Red Hat Product Distribution Agreement

Exhibit 10.15


RED HAT PRODUCT DISTRIBUTION AGREEMENT


This is an agreement related to the distribution of certain products of Red Hat Software, Inc. Red Hat Software, Inc., a Delaware corporation ("Red Hat") and FRANK KASPER & ASSOCIATES, INC., a Minnesota corporation ("Distributor"), enter into this Agreement as of the last date following the signatures below.


1. DEFINITIONS.


A. "Customers" of Distributor shall include dealers, resellers, value added resellers, direct resellers and other entities that acquire the Products from Distributor.


B. "DOA" shall mean Product, or any portion thereof, which fails to operate properly on initial installation, boot, or use, as applicable.


C. "Documentation" shall mean user manuals, training materials, Product descriptions and specifications, brochures, technical manuals, license agreements, supporting materials and other printed information relating to the Products and included with the Products, whether distributed in print, electronic, or video format.


D. "Effective Date" shall mean the date on which this Agreement is signed and dated by a duly authorized representative of each party.


E. "End Users" shall mean the final purchasers or licensees who have acquired Products for their own use and not for resale, remarketing or redistribution.


F. "Non-Saleable Products" shall mean any Product that has been returned to Distributor by its Customers that has had the outside shrink wrapping or other packaging seal broken; any components of the original package are missing, damaged or modified; or is otherwise not fit for resale.


G. "Products" shall mean, individually or collectively, the software licenses, electronic products, the sealed software packages comprised of the computer programs encoded on media together with manuals, materials and other contents of the packages associated therewith of Red Hat.


H. "Return Credit" shall mean a credit to Distributor in an amount equal to the price paid by Distributor for Products less any price protection credits but not including any early payment, prepayment or other discounts.


I. "Services" means any warranty, maintenance, advertising, marketing or technical support and any other services performed or to be performed by Red Hat.


J. "Territory" shall mean worldwide.


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2. APPOINTMENT AS DISTRIBUTOR.


Red Hat hereby grants to Distributor, and Distributor accepts, the non-exclusive, non-transferable right and license to distribute Products during the term of this Agreement within the Territory, together with any updates or enhancements to the Products and any new releases related to the Products. This license includes the right to order, possess and distribute the Products to Customers and to provide the Products to Customers for use on demonstration units. Red Hat and Distributor acknowledge and agree that the license to use the Product is solely between Red Hat and the End User and is governed by the terms of the Red Hat's standard end user license agreement enclosed with the Product. Distributor will use commercially reasonable efforts to promote distribution of the Products.


3. PURCHASE ORDERS.


A. Distributor shall issue to Red Hat one or more purchase orders identifying the Products Distributor desires to purchase from Red Hat. The terms and conditions of this Agreement shall govern all purchase orders, except that purchase orders may include other terms and conditions which are consistent with the terms and conditions of this Agreement, and which are mutually agreed to in writing by Distributor and Red Hat. Purchase orders will be placed by Distributor by fax or electronically transferred.


B. If for any reason Red Hat's production is not on schedule, Red Hat agrees to use its best efforts to allocate inventory to Distributor and make shipments in proportion to Distributor's percentage of all Red Hat's orders during the previous [CONFIDENTIAL TREATMENT REQUESTED]** days.


4. ACCEPTANCE OF PRODUCT, SHIPPING


A. Distributor shall, after a reasonable time to inspect each shipment, such time not to exceed ten days, accept Products (the "Acceptance Date") if the Products and all necessary Documentation delivered to Distributor are in accordance with the purchase order. Products shall be shipped FOB origin. Title and risk of loss or damage to Products shall pass to Distributor at the time the Products are delivered by Red Hat to common carrier for shipping to Distributor. Red Hat shall ship Products to Distributor's warehouses anywhere in the world as specified by Distributor. Distributor shall pay the reasonable costs and expenses of shipping Products to Distributor.


B. Red Hat and Distributor agree that no title or ownership of the proprietary rights to any software code is transferred by virtue of this Agreement notwithstanding the use of terms such as "purchase", "sale" or the like within this Agreement. Red Hat and third parties retain all ownership rights and title to any and all software code within the Products.


------------- **[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.


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5. RETURNS.


A. Red Hat agrees to accept return of overstocked Products returned by Distributor, provided that the quantity of Products returned by Distributor does not exceed [CONFIDENTIAL TREATMENT REQUESTED]** of the Products purchased by Distributor during the previous [CONFIDENTIAL TREATMENT REQUESTED]**. Shipments of Products being returned shall be new, unused and in sealed cartons. Red Hat shall credit Distributor's account in the amount of the Return Credit. Distributor shall bear all costs of shipping and risk of loss of those Products returned under this Section to Red Hat's location.


B. Distributor shall have the right to return to Red Hat for Return Credit any DOA Product or any Product that is returned to Distributor within thirty (30) days after the initial delivery date to the End User and that fails to perform in accordance with Red Hat's Product warranty. Red Hat shall bear all costs of shipping and risk of loss of DOA and in-warranty Products to Red Hat's location and back to Distributor or Distributor's Customer.


C. Distributor shall have the right to return for Return Credit, [CONFIDENTIAL TREATMENT REQUESTED]** all Products that are damaged in transit, become obsolete or Red Hat discontinues, updates, revises or are removed from Red Hat's current price list; provided that Distributor uses it best efforts to return all such Products within [CONFIDENTIAL TREATMENT REQUESTED]** after Distributor receives written notice from Red Hat that such Products are obsolete, superseded by a newer version, discontinued or are removed from Red Hat's price list. Red Hat shall bear all reasonable costs of shipping and risk of loss of obsolete or outdated Products to Red Hat's location.


D. Distributor shall have the right to return to Red Hat for Return Credit Non-Saleable Products. Distributor shall bear all costs of shipping and risk of loss of Non-Saleable Products to Red Hat's location.


E. As a condition precedent to returning Products, Distributor shall request and Red Hat shall issue a Return Material Authorization Number (RMA) within 15 days of the Distributor's request. Red Hat shall have no obligation to accept returns in the absence of a valid RMA.


F. This Section 5 does not apply to any Products purchased by Distributor prior to April 28, 1999. A good faith effort will be used by Distributor to return products purchased before April 28, 1999 by Distributor in accordance with the terms of this Section 5.


6. PRODUCT PRICES.


A. Charges, prices, quantities and discounts and shipping costs, if any, for Products shall be determined as set forth in Exhibit A of this Agreement, or as otherwise mutually agreed upon by the parties in writing. Such charges, prices, quantities, discounts and shipping costs shall not be higher than those charged to other same class of customers buying in like quantities.


------------- **[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.


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[CONFIDENTIAL TREATMENT REQUESTED]**


B. Red Hat shall have the right to increase prices from time to time, upon written notice to Distributor not less than [CONFIDENTIAL TREATMENT REQUESTED]** days prior to the effective date of such increase. All orders placed prior to the effective date of the increase, for shipment prior to the effective date, shall be invoiced by Red Hat at the lower price.


C. Red Hat shall have the right to decrease prices from time to time, upon written notice to Distributor. Red Hat shall grant to Distributor, its parent, affiliates and subsidiaries and Distributor's Customers a price credit for the full amount of any Red Hat price decrease on all Products on order, in transit and in their inventory on the effective date of such price decrease. Distributor and its Customers shall, after receiving written notice of the effective date of the price decrease, provide a list of all Products for which they claim a credit.


7. PAYMENT.


A. Except as otherwise set forth in this Agreement, any undisputed sum due to Red Hat pursuant to this Agreement shall be payable net [CONFIDENTIAL TREATMENT REQUESTED]** after the Acceptance Date. Red Hat shall invoice Distributor no earlier than the applicable shipping date for the Products covered by such invoice. Any payments more than [CONFIDENTIAL TREATMENT REQUESTED]** past due shall be subject to a late fee of [CONFIDENTIAL TREATMENT REQUESTED]** percent per month, or the maximum allowable by law, whichever is less.


B. Distributor shall be responsible for franchise taxes, sales or use taxes, and all other taxes, or shall provide Red Hat with an appropriate exemption certificate.


8. ADVERTISING.


A. Red Hat offers a [CONFIDENTIAL TREATMENT REQUESTED]** advertising program [CONFIDENTIAL TREATMENT REQUESTED]**. Distributor shall have the right, at Distributor's option, to participate in such programs.


B. Red Hat shall provide at no charge to Distributor and the Customers of Distributor, reasonable marketing, support, and advertising materials in reasonable quantities in connection with the resale of Products as are currently offered or that may be offered by Red Hat. Red Hat shall bear no costs or expenses incurred by Distributor related to Distributor's marketing of Products unless such expenses are approved in advance in writing by Red Hat.


C. Upon request of Distributor, Red Hat shall consider providing Customized Products for specific customers of Distributor.


9. WARRANTIES/INDEMNIFICATION


A. Subject to the provisions of Section 10., Limitation on Liability, Red Hat shall defend, hold harmless, and indemnify, including reasonable attorney's fees, Distributor from and against


------------- **[CONFIDENTIAL TREATMENT REQUESTED] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.


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I. any claim that any of the Products infringes upon any
intellectual property interest of any third party; and


II. any claim that any of the Products is not year 2000
compliant, meaning that it is unable to correctly process and exchange
date data with respect to the change from the twentieth to the
twenty-first century.


III. any claim arising out of [CONFIDENTIAL TREATMENT
REQUESTED]**.


The indemnification obligations set forth in this Section 9.A shall apply only provided that Distributor provides Red Hat with prompt written notice of each such claim, and provided that Red Hat shall have complete control of the defense of such claim and Distributor's reasonable cooperation in its defense.


B. EU WARRANTY. Vendor warrants and represents for Products distributed to the European Union ("EU") that , that to the best of its knowledge, the Products will be accepted under al ...