ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement") dated as of February 15, 2000,
by and among LANCER INTERNATIONAL, INC., a Nevada corporation ("Seller"), and
STARTRONIX.COM, INC., a Delaware corporation ("Purchaser") a wholly owned
subsidiary of StarTronix International, Inc.
PRELIMINARY RECITALS
WHEREAS, Seller is engaged in the business of developing and marketing
various health products and services to customers, and has a business location
at 10 Corporate Park, Suite 110, Irvine, CA 92606 (the "Business").
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller certain of the Seller's property and assets, upon the terms
and subject to the conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
ARTICLE I
SALES AND PURCHASE OF THE PURCHASED ASSETS
1.1 PURCHASED ASSETS. On the terms and subject to the conditions
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hereinafter set forth, Seller hereby sells, conveys, transfers, assigns and
delivers to Purchaser, free and clear of all Liens (as defined), and Purchaser
hereby purchases and acquires all of Seller's rights, title and interest in and
to the following property and assets (other than Excluded Assets as defined in
Section 1.2) which are used in or arise out of the conduct of the Business or
are considered to be assets of Seller as of the Closing Date (as defined),
located at the Irvine Business and whether or not all or any of said property
and assets appear on or are reflected upon Seller's books, records or financial
statements (collectively, the "Purchased Assets"), exclusively including the
following:
1.1.1 Tangible Personal Property. All office furniture and
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equipment and other similar personal property of Seller, listed on "ADDENDUM I"
herein attached as a part of this Agreement;
1.1.2 Inventories and Supplies. All inventory of Seller,
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including without limitation, equipment and office, operating proprietary
systems, products, and other supplies listed on "ADDENDUM II" herein attached as
a part of this Agreement;
1.1.3 Records. All records, files, documents and papers of the
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Business, including but not limited to, list of investors and amounts invested
financial statements, journals, ledgers, correspondence, customer records, books
of account, and employment application and records, " herein attached as a part
of this Agreement;
1.1.4 Claims. All causes of action, claims, rights of recovery
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and set-off of every kind and character pertaining or relating to the Purchased
Assets, including all insurance, warranty and condemnation proceeds received
after the Closing Date with respect to damage, destruction or loss of any
Purchased Assets;
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1.1.5 Other Assets. All other properties and assets owned or held by
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Seller that are used in, or are necessary for the continued conduct of, the
Business as of the date hereof, whether or not of a type falling within any of
the categories of assets or properties described above; and
1.1.6 Name and Goodwill. The name "Lancer International" that are or
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could be under the control of Seller, together with all goodwill associated
therewith and with the Business.
1.1.7 Proprietary Rights. Any and all servicemarks, trademarks, serivcemark
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and trademark registrations and applications, trade-names, logos, copyrights,
and other licenses thereof, know-how, trade secrets, listings of past and
present customers, potential customers, recorded knowledge, business plans,
performance standards, catalogues, research data, analyses and computer software
programs, sales data, sales and advertising materials, scheduling and service
methods, sales and service manuals and all other proprietary, confidential and
other similar information (in whatever form or medium) relating to the conduct
of the Business (collectively, "Proprietary Rights") "Addendum III" " herein
attached as a part of this Agreement.
1.1.8 Accounts Receivable. All accounts receivable, notes, bonds or other
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evidences of indebtedness of any corporation, entity or person held by Seller,
including any such receivables from officers, stockholders, employees and
companies affiliated with Seller;
1.2 EXCLUDED ASSETS. The following assets ("Excluded Assets") shall be
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retained by Seller and shall not be sold and transferred to Purchaser hereunder:
1.2.1 Purchase Assets to Irvine Location. All Assets involved in Seller's
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Businesses that are specifically listed on "ADDENDUM III" herein attached as a
part of this Agreement.
1.2.2 Rights Under This Agreement. Seller's rights pursuant to or under
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this Agreement;
1.2.3 Cash and Cash Equivalents. Any and all cash and cash equivalent
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assets of Seller, including rights to tax refunds, insurance deposits or
premiums and rights to return of premiums;
1.3 CLOSING. The closing of the sale and purchase of the Purchased
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Assets (the "Closing") will take place beginning at 1:00 p.m. on
, 1999, at the office of Lancer International, located at 10 Corporate Park,
Suite # 110, City of Irvine, California (such time and date being hereinafter
referred to as the "Closing Date").
ARTICLE II
PURCHASE PRICE
2.1 CLOSING AMOUNTS. The Purchase Price to be paid by Purchaser to
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Seller for the Business and the Purchased Assets shall be SEVEN HUNDRED
TWENTY-TWO THOUSAND FIVE HUNDRED THIRTY-TWO DOLLARS ($723,532) subject to final
review and approval of the StarTronix International, Inc. Board of Directors.
2.2 PAYMENT OF PURCHASE PRICE. An amount of the Purchase Price equal
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to FIFTY THOUSAND DOLLARS ($50,000), less the amount of earnest money payment
already received, shall be payable by Purchaser at Closing in cash or
immediately available funds. An amount of the Purchase Price equal to SIX
HUNDRED SEVENTY-THREE THOUSAND FIVE HUNDRED THIRTY-TWO DOLLARS ($673,532) shall
be payable by Purchaser by the delivery at Closing of the number of SHARES OF
RESTRICTED COMMON STOCK OF STARTRONIX INTERNATIONAL, INC. that equate to a value
of $673,532 based upon the average closing price of SHARES OF COMMON STOCK OF
STARTRONIX INTERNATIONAL, INC. on the NASDAQ Bulletin Board within the last 10
business day period prior to Closing (the "Shares of Stock"), as per the daily
Bloomberg stock closing price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 ABSENCE OF UNDISCLOSED LIABILITIES. Seller has no debts,
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liabilities or obligations of any nature (whether accrued, absolute, contingent,
direct, indirect, perfected, inchoate, unliquidated or otherwise, whether due or
to become due) arising out of any transaction entered into at or prior to the
Closing, or any transaction, series of transactions, action or inaction at or
prior to the Closing, or any state of facts or condition existing or obligation
is asserted, including without limitation, taxes with respect to or based upon
transactions or events occurring on or before the Closing that may affect the
assets to be purchased under this Agreement.
3.2 NO MATERIAL ADVERSE CHANGES. Since December 31, 1998, there has
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been no material adverse change in the assets, liabilities, condition (financial
or otherwise), operating results, employee or customer relations, business
activities or reputation of Seller's Business.
3.3 PURCHASED ASSETS.
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3.3.1 Title. "ADDENDUMS I & II" contain true and complete lists of
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all vehicles, equipment, furniture, supplies, drawings and all other tangible or
intangible personal property, rights and assets owned or leased by, in the
possession of, or used by Seller in connection with the Business, located on the
leased real property (except property sold or otherwise disposed of in the
ordinary course of business consistent with past custom and practice), which
list indicates the location of such items. Except for the Excluded Assets, the
Purchased Assets constitute all of the property and assets which are used in or
considered part of the Business as presently conducted, other than assets sold
or disposed in the ordinary course of business to nonaffiliated third parties.
Seller owns good and marketable title, free and clear of Liens to all Purchased
Assets. Seller has the right to convey, and upon consummation of the
transactions which are the subject of this Agreement, Purchaser will be vested
with good and marketable title to the Purchased Assets, free and clear of all
liens, mortgages, charges, claims or interests of any nature (collectively,
"Liens").
3.3.2 Leases. All leases of the real and personal property leased by
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the Seller and utilized in the Business, including all such leases with related
parties or affiliates are listed on "ADDENDUM IV" herein attached as a part of
this Agreement. Seller has heretofore delivered to Purchaser accurate and
complete copies of all such leases. Purchaser has agreed to assume such leases
to the extent that the lessor of such leases consents to such assumption and to
indemnify and hold Seller harmless from any further obligation under such
leases.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to and agrees with Purchaser as hereinafter
set forth in this Article IV.
4.1 OPERATION OF PURCHASER'S BUSINESS. During the Post Closing period
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as defined, Seller shall operate the Business in a prudent business manner and
will not make material changes in the manner of operation in the Business so as
to negatively and adversely affect Purchaser's interest in obtaining the
payments required by Seller under Section 2.2 herein.
4.2 LITIGATION. There is no claim, counter-claim, action, suit
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proceeding or governmental investigation pending or, to the best knowledge of
Seller, threatened against or involving Seller with respect to or affecting
Seller or its business, properties, services or operations, or relating to the
transactions contemplated hereby, before any court, agency, commission, board,
bureau or other governmental body or instrumentality which would adversely
affect Seller's ability to perform its obligations hereunder including without
limitation any payment due hereunder.
4.3 TAXES. All taxes due and payable by the Seller have been paid in
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full. Seller has timely filed all federal, state, county, local and foreign tax
returns which it is required to have filed, and such returns are complete and
correct. Any deficiencies proposed as a result of any governmental audits have
been paid or settled, and there are no present disputes as to taxes payable by
Seller. There are no unexperienced waivers by Seller of any statute of
limitations with respect to any taxes, and Seller is not a party to any action
or proceedings by any governmental authority for the collection or assessment of
taxes.
4.4 RESALE OF PURCHASED ASSETS. During the Post Closing period, Seller
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agrees not to sell any of the Purchased Assets to any third party without the
prior written approval of Purchaser.
ARTICLE V
OTHER AGREEMENTS
5.1 ADDITIONALAGREEMENTS. Seller shall, from time to time after the
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Closing, upon the request of Purchaser, do, execute, acknowledge and deliver, or
cause to be done, execute acknowledge and deliver, all such further acts,
assignments, transfers, assurances, transferring, granting, conveying, assuring
and confirming to Purchaser the Purchased Assets sold to Purchaser pursuant to
this Agreement.
ARTICLE VI
CLOSING DELIVERIES
6.1 CLOSING DOCUMENTS BY PURCHASER. On the Closing Date Purchaser
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shall deliver to Seller:
6.1.1 Purchase Price. Cash or bank check in an amount equal to FIFTY
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THOUSAND DOLLARS ($50,000), being that portion of the Purchased Price due in
cash, at Closing; and
6.1.2 Stock. The balance of the Purchase Price is SIX HUNDRED
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SEVENTY-TWO THOUSAND FIVE HUNDRED THIRTY-THREE DOLLARS ($673,532) and shall be
fully paid by a stock certificate from StarTronix International, Inc.
representing the Shares of Stock as determined in accordance with Section 2.2
hereof; and
6.1.3 Employment Agreements. Employment Agreements for Jonathan and
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Barbara Gulla Exhibit "A & B" attached hereto.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNITY BY PURCHASER. Without limitation of any other provision
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of this Agreement, Purchaser covenants and agrees to protect, indemnify, defend
and hold Seller harmless from all third party liabilities, obligations, losses,
suites, claims, breaches, demands, damages, judgments, interest, penalties,
fines, costs and expenses (including reasonable attorneys' and accountants' fees
and expenses) actually or allegedly arising out of, or in connection with, or
relating to only those specific limited Assumed Liabilities expressly assumed by
Purchaser on the Closing Date in accordance with this Agreement.
7.2 PROCEDURE AND PAYMENT. If after the Closing Date the Seller shall
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receive notice of any third party claim or alleged third party claim asserting
the existence of any matter of the nature as to which the Purchaser has been
indemnified against under this Article VIII by the Purchaser, Seller shall
promptly notify Purchaser in writing with respect thereto. Purchaser shall have
the right to defend against any such claim provided (i) Purchaser shall, within
10 days after the giving of such notice by Seller, notify Seller that it
disputes such claim, give reasons therefor, and that Purchaser will, at its own
cost and expense, defend the same , and (ii) such defense is instituted and
continuously maintained in good faith by Purchaser. In such event the defense
may, if necessary, be maintained in the name of Seller. Seller may, if it so
elects, designate its own counsel to participate with the counsel selected by
Purchaser in the conduct of such defense. Purchaser shall not permit any lien
or execution to attach to the assets of the Seller as a result of such claim,
and the Purchaser shall provide such bonds or deposits as shall be necessary to
prevent the same. In any event, Seller shall be kept fully advised as to the
status of such defense. If Purchaser shall be given notice of a claim as
aforesaid and shall fail to notify Seller of its election to defend such claim
within the time and as prescribed herein, or after having so elected to defend
such claim shall fail to institute and maintain such defense in accordance with
the foregoing, or if such defense shall be unsuccessful then, in any such event,
the Purchaser shall fully satisfy and discharge the claim within 10 days after
notice from Seller requesting Purchaser to do so.
ARTICLE VIII
MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ASSIGNMENT. The
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representations and warranties of Seller and Purchaser in this Agreement or in
any certificate or document delivered prior to or on the Closing Date shall
survive the Closing for a period of five (5) years subsequent to the Closing
Date and shall be considered in effect thereafter for claims alleging a breach
thereof as to which Seller and/or Purchaser have been notified during such
period. In addition, the rights to indemnity provided in Article VIII shall
survive the Closing of this Agreement and shall inure to the parties' respective
successors and assigns. This Agreement shall not be assigned by any party
without the prior written consent of the other party. Subject to the foregoing,
this Agreement shall be for the benefit of and shall be binding upon the parties
hereto and their respective successors and assigns.
8.2 CONSTRUCTION. This Agreement shall be construed and enforced in
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accordance with, and all questions concerning this construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of California without giving effect to provisions thereof regarding
conflict of laws.
8.3 NOTICES. All necessary notices, demands and requests required or
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permitted to be given hereunder shall be deemed duly given when actually
delivered subject to the subsequent designation of another address, addressed as
follows:
If to Purchaser: Greg Gilbert, President
StarTronix International, Inc.
7700 Irvine Center Drive
Suite 510
Irvine, California 92618
To Seller: Jonathan & Barbara Gulla
Lancer International, Inc.
10 Corporate Park
Suite 110
Irvine, CA 92606
With a copy to: R. Laken Mitchell, Esq.
105 South Dixie Avenue
Cookeville, TN 38501
8.4 HEADINGS; CONTEXT. The heading of the sections and paragraphs
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contained in this Agreement are for convenience of reference only and do not
form a part hereof and in no way modify, interpret or construe the meaning of
this Agreement.
8.5 COUNTERPARTS. This Agreement may be executed in counterparts, all
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of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the parties
hereto and delivered to the other.
8.6 RELIANCE. All covenants, warranties and representations made
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herein by any party shall be deemed to be material and relied upon by the other
party, notwithstanding any investigation by or knowledge of such other party.
8.7 EXPENSES WITH RESPECT TO TRANSACTION. The Purchaser shall pay all
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fees, costs and expenses incurred in connection with this transaction, including
Seller's attorney's fees.
8.8 COMPLETENESS OF AGREEMENT. This Agreement, and the Schedules
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hereto and the other documents referred to or provided for herein represent the
entire contract among the parties with respect to the subject matter hereof, and
shall not be modified or affected by any offer, proposal, statement or
representation, oral or written, and by or for any party in connection with the
negotiation of the terms hereof.
8.9 AMENDMENT AND WAIVER. This Agreement may be amended, or any
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provision of this Agreement may be waived, provided that any such amendment or
waiver will be binding on Seller only if such amendment or waiver is set forth
in a writing executed by Seller. The waiver of any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any other breach.
8.10 PREAMBLE; PRELIMINARY RECITALS. The Preliminary Recitals set
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forth in the Preamble hereto are hereby incorporated and made a part of this
Agreement.
8.11 NO STRICT CONSTRUCTION. The language used in this Agreement
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will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto.
IN WITNESS WHEREOF, Seller and Purchaser each have caused this Agreement to
be duly executed and delivered in its name and on its behalf, all as of the day
and year first above written.
LANCER INTERNATIONAL, INC.
/s/ Jonathan Gulla
_____________________________________
By: Jonathan Gulla
Title: ________________________________
/s/ Barbara Gulla
_____________________________________
By: Barbara Gulla
Title: _____________________________
STARTRONIX.COM, INC.
/s/ Greg Gilbert
_____________________________________
By: Greg Gilbert
Title: Co-Chief Executive Officer
/s/ Lloyd N. Adams
_____________________________________
By: Lloyd N. Adams
Title: Co-Chief Executive Officer
