STOCK TRANSFER AND LICENSE AGREEMENT
AGREEMENT made October 31, 1999 between The Daedalus Project, Inc., a
Virginia Corporation (hereinafter called "TDP" and "Licensor") and Daedalus
Building Systems, Inc., a Delaware Corporation (hereinafter called "DBS" and
"Licensee").
WITNESSETH:
WHEREAS, TDP is the owner of potential patents, technology, processes,
and trade secrets with respect to composite housing.
WHEREAS, TDP raised monies from investors to refine said technology and
processes and to acquire assets of a manufacturing facility in Ontario, Canada.
WHEREAS, TDP, in conjunction with the selling of its shares, promised
and covenanted that any subscriber shall receive an equal amount of shares in
any entity created for the purpose of public ownership.
WHEREAS, TDP created DBS for the purpose of manufacturing, marketing,
and selling composite and other housing systems, utilizing the information and
technology processed and developed by TDP.
WHEREAS, TDP created and funded Daedalus Composites, Inc., a Canadian
company, to own and operate the plant in Canada.
WHEREAS, DBS was created to be owned proportionately by the
shareholders of TDP.
WHEREAS, the shares of DBS have been allocated to the shareholders of
TDP proportionately to their individual ownership in TDP, except Xxxxxx X.
Xxxxxxxxx as the majority shareholder and sole director of TDP has agreed to
substantially reduce and curtail his equity ownership until certain earnings
have been attained by DBS.
WHEREAS, the shares in DBS have been issued to its shareholders.
WHEREAS, the shares in DCI are to be transferred to DBS so that DBS may
operate the business herein contemplated.
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It is therefore agreed:
1. Shares of Daedalus Composites, Inc. All shares, title, and ownership in the
shares of Daedalus Composites, Inc. are hereby irrevocably transferred and
assigned to DBS.
2. Purchase of Corporate Stock of Daedalus Composites, Inc.
2.1 Instruments of Assignment. The sale, assignment and
transfer of the above stock to DBS shall be effected by TDP's execution
and delivery of the Stock Certificates, assignments and other good and
sufficient instruments of transfer and conveyance as shall be
satisfactory to DBS and its Counsel and shall be effective to vest in
DBS all of TDP's right, title and interest in the above corporate
stock.
2.2 Documentation. At or prior to Closing, TDP shall provide
DBS with all existing documentation available to TDP and necessary in
the operation of Daedalus Composites, Inc., including, but not limited
to, copies of agreements with suppliers, worksheets and invoices for
1999, all financials with respect to this operations for year 1999,
equipment records reflecting date of purchase, warranties, maintenance
and repair information, TDP's list of suppliers, and all intangible
rights.
2.3 Liabilities. DBS shall not be or become responsible for
any debts, claims, obligations, contracts or liabilities of TDP, with
respect to Daedalus Composites, Inc., accruing before October 31, 1999
until closing, whether known or unknown, fixed or contingent, including
but not limited to tax liabilities, license fees, or assessments made
by Federal, state or local governments, except all liabilities of the
Lease accruing after date of settlement.
2.4 Allocation of Purchase Price. TDP and DBS mutually agree
that the stock of DCI shall be allocated as follows:
The stock and the underlying assets of Daedalus Composites,
Inc.
TOTAL $2,500,000.00
None of the parties hereto shall take for tax purposes any position
inconsistent with the allocation of valuation set forth above.
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3. Bulk Sales Compliance
3.1 Notice to Creditors. If applicable, within five (5) days
after execution of this Agreement, but in no event less than fifteen
(15) days prior to Closing, TDP shall prepare and furnish to DBS a list
of creditors of TDP which conforms to all of the requirements of the
Virginia Uniform Commercial Code -- Bulk Transfers, in particular the
requirements as to form set forth in Virginia Code Section 8.6-104 and
any Canadian equivalent statute.
4. Representations and Warranties of TDP. TDP represents and warrants to DBS
as follows:
4.1 Conduct of Business. At all times after execution of this
Agreement, TDP agrees to conduct the business of its Canadian
subsidiary only in the ordinary course, without incurring any
obligations or liabilities which would affect its obligations under
this Agreement, up to the Closing.
4.2 Title to Assets. Except as otherwise provided herein, TDP
through its subsidiary has good and marketable title to all of the
Assets, and none of the Assets or use thereof: (i) is subject to any
restrictions, liens, pledges, claims, encumbrances, licenses or rights
of others of any kind or nature; (ii) encroaches or infringes on the
property rights of another; or (iii) contravenes any applicable law,
ordinance or regulation.
4.3 Transfer. The transfer of the Corporate Stock of Daedalus
Composites, Inc. is not made with intent to delay, hinder or defraud
creditors, DBS or other persons, as defined in Virginia Codess.55-80 or
Canadian equivalent statute.
4.4 Creditors. Except as provided herein all claims of
creditors will be paid by TDP when due.
4.5 Lease. DBS have been provided with a draft copy of the
Lease (the "Lease") for the Premises of Daedalus Composites, Inc. TDP
represents that it is not in default under the Lease in any respect and
that the Lease is in full force and effect in all respects and binding
upon the Landlord and TDP.
4.6 Applicable Laws and Regulations. The Assets of Daedalus
Composites, Inc. are installed and are being maintained, and Daedalus
Composites, Inc.'s business has, at all times, operated in full
compliance with all applicable health, safety, zoning and land use, and
other laws, rules and regulations and contractual provisions, if any.
4.7 Environmental Laws and Regulations. TDP and Daedalus
Composites, Inc. is in compliance in all material respects with all
applicable Federal, Provincial and local laws and regulations relating
to environmental protection and zoning including, but not limited to,
all laws and regulations governing the generation, use, collection,
discharge, or disposal of Hazardous Materials and all laws and
regulations with regard to record keeping, notification and reporting
requirements respecting Hazardous Materials. TDP and/or its subsidiary
has not been alleged to be in violation of, nor has it been subject to
any administrative or judicial proceeding pursuant to, such laws or
regulations either now or any time during the past three (3) years.
There are no facts or circumstances which TDP or its subsidiary
reasonably expects could form the basis for the assertion of any claim
against TDP or its subsidiary relating to environmental matters
including, but not limited to, any claim arising from past or present
environmental practices asserted under any other Federal, Provincial or
local environmental statute, which TDP or its subsidiary believes might
have a material adverse change in the assets, properties, business,
condition (financial or otherwise), operation or prospects of TDP.
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4.8 Permits and Licenses. TDP and/or its subsidiary has all
necessary permits, Certificates of Occupancy, licenses and approvals
("Permits") from all governmental agencies required to own and use the
Assets in, and operate the business, and all Permits are in good
standing and in full force and effect.
4.9 Information Furnished. Financial information, operating
information, contract information and data previously provided to DBS
are complete and accurate in all material respects.
4.10 Employees. There are no employee benefit plans of TDP or
its subsidiary. All payments of salary, benefits, insurance or taxes
paid to or on behalf of their employees are current, and there are no
claims or causes of action by employees or former employees of TDP or
its subsidiary. All obligations, loans or debts due any officer,
employee, shareholder, director or related party to any of the above is
and shall be the sole obligation of TDP.
4.11 Notice of Breach or Adverse Action. TDP has not received
notice and has no knowledge of any breach of any contract, law,
ordinance or regulation relating to Daedalus Composites, Inc.'s
business or the Premises or the Assets.
4.12 No Litigation. There are no actions, suits,
investigations or proceedings pending or threatened against or
affecting TDP or TDP Shareholder (or any of them) or any of their
respective assets or properties, in any court or before any arbitrator,
or before or by any governmental department, commission, bureau, board,
agency or instrumentality, domestic or foreign, which, if adversely
determined, would adversely affect TDP's or Daedalus Composites, Inc.'s
ability to operate the business or the Assets, or would adversely
affect its financial condition in any material respect, or would impair
the ability of TDP or Daedalus Composites, Inc. to perform their
respective obligations hereunder. Furthermore, there are no defaults by
TDP or Daedalus Composites, Inc. (or either of them) under any
applicable order, writ, injunction, decree or award of any Court or
arbitrator or any governmental department, board, agency or
instrumentality which would adversely affect TDP's or Daedalus
Composites, Inc. ability to operate its business or the Assets, or
would adversely affect its financial condition in any material respect,
or would materially impair the ability of TDP or Daedalus Composites,
Inc. to perform their respective obligations hereunder.
4.13 Tax Obligations. TDP has filed or caused to be filed,
within the times and in the manner prescribed by law, all Federal,
state, local and foreign tax returns and tax reports which are required
to be filed by, or with respect to, TDP. Such returns and reports
reflect accurately the liability for taxes of TDP for the periods
covered thereby. All Federal, state, local and foreign income, profits,
franchise, sales, use, occupancy, excise and other taxes and
assessments (including interest and penalties) payable by, or due from,
TDP have been fully paid or adequately disclosed and fully provided for
in the books and financial statements of TDP. The Federal income tax
liability of TDP has been finally determined for all fiscal years to
and including the fiscal year ended December 31, 1998. No examination
of any tax return or report of TDP or Daedalus Composites, Inc. is
currently in progress. There are no (i) audits or investigations
pending or threatened against TDP or TDP Shareholders in respect to
taxes asserted by any governmental authority, (ii) outstanding
agreements or waivers extending the statutory period of limitation
applicable to any tax return of TDP and (iii) agreements with any
Federal, state, county or local taxing authority that may affect the
subsequent tax liabilities of TDP.
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4.14 Organization, Authority. TDP is duly organized, validly
existing, and in good standing under the laws of the State of Virginia
and has the corporate power and authority to own its properties and to
conduct the business now conducted by it. TDP has full corporate power
and authority to enter into this Agreement and carry out its
obligations hereunder.
4.15 No Change in Business. Neither TDP nor Daedalus
Composites, Inc. have any knowledge or reason to know of any existing
termination, cancellation, limitation, modification or change or threat
of any such termination, cancellation, limitation, modification or
change of the business relationship of TDP with any customer, or any
other person which would have a material impact on the business
presently conducted by TDP. Neither TDP or said Daedalus Composites,
Inc. has any knowledge of any specific reason (other than general
market conditions) why Daedalus Composites, Inc. customers would not
continue to do business with DBS in the future to the same or a greater
extent as they have done business with TDP and/or Daedalus Composites,
Inc. in the past.
4.16 No Violation. The execution and delivery by TDP, of this
Agreement, the consummation by them of the transactions contemplated
hereby, and compliance by them with the terms hereof, will not:
(i) violate or result in the breach of or contravene any of
the terms, conditions or provisions of any law, regulation,
order, writ, injunction, decree, determination or award of any
Court, governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator,
applicable to TDP or Daedalus Composites, Inc. or to assets
and properties of TDP or Daedalus Composites, Inc.;
(ii) result in prohibited action under any term or provision
of, or the material breach of any term or provision of, the
termination of, or the acceleration or permitting the
acceleration of the performance required by the terms of, or
constitute a default under or require the consent of any party
to, any loan agreement, indenture, mortgage, deed or trust or
other contract, agreement or instrument, to which TDP or
Daedalus Composites, Inc., or any of them, is a party or by
which any is bound; or
(iii) conflict with the Articles of Incorporation or By-Laws
of TDP or Daedalus Composites, Inc. or any other agreements,
licenses or permits of any kind relating to the formation,
management, operation or other activity of TDP or Daedalus
Composites, Inc.
5. Conditions Precedent to Obligations of DBS. The obligations of DBS under this
Agreement are subject to the conditions that, at or prior to the Closing Date,
the following conditions shall be satisfied.
5.1 TDP shall have signed this Agreement, obligating and
committing TDP to sell to DBS the corporate stock of Daedalus
Composites, Inc. The individuals signing this Agreement on behalf of
Daedalus Composites, Inc. shall have authority to do so. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly authorized by
TDP's Board of Directors. Evidence of Director approval shall be
provided to DBS at Closing since Daedalus Composites, Inc. is the
wholly owned subsidiary of TDP.
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5.2 The representations and warranties of TDP set forth in
this Agreement in connection with the transactions contemplated by this
Agreement shall be true and correct on the date when made and at
Closing.
5.3 TDP shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or
complied with by it prior to or contemporaneously with Closing.
5.4 TDP shall have taken all actions (whether corporate or
otherwise) which, in DBS reasonable judgment, are necessary or
appropriate to authorize the execution and delivery of this Agreement,
the transactions contemplated by this Agreement, and all documents and
instruments incident to such transactions.
5.5 There shall be no suit, action, investigation, inquiry or
other proceeding by any governmental authority or any other person or
any other legal or administrative proceeding pending or threatened
which questions the validity or legality of the transactions
contemplated by this Agreement, or seeks damages in connection
therewith.
5.6 There shall have been no fire, flood, or other casualty,
which has a materially adverse affect on the value of Daedalus
Composites, Inc.'s business.
5.7 All inventory and property, contracts, furniture, fixtures
and equipment shall not be damaged, assigned, conveyed, converted, or
in any manner removed from the Premises of Daedalus Composites, Inc.
5.8 The business conducted at the Premises shall continue to
be an ongoing business at the date of Closing, and there shall have
been no material adverse change to the existence, nature or quality of
said business.
In the event that any of the foregoing conditions are not satisfied,
TDP shall have notice and opportunity to cure. Time to cure shall be fifteen
(15) business days. If the condition remains unsatisfied, at the option of DBS,
this Agreement shall be null and void and the parties shall have no further
liability hereunder.
6. Conditions Precedent to Obligations of TDP:
6.1 This Agreement shall have been signed by DBS, obligating
and committing DBS to purchase and TDP to sell the stock of Daedalus
Composites, Inc. of TDP set forth herein. The person signing the
Agreement on behalf of TDP shall have the authority to do so.
6.2 DBS shall have performed and complied with all agreements,
conditions, representations and warranties contained in the Agreement
required to be performed or complied with by it prior to or
contemporaneously with Closing.
7. Closing. The sale and purchase of stocks provided for in this Agreement shall
be consummated by October 31, 1999. (The date and event of the sale of purchase,
respectively, hereinafter referred to as the "Closing Date" and the "Closing.")
The parties hereto acknowledge that they are entitled to be represented by
Counsel of their own choosing at the Closing.
8. Access to Information. The parties hereto acknowledge that prior to the
execution of this agreement, DBS have had the right to verify the Assets set
forth herein, interview employees, and to examine and/or copy all of the books
and records of TDP and Daedalus Composites, Inc., in person or by the agents,
attorneys or accountants and to observe the inventory and facilities of the
business.
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9. Indemnification and Hold Harmless. TDP as herein identified shall and do
jointly and severally indemnify, defend and hold harmless DBS, their members,
officers, directors, shareholder, successors and assigns against any and all
losses, damages, demands, claims, assessments, actions, taxes, deficiencies,
penalties, interest, attorneys' fees, costs and expenses arising out of or
incident to any of the following:
(a) If any representation or warranty made by TDP or Daedalus
Composites, Inc. in this Agreement shall be untrue, or if any covenant
of TDP or Daedalus Composites, Inc. not be performed;
(b) Without limiting the generality of the foregoing, any claim
asserted against DBS, its successors or assigns, and alleged to arise
out of any act, omission, obligation or liability of TDP or Daedalus
Composites, Inc. or any of their employees (while employed by TDP or
Daedalus Composites, Inc.) or agents including, but not limited to,
claims of ownership of or rights to the corporate stock, taxes of all
kinds except those assumed herein, any claim made under the Bulk
Transfers Title of the Uniform Commercial Code, any claim, damage or
liability resulting from negligence or products liability of TDP or of
Daedalus Composites, Inc., and any claim, damage or liability resulting
from lack of compliance by TDP or Daedalus Composites, Inc. with laws
or governmental regulations, whether Federal, state or local.
10. Post-Closing Covenants of Parties.
10.1 At the request of DBS, TDP and Daedalus Composites, Inc.
shall deliver any further instruments of transfer and take any and all
action as may be in the reasonable opinion of Counsel for DBS,
necessary and appropriate to:
(i) vest in DBS good and marketable title to the corporate
stock of Daedalus Composites, Inc.;
(ii) vest in DBS all rights in Daedalus Composites, Inc.
10.2 TDP shall do no act to dissolve, liquidate, or terminate
the existence of Daedalus Composites, Inc. at any time prior to the
effective date of the Stock Purchase Agreement. Until said date, TDP
shall remain in good standing and qualified to do business in Canada.
11. Expenses. TDP and DBS shall each pay their own expenses and costs, including
without limitation all Counsel fees, transfer taxes and taxes arising out of
this transaction.
12. Miscellaneous
12.1 Waiver of Breach. Any waiver by any party hereto of a
breach of any of the provisions of this Agreement by any other party
shall not operate or be construed as a waiver by the other parties of
any of the rights and privileges of said parties hereunder or of any
subsequent breach.
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12.2 Controlling Law. This Agreement shall be interpreted,
construed and administered according to the law of the Commonwealth of
Virginia.
12.3 Survival of Representations and Warranties. This
Agreement shall not be deemed merged into any Xxxx of Sale or other
document executed at or pursuant to Closing. All of the representations
and warranties of all parties set forth in this Agreement shall survive
the Closing Date and shall not be affected by any investigation,
verification or approval by any party hereto or by anyone on behalf of
any such parties.
12.4 Construction. The language in all parts of this Agreement
shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against either party.
12.5 Further Acts. TDP shall, at any time and from time to
time after the Closing Date, upon request of DBS, do, execute,
acknowledge and deliver all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may
reasonably be required to convey, transfer to and vest in DBS, and
protect the right, title, interest in and enjoyment of, the assets of
TDP intended to be assigned, transferred and conveyed pursuant to this
Agreement.
12.6 Counterparts. This Agreement may be executed and/or
conformed in any number of counterparts, each of which shall be deemed
original.
12.7 Alteration. This Agreement may be altered, amended,
modified or terminated only by a writing signed by all of the parties
hereto.
13. License. The Licensor grants to the Licensee the exclusive, nontransferable
right and license to manufacture, use, market, sell and otherwise to
commercialize the patents, potential patents, technology, information and
processes, and the improvements (the "Technology) throughout the world related
to residential housing units. Such license includes the right to grant
sublicenses upon terms consistent with this agreement. The exclusive right and
license herein granted shall apply to all inventions, improvements, patent
application or letters patent, which the Licensor now owns or controls, or
hereafter shall own or control, relating to the Technology.
The current embodiment of the technology is in the form of panels that
are fabricated from advanced composite technology, principally from
recycled polyolefins, primarily polyethylene, with various additives,
including glass fiber and talc, to increase performance parameters and
the typical attributes of composites such as strength, flexibility,
durability, and permanence. Production technologies presently include
compression, injection-compression, thermoforming and various other
plastic forming method.
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14. Representations of Licensor. The Licensor represents the following:
a. that the licensor is the exclusive owner of all rights to
any potential patent, has the right to grant this exclusive
license, and has not granted to any other person, firm or
corporation any right, license, shop right, or privilege
thereunder;
b. that the Licensor has at no time filed, or caused to be
filed, applications for letters patent, or obtained in its
name, or caused to be obtained in the name of others, any
letters patent in the United States or elsewhere, relating to
the Invention or articles similar thereto.
15. Necessary Aid and Information. The Licensor shall furnish to the Licensee,
its nominees, or patent attorneys all information and documents relating to the
technology, trade secrets, potential patents, etc., which are necessary to
enable the Licensee to prosecute the patent applications and to conduct
operations under the terms of this agreement. The Licensor shall not reveal such
information or any information relating thereto to any other person without the
approval of the Licensee.
16. Patents. Any letters patent issued on such technology and its improvements
shall be the exclusive property of the Licensor, subject to the license hereby
granted. The Licensee shall prepare, file and prosecute, in the name of the
Licensor but at its own expense, applications for the letters patent of the
United States for the Invention and all improvements hereafter made by the
Licensor, Licensee or sublicensees. The Licensor shall, without further
consideration, at the request of the Licensee, do all acts necessary for
obtaining, sustaining, reissuing, or extending any letters patent and shall give
testimony and otherwise provide evidence in cases of interference.
17. License Year. A license year shall be a period of one-year starting on
January 1 of one year and ending on December 31 of the same year.
18. Royalties. The Licensee shall pay and deliver to the Licensor:
a. $1,000 by certified check upon the execution of this
agreement.
b. Royalties equivalent to 5% of gross sales of any products in
which the Technology is embodied.
19. Payment of Royalties. The Licensee shall at all times keep an accurate
account of all operations under the scope of this license, shall render written
statements thereof to the Licensor within 30 days after every quarter-annual
period of each license year during the life of this agreement, and shall pay to
the Licensor with each such statement the amount of all royalties earned during
the corresponding quarter-annual period. The Licensor shall have the right, at
its own expense and not more often than once in each quarter-annual period, to
have the Licensee's books examined for the purpose of verifying such royalty
statements. In all sublicensing agreements, the Licensee shall procure for the
Licensor a similar right to have the books of the sublicensee examined for the
purpose of verifying royalty statements.
20. Covenants of licensee. The Licensee covenants as follows:
a. The Licensee shall in good faith and with diligence conduct
all manufacturing, marketing, and other operations in
accordance with the best business customs of its industry.
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21. Term. This license shall continue indefinitely so long as revenues are
generated as a result of building systems technologies being brought to Daedalus
Building System, Inc., subject to the following:
a. If royalty payments to the Licensor are in arrears for 60
days after the due date, or if the Licensee defaults in
performing any of the other terms of this agreement and
continues in default for a period of 60 days, of if the
Licensee is adjudicated a bankrupt or becomes insolvent, or
enters into a composition with creditors, or if a receiver
is appointed for it, then the Licensor shall have the right
to terminate this agreement upon giving notice to the
Licensee ten days before the time when such termination is
to take effect, and if the cause for such notice is not
cured within the ten days, then at the expiration of the ten
days the agreement shall terminate, without prejudice to any
moneys due or to become due to the Licensor under this
agreement, and without prejudice to any other rights of the
Licensor.
b. Upon termination of this agreement for any cause, the
Licensee shall duly account to the Licensor and shall
transfer to him all rights which it may possess in
sublicenses, letters patent, inventions, trade names, and
trademarks, relating to the Invention/technology.
22. Infringement. The Licensee shall defend at its own expense all infringement
suits that may be brought against is on account of the manufacture, use or sale
of the Invention/technology, and when information is brought to its attention
indicating that others without license are unlawfully infringing on the rights
granted in this agreement, it shall prosecute diligently any infringer at its
own expense. In connection with such suits, the Licensor shall, at the expense
and at the request of the Licensee, give evidence and execute such documents as
the Licensee may require.
23. Notice. Any notice required or permitted to be given under this Agreement
shall be given in writing and sent by certified mail to the address of the party
set forth herein, unless that party shall give notice of a different address.
The date of notice shall be the date of mailing. Any notices under this
Agreement shall also be delivered to:
If to DBS: Daedalus Building Systems, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
If to TDP: The Daedalus Project, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
With copies to: Xxxxxxx X. Xxxxxxxxx, Esquire
Xxxx Xxxxxx Xxx 00
Xxxxxxxxxx, XX 00000-0000
24. Assignment. The Licensee shall not have the right to assign this agreement
without the prior written consent of the Licensor.
25. Arbitration. Any dispute under this agreement shall be settled in
Alexandria, Virginia by arbitration pursuant to the rules, then obtaining, of
the American Arbitration Association.
In witness whereof the parties have executed this agreement on the date
first set forth above.
SELLER AND LICENSOR:
The Daedalus Project, Inc.
/s/
---------------------------
Xxxxxx X. XxXxxxxxx
President
PURCHASER AND LICENSEE:
Daedalus Building Systems, Inc.
/s/
---------------------------
Xxxxxxxx X. Xxxxxx-Xxxxx
Vice President
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