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EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
AGREEMENT dated June 15, 1999, by and among BLOCK TRADING, INC., a Texas
corporation ("Seller"), and RUSHMORE SECURITIES CORPORATION, a Texas
corporation ("Purchaser").
Subject to the approval of the United States Bankruptcy Court for the
Southern District of Texas, Houston Division, and the other terms and
conditions of this Agreement, Purchaser desires to acquire certain assets of
Seller and Seller is willing to sell such assets on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. Transfer and Assignment of Assets. At the Closing (as hereinafter
defined), Seller agrees to convey, transfer, assign and deliver to Purchaser
certain of the assets and properties used by it in its securities trading and
software development business (the "Business") as conducted from its facilities
in Houston, Texas, and Purchaser agrees to accept the same. The assets and
properties so conveyed and transferred are hereinafter referred to as the
"Purchased Assets" and shall consist of the following, except as set forth in
Section 2:
(a) Furniture, Fixtures and Equipment. All furniture,
fixtures and equipment and all parts, accessories, tools and supplies
pertaining thereto (the "Furniture, Fixtures and Equipment"), the
principal items of which as of June 1, 1999, are described in Schedule
1(a) attached hereto.
(b) Prepaid Expenses. All prepaid expenses and deposits, but
only to the extent that the benefits thereof shall accrue to Purchaser
on and after Closing (the "Prepaid Expense Items"), the principal
items of which as of June 1, 1999, are described in Schedule 1(b)
attached hereto.
(c) Software. All computer hardware and software, including
the software designed for the purpose of providing quote information,
executions, trader support and back office record keeping for traders
who access the securities, option, futures or commodities markets
electronically, including the object (machine-readable) and source
(human-readable) code, and all rights thereto.
(d) Name. The right to use the name "BLOCK TRADING" and any
variation thereof. At Closing, Seller shall execute and deliver to
Purchaser an Amendment to Seller's Articles of Incorporation to delete
the name "Block Trading" from its corporate name.
(e) Warranties. All warranties, guarantees and the like of
manufacturers, contractors, sellers or suppliers which pertain to the
Purchased Assets.
(f) Telephones. Seller's interest in the telephone numbers
and all listings pertaining to Seller in Houston area telephone books
and directories.
(g) Receivables. All of Seller's accounts and notes
receivable, purchase orders and contract rights for the receipt of
money ("Receivables"), a listing of which along with the amount
thereof as of June 1, 1999, is to be set forth in Schedule 1(h) to be
prepared by Seller and attached hereto.
(h) Going Concern. The business of Seller as a going concern
including the goodwill, if any, contract rights, and all records,
books, customer lists, brochures, office supplies, literature, general
intangible rights, credit information and any and all other operating
data of Seller.
(i) Intellectual Property. Full and exclusive rights, subject
only to that certain Software Assignment and Settlement Agreement
dated April 8, 1999, unencumbered by any other licenses or grants
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of rights to any third party, to any patents, patents pending, patent
applications, trademarks, copyrights, service marks, trade names,
nondisclosure agreements, a listing of which shall be prepared by
Seller and attached as Schedule 1(j), and in addition all trade
secrets, inventions, engineering designs, product specifications and
processes pertaining to the Purchased Assets.
2. Excluded Assets. Notwithstanding the generality of the foregoing,
Purchaser shall not acquire the following assets of Seller:
(a) Cash. Any of Seller's cash, investments or cash
equivalents, including any tax refunds and amounts received by Seller
from Xxxxxx Financial.
(b) Avoidance Powers. Seller does not by this Agreement agree
to transfer to Purchaser any bankruptcy avoidance powers or other
causes of action with respect to the Purchased Assets or otherwise,
all of which shall be retained by Seller.
3. Assumed Obligations. Buyer shall assume on the Closing Date only
the obligations, contracts, liabilities and commitments of Seller (the "Assumed
Obligations") which are listed on Schedule 3 attached hereto. Buyer shall
execute an assumption agreement with respect thereto, in an appropriate form
approved by the parties. Buyer shall not assume, be liable for or discharge any
debts, liabilities or obligations of Seller of any kind or character which are
not specifically listed on Schedule 3.
4. Purchase Price.
(a) Amount. The purchase price for the Purchased Assets shall
be the sum of $800,000.
(b) Form of Payment. The purchase price (the "Purchase
Price") shall be paid as follows:
(i) A sum equal to $50,000 shall be deposited in
cash, with Xxxxxxxxx, Xxxxx & Xxx, attorneys for seller, to
be held in an interest bearing account, to be released to the
Seller at Closing upon satisfaction of all conditions and
requirements of this Agreement, or to be returned to
Purchaser if this Agreement fails to close pursuant to its
terms;
(ii) A sum of cash equal to the amount released from
escrow and such additional amount required to fund the
Purchase Price.
5. Representations and Warranties of Seller. Seller makes no
representations or warranties about the nature or condition of the Purchased
Assets. The sale hereby shall have been approved by order of the United States
Bankruptcy Court for the Southern District of Texas, Houston Division, and the
Purchased Assets will be transferred to Purchaser free and clear of all
pre-petition and post-petition liens, claims, encumbrances and taxes.
6. Conditions Precedent. All obligations of Purchaser and Seller under
this Agreement are subject to the fulfillment prior to or on the Closing of
each of the following conditions, unless waived in writing by both. Purchaser
and Seller shall each have the right to terminate this Agreement if all such
conditions are not fulfilled prior to the Closing, and Purchaser and Seller
shall use their best efforts to cause each of the following to be fulfilled:
(a) Bankruptcy Court Approval. Seller shall have received
final and nonappealable approval of the United States Bankruptcy Court
for the Southern District of Texas, Houston Division, of this
Agreement and the sale provided for herein, in a proceeding under
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, 11 U.S.C. Sec. 363.
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(b) Performance by Purchaser and Seller. Purchaser and Seller
shall have performed and complied with all agreements, covenants and
obligations required by this Agreement to be performed or complied
with by them prior to or on the Closing.
(c) No Material Adverse Changes. There shall have been no
material adverse change in Seller's business, financial results,
relationships with suppliers and distributors, financial condition, or
the condition of the Purchased Assets.
(d) Satisfaction with Review. Purchaser shall in its sole
discretion be satisfied with its due diligence review of the Purchased
Assets and the Business.
(e) Delivery of Items. Seller shall have delivered to
Purchaser all items required by this Agreement.
(f) Closing Date. Closing of the purchase and sale hereby
shall have occurred not later than 30 days following delivery to
Purchaser of all requested due diligence information.
7. Other Agreements and Covenants. In addition to the Agreements set
forth herein, the parties hereto agree as follows:
(a) Expenses and Commissions. Each party to this Agreement
shall bear its own legal, accounting and other related expenses in
connection with the transactions provided for herein. Each of the
parties hereto agrees to hold the other harmless from and against any
liability for broker's or finder's fees in connection with the
purchase and sale provided for herein arising out of contracts,
express or implied, which may be asserted against the noncontracting
parties.
(b) Future Transactions. During the period from and after the
date of this Agreement through the Closing Date, Seller covenants and
agrees that, without Purchaser's prior written consent to the
contrary, Seller will operate so as:
(i) To carry on the Business in substantially the
same manner as heretofore carried on, and not to make any
purchase or sale, or enter into any agreement or lease
(whether as a lessor or lessee), or introduce any new method
of management or operation in respect of any such business,
except in the ordinary course of business and in a manner not
inconsistent with prior practice and with the terms of this
Agreement;
(ii) Not to acquire, sell, transfer, lease,
mortgage, pledge, encumber or otherwise dispose of any fixed
asset (other than inventory that is sold in the ordinary and
usual course of business) having a present value in excess of
$1,000;
(iii) Not to change or alter the physical contents
or character of the Business or result in a change of the
total valuation thereof, other than as a result of
transactions in the ordinary course of business or as
required under the terms of this Agreement;
(iv) To maintain and preserve its business
organization and goodwill intact and maintain its
relationships with suppliers, customers, creditors, employees
and others having business relationships with it;
(v) Not to make any changes or modifications in any
agreement to which it is a party which affects the Purchased
Assets, except in the ordinary course of business or in an
amount not exceeding $1,000 in any one transaction or as
required by this Agreement;
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(vi) Not to make any commitment for any capital
expenditures for a single item exceeding $500 and not to make
commitments for capital expenditures exceeding $1,000 in the
aggregate.
(c) Future Assistance. Seller will assist and cooperate with
Purchaser in assuming the Business of the Seller. Purchaser shall have
the right, but not the obligation, to retain any or all of the current
employees of the Seller.
(d) Notice. Any notice, instruction, document or other
communication required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given when
delivered personally or by facsimile as follows:
If to Purchaser, to:
X. X. Xxxxx, Xx., Chief Executive Officer
Rushmore Securities Corporation
00000 Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Fax: (000)000-0000
With copies to:
Xxxxxx X. Xxxxx, Esq.
Glast, Xxxxxxxx & Xxxxxx, P.C.
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000)000-0000
If to Seller, to:
Xxxxxxx Xxxxx, President
Block Trading, Inc.
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
With copies to:
Xx Xxxxxx
Xxxxxxxxx, Xxxxx & Xxx
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Any party may change its address or addresses for purposes of
this Section by written notice of such change to the other party in
the manner herein provided for giving notice.
(e) Non-Solicitation. Neither the Seller, nor its officers
and directors will solicit or entertain offers from or negotiate with
any person or entity regarding the sale of the Business or assets upon
execution of this Agreement. Seller may only solicit or entertain
offers if this Agreement is terminated.
(f) Access to Information. From and after the date hereof,
Purchaser and its representatives shall be provided with access to the
assets, financial statements, employment files, books, records and
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employees of Seller and shall have the right to inspect such property
and to inspect and copy all such books and records of Seller.
(g) Liquidated Damages. Upon termination of this Agreement
upon the occurrence of either of the following events, Seller shall
pay to Purchaser the direct out-of-pocket expenses incurred by
Purchaser in conducting its due diligence and paying legal fees and
other costs of the transaction hereby, in the maximum amount of
$150,000, as liquidated damages and not as a penalty: (i) Seller shall
be in breach of any provision of this Agreement, which breach results
in the failure to close the sale hereby; or (ii) this Agreement shall
be terminated upon the failure of Seller to satisfy a condition to
closing, and at any time during 12 months thereafter, Seller shall
conclude a transaction for the sale of Seller or its assets with any
other party.
8. Closing.
(a) Closing. The Closing shall take place at the offices of
Purchaser as set forth above, at such time as the parties may mutually
agree upon, but in no event later than the date set forth in Section
6(f) (the "Closing Date"). The Closing Date may be extended upon the
joint approval of the parties or by the parties if necessary in order
to obtain Bankruptcy Court approval.
(b) Delivery of Items by Seller. At or prior to the Closing,
Seller shall deliver to Purchaser:
(1) A Xxxx of Sale covering all of the Purchased
Assets.
(2) An order of the Bankruptcy Court authorizing the
transactions contemplated hereby, in form satisfactory to
counsel to Purchaser.
(3) All other books, records, papers, evidences of
title or interest and documents relating to the Purchased
Assets and assumed liabilities.
(c) Delivery of Items by Purchaser. Purchaser shall deliver
to Seller at the Closing:
(1) The consideration set forth in Section 4.
(2) An assumption of liabilities as described in
Section 3.
(d) Allocation of Price. The purchase price shall be
allocated among the Assets as set forth on Schedule 8(d).
9. General.
(a) Section and Subsection headings contained in this
Agreement have been inserted for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.
This Agreement may not be amended, modified or terminated except by
writing signed by executive officers of both Purchaser and Seller.
This Agreement represents the culmination of substantial negotiations
between the parties and is the entire final Agreement between them
pertaining to the subject matter hereof. No waiver of any breach of
any term hereof shall be effective unless made in writing, signed by
the party against whom enforcement of the waiver is sought, and no
such waiver shall be construed as a waiver of any subsequent breach of
that term or of any other term of the same or different nature.
(b) This Agreement may be executed in counterparts, all of
which together shall constitute one and the same instrument.
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(c) If any section or portion of this Agreement is held to be
illegal or otherwise void or invalid, the remainder of this Agreement
shall not be affected and shall remain in full force and effect.
(d) THIS AGREEMENT SHALL BE INTERPRETED UNDER AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
(e) All exhibits, schedules and statements which are attached
to the Agreement are incorporated in this Agreement as though fully
set forth at the respective points indicated in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement this 15th day of June, 1999
SELLER:
BLOCK TRADING, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
PURCHASER:
RUSHMORE SECURITIES CORPORATION
By: /s/ X.X. Xxxxx, Xx.
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X. X. Xxxxx, Xx., Chief Executive Officer
