encumbrances whatsoever, and shall include the goodwill, the
ongoing business and other assets associated therewith, whether tangible,
intangible or otherwise, with it being the intent of the parties, by this
agreement, to define the terms and conditions upon which CLEVELAND will sell and
BNC will purchase the same.
NOW, THEREFORE, in consideration of the mutual covenants and
conditions, it is agreed by and between the parties, as follows:
1.0 Incorporation of Recitals. The recitals set forth above are
incorporated herein by reference and are made a part of this
agreement as if fully set forth herein and shall constitute an
expression of the intent of the parties and as an aid in the
construction of this agreement.
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2.0 Description of Assets Sold and Purchase Price. The assets
which CLEVELAND shall sell to BNC, and which BNC shall
purchase from CLEVELAND, shall be the following assets owned
or used by CLEVELAND in conducting its accounting operations
and which are represented in the categories of assets listed
below in the paragraph 2.0 (hereinafter collectively referred
to as "PROPERTY"):
2.1 Prepaid Expenses. All of CLEVELAND's prepaid expenses
as of December 31, 1996 (PREPAID EXPENSES). PREPAID
EXPENSES shall include all right, title and interest
of CLEVELAND in and to software or other computer
components (excluding computer hardware or supplies),
whether or not the same have yet been delivered or
received. The PREPAID EXPENSES shall be separately
identified and set forth in EXHIBIT A, which is
attached hereto and incorporated by reference herein,
with the purchase price to be paid by BNC to
CLEVELAND to be the dollar amount designated therein.
2.2 Accounts Receivable. All of CLEVELAND's accounts
representing payments owing or to be owed by those
clients as hereafter identified on the client list in
the Exhibit so designated and are such sums as are
due and owing as of December 31, 1996 (ACCOUNTS
RECEIVABLE.) The ACCOUNTS RECEIVABLE shall be
separately identified and set forth in Exhibit B,
which is attached hereto and incorporated by
reference herein, with the purchase price to be paid
by BNC to CLEVELAND to be that dollar amount as
individually indicated for clients and as thereafter
totaled and set forth on Exhibit B.
2.3 Work in Process. All of the professionally related
services being provided as of the execution of this
agreement and continuing through December 31, 1996,
and as identified in Exhibit C which is attached
hereto and incorporated by reference herein (WORK IN
PROCESS). The WORK IN PROCESS shall include the
transfer and assignment of all working papers,
documents, memoranda, correspondence and other files
and information concerning each of the items set
forth in the WORK IN PROCESS, including that which
may exist as of the time of execution of the
agreement or hereinafter generated through December
31, 1996. The purchase price which BNC shall pay
CLEVELAND for WORK IN PROCESS shall be dollar amount
as set forth for each of the individual clients as
identified in Exhibit C and the amount as totaled
thereinin.
2.4 Client List. Each and every client of CLEVELAND as
the same are itemized and set forth in Exhibit D,
which is attached hereto and incorporated by
reference herein (CLIENT LIST). The parties recognize
that the CLIENT LIST identifies specific clients of
CLEVELAND as the same now exists and whether
CLEVELAND is presently actively engaged to provide
accounting services or has performed the same in the
past on a periodic basis. Based upon the appraisal as
made and provided by and between the parties, the
purchase price which BNC
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shall pay CLEVELAND for the CLIENT LIST shall be Two
Hundred Sixty-Five Thousand Dollars ($265,000). The
parties agree that as an integral part of the
consideration being paid by BNC for the CLIENT LIST
is a sum representing all goodwill associated with
the CLIENT LIST which is, by agreement of the
parties, conveyed as a portion of this agreement and,
additionally, with the sum of $1,000 out of the
consideration being paid pursuant to the terms and
conditions of this paragraph representing the
Covenant Not to Compete as more fully hereinafter
stated.
2.5 Adjustments. The parties recognize and agree that the
sums set forth in Exhibits A, B and C represent
amounts calculated through November 30, 1996 and,
further, that a final calculation for all of said
Exhibits will be made during the month of January,
1997, representing a final calculation through
December 31, 1996, with said amount then compensable
on January 31, 1997.
3.0 Payment of Purchase Price. The purchase price, as provided in
paragraph 2.0, shall be paid by BNC to CLEVELAND as follows:
3.1 The sums as set forth in Exhibits A, B and C shall be
paid, in full, at closing. The adjustment to said
sums as set forth in paragraph 2.5 shall be payable
by BNC to CLEVELAND or refundable by CLEVELAND to
BNC, based upon such adjustments, on January 31,
1997.
3.2 The sum of Two Hundred Sixty-Four Thousand Dollars
($264,000) representing the purchase price for the
CLIENT LIST and Goodwill associated therein, and as
more fully set forth in Exhibit D, and the sum of
$1,000 representing consideration for the Covenant
Not to Compete, shall be due and payable, in full, by
BNC to CLEVELAND on January 31, 1997.
3.3 Payment of the purchase price as set forth in either
paragraph 3.1 or paragraph 3.2 shall be paid to
CLEVELAND or as otherwise designated by CLEVELAND.
4.0 Closing and Contingency to Close. The parties agree as follows:
4.1 The closing of this transaction shall take place at a
location on or before December 31, 1996 and at such
time mutually agreed upon by BNC and CLEVELAND. At
the closing, CLEVELAND shall execute and deliver to
BNC such bills of sale or other instruments as may be
necessary to transfer to BNC the PROPERTY as
hereinbefore identified and defined and shall deliver
possession thereof to BNC. All such bills of sale and
other instruments will contain the usual warranties
and will effectively transfer to BNC full title to
the same, free and clear of all liens, security
interests and encumbrances.
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4.2 The transfer of assets contemplated by this agreement
is being accomplished contemporaneously with the sale
and transfer of a partnership interest by Xxxxxxx
Xxxxxxx, P.C. (XXXXXXX), to Xxxxxxx X. Xxxxxxxxx,
P.C., Seller herein, in that partnership known as
Xxxxxxx X. Xxxxxxxxx & Co. (the PARTNERSHIP). The
closing of this transaction is contingent upon the
accomplishment of a closing transferring any and all
interests in the PARTNERSHIP by XXXXXXX to CLEVELAND.
Documentation shall be provided BNC at the time of
the closing of the transaction represented by this
agreement substantiating that XXXXXXX has transferred
any and all interests in the PARTNERSHIP to
CLEVELAND, including the assets being conveyed
hereby.
5.0 Business Operations. The accounting operations of CLEVELAND
sold and accompanying the PROPERTY conveyed hereby shall be
surrendered and relinquished to BNC as of the close of
business December 31, 1996.
6.0 Tax Claims. CLEVELAND represents and warrants that no taxes
are outstanding against its operations, with the PROPERTY
transferred hereby and that any taxes related to its
operations including, but not limited to, sales tax, state and
federal income tax withholding, federal Social Security tax
withholding, employment taxes and business, professional or
license fees, have been paid, in full, through December 31,
1996, with CLEVELAND hereby agreeing to and hereafter
indemnifying BNC from any responsibility, liability or loss
for any such taxes not paid as a result of operations through
December 31, 1996.
7.0 Covenant Not to Compete. In consideration of the sum paid by
BNC for this covenant as hereinbefore set forth, CLEVELAND,
and its owner, Xxxxxxx X. Xxxxxxxxx, individually, agree that
for a period of five (5) years from and after December 31,
1996, they will not engage in any aspect of the accounting
profession in Burleigh County, North Dakota, that in any
manner whatsoever represents competition to the accounting
purposes
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and activities of BNC as it relates to the assets including,
but not limited to, the CLIENT LIST purchased hereby, with
prohibited competition including, but not necessarily limited
to, the use of the name Xxxxxxx X. Xxxxxxxxx & Co., or any
name deceptively similar thereto, and shall also include any
participation, directly or indirectly, in the ownership,
management, investing, assisting or other operation of any
accounting business that carries on any similar business
purpose or activity in Burleigh County, North Dakota, whether
that activity originates in a center of location located in
said County or is initiated outside of said County but is
carried on, to any degree, within said area of this covenant.
Notwithstanding the Covenant Not to Compete as set forth
herein, it is the express agreement of the parties that it
shall not be a violation of this covenant for Xxxxxxx X.
Xxxxxxxxx, individually, or in conjunction with other persons
or legal entities, to carry on work related activities
generally associated with the accounting profession and the
assets transferred hereby, provided that such work related
activity is associated with the ongoing endeavors of BNC, the
holding company of BNC or any of the corporate affiliates
either of the holding company or BNC and with such activity is
carried out as an employee of said banking entities or on a
consulting or other business relationship. The Covenant Not to
Compete as set forth herein and including the exclusion to the
same shall be binding upon and the exception applicable to
Xxxxxxx Xxxxxxx who, by his signature appearing herein, agrees
to this covenant and the exclusion recognizing and
representing that the goodwill paid hereunder is, in part, the
consideration for the goodwill being sold in that
contemporaneous transaction between XXXXXXX and CLEVELAND.
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8.0 Employees. The parties agree as follows:
8.1 BNC has and may continue to elect to employ all of
the present employees of CLEVELAND. By such acts, BNC
is not binding itself to continue the employ of such
persons or restricting itself from assigning other
duties and responsibilities to any or all of such
persons as it, in its sole discretion, sees fit. Any
salaries, bonuses, commissions or other remuneration
owing to any employees as of December 31, 1996, shall
be and remain the sole and separate obligation of
CLEVELAND, who shall indemnify and hold BNC harmless
from any liability or loss occasioned thereby
including, but not limited to, payroll taxes and the
like. BNC shall be responsible to and hereby does
assume the obligation to provide employee benefits to
those employees of CLEVELAND that shall continue in
the employ of BNC after the closing of this
transaction, with that responsibility and assumption
being as to any and all benefits in the form of
vacation, sick leave, personal leave and the like,
with such assumption and responsibility being for the
same as they otherwise exist on the books and records
of CLEVELAND as of December 31, 1996, with BNC
thereafter entitled to modify any employment policies
related to the same and as they affect the employees
from and after January 1, 1997, other than benefits
accrued through year end.
8.2 CLEVELAND maintains for the benefit of its employees
a plan or plans of deferred compensation, 401(k), or
the like. After January 1, 1997, BNC shall provide
notice to CLEVELAND and the employees of CLEVELAND
that shall become employed by BNC of the options
concerning rollover of any presently existing
deferred benefits. BNC shall be required to accept
any rollover of such benefits as requested by the
employees. The terms and conditions of any rollover
shall be as reasonably required by BNC, with BNC
thereafter entitled to provide deferred compensation
benefits to such employees as it, in its sole
discretion, sees fit.
9.0 Representations by Cleveland. CLEVELAND makes the following
representations and warranties to BNC, all of which shall
survive the closing:
9.1 CLEVELAND is a duly recognized legal professional
entity in the State of North Dakota operating as a
professional accounting firm and has full power and
authority to execute this agreement and carry out all
terms and provisions as set forth herein.
9.2 CLEVELAND is the owner of and has good and marketable
title to the PROPERTY conveyed hereby, free of all
debts, liens, security interests and encumbrances,
and shall be conveyed free of the same to BNC
hereunder at closing.
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9.3 There are no judgments, liens, actions, or
proceedings pending or threatened against the assets
of CLEVELAND being conveyed hereby.
9.4 CLEVELAND has complied with the laws, rules and
regulations relating to the business and PROPERTY and
being conveyed hereby.
9.5 CLEVELAND has paid, or will pay, in full all
liability incurred by it through December 31, 1996,
of state and federal employee income tax withholding,
federal social security tax withholding, employment
taxes, unemployment insurance, sales and use taxes,
business or license fees and any other business
related taxes or governmental charges.
9.6 CLEVELAND states that, in its opinion, consideration
be paid hereunder represents the reasonable fair
market value of the assets transferred hereunder and
that the appraisal obtained for the value of the
assets transferred represents a free and voluntary
opinion expressed by the individual performing the
same.
9.7 CLEVELAND, and its principals, shall use their best
efforts to assist BNC in keeping and promoting (i)
the clients and continuing work represented thereby
as set forth in Exhibit D; and (ii) continuing and
collecting all accounts receivable and WORK IN
PROCESS as represented by Exhibits B and C,
respectively.
9.8 The PROPERTY being sold hereby and as set forth
herein and in the Exhibits attached hereto includes,
but is not necessarily limited to, all records,
files, client materials and other documents or
records associated with the CLIENT LIST and the
clients represented therein. It excludes any and all
corporate records and documents provided,
nevertheless, that BNC shall have access to the same
upon advance notice to CLEVELAND and for reasonable
business purposes.
10.0 Representations by BNC. BNC makes the following
representations and warranties to CLEVELAND, all of which
shall survive the closing:
10.1 BNC is a duly recognized, federally chartered banking
institution, lawfully carrying out its business in
the State of North Dakota and has full power and
authority to execute this agreement and carry out all
terms and provisions as set forth herein including,
but not limited to, continuation of the business
associated with the assets being purchased hereby.
10.2 From and after the date of closing, BNC shall be
responsible for and shall pay all advertising costs
associated with any telephone yellow page advertising
or other advertising presently in place and
previously arranged by CLEVELAND.
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10.3 BNC has received and reviewed a report of appraisal
valuing the CLIENT LIST represented by Exhibit D and
it is satisfied that the appraisal was freely and
voluntarily completed and that the consideration
being paid hereunder is consistent therewith and is
appropriate in amount.
10.4 BNC shall be solely responsible for obtaining
necessary consents to assignment of software and
other computer related requirements involving
copyright, tradenames, registration names or the like
and, additionally, for purging and eliminating any
software or aspects of computer operations being
received from CLEVELAND that would otherwise
represent copyright infringement, registration
violations or the like.
10.5 The Covenant Not to Compete as it affects Xxxxxxx
Xxxxxxx shall terminate and no longer be of any force
and effect in the event BNC, in its discretion,
terminates his employment.
10.6 XxXxx Xxxxx, P.C., Attorneys at Law, have been
retained by BNC and do operate on its behalf in all
aspects of preparation and closing of this agreement.
10.7 BNC and the officer of it executing this agreement
have full power and authority granted by the Board of
Directors through resolution duly made and adopted
consenting to and approving the transaction
represented hereby, including the consideration to be
paid.
10.8 The assets, including the CLIENT LIST and clients
represented therein being purchased hereby represents
assimilation of a professional accounting practice to
the extent that it is associated with the assets
transferred and BNC shall use reasonable business
efforts to continue servicing said clientele and
promoting and furthering the name and reputation of
CLEVELAND as associated therewith.
10.9 The assets being transferred does not include any
audit or review of clients, with BNC representing
that it is aware that said audit or review clients
are being sold and transferred by separate agreement
to a third party.
11.0 Risk of Loss. CLEVELAND assumes all risk of loss due to fire,
theft or other casualty up to and through December 31, 1996,
with BNC assuming and responsible for the same from and after
said date. In the event of any such loss prior to such date,
the obligation to close and fulfill all duties and
responsibilities hereunder shall continue and remain in full
force and effect provided, nevertheless, any and all insurance
coverage provided for such loss shall belong to and become the
property of BNC.
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12.0 Indemnity. As this agreement only provides for a purchase of
assets, upon execution of this agreement, CLEVELAND, and its
principal, individually, and its successors and assigns, agree
to a and shall defend, indemnify and hold BNC, and its
successors and assigns, harmless from any claims, demands,
losses, and/or any lawsuits by any party as a result of any
activity of CLEVELAND prior to December 31, 1996. As BNC shall
continue providing professional accounting services to the
CLIENT LIST of clients identified therein and as set forth
herein from and after December 31, 1996, it, as well as its
successors and assigns, agree to and shall defend, indemnify
and hold CLEVELAND and its successors and assigns, harmless
from any claims, demands, losses, and/or any lawsuits by any
party as a result of any activity of BNC after December 31,
1996.
13.0 Intent of Agreement. This agreement is not intended to create
a partnership, joint venture or other type of business
relationship between CLEVELAND and BNC.
14.0 Construction. This agreement contains the entire agreement of
the parties and the matters discussed herein, with the
Recitals as set forth at the beginning of this agreement
becoming an integral part of the contractual relationship
between the parties. Any matters pertaining to the
construction and application hereof shall be governed by the
laws of the State of North Dakota.
15.0 Entire Agreement. This agreement sets forth the entire
understanding of the parties and it may not be changed except
in writing and signed by both parties.
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16.0 Binding Effect. This agreement shall be binding upon and inure
to the benefit of, the parties hereto, and CLEVELAND, if not
executed as an individual, then in all individuals that are
partners, shareholders, directors or officers of CLEVELAND,
and all of the respective successors and assigns of all
parties hereto.
IN WITNESS WHEREOF, the parties have signed this agreement in
duplicate originals effective the day and date first above written,
notwithstanding execution at some later date.
XXXXXXX X. XXXXXXXXX, P.C. BNC NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxx Xxxxx
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Its: President Its: Chairman/CEO
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The undersigned consents and agrees to accept all terms and
conditions as set forth herein and to be bound to all obligations and remedies
as provided herein or otherwise allowed by law.
Dated: December 31 , 1996. /s/ Xxxxxxx X. Xxxxxxxxx
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XXXXXXX X. XXXXXXXXX
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The undersigned has read the foregoing and consents and agrees
to be bound by the terms and conditions therein as they apply to him,
individually, representing and agreeing that goodwill payable hereunder is
equivalent to and as a result of goodwill paid to him under separate agreement
referenced herein and as executed contemporaneously herewith, and further
consenting to the Covenant Not to Compete as set forth.
Dated: December 31, 1996. /s/ Xxxxxxx Xxxxxxx
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XXXXXXX XXXXXXX
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