ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (the "Agreement") is entered into as of September
28,
2007, by and among ADVANCED VEHICLE SYSTEMS, LLC, a Florida Limited Liability
Company, (hereinafter referred to as "AVS"), Xxxxxxx Xxxxxxx, individually,
and
LAW ENFORCEMENT ASSOCIATES CORPORATION, a Nevada corporation, (hereinafter
referred to as "LEA");
WHEREAS,
Xxxxxxx Xxxxxxx currently controls AVS which is a company which
manufactures and sells surveillance vans; and
WHEREAS,
AVS
desires to sell, and LEA desires to buy certain assets of AVS;
and
WHEREAS,
there is currently pending a lawsuit in the Circuit Court of
Broward County, Florida, Circuit Court Case No. 05-013630 CAGE 04 (the "Case"),
wherein AVS and Xxxxxxx Xxxxxxx, amongst other, are Plaintiffs amongst others
and LEA is a Defendant; and
WHEREAS,
the parties are desirous of settling the Case.
NOW
THEREFORE, in consideration of the mutual agreements, representations and
warranties in this Agreement, the parties agree as follows:
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1.
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ASSETS
PURCHASED. Subject to all other terms and conditions set forth herein,
on
the Closing Date, AVS shall sell, convey, transfer and assign to
LEA and
LEA shall purchase from AVS those certain limited assets of AVS,
as set
forth in Exhibit A attached hereto, which assets include all of AVS'
designs, drawings and intellectual property rights. It is understood
that
the assets do not constitute more than 50% of the assets of AVS.
In
addition, LEA shall purchase certain usable inventory on hand of
AVS. The
term "usable inventory" shall be defined as those assets which may
be
immediately used by. LEA, are in good condition, not damaged and
which are
not obsolete.
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2.
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PURCHASE
PRICE. The purchase price for the Assets shall be: (1) 375,000 shares
of
LEA's restricted common stock which shall be issuable upon the closing;
(2) AVS' cost of the usable inventory purchased; and (3) and the
granting
to Xxxxxxx Xxxxxxx of the put option described in Section 12
below.
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3.
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ISSUANCE
OF ADDITIONAL SHARES. In addition, LEA shall issue Xxxxxxx Xxxxxxx
25,000
shares in consideration of Wortley causing the dismissal of the Suit,
with
prejudice.
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4.
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AVS'
REPRESENTATIONS AND WARRANTIES. AVS represents and warrants to LEA
as follows:
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1
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A.
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AVS
holds good and marketable title to the Assets, free and clear of
all
restrictions, liens and
encumbrances.
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B.
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Neither
Xxxxxxx Xxxxxxx nor any other person or entity has any interest in
the
assets being sold by AVS to LEA.
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C.
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AVS
has not employed any broker or finder in connection with the transactions
contemplated by this Agreement, or taken action that would give rise
to a
valid claim against any party for a brokerage commission, finder's
fee, or
other like payment.
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D.
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The
execution and delivery of this Agreement by AVS and the consummation
of
the contemplated transactions, will not result in the creation or
imposition of any valid lien, charge, or encumbrance on any of the
Assets,
and will not require the authorization, consent, or approval of any
third
party, including any governmental subdivision or regulatory
agency.
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E.
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AVS
has no knowledge of any claim, litigation, proceeding, or investigation
pending or threatened against AVS or its Assets that might result
in any
material adverse change in the business or condition of the Assets
being
conveyed under this Agreement.
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F.
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None
of the representations or warranties of AVS contain or will contain
any
untrue statement of a material fact or omit or will omit or misstate
a
material fact necessary in order to make statements in this Agreement
not
misleading. AVS knows of no fact that has resulted, or will result
in a
material change in the business, operations, or assets of
AVS.
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5.
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REPRESENTATIONS
OF LEA. LEA represents and warrants as
follows:
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A.
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LEA
is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Nevada. LEA has all requisite corporate
power and authority to enter into this Agreement and perform its
obligations hereunder.
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B.
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The
execution, delivery, and performance of this Agreement has been duly
authorized and approved by the Board of Directors of LEA, and this
Agreement constitutes a valid and binding Agreement of LEA in accordance
with its terms.
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X.
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XXX
has not employed any broker or finder in connection with the transaction
contemplated by this Agreement and has taken no action that would
give
rise to a valid claim against any party for a brokerage commission,
finder's fee, or other like
payment.
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2
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D.
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None
of the representations or warranties of LEA contain or will contain
any
untrue statement of a material fact or omit or will omit or misstate
a
material fact necessary in order to make the statements contained
herein
not misleading.
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6.
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COVENANTS
OF AVS. AVS agrees that between the date of this Agreement and the
Closing Date, AVS will:
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A.
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Continue
to operate its business in the usual and ordinary course and in
substantial conformity with all applicable laws, ordinances, regulations,
rules, or orders, and will use its best efforts to preserve the continued
operation of its business with its customers, suppliers, and others
having
business relations with AVS.
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B.
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Not
assign, sell, lease, or otherwise transfer or dispose of the Assets,
whether now owned or hereafter acquired, except in the normal and
ordinary
course of business and in connection with its normal
operation.
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C.
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Maintain
all of the Assets other than inventories in their present condition,
reasonable wear and tear and ordinary usage
excepted.
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D.
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AVS
will use its best efforts to effectuate the transactions contemplated
by
this Agreement and to fulfill all the conditions of the obligations
of AVS
under this Agreement, and will do all acts and things as may be required
to carry out their respective obligations under this Agreement and
to
consummate and complete this
Agreement.
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7.
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COVENANTS
OF LEA.
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A.
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LEA
will use its best efforts to effectuate the transactions contemplated
by
this Agreement and to fulfill all the conditions of LEA's obligations
under this Agreement, and shall do all acts and things as may be
required
to carry out LEA's obligations and to consummate this
Agreement.
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B.
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If
for any reason the sale of Assets is not closed, LEA will not disclose
to
third parties any confidential information received from AVS in the
course
of investigating, negotiating, and performing the transactions
contemplated by this Agreement.
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8.
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CONDITIONS
PRECEDENT TO LEA'S OBLIGATIONS. The obligation of LEA to purchase
the
Assets is subject to the fulfillment, prior to or at the Closing
Date, of
each of the following conditions, any one or portion of which may
be
waived in writing by LEA:
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A.
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All
representations and warranties made in this Agreement by AVS shall
be
true,
in all material respects, as of the Closing Date as fully as though
such
representations and warranties had been made on and as of the Closing
Date, and, as of the Closing Date, AVS shall not have violated or
shall
have failed to perform in any material way, in accordance with any
covenant contained in this
Agreement.
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B.
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There
shall have been no material adverse change in the manner of operation
of
the AVS's business prior to the Closing
Date.
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C.
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At
closing, AVS and Wortley shall cause the Case to be dismissed with
prejudice.
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D.
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At
the Closing Date no suit, action, or other proceeding shall have
been
threatened or instituted to restrain, enjoin, or otherwise prevent
the
consummation of this Agreement or the contemplated
transactions.
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9.
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CONDITIONS
PRECEDENT TO OBLIGATIONS OF AVS. The obligations of AVS to Close
this
Agreement are subject to the fulfillment, prior to or at the Closing
Date,
of each of the following conditions, any one or a portion of which
may be
waived in writing by AVS:
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A.
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All
representations and warranties made in this Agreement by LEA shall
be true
as of the Closing Date as fully as though such representations and
warranties had been made on and as of the Closing Date, and LEA shall
not
have violated or shall not have failed to perform in accordance with
any
covenant contained in this
Agreement.
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10.
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INDEMNIFICATION
AND SURVIVAL. All representations and warranties made in this Agreement
shall survive the Closing of this Agreement, except that any party
to whom
a representation or warranty has been made in this Agreement shall
be
deemed to have waived any misrepresentation or breach of representation
or
warranty of which such party had knowledge prior to Closing. Any
party
learning of a misrepresentation or breach of representation or warranty
under this Agreement shall immediately give written notice thereof
to all
other parties to this Agreement. The representations and warranties
in
this Agreement shall terminate two years from the Closing Date, and
such
representations or warranties shall thereafter be without force or
effect,
except any claim with respect to which notice has been given to the
party
to be charged prior to such expiration date. AVS hereby agrees to
indemnify and hold LEA, it successors, and assigns harmless from
and
against any and all damage or deficiency resulting from any material
misrepresentation, breach of warranty or covenant, or nonfulfillment
of
any agreement on the part of AVS under this
Agreement.
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11.
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CLOSING.
This Agreement shall be closed on or before October 15, 2007, or
at such
other time at such place that the parties may agree to in writing.
If
Closing has not occurred on or prior to that time, then any party
may
elect to terminate this Agreement. If, however, the Closing has not
occurred because of a breach of contract by one or more parties,
the
breaching party or parties shall remain liable for breach of
contract.
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A.
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At
the Closing and coincidentally with the performance by LEA of its
obligations described herein, AVS shall deliver to LEA the
following:
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1.
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Xxxx
of Sale for the Assets and all documents necessary to transfer any
titles
to any asset purchased.
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2.
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All
other documents called for in this Agreement and such other documents
that LEA and its counsel may reasonably
require.
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B.
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At
the Closing and coincidentally with the performance by AVS of its
obligations
described herein, LEA shall deliver to AVS the
following:
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1.
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The
Shares or a copy of instructions to LEA's transfer agent instructing
it to issue the Shares.
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2.
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A
wire transfer to AVS in an amount equal to the cost of, in accordance
with
GAAP, the usable inventory, of AVS purchased by
LEA.
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12.
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DEMAND
OPTION. As further consideration of the purchase of the AVS assets
herein,
Wortley shall be granted the right to demand that LEA purchase up
to
1,200,000 shares of common stock owned by Wortley on August 1, 2009
at a
price of $1.25 per share. In order to exercise this right Wortley
must
make a demand in writing to LEA at least 10 days prior to the demand
date
to purchase 1,200,000 Shares. If Wortley fails to give such written
notice, LEA shall have no obligation to purchase any Shares from
Wortley.
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13.
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ATTORNEYS.
Wortley and AVS represent and warrant that they have had the opportunity
to be represented by independent counsel and that Xxxx X. Xxxxxxx
has
represented only LEA in this
transaction.
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14.
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GOVERNING
LAW. This Agreement and any matters arising out of or related to
this
Agreement will be governed by the laws of the State of North Carolina.
If
any action is brought among the parties with respect to this Agreement
or
otherwise, by way of a claim or counterclaim, the parties agree that
in
any such action, and on all issues, the parties irrevocably waive
their
right to a trial by jury. Exclusive jurisdiction and venue for any
such
action shall be the State Courts of North
Carolina.
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15.
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ENTIRE
AGREEMENT. This Agreement contains the entire agreement among the
parties,
and supersedes all prior agreements, representations and understandings
of
the parties, relating to the subject matter of this
Agreement.
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16.
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FURTHER
ACTIONS. Each party agrees that after the delivery of this Agreement
it or
he will execute and deliver such further documents and do such further
acts and things as another party may reasonably request in order
to carry
out the terms of this Agreement.
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17.
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AMENDMENT.
No supplement to or amendment of this Agreement will be binding unless
executed in writing by AVS and LEA.
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18.
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SUCCESSORS
AND ASSIGNS. This Agreement will be binding on, and will inure to
the
benefit of, the parties and their respective successors and assigns,
and
shall not confer any rights or remedies on any other
Persons.
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19.
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COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each
of which
will be deemed a valid, original agreement, but all of which together
will
constitute one and the same
instrument.
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20.
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SEVERABILITY.
If any provision of this Agreement or its application to any Person
or
circumstances is held to be unenforceable or invalid by any court
of
competent jurisdiction, its other applications and the remaining
provisions of this Agreement will be interpreted so as best reasonably
to
effect the intent of the parties.
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21.
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ATTORNEYS'
FEES. Each party will pay its or his own legal fees and other expenses
in
connection with the preparation of this Agreement and the sale of
Assets
in accordance with this Agreement. However, if any legal action or
other
proceeding is brought for the enforcement of this Agreement, or because
or
arising out of an alleged dispute, breach, default or misrepresentation
in
connection with any of the provisions of this Agreement, the prevailing
party will be entitled to recover reasonable attorneys fees and other
costs incurred in that action or proceeding, in addition to any other
relief to which it or he may be
entitled.
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22.
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NOTICES.
All notices, requests, demands, and other communications required
or
permitted hereunder will be in writing and will be deemed to have
been
duly given when delivered by hand, by overnight courier, or fax,
or two
days after being mailed by certified or registered mail, return receipt
requested, with postage prepaid:
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| If to LEA: | Xxxx Xxxxxxx, President | |
| 000X Xxxxxx Xxxxx | ||
| Xxxxxxxxxxx, XX 00000 | ||
| Copy to: | Xxxx X. Xxxxxxx, Esquire | |
| 0000 X.X. 000xx Xxxxxx | ||
| Xxxxx 000 | ||
| Xxxxx, XX 00000 | ||
| If to AVS and Wotley: | 000 X.X. 00* Xxxxxx | |
| Xxxxxxxxx Xxxxx, XX 00000 |
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23.
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WAIVERS.
Any provision of this Agreement may be waived at anytime by the party
entitled to the benefit thereof by a written instrument executed
by the
party or by a duly authorized officerof the party. No waiver of any
of the
provisions of this Agreement will be deemed, or will constitute,
a waiver
of any other provision, whether or not similar, nor will any waiver
constitute a continuing waiver.
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5
SIGNATURES
| BUYER | SELLER | |||
| LAW ENFORCEMENT ASSOCIATES CORPORATION, | ADVANCED VEHICLE SYSTEMS LW | |||
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/s/
Xxxx
Xxxxxxxx
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/s/
Xxxxxxx
Xxxxxxx
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Xxxx
Xxxxxxxx
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Xxxxxxx
Xxxxxxx
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President
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Manager | |||
| /s/ Xxxxxxx Xxxxxxx | ||||
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Xxxxxxx
Xxxxxxx
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| Individually |
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