Distribution Agreement - Frank Kasper & Associates Inc. and Caldera Systems Inc.
DISTRIBUTION AGREEMENT
THIS FRANK KASPER & ASSOCIATES, INC. ("Agreement"), dated this 8th day of
February, 2000 is made by and between FRANK KASPER & ASSOCIATES, INC. ("FKA"), a
Minnesota corporation, with its principal place of business at 7351 Washington
Avenue South, Edina, Minnesota 55439 and CALDERA SYSTEMS, Inc. a Delaware
corporation, with its principal place of business at 240 West Center Street,
Orem, Utah 84057 ("Vendor").
RECITALS
WHEREAS, FKA is engaged in the sale and distribution of CD-ROM titles, books and
related products; and
WHEREAS, Vendor is engaged in the manufacture, production and supply of such
products, ("Products"); and
WHEREAS, FKA desires to purchase Products from Vendor for sale and distribution
to FKA's resellers on a worldwide basis pursuant to the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the terms and conditions set forth herein,
the parties agree as follows:
1. Appointment. Subject to the terms and conditions of this Agreement, Vendor
grants to FKA, and FKA hereby accepts, the non-exclusive right to
distribute the Products as set forth in Exhibit A on a worldwide basis.
2. Order Fulfillment. Vendor will fulfill all FKA's orders promptly and
completely. If a shortage of any Product in Vendor's inventory exists in
spite of Vendor's good faith efforts, Vendor agrees to allocate its
available inventory of such Product to FKA in proportion to FKA's
percentage of all of Vendor's customer orders for such Product during the
previous sixty (60) days. FKA shall not be required to purchase any
minimum amount or quantity of the Product.
3. Delivery of Product. Vendor shall deliver all Products as designated in
FKA's Purchase Orders ("P.O.") unless Vendor rejects the P.O. within ten
(10) days of P.O. date. Products will be shipped F.O.B. FKA's warehouse
unless otherwise indicated on such P.O. Vendor shall bear all shipping
costs and risk of loss of damage to Products in transit. Risk of loss to
Products will pass to FKA upon receipt thereof. FKA agrees to pay for all
taxes and custom duties incurred in delivery of all Products.
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4. Intellectual Property. Distributor shall have the right to utilize
Vendor's trade name and any trademarks and service marks associated with
the Products to identify the origin of the Products in advertising and
promotional materials. With respect to Products made by third party
manufacturers, Vendor shall ensure throughout the term of the Agreement
that FKA has the right to use the third party manufacturer's trademark,
service marks and any trademarks and service marks associated with such
Products in advertising and promotional materials.
5. Returns of Product.
a. FKA may return any Products, including Products returned by FKA
customers, for credit against open invoices. Such returns shall be
limited to once per month, and shall be made with advance notice to
Vendor as to estimated arrival date. Upon advance notice of returns,
Vendor shall provide a Return Material Authorization (RMA) within
five (5) days of notice. In the event that such RMA is not issued
within five (5) days, FKA shall have the right to return any
Product(s) to Vendor without an RMA, and Vendor shall be obligated
to accept such return for credit. FKA shall bear expense and risk of
loss of return shipment. Vendor shall issue payment to FKA for such
returned Products if no balance is then outstanding.
b. Vendor shall issue an immediate credit for purchase price plus all
return freight charges for defective Product, and Product returned
as defective by FKA customers. Upon Vendor recall of Products due to
defects, revisions, or upgrades, FKA shall provide reasonable
assistance, at Vendor's expense, in such recall.
c. FKA's right to return Products shall survive the term and
termination of this Agreement. Should FKA have a balance due upon
reconciliation of the account for Products returns, freight
chargebacks, advertising credits, or other upon end of term or
termination, Vendor shall issue payment therefore within (****) days
of such end of term or termination. FKA shall use best efforts to
return all Products within (****) days of termination of the
Agreement.
6. Sales and Selling Price. FKA's selling prices to its resellers shall be at
FKA's sole discretion and control. Vendor shall make no pricing
commitments to resellers or other third parties which otherwise obligates
FKA. Vendor shall have the right to change the list price of any Products
upon giving (****) days prior written notice to FKA. In the event that
****CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO SUCH OMITTED PORTION.
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Vendor shall raise the list price of a Product, all orders for such
Product placed prior to the effective date of the price increase shall be
invoiced at the lower price.
7. Price Protection. In the event that Vendor reduces the price of any
Product or offers the Product at a lower price, including raising the
discount offered to any other like distributor, Vendor shall promptly
credit FKA for the difference between the invoice price charged to FKA and
the reduced price for each unit of Product held in inventory by FKA on the
date the reduced price is first offered. Vendor will also credit FKA for
the difference between the invoice price charged by FKA to the customer
and the reduced price charged by FKA to the customer for each unit of
Product held in inventory by FKA's customer's on the date the reduced
price is first offered by Vendor if FKA's customers request a credit
resulting from Vendor's price reduction. Should any of FKA's customers
request a price adjustment as outlined in this Section, FKA shall provide
for an independent third party audit of that customer's Inventory upon
Vendor's reasonable request and at Vendor's expense. FKA will use
commercially reasonable efforts to provide inventory reporting of its
customer's inventory.
8. Records. Vendor shall furnish documentation with each shipment to and
return of Products from FKA. FKA shall keep accurate records of all
Products sales and returns, and monthly inventory reports. FKA shall
reconcile its account with Vendor upon end of term or termination of the
Agreement. Vendor shall respond to any FKA request for reconciliation
within thirty (30) days.
9. Term. The initial term of this Agreement shall be one (1) year.
Thereafter, the Agreement shall automatically renew for additional one (1)
year periods.
10. Termination. Either party may terminate the Agreement, with cause, upon
ninety (90) days advance written notice. FKA may continue to sell any
Products in inventory at the time of expiration or termination. For one
hundred eighty (180) days after the expiration or earlier termination of
this Agreement, FKA may return to Vendor any Product for credit against
outstanding invoices, or if there are no outstanding invoices, for a cash
refund. Any credit or refund due FKA for returned Product shall be equal
to the Product's original cost minus any price protection payments. If FKA
terminates the Agreement, Freight charges incurred by FKA in returning the
Product shall be paid by FKA. If Vendor terminates the Agreement, Freight
charges incurred by FKA in returning the Product shall be paid by Vendor.
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11. Payment. Vendor will issue invoices concurrently with Product shipments to
FKA. FKA will pay Vendor upon net (****) day terms.
12. Rebate. Vendor will pay FKA a (****) quarterly rebate based on gross
sales. The rebate will be paid by check within (****) days after the
quarter end. If no check is received within that period FKA shall deduct
that amount from the Vendor's next payment.
13. Confidential Information and Non-Compete. Vendor acknowledges that during
the term of this Agreement, Vendor will have access to and may become
acquainted with certain confidential information of FKA, including but not
limited to Distributor's customer lists, as well as the nature and type of
software, products, services and methods used and preferred by FKA's
customers. Vendor agrees this is proprietary information and will not
directly or indirectly make it known to any person, firm or corporation
except in connection with this Agreement. Vendor agrees he will not
actively solicit orders from FKA's customers or initiate contact with them
during the term of this Agreement, and for six months thereafter.
14. Marketing/Advertising. Vendor and FKA agree to conduct joint marketing and
advertising for the Products as mutually agreed by the parties in writing.
Both parties agree to cooperate in the planning and funding of such
advertising. Vendor shall make no marketing, advertising, pass through or
promotional commitments to resellers or other third parties which
otherwise obligates FKA.
15. Warranties/Certification
(a) General Warranty. Vendor represents and warrants that (i) it has
good and transferable title to the Products, (ii) the Products will
perform in conformity with specifications and documentation supplied
by Vendor, (iii) the Product or its use does not infringe any
patents, copyrights, trademarks, trade secrets, or any other
intellectual property rights, (iv) that there are no suits or
proceedings pending or threatened which allege any infringement of
such proprietary rights, and (v) the Product sales to FKA do not in
any way constitute violations of any law, ordinance, rule or
regulation in the distribution territory.
****CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO SUCH OMITTED PORTION.
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(b) Warranty. Vendor hereby represents and warrants that any Product
offered for distribution does not contain any obscene, defamatory or
libelous matter or violate any right of publicity or privacy.
(c) End-User Warranty. Vendor shall provide a warranty statement with
Products for end user benefit. This warranty shall commence upon
Products delivery to end-user. NO OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE MADE BY
VENDOR WITH RESPECT TO THE PRODUCTS. FKA SHALL NOT EXTEND ANY
ADDITIONAL WARRANTIES TO ANY RESELLERS OR END-USERS OF THE PRODUCTS.
IN NO EVENT WILL SHALL EITHER PARTY BE LIABLE FOR ANY LOST PROFITS
OR ANY OTHER INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF EITHER
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(d) Millennium Compliance Warranty. Vendor warrants and represents that
the Products will properly (a) record, store, calculate or present
calendar dates falling on and after (and if applicable, spans of
time including ) January 1, 2000 as a result of the occurrence of,
or use of data consisting of, such dates, and (b) calculate any
information dependent on or relating to dates on or after January 1,
2000 in the same manner, and with the same functionality, data
integrity and performance, as such Product records, stores,
processes, calculates and presents calendar dates on or before
December 31, 1999, or information dependent on or relating to such
dates.
(e) EU Warranty. Vendor further warrants and represents for Products
distributed in the European Union ("EU") that the Products will be
accepted under all EU directives, regulations and the EU country's
legislation.
(f) Made in America Certification. Vendor by the execution of this
Agreement certifies that it will not label any of its products as
being "Made in America," "Made in U.S.A.," or with similar wording,
unless all components or elements of such Products are in fact made
in the United States of America. Vendor further agrees to defend,
indemnify and hold harmless from and against any and all claims,
demands, liabilities, penalties, damages, judgments or expenses
(including attorney's fees and court costs) arising out of or
resulting in any way from Product that does not conform to the
Certification.
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(g) Compliance with U.S. Export Laws. Vendor by execution of this
Agreement hereby agrees to inform FKA if any of the Products cannot
be legally exported out of the United States. Upon receiving such
notice from Vendor, FKA hereby warrants and certifies that it will
not export or make available for export any such Product about which
FKA received notice from Vendor.
16. Indemnity. Vendor shall defend, indemnify and hold FKA harmless from and
against all damages and costs incurred by FKA due to claims of
infringement of any patents, copyrights, trademarks, trade secrets, or
other proprietary rights in the manufacture or marketing of Product;
provided that, FKA promptly notifies Vendor of the infringement claim.
Upon claim of infringement, Vendor may, at its expense and option, either
procure the right to continue using any part of Products, replace same
with non infringing Products, or modify Products to make it
non-infringing; should Vendor be unable or unwilling to replace, modify,
or procure right to continued use of Products within ninety (90) days of
claim notification, FKA may return Products for a full credit or a cash
refund, at FKA's option.
17. Millennium Compliance Indemnity. Vendor agrees to indemnify and hold FKA
and its shareholders, officers, directors, employees, agents, successors,
and assigns harmless from and against any and all claims, suits, actions,
liabilities, losses, costs, reasonable attorney's fees, expenses,
judgments or damages, whether ordinary, special or consequential,
resulting from any third party claim made or suit brought against FKA or
such persons, to the extent such results from Vendor's breach of the
warranty specified in Section 15(d).
18. Competitive Price. Vendor agrees that the prices and terms it offers to
FKA are now and will continue to be at least as low as those it offers to
any of its like customers. If Vendor offers a lower price, including, but
not limited to, sales price, volume discount, extended terms, to any other
element of the total price of the Product to Vendor to any other customer,
then Vendor will immediately offer that lower price to FKA, and shall
apply such lower price to all FKA orders not yet shipped. FKA shall also
be entitled to participate in and receive notice of the same no later than
Vendor's other customers. In addition, Vendor will issue a credit to
reflect the difference in price for all affected inventory in FKA's or its
resellers inventory on the date of the price decrease.
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19. Arbitration. Except for enforcement of Paragraph 13 of this Agreement, any
dispute, controversy, or claim between the parties hereto arising out of
or relating to this Agreement or a breach, termination, or invalidity
thereof, shall be determined by arbitration. The arbitration proceedings
shall be conducted in accordance with the rules then in force of the
American Arbitration Association. The decision of the arbitrator or
arbitrators shall be final and non-appealable, and judgement may be
entered upon the award rendered in any court having jurisdiction thereof.
Any arbitration award shall include attorneys' fees for the prevailing
party.
20. Notices. All notices or other communications made hereunder shall be in
writing and send by U.S. certified or registered first-class mail prepaid,
and receipt thereof shall be deemed to be two (2) days from date
postmarked.
21. Entire Agreement/Law. This Agreement contains all understandings and
agreements between the parties and may not be modified or supplemented
except in a writing signed by both parties. The parties agree that the
Agreement shall be governed by the law of the State of Minnesota,
excepting that body of law concerning conflicts of law. This agreement
shall specifically exclude the United Nations Convention on Contracts for
the International Sale of Goods without giving effect to conflict of laws.
22. Survival. Sections 5., 13., 14., 15.,16., 17.,18.,19., 20, 21.,22., and
23. shall survive termination of this Agreement.
23. Authorized Representatives. Either party's authorized representative for
execution of this Agreement or any amendment hereto shall be president, a
partner, or a duly authorized vice-president of their respective party.
The parties executing this Agreement warrant that they have the requisite
authority to do so.
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The signer represents that he/she has read this Agreement, agrees, and is an
authorized representative of their respective party.
FRANK KASPER & ASSOCIATES, INC.
By: /s/ Frank Kasper
-------------------------------------
Name: Frank Kasper
-----------------------------------
Title: President
----------------------------------
Date: February 8, 2000
-----------------------------------
CALDERA SYSTEMS
By: /s/ Don R. Hansen
-------------------------------------
Name: Don R. Hansen
-----------------------------------
Title: Sr. Dir., Worldwide Distribution
----------------------------------
Date: February 8, 2000
-----------------------------------
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EXHIBIT A- Products:
CALDERA SYSTEMS PRODUCT PRICE LIST
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
PRODUCT PART # PRODUCT DESCRIPTION MSRP DISTRIBUTOR PRICE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1COL01E023RG OpenLinux 2.3 English (****) (****)
1COL01E023RB OpenLinux 2.3 Eng. Rebate (****) (****)
1COL01F023RG OpenLinux 2.3 French (****) (****)
1COL01G023RG OpenLinux 2.3 German (****) (****)
1COL01I023RG OpenLinux 2.3 Italian (****) (****)
Eserver 2.3 English (****) (****)
</TABLE>
****CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO SUCH OMITTED PORTION.
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