EXHIBIT 10.11
LICENSE, NON-COMPETE AND CONFIDENTIALITY AGREEMENT
THIS LICENSE, NON-COMPETE AND CONFIDENTIALITY AGREEMENT ("Agreement")
is entered into this 12th day of March, 1999, by and between GEORGE R. CANNON
AND DELORES M. CANNON (being referred to individually and collectively, joint
and severally, herein as "Licensor"), being all director-trustees of GEORGE R.
CANNON BUSINESS MACHINES, INC., formerly a Maryland corporation ("CBM"), and
IMTEK CORPORATION, a Maryland corporation ("Licensee").
WHEREAS, the corporate charter of CBM was forfeited on October 2, 1997
by the Maryland State Department of Assessments and Taxation in accordance with
Section 3-503 of the Maryland General Corporation Law, due to the failure by CBM
to pay certain taxes to the State of Maryland (the "Forfeiture");
WHEREAS, Licensor constituted the full board of directors of CBM at the
time of the Forfeiture and became the only trustees of CBM upon the Forfeiture
by operation of law, and continue to serve in such capacity as of the date of
this Agreement;
WHEREAS, CBM's assets, including the customer list attached hereto as
EXHIBIT A and incorporated herein by reference (the "Customer List"), were
automatically transferred to Licensor as trustees for the benefit of the
creditors and stockholders of CBM at the time of the Forfeiture;
WHEREAS, Licensor has determined in good faith that it is in the best
interests of CBM and its creditors and stockholders to license the Customer List
to Licensee under the terms of this Agreement, thereby permitting Licensor to
receive the License Fee (hereinafter defined) provided for herein for the
benefit of the stockholders and creditors of CBM, and apply the same to pay
CBM's creditors as more fully set forth herein; and
WHEREAS, Licensor collectively owns all rights, title and interest in
and to the Customer List, and Licensor has agreed to license the Customer List
to Licensee on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. GRANT OF LICENSE. In exchange for the License Fee set forth in
Article 2 hereof, Licensor grants to Licensee the exclusive (even as to
Licensor), worldwide, perpetual license and right to use, reproduce, modify,
exploit, disclose, develop, service and market the Customer List and to receive
for Licensee's use and benefit all proceeds and benefits arising from the
Customer List from and after the date hereof (the "License"). The License shall
be sublicensable and assignable by Licensee.
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2. LICENSE FEE.
(A) LICENSE FEE. Provided that Licensee's rights in and to the
License have not been disturbed, threatened or otherwise challenged in any way
(whether through legal action or otherwise), as sole consideration for the
granting of this License and the other consideration provided by Licensor
hereunder and in lieu of any other payment, Licensor shall be entitled to
receive a licensing fee of $51,000 payable in six equal monthly installments of
$8,500 per month, payable on the 15th day of each month beginning after the date
of this Agreement.
(B) MANNER OF PAYMENT. Licensee shall pay the License Fee
hereunder into an account which shall be set up on or prior to the date of this
Agreement (the "Account") at a bank to be mutually agreed upon by the parties.
Withdrawals from the account shall require the signature of both Licensor and an
authorized representative of Licensee, it being understood and agreed that funds
deposited in the Account shall be withdrawn and applied toward the payment of
those liabilities and obligations of CBM listed on SCHEDULE 1 attached hereto
(the "Liabilities"), as and in the amount the same come due each month. All
amounts deposited into the Account shall be deemed paid to Licensor hereunder;
PROVIDED, HOWEVER, that Licensee shall not assume any of Licensor's liabilities
or other obligations hereby and this Agreement shall not be construed as an
express or implied assumption of such liabilities and obligations. Licensor
agrees to promptly provide any and all information reasonably requested by
Licensee to permit the proper withdrawal and payment of the Liabilities. The
foregoing notwithstanding, from and after the 180th day following the date of
this Agreement, Licensee agrees to pay License Fee accruing after such date, if
any, to Licensor directly, without deposit into the Account.
(C) CONDITIONS TO PAYMENT. In the event that Licensee's right
to fully use and enjoy the License granted hereunder shall be challenged,
threatened, disputed or otherwise interfered with (except because of an act of
Licensee), Licensee's obligation to pay the License Fee shall immediately
terminate from and after the date on which Licensee learns of such challenge,
threat or dispute.
(D) PERPETUAL LICENSE. The License granted pursuant to this
Agreement shall be perpetual, and shall not terminate upon a termination of
Licensor's right to receive the License Fee or upon final payment of all monthly
License Fees called for under this Agreement. This Section shall survive the
termination of this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF LICENSOR. Licensor represents and
warrants to Licensee the following as of the date of this Agreement:
(A) AUTHORITY. Licensor is the sole trustee of CBM and has
acquired all right, title and interest in and to the Customer List. As sole
trustee of CBM, Licensor the full capacity, power and authority to execute and
deliver this Agreement and to grant the License contemplated hereby. This
Agreement has been duly executed and delivered by Licensor and this Agreement
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constitutes the valid and binding obligations of Licensor, enforceable against
Licensor in accordance with its terms, except as such terms may be limited by
(i) bankruptcy, insolvency or similar laws affecting creditors' rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or at law.
(B) NO VIOLATION. The execution and delivery by Licensor of
this Agreement and the granting of the License hereunder does not, and the
consummation of the transactions contemplated hereby will not (i) violate any
rights of CBM, its shareholders or creditors or any other person holding rights
in or to the Customer List, if any, (ii) result in a default, or give rise to
any right of termination, modification or acceleration, under the terms or
provisions of any agreement or other instrument or obligation to which Licensor
or CBM is a party or by which Licensor, CBM or the Customer List may be bound,
or (iii) violate any law or regulation, or any judgment, order or decree of any
court, governmental body, commission, agency or arbitrator applicable to
Licensor, CBM or the Customer List.
(C) CONSENTS AND APPROVALS. There is no requirement applicable
to Licensor to make any filing with, or to obtain any consent or approval from
any person or entity as a condition to the granting of the License to Licensee
and the consummation of the transactions contemplated by this Agreement.
(D) FINANCIAL STATEMENTS. Licensor has previously furnished
Licensee with true and complete copies of the financial statements relating to
its maintenance service business (which shall consist of a balance sheet, income
statement, and statement of cash flows) of Licensor for the years ending
December 31, 1997 and 1998, including the notes thereto (the "Financial
Statements"). The Financial Statements present fairly the financial position of
Licensor and amount of revenues attributable to the Customer List as of the
dates thereof and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis.
(E) ABSENCE OF CHANGE. Since December 31, 1998, there has not
been any material adverse change, or development involving a prospective change
which affects or can reasonably be expected to affect, materially or adversely,
the value of the Customer List to Licensee or Licensee's ability to service the
customers listed on the Customer List or generate revenue from the Customer List
including, without limitation, any deterioration in the business relationship
between Licensor and any person or entity on the Customer List.
(F) UNDISCLOSED LIABILITIES. All of Licensor's liabilities are
reflected on the Financial Statements. Since December 31, 1998, Licensor has not
incurred any liabilities other than those which were incurred subsequent to such
date in the ordinary course of business and consistent with past practices and
which have not and cannot reasonably be expected to have a material adverse
effect on the value of the Customer List to Licensee or Licensee's ability to
service the customers listed on the Customer List or generate revenue from the
Customer List. There has been no deterioration in
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the business relationship between Licensor and any person or entity on the
Customer List.
(G) LITIGATION. There are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of Licensor,
threatened against Licensor, before any court, governmental body, commission,
agency or arbitrator, which have or can reasonably be expected to have a
material adverse effect on the Customer List or Licensee's use thereof as
contemplated by this Agreement or which seek to limit, in any manner, the right
of Licensee to control the Customer List after the consummation of the
transactions contemplated by this Agreement. Furthermore, there are no
judgments, orders or decrees of any court, governmental body, commission, agency
or arbitrator which have or can reasonably be expected to have any such effect.
(H) TITLE TO CUSTOMER LIST. Licensor holds good and marketable
title to the Customer List, free and clear of liens, mortgages, charges,
security interests or other defects in title ("Encumbrances").
(I) NO FRAUDULENT INTENT. Licensor and Licensee reasonably
believe that the License granted pursuant to this Agreement will improve
Licensor's financial condition and will facilitate the payment of the
Liabilities. Licensor represents and warrants that he has no intention of
hindering or delaying payment to, or satisfaction of any obligations owed or
owing to, any creditors including, without limitation, federal, state and local
tax authorities, by consummating the transactions with Licensee as set forth in
this Agreement.
(J) NO BANKRUPTCY. With respect to Licensor (either
individually or in their capacity as trustees/directors of CBM) and CBM, there
has not been: any adjudication of the Licensor or CBM as insolvent, or any entry
of any order of relief with respect to Licensor or CBM under any applicable
insolvency or bankruptcy laws, or the filing of any involuntary petition in
bankruptcy against Licensor or CBM, or any filing against Licensor or CBM of a
petition for reorganization under the Federal Bankruptcy Code or any state
statute, or a general assignment by Licensor or CBM for the benefit of creditors
(except by CBM to Licensor upon the Forfeiture), or the voluntary claim (by
Licensor or CBM) that it is insolvent or entitled to relief under any provisions
of the Federal Bankruptcy Code (or any state insolvency statute), or the
appointment for Licensor or CBM of a temporary or permanent receiver, trustee,
custodian or sequestrator, and, to the knowledge of Licensor, none of the
foregoing acts have been threatened.
(K) FULL DISCLOSURE. None of the representations and
warranties made in this Article contains any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4. REPRESENTATIONS AND WARRANTIES OF LICENSEE. Licensee represents and
warrants to Licensor the following as of the date of this Agreement:
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(A) ORGANIZATION; AUTHORITY. Licensee is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland. Licensee has corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Licensee of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Licensee and no other corporate proceedings on the part of Licensee
are necessary with respect thereto. This Agreement has been duly executed and
delivered by Licensee, and this Agreement, when executed and delivered by
Licensee and Licensor, will constitute the valid and binding obligations of
Licensee, enforceable in accordance with their terms except as their terms may
be limited by (i) bankruptcy, insolvency, or similar laws affecting creditors'
rights generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
(B) CONSENTS AND APPROVALS. There is no requirement applicable
to Licensee to make any filing with, or to obtain any consent or approval of any
person or entity as a condition to the consummation of the transactions
contemplated by this Agreement.
(C) NO VIOLATION. The execution and delivery by Licensee of
this Agreement does not and will not (i) violate or result in a breach of any
provision of the Articles of Incorporation or Bylaws, as amended to date, of
Licensee, (ii) result in a default, or give rise to any right of termination,
modification or acceleration under the terms, conditions or provisions of any
agreement or other instrument or obligation to which Licensee is a party or by
which Licensee may be bound, or (iii) violate any law or regulation, or
judgment, order or decree of any court, governmental body, commission, agency or
arbitrator applicable to Licensee.
5. RESTRICTIONS ON LICENSOR.
(A) NON-COMPETE. Licensor agrees that, for a period beginning
on the date of this Agreement and ending on the second anniversary of this
Agreement (the "Restricted Period"), Licensor will not directly or indirectly:
(i) engage in any business which is competitive with
the business of Licensee;
(ii) own or control any interest of whatever nature
in or act as an officer, director, agent or employee of, or consultant, sales
representative, independent contractor or advisor to, any person or entity of
whatever nature which is, directly or indirectly, in competition with the
business of Licensee.
The limitations set forth in this subsection apply to business
conducted:
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(x) in Maryland;
(y) in all areas within 50 miles of the location of
Licensee's place of business or Licensor's home or place of business; and
(z) in all areas within 100 miles of the location of
Licensee's place of business or Licensor's home or place of business.
The limitation of this provision to the Restrictive Period should not
be construed to limit the perpetual and exclusive (even as to Licensor) nature
of the License granted pursuant to this Agreement or permit the use of the
Customer List by Licensor in violation of Licensee's exclusive (even as to
Licensor) License at any time.
(B) DEFINITION. For the purposes of this Agreement, a business
activity is competitive with the business of Licensee if it involves engaging in
(i) the business of providing office product maintenance services through
whatever means, or (ii) is of the same type of business as the business of
Licensee, competes with the business of Licensee or supplies goods or services
which may substitute, directly or indirectly, for services or products of
Licensee, whether or not such business activity is pursued for gain, profit, or
other pecuniary advantage.
(C) ACKNOWLEDGMENT. Licensor acknowledges that the geographic
scope of the restrictions contained in this Section is necessary for the
protection of Licensee and specifically covenants that the restrictions,
including the limitations as to scope, period of time and geographic area, are
reasonable and necessary to protect the legitimate business interests of
Licensee.
(D) NON-SOLICITATION. Licensor agrees that, during the
Restricted Period:
(i) Licensor will not solicit, or divert or attempt
to solicit or divert, any customers, suppliers, or accounts from Licensee
including, without limitation, those on the Customer List; and
(ii) Licensor will not hire, attempt to hire,
solicit, entice away or in any other manner persuade or attempt to persuade any
officer, employee, independent contractor or agent of Licensee to discontinue
his/her relationship with Licensee nor will Licensee hire or solicit for hire
any former officer, employee or agent of Licensee for any reason, if such person
is subject to the operation of any covenant not to compete with the Company.
(E) INJUNCTIVE RELIEF. Licensor agrees that in the event of
any breach of the restrictive covenants contained herein, the Company shall be
entitled to seek preliminary and permanent injunctive relief to restrain the
violation of the terms hereof by Licensor and all persons acting for or on
Licensor's behalf.
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(F) MODIFICATION. The parties have attempted to limit
Licensor's right to compete to the extent necessary to protect Licensee from
unfair competition. The parties recognize, however, that reasonable people may
differ in making such a determination. Consequently, the parties hereby agree
that, if the scope or enforceability of the restrictive covenants are in any way
disputed at any time, a court or other trier of fact may modify and enforce the
covenants to the extent that it believes to be reasonable under the
circumstances existing at that time.
(G) SURVIVAL. The provisions of this Section shall survive the
termination or expiration of this Agreement and shall be deemed a separate and
independent agreement.
6. CONFIDENTIALITY. Licensor acknowledges that the value of the License
contained herein would be substantially reduced if the Customer List were
disclosed to any person or entity other than Licensee or if another person or
entity acquired the use of the Customer List. Therefore, the Customer List is
and shall be treated as confidential by Licensor. Licensor agrees that it will
limit access to the Customer List and information and other data relating to the
Customer List to George R. Cannon only. Licensor shall take such measures to
protect the confidentiality of the Customer List as it customarily takes to
protect its trade secrets and as are otherwise reasonable and customary within
the industry. After the date hereof, the Customer List shall not be disclosed by
Licensor to any person or entity and shall not be used for any purpose other
than by Licensee. Licensor agrees that it shall be liable for any damage to
Licensee caused by breach of the confidentiality obligations herein agreed to,
including but not limited to any unauthorized disclosure or use of the Customer
List by its present or former directors, officers, agents, representatives and
employees or third parties to whom disclosure is or was made by any of such
individuals and any consequential loss of business or revenues arising out of or
in connection with such unauthorized disclosure or use. In addition to monetary
damages and any other rights or remedies, Licensee shall be entitled to
appropriate equitable relief, including an injunction, to protect and prevent
unauthorized disclosure of the Customer List. Licensor agrees that it will
return to the Company upon request all materials containing the Customer List or
any information relating thereto.
7. INFRINGEMENT PROCEEDINGS: INDEMNIFICATION. Licensor agrees to
provide prompt written notification to Licensee of any unauthorized use of the
Customer List as it comes to Licensor's attention. Licensee shall have sole
right and discretion to bring infringement or unfair competition proceedings
involving the Customer List.
8. TERM AND TERMINATION The License granted hereunder, the obligation
to pay the License Fee, and the other terms of this Agreement not expressly
surviving the termination of this Agreement are terminable by Licensee upon 30
days prior written notice to Licensor with or without cause, all without further
liability on the part of Licensee.
9. MISCELLANEOUS
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(A) NOTICES. In any case where any notice or other
communication is required or permitted to be given hereunder, such notice shall
be in writing, and (i) personally delivered, or (ii) sent by Federal Express or
other nationally recognized overnight delivery service to the following
addresses:
If to Licensor:
Mr. George R. Cannon and Dolores M. Cannon
44199 Medleys Neck Rd.
Leonardtown, MD 20650
If to Licensee:
Imtek Corporation
707 E. Main Street, Suite 1450
Richmond, VA 23219
with a copy to:
Patrick M. Shelley, Esquire
McGuire, Woods, Battle & Boothe LLP
Seven Saint Paul Street, Suite 1000
Baltimore, Maryland 21202-1626
(B) EFFECTIVE TIME OF NOTICE. If delivered personally, the
date on which a notice, request, instruction or document is delivered shall be
the date on which such delivery is made and, if delivered by Federal Express or
other overnight delivery service the date on which such notice, request,
instruction or document is received shall be the date of delivery and, if
delivered by telecopy, 9:00 a.m. on the business day after the date on which
such notice, request, instruction or document is sent shall be the date of
delivery. Any party hereto may change its address specified for notices herein
by designating a new address by notice in accordance with this Section.
(C) RELATIONSHIP OF THE PARTIES. The parties hereto are
licensor and licensee only. Except as expressly set forth in this Agreement,
none shall (i) incur any obligation on behalf of any other, (ii) engage any
other's credit or authority, or (iii) be deemed to be an agent of the other.
Each party hereto shall be itself solely liable and responsible for its own
actions and omissions. Nothing in this Agreement shall constitute or be deemed
to constitute a partnership between the parties hereto or to constitute any
party as a partner of any other party for any purpose whatsoever.
(D) EFFECTIVENESS; SEVERABILITY. All rights, remedies and
powers provided in this Agreement may be exercised only to the extent that the
exercise thereof does not violate any applicable provision of law, and all the
provisions of this Agreement are intended to be subject to all
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applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render this Agreement
invalid, unenforceable in whole or in part, or not entitled to be recorded,
registered or filed under the provisions of any applicable law. If any provision
hereof is invalid and unenforceable in any jurisdiction, then, to the fullest
extent permitted by law, (i) the other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally construed in order
to carry out the intentions of the parties hereto as nearly as may be possible;
and (ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provisions
in any other jurisdiction.
(E) GOVERNING LAW. This Agreement, the relationship of the
Licensor and the Licensee, any and all dealings of the parties that are directly
or indirectly connected to the subject matter of this Agreement, and any and all
questions or disputes arising in connection therewith, will be governed by and
construed in accordance with the internal law, and not the law of conflicts, of
the State of Maryland.
(F) HEADINGS. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(G) AMENDMENT. This document constitutes the entire agreement
between the parties; it shall not be varied or supplemented except by a written
document referencing this Agreement and signed by the proper authorized persons
representing the parties.
(H) INTEGRATION CLAUSE. This Agreement supercedes and cancels
any and all previous and contemporaneous understandings, agreements and
commitments between the parties relating to the subject matters covered hereby.
It expresses the complete and final understanding of the parties hereto.
(I) WAIVER. No delay in acting or failure to act shall
constitute a waiver of any right of any party under this Agreement. Any waiver
must be in writing and signed by the party entitled to the benefit of the right
being waived. Unless otherwise stated in the waiver, any waiver applies only to
the specific circumstance for which the waiver is given and not to any
subsequent circumstance involving the same or any other right.
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to be
executed as of the day and year first above written.
GEORGE R. CANNON, AS DIRECTOR-TRUSTEE OF
GEORGE R. CANNON BUSINESS
MACHINES, INC.
BY:/s/ GEORGE R. CANNON
---------------------------------
GEORGE R. CANNON, DIRECTOR-TRUSTEE
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DOLORES M. CANNON, AS DIRECTOR-TRUSTEE
OF GEORGE R. CANNON BUSINESS
MACHINES, INC.
BY:/s/ DOLORES M. CANNON
---------------------------------
DOLORES M. CANNON, DIRECTOR-TRUSTEE
GEORGE R. CANNON, INDIVIDUALLY
/s/ GEORGE R. CANNON
-----------------------------------
GEORGE R. CANNON
DOLORES M. CANNON, INDIVIDUALLY
/s/ DOLORES M. CANNON
-----------------------------------
DOLORES M. CANNON
IMTEK CORPORATION
By: /s/ MICHAEL LOWE
---------------------------------
Michael Lowe
President
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EXHIBIT A
Exhibit A, omitted herefrom, contains a list of CBM customers and
clients.
SCHEDULE 1
Schedule 1, omitted herefrom, contains a list of obligations and
liabilities of CBM which will be paid from the license fees contemplated by
this agreement.
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