EXHIBIT 10.3
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is entered into effective this
16th day of January, 1999 between GlobalSCAPE, Inc., a Delaware corporation with
its principal office in San Antonio, Texas ("GlobalSCAPE") and Alex Kunadze, an
individual residing in Paris, France ("Kunadze").
RECITALS:
A. GlobalSCAPE and Kunadze entered into an Exclusive Distribution, OEM
Agreement dated as of June 21, 1996, which was amended by that Amendment to
Exclusive Distribution Agreement signed August 12, 1997, and that Amendment No.
2 to Exclusive Distribution Agreement signed September 11, 1998 (collectively,
the "Distribution Agreement");
B. GlobalSCAPE and Kunadze entered into a Source Code License Agreement
dated June 21, 1996 which was amended by that Amendment to Exclusive
Distribution Agreement signed August 12, 1997, and that Amendment to Source Code
License Agreement dated August 12, 1997 (collectively, the "License");
C. Under the Distribution Agreement and License, Kunadze, among other
things, granted certain rights to GlobalSCAPE with respect to a software program
developed solely by him and marketed under the trade name and xxxx "CuteFTP,"
including the right to distribute the software on a world wide basis in exchange
for the payment of royalties and other consideration;
D. GlobalSCAPE has developed and distributed the CuteFTP program, and has
paid Kunadze royalties pursuant to the Distribution Agreement and License;
E. Kunadze has reviewed the books and records of GlobalSCAPE to verify
the accuracy and timeliness of all royalty payments paid and payable under the
Distribution Agreement and License, and Kunadze is satisfied with same; and
F. Kunadze and GlobalSCAPE have now agreed that they will terminate the
Distribution Agreement and License, and that Kunadze will sell all of his
ownership rights in the product known as CuteFTP and certain related property of
GlobalSCAPE on the terms and conditions described in this Agreement.
NOW THEREFORE, the parties agree as follows:
1. Property Purchased. Kunadze hereby transfers and assigns to GlobalSCAPE all
of his worldwide right, title and interest in the computer software program
known as "CuteFTP," including without limitation the source code and any common
law or statutory copyright in the source code for CuteFTP versions 1.8, 2.0, 2.5
and 2.8, in any language, as they may be renewed or extended, and any subsequent
releases of, or
modifications, revisions, upgrades, or fixes to the program whose core base was
originally known as "CuteFTP," (the "Software"); all documentation related to
the Software (including any user manuals, help files, and installation
instructions); and the trademark "CuteFTP" and any variations thereof employing
the formative "Cute," together with the goodwill of the business in connection
with which the xxxx is used and which is symbolized thereby, and any causes of
action accrued in his favor for infringement of any copyright in the Software
and the CuteFTP trademark (the Software and other property described in this
Section are referred to in this Agreement collectively as "Property").
2. Purchase Price. GlobalSCAPE shall pay Kunadze: (i) seven hundred fifty-six
thousand and no/100 dollars ($756,000.00) in 12 equal monthly installments of
$63,000.00 on or before the last day of each calendar month beginning February
28, 1999 (with the second six months payments to be evidenced by the note
attached as Exhibit B; plus (ii) one hundred and seventy thousand, eight hundred
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eighty-seven and 70/100 dollars ($170,887.70) (which the parties agree is the
amount that would have been due under the Distribution Agreement and License for
the fourth quarter, 1998 royalties if those agreements had not been terminated
by this Agreement) on or before January 31, 1999; and (iii) an amount equal to
20% of the total sales of the "Product" (as that term was defined in the
Distribution Agreement) for the period January 1, 1999 through January 15, 1999,
with sales of the Product in a currency other than U.S. Dollars to be converted
to U.S. Dollars based on the recognized exchange rate in effect as of January
15, 1999, and the calculations to be made in the same manner as royalties were
calculated by GlobalSCAPE under the Distribution Agreement and License prior to
termination (collectively, the "Purchase Price"). All amounts are payable in
U.S. dollars by wire transfer to a bank account to be specified by Kunadze in
writing to GlobalSCAPE from time to time no later than five days prior to the
due date for a payment.
3. Termination of Distribution Agreement and License. The Distribution
Agreement and License are hereby terminated.
4. Mutual Release. Kunadze and GlobalSCAPE each release and discharge the
other, and each of their respective agents, insurers, servants, employees,
assigns and representatives of any kind, from any and all past or accrued
claims, demands, controversies, actions, debts or causes of action of any nature
either of them may have against the other arising out of or with respect to the
Distribution Agreement, the License, the Property (other than those arising from
this Agreement), and any prior transaction between them with respect to the
Distribution Agreement, the License and Property, whether known or unknown, and
whether based on contract, tort (including fraud and misrepresentation),
statute, equity or any other legal principal, and those for present, future,
known and unknown damages. Kunadze acknowledges that this release includes any
claim for stock or options to purchase stock of GlobalSCAPE, payment of
royalties due or accruing under the Distribution Agreement to and through the
date of this Agreement, any other accrued but unpaid amounts under the
Distribution Agreement and License, and any right to the adjustment of past
royalties or other payments due under the
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Distribution Agreement and License. GlobalSCAPE acknowledges that this release
includes any claim it may have against Kunadze for overpayment of royalties or
other payments due or accrued under the Distribution Agreement and License.
5. No Competitive Products. Kunadze shall not market, promote, sell, offer to
sell, distribute, or develop or assist in the development of, any file transfer
protocol related program or component for sale or distribution to any person
other than GlobalSCAPE, anywhere in the world for a period of two years
following the execution of this Agreement; provided, however, that the FTP
server under development by Kunadze at the time of execution of this Agreement
may be transferred to a third party if Kunadze first offers it to GlobalSCAPE on
the same terms and conditions as the proposed transfer to a third party and
GlobalSCAPE does not accept the offer within 30 days of receipt.
6. Warranties.
(a) Kunadze represents, warrants and covenants that:
1) he is the exclusive owner of all right, title and interest in the
Property and has authority to enter into this Agreement;
2) the portions of the Software that have been delivered by him or
his agent to GlobalSCAPE are his original work;
3) the portions of the Software that have been delivered by him or
his agent to GlobalSCAPE do not infringe on the copyright,
trademark, trade secret or other proprietary rights of any other
person;
4) he has not provided any portion of the source code for the
Software to any person other than GlobalSCAPE, and does not know
of any person other than GlobalSCAPE and himself who has ever had
possession of the source code, except for Kazan Software of
Houston, Texas, which evaluated the source code under a
confidentiality agreement in 1995;
5) he has not developed any product competitive with the Software,
including any file transfer protocol related product but not
including an FTP server, or used or authorized any other person
to use the word "Cute" in connection with any actual or planned
product or service, including a software, hardware or computer
related product of any kind;
6) he has not allowed any person other than GlobalSCAPE to use, nor,
to the best of his knowledge has any person other than
GlobalSCAPE used, the CuteFTP trademark or any confusingly
similar xxxx for the same or related services, and that prior to
the
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time that Distribution Agreement was signed, he continually used
the xxxx since the time of its adoption and did not abandon it;
7) that the Property is in all respects free and clear and he has
not and will not grant any license, lien, or otherwise encumber
the Property in any manner or transfer any rights in the Property
to any person other than GlobalSCAPE, nor has he or will he make
any commitment to any person which will or may impair
GlobalSCAPE's rights in the Property, except that Original
Equipment Manufacturer Agreement between Kunadze and Performance
Technology (the "OEM Agreement");
8) Neither Performance Technology nor any of its successors or
assigns has exercised any rights or performed any obligations
under the OEM Agreement since November 5, 1998, and Kunadze has
delivered to GlobalSCAPE evidence of the termination of the OEM
Agreement;
9) his rights in the Property as described in this Agreement have
never been disputed, either formally or informally; and
10) there is no fact regarding the Property that is material to the
transactions evidenced by this Agreement that he has not
disclosed to GlobalSCAPE, and he will communication to
GlobalSCAPE any such facts which become known to him in the
future;
(b) GlobalSCAPE represents, warrants and covenants that:
1) it is duly organized, validly existing and in good standing under
the laws of the jurisdiction under which it is organized, it has
the power to enter into this Agreement, and it has taken all
necessary actions to authorize and execute this Agreement;
2) it will show Kunadze as the original author of the Software in
conjunction with its copyright notice on the Software;
3) Kunadze's rights in the Property have never been disputed, either
formally or informally, to the knowledge of GlobalSCAPE; and
4) There is no fact which GlobalSCAPE has not disclosed to Kunadze
which could have a material adverse affect on the financial
condition of GlobalSCAPE or impair its ability to perform its
obligation under this Agreement.
7. Indemnification. Each party shall indemnify, and hold harmless the other
party from and against any and all liabilities, obligations, losses, damages,
penalties, fines, punitive damages, amounts in interest, expenses and
disbursements of any kind and nature whatsoever arising under any theory of
legal liability (including reasonable
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attorneys fees and costs) that may be imposed on, incurred by or asserted
against the indemnified party, or any of its property, arising from, related to
or caused by an actual or asserted breach of this Agreement, or the Distribution
Agreement or License as to claims arising at a time when such agreements were in
effect, by the indemnifying party (including breach of any warranty). Theories
of legal liability include, but are not limited to, contract, tort, strict
liability, infringement on intellectual property rights, breach of express or
implied warranty, breach of implied covenant and the sole or concurrent
negligence of the indemnified party or any person whose negligence, duties,
actions or liabilities may be attributed or imputed to the indemnified party. A
party seeking indemnification under this Section shall provide prompt notice of
its claim for indemnification to the indemnifying party, provided, however, that
failure to give prompt notice shall not affect the indemnifying party's
obligations under this Section unless the failure materially prejudices the
indemnifying party's rights. The indemnified party will have the right to select
counsel to defend it in respect of any indemnified matter under this Section,
provided, however, that the counsel selected must be reasonably satisfactory to
the indemnifying party. The indemnified party will keep the indemnifying party
informed of the status of any litigation or dispute resolution procedure, will
give reasonable consideration to the suggestions and requests of the
indemnifying party with respect to the conduct of the litigation or dispute
resolution procedure, and will not settle any matter covered by this Section
without the prior consent of the indemnifying party, which shall not be
unreasonably withheld. Amounts due under this section shall be paid as incurred,
and may be offset against amounts due the indemnifying party under this
Agreement if not paid promptly.
8. Confidentiality. The following information is "Confidential Information":
(a) the specific terms of this Agreement (except for the Xxxx of Sale and
Assignment) and all information exchanged by the parties during
negotiations culminating in this Agreement;
(b) the specific terms of the Distribution Agreement and License and all
information exchanged by the parties during negotiations culminating
in the Distribution Agreement and License;
(c) any information related to either party's performance of, or failure
to perform, this Agreement, the Distribution Agreement or the License;
(d) the Software; and
(e) any information related to a party's assets, liabilities; financial
results, business strategies plans or operations; proprietary
information, technology or know-how; and customers, vendors,
contractors or suppliers;
but excluding any information which is or becomes generally available to the
public other than through breach of this Agreement, or violation of law or other
agreement. Each party agrees not to disclose the other's Confidential
Information to any third party except
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to its agents and representatives who need to know the information to any third
party except to its agents and representatives who need to know the information
to represent or advise it with respect to the subject matter of this Agreement;
provided, however, that a party will not be liable for disclosure of the other
party's Confidential Information if it is required by law or regulation to be
disclosed and the disclosing party gives advance notice of the disclosure to the
other party at the earliest possible time.
9. Delivery of Source Code and Other Materials. Kunadze shall deliver all
copies of the Software (whether in machine or human readable form) in his
possession and control to GlobalSCAPE no later than January 25, 1999. If
Kunadze fails to make timely delivery, GlobalSCAPE shall be entitled to withhold
any and all payments due to Kunadze hereunder, without penalty, until Kunadze
has delivered the materials required under this Paragraph 9. Delivery of the
Software is not a condition precedent to this Agreement.
10. Execution of Other Documents. Kunadze shall execute the Xxxx of Sale and
Assignment attached to this Agreement as Exhibit A and shall execute any other
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documents and take any other steps reasonably requested by GlobalSCAPE to
evidence the transactions described in this Agreement, including: (i) executing
copyright and trademark registration applications, testifying in legal
proceedings and assisting GlobalSCAPE in obtaining, perfecting, maintaining, and
enforcing proper copyright, trademark and other protection for the Property
anywhere in the world, (ii) executing any documents or correspondence that
terminate or evidence the termination of any rights of Performance Technologies
or Kazan Software, and (iii) executing an assignment of the OEM Agreement.
11. Notices. Notices under this Agreement must be given in writing by 1st
Class U.S. Mail, Certified, Return Receipt Requested with a facsimile
transmission the same day as the original is placed in the mail to the following
address:
GlobalSCAPE: Xxxxxx Xxxxx Xxxxxxxx
GlobalSCAPE, Inc.
000 Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Kunadze: Xxxx Xxxxxxxxx, Attorney at Law
0000 Xxxxxxxx Xxxx
Xxx Xxxxxxx, Xxxxx 00000-0000
with a copy e-mailed to xxxxxxx@xxx.xxx
Notices will be deemed given, delivered and effective on the first business day
that is three days after the notice is placed in the mail.
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12. Miscellaneous.
(a) This Agreement constitutes the final and complete agreement of
the parties with respect to its subject matter, and supercedes any prior
agreements, discussions or understandings, written or oral.
(b) This Agreement may be modified only by a written document that
refers specifically to this Agreement and is signed by both parties.
(c) A party's failure or delay in enforcing any provision of this
Agreement will not be deemed a waiver of that party's rights with respect to
that provision or any other provision of this Agreement. A party's waiver of
any of its rights under this Agreement is not a waiver of any of its other
rights with respect to a prior, contemporaneous or future occurrence, whether
similar in nature or not.
(d) This Agreement shall be governed by the laws of the State of
Texas, and Kunadze agrees to submit to the jurisdiction of the courts of the
State of Texas for all purposes. Sole and exclusive venue for any dispute or
disagreement arising under or relating to this agreement shall be in a court
sitting in Bexar County, San Antonio, Texas.
(e) This Agreement may be executed in counterparts, which together will be
deemed an original.
(f) This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto. Kunadze shall not assign this
Agreement without the prior written consent of GlobalSCAPE, which shall not be
unreasonably withheld.
(g) If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable, such determination shall
not affect the validity or enforceability of any other part or provision of this
Agreement, unless such invalidity shall have deprived a party of substantially
all of the consideration such party was to receive hereunder.
(h) The prevailing party in any action to enforce this Agreement or
claims arising from the execution of this Agreement will be entitled to
reimbursement of reasonable attorney fees and costs from the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
GlobalSCAPE, INC.
By: /s/ Xxxxxx Xxxxx Xxxxxxxx /s/ Alex Kunadze
------------------------- ----------------
Xxxxxx Xxxxx Xxxxxxxx Xxxx Kunadze
President
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Exhibit A
Xxxx of Sale and Assignment
WHEREAS, I, Alex Kunadze, a citizen of Russia, residing at 00 xxx xx
Xxxxxxxxx, Xxxxx, Xxxxxx 00000 ("Assignor") have created original literary
works entitled CuteFTP versions 1.8, 2.0, 2.5 and 2.8 (collectively, the
"Works") and am the sole owner of valid subsisting copyrights in and thereto;
and
WHEREAS, I have adopted and am using CuteFTP as a trademark for
computer programs relating to file transfer protocols for the Internet (the
"Trademark"); and
WHEREAS, GlobalSCAPE, Inc., a corporation organized under the laws of
the State of Delaware, having a place of business in San Antonio, Texas
("Assignee") desires obtaining the entire right, title, and interest in, to and
under the Works including the aforesaid copyrights and the Trademark;
NOW, THEREFORE in consideration of the sum of One Dollar ($1.00) paid
by the Assignee to the Assignor simultaneously herewith, receipt of which is
hereby acknowledged by the Assignor, and for other good and valuable
considerations, I:
HEREBY SELL, ASSIGN, TRANSFER AND SET OVER unto the Assignee the
entire right, title, and interest in and to the Works, the entire right, title,
and interest in and to the aforesaid copyrights and any and all statutory or
common-law copyrights or copyright registrations covering the Works, and the
entire right, title and interest in and to the Trademark and the goodwill of the
business in connection with which the Trademark is used and which is symbolized
by the Trademark, TO HAVE AND TO HOLD THE SAME unto the Assignee, its
successors, legal representatives and assigns absolutely and forever;
HEREBY authorizes and request the Register of Copyrights of the United
States, and any official of any country or countries foreign to the United
States, whose duty it is to issue copyright registrations or similar indicia of
copyright, to issue all such copyright, registrations for said Works to
Assignee, its successor, legal representatives and assigns;
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HEREBY constitute and appoint the Assignee my true and lawful
attorney-in-fact with full power of substitution, in my name and xxxxx, but for
the Assignee's benefit, to take any and all steps (including proceeding at law,
in equity or otherwise), and to execute, acknowledge and deliver any and all
instruments and assurances necessary or expedient in order to vest the aforesaid
Works, copyrights, Trademark and any cause of action related to any of them more
effectively in the Assignee, or to protect the same, or to enforce any claim or
right of any kind with respect thereto. The Assignor hereby declares that the
foregoing power is coupled with an interest and is irrevocable.
By: /s/ Alex Kunadze
---------------------------
Name: Alex Xxxxxxx
0
XXXXX XX XXXXX (S)
COUNTY OF BEXAR (S)
Before me, the undersigned authority, on this day personally appeared Alex
Kunadze, known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed.
Given under my hand and seal of offices on this ___ day of January, 1999.
/s/ Xxxxxx Xxxxx
----------------
Notary Public in and for
the State of Texas
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Exhibit B
Principal Amount: $378,000.00
Dated: January 15, 1999
NOTE
For the consideration described in that Purchase Agreement between
GlobalSCAPE, Inc. ("GlobalSCAPE") and Alex Kunadze ("Kunadze") dated January 15,
1999 (the "Purchase Agreement"), GlobalSCAPE promises to pay Three Hundred
Seventy Eight Thousand and no/100 U.S. Dollars ($378,000.00) to the order of
Kunadze at 0000 Xxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxx 00000-0000, or such other
place in San Antonio, Texas as Kunadze may designate in writing, in six equal
monthly installments of Sixty Three Thousand and 00/100 Dollars ($63,000.00),
without interest, on or before the last day of each calendar month beginning
August 31, 1999 with a final maturity of January 31, 2000.
This Note is subject to the Purchase Agreement. In addition any other rights
or remedies that GlobalSCAPE may have against Kunadze, GlobalSCAPE may offset
amounts due under this Note against amounts due GlobalSCAPE under the Purchase
Agreement, for breach of the Purchase Agreement or for any other claim arising
in connection with the execution of the Purchase Agreement, whether or not those
amounts are matured.
The parties acknowledge and agree that this Note is given in respect of
GlobalSCAPE's obligations to pay the seventh through twelfth installments of
that portion of the Purchase Price (as that term is defined in the Purchase
Agreement) that is described in Section 2(i) (to wit: the $756,000 to be paid in
twelve installments beginning February 28, 1999), and that the amount due under
this Note will not be reduced until all other portions of the Purchase Price
have first been paid, and that any payments made after those amounts have been
paid, will reduce the amount of this Note.
Upon and at any time after any Default (as defined below) all amounts due
under this Note, at the option of Kunadze and without demand, notice or legal
process of any kind, may be declared and immediately shall become due and
payable. "Default" shall mean the occurrence or existence of any one or more of
the following events or conditions: (i) GlobalSCAPE fails to pay when due any
amount due under this Note and fails to cure such late payment within five (5)
days following written receipt of notice of the late payment; or (ii)
GlobalSCAPE makes an assignment for the benefit of creditors, or any proceeding
is filed or commenced by or against GlobalSCAPE under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or
receivership law or statute, and any such proceeding remains undismissed or
unstayed for a period of 30 days, or any of the actions sought in any such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a
receiver, trustee, custodian or other similar official for, GlobalSCAPE or for
any substantial part of its property) shall occur, or GlobalSCAPE shall take any
action to authorize any of the actions set forth above in this subsection.
If Kunadze prevails in any action to collect on or enforce this Note or
claims arising from the execution of this Note, then his reasonable attorney
fees and costs will also be payable under this Note.
Neither party may assign this Note without the prior written consent of the
other, which shall not be unreasonably withheld.
This Note may be modified only by a written document that refers
specifically to this Note and is signed by both parties. A party's failure or
delay in enforcing any provision of this Note will not be deemed a waiver of
that party's rights with respect to that provision or any other provision of
this Note. A party's waiver of any of its rights under this Note is not a waiver
of any of its other rights with respect to a prior, contemporaneous or future
occurrence, whether similar in nature or not. This Note shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto.
THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, AND KUNADZE
AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS FOR ALL
PURPOSES. SOLE AND EXCLUSIVE VENUE FOR ANY DISPUTE OR DISAGREEMENT ARISING UNDER
OR RELATING TO THIS NOTE SHALL BE IN A COURT SITTING IN BEXAR COUNTY, SAN
ANTONIO, TEXAS.
Made this 15th day of January, 1999.
GlobalSCAPE, INC.
By: /s/ Xxxxxx Xxxxx Xxxxxxxx
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Xxxxxx Xxxxx Xxxxxxxx
President
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GUARANTEE
American TeleSource International, Inc., being the majority shareholder of
GlobalSCAPE, Inc., does hereby irrevocably guarantee payment of all amounts due
Alex Kunadze under the Purchase Agreement, by and between GlobalSCOPE, Inc. and
Kunadze dated January 16, 1999, conditioned only upon said Agreement being still
in full force and effect.
AMERICAN TELESOURCE INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Xxxxxxx X. Xxxxx
President
Date: 1/16/99
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ASSIGNMENT
In consideration of the sum of One Dollar ($1.00), I, Alex Kunadze, hereby
assign all of my right, title and interest in and to the following agreements to
GlobalSCAPE, Inc.:
1. Original Equipment Manufacturer Agreement between Alex Kunadze and
Performance Technologies under which the software known as CuteFTP was
licensed to Performance Technologies,
2. a confidentiality agreement with Kazan Software of Houston, Texas,
3. any other agreement executed by me regarding the software known as CuteFTP,
TO HAVE AND TO HOLD THE SAME unto GlobalSCAPE, Inc., its successors, legal
representatives and assigns absolutely and forever.
/s/ Alex Kunadze
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Alex Kunadze
STATE OF TEXAS (S)
COUNTY OF BEXAR (S)
Before me, the undersigned authority, on this day personally appeared Alex
Kunadze, known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for the purposes
and consideration therein expressed.
Given under my hand and seal of offices on this ___ day of January, 1999.
/s/ Xxxxxx Xxxxx
------------------------------
Notary Public in and for
the State of Texas
