Ibm Application Form Ibm Solution Provider Agreement

LETTERHEAD]


October 6, 1998


IBM APPLICATION FORM IBM Solution Provider Agreement IBM Reseller Agreement


Re: Design Automation Systems, Inc.


To Whom It May Concern:


This communication is to serve as a formal cover letter regarding renewing our legal rights to continue to resell the specific IBM products and services covered within this new Agreement. We have been a valued reseller of certain IBM products and services for a number of years. This year IBM is making substantial changes in the categories and structure of their reseller Channel.


Our goal is to gain ground in this transition and not lose the progress we have made to date. We have made significant investments in our IBM business relationship with the intention of them being long-term investments. Design Automation has strived to maintain the appropriate levels of certification while generating revenues in excess of expectations. This is a symbiotic relationship as our firm has benefited from the association.


We believe that we have completed the forms and are submitting the necessary information to attain the VAE's and Customer Growth classification which we desire. It is our further understanding that missing documentation can be submitted at a later date when it is secured as long as it is no later than your final date. We are sincerely requesting your assistance and guidance through this new process making us a more formidable IBM Reseller as a result. If you have any questions, please contact me at 713-784-2374.


Sincerely,


/s/ Gary A. Reece


Gary A. Reece Account Executive/Partnering


cc: Mr. Chuck Leaver/President, Design Automation Systems, Inc.


[LOGO]


Solution Provider Business Plan (Firms Acquiring IBM Product from Distributors) The purpose of this document is to provide IBM and the Distributor from which your firm acquires or will acquire IBM products, current information that is collected during the Solution Provider Application Process, and is updated periodically thereafter. This information will be used to help IBM and your Distributor work with your firm. As this form is designed to assist your company with the marketing of IBM products, please complete all questions and be as specific as possible. All questions must be answered for this document to be meaningful. Attach any additional information which you deem appropriate and helpful.


DESIGN AUTOMATION SYSTEMS 0019498 - - ----------------------------------- --------------------------------------- Legal Business Name Business Partner Indentification Number


3200 WILCREST DRIVE, S. 370 HOUSTON, TX 77042 (713) 784-2374 784-2486 - - --------------------------------- ------------------------ ------------------ Street, City, State Zip Telephone Number Fax Number


GARY A. REECE ACCOUNT EXECUTIVE/PARTNERING - - --------------------------------- ------------------------------------------ Key Executive Contact Title


Solution Provider Profile How many years have you been in business? 14 Total annual Computer/Computer Related Revenue? $27M Last 12 months IBM Revenue? $5M


From how may locations do you sell computers/computer related products? 1 What are the locations and how many miles from each is the majority of your business based? HOUSTON DALLAS AUSTIN
------- ------ ------


- - ------------- ------------- ------------- ------------- ------------- (Attach separate listing it needed)


How many of your personnel are currently, or will be, involved with your Solution Provider relationship? 20
How many are currently at each of the following skill levels in each of the following job responsibilities? ( ILLEGIBLE )


Skill Level 4 Skill Level 3 Skill Level 2 Skill Level 1 Sales Representatives 4 2 1 Programmers/Software Developers 2 Service/Support Personnel 2 2 2 Administrative Support 1 3 Demonstration Center Personnel 1 Other __________________________


What percentage (%) of your past twelve (12) months sales have been in the following market segments?


10 Small Business (Less than 50 employees)? - - ---- 60 Large accounts (over 1000 employees)? - - ---- 10 Government Accounts State and Local (Y/N Y ) Federal (Y/N ) - - ---- ---- ----
Other (Explain) - - ---- --------------------------------------------------------


20 Medium sized businesses (50 to 1000) employees - - ---- Consumer / Home


- - ----


What percentage (%) of your Past twelve months sales have been focused on a specific industry or industries (e.g. health, banking)? 30% in Energy industry; 20% in Telecom industry; % in industry - - -- ------ -- ------- -- -----------


From which distributors are you acquiring or proposing to acquire which IBM products (e.g. Distributor A, AS/400)?


Distributor HALL-MARK. Product All IBM; Distributor . Product ;
--------- ------- -------- ------ Distributor . Product ; Distributor . Product ;
--------- ------- -------- ------


What current relationship(s) do you nave with other IT vendors? Vendor ACCESS GRAPHICS Product SUN Vendor HALL-MARK Product HP
--------------- --- --------- -- Vendor Product
--------------- ---


Software Application / Solution Value Added Enhancement (VAE)


Describe your application or business solution:
--------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - --------------------------------------------------------------------------------


What VAE(s) are you applying for or approved to sell? (VAE(s) should equal that in SP Application or current contract.)
----------------------------------------- - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- - - --------------------------------------------------------------------------------


SPI30 SAM PAGE I


Marketing Plans What are your revenue objectives for the IBM products that your firm markets or will market in this relationship:


AS/400 AS/400 9401/150
-------- ------------- RS/6000 $2M RS/6000 SP $1.4M
-------- ------------------ STORAGE $1M Networking
------- ------------------ POS Printers
---------- -------------------- PC Products Software $.6M
----- -------------------- Services $1M Support
----- --------------------- Other (Explain)
----------- -------------------------------------------------


Total IBM Revenue
-------------------------------------------------------------


What is your Marketing Strategy which will enable your firm to achieve your marketing goals? ("What business are you in?) PREVIOUSLY SUBMITTED - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- Describe or list, your key "go to market" plans to achieve your annual revenue goals and objectives: PREVIOUSLY SUBMITTED - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- What assistance do you require to make your annual revenue plan: From Distributor? - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------


From IBM? - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------


What are the key education plans for your employees? - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------


THE ABOVE INFORMATION IS DEEMED TO BE ACCURATE AND PROPERLY REFLECTS OUR FIRM'S CURRENT MARKETING PLAN FOR THE TWELVE MONTHS BEGINNING __/__/__ WE UNDERSTAND THIS INFORMATION WILL BE USED BY IBM AND OUR DISTRIBUTOR FOR THE PURPOSES OF PROVIDING OUR FIRM WITH ASSISTANCE AS REQUIRED DURING THE COURSE OF THE NEXT 12 MONTH PERIOD. THIS INFORMATION WILL BE CONSIDERED PART OF THE APPLICATION PROCESS AND AS SUCH WILL BE USED IN THE CONTRACT RENEWAL PROCESS BY IBM AND OUR DISTRIUBTOR.


Gary A. Reece Account Executive/partnering - - ------------------------------------ ---------------------------------------
Signature Title


(713) 784-2374 - - ------------------------------------
Telehone Number


IBM BUSINESS PARTNER AGREEMENT FOR SOLUTION PROVIDERS


1. MARKETING APPROVAL


As our IBM Business Partner-Solution Provider, we approve you under the
terms of this Agreement to market to End User, Products and Services
specified in this Agreement. As our remarketer, you acquire such Products
and Services from an IBM Distributor. When approved as a Solution Provider
under a remarketer relationship, you may also be approved under a
complimentary marketing relationship. If we approve you to market the same
Product and Services under both remarketer and complementary marketing
terms, all transactions will be under remarketer terms. You may unilaterally
elect not to participate under remarketer terms for a specific transaction
or business segment by providing your IBM Distributor-signed IBM Business
Partner Statement of Election. If you meet the requirements of the Marketing
Approval section of the Complementary Marketing Terms Attachment for
Solution Providers, you may participate under those terms.


Certain Products we make available to your IBM Distributor are eligible for
marketing in both Canada and the United States. Your IBM Distributor will
advise you of those Products which are eligible for export between Canada
and the United States.


We may specify the specific industry codes to which you market Products. If
we do so, you agree to comply.


2. DEFINITIONS


END USER is anyone, who is not part of the Enterprise of which you are a
part, who uses Services or acquires Products for its own use and not for
resale.


ENTERPRISE is any legal entity and the subsidiaries it owns by more than
50%.


MACHINE is a machine, its features, conversions, upgrades, elements,
accessories, or any combination of them. The term "Machine" includes an IBM
Machine and any non-IBM Machine (including other equipment) that we approve
you to market.


PRODUCT is a Machine or Program.


PROGRAM is an IBM Program or a non-IBM Program provided under its applicable
license terms that we approve you to market.


SERVICE is the performance of a task, provision of advice and counsel,
assistance, or use of a resource that we approve you to market.


3. VALUE ADDED ENHANCEMENT


For products we specify to your IBM Distributor, you are required to have a
solution which is a value added enhancement, that we approve and specify and
which significantly adds to the Product's function and capability. You agree
to market. Products and Services only with your approved value added
enhancement as part of an integrated solution for End Users. Certain
Products we specify do not require a value added enhancement.


In the event we withdraw approval of your value added enhancement, we also
withdraw your approval as an IBM Business Partner for that value added
enhancement.


We may,at any time, modify the criteria for approval of your value added
enhancement. You are responsible to modify your Value added enhancement to
meet these criteria.


You agree to market Products including processor upgrades requiring a
processor, serial number change only to End Users for whom your value added
enhancement is their primary reason for acquiring the Products. A sale to
an End User without a value added enhancement, when required, is a material
breach of the Agreement.


However, your value added enhancement is not required to be the End User's
primary reason for acquiring upgrades to systems you previously installed
with your enhancement and where your enhancement is still in productive use.
Upgrades include processor upgrades (non-serial number change), peripherals,
and programs.


Unless we specify otherwise in writing, you may market upgrades only to
those End Users where you have installed your value added enhancement, and
who intend on-going use of that value added enhancement.


4. Our Relationship


Each of us agrees that:


1. each of us is responsible for our own expenses regarding fulfillment of
our responsibilities and obligations under the terms of this
Agreement.


2. neither of us will assume or create any obligations on behalf of the
other or make any representations or warranties about the other, other
than those authorized.


3. niether of us will bring a legal action against the other more than two
years after the cause of action arose unless otherwise provided by
local law wilhout the possibility of contractual waiver.


4. failure by either of us to insist on strict performance or to exercise
a right when entitled does not prevent either of us from doing so at a
later time either in relation to that default or any subsequent one,
and


5. IBM may change the terms of this Agreement on one month's written
notice. Otherwise, for any other change to be valid, both of us must
agree in writing. Changes are not retroactive. Additional or different
terms in a communication from you are void, and


6. IBM reserves the right to assign, in whole or in part, this
Agreement to any other IBM related company.


5. YOUR RESPONSIBILITIES TO IBM


You agree:


1. to develop a mutually acceptable business plan with us or your IBM
Distributor, as we specify, if we require one. Such plan will document
your marketing plans as they apply to our relationship. IBM or your IBM
Distributor will review the plan, at a minimum, once a year;


2. that, unless precluded by applicable law, if we specify a minimum
annual attainment, one of the requirements for you to retain this
relationship is that you achieve such attainment;


3. to provide us, or our representative, with access to your facilities in
order for us to fulfill our obligations and to review your compliance
with the Agreement;


4. if you acquire Products you are approved to market from your
Distributor for demonstration, development, and evaluation purposes,
to use such Products primarily in support of your Product marketing
activities and to retain such Products for twelve months from the
Date of Installation of the Products, unless specified otherwise for
specific Products by your Distributor. If you acquire Products you
are approved to market from your Distributor for internal use, to use
such Products only within your Business Partner operations. Any value
added enhancement or system integration service otherwise required by
your relationship is not applicable when you acquire Products for
internal use. You must retail such Products for a minimum of twelve
months unless otherwise specified by your Distributor;


5. to comply with all terms regarding Program upgrades;


6. your rights under this Agreement are not property rights and,
therefore, you can not transfer them to anyone else or encumber them
in any way;


7. to maintain the criteria we specified when we approved you;


8. for a Program requiring the End User's signature on the Program's
license agreement, to obtain the signature before providing the
Program to the End User, and return any required documentation to
your IBM Distributor (all other Programs are licensed under the terms
of the agreement provided with them);


9. to retain records of each Product and Service transaction (for example,
a sale, a credit or a warranty claim) for three years and provide us
relevant records on request. We may reproduce and retain copies of these
records;


10. to provide information, including installation reporting, to us or
your IBM Distributor, as we require your Distributor to provide to us;


11. to report to us any suspected Product defects or safety problems, and to
assist us in tracing and locating Products;


12. if during our review of your compliance with your Business Partner
Agreement with us, we find that you have materially breached the
terms of this Agreement, then in addition to IBM's remedies under the
terms of this Agreement, you may be subject to restitution of
discount or other financial penalties under the terms of your
agreement with your IBM Distributor; and


13. to comply with the highest ethical principles in performing under the
Agreement You will not offer or make payments or gifts (monetary or
otherwise) to anyone for the purpose of wrongfully influencing
decisions in favor of IBM, directly or indirectly. IBM may terminate
this Agreement immediately in case of a) a of breach of this clause
or b) when IBM reasonably believes such a breach has occurred.


6. YOUR RESPONSIBILITIES TO END USERS


You agree to:


1. be responsible for customer satisfaction and to participate in
customer satisfaction programs as we determine;


2. refund the amount paid for a Product returned to you because the End
User returned it to you under the terms of its warranty or did not
accept the terms of the license or a money-back guarantee we offer End
Users. You may return such Products to the IBM Distributor from whom you
acquired them for credit;


3. develop a plan agreed to by the End User for installation and post
installation support for the offering you market. For Products and
Services we approve you to market, support includes your being the
primary contact for Product information, technical advice and
operational advice associated with the offering. You may delegate
these support responsibilities for Products and Services and any
other associated products, to another IBM Business Partner who is
approved to market such Products. If you do, you retain customer
satisfaction responsibilities. Alternatively, such support
responsibilities will be provided by IBM if you market the applicable
IBM Services to the End User. If you do, we assume customer
satisfaction responsibilities for such support;


4. provide a dated written record, such as a sales receipt or an invoice,
which specifies the End User's name, the part number or Machine
type/model and serial number, if applicable;


5. inform your End User in writing who the warranty provider is, if
other than yourself, and of any other applicable Warranty
information, as well as any modification you or the IBM Distributor
make to a Product and advise that such modification may void the
warranty;


6. inform your End User that the sales receipt (or other documentation we
may specify, such as Proof of Entitlement if it is will be necessary for
proof of warranty entitlement and for Program upgrades;


7. provide to your End Users the Program Services the IBM Distributor
provides to you; and


8. assist the End User to achieve productive use of your solution and the
Products and Services you marketed.


7. STATUS CHANGE


You agree to give us prompt written notice (unless precluded by law or
regulation) of any substantive change or anticipated change to the
information supplied in your application. Upon notification of such change,
(or in the event of failure to give notice of such change) IBM may, at its
sole discretion, immediately terminate this Agreement.


8. MARKETING FUNDS AND PROMOTIONAL OFFERINGS


We may provide marketing funds and promotional offerings. If we do, you
agree to use them according to our guidelines and to maintain records of
your activities regarding the use of such funds and offerings for three
years. We may withdraw or recover marketing funds and promotional offerings
from you if you breach any terms of the Agreement. Upon notification of
termination of the Agreement, marketing funds and promotional offerings will
no longer be available for use by you, unless we specify otherwise in
writing.


9. PRODUCTION STATUS


Each IBM Machine is manufactured from new parts, or new and used parts. In
some cases, the IBM Machine may not be new and may have been previously
installed. Regardless of the IBM Machine's production status, our
appropriate warranty terms apply. You agree to inform your End User of these
terms, in writing. Warranty information is available from your IBM
Distributor.


10. ISM WARRANTY SERVICE


If we approve you to provide IBM Warranty Service, you agree to do so for
those Products specified and according to the guidelines provided to you.


11. MARKETING of SERVICES


The following are the conditions under which you may market Services, which
your Distributor makes available to you


1. if you marketed a Product to the End User; or


2. regardless of whether you marketed a Product to the End User, you may
market the Services we specify in this Agreement.


You may market Services on eligible non-IBM Products regardless of whether
you marketed a Machine or Program to the End User


MARKETING OF SERVICES FOR A FEE


If you market an IBM Service which is eligible for a fee and which your
IBM Distributor makes available to you, we will pay the fee to your IBM
Distributor. Alternatively, if such IBM Service is not available from
your IBM Distributor, but is available to you from us, we will pay the
fee to you.


In either case we pay the fee when 1) you identify the opportunity and
perform the marketing activities; 2) you provide the order and any
required documents signed by the End User; and 3) A Standard Statement of
Work is used and there are no changes, and no marketing assistance from
us is required.


Additionally, for Services we specify, and which are not available from
your IBM Distributor, we WILL pay you a fee when you provide us a lead
and the following criteria are met; 1) it is submitted on the form we
provide to you; 2) it is for an opportunity which is not known to us; and
3) it results in the End User ordering the Service from us within six
months from the date we receive the lead from you.


We will not pay you the fee if 1) the machine or program is already under
the Applicable Service; 2) we have an agreement with the End User to
place the machine or program under the applicable Service; or 3) the
Service was terminated by the End User within the last six month.


REMARKETING OF SERVICES


We provide terms in an applicable Attachment governing your remarketing of
Services the End User purchases from you and which we perform under the
terms of the IBM Service agreement signed by the End User.


Shrink-wrap Services are performed under the terms of the agreement provided
with them. If the terms of the agreement are not visible on the shrink-wrap
package, you agree to provide (or, if applicable, request your Remarketer to
provide) the Services terms to the End User before such Services are
acquired by the End User.


12. MARKETING OF FINANCING


If we approve you on the signature page of this Agreement, you may market
our Financing Services for Products and Services and any associated
products and services you market to the End User. If you market our
Financing Services we will pay a fee if specified in the Business Partner
Financing Fee Schedule.


We provide Financing Services to End Users under the terms of our
applicable agreements signed by the End User. You agree, that for the
items that will be financed, 1) you WILL promptly provide us, or your
Distributor, as we specify, any required documents in ...