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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[OR]
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File Number: 0-9129
EPICEDGE, INC.
FORMERLY KNOWN AS DESIGN AUTOMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1657943
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3200 WILCREST, SUITE 370
HOUSTON, TEXAS 77042-3366
(Address of principal executive offices)
(713) 784-2374
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [_]
Registrant's revenues for the year ended December 31, 1999 were $29,439,569.
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the last sales price as quoted by the American Stock
Exchange on March 29, 2000 was $204,831,572. As of March 29, 2000, the
registrant had 25,618,486 shares of common stock outstanding.
Documents Incorporated by Reference: None.
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PART I
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This annual report contains forward-looking statements. These statements
relate to future events or our future financial performance and involve known
and unknown risks, uncertainties and other factors that may cause our or our
industry's actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential," or the negative of these terms or other
comparable terminology. These statements are only predictions. Actual events
or results may differ materially.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other
person assumes responsibility for the accuracy and completeness of these
forward-looking statements. We are under no duty to update any of the forward-
looking statements after the date of this report to conform our prior statements
to actual results.
ITEM 1. BUSINESS
GENERAL
EpicEdge, Inc. is a publicly-held Texas corporation listed on the American
Stock Exchange under the symbol "EDG." EpicEdge was originally incorporated
under the name Loch Exploration, Inc. in June 1979, and historically engaged in
the oil and gas business. In April 1989, the company filed for Chapter 11
bankruptcy, and was reorganized in connection with its Plan of Reorganization,
effective November 17, 1989. In December 1998, the company transferred all of
its assets and liabilities to Loch Energy, Inc., in exchange for shares of
company common stock, whereby Loch Energy became a subsidiary of Design
Automation Systems Incorporated. In January 1999, the company acquired all of
the issued and outstanding capital stock of Design Automation, a private
company, in exchange for shares of company common stock. In April 1999, Design
Automation was merged into the company, and the company changed its name to
Design Automation Systems Incorporated. In March 2000, the company changed its
name to EpicEdge, Inc. EpicEdge operates as a business to business total
solution provider through the parent corporation, and conducts oil and gas
business through its subsidiary, Loch Energy. EpicEdge intends to distribute the
shares of Loch Energy common stock held by EpicEdge to its shareholders of
record as of December 2, 1998. Our executive offices are located at 3200
Wilcrest, Suite 370, Houston, Texas 77092.
We are engaged in the business of enabling our clients to meet their business
goals through implementation of e-business strategies utilizing Enterprise
Portal Solutions that allow anytime, anywhere, device-independent sharing of
applications, information, and communication tools between trading communities.
Enterprise Portal Solutions improve collaboration among trading partners by
creating a virtual workspace for businesses. With Enterprise Portal Solutions,
all that is required is a browser and the Internet to enable real-time access to
mainframe, client/server or web-enabled applications. Enterprise Portal
Solutions enable collaborators to use common communication tools such as e-mail,
calendaring and file sharing. The existing infrastructure of applications and
systems remain intact and collaborators are not forced to change and adapt due
to constraints in technology.
We are able to deliver a common virtual workspace for employees, partners and
customers. This virtual workspace provides all of the real time information,
applications and communication tools needed by collaborators. The strength of
the Enterprise Portal System is that information, applications and communication
tools are accessible in a way that leaves intact the existing information
technology infrastructure for all trading partners. The client and its
suppliers, distributors, alliance partners and customers are not forced to adapt
due to the constraints in
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technology. Clients, suppliers and partners will have access to common
collaboration tools such as e-mail, file sharing, unified messaging and
calendars. They will also have on-demand, secure access to mainframe, client-
server or web-enabled applications for real-time decision making. The Enterprise
Portal System allows access to information independent of who owns the data,
where it is located or whether the information is hosted or provided by an
internal or external partner.
Our services assist clients in dealing with issues during the entire life
cycle of their projects, including the following: strategic planning, business
process evaluation, integrated marketing and communications, brand structure and
design, system architecture and design, product acquisition, application
hosting, configuration and implementation, ongoing operational support, and
evolutions in technology. We provide solutions to complex information
technology problems focusing on enabling our clients to take advantage of the
evolving Internet economy.
We believe that our success is attributed principally to our technical
expertise, marketplace relationships, vendor alliances, direct sales strategy,
customer service orientation, strong consulting methodology, and ability to hire
and retain skilled professionals in all practices. We intend to grow primarily
through the acquisition of other strategic, geographically located consulting
service businesses with similar characteristics to EpicEdge, and by leveraging
the common pool of resources created by such acquisitions.
RECENT FINANCING
On February 18, 2000, we entered into a stock purchase agreement with
Edgewater Private Equity III, L.P., Aspen Finance Investors I, LLC, a Colorado
limited liability company, Fleck T.I.M.E. Fund L.P., a Connecticut limited
partnership, Fleck Family Partnership II L.P., a Florida limited partnership,
LJH Partners, LP, a Delaware limited partnership, Wain Investment, LLC, an Ohio
limited liability company, Gerald C. Allen, and John Paul Dejoria. Pursuant to
the stock purchase agreement, the investors purchased 2,260,000 shares of our
common stock at a purchase price of $5.00 per share, for an aggregate purchase
price of $11,300,000 which was paid in cash at the closing. In connection with
the stock purchase agreement, we executed a registration rights agreement with
the investors in which we agreed to register the shares of our common stock they
received in the transaction on or before August 18, 2000.
BUSINESS STRATEGY
Since the acquisition of Design Automation by Loch Exploration, we have
engaged in the business of providing computer system integration specializing in
UNIX client server architecture and its components, and offering system
management services with a complete software selection. We provided solutions to
complex information technology problems including system availability and
performance, UNIX/Microsoft Windows NT integration, client service database
implementation, network security and internet/intranet electronic
commerce/electronic business World Wide Web application deployment.
In 1999, we repositioned our products and services to take full advantage
of the expanding business to business Internet consulting market. Our objective
is to provide customers with comprehensive total solutions services for Internet
strategy and implementation. We plan to achieve this goal through a combination
of growth through acquisition and accelerated internal growth. Management
intends to carry out the following strategies.
Expanding New and Existing Markets Through Acquisitions.
We intend to pursue an aggressive acquisition strategy to enhance our
position in our current markets and acquire operations in new markets. In
particular, we will focus our acquisition strategy on candidates that have a
proven record of delivering high-quality technical services, a customer base of
large and mid-sized companies and which may benefit from the synergies offered
by our acquisition strategy. Management believes we will have many acquisition
opportunities in a fragmented market and be able to offer the management of
these acquisition candidates an opportunity to continue operating their
respective businesses, as well as, to participate in a company with a growth
strategy and liquid trading market for its securities. We look forward to
expanding into new and existing markets by acquiring well-established consulting
practices that are leaders in their regional markets. Given
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the size and highly fragmented composition of the industry, we believe that
there is an opportunity to implement a market roll-up program within the value-
added reseller and consulting industry.
Accelerating Internal Growth.
A key component of our strategy is to accelerate internal growth of our
existing business as well as the existing business of our acquisitions.
Applying Additional Resources to Current Operations.
The consulting practice organizations, which we expect to acquire, are
primarily small, privately held companies. We intend to facilitate internal
growth of these acquisitions by providing them with access to capital resources
and technical expertise in product procurement and integration services.
Leveraging Additional Opportunity Through the Collective Skill Set.
We intend to create an environment in which each of the acquired companies
is able to cross-leverage its unique skills and markets for the benefit of the
entire organization. We believe this will result in increased operating
efficiencies without proportionate increases in administrative costs.
Increasing Services Revenues.
We plan to implement a marketing initiative designed to increase service
revenues through the development of standardized service packages. We intend to
create standardized service packages in several areas, including systems
administration, database administration, security and systems and network
performance tuning. We believe that such service packages will make our
products and services more cost-effective and accessible to customers as well as
increase our profit margins.
Developing Identity.
We intend to produce marketing materials and develop the market image and
reputation of EpicEdge as a "national organization" of regional companies, with
the goal of providing business opportunities which would not normally be
available to a regional company.
ACQUISITION STRATEGY
We believe there are many attractive acquisition candidates in our industry
because of the highly fragmented composition of the marketplace, the industry
participants' need for capital and their owners' desire for liquidity. We
intend to pursue an aggressive acquisition program to consolidate and enhance
our position in our current market and to acquire operations in new markets.
Initially, we intend to expand our business through selective, strategic
acquisitions of other companies with complementary businesses in a revenue range
of $5 million to $15 million per annum. In particular, we intend to focus our
acquisition strategy on candidates which have a strong relationship with key
technology vendors, a proven record of delivering high-quality network computing
solutions, enterprise resource planning/enterprise relationship management
("erp/erm") consulting services, e-business solutions, and a customer base of
large and mid-sized companies.
RECENT ACQUISITIONS
On March 31, 1999, we acquired all of the issued and outstanding stock of
COAD Solutions, Inc., an information technology consulting firm, in an arms-
lengths transaction between EpicEdge and the shareholders of COAD. The
consideration for the acquisition was (1) 600,000 shares of our common stock,
(2) $200,000 cash, payable $100,000 at closing, and $100,000 payable in
quarterly installments of $25,000 beginning 90 days from the closing date, and
(3) for a period of 24 months each COAD shareholder will receive a 20% royalty
on gross revenues of SQLACE products. The shareholders of COAD entered into
employment agreements, which terminate
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in December 2001 and include a non-compete provision for the term of the
agreement and one year thereafter. However, we can provide no assurance the non-
compete will be enforceable. The transaction has been accounted for as a
purchase and resulted in goodwill of approximately $2,900,000, which will be
amortized over a period of eight years.
On May 28, 1999, we acquired all of the issued and outstanding stock of
Dynamic Professional Services, LLC, an information technology consulting firm,
in an arms-lengths transaction between the EpicEdge and the shareholders of
Dynamic. The consideration for the acquisition was: (1) 524,000 shares of our
common stock, (2) $200,000 cash, payable $100,000 at closing, and $100,000
payable in quarterly installments of $25,000 beginning 90 days from the closing
date, and (3) additional stock consideration if on June 1, 2000 the closing
price for our common stock for the prior 15 business days is less than $5.15 per
share in an amount equal to 5,340 shares for each $0.01 below $5.15. We have
reserved 2,750,000 shares of our common stock for the additional consideration.
Certain shareholders of Dynamic entered into employment agreements which
terminate in 2001 and include a non-compete provision for the term of the
agreement and one year thereafter. However, we can provide no assurance the non-
compete will be enforceable. This transaction has been accounted for as a
purchase and resulted in goodwill of approximately $2,800,000, which will be
amortized over a period of eight years.
Effective July 30, 1999, we acquired all of the issued and outstanding
stock of Connected Software Solutions, LLC, an electronic-business consulting
and training firm, in an arms-length transaction between the EpicEdge and the
members of Connected. The consideration for the acquisition was: (1) 300,000
shares of our common stock, (2) $300,000 cash payable in six quarterly
installments of $50,000 beginning 90 days from the closing date, and (3)
additional stock consideration if on August 1, 2000 the closing price for our
common stock for the prior 15 business days is less than $5.15 per share in an
amount equal to 3,000 shares for each $0.01 below $5.15. We have reserved
1,500,000 shares of our common stock for the additional consideration. The
members of Connected entered into employment agreements which will continue on a
year-to-year basis and include a non-compete provision for the term of the
agreement and one year thereafter. However, we can provide no assurance the
non-compete will be enforceable. This transaction has been accounted for as a
purchase, and resulted in goodwill of approximately $1,800,000, which will be
amortized over a period of eight years.
On November 29, 1999, we acquired all of the assets of Net Information
Systems, Inc., a provider of leading-edge e-business solutions that leverage
Internet communications with traditional back-office computer systems. The
consideration for the acquisition was (1) 350,000 shares of our common stock,
and (2) $230,000 cash, payable $180,000 at closing and $50,000 in quarterly
installments of $12,500 beginning 90 days from the closing date, and (3) the
assumption of a $220,000 line of credit with Wells Fargo. We have reserved
95,000 shares of our common stock for additional consideration. In addition,
certain shareholders of Net entered into employment agreements which terminate
in November 2000 and include a non-compete provision for the term of the
agreement and one year thereafter. However, we can provide no assurance the
non-compete will be enforceable. This transaction has been accounted for as a
purchase, and resulted in goodwill of approximately $1,500,000, which will be
amortized over a period of eight years.
Effective March 1,2000, we acquired all of the issued and outstanding stock
of The Growth Strategy Group, Inc., a marketing and strategic planning firm, in
an arms-length transaction between the company and the three stockholders of
Growth Strategy. The consideration for the acquisition was: (1) 277,000 shares
of our common stock, and (2) $375,000. The three stockholders of Growth Strategy
entered into employment agreements with the company, which terminate in February
2003 and include a non-compete provision for the term of the agreement and one
year thereafter. However, we can provide no assurance the non-compete provisions
will be enforceable. This transaction has been accounted for as a purchase.
PRODUCTS AND SERVICES
EpicEdge is a provider of products and consulting services that help
clients transform their business to take advantage of the speed and ubiquity of
the Internet. Taken together, this mix of products and services allow clients
to create one Internet-based interface, the Enterprise Portal, for seamless use
by all trading partners, including employees, suppliers, alliance partners, and
customers. To deliver a free flow of information and allow transactions between
natural trading partners, we provide expertise in three critical areas for
planning, building and managing Enterprise Portals: strategic planning,
creative design, and technology. Our services assist customers in dealing
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with issues during the entire life cycle of their projects, including the
following: strategic planning, business process evaluation, integrated marketing
and communications, brand structure and design, system architecture and design,
product acquisition, application hosting, configuration and implementation,
ongoing operational support, and evolutions in technology.
Our customer base varies in range from relatively small companies to
Fortune 1,000 and other large and mid-sized companies. They are geographically
located in the Continental United States, primarily in Texas, Oklahoma,
Missouri, Massachusetts, Tennesee, New York and Washington; and they span
various industries including manufacturing, telecom, publishing, financial,
hospitality, distribution, energy, education, and state and local government.
Our ability to deliver integrated solutions is principally attributable to
our technical expertise and in working with industry-leading vendors of
information technology products such as Sun Microsystems Computer Corporation,
International Business Machines Corp., Hewlett-Packard Company, Oracle
Corporation, Check Point Software Technologies, Ltd., PeopleSoft, Inc., Siebel
Systems, Inc. and Cisco Systems, Inc.
We plan to implement a marketing initiative designed to increase services
revenues through the development of standardized service packages. We intend to
create standardized service packages in several areas, including systems
administration, database administration, security and systems and network
performance tuning. We believe that such service packages will make our
products and services more cost-effective and accessible to customers as well as
increase our profit margins.
We have a strategy for providing products and services in four core areas
of competency: Strategic Planning, Marketing and Creative Design, and
Technology and Implementation. Our business strategy is to combine market-
leading products with our highly-skilled technical personnel to deliver
comprehensive information-technology solutions based within these core
competencies to new and existing customers. We believe this single-source
solution reduces risk, speeds market entry, reduces consulting engagement
duration, and ensures tight alignment of overall business goals with client
e-business strategy.
Strategic Planning.
The Internet poses new territory for even the most seasoned organization.
We believe that thorough up-front analysis and planning are essential for
companies to effectively leverage the Internet. We provide consulting services
that help companies visualize the Internet as an integrated part of their
operations and provide the planning framework for the critical building and
managing phases of the engagement. Strategic planning services include the
following: alignment of business and marketing goals with Internet strategy;
evaluation of business processes; recommendations of new processes;
understanding of customers, partners, and competitors; and opportunity analysis.
Marketing and Creative Design.
We provide visual design, branding, and marketing support for clients to
ensure that clients present Portal solutions that are not only useful by easy to
use. We provide the following consultation for clients: integrated marketing
and communications plan, market research, brand structure and strategy, field
testing of concepts, web-site creation, prototype testing, and go-to-market
strategy.
Technology and Implementation.
We design and build systems that become the infrastructure for Internet-
based management of information and transactions. We believe this is the most
crucial part of client engagements. With technology changing rapidly, we
believe it is imperative that we maintain personnel who have thorough and deep
knowledge of existing and emerging technologies. We not only help clients
select and manage the appropriate technologies, but also offer full-service
implementation of such back-office systems as PeopleSoft. In addition to strong
competency in PeopleSoft implementations, we provide expertise in the major
hardware platforms as well as in such operating systems and languages as
PeopleSoft, Siebel, Java, NetDynamics and iPlanet. As the single source for
clients, engagements
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drive product sales in the areas of enterprise and departmental servers,
software licenses, network components, workstations, and related equipment.
We offer expertise in the following: assessing viability and fit of latest
proven technologies; architecture and network-systems design; application
development; integration with legacy systems; integration with intranet,
extranet, and Internet applications; management and hosting of applications and
infrastructure, professional services for implementation, application hosting,
and network security.
SALES AND MARKETING
We currently focus our marketing and sales efforts on referrals from
vendors and major corporations through direct sales and marketing staff. We
believe that our direct sales and support, including having salespersons serve
as client-relationship managers, leads to better account penetration and
management, better communications and long-term relationships with our customers
and more opportunities for follow-up sales of products and services to our
existing client base. To date, we have focused our sales and marketing efforts
on large and mid-sized customers within the continental United States,
principally in Texas, Oklahoma, Missouri, Massachusetts, Tennessee and
Washington.
As part of our business strategy, we intend to expand the size of our sales
and marketing staff. Historically, we have conducted limited marketing. Most
business has been made through referrals from direct sales calls made by
individual sales personnel, and some referrals from vendors. Sales personnel
derive sales leads from individual business contacts, the marketing department's
efforts and from customer referrals from suppliers and vendors, many of whom
receive requests from customers seeking an authorized reseller to design and
install their new systems.
We benefit from the name recognition of the products we sell and have
successfully leveraged our relationships with vendors and manufacturers to build
strong product and service sales. We expect to continue to utilize these
relationships. We believe additional significant business opportunities with
some of our major global and national customers will develop as a result of the
implementation of our acquisition strategy.
We intend to hire additional sales and service personnel as the business
grows. Our sales and marketing focus continues to be technology-driven, with
systems engineers participating with direct-sales personnel as part of a team
approach to sales and marketing. Sales personnel also participate in training
programs designed to introduce new products and new versions of existing
products and to provide industry information and sales technique instruction.
We believe that we maintain a competitive advantage by hiring highly technical
sales personnel with in-depth product knowledge who require little technical
assistance in the sales process, which reduces overhead.
In addition, we have plans to develop a marketing department dedicated to
facilitating the sales process. External marketing efforts would continue to
include brochures, direct-mail programs, formulation of marketing strategies
designed to create new business opportunities, development of sales presentation
materials and follow-up of prospects introduced to us by our existing customers
and vendors. Many of our brand-name vendors have earned marketing revenue
programs in which 1%-2% of overall sales are put aside in designated marketing
funds. In addition, all of our distributors have in-house marketing programs
whose sole purpose is to assist us in our marketing efforts.
COMPETITION
The information technology value-added channel is comprised of a large
number of participants and is subject to rapid change and intense competition.
We face competition from system integrators, value-added resellers, local and
regional network services firms, telecommunications providers, network equipment
vendors and computer system vendors, many of which have significantly greater
financial, technical and marketing resources and greater name recognition and
generate greater revenue than we do. We expect to continue to face additional
competition from new entrants into our markets. Increased competition may
result in price reductions, fewer client projects, under utilization our
personnel, reduced operating margins and loss of market share, any of which
could materially adversely effect our business, operating results and financial
condition
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PERSONNEL
As of December 31, 1999, we employed 82 persons, of whom 10 were engaged
in sales and marketing, 10 were engaged in providing our technical services, 42
were consultants, and 20 were engaged in finance, administration and management
functions. None of our employees is covered by a collective bargaining
agreement. There is increasing competition for experienced technical
professionals and sales and marketing personnel. We consider relations with our
employees to be excellent.
SUBSIDIARY BUSINESS
Our subsidiary, Loch Energy, is engaged in exploration for, and development
of, oil and gas reserves, primarily onshore in the Midwestern and Southwestern
area of the United States. To a lesser extent, Loch Energy has also acquired
and sold oil and gas properties, an area of business which has significant
competition. Loch Energy may be at a competitive disadvantage in acquiring oil
and gas prospects since it must compete with companies which have greater
financial resources and larger technical staffs. Various state and federal
authorities regulate the production and sale of oil and gas. In addition, Loch
Energy's activities are also subject to existing federal and state laws and
regulations governing environmental quality and pollution control.
Loch Energy presently has one full-time officer. In addition, Loch Energy
employs consultants from time-to-time to assist in its acquiring and evaluating
oil and gas properties. Pursuant to industry practice, Loch Energy expects it
will pay its consultants a retainer and cash and/or overriding bonus on
properties which prove productive which were brought to Loch Energy's attention
by one or more consultants. In November 1998, Loch Energy formed a Texas
limited liability company, Kantex LLC, in which it owns a 50% membership
interest. Kantex acquired certain oil and gas properties. Kantex also acquired
Cherokee Methane Corporation, a gas transport company located in Independence,
Kansas.
INTELLECTUAL PROPERTY RIGHTS
We rely upon a combination of trade secret, nondisclosure and other
contractual arrangements, and copyright and trademark laws, to protect our
proprietary rights. We enter into confidentiality agreements with certain of
our employees, generally require that our consultants and clients enter into
such agreements, and limit access to and distribution of our proprietary
information. There can be no assurance that the steps taken by us in this
regard will be adequate to deter misappropriation of our proprietary information
or that we will be able to detect unauthorized use and take appropriate steps to
enforce our intellectual property rights. In February 2000, we applied for the
trademark and tradename of EpicEdge, Inc. and Enterprise Portal Solutions,
however there can be no assurance that such trademarks and tradenames will be
granted.
RISK FACTORS
The following important factors, among others, could cause actual results
to differ materially from those contained in forward-looking statements made in
this Annual Report on Form 10-KSB or presented elsewhere by management from time
to time.
Our Success Depends on Increased Adoption of the Internet as a Means for
Commerce.
Our future success depends heavily on the acceptance and use of the
Internet as a means for commerce. The widespread acceptance and adoption of the
Internet for conducting business is likely only in the event that the Internet
provides businesses with greater efficiencies and improvements. If commerce on
the Internet does not continue to grow, or grows more slowly than expected, our
growth would decline and our business would be seriously harmed. Consumers and
businesses may reject the Internet as a viable commercial medium for a number of
reasons, including:
. potentially inadequate network infrastructure,
. delays in the development of Internet enabling technologies and
performance improvements,
. delays in the development or adoption of new standards and protocols
required to handle increased
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levels of Internet activity,
. delays in the development of security and authentication technology
necessary to effect secure transmission of confidential information,
. changes in, or insufficient availability of, telecommunications
services to support the Internet, and
. failure of companies to meet their customers' expectations in
delivering goods and services over the Internet.
We may also incur substantial costs to keep up with changes surrounding the
Internet. Unresolved critical issues concerning the commercial use and
government regulation of the Internet include the following:
. security;
. cost and ease of Internet access;
. intellectual property ownership;
. privacy;
. taxation; and
. liability issues.
Any costs we incur because of these factors could materially and adversely
affect our business, financial condition and results of operations.
Our Business is Dependent on our Ability to Keep Pace with the Latest
Technological Changes.
Our market and the enabling technologies used by our clients are
characterized by rapid technological change. Failure to respond successfully to
these technological developments, or to respond in a timely or cost-effective
way, will result in serious harm to our business and operating results. We
expect to derive a substantial portion of our revenues from creating e-business
systems that are based upon today's leading technologies and that are capable of
adapting to future technologies. As a result, our success will depend, in part,
on our ability to offer services that keep pace with continuing changes in
technology, evolving industry standards and changing client preferences. There
can be no assurance that we will be successful in addressing these developments
on a timely basis or that if addressed we will be successful in the marketplace.
Our failure to address these developments could have a material adverse effect
on our business, financial condition and results of operations.
We May Not be Able to Attract and Retain Professional Staff.
Our business is labor intensive and our success will depend in large part
upon our ability to attract, retain, train and motivate highly-skilled
employees. Because of the rapid growth of the Internet, there is intense
competition for employees who have strategic, technical or creative experience
relating to the Internet. We cannot be certain that we will be successful in
attracting a sufficient number of highly skilled employees in the future, or
that we will be successful in retaining, training and motivating the employees
we are able to attract. Any inability to retain, train and motivate our
employees could impair our ability to adequately manage and complete our
existing projects and to bid for or obtain new projects. In addition, because
the competition for qualified employees in the Internet industry is intense,
hiring, training, motivating, retaining and managing employees with the
strategic, technical and creative skills we need is both time consuming and
expensive. If our employees are unable to achieve expected performance levels,
our business, financial condition and results of operations could be adversely
affected.
We May Have Difficulty Managing Our Growth.
Our growth has placed significant demands on our management and other
resources. Our revenues for 1999 increased approximately 44% over our revenues
for the year ended December 31, 1998. Our staff increased from 25 full-time
employees at December 31, 1998 to 82 at December 31, 1999. Our future success
will depend on our ability to manage our growth effectively. If we are unable
to manage our growth and projects effectively, such inability could have a
material adverse effect on the quality of our services and products, our ability
to retain key personnel and our business, financial condition and results of
operations.
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Our Business Could be Adversely Affected if We are Unable to Integrate
Businesses We Acquire.
In March 1999, we acquired COAD, in May 1999; we acquired Dynamic; in July
1999, we acquired Connected; in November 1999, we acquired Net and in February
2000, we acquired Growth Strategy Group, Inc. The anticipated benefits from
these and future acquisitions may not be achieved unless the operations of the
acquired business are successfully combined with those of EpicEdge in a timely
manner. The integration of acquisitions requires substantial attention from
management. We may also encounter difficulties in integrating these acquired
businesses. We cannot be certain that customers of the acquired businesses will
continue to order services from us without reduction or that employees of the
acquired businesses will continue their employment and become well integrated
into our operations and culture. The diversion of the attention of management,
and any difficulties encountered in the transition process, could have an
adverse impact on our business, financial condition and results of operations.
The Price of Our Common Stock is Subject to Significant Fluctuation.
The trading price of our common stock could be subject to wide fluctuations
in response to:
. quarterly variations in operating results,
. changes in earnings estimates by analysts,
. any differences between reported results and analysts' published or
unpublished expectations,
. announcements of new contracts or service offerings by us or our
competitors,
. general economic or stock market conditions unrelated to our operating
performance, and
. other events or factors.
We Depend Heavily on Our Principal Clients.
We have derived, and believe that we will continue to derive, a significant
portion of our revenues from a limited number of large clients. In 1999, six
clients each accounted for more than 5% of our revenues. The volume of work
performed for specific clients is likely to vary from year to year, and a major
client in one year may not use our services in a subsequent year. The loss of
any large client could have a material adverse effect on our business, financial
condition and results of operations. In addition, revenues from a large client
may constitute a significant portion of our total revenues in a particular
quarter.
We Depend Heavily on Our Principal Vendors.
We have existing reseller agreements with industry-leading vendors of
information technology products, including Sun Microsystems, IBM and Hewlett-
Packard. For the years ended December 31, 1998 and December 31, 1999, we
purchased approximately 86% and 74%, respectively, of our products from the
foregoing vendors. The loss of any of these vendors could have a material
adverse effect on our business, results of operations and financial condition.
We Have Significant Fixed Operating Costs and Our Operating Results are
Subject to Fluctuations.
A high percentage of our operating expenses, particularly personnel and
rent, are fixed in advance of any particular quarter. As a result,
unanticipated variations in the number, or progress toward completion, of our
projects or in employee utilization rates may cause significant variations in
operating results in any particular quarter and could result in losses for such
quarter.
An unanticipated termination of a major project, a client's decision not to
proceed to the stage of a project we anticipated, or the completion during a
quarter of several major client projects could require us to maintain
underutilized employees and could therefore have a material adverse effect on
our business, financial condition and results of operations. Our revenues and
earnings may also fluctuate from quarter to quarter based on such factors as the
contractual terms and degree of completion of such projects, any delays incurred
in connection with projects, the accuracy of estimates of resources required to
complete ongoing projects, and general economic conditions.
<PAGE>
We Enter into Fixed-Price Contracts.
Some of our projects are based on fixed-price, fixed-timeframe contracts,
rather than contracts in which payment to us is determined on a time and
materials basis. Our failure to accurately estimate the resources required for
a project or our failure to complete our contractual obligations in a manner
consistent with the project plan upon which our fixed-price, fixed-timeframe
contract was based would adversely affect our overall profitability and could
have a material adverse effect on our business, financial condition and results
of operations. We have been required to commit unanticipated additional
resources to complete certain projects, which has resulted in losses on certain
contracts. We recognize that we will experience similar situations in the
future. In addition, for certain projects we may fix the price before the
design specifications are finalized, which could result in a fixed price that
turns out to be too low and therefore adversely affect our profitability.
Many of Our Contracts can be Canceled with Limited Notice and Without
Significant Penalty.
Many of our contracts are terminable by the client following limited notice
and without significant penalty. Such terminations could result in a loss of
expected revenue and additional, un-reimbursed expenses for staff which were
allocated to that client's project. The cancellation or significant reduction
in the scope of a large project could have a material adverse effect on our
business, financial condition and results of operations.
We Face Significant Competition in Markets That are New, Intensely
Competitive and Rapidly Changing.
The markets for the services we provide are highly competitive. We believe
that we currently compete principally with strategy consulting firms, Internet
and e-business professional services providers, software integration firms,
application software vendors and internal information systems groups. Many of
the companies that provide such services have significantly greater financial,
technical and marketing resources than we do and generate greater revenues and
have greater name recognition than we do. In addition, there are relatively low
barriers to entry into our markets and we have faced, and expect to continue to
face, additional competition from new entrants into our markets.
We believe that the principal competitive factors in our markets include:
. Internet expertise and talent,
. quality of service, price and speed of delivery,
. ability to integrate strategy, technology and creative design services,
. vertical industry knowledge, and
. project management capability.
We believe that our ability to compete also depends in part on a number of
competitive factors outside our control, including:
. the ability of our competitors to hire, retain and motivate their senior
staff,
. the development by others of Internet solutions or software that is
competitive with our products and services, and
. the extent of our competitors' responsiveness to client needs.
There can be no assurance that we will be able to compete successfully with our
competitors.
Our Business is Sensitive to Economic Downturns.
Our revenues and results of operations are likely to be influenced by
general economic conditions. In the event of a general economic downturn or a
recession in the United States, Europe or Asia, our clients and potential
<PAGE>
clients may substantially reduce their information technology and related
budgets. Such an economic downturn may materially and adversely affect our
business, financial condition and results of operations.
Increasing Government Regulation Could Affect Our Business.
We are subject not only to regulations applicable to businesses generally,
but also laws and regulations directly applicable to electronic commerce.
Although there are currently few such laws and regulations, both state, federal
and foreign governments may adopt a number of these laws and regulations. Any
such legislation or regulation could dampen the growth of the Internet and
decrease its acceptance as a communications and commercial medium. If such a
decline occurs, companies may decide in the future not to use our services to
create an electronic business channel. This decrease in the demand for our
services would seriously harm our business and operating results.
Our Business Could be Adversely Affected if We are Unable to Protect Our
Proprietary Technology.
Our success depends, in part, upon our proprietary methodologies and other
intellectual property rights. We rely upon a combination of trade secret,
nondisclosure and other contractual arrangements, and copyright and trademark
laws to protect our proprietary rights. We enter into confidentiality
agreements with our employees, generally require that our consultants and
clients enter into such agreements, and limit access to and distribution of our
proprietary information. There can be no assurance that the steps taken by us
in this regard will be adequate to deter misappropriation of our proprietary
information or that we will be able to detect unauthorized use and take
appropriate steps to enforce our intellectual property rights. In addition,
although we believe that our services and products do not infringe on the
intellectual property rights of others, there can be no assurance that such a
claim will not be asserted against us in the future, or that if asserted any
such claim will be successfully defended. A successful claim against us could
materially and adversely affect our business, financial condition and results of
operations.
We May Not Have the Right to Resell or Reuse Applications Developed for
Specific Clients.
A portion of our business involves the development of Internet and software
applications for specific client engagements. Ownership of such software is the
subject of negotiation and is frequently assigned to the client, although we may
retain a license for certain uses. Issues relating to the ownership of and
rights to use software applications can be complicated and there can be no
assurance that disputes will not arise that affect our ability to resell or
reuse such applications. Any limitation on our ability to resell or reuse an
application could require us to incur additional expenses to develop new
applications for future projects.
Our Officers and Directors Have Significant Voting Power.
Carl R. Rose, the Chairman of the Board of Directors, and Charles H.
Leaver, Jr., the Chief Executive Officer and Vice Chairman of the Board of
Directors, have voting control over 56.8% and 5.65%, respectively, of our
outstanding common stock. As a result, these shareholders have the ability to
substantially influence, and may effectively control, the outcome of corporate
actions requiring shareholder approval, including the election of directors.
This concentration of ownership may have the effect of delaying or preventing a
change in control of EpicEdge.
We are Dependent on a Number of Key Personnel.
Our success will depend in large part upon the continued services of a
number of key employees, including our Chief Executive Officer, Chief Operating
Officer and President. The loss of the services of any of these individuals or
of one or more of our other key personnel could have a material adverse effect
on us. In addition, if one or more of our key employees resigns to join a
competitor or to form a competing company, the loss of such personnel and any
resulting loss of existing or potential clients to any such competitor could
have a material adverse effect on our business, financial condition and results
of operations. In the event of the loss of any such personnel, there can be no
assurance that we would be able to prevent the unauthorized disclosure or use of
our technical knowledge, practices or procedures by such personnel.
<PAGE>
Our Efforts to Develop Brand Awareness of our Services May Not Be
Successful.
An important element of our business strategy is to develop and maintain
widespread awareness of our brand name. To promote our brand name, we plan to
increase our marketing expenses, which may cause our operating margins to
decline. Moreover, our brand may be closely associated with the business
success or failure of some of our high-profile clients, many of whom are
pursuing unproven business models in competitive markets. As a result, the
failure or difficulties of one of our high-profile clients may damage our brand.
If we fail to successfully promote and maintain our brand name or incur
significant related expenses, our operating margins and our growth may decline.
ITEM 2. PROPERTIES
Our headquarters and principal administrative, accounting, selling and
marketing operations are located in approximately 5,424 square feet of leased
office space in Houston, Texas at a current monthly rate of approximately
$6,513. We also lease office space of approximately 2,500 square feet in
Austin, Texas, 597 square feet in St. Louis, Missouri, 3,000 square feet in
Seattle, Washington and 1,081 square feet in Nashville, Tennessee.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
EpicEdge held a special meeting of its stockholders on March 15, 2000 to
amend our Articles of Incorporation to change the name of the company from
Design Automation Systems, Inc. to EpicEdge, Inc. The number of shares of
common stock entitled to vote on the amendment was 23,081,486; of the 23,081,486
shares, 17,821,381 were voted for the amendment, 245 shares were voted against
the amendment and 563 shares abstained from voting.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) Market Price of Common Stock
Our common stock was previously quoted on the OTC Bulletin Board, on
December 1, 1999, we began trading on the American Stock Exchange under the
symbol "EDG." The following table sets forth for the periods indicated the high
and low sale prices for EpicEdge's common stock.
FISCAL YEAR 1999 BID PRICE
---------
HIGH LOW
---- ---
1st Quarter 3.75 2.40
2nd Quarter 3.75 3.00
3rd Quarter 3.56 2.00
4th Quarter 16.25 3.00
<PAGE>
FISCAL YEAR 1998 BID PRICE
---------
HIGH LOW
---- ---
1st Quarter 1.36 .74
2nd Quarter 1.36 .30
3rd Quarter .81 .33
4th Quarter .35 .25
On March 29, 2000, the last reported sale price of EpicEdge's Common Stock
was $22 per share. As of March 29, 2000, there were approximately 3,236
holders of record of the Common Stock.
(b) Recent Sales of Unregistered Securities
In November 1999, the Company issued an aggregate 350,000 shares of our
common stock to the Net Information Systems, Inc. stockholders in connection
with the acquisition of Net. In December 1999, the Company issued warrants to
purchase 25,000 shares of its common stock. The Company believes these
transactions were exempt from registration pursuant to Section 4(2) and/or
Regulation D promulgated under the Securities Act of 1933, as amended, as a
transaction not involving a public offering.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with "Selected Consolidated
Financial Data" and our consolidated financial statements and notes thereto
appearing elsewhere in this annual report. This discussion and analysis
contains forward-looking statements that involve risks, uncertainties and
assumptions. Our actual results may differ materially from those anticipated in
these forward- looking statements as a result of certain factors, including
those set forth under "Risk Factors" and elsewhere in this annual report.
Overview
We are currently engaged in transitioning our business from a reseller to the
business of enabling our clients to meet their business goals through
implementation of e-business strategies utilizing Enterprise Portal Solutions
that allow anytime, anywhere, device-independent sharing of applications,
information, and communication tools between trading communities. Enterprise
Portal Solutions improve collaboration among trading partners by creating a
virtual workspace for businesses. With Enterprise Portal Solutions, all that is
required is a browser and the Internet to enable real-time access to mainframe,
client/server or web-enabled applications. Enterprise Portal Solutions enable
collaborators to use common communication tools such as e-mail, calendaring and
file sharing. The existing infrastructure of applications and systems remain
intact and collaborators are not forced to change and adapt due to constraints
in technology.
EpicEdge was originally incorporated under the name Loch Exploration, Inc. in
June 1979 and historically engaged in the oil and gas business. In December
1998, the company transferred all of its assets and liabilities to Loch Energy,
Inc., in exchange for shares of company common stock, whereby Loch Energy became
a subsidiary. In January 1999, Loch Exploration acquired all of the issued and
outstanding capital stock of Design Automation Systems Incorporated, a private
company, in exchange for shares of company common stock. At December 31, 1999 it
also had a 53% equity interest in Loch Energy, which is in the oil and gas
business. Loch Energy is reported as a discontinued operations, and EpicEdge
intends to distribute the shares of Loch Energy common stock held by EpicEdge to
its shareholders of record as of December 2, 1998.
<PAGE>
SIGNIFICANT ACCOUNTING POLICIES
Revenues are generated primarily from providing customers with
comprehensive information technology products "systems integration revenue," and
services and support revenue.
Revenues from discrete hardware and software sales are recognized as
revenues when an executed agreement is received and the products are delivered
to the customer. Revenues from system integration and maintenance are recognized
primarily as the services are performed and are usually performed on a time and
material basis.
We use the percentage of completion method to account for customer
consulting contacts. Under this method, revenues are recognized as the work on
the contract progresses and defined "milestones" are reached. Accounts
receivable at December 31, 1999, include approximately $204,000 in accrued
revenue related to customer contracts for which certain milestones had been
reached, but the customer had not yet been billed. Revenues related to a service
contract signed in connection with a consulting contract are recognized ratable
over the term of the service contract, which typically begins upon completion of
the consulting contract.
Property and Equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided using the straight-line
method over the following estimated useful lives: computer hardware and
software, three to five years; office furniture and fixtures, three to seven
years; and leasehold improvements, five years or over the life of the lease if
shorter.
Goodwill represents the excess of cost fair value of net assets acquired in
business combinations, is amortized on a straight-line basis over eight years
and is stated net of accumulated amortization of $593,012 at December 31, 1999.
Stock-Based Compensation arising from stock option grants is accounted for
by thee intrinsic value method under Accounting Principles Board ("APB") Opinion
No. 25. SFAS No. 123 and encourages (but does not require) the cost of
stock-based compensation arrangements to be measured based on the fair value of
the equity instrument awarded. As permitted by SFAS No. 123, we applied APB
Opinion No. 25 to our stock-based compensation awards to employees and disclosed
the required pro fonna effect on net income and earnings per share in the notes
to the financial statements.
New Accounting Standards - In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS No. 133"), which establishes accounting and reporting
standards for derivative instruments. SFAS No. 133 is effective beginning in
2001. We currently do not use derivative financial products for hedging or
speculative purposes and, as a result, do not anticipate any impact on the
financial statements.
<PAGE>
RESULTS OF OPERATIONS
The results of operations for the years ended 1999 and 1998 are based on
our former reseller business, and do not reflect our current e-business
strategy. In view of the rapidly changing nature of our business, and our
recent entrance into the e-business market, we believe period to period
comparisons of our revenue and operating results are not necessarily meaningful
and should not be relied upon as indications of our future performance.
The following table sets forth certain statement of operations data
expressed as a percentage of total revenues for the periods indicated:
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1999 1998
---- ----
<S> <C> <C>
Revenues:
Systems Integrator 86.5% 100.0%
Consulting 13.5% -
----- -----
Total Revenues 100.0% 100.0%
-----
Cost of Revenues:
Systems Integrator 79.1% 88.7%
Consulting 10.30% -
----- -----
Total Cost of Revenues 89.4% 88.7%
------ -----
Gross profit 10.6% 11.3%
----- -----
Operating Expenses:
Selling, general and administrative 16.4% 10.0%
Consulting 12.0% -
Depreciation and amortization 2.2% -
----- -----
Total operating expenses 30.6% 10.0%
----- -----
Income (loss) from operations (20.1%) 1.3%
Other Income and Expense - -
----- -----
Income (loss) before income taxes and
discontinued operations (20.1%) 1.3%
(Provision) benefit for Income Taxes - -
----- -----
Income from continuing operations (20.1)% 1.3%
Discontinued Operations (1.5)% -
----- -----
Net Income (loss) (21.6%) 1.3%
===== =====
</TABLE>
<PAGE>
REVENUES
We generate revenues primarily from our systems integrator, and from a
lessor extent our consulting services. The systems integrator consist of
primarily hardware sales. The consulting services are a result of Peoplesoft
implementations, and e-commerce solutions.
Total Revenues. Total revenues increased 44% from $20.4 million in 1998 to
$29.4 million in 1999. In 1998, three clients individually accounted for 23%,
13%, and 12% of revenues respectively. In 1999, three clients individually
accounted for 20%, 13%, and 11% of revenues respectively. The same three clients
in the years ended 1999 and 1998 comprise these revenue percentages.
Systems Integrator Revenues. Systems integrator revenues increased 25% from
$20.4 million in 1998 to $25.5 million in 1999, representing 100% and 86.5% of
total revenues in the respective years. All of the revenues in 1998 were
generated from the systems integrator. The increase in system integrator
revenues was primarily due to sales to existing and new clients.
Consulting Revenues. Consulting revenues increased 100% to $4.0 million in
1999. The increase of consulting revenues was primarily the result of the four
acquisitions made in 1999. During 1999 we made the following acquisitions; COAD
on March 31, 1999, Dynamic on May 28, 1999, Connected on July 30, 1999, and Net
on November 30, 1999. COAD, and Dynamic provided information technology
consulting services. Connected and Net provides electronic-business consulting
and Connected also provides training.
COST OF REVENUES
Cost of Systems Integrator Revenues. Cost of systems integrator revenues was
$18.0 million in 1998, and $23.3 in 1999, representing 88.7% and 79.1% of total
revenues in the respective years. While the cost of systems integrator revenues
was relatively constant from 1998 to 1999, the decrease in cost of systems
integrator revenues as a percentage of total costs of revenues in 1999 was a
result of a shift in the mix of systems integrator revenues and consulting
revenues in 1999 compared to 1998.
Cost of Consulting Revenues. Cost of consulting revenues consists primarily
of personnel costs associated with consulting services, as well as amounts paid
to third-party consulting firms for those services. Cost of consulting revenues
was $0.0 in 1998 and $3.0 million in 1999 representing 0% in 1998 and 10.4% in
1999 of total
<PAGE>
revenues for the respective years. The increase as a percentage of total
revenues from 1998 to 1999 was a result of the acquisitions of COAD, Dynamics,
Connected, and Net.
OPERATING EXPENSES
Sales, General and Administrative Expenses. Sales, General, and
Administrative expenses increased from $2 million in 1998 to $4.8 million in
1999, representing 10% and 16% of total revenues in the respective years. The
increase in general and administrative expenses reflects our continued
investment in increased staffing and related expenses for the enhancement of the
infrastructure necessary to support our growing business, including investor
relations programs, and the increased utilization of outside professional
service firms.
Consulting Expense. Consulting expense consists of non-cash compensation
exchanged for consulting services performed by an ouutside consulting firm, as
well as non-cash compensation issued to outside directors for consulting
services. Consulting expense was $0.0 in 1998 and $3.5 million in 1999
representing 0% in 1998 and 39% in 1999 of total operating expenses.
Goodwill Amortization. The acquisitions in 1999, as described previously in
Item 1 hereof, resulted in an aggregate $9 million of goodwill. Goodwill is
being amortized over an eight year period and resulted in $600,000 in 1999. The
$600,000 increase in goodwill increased depreciation and amortization from
$22,803 in 1998 to $648,706 in 1999, a 2,745% increase.
DISCONTINUED OPERATIONS
This represents the Company's 53% equity interest in Loch Energy. Total
revenue for year ended 1999 amounted to $72,879, and operating expenses amounted
to $452,779. The net loss for the year of $430,078 is mainly due to the
issuance of common stock for certain consulting services.
<PAGE>
STATEMENT OF CASH FLOWS
We used cash from operating activities of $3.8 million during 1999. These
outflows were partially offset by an increase in accounts payable, and accrued
expenses. Our average days sales outstanding at December 31, 1999 decreased to
59 days, from 72 days at December 31, 1998. The overall decrease in days sales
outstanding from 1998 to 1999 reflects the improved collection efforts over the
year and the quality of our relations with our customers. The method for
calculating the average days sales outstanding was accomplished by dividing the
ending accounts receivable by the revenues for the year and multiply this amount
by 365. The average days sales outstanding can be affected by the amount of
sales at the end of the year.
<PAGE>
During the year ended December 31, 1999, cash used in investing
activities was $1,201,401 which included the purchase of $296,856 of property
and equipment. In addition $904,545 was used in the acquisition of COAD,
Dynamic, Connected, and Net. The property and equipment investments primarily
took the form of computer hardware to support our expanding organization. For
the year ended December 31, 1998 cash used in investing activities was $644,815
which was comprised primarily of an advance to a related party. The increase of
$556,586 or 87% is primarily the result of cash outflows for acquisitions.
Cash provided by financing activities for the year ended December 31, 1999
was $1.9 million, primarily due to the line of credit and notes payable from
FINOVA Capital Corporation. As compared to cash used in financing activities of
$619,081 for the year ended December 31, 1998 which was comprised primarily of
$753,043 in repayment of debt to Finova Capital Corporation.
NET INCOME (LOSS)
BASIC INCOME (LOSS) PER COMMON SHARE
For the year ended December 31, 1999, our net loss was $6,367,454 compared
to net income of $260,332 for the year ended December 31, 1998. As discussed
above, the net loss was primarily attributed to an increase in non-cash
charges for consulting services, general and administrative expenses
associated with the integration of acquisitions and goodwill costs resulting
from such acquisitions. In addition, we had a loss per common share of $.32
for the year ended December 31, 1999, as compared to earnings per share of $.02
for the year ended December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Our capital requirements in connection with our business plan will be
significant. As of December 31, 1999 we had negative working capital of $3.3
million and negative cash flows from operations of $3.8 million. On February 18,
2000 we sold 2,260,000 shares of its common stock for gross proceeds of $11.3
million dollars. The financing had a positive effect on working capital in that
the negative $3.3 working capital on December 31, 1999 has changed on the
February 29, 2000 balance to a positive $7 million. We intend to use the
proceeds to provide financing for future acquisitions; provide general working
capital; provide funding for capital improvements; and other corporate needs. In
addition, we also have a $4 million line of credit with Finova Capital
Corporation which as of March 27, 2000 had a balance of $2,047,877. The amount
of funds available for use under the line of credit is based upon 85% of
acceptable receivables. Management anticipates that current working capital and
revenues from operations will provide sufficient liquidity through fiscal 2000,
although this period may be shortened due to factors beyond our control, as
discussed earlier in this report. In addition, our current business strategy is
to pursue the acquisition of complimentary businesses and expand current
operations, which would increase our capital requirements. The timing, size and
success of our acquisition and expansion efforts cannot be readily predicted. We
currently intend to finance future acquisitions by using shares of our common
stock for a portion of the consideration to be paid. In the event that our
common stock does not maintain a sufficient market value, or potential
acquisition candidates are otherwise unwilling to accept common stock as part of
the consideration for the sale of their business, we may be required to utilize
more of our cash resources. If we do not have sufficient cash resources, our
growth could be limited unless we are able to obtain additional equity or debt
financing. Except for our current line of credit, we have no commitment for
additional financings or borrowings, nor can we provide you any assurance that
additional debt or equity financing will be undertaken, and if undertaken will
be successful and the proceeds derived therefrom, will in fact be sufficient to
fund operations and meet the needs of our business plan. Lower than expected
earnings resulting from adverse conditions or otherwise, could restrict our
ability to expand operations as planned, and if severe enough may shorten the
period in which the current working capital may be expected to satisfy our
requirements, force curtailed operations, or cause us to sell assets.
<PAGE>
EPICEDGE, INC.
INDEX TO FINANCIAL STATEMENTS
ITEM 7 IN 10-KSB
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT F-2
FINANCIAL STATEMENTS AND NOTES:
Balance Sheet as of December 31, 1999 F-3
Statements of Operations for the Years Ended December 31, 1999 and 1998 F-4
Statements of Stockholders' Equity for the Years Ended December 31, 1999
and 1998 F-5
Statements of Cash Flows for the Years Ended December 31, 1999 and 1998 F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Directors and Stockholders of EpicEdge, Inc.:
We have audited the accompanying balance sheet of EpicEdge, Inc. (the "Company")
(formerly Design Automation Systems, Inc.) as of December 31, 1999, and the
related statements of operations, stockholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We did not audit the financial
statements of Loch Energy, Inc. ("LEI"), the Company's investment in which is
accounted for under the equity method. The Company's equity of $84,337 in LEI's
net assets at December 31, 1999, and of $430,078 in that company's net loss for
the year then ended are included in the accompanying financial statements as
discontinued operations and summarized in Note 6. The financial statements of
LEI were audited by other auditors whose report has been furnished to us, and
our opinion, insofar as it relates to the amounts included for such company as
discontinued operations, is based solely on the report of such other auditors.
The financial statements of the Company for the year ended December 31, 1998
were audited by other auditors whose report, dated February 1, 1999, expressed
an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit and the report of
other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audit and the report of the other auditors, the
1999 financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 1999, and the results of
its operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Dallas, Texas
March 17, 2000
F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Shareholders
EpicEdge, Inc. (formerly
Design Automation Systems, Inc.)
We have audited the accompanying balance sheets of EpicEdge, Inc. (formerly
Design Automation Systems, Inc.) as of December 31, 1998 and 1997, and the
related statements of operations, shareholders' equity (deficit) and cash flows
for each of the years in the three-year period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EpicEdge, Inc. (formerly Design
Automation Systems, Inc.) as of December 31, 1998 and 1997, and the results of
its operations and its cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
Certified Public Accountants
Houston, Texas
February 1, 1999
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
Board of Directors
Loch Energy, Inc.
We have audited the accompanying balance sheets of Loch Energy, Inc. (a Texas
Corporation) as of December 31, 1999 and 1998, and the related statements of
operations, changes in shareholders' equity and cash flows for the year ended
December 31, 1999 and the period from May 29, 1998 (inception) to December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Loch Energy, Inc. as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for the year ended December 31, 1999 and the period from May 29, 1998
(inception) to December 31, 1998, in conformity with generally accepted
accounting principles.
/S/ Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
March 24, 2000
242
<PAGE>
<TABLE>
<CAPTION>
EPICEDGE, INC.
BALANCE SHEET
DECEMBER 31, 1999
- --------------------------------------------------------------------------------------------------------
ASSETS
<S> <C>
CURRENT ASSETS:
Cash $ 1,517,065
Trade receivables, less allowance of $37,000 (Notes 1, 8 and 13) 4,551,736
Other current assets (Note 5) 247,617
-----------
Total current assets 6,316,418
PROPERTY AND EQUIPMENT - Net (Notes 1 and 4) 485,261
GOODWILL - Net (Notes 1 and 3) 8,789,669
DISCONTINUED OPERATIONS - Net assets (Notes 6) 84,337
-----------
TOTAL $15,675,685
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit and term note (Note 8) $ 2,866,471
Other notes payable (Notes 3 and 8) 375,000
Accounts payable (Note 13) 5,096,439
Accrued expenses and other current liabilities (Note 7) 1,316,866
-----------
Total current liabilities 9,654,776
COMMITMENTS AND CONTINGENCIES (Note 10)
STOCKHOLDERS' EQUITY (Notes 3 and 11):
Common stock, par value $.01; 50,000,000 shares
authorized; 21,786,200 shares
issued and outstanding 217,862
Common stock warrants 115,000
Additional paid-in capital 12,251,520
Accumulated deficit (6,563,473)
-----------
Total stockholders' equity 6,020,909
-----------
TOTAL $15,675,685
===========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
EPICEDGE, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
1999 AND 1998
- --------------------------------------------------------------------------------------------------------------------------------
1999 1998
<S> <C> <C>
REVENUES (Notes 1 and 13):
Systems integration $25,477,609 $20,442,937
Consulting 3,961,960
----------- -----------
Total revenues 29,439,569 20,442,937
COST OF REVENUES (Note 13):
Systems integration 23,308,328 18,124,043
Consulting 3,034,368
----------- -----------
Total cost of
revenues 26,342,696 18,124,043
----------- -----------
GROSS PROFIT 3,096,873 2,318,894
OPERATING EXPENSES:
Selling, general and administrative 4,827,783 2,036,039
Consulting (Note 11) 3,548,476
Depreciation and amortization (Notes 1
and 4) 648,706 22,803
----------- --------------
Total operating
expenses 9,024,965 2,058,842
----------- --------------
(LOSS) INCOME FROM OPERATIONS (5,928,092) 260,052
OTHER INCOME (EXPENSE):
Interest expense (98,781) (61,060)
Interest income 35,176 56,074
Other 54,321 5,266
----------- --------------
Total other
income (expense) (9,284) 280
----------- --------------
(LOSS) INCOME FROM CONTINUING
OPERATIONS (5,937,376) 260,332
LOSS FROM DISCONTINUED
OPERATIONS (Note 6) (430,078)
----------- --------------
NET (LOSS) INCOME $(6,367,454) $ 260,332
=========== ===========
NET (LOSS) INCOME PER SHARE
Basic and diluted (Note 1):
Continuing operations $(0.30) $0.02
Discontinued operations $(0.02)
----------- --------------
Total $(0.32) $0.02
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - Basic and diluted
(Note 1) 19,895,928 14,405,918
=========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
EPICEDGE, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
STOCKHOLDER
RECEIVABLE
FOR RETAINED
COMMON STOCK COMMON ADDITIONAL PURCHASE OF EARNINGS
---------------------------- STOCK PAID-IN COMMON (ACCUMULATED
SHARES AMOUNT WARRANTS CAPITAL STOCK DEFICIT) TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1998 14,400,000 $ 35,237 $ - $ (227,056) $ 114,239 $ (77,580)
Distribution to
stockholder 227,056 (459,382) (232,326)
Common stock grants 2,160,000 19,155 19,155
Net income 260,332 260,332
---------- ----------- ----------- ---------- ----------- ----------
BALANCE, DECEMBER 31, 1998 16,560,000 54,392 - (84,811) (30,419)
Merger with Loch, a public
company (Note 2) 69,975 69,975
Change in par value of
common stock 111,208 (111,208)
Common stock issuances:
Consulting services -
Loch (Note 11) 2,304,700 23,047 702,934 725,981
COAD acquisition (Note 3) 600,000 6,000 2,619,000 2,625,000
Connected acquisition
(Note 3) 300,000 3,000 1,542,000 1,545,000
Dynamic acquisition (Note 3) 524,000 5,240 2,690,360 2,695,600
NET acquisition (Note 3) 350,000 3,500 1,090,250 1,093,750
Consulting services (Note
11) 1,147,500 11,475 3,537,001 3,548,476
Common stock warrants (Note 11) 115,000 115,000
Net loss (6,367,454) (6,367,454)
---------- ----------- ------- ----------- ---------- ----------- ----------
BALANCE, DECEMBER 31, 1999 21,786,200 $ 217,862 115,000 $12,251,520 $ - $(6,563,473) $6,020,909
========== =========== ======= =========== ========== =========== ==========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
EPICEDGE, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998
<C> <S> <S>
OPERATING ACTIVITIES:
(Loss) income from continuing operations $(5,937,376) $ 260,332
Adjustments to reconcile
net (loss) income to
net cash provided by
(used in) operating
activities:
Depreciation and amortization 648,706 22,803
Issuance of common stock for services 3,548,476 19,155
Changes in assets and
liabilities, net of
acquisitions:
Accounts receivable (196,513) (863,644)
Prepaid and other
assets 94,715 (117,112)
Accounts payable 1,368,485 2,362,045
Accrued expenses and
other liabilities 391,060 76,691
----------- -------------
Net cash provided by (used in)
operating activities (82,447) 1,760,270
----------- -------------
INVESTING ACTIVITIES:
Purchase of property and
equipment (296,856) (22,190)
Cash for acquisitions (904,545) -
Adv. to related parties - (654,673)
Proceeds from sale of
property and equipment 32,048
----------- -------------
Net cash used in
investing
activities (1,201,401) (644,815)
----------- -------------
FINANCING ACTIVITIES:
Proceeds from issuance of
debt 11,287,136 (753,043)
Repayment of debt (9,337,148)
Advances from
stockholder, net 133,962
----------- -------------
Net cash provided by (used in)
financing activities 1,949,988 (619,081)
----------- -------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 666,140 496,374
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 850,925 354,551
----------- -------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,517,065 $ 850,925
============ =============
SUPPLEMENTAL INFORMATION:
Interest paid $ 68,987 $ 61,060
============ =============
Income taxes paid $ 72,600 $ -
============ =============
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Increase in goodwill from common stock issuances 8,325,313
Elimination of shareholder receivable (227,056)
Elimination of shareholder advances 422,347
Elimination of related party receivable (654,673)
</TABLE>
See notes to financial statements.
F-6
<PAGE>
EPICEDGE, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS - EpicEdge (the "Company") (formerly Design Automation Systems)
Inc. engages in the business of enabling Global 1000 and dot com companies to
implement e-business strategies utilizing Enterprise Portal Solutions that
allow device-independent sharing of applications, information and
communication tools between trading communities. The Company's services
assist customers in dealing with issues related to system architecture and
design, product acquisition, configuration and implementation, ongoing
operational support and evolutions in technology to take advantage of the
evolving Internet economy.
FINANCIAL STATEMENT PREPARATION requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingencies as of the date of the financial statements and
revenues and expenses for the period. Differences from those estimates are
recognized in the period they become known.
REVENUES are generated primarily from providing customers with comprehensive
information technology products ("systems integration") and services and
support ("consulting").
Revenues from discrete hardware and software sales are recognized as revenues
when an executed agreement is received and the products are delivered to the
customer. Revenues from system integration and maintenance are recognized
primarily as the services are performed and are usually performed on a time
and material basis.
The Company uses the percentage-of-completion method to account for custom
consulting contacts. Under this method, revenues are recognized as the work
on the contract progresses and defined "milestones" are reached. Accounts
receivable at December 31, 1999, include approximately $204,000 in accrued
revenue related to customer contracts for which certain milestones had been
reached, but the customer had not yet been billed. Revenues related to a
service contract signed in connection with a consulting contract are
recognized ratably over the term of the service contract, which typically
begins upon completion of the consulting contract.
PROPERTY AND EQUIPMENT are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided using the straight-
line method over the following estimated useful lives: computer hardware and
software, three to five years; office furniture and fixtures, three to seven
years; and leasehold improvements, five years or over the life of the lease
if shorter.
GOODWILL represents the excess of cost over fair value of net assets acquired
in business combinations (Note 3), is amortized on a straight-line basis over
eight years and is stated net of accumulated amortization of $593,012 at
December 31, 1999.
F-7
<PAGE>
FINANCIAL INSTRUMENTS consist of cash, receivables, payables and debt, the
carrying value of which are a reasonable estimate of their fair value due to
their short maturities or variable interest rates.
STOCK-BASED COMPENSATION arising from stock option grants is accounted for by
the intrinsic value method under Accounting Principles Board ("APB") Opinion
No. 25. Statement of Financial Accounting Standards ("SFAS") No. 123 and
encourages (but does not require) the cost of stock-based compensation
arrangements to be measured based on the fair value of the equity instrument
awarded. As permitted by SFAS No. 123, the Company applies APB Opinion No. 25
to its stock-based compensation awards to employees and discloses the
required pro forma effect on net income and earnings per share in Note 11.
NET (LOSS) EARNINGS PER SHARE - Basic net (loss) income per share is computed
by dividing the net (loss) income by the weighted average number of shares of
common stock outstanding during the period. Diluted net (loss) income per
share is computed by dividing the net (loss) income by the weighted average
number of shares of common stock outstanding, and when dilutive, options and
warrants to purchase common stock. The dilutive effect of the options and
warrants to purchase common stock are excluded from the computation of
diluted net (loss) income per share if their effect is antidilutive. For the
year ended December 31, 1999, the antidilutive effect excluded from the
diluted net (loss) per share computation was 2,658,900 shares related to
common stock options and warrants.
NEW ACCOUNTING STANDARDS - In June 1998, the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", which establishes accounting and reporting standards for
derivative instruments. SFAS No. 133, as amended, is effective beginning
in 2001. The Company currently does not use derivative financial products
for hedging or speculative purposes and, as a result, does not anticipate
any impact on the financial statements.
2. BUSINESS COMBINATION WITH PUBLIC COMPANY
Effective January 1, 1999, Loch Exploration, Inc. ("Loch"), a public company,
acquired all of the stock of the Company in a "reverse merger," whereby the
Company is the acquirer for accounting purposes. In connection with the
acquisition, Loch exchanged with the Company's stockholders
shares of common stock. The transaction was accounted for in a manner similar
to a pooling of interests, whereby no goodwill resulted from this
transaction, and the Company's equity interest in Loch's net assets of
$69,975 was recorded at Loch's historical cost basis. As a result of the
transaction, the Company is taxed as a C Corporation; however, at the date of
the transaction, no significant basis differences existed between tax and
financial reporting purposes that resulted in deferred tax balances at that
date.
Loch's net assets were transferred to a subsidiary, Loch Energy, Inc.
("LEI"), which is in the oil gas business, and the Company intends to
distribute the shares of LEI common stock owned by the Company to its
stockholders in year 2000. Accordingly, the Company's equity interest in
Loch's net assets and operations is reported as discontinued operations in
the accompanying financial statements.
F-8
<PAGE>
3. ACQUISITIONS
On March 31, 1999, the Company acquired all of the issued and outstanding
stock of COAD Solutions, Inc. ("COAD"), an information technology consulting
firm, in exchange for (1) 600,000 shares of the Company's common stock valued
at $2,625,000; (2) $200,000 cash, payable $100,000 at closing, and $100,000
payable in quarterly installments of $25,000 beginning 90 days from the
closing date; and (3) for a period of 24 months, each COAD stockholder will
receive a 20% royalty on gross revenues of SQLACE products. The transaction
was accounted for as a purchase and resulted in goodwill of approximately
$3,000,000.
On May 28, 1999, the Company acquired all of the issued and outstanding stock
of Dynamic Professional Services, LLC ("Dynamic"), an information technology
consulting firm, in exchange for (1) 524,000 shares of the Company's common
stock valued at $1,545,000; (2) $200,000 cash, payable $100,000 at closing,
and $100,000 payable in quarterly installments of $25,000 beginning 90 days
from the closing date; and (3) additional stock consideration if on June 1,
2000, the closing price for the Company common stock for the prior 15
business days is less than $5.15 per share in an amount equal to 5,340 shares
for each $0.01 below $5.15. The Company has reserved 2,750,000 shares of
common stock for the potential additional consideration. This transaction was
accounted for as a purchase and resulted in goodwill of approximately
$2,800,000.
On July 30, 1999, the Company acquired all of the issued and outstanding
stock of Connected Software Solutions, Inc. ("Connected"), an electronic-
business consulting and training firm, in exchange for (1) 300,000 shares of
the Company's common stock valued at $2,695,600; (2) $300,000 cash payable in
six quarterly installments of $50,000 beginning 90 days from the closing
date; and (3) additional stock consideration if on August 1, 2000, the
closing price for the Company's common stock for the prior 15 business days
is less than $5.15 per share in an amount equal to 3,000 shares for each
$0.01 below $5.15. The Company has reserved 1,500,000 shares of common stock
for the potential additional consideration. This transaction was accounted
for as a purchase and resulted in goodwill of approximately $1,800,000.
On November 29, 1999, the Company acquired substantially all of the assets of
Net Information Systems, Inc., an e-business solutions provider, in exchange
for (1) 350,000 shares of the Company's common stock valued at $1,093,750;
(2) $180,000 cash; (3) a one-year promissory note in the amount of $50,000
payable quarterly with the first payment due 90 days after closing; and (4)
the assumption of Connected's Wells Fargo debt not to exceed $220,000. This
transaction was accounted for as a purchase and resulted in goodwill of
approximately $1,500,000.
The operations of each acquired entity are included in the Company's
consolidated operations from their respective acquisition date.
F-9
<PAGE>
The unaudited consolidated results of operations on a pro forma basis as
though the above acquisitions were made and the related common shares were
issued as of the beginning of the Company's fiscal year 1998 are as follows:
1999 1998
Revenues $31,525,390 $24,852,001
=========== ===========
Loss from continuing operations $(6,348,221) $ (729,469)
=========== ===========
Per share $ (.32) $ (0.05)
=========== ===========
Weighted average common shares outstanding 19,895,928 14,405,918
=========== ===========
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Computer equipment $ 534,964
Office furniture and fixtures 107,605
Leasehold improvements 13,500
-----------
Total 656,069
Less accumulated depreciation and
amortization 170,808
-----------
Property and equipment - net $ 485,261
===========
5. OTHER CURRENT ASSETS
Other current assets consist of the following:
Accrued unbilled revenues $ 204,000
Supplies inventory 16,931
Prepaids 26,686
-----------
Total $ 247,617
===========
F-10
<PAGE>
6. DISCONTINUED OPERATIONS
As a result of the reverse merger with Loch (Note 2) the Company has acquired
a 53% equity interest in Loch Energy, Inc. ("LEI"), in the oil and gas
business, as of December 31, 1999. This is presented as discontinued
operations because the Company intends to distribute these LEI common shares
to the Company's stockholders in year 2000. Summarized financial information
for LEI at December 31, 1999 is as follows:
Total assets $ 168,144
========
Total stockholders' equity $ 159,127
========
The Company's equity interest $ 84,337
========
Net loss $(811,468)
========
The Company's equity interest $(430,078)
========
7. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
1999
Sales tax payable $ 416,453
Accrued payroll and compensation 560,910
Other accrued expenses 339,503
----------
Total $1,316,866
==========
F-11
<PAGE>
8. NOTES PAYABLE
Notes payable consist of the following:
Borrowings under revolving line of credit, which
expires August 10, 2001, with one year renewal
at the lender's option, bearing interest at
prime plus 1.5% (10% at December 31, 1999)
and collateralized by all investments, accounts
receivable, inventory and property $1,981,471
Borrowing under term loan facility that bears
interest at prime plus 2.5% (11% at December 31,
1999), payable in 11 monthly installments of
$25,000 beginning January 15, 2000, and one final
principal payment of $725,000 on December 31, 2000 885,000
----------
2,866,471
Debt from acquisitions - due to former owners
(Note 3) 375,000
----------
Total current debt $3,241,471
==========
REVOLVING LINE OF CREDIT AND TERM LOAN FACILITY - On August 10, 1999, the
Company entered into a Loan and Security Agreement for a total credit
facility of up to $5,000,000, limited to the available borrowing base which
is based on levels of eligible accounts receivable and inventory, as defined
in the Agreement, expiring August 10, 2001 with three one-year renewals at
the lender's option.
On December 29, 1999, the Company amended its Agreement to include a
$1,000,000 term loan under the total credit facility of $5,000,000. In
connection with this amendment the Company entered into a warrant purchase
agreement with the lender, and issued warrants to purchase 25,000 shares of
the Company's common stock (Note 11). The fair value assigned to these
warrants of $115,000 has been accounted for as debt discount, of which the
unamortized portion is reflected as a reduction of the related debt.
At December 31, 1999, the available unused balance under the Agreement was
$2,018,000.
9. INCOME TAX
Prior to reverse merger in January 1999, the Company was an S Corporation for
tax purposes. Accordingly, no provision for income taxes was made in 1998.
Based on C Corporation status for tax purposes beginning in 1999, deferred
income tax benefits total approximately $2 million at December 31, 1999,
arising principally from the tax benefits of net operating loss
carryforwards, and are fully reserved until recoverability in the future is
reasonably assured.
F-12
<PAGE>
10. LEASES AND OTHER COMMITMENTS
LEASES - The Company leases office space under a noncancelable operating
lease. Total rent expense for the years ended 1999 and 1998 was
approximately $119,231 and $82,000, respectively. Minimum future rental
commitments under operating leases at December 31, 1999 are as follows:
Fiscal year ending December 31:
2000 $75,349
2001 58,998
2002 37,262
2003 38,049
2004 4,158
--------
Total minimum payments $213,816
========
EMPLOYMENT CONTRACTS - In connection with the reverse merger the Board of
Directors of the Company approved five-year employment agreements with three
key employees for an aggregate minimum base salary and bonus compensation of
$925,000.
In connection with the COAD acquisition the stockholders of COAD were
granted employment agreements with the Company, which expire on December 31,
2004, and continue thereafter on a year-to-year basis and include a
noncompete provision for the term of the agreement and one-year thereafter.
In connection with the Dynamic acquisition certain stockholders of Dynamic
entered into employment agreements with the Company, which continue on a
year-to-year basis and include a noncompete provision for the term of the
agreement and one-year thereafter.
In connection with the Net acquisition the Company reserved stock options
for 95,000 shares of the Company's common stock to be issued to former
employees of Net employed by the Company. Also in connection with the Net
acquisition the sole-shareholder of Net entered into an employment agreement
which terminates November 30, 2002, and includes a noncompete provision for
the term of the agreement and one-year thereafter.
11. CAPITAL STOCK
STOCK OPTIONS - In February 1999, the Board of Directors approved the 1999
Employee Stock Option Plan (the "Plan"). The Board reserved 3,000,000 shares
of common stock for issuance under the Plan. Under the terms of the Plan,
options to purchase common stock may be granted at the discretion of the
Company's compensation committee and may be subject to certain restrictions.
Generally, the options vest over a three-year life, excluding 420,000 number
of options granted in November 1999 to certain employees that vest over a
one-year period. The options expire 10 years after the date of grant. At
December 31, 1999, there were 2,633,900 options outstanding and 366,100
options available for grant under the Plan. There were 2,633,900 options
granted during 1999 at exercise prices ranging from $2.00 to $14.25 ($3.60
weighted average price). No options were exercised or expired during 1999,
and there were no options exercisable at December 31, 1999.
F-13
<PAGE>
STOCK-BASED COMPENSATION - The Company applies APB Opinion No. 25 and related
Interpretations in accounting for its stock option plans. No compensation
cost was recognized for the Company's stock option plans because the options
were granted at an exercise price that equaled the fair market value on the
date of grant. SFAS No. 123 prescribes a method to record compensation cost
for stock-based employee compensation plans at fair value, but allowed
disclosure as an alternative. The pro forma disclosure for December 31, 1999
as if the Company had adopted the cost recognition requirements under SFAS
No. 123 is presented below. The pro forma compensation cost may not be
representative of that expected in future years.
Net loss:
As reported $(6,367,000)
Pro forma (8,473,000)
Loss per share - basic and diluted:
As reported $ (0.32)
Pro forma (0.43)
Stock options granted 2,633,900
In the pro forma calculations, the weighted average fair value of options
granted during 1999 was estimated at $3.60 per share. The fair value of each
option grant is estimated on the date of grant using the Black-Scholes with
the following assumptions: (i) expected volatility computed using the monthly
average of the Company's common stock market price as listed on the American
Stock Exchange for the period from April 1999, through December 1999, which
market price volatility averaged 78%; (ii) expected dividend yield of 0%;
(iii) expected option term of three years; and (iv) risk-free rate of return
as of the date of grant, which ranged from 5.5% to 6.5%, based on
extrapolated yield of five-and seven-year U.S. Treasury securities.
COMMON STOCK GRANTS - During 1999, the Company granted 1,147,500 shares of
common stock, valued at $3,548,476 in exchange for consulting services from
various consulting firms which was recorded by the Company in its 1999
operating expenses. Also, 2,304,700 common shares valued at $725,981 were
exchanged for consulting services performed by various consulting firms for
LEI in connection with the reverse merger (Note 2). This transaction
resulted in the Company recording an additional investment in LEI of
$725,981.
COMMON STOCK WARRANTS - Warrants to purchase 25,000 common shares were
granted in 1999 with the term loan (Note 8). The shares can be purchased any
time prior to March 31, 2005 at an exercise price of $11.70 per warrant
share. A fair value of $115,000 was assigned to these warrants at the date of
grant.
F-14
<PAGE>
12. EMPLOYEE BENEFIT PLAN
The Company has a profit sharing plan under Section 401(k) of the Internal
Revenue Code, which covers substantially all employees. The Company does not
match employee contributions.
13. CONCENTRATIONS OF CREDIT RISK
Sales to significant customers and vendors as a percentage of the Company's
total revenues, accounts receivable cost of sales and accounts payable,
respectively, for 1999 and 1998 are as follows:
As a Percentage of As a Percentage of
Trade Receivables Revenues for the
at December 31 Year Ended December 31
------------------ ----------------------
1999 1999 1998
Customer A 19% 20% 23%
Customer B 14 13 13
Customer C 1 11 12
As a Percentage of As a Percentage of
Accounts Payable Cost of Sales for the
at December 31 Year Ended December 31
------------------ ----------------------
1999 1999 1998
Vendor A 26% 36% 36%
Vendor B 22 30 24
Vendor C 3 17 22
14. RELATED PARTY TRANSACTIONS
The Company had $0 and $119,497 of management fee income for the years ended
December 31, 1999 and 1998, respectively, from a company that is wholly
owned by the 1998 majority stockholder of the Company.
F-15
<PAGE>
15. SUBSEQUENT FINANCING AND ACQUISITION
On February 18, 2000, the Company entered into a Stock Purchase Agreement
with Edgewater Private Equity Fund III, L.P.; Aspen Finance Investors I,
LLC, a Colorado limited liability company; and Fleck T.I.M.E. Fund, L.P for
them to purchase from the Company 2,260,000 shares of common stock for
$11,300,000 in cash.
On March 1, 2000, the Company acquired the stock of The Growth Strategy
Group, Inc., a marketing and strategic planning firm, in exchange for (1)
277,000 shares of the Company's common stock and (2) $375,000 in cash. The
acquisition of GrowthStrategies has been deemed "significant"; accordingly,
separate historical and pro forma financial statements will be filed by
amendment no later than 75 days after the consummation of the acquisition.
F-16
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEMS 9 TO 12 INCLUSIVE.
These items have been omitted in accordance with the general instructions to
Form 10-KSB. Prior to April 29, 2000, we will file a definitive proxy statement
or information statement that will involve the election of directors. The
information required by these items will be included in such proxy statement or
information statement and are incorporated by reference in this annual report.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are to be filed as part of the annual report:
EXHIBIT NUMBER DESCRIPTION
2.1 (1) Exchange Agreement by and between Loch Exploration, Inc. and
Design Automation Systems Incorporated
2.2 (2) Exchange Agreement by and between Loch Exploration, Inc. and
COAD Solutions, Inc.
2.3 (2) Acquisition Agreement of Cherokee Methane Corporation
2.4 (2) Plan of Merger between the Company and Design Automation
Systems Incorporated
2.5 (6) Exchange Agreement between the Company and Dynamic
Professional Services, LLC
2.6 (7) Exchange Agreement between the Company and Connected Software
Solutions, Inc.
2.7 (10) Acquisition Agreement by and among the Company COAD Solutions,
Inc. and Net Information Systems, Inc.
2.8 (11) Agreement and Plan of Merger by and between the Company, Eacq,
LLC and The Growth Strategy Group, Inc.
3.1 (3) Articles of Incorporation
3.2 (4) Amended Articles of Incorporation
3.3 (3) By-laws
4.1 (3) Common Stock Specimen
10.1 (4) 1999 Employee Stock Option Plan
10.2 (2) Employment Agreement with Carl Rose
10.3 (2) Employment Agreement with Charles Leaver
10.4 (5) Employment Agreement with Kelly Knake
10.5 (2 Lease Agreement
10.6 (2) Indirect Reseller Agreement between the Company, Hewlett-
Packard Company and Hall-Mark Computer Products
10.7 (2) Indirect Reseller Agreement between the Company, Hewlett-
Packard Company and Client Systems, Inc.
10.8 (2) Indirect Value Added Reseller Agreement between the Company
and Sun Microsystems Computer Corporation
10.9 (2) IBM Business Partner Agreement for Solution Providers
10.10 (8) 1999 Line of Credit with FINOVA Capital Corporation
10.11 (2) Line of Credit with Finova Corporation
10.12 (9) Agreement for Services with Optimization Group, LLC
10.12 (12) Finova Line of Credit
10.13 (12) Microsystem Products Purchase Agreement
10.14 (12) Sun Channel Agreement Master Terms
10.15 (12) Ferrari/Connected Software Solutions Lease
10.16 (12) Sun Trademark and Logo Policies
10.17 (12) HP Authorized Reseller Agreement
10.18 (12) IBM Business Partner/Solutions Provider Agreement
10.19 (12) HP Agreement for Authorized Solutions Direct Resellers
10.20 (12) Office Space Lease Austin
10.21 (12) Texas Association of Realtors Commercial Lease
10.22 (12) Seattle Lease Agreement
10.23 (12) St. Louis Lease Agreement
21.1 (2) List of Subsidiaries of the Registrant
27. (12) Financial Data Schedule
- --------------
(1) Filed as an exhibit to the Company's Current Report on Form 8-K dated
January 15, 1999 and incorporated herein by reference.
(2) Filed as an exhibit to the Company's 10-KSB for the year ended December
31, 1998 and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Registration Statement on Form S-1
dated September 7, 1979 and incorporated herein by reference.
(4) Filed as an exhibit to the Company's Definitive Information Statement
filed March 9, 1999 and incorporated herein by reference.
(5) Filed as an exhibit to the Company's 10-QSB for the quarter ended
March 31, 1999 and incorporated herein by reference.
(6) Filed as an exhibit to the Company's Form 8-K filed June 14, 1999 and
incorporated herein by reference.
(7) Filed as an exhibit to the Company's Form 8-K filed August 11, 1999 and
incorporated herein by reference.
(8) Filed as an exhibit to the Company's 10-QSB for the quarter ended
June 30, 1999 and incorporated herein by reference.
(9) Filed as an exhibit to the Company's 10-QSB for the quarter ended
September 30, 1999 and incorporated herein by reference.
(10) Filed as an exhibit to the Company's Current Report on Form 8-K filed
December 14, 1999 and incorporated herein by reference.
(11) Filed as an exhibit to the Company's Current Report on Form 8-K filed
March 15, 2000 and incorporated herein by reference.
(12) Filed herewith.
<PAGE>
(b) Reports on Form 8-K
8-K filed November 15, 1999
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EPICEDGE CORPORATION
/s/ CHARLES LEAVER
By: _________________________________
CHARLES LEAVER
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
--------- -------- ----
/s/ CARL R. ROSE
________________________________ Chairman of the Board March 30, 2000
Carl R. Rose
/s/ CHARLES H. LEAVER, JR.
________________________________ Chief Executive Officer March 30, 2000
Charles H. Leaver, Jr. and Director
/s/ JEFFREY SEXTON
________________________________ President, Chief March 30, 2000
Jeffrey Sexton Operating Officer
and Director
/s/ ROBERT E. NELSON
________________________________ Chief Financial Officer, March 30, 2000
Robert E. Nelson Principal Accounting
Officer
/s/ BAHRAM NOUR OMID
________________________________ Director March 30, 2000
Bahram Nour Omid
<PAGE>
/s/ JOHN STREETEN
________________________________ Director March 30, 2000
John Streeten
<PAGE>
EHIBIT 10.12
FINOVA
<PAGE>
December 29, 1999
Design Automation System,Inc
3200 Wilcrest Dr. Ste 370
Houston, Tx. 77042
ATTN: Mr.Charles Leaver, President
Dear Chuck:
FINOVA Capital Corporation("FINOVA") is pleased to propose a Term Loan totaling
One Million Dollars ($ 1,000,000) to Design Automation Systems, Inc.
("Borrower"), as a sub-line of the existing FINOVA Credit Facility closed and
documented on August 10, 1999.
TERMS
PURPOSE: To repay a portion of existing debt, and to
provide ongoing working capital.
REPAYMENT: Eleven (11) monthly principal installments of
$ 25,000 to begin on January 15, 2000, and a
final principal payment of $775,000 due on
December 15, 2000.
SECURITY: An amendment to the existing Credit Facility
Loan and Security Agreement shall provide for
the Term Loan to be secured as a component
of the existing Loan and Security Agreement.
MATURITY: Unless extended or renewed by FINOVA prior to
the maturity date, the entire amount owing on
the Term Loan component of the Credit Facility
will be due and payable no later than December
15, 2000.
<PAGE>
Design Automation Systems, Inc.
December 15, 1999
EARLY
TERMINATION: No penalty shall apply for any prepayment on the
Term Loan. ( The early termination fee regarding
the existing Credit Facility will remain in
affect.)
INTEREST: Interest will accrue at the Prime Rate plus 2.5%
on the average daily balance outstanding.
Interest will be billed monthly on the existing
Credit Facility statement.
FACILITY FEE: One percent (1%) of the total amount of the Term
Loan, which shall be due on the closing date.
SUCCESS FEE: Upon closing, FINOVA will receive separate and
detachable warrants to purchase 25,000 shares
of Design Automation Systems, Inc. common stock
at a per share price equal to 90% of the stock's
closing price on the day of closing this Term
Loan. These warrants shall be exercisable (30)
days from date of issue without restriction, and
will expire March 31,2005.
The warrants will include standard covenants such
as antidilution provisions for stock splits and
distributions, and piggy-back registration rights
on a firm commitment underwriting of Design
Automation Systems, Inc.'s securities. The
warrants will otherwise be in form and substance
attached hereto as Exhibit"A".
CONDITIONS: 1. Documentation satisfactory to FINOVA and its
counsel. This Term Loan and the repayment of,
shall adhere to all the documentation,
provisions, and requirements set forth in the
existing Credit Facility closed, documented and
established on August 10, 1999.
2. FINOVA will be absorb its legal costs and
expenses in connection with this transaction
using FINOVA's standard loan documents. In the
event that changes are requested to the
2
<PAGE>
Design Automation Systems, Inc.
December 15, 1999
standard loan documents, Borrower will
reimburse FINOVA at closing for its legal
costs and expenses shall be reimbursed
whether or not the proposed financing
arrangements are consummated.
it should be understood that this is not a commitment on the part of FINOVA,but
merely a proposal. While the details of this proposal have been reviewed by
management, it is subject to the completion of a field examination, asset
appraisals (if applicable), due diligence, analysis, approval of the Executive
Credit Committee of FINOVA, and legal documentation fully acceptable to FINOVA.
If the terms and conditions of this proposal are acceptable to you, please
return and executed copy of this letter. Upon receipt, FINOVA will commence its
due diligence.
If you have any questions regarding this proposal, please do not hesitate to
contact me.
We appreciate this opportunity to structure a Term Loan for Design Automation
Systems, Inc. and hope that we can work with you to fulfill your financing
needs.
Sincerely,
FINOVA Capital Corporation Acknowledged and Agreed to
this 29 day of Dec, 1999
S.Scott Simmons Design Automation Systems, INc.
Vice President
By:/s/ [Signature Appears Here]
Title: President
3
<PAGE>
SECURED TERM NOTE
$1,000,000.000 December29,1999
FOR VALUE RECEIVED, the undersigned Design Automation Systems, Inc. (the
"Borrower"), a Texas corporation with its principal place of business at 3200
Wilcrest Drive, Suite 370 Houston, Texas 77042 hereby promises to pay to FINOVA
Capital Corporation ("FINOVA"), or order at 1060 First Avenue, Suite 100, King
of Prussia, PA 19406, or at such other address as the holder may specify in
writing, the principal sum of One Million Dollars ($1,000,000.00) plus interest
in the manner and upon the terms and conditions set forth below. This Secured
Term Note ("Note") is made pursuant to that certain Loan and Security Agreement
of even date between the undersigned and FINOVA (the"Agreement"), the provisions
of which are incorporated herein by this reference. Capitalized terms herein,
unless otherwise noted, shall have the meaning set forth in the Agreement.
1.0 Rate And Payment of Interest. The principal balance of this Note shall bear
interest at a per annum rate of two and one half percentage points (2.5%)in
excess of the Base Rate as outlined in the Agreement. The interest rate
chargeable hereunder shall be increased or decreased, as the case may be,
without notice or demand of any kind, upon the announcement of any change in the
Base Rate shall be effective hereunder on the first day following the
announcement of such change. Interest charges and all other fees and charges
herein shall be computed on the basis of a year of 360 days and actual days
elapsed and shall be payable to FINOVA in arrears on the first day of each month
hereafter at its address set forth above. Accrued but unpaid interest under this
Note shall be due and payable on the first day of each month, commencing
February 1,2000, and at maturity.
2.0 Schedule of Principal Payments. Principal under this Note shall be due and
payable in accordance with the following schedule:
a. Eleven (11) equal consecutive monthly installment of Twenty Five
Thousand Dollars (25,000) the 15th day of each calendar month
commencing January 15, 2000, and
b. a final installment of all remaining principal, accrued and unpaid
interest and all other sums payable pursuant to the Agreement on
December 15, 2000 unless earlier in accordance with the terms of the
Agreement.
3.0 Prepayment. Prepayment may be made under this Note in whole or in part,
subject to the Termination Fee, as applicable, as set forth in the Agreement.
4.0 Holder's Right of Acceleration. If the Agreement is terminated for any
reason whatsoever, or if there shall occur an Event of Default or if this Note
is not paid when due, the entire remaining principal balance and all accrued
and unpaid interest and other fees and charges with respect to this Note
shall, at FINOVA's option, become immediately due and payable.
5.0 Holder's Right Upon Default. If any Event of Default occurs, then from the
date such Event of Default occurs until it is cured or waived in writing,in
addition to any agreed upon charges, the principal balance of this Note shall
thereafter, at FINOVA's option, bear interest at six percentage point(6.0%) per
annum in addition to the rate set forth in Section 1 above, computed on the
basis of a year of 360 days and actual days elapsed.
6.0 Additional Rights of Holder. If any installment of principal or interest
hereunder is not paid when due, the holder shall have, in addition to the rights
set forth herein, in the Agreement and under law, the right to compound
interest by adding the unpaid interest to principal, with such amount thereafter
bearing interest at the rate provided in this Note.
7.0 General Provisions.
4
<PAGE>
7.1 If this Note is not paid when due or upon the occurrence of an
Event of Default, the undersigned further promises to pay all cost of
collection, foreclosure fees, reasonable attorneys' fees and expert witness fees
incurred by the holder, whether or not suit is filed hereon, and the fees, cost
and expenses as provided in the Agreement.
7.2 The undersigned hereby consents to any and all renewals,
replacements and/or extensions of time for payment of this Note before, at or
after maturity.
7.3 The undersigned hereby consents to the acceptance, release or
substitution of security for this Note.
7.4 Presentment for payment, notice of dishonor, protest and notice of
protest are hereby expressly waived.
7.5 The contracted for rate of interest of the loan contemplated
hereby, without limitation, shall consist of the following: (i) the interest
rate set forth on the schedule, calculated and applied to the principal balance
of this Note in accordance with the provisions of this Note; (ii) interest after
an Event of Default, calculated and applied to the amounts due under this Note
in accordance with the provision hereof; and (iii) all Additional Sums (as
herein defined), if any. Borrower agrees to pay an effective contracted for rate
of interest which is the sum of the above-referenced elements. All examination
fees, reasonable attorneys' fees, expert witness fees, collateral monitoring
fees, closing fees, Facility Fees, termination Fees, other charges, goods,
things in action or any other sums or things of value paid or payable by
Borrower (collectively, the "Additional Sums"), whether pursuant to this Note,
the Agreement or any other documents or instruments in any way pertaining to
this lending transaction, or otherwise with respect to this lending transaction,
for the purpose of any applicable law that may limit the maximum amount of
interest to be charged with respect to this lending transaction, shall be
payable by Borrower as, and shall be deemed to be, additional interest and for
such purposes only, the agreed upon and "contracted for rate of interest" of
this lending transaction shall be deemed to be increased by the rate of interest
resulting from the inclusion of the Additional Sums.
It is the intent of the parties to comply with the usury law of the
State of Arizona(the"Applicable Usury Law"). Accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Note, or in any of the
documents to the contrary in this Note, or in any of the documents securing
payment hereof or otherwise relating hereto, in no event shall this Note or such
documents require the payment or permit the collection of interest in excess of
the maximum contract rate permitted by the Applicable Usury Law(the"Maximum
Interest Rate"). In the event (a) any such excess of interest otherwise would be
contracted for, charged or received from Borrower or otherwise in connection
with the loan evidenced hereby, (b) the maturity of indebtedness evidenced by
this Note is accelerated in whole or in part, or (c) all or part of the interest
contracted for, shared or received in connection with the loan evidenced hereby,
would exceed the Maximum Interest Rate, then in any such event(1) the provisions
of this paragraph shall govern and control,(2) neither Borrower nor any other
person or entity now or hereafter liability for the payment hereof shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the Maximum Interest Rate, (3) any such excess which may have been collected
shall be either applied as a credit against the then unpaid principal amount
hereof or refunded to Borrower, at FINOVA"s option,and (4) the effective rate of
interest shall be automatically reduced to the Maximum Interest Rate. It is
further agreed, without limiting the generality of the foregoing, that to the
extent permitted by the Applicable Usury Law;(x) all calculations of interest
which are made for the purpose of determining whether such rate would exceed the
Maximum Interest Rate shall be made by amortizing, prorating, allocating and
spreading during the period of the full stated term of the loan evidenced
hereby, all interest at any time contracted for charged or received from
Borrower or otherwise in connection with such loan; and (y) in the event that
the effective rate of interest on the loan should at any time exceed the Maximum
Interest Rate, such excess interest that would otherwise have been collected had
there been no ceiling imposed by the Applicable Usury Law shall be paid to
FINOVA from time to time, if and when the effective interest rate on the loan
otherwise falls below the Maximum Interest Rate, to the extent that interest
paid to the date of calculation does not exceed the Maximum Interest Rate, until
the entire amount of interest which would otherwise have been collected had
there been no ceiling imposed by the Applicable Usury Law has been paid in full.
Borrower further agrees that should the Maximum Interest Rate be increased at
any time hereafter because of a change in the Applicable Usury Law, then to the
extent not prohibited by the Applicable Usury Law, such increases shall, if
applicable, apply to all indebtedness evidenced hereby regardless of when
incurred; but, again to the extent not prohibited by the Applicable Usury Law,
should the Maximum Interest Rate be Decreased because of a change in the
Applicable Usury Law, such decreases shall not apply to the indebtedness
evidenced hereby regardless of when incurred.
2
<PAGE>
7.6 No delay or omission on the part of the holder of this Note in
exercising any right shall operate as waived thereof or of any other right.
7.7 No waiver by the holder of this Note upon any one occasion shall be
effective unless in writing not shall it be construed as a bar or waiver of any
other right or remedy on any future occasion.
7.8 Time is of the essence for the performance by the undersigned of
the obligations set forth in this Note.
7.9 Should any one or more of the provisions of this Note be determined
illegal or unenforceable, all other provisions shall nevertheless remain
effective.
7.10 This Note cannot be changed, modified, amended or terminated
orally.
7.11 This Note shall be governed by, construed and enforced in
accordance with the laws of the State of Arizona, without reference to the
principles of conflicts of laws thereof.
7.12 THE UNDERSIGNED HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE
AND ACKNOWLEDGES THAT LENDER ALSO WAIVES SUCH RIGHT.
8.0 Security For This Note. This Note is secured pursuant to the
Agreement and is subject to all of the terms and conditions thereof, including,
but not limited to, the remedies specified therein.
IN WITNESS WHEREOF, this secured Term Note has been executed and delivered as of
the date first set forth above.
DESIGN AUTOMATION SYSTEMS, INC.
By /s/ [Signature Appears Here]
Its President
Tax I.D.No.:_75-1657943
3
<PAGE>
EXHIBIT 10.13
Agreement
Between
MRA Systems, Inc., dba GE Access
and
EpicEdge, Inc.
for purchase of Sun Microsystem Products
This Agreement between MRA Systems, Inc. dba GE Access and EpicEdge, Inc.
("Reseller") is entered as of the 29th day of February, 2000 ("Effective Date").
This Agreement is entered into in contemplation of the following:
A. Reseller desires to designate GE Access as its Master Reseller through
which to purchase certain products manufactured by Sun Microsystems, Inc.
("Sun Products") and related services.
B. Reseller has executed and accepted certain Terms and Conditions of GE
Access ("T/Cs"), which contain terms applicable to its purchases and other
transactions with GE Access.
C. GE Access and Reseller have discussed certain additional terms that will
mutually benefit both parties, which they wish to apply to Reseller's
purchases of Sun Products and/or services from GE Access.
Therefore, in consideration of the mutual promises and undertakings of the
parties and for other valuable consideration, which the parties acknowledge is
sufficient, Reseller and GE Access agree as follows:
1. The terms of this Agreement and Exhibits shall apply from the Effective
Date through February 28, 2001 ("Expiration Date").
2. Reseller agrees to designate GE Access as its Master Reseller through which
to purchase certain products manufactured By Sun Microsystems, Inc. ("Sun
Products") and related services for the term of this Agreement.
3. Both parties agree that the specified additional terms listed in the
attached Exhibit A are incorporated herein and will apply in connection
with all of Reseller's purchases of Sun Products from GE Access during the
term of this Agreement.
4. In the event Reseller's status as an authorized Sun Reseller is terminated,
Reseller will forfeit all rights under this Agreement and as described in
Exhibit A. Upon expiration or breach of this Agreement, Reseller will
forfeit all rights under this Agreement and as described in Exhibit A.
5. Sun Products are not designed or intended for use in on-line control of
aircraft, air traffic, aircraft navigation or aircraft communications; or
in the design, construction, operation or maintenance of any nuclear
facility. Sun and GE Access specifically disclaim any express or implied
warranty of fitness for such uses. Reseller represents and warrants that it
will not knowingly use or resell Sun Products for such purposes, and that
it will use its best efforts to ensure that its customers are provided with
a copy of the foregoing notice.
6. This Agreement constitutes an addendum to the most recent T/Cs signed by
Reseller. If there is any conflict between the terms of this Agreement and
the T/Cs, the terms herein shall take precedence.
7. A fully signed facsimile of this Agreement shall be considered as valid as
an original, and shall be deemed admissible by the parties in any
proceeding to enforce the terms hereof.
8. The terms of this Agreement shall be kept in confidence by the parties and
shall not be disclosed by them or any of their agents or employees to any
third party, unless in connection with any proceeding to enforce their
rights hereunder (in which case the parties will agree to a protective
order ensuring the confidentiality of the terms) or pursuant to a valid
order of a court with proper jurisdiction (after the disclosing party has
given at least 10 days written notice to the other party and an opportunity
for it to seek a protective order if it deems such to be necessary.
<PAGE>
9. In the event that Sun Microsystems, Inc. changes the Master Reseller
pricing. Reseller agrees that GE Access may correspondingly adjust the
discount rate for Resellers' purchases from GE Access.
10. In the event that Sun Microsystems, Inc. changes the Master Reseller
pricing strategy and/or Sun product classifications, Reseller agrees that
GE Access may adjust their pricing for Resellers' purchases from GE Access.
By signing this Agreement below, the undersigned acknowledge that they
understand and agree to the terms set forth herein and that they have authority
to execute this Agreement and to bind their respective companies hereto.
EpicEdge, Inc. (Reseller) MRA Systems, Inc. dba GE Access
By: /s/ Gary A. Reece By:
--------------------------------------- -----------------------------
Printed name Gary A. Reece Printed name
---------------------------- --------------------
Title VP of Technology Integration Title
---------------------------- --------------------
Date 3/10/00 Date
---------------------------- --------------------
<PAGE>
Exhibit A
PRICING TERMS FOR SUN MICROSYSTEMS COMPUTER SYSTEMS PRODUCTS
- ------------------------------------------------------------
(based on Reseller's existing or forecasted performance)
<TABLE>
<CAPTION>
Product Category Discount Level Off Of Sun's Current List Price Accrued Funding Rate
- ---------------- ---------------------------------------------- --------------------
<S> <C> <C>
A Products 33.00% 0._%
B Products 25.00% 0._%
H Products 17.00% 0._%
E 10K Products 31.75% 0._%
</TABLE>
<TABLE>
<CAPTION>
PRICING MODEL FOR SUN MICROSYSTEMS COMPUTER SYSTEMS PRODUCTS - COMMERCIAL CONTRACT
- ----------------------------------------------------------------------------------
GE Access Accrued
Revenue Run Rate A Discount* B Discount* H Discount* E10K Discount* Funding Rate*
- ---------------- ----------- ----------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
[$1MM 30.00% 25.00% 15.00% 28.75% 0.00%
$1MM-$2.5MM 31.00% 25.00% 15.00% 29.75% 0.00%
$2.5MM-$5MM 32.00% 25.00% 16.00% 30.75% 0.00%
$5MM-$20MM 33.00% 25.00% 17.00% 31.75% 0.00%
$20MM-$50MM 33.00% 25.00% 17.00% 31.75% 0.10%
$50MM-$75MM 33.00% 25.00% 17.00% 31.75% 0.25%
]$75MM 33.00% 25.00% 17.00% 31.75% 0.75%
</TABLE>
* Reseller's revenue run rate is calculated on total revenues of products and
services purchased by Reseller from GE Access. Discount rates are based on a
percentage discount off of Sun's list price in effect on the date of purchase.
Accrued Funding rates are based on Reseller's annualized run rate of purchases
of Sun Computer Systems Products through GE Access.
Accrued funds may only be used for the following:
- --------------------------
Accrued funds have no cash value and may not be redeemed by Reseller for cash or
otherwise. Accrued funds may only be used to fund services approved by Reseller
and GE Access. Accrued funds will expire and be forfeited by Reseller, if they
are not used with the approval of Reseller and GE Access before the expiration
or any breach of the base Agreement. Reseller is responsible for proposing the
use of Accrued funds. GE Access can not be held responsible for any Accrued
funds and/or credits which may be forfeited if Reseller fails to use Accrued
funds or propose reasonable means for their use. Reseller shall not be entitled
to the items listed in this Exhibit A to the extent Reseller fails to comply
with the Customer Terms & Conditions and/or the base Agreement Between MRA
Systems, Inc. dba GE Access and Reseller for purchase of Sun Products
("Agreement"). In no event shall Reseller be entitled to the cash value of any
unused Accrued funds or credits.
DISCOUNT ADJUSTMENT POLICY
- --------------------------
Reseller's revenue history will be reviewed at the end of each calendar quarter
to assess Reseller's 3-, 6-, 9- and 12-month performance and to confirm Reseller
has been performing at the revenue run rate required for the discount and
accrued funding levels described above. If Reseller's run rate for any of those
periods is greater than the minimum required to reach a higher discount tier,
Reseller will be notified quarterly in writing by GE Access of the appropriate
upward adjustment of Reseller's discount and/or accrued funding levels,
effective on the fifteenth (15th) day of the first month of the following
quarter. If Reseller's run rate is below the minimum to maintain Reseller's
current discount rate, Reseller will be notified in writing by GE Access that
Reseller has an additional ninety (90) days in which to increase its run rate in
order to maintain the same discount and/or accrued funding levels. If the
required minimum run rate for any of the above measurement periods is not
resumed after ninety (90) days, Reseller's discount and/or accrued funding
levels will be adjusted to the new levels corresponding to the reduced run rate,
effective on the first (1st) day of the second month of the following quarter.
<PAGE>
INSTRUCTIONS: The accrual funds described on Exhibit A may be used for any of
the following Services. You should determine which of the following items will
be most valuable to your Reseller and use them in your negotiations. When you
offer one or more of the following, you must "copy" the title and language and
"paste" it into Exhibit A of the Agreement between MRA Systems, Inc. dba GE
Access and for the Purchase of Sun Microsystem Products in the
appropriate section.
Exhibit A - Uses for Accrual Funds
Accrual Funds for Educational Services
- --------------------------------------
Accrual funds may be used for Educational Services offered at any GE Access
Education Centers. In order to be eligible to receive such Educational Services,
Reseller is required to agree to and execute the GE Access Education Services
Enrollment Terms and Conditions.
Accrual Funds for System Engineering Services
- ---------------------------------------------
Accrual funds may be used for System Engineering Services offered by GE Access.
In order to be eligible to receive such system Engineering Services, Reseller is
required to agree to and execute the GE Access System Engineering Service Terms
and Conditions.
Accrual Funds for Integration Services
- --------------------------------------
Accrual funds may be used for Integration Services offered by GE Access.
Accrual Funds for Consulting Partner Network (CPN) Services
- -----------------------------------------------------------
Accrual funds may be used for Services offered through the Consulting Partner
Network offered by GE Access. In order to be eligible to receive such
Consulting Partner Services, Reseller is required to agree to and execute the GE
Access Consulting Partner Network Service Reselling Terms and Conditions.
Accrual Funds for Six Sigma Quality Services
- --------------------------------------------
Accrual funds may be used for Six Sigma Quality Services offered by GE Access.
In order to be eligible to receive such Six Sigma Quality Services, Reseller is
required to agree to and execute the GE Access Six Sigma Quality Services Terms
and Conditions.
Accrual Funds for Freight Carrier Charges
- ----------------------------------------
Accrual funds may be used for freight carrier charges incurred by Reseller
related to shipments of Product from GE Access as reflected on Reseller
invoices.
Accrual Funds for Freight Insurance Charges
- -------------------------------------------
Accrual funds may be used for freight insurance charges incurred by Reseller
related to shipments of Product from GE Access as reflected on Reseller
invoices.
Accrual Funds for Integration Services
- --------------------------------------
Accrual funds may be used for integration Services offered by GE Access as
reflected on Reseller invoices.
<PAGE>
[SUN MICROSYSTEMS LOGO]
CHANNEL AGREEMENT
Sun Channel Agreement #
---------
SUN CHANNEL AGREEMENT
MASTER TERMS
THIS SUN MICROSYSTEMS, INC. CHANNEL AGREEMENT MASTER TERMS ("Master Terms"), is
made as of the 1st day of February, 2000 ("Effective Date") between Sun
Microsystems, Inc., with its address at 901 San Antonio Rd, Palo Alto, CA 94303
("Sun"), and Design Automation Systems, Inc. with its address at 3200 Wilcrest
Suite 370, Houston, TX 77042 ("Partner", "Regional Systems Partner" or "National
Systems Partner").
The parties agree as follows:
1. SCOPE OF AGREEMENT
1.1 Exhibits and Schedules. These Master Terms describe the general terms
by which Partner may purchase Products and Services from Sun or from
a Sun authorized Master Reseller as set forth in an Exhibit. The
specific terms related to the purchase of Equipment, Software and
Services are described in the appropriate Product Exhibits or Service
Exhibits and Schedules (collectively referred to as "Exhibits"). Each
Exhibit and these Master Terms together constitute a separate
agreement ("the Agreement"). Exhibits may be added or deleted from
time to time by the agreement of the parties, but Partner is only
authorized to purchase Products or Services hereunder to the extent
that one or more applicable Exhibit(s) is executed and in force.
1.2 Order of Precedence. The provisions of any Exhibit will take
precedence over these Master Terms, to the extent that they are
inconsistent.
2. DEFINITIONS
2.1 EQUIPMENT means the hardware components (may also be referred to as
"hardware") of Product and includes the media on which Software is
pre-loaded.
2.2 PRODUCTS(S) means any Equipment and Software delivered by Sun
directly or indirectly to Partner under the Agreement.
2.3 SERVICES(S) means any consulting, educational and support services
provided directly or indirectly to Partner under the Agreement.
2.4 SOFTWARE means any binary software (and related documentation)
provided by Sun directly or indirectly to Partner under the
Agreement.
3. TERM AND TERMINATION
3.1 Term. These Master Terms commence on the Effective Date and will
continue until the expiration or termination of all Exhibits.
Each Exhibit shall detail the commencement date of the Exhibit
("Exhibit Effective Date").
3.2 Termination at Will. Either party may terminate these Master Terms
for convenience on written notice to the other party in the event
that all Exhibits have been terminated or have expired.
3.3 Termination for Cause. Either party may terminate these Master Terms
and any or all Exhibits:
(a) immediately, by written notice, upon material breach by the
other party of the Agreement, if such breach cannot be
remedied;
(b) by written notice, if the other party fails to cure any
material remediable breach of the Agreement within thirty (30)
days of receipt of written notice of such breach;
(c) automatically if Partner ceases to do business in the normal
course, becomes or is declared insolvent or bankrupt, is the
subject of any proceeding relating to the liquidation or
insolvency of Partner which is not dismissed within ninety (90)
days or makes an assignment for the benefit of its creditors;
(d) immediately by written notice if Partner undergoes any change
in ownership or control (whether by way of voting or contract
rights or otherwise) or in its business, which change Sun
considers material, in light of the fact that Partner has been
appointed by Sun because of its present financial, technical
and managerial conditions.
3.4 Termination by Sun. In addition to the general reasons set forth in
Sections 3.2 and 3.3 above, Sun may terminate these Master Terms and
any or all Exhibits, immediately by written notice if Partner:
(a) breaches any Sun Software license;
(b) breaches Section 5 (Confidential
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Information) of these Master Terms;
(c) breaches (or Sun reasonably believes Partner will breach) the
U.S. Export Administration Regulations, the U.S. Foreign Corrupt
Practices Act or similar laws or regulations of any other
government; or
(d) infringes or challenges the validity of any Sun copyright or Sun
Trademark (as defined herein).
3.5 Consequences of Termination or Expiration. Upon any expiration or
termination of the Agreement (or all of them), the following will
occur:
(a) all outstanding invoices and amounts owing from Partner to Sun
will thereupon become immediately due and payable;
(b) Sun will have the right of first refusal to repurchase Products
in Partner's inventory at the lower of net invoice price or the
then fair market value, as may be adjusted for any amounts due
but unpaid pursuant to Section 3.5(a). If Sun desires to exercise
this right, it will do so by written notice. Except in the case
of Sun's termination for material breach, for a period of ninety
(90) days from the date of termination or expiration, Partner may
sell and/or license under the terms of the Agreement any
inventory Sun elects not to repurchase;
(c) Sun will have the right to cancel by written notice all or part
of any unfulfilled order previously accepted by Sun. To the
extent that Sun does not cancel any such order, the Agreement
will continue to apply to such order;
(d) Partner will immediately return all Sun property under Partner's
control (including without limitation all Sun confidential
information, schematics, manuals, Software and Sun business
plans) and remove, cancel and/or cease to use the Sun Trademarks,
any signs or other advertising materials referring to Sun, or
Products or Services or to Partner as an authorized reseller of
Sun; and
(e) all of Partner's rights under the Agreement shall immediately
cease and Partner shall at no time in the future represent that
it is an authorized reseller of Sun or that it is in any way
associated with Sun or Products or Services.
3.6 Survival. Rights and obligations under the Agreement which by their
nature should survive, will remain in effect after termination or
expiration of the Agreement.
3.7 No Liability for Termination or Expiration. The right of termination
or expiration provided herein is absolute. Each party waives and
releases the other from any claim to compensation or indemnity related
to the permitted or lawful termination of the business relationship
established under the Agreement.
4. COMMERCIAL TERMS
4.1 Commercial terms for Partners who purchase Products or Services from a
Sun authorized Master Reseller will be determined by Partner's
agreement with such Master Reseller. This Section 4.1 applies only to
Partners who purchase Products or Services directly from Sun.
(a) Prices and Taxes. Prices and fees for Products and Services are
exclusive of all shipping and insurance charges, and do not
include sales tax or any other tax based upon the value of
Products and/or Services. Partner is responsible for payment of
all such charges and taxes.
(b) Payments. If Partner satisfies Sun's credit requirements, payment
terms are net thirty (30) days from (i) the date of invoice for
Products or Services, or (ii) where Partner is purchasing
Products, the date of shipment of Products, whichever is the
later. Otherwise terms are cash in advance of delivery. Sun in
its reasonable commercial judgment may place Partner on credit
hold, in which event, Sun will promptly inform Partner and may:
i) with respect to Product purchases, delay or reschedule Partner
orders, and ii) with respect to Services, discontinue delivery
upon thirty (30) days' written notice to Partner. Interest will
accrue from the date on which payment is due at the lesser of
fifteen percent (15%) per annum or the maximum rate permitted by
applicable law. Partner will not be required to pay the disputed
portion of any invoice, pending resolution of that dispute,
provided that written notice of the dispute has been forwarded to
Sun in writing within fifteen (15) days of the date of that
invoice.
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4.2 Records and Audits. During the term of the Agreement and for a period
of five (5) years thereafter, Partner will maintain accurate records
as necessary to verify compliance with the Agreement. Sun may audit
these records at any time after reasonable written notice to verify
compliance. Sun will conduct this audit through an independent auditor
of Sun's choice ("Auditor"). Auditor will be bound to keep
confidential the details of the business affairs of Partner and to
limit disclosure of the audit results to only the sufficiency of the
records, including, whether Partner is in compliance with the terms of
the Agreement and the amount, if applicable, of any required
additional payment or other payment adjustment. Except as described
below, Sun will bear all costs and expenses associated with the
exercise of its audit rights. Any errors in payments identified will
be corrected by Partner by appropriate adjustment in payment for the
quarterly period during which the error is discovered. In the event of
an underpayment of more than five percent (5%), Partner will reimburse
Sun the amount of the underpayment, the reasonable charges of the
Auditor in performing the audit that identified the underpayment, and
interest on the overdue amount at the maximum allowable interest rate
from the date the obligation accrued.
5. CONFIDENTIAL INFORMATION
If either party desires that information provided to the other party under
the Agreement be held in confidence, that party will, prior to or at the
time of disclosure, identify the information in writing as confidential or
proprietary. The recipient may not disclose such confidential or
proprietary information, may use it only for purposes specifically
contemplated in the Agreement, and must treat it with the same degree of
care as it does its own similar information, but with no less than
reasonable care. These obligations do not apply to information which:
a) is or becomes known by recipient without an obligation to maintain its
confidentiality; b) is or becomes generally known to the public through no
act or omission of recipient; or c) is independently developed by recipient
without use of confidential or proprietary information. This section will
not affect any other confidential disclosure agreement between the parties.
6. LIMITED WARRANTIES
6.1 Product and Service Warranties. Any warranties for Products and
Services will be specified in the Exhibit(s).
6.2 Year 2000 Warranty.
(a) Sun warrants that specified versions of Products identified on
Sun's external Website (url: www.sun.com/y2000/cpl.html) as being
Year 2000 compliant ("Listed Products") will not produce errors
in the processing of date data related to the year change from
December 31, 1999 to January 1, 2000. Date representation,
including leap years, will be accurate when Listed Products are
used in accordance with their accompanying documentation,
provided that all hardware and software products used in
combination with Listed Products properly exchange date data with
them.
(b) Versions of Products identified on Sun's external Web site as not
yet compliant, but which are scheduled to be made compliant, will
become Listed Products when remedial replacement parts, patches,
software updates or subsequent releases ("Y2K Fixes") are issued
and properly installed.
(c) Other Products are not covered by these warranties.
(d) To the extent that Sun installs Y2K Fixes or performs other
Services under the Agreement for Partner, Sun respectively
warrants that:
(i) upon installation of the Y2K Fixes, Products will become
Listed Products; and
(ii) Services performed on Listed Products will not result in
them ceasing to be Listed Products.
(e) Partner's sole and exclusive remedy for Sun's breach of these
warranties will be for Sun at its option: (i) to use commercially
reasonable efforts to repair Listed Products or provide Y2K
Fixes, as the case may be; (ii) to supply functionally equivalent
Year 2000 compliant products; or (iii) if (i) and (ii) are
commercially unreasonable, to refund to Partner its net book
value respectively for non-compliant Listed Products or products
for which scheduled Y2K Fixes were not provided.
6.3 DISCLAIMER OF WARRANTIES. UNLESS SPECIFIED IN THE AGREEMENT, ALL
EXPRESS OR IMPLIED CONDITIONS, REPRESENTATIONS AND WARRANTIES,
INCLUDING ANY IMPLIED WARRANTY OF
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MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT,
ARE DISCLAIMED, EXCEPT TO THE EXTENT THAT SUCH DISCLAIMERS ARE HELD TO
BE LEGALLY INVALID.
7. IMPORT AND EXPORT LAWS
All Products, Services and technical data delivered under the Agreement are
subject to U.S. export control laws and may be subject to export or import
regulations in other countries. Partner agrees to comply strictly with all
such laws and regulations and acknowledges that it has the responsibility to
obtain such licenses to export, re-export or import as may be required after
delivery to Partner.
8. NUCLEAR APPLICATIONS
Partner acknowledges that Products and/or Services are not designed or
intended for use in the design, construction, operation or maintenance of
any nuclear facility. SUN DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OF
FITNESS FOR SUCH USES.
9. TRADEMARKS
9.1 Trademarks. "Sun Trademarks" means all names, marks, logos, designs,
trade dress and other brand designations used by Sun in connection with
Products and Services. Partner may refer to Products and Services by
the associated Sun Trademarks provided that such reference is not
misleading and complies with Sun's Trademark and Logo Policies. Partner
may not remove or alter any Sun Trademarks, nor may it co-logo
Products. Partner agrees that any use of Sun Trademarks by Partner
will inure to the sole benefit of Sun or its licensors. Partner agrees
not to incorporate any Sun Trademarks into Partner's trademarks,
service marks, company names, internet addresses, domain names, or any
other similar designations.
9.2 Special Program Logos. Partner may use the special program logo, if
any, applicable to Partner's appointment, as established in any Exhibit
only: (a) as shown in the artwork provided by Sun; (b) in pre-sale
marketing materials and advertising, but not on goods, packaging,
product labels, documentation or other materials distributed with
Products; (c) in a manner no more prominent than Partner's corporate
name and logo; and (d) otherwise in accordance with the then current
Sun Trademark and Logo Policies.
9.3 Use of Partner Information. Sun has the right to disclose and publish
Partner's name, address and profile information in connection with
Sun's Partner programs.
10. INTELLECTUAL PROPERTY CLAIMS
Sun will indemnify Partner for its reasonable expenses and will defend or
settle at Sun's option and expense any legal proceeding brought against
Partner, to the extent that it is based on a claim that Products infringe a
trade secret, a trademark, a mask work, a copyright or a patent. Sun will
pay all damages and costs awarded by the court which finally determines the
case or are incurred in the settlement thereof, provided that Partner: (a)
gives written notice of the claim promptly to Sun; (b) give Sun sole
control of the defense and settlement of the claim; (c) provides to Sun all
available information and assistance; and (d) has not compromised or settled
such claim. If any Products or Materials are found to infringe, or in Sun's
opinion are likely to be found to infringe, Sun may elect to: (a) obtain for
Partner the right to use such Products and/or Materials; (b) replace or
modify such Products and/or Materials so that they become non-infringing; or
if neither of these alternative is reasonably available, (c) remove such
Products and/or Materials and refund Partner's net book value for these
Products and/or Materials. Sun has no obligation under this Section 10 for
any claim which results from: (a) use of Products and/or Materials in
combination with any equipment, software or data not provided by Sun; (b)
Sun's compliance with designs or specifications of Partner; (c) modification
of Products and/or Materials; or (d) use of an allegedly infringing version
of any Products and/or Materials, if the alleged infringement could be
avoided by the use of a different version made available to Partner. THIS
SECTION 10 STATES THE ENTIRE LIABILITY OF SUN AND EXCLUSIVE REMEDIES OF
Partner FOR CLAIMS OF INFRINGEMENT.
11. LIMITATION OF LIABILITY
Except for obligations under Section 10 (Intellectual Property Claims), or
Section 12 (Indemnity and Insurance) or breach of any applicable license
grant, and to the extent not prohibited by applicable law (i) each party's
aggregate liability to the other for claims relating to the Agreement,
whether for breach or in tort, including but not limited to negligence, will
be limited to the amount paid to Sun for Products, Services, or Materials
which are the subject matter of the claims, and (ii) neither party will be
liable for any indirect, punitive, special, incidental or consequential
damages in connection with or arising out of the Agreement (including loss
of business, revenue, profits, use, data or other economic advantage)
however it arises, whether for breach or in tort, even if that
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party has been previously advised of the possibility of such damage. LIABILITY
FOR DAMAGES WILL BE LIMITED AND EXCLUDED EVEN IF ANY EXCLUSIVE REMEDY PROVIDED
FOR IN THE AGREEMENT FAILS OF ITS ESSENTIAL PURPOSE.
12. INDEMNITY AND INSURANCE
Except for claims arising under Section 10 (Intellectual Property Claims),
Partner will indemnify Sun and its suppliers from and against all claims,
liabilities, damages and costs (including legal fees and costs), relating
to (i) Partner's use or distribution of Products and Services under the
Agreement or (ii) any acts or omissions of Partner. Partner shall carry
liability insurance to protect Sun from all such claims, pay the premiums
therefor, and deliver to Sun, upon request, proof of such insurance (which
shall require thirty (30) days' written notice to Sun in event of
modification or termination).
13. FORCE MAJEURE
A party is not liable under the Agreement for non-performance caused by
events or conditions beyond that party's control, if the party makes
reasonable efforts to perform. This provision does not relieve either party
of its obligations to make payments then owing.
14. WAIVER OR DELAY
Any express waiver or failure to exercise promptly any right under the
Agreement will not create a continuing waiver or any expectation of non-
enforcement.
15. ASSIGNMENTS
Neither party may assign or otherwise transfer any of its rights or
obligations under the Agreement, without the prior written consent of the
other party, except that Sun may assign its right to payment, assign the
Agreement to an affiliated company, or subcontract the delivery of Services
or Products. If Sun elects to subcontract Service or Product delivery, Sun
will remain primarily responsible for delivery.
16. RELATIONSHIP OF THE PARTIES
An Agreement is not intended to create a relationship such as a
partnership, franchise, joint venture, agency, or fiduciary or employment
relationship. Neither party may act in a manner which expresses or implies
a relationship other than that of independent contractor, nor bind the
other party.
17. NOTICES
All written notices required by the Agreement must be delivered in person
or by means evidenced by a delivery receipt or via email or website and
will be effective upon receipt.
18. SEVERABILITY
If any provision of the Agreement is held invalid by any law or regulation
of any government or by any court or arbitrator, such invalidity will not
affect the enforceability of any other provisions.
19. GOVERNING LAW
Disputes which cannot be settled amicably will be governed by the laws of
California and controlling US Federal law. Choice of law rules of any
jurisdiction and the United Nations Convention on Contracts for the
International Sale of Goods will not apply.
20. ENTIRE AGREEMENT
20.1 An Agreement (which includes the applicable Exhibit) is the parties'
entire agreement relating to its subject matter. It cancels and
supersedes all prior or contemporaneous oral or written
communications, proposals, conditions, representations and warranties
and prevails over any conflicting or additional terms of any quote,
order, acknowledgment, or other communication between the parties
relating to its subject matter.
20.2 No modification to the Agreement will be binding, unless in writing
and signed by an authorized representative of each party.
20.3 The provisions of this Agreement are not altered by the terms and
conditions of any other agreement Partner may have with Sun.
21. SURVIVAL
Rights and obligations under this Agreement which by their nature should
survive, will remain in effect after termination or expiration.
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IN WITNESS WHEREOF, THE DULY AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE
EXECUTED THESE MASTER TERMS AS OF THE EFFECTIVE DATE.
SUN MICROSYSTEMS, INC. PARTNER
By: By:
--------------------------------- -----------------------------
Name: Name:
------------------------------- ---------------------------
Title: Title:
------------------------------ --------------------------
Date: Date:
------------------------------- ---------------------------
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[SUN MICROSYSTEMS LOGO] Sun Channel Agreement
#
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EXHIBIT A
Software Products
(Partner)
This SMI Software Exhibit ("Software Exhibit") between Sun Microsystems, Inc.
and Partner is an attachment to the Master Terms between Sun and Partner and is
effective as of the date of execution by Sun ("Exhibit Effective Date"). The
Master Terms are an integral part of this Software Exhibit and are incorporated
by reference herein.
1. DEFINITIONS
1.1 "BCL" means the Sun binary code license contained in Software or
related documentation.
1.2 "Channel Web" means Sun's proprietary software channel information
system."
1.3 "End User" means the entity licensed to use Software under a BCL. If
End User is a corporation or other entity, then, for license fee
purposes, "End User" includes each individual within such corporation
or entity licensed to use Software under the BCL.
1.4 "Error" means any reproducible failure or Software to perform its
intended function or any significant inaccuracy in its related
documentation.
1.5 "Error Correction" means a modification, procedure, patch or routine
intended to correct the practical adverse effect of an Error.
1.6 "Fees" means the fees set forth in the Price List.
1.7 "Guide" means the Sun Channel Program Guide or Guides relating to
Software ordered under this Software Exhibit.
1.8 "NFR Software" means Software designated on the Channel Web as "not
for resale" software.
1.9 "Price List" means the applicable Sun Price List current at the time
of execution of this Software Exhibit and any subsequent price
changes made by Sun under Section 3.4 of this Software Exhibit.
1.10 "Software", in addition to the definition in the Master Terms,
includes Error Corrections, Upgrades, NFR Software and Subscription
Kits.
1.11 "Software Release" means a release of Software that is designated by
Sun in its sole discretion by a change in the digit(s) to the left
of the decimal point in the Software version number [(x).x.x].
1.12 "Subscription Kit" means tangible or electronically downloadable
materials designated in the Price List as a Sun Software Subscription
Program Product and delivered in kit form.
1.13 "Territory" means the countries or geographic regions identified in
Schedule 1 to this Software Exhibit.
----------
1.14 "Update" means a release of a Software that is designated by Sun in
its sole discretion by a change in the digit(s) to the right of the
tenths digit in the Software version number [x.x.(x)].
1.15 "Upgrade" means Updates, Version Releases, or Software Releases that
Sun makes generally commercially available.
1.16 "Version Release" means a release of a Software that is designated by
Sun in its sole discretion by a change in the tenths digit in the
Software version number [x.(x).x].
2. APPOINTMENT OF PARTNER
2.1 Appointment. Sun appoints Partner as a nonexclusive "Authorized
Software Enterprise Partner" and grants Partner the nonexclusive and
nontransferable right to distribute Software to End Users in the
Territory. Sun will segregate Software into product specialty
categories and provide Partner with written notice of these
categories. Certain Software, as identified in the Guide, may only be
purchased from Sun Authorized Distributors. Partner will not
advertise, sell, lease or ship Software outside the Territory without
Sun's prior written consent. Partner may not open Software prior to
delivery to End Users.
2.2 Guide. The Guide sets forth additional terms and information
concerning special promotions and programs relating to the Sun
Software Channel Program. Partner may participate in these promotions
and programs, provided that Partner is in compliance with its other
obligations under the Agreement, and any other agreement with Sun or
its affiliated companies, including payment and reporting
obligations. Sun has the right to change the Guide at any time
without notice. Changes to the Guide may be provided via the Channel
Web and Partner agrees to be bound by these changes. For Partners who
do not have regular access to the internet and Channel Web,
printed copies of changes to the Guide will be provided by Sun upon
written request.
2.3 Obligations. Partner agrees to: (a) actively market and support
Software; (b) follow up on any leads provided by Sun (which will be
considered Sun Confidential Information); (c) ensure that the
marketing and support efforts for Software are conducted by
identified and trained personnel within Partner who have knowledge of
Software and meet the training requirements in the Guide; (d) provide
Sun on a quarterly basis with a relationship planning document as
described in the Guide; and (e) not misrepresent Software or make any
representation or warranty inconsistent with the Master Terms, this
Software Exhibit or a BCL.
3. COMMERCIAL TERMS
3.1 Direct Purchases Only. Commercial terms for Partners who purchase
Software from a Sun Authorized Distributor will be determined in
Partner's agreement with such Distributor. This Section 3 applies
only to Partners purchase of Software directly from Sun.
3.2 Reporting. Partner will provide to Sun a written point-of-sale report
by the fifth (5/th/) working day of each month that includes the name
and address of each End User, dollar volume, type and quantity of
Software distributed and other information described in the Guide.
Partner acknowledges that it will not receive marketing funds unless
it has met all
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Sun Channel Agreement
Exhibit A Software Products
point-of-sale requirements. In addition, on the first business day of
each calendar quarter, Partner will provide Sun a rolling six (6)
month non-binding forecast of Partner's annual projected shipments for
each Software distributed under this Agreement. With each forecast,
Partner will also provide a completed relationship management document
as described in the Guide. Upon request, Partner will provide Sun with
audited financial statements.
3.3 Returns. Commencing on the Exhibit Effective Date, on a quarterly
basis Partner may request to return for credit, a quantity of Software
(other than NFR Software) the net Fees for which will not exceed ten
percent (10%) of the cumulative net Fees for Software shipped to
Partner during the immediately preceding quarter. Before returning any
Software, Partner must obtain from Sun a "Return Material
Authorization" (RMA). Partner must place an offsetting order with Sun
for Software of dollar value at least equal to any credit issued
hereunder. No more than one percent (1%) of all returned Software may
be in opened packages. Partner may not deduct the amount of any credit
from outstanding invoices. Partner will be responsible for paying all
freight and shipping charges for Software returned under this Section
3.3. Stock rotation is not available for discontinued Software.
3.4 Payments. For all Software purchased under this Software Exhibit,
Partner will pay Sun an amount equal to the Fee, less the applicable
discount set forth in Schedule 1.
3.5 Price Changes. Sun reserves the right to change the Price List,
discounts and Fees for any Software at any time without approval of
Partner. Changes which result in a decrease in Fees will take effect
immediately upon announcement. In the event of a change which
increases Fees, Sun will provide Partner with thirty (30) days prior
written notice. If, during the term of this Software Exhibit, Sun
decreases the Fee for any Software, Partner will be entitled to a
credit toward new orders for any Software placed within thirty (30)
days after announcement by Sun. This credit will be equal to the
difference between the new Fee and the Fee paid by Partner less any
previous credits provided, for the affected Software multiplied by the
quantity of that Software in Partner's inventory as of the date of the
announcement. In order to claim this credit, Partner must, within
thirty (30) days of announcement of a change which decreases Fees,
supply Sun with a written report including: (a) the identification of
all affected Software which were in Partner's inventory immediately
prior to announcement of the decrease; (b) the net Fee for this
Software before and after the decrease and (c) other information as
Sun may reasonably request. Sun will issue the credit to Partner
within sixty (60) days from the date Sun receives the report. All
orders for Software scheduled for shipment or in transit to Partner at
the time of the announcement will be adjusted to the decreased Fee.
3.6 Delivery and Title. Software purchase orders will be submitted to Sun
by Partner under the terms of this Software Exhibit and subject to a
minimum of Five Thousand Dollars ($5,000) per order. Sun will deliver
Software Ex Works, Sun facilities. Partner assumes all risk of loss or
damage upon delivery of Software. Partner acknowledges that it does
not take title to Software, with the exception of media and printed
materials, but rather licenses Software under the terms of this
Agreement.
3.7 Updates, Version Releases and Software Releases. Fees are for the
Software releases current as of the Effective Date. Except as provided
in Section 4 of this Software Exhibit, Updates, Version Releases and
Software Releases may require additional payment and be subject to
additional terms. Sun may, without Partner's approval and without
incurring any liability to Partner, modify Software or discontinue its
manufacture, sale or support upon thirty (30) days prior written
notice to Partner.
4 UPGRADES AND OBSOLESCENCE
4.1 Direct Purchases Only. This Section 4 applies only to Partner's
purchase of Software directly from Sun.
4.2 Upgrades. Subject to the terms below, Partner may upgrade unopened
Software in its inventory before the date Sun commences shipment of a
new Upgrade ("Commencement Date").
(a) Updates from the immediately proceeding Update version will be
provided to a Partner at no charge.
(b) Upgrades to a Version Release or Software Release from the
immediately preceding Version Release or Software Release will be
provided to Partner at no charge unless Sun increases its Fees
for the new release. If Sun increases its Fees, the new release
will be made available to Partner at the incremental price
difference between the original Fee paid by Partner and the Fee
for the new release.
(c) To receive Upgrades under this Section 4, Partner must provide
Sun with a written request for the Upgrade, obtain an RMA and
return to Sun all Software to be upgraded. Partner will pay all
shipping charges for returned Software and Upgrades ordered under
this Section 4. Sun will credit Partner with the total amount
Partner paid for the returned Software if the return is
accompanied by a firm order for the immediate delivery of
Upgrades whose total payment amount at least equals that of the
returned Software. Partner is limited to two (2) upgrade requests
for each Update, Version Release and Software Release. The first
request must be received by Sun within thirty (30) days of the
Commencement Date and the second request within ninety (90) days
of the Commencement Date. If Partner fails to make the requests
within the time frame described, Partner will no longer have the
right to upgrade Software under this Section 4.
(d) For a period of ninety (90) days after Sun discontinues offering
Software, Partner will have the right, shipping prepaid and
retaining all risk of loss, to return the unopened discontinued
Software to Sun. Sun will credit Partner with the total amount
Partner paid for the discontinued Software if the return is
accompanied by a firm order for the immediate delivery of other
Software whose total payment amount at least equals that of the
returned Software.
5. SUBSCRIPTION KITS
5.1 Distribution of Subscription Kits. Sun grants to Partner a non-
transferable, nonexclusive, limited license to distribute Subscription
Kits within the Territory. "Subscription Kit" means tangible or
electronically downloadable materials for Licensed Products designated
in the applicable Sun price list as a Sun Software Subscription
products and delivered in a kit form. Subscription Kits contain (i) a
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Sun Channel Agreement
Exhibit A Software Products
certificate for the Sun Software Subscription services entitling an
End User to receive drop-shipments of upgrades for Licensed Products
directly from Sun; (ii) Sun Software Subscription services program
terms; (iii) End User registration and acceptance forms to be
completed and returned to Sun; and (iv) marketing collateral.
5.2 Restrictions. Partner may not open any Subscription Kit prior to
delivery to End Users. Partner may not sell or distribute
Subscription Kits unless the End User has first provided satisfactory
proof of its license for the most current version of the Licensed
Products. Proof of End User's current license will be satisfied by
the End User showing Partner copies of its license or install disk,
cover page of the install disk manual or other form of proof
satisfactory to Sun that End User is licensed to the current version
level. Subscription Kits may be purchased only from Authorized
Distributors or Sun.
5.3 Returns. In the event an End User does not accept the terms provided
in the Subscription Kit and elects within fifteen (15) days of
purchase to return the Subscription Kit to Partner, Partner must
accept return of the Subscription Kit and refund the fees paid by End
User. Partner may return, shipping prepaid, to the Authorized
Distributor from which the Subscription Kit was purchased, the
Subscription Kit returned by the End User for a refund of the fees
paid by Partner, provided, however, that: (i) the Subscription Kit
was properly returned to Partner by the End User within fifteen (15)
days of its purchase; and (ii) Partner requests and has received a
Return Material Authorization ("RMA") number from the Authorized
Distributor within five (5) business days of the Subscription Kit's
return by the End User to Partner.
5.4 Other Programs. Any additional subscription offerings and
requirements are set forth in the Guide.
6. NOT FOR RESALE SOFTWARE
6.1 Purchase. As part of the Sun Software Channel Program, Partner may
obtain not-for-resale copies of Licensed Products ("NFR Software").
Licensed Products available as NFR Software are designated on the
Channel Web and may be ordered only from Authorized Distributors and
Sun. Partner may use no more than one (1) copy of each NFR Software
at each Partner business location. Each location at which NFR
Software is used must be staffed with Partner employees who have met
all applicable training, testing and authorization requirements set
forth in the Guide.
6.2 Labeling and Use. NFR Software must at all times be clearly labeled
"Not For Resale Software" and may be used only for purposes of
internal staff training, pre-sales support, Partner demonstrations
and Sun approved marketing.
6.3 Destruction of NFR Software. Partner must destroy all NFR Software:
(i) upon notice that the NFR Software has been discontinued or is
available as a new revision release or (ii) if it is no longer being
used on a regular basis by Partner for the purposes described in
Section 6. To obtain new revision releases of NFR Software, Partner
must provide Authorized Distributor or Sun with written certification
that the NFR Software has been destroyed.
6.4 Restrictions. Partner may not use the NFR Software for development of
software programs; nor copy, resell or distribute the NFR Software to
any third party. In addition to this Section 6, Partner's use of NFR
Software is further subject to the terms of the BCL which accompanies
the software.
7. SUPPORT
During the term of this Agreement, Partner will provide prospective
End Users with complete pre-sale support, and End Users with post-
sale support as provided in the Guide.
8. SUN SOFTWARE CHANNEL PROGRAM WEB SITE
Subject to the following, Sun will provide Partner with an account login,
password and the site URL for the Channel Web.
8.1 Use of Web Contents. Title to and ownership in all products,
Including software products, documents and other program information
contained in the Channel Web ("Web Contents") will solely and exclusively
be and remain in Sun and its licensors. Partner may use Web Contents only
for: (a) its internal evaluation purposes and (b) at its primary business
facility. If the software products accessed as part of Web Contents
contain third party code, Partner's use of the products may be subject to
additional terms. Partner is not authorized to make any modifications or
revisions to Web Contents nor distribute Web Contents to any third party.
Partner will indemnify Sun from all liability, expense, and damage of any
type arising from Partner's violation of this Section 8.1.
8.2 No Support for Web Contents. Partner acknowledges that Sun is
not obligated to make any of Web Contents available as a final Sun
product. Sun retains the right to make any modifications or changes to Web
Contents at any time without prior notice to Partner. Web Contents are
provided strictly on an "AS IS" basis. Partner acknowledges that no
support will be provided by Sun for the software product(s) contained in
the Web Contents.
9. WARRANTIES AND DISCLAIMER
Sun warrants that for a period of ninety (90) days from Partner's receipt
of Software provided under this Software Exhibit, the media on which the
Software is furnished will be free of defects in materials and workmanship
under normal use. Partner's exclusive remedy and Sun's entire liability
under this limited warranty will be for Sun to replace the Software media.
10. ADDITIONAL LIMITATIONS
IN NO EVENT WILL ANY ENTITY WORKING WITH SUN ON THE DEVELOPMENT AND SUPPLY
OF ANY LICENSED PRODUCT OR PART THEREOF BE LIABLE UNDER THIS AGREEMENT.
11. TERM AND TERMINATION.
This Software Exhibit will commence upon the Software Effective Date.
Unless earlier terminated as provided in the Master Terms, this Software
Exhibit will remain in effect until the date established in the following
schedule:
Effective Date Expiration Date
- -------------- ---------------
(Of the following year)
-----------------------
March 1 - August 31 August 31
September 1 - February 28 February 28
Page 3 of 5
<PAGE>
Sun Channel Agreement
Exhibit A Software Products
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties have authorized their representatives to execute
this Software Exhibit effective as of the Effective Date written below.
SUN MICROSYSTEMS, INC. Partner
By: By:
--------------------------------- ------------------------------
Name: Name:
--------------------------------- ------------------------------
(printed or typed) (printed or typed)
Title: Title:
--------------------------------- ------------------------------
Effective Date: Date:
------------------------- ------------------------------
- --------------------------------------------------------------------------------
Page 4 of 5
<PAGE>
Sun Channel Agreement
Exhibit A Software Products
- --------------------------------------------------------------------------------
Schedule I
to Software Exhibit
(Partner)
1. Territory: United States
2. Discount: Discount for Software on the Sun-Netscape Alliance Price List shall
be thirty-two percent (32%) off the MSRP as noted on such Price List.
- --------------------------------------------------------------------------------
Page 5 of 5
<PAGE>
[LOGO OF SUN MICROSYSTEMS APPEARS HERE]
SUN PARTNER AGREEMENT #____________
EXHIBIT B
EQUIPMENT PRODUCTS
This Sun Equipment Exhibit ("Equipment Exhibit") is effective on February 1,
2000 ("Equipment Exhibit Effective Date") between Sun Microsystems Inc. and
Partner, and is an attachment to the Master Terms between Sun and Partner. The
Master Terms are an integral part of this Equipment Exhibit and are incorporated
by reference.
1. DEFINITIONS
A. "Approved buying and selling locations" means those location addresses
whose identity is set out in Attachment A.
B. "End User" means the entity purchasing Equipment for its own use.
C. "Guide" means the Sun Partner Reference Guide.
D. "Master Reseller" means a designated Sun Authorized master reseller.
E. "Price List" means the applicable Sun Price List current at the time
of execution of this Equipment Exhibit and any subsequent price
changes made by Sun.
F. "Sun Funds" means Sun Enterprise Development Funds.
2. APPOINTMENT OF PARTNER
A. Appointment.
(1) Sun appoints Partner as a non-exclusive Partner ("Partner").
Partner is authorized to purchase available Product directly from
Sun or from its designated Master Reseller. Product must be (i)
sold, leased or rented (collectively referred to as "sold"); (ii)
sold directly to End Users via personal contact, web or directly
to End Users via personal contact, web or telesales basis; and
(iii) installed and supported on a face to face basis at an End
User site in the United States ("Authorized Sale"). Partner is
permitted to outsource services up to ten percent (10%) of its
purchases of Product under this Exhibit B.
(2) The sale of Products to any entity other than an End User is
prohibited. The sale of Products to the Federal Government is
prohibited unless Partner executes a Government System (GSI)
Agreement. Partner's primary business must at all times be the
sale and support of computer systems and related services.
B. Guide. Sun's Partner's policies are detailed in its Partner Reference
Guide located at http://channel.sun.com/US/. Partner represents that
it has read the Guide and will comply with all applicable rules and
procedures. Sun may modify the Guide from time to time upon thirty
(30) days' Notice.
3. SUN FUNDS
Partner will receive from Sun, Sun Funds on certain sales of Products
computed at Sun's list price, excluding Products not purchased for resale
and Products that Partner's Master Reseller did not purchase from Sun. Sun
may modify this Section upon thirty (30) days' Notice.
4. BUSINESS PLAN
Partner has submitted a Business Plan to, and which has been reviewed by,
Sun (attached as Attachment B). Partner has represented to Sun that the
Business Plan accurately reflects the manner in which it intends to market
and support Products. Either party may initiate a review of the accuracy of
Partner's Business Plan upon thirty (30) days' notice, provided that Sun
shall initiate no more than one review per calendar quarter.
5. ATTACHMENTS
The Attachments may be modified only upon the mutual consent of the
parties, except that Sun may modify Attachment C (Object Code License) at
any time. The current version of each Attachment is hereby incorporated by
reference.
6. PARTNER'S OBLIGATIONS
A. Sale and Support. Partner shall use its best efforts to promote the
sale of Products, and shall purchase and maintain the demonstration
equipment identified in the Guide for each authorized selling
location. Partner shall provide to each End User, as detailed in the
Guide and the Business Plan; (i) complete pre- and post-installation
support, including complete installation, training, and continuous
technical service and (ii) hardware and software maintenance support.
Partner must meet the additional Competency requirements detailed in
the Guide prior to selling or installing Products more than 200 miles
from an authorized selling location. The sale and direct support of
Products must be performed at all times by full-time employees who are
Sun trained and Sun certified, including at least one full time Sun
dedicated sales representative and one full time, Sun dedicated
systems engineer. Training and certification may be secured directly
from Sun or from any Sun Authorized training provider. Sun's support
options are set out in the Guide. Certification requirements are
detailed in the Guide.
B. Spare Parts. The use of spare parts purchased under the authority
granted by this Agreement is strictly limited to (i) resale to an
Partner's End User for internal use, or (ii) the service of Products
sold and installed by Partner under this Agreement, except that
Partner may use such parts to service all of an End User's systems if
Partner has sold and installed at least twenty-five percent (25%) of
the systems for which service is being provided.
C. Upgrades. The list price of upgrades is based upon the return to Sun
of specified parts from the system(s) being upgraded, as set out in
the U.S. Price List. Partner is
Page 1 of 6
Sun, Sun Microsystems Inc., ("Sun"), and the Sun Logo are trademarks of
Sun Microsystems, Inc. Products bearing SPARC trademarks are based
upon an architecture developed by Sun Microsystems, Inc.
<PAGE>
responsible for assuring that the specified parts are received by Sun
within thirty (30) days after shipment of the upgrade to Partner. If the
specified parts are not timely received, Master Reseller or Sun will
invoice and Partner agrees to pay Master Reseller or Sun (net 30 days)
for the non-returned parts, the difference between the list price of the
purchased upgrade(s) and the list price of the upgraded system(s) if
purchased new.
D. Partner Documentation Business Records, and Reports. Partner shall
furnish to its End Users, at the time of delivery of Products, a sales
receipt stating the date of sale, and, if applicable, the serial number
of Products sold. Partner shall, during the term of this Agreement and
for five (5) years thereafter, keep and maintain complete and accurate
business records with respect to its purchase and sale of all Products,
including, all documents relating to or exchanged between Partner and
its End Users, Master Partner and Sun. Sun may review these records upon
request.
Partner shall provide monthly Productivity Status Reports ("PSRs") to
Sun. All PSR reports shall be Java-based PSR reports only, in accordance
with the Java-based PSR guidelines beginning at
url:http://channel.sun.com/US/policies/newpsrguide.html. Upon the
initial failure to timely submit a complete PSR, Sun may cancel Sun Fund
accruals and suspend participation in other programs. Any subsequent
failure to remedy or timely submit a PSR may result in immediate
termination of this Agreement.
E. Indemnity and Insurance. Partner agrees to indemnify and hold Sun
harmless from and against all claims from Partner's End Users or third
parties arising out of any acts and/or omissions of Partner or its
employees or representatives. Partner shall carry liability insurance to
protect Sun from all such claims, pay the premiums therefor, and deliver
to Sun, upon request, proof of such insurance (which shall require
thirty (30) days' written notice to Sun in event of modification or
termination).
F. Fair Representation. Partner shall display, demonstrate, and represent
Products fairly and shall make no representations concerning Sun or its
Products which are false, misleading, or inconsistent with those
representations set forth in promotional materials, literature and
manuals published and supplied by Sun. Partner shall comply with all
applicable laws and regulations in performing under this Agreement.
G. Sun SPARC Only. Except as otherwise provided in writing by Sun, Partner
shall not sell, lease, or otherwise deal in any product based on SPARC
Architecture, unless such product (i) is a Sun Product or (ii) is a
"laptop system". A product is a "laptop system" if it is (i)
transportable, (ii) battery operated, (iii) under sixteen (16) pounds
total weight including case, and (iv) packaged without a CRT. Partner
is not prohibited by this Agreement from selling any product that does
not contain the SPARC Architecture.
H. Partner shall purchase all Sun Products for resale directly from Sun or
from its designated Master Reseller unless an exception is granted by
Sun in writing. Purchase terms and conditions as may be agreed upon
between Partner and designated Master Reseller shall govern the purchase
of Products from the Master Reseller. Sun will permit Reseller to change
the identity of its designated Master Reseller only once per year, by
Notice (which shall include the effective date of the transition),
during the thirty (30) days' period prior to each year's Expiration
Date.
No Simultaneous Order. The intention of the parties, and the goal of
this Agreement, is that Partner will not issue the same purchase orders
for Products from both Sun and Master Reseller with the intention that
one order be canceled in favor of the other order. Partner must not
issue orders directly to Sun and to a Master Reseller at the same time
for the same Products. Failure to comply with this section will be
considered a material breach, and may result in immediate termination of
the Agreement. This section does not otherwise affect terms and
conditions regarding cancellations of, or changes to, orders that may
exist in the Agreement or in any agreement with a Master Reseller.
I. Limited Warranty. Partner must provide a warranty to its End Users at
least equivalent to the warranty provided by Sun. Partner agrees to
indemnify Sun for any liability or damages caused by Partner's provision
of any other warrant.
J. Failure to comply with any of the foregoing obligations will constitute
a material breach of this Agreement.
7. LIMITED WARRANTY
7.1 Partner shall arrange for all End users to be notified that they will
receive the following warranty ("the Warranty") directly from Sun. This
Warranty will be included in Sun product packaging. The duration of the
Warranty, applicable response times, start dates and other Warranty details
are specified at http://channel.sun.com/service/globalwarranty/ ("the
Warranty Web Page") and are applicable as at the date an order is accepted,
or at End User's option, the Effective Date of this Agreement. Any
subsequent changes to Warranty details specified on the Warranty Web Page
will not apply to Products purchased by End Users prior to any change.
Partner is responsible for notifying its end users that they will receive
the following warranty ("The Warranty") directly from Sun.
7.2 Subject to 7.1 above, Sun warrants that:
(a) the Hardware will be free from defects in materials and
workmanship.
(b) The Software will be warranted either according to the warranty set
set forth in 7.2 (c) below or the warranty set out at the Warranty Web-
Page, whichever is greater, for such software specifically mentioned
therein.
(c) the media on which Software is furnished (if any) will, for a
period of ninety (90) days from the date of purchase, as evidenced by a
copy of the receipt, be free from defects in materials and workmanship
under normal use. Except for the foregoing, software is provided "AS
IS".
7.3 Partner's sole and exclusive remedy and Sun's entire liability for
breach of the warranties specified in this Section 7, will be, at Sun's
option, the repair, replacement of, or refund of the actual cost paid for
the Products (less reasonable wear and
Page 2 of 6
Sun, Sun Microsystems Inc., ("Sun"), and the Sun Logo are trademarks of Sun
Microsystems, Inc. Products bearing SPARC trademarks are based upon an
architecture developed by Sun Microsystems, Inc.
<PAGE>
tear) and/or to replace the media for Software or refund the associated
license fee paid.
7.4 This Warranty is contingent upon proper treatment and use of the
Products and maintenance of a safe and suitable site. No warranty will
apply to any Product that has been (i) modified, altered or adapted without
Sun's written consent, (ii) maltreated or used in a manner other than in
accordance with the Product manual or, (iii) repaired by any third party in
a manner which fails to meet Sun's maintenance requirements and quality
standards. Product problems attributable to the use of the Products with
equipment or software not supplied or expressly approved by Sun are not
covered under warranty. Any services provided for Product or problems which
are out of warranty will be billed for on a time and materials basis.
8. COMMERCIAL TERMS FOR PRODUCTS
Prices and Discounts. For Products on Sun's then current, applicable U.S.
Computer Systems Price List, Sun agrees to grant to Partner the following
discounts when Partner purchases directly from Sun: thirty-two percent
(32%) on Category A Product, twenty-five percent (25%) on Category B
Products and seventeen percent (17%) on Category H Products. Such discounts
will not apply to those Products which are listed as "non-discountable" in
the appropriate price list, nor may they be applied to exceed any listed
maximum discount. Such discounts will apply towards purchases of
discountable spare parts, but such discounts will not apply to purchases of
training, installation (except where included in the purchase price of the
Products), consulting, repairs, maintenance work or similar services and
source code license fees.
Orders and Delivery. When Partner purchases direct from Sun, Partner shall
submit purchase orders in writing or electronically via Sun's eCommerce
site in accordance with the requirements defined on that site. Order
acceptance will only be effective upon issuance of Sun's order
acknowledgement. Each order must be for a minimum of five hundred dollars
($500.00) Sun will use reasonable efforts to meet target delivery dates
identified on the order acknowledgement. Title to Products (except
Software) and risk of loss or damage to Products will pass to Partner upon
shipment, FOB Sun's Product Delivery Center. Sun reserves the right to make
Product substitutions and modifications that do not cause a material
adverse effect in overall Product performance.
Rescheduling and Reconfiguration. Partner may, when purchasing direct from
Sun, reschedule or reconfigure all or part of any specific orders once at
no charge, as long as a "Change Purchase Order" is received by Sun at least
thirty (30) days prior to the scheduled delivery date and the rescheduled
delivery date is within sixty (60) days of the original date. If an order
is rescheduled or reconfigured at Partner's request on any other basis, or
if Sun rescheduled the order because Partner fails to meet an obligation
under this Agreement, Sun may charge Partner a restocking fee equal to ten
percent (10%) of the list price of the rescheduled or reconfigured portion
of the order. If Partner refuses shipment at its requested delivery
location, Sun may charge Partner a restocking fee of twenty-five percent
(25%) of the list price of the shipment.
9. ASSIGNMENT OF PURCHASING RIGHTS
Partner may receive an assignment of purchase rights from an approved third
party when the third party receives a purchase order from its end user so
that Partner may procure Product for said third party. A separate
assignment agreement ("Assignment Agreement") must be signed by Sun,
Partner and third party authorized signatories.
10. TERM AND TERMINATION
Term. This Agreement shall commence on the Equipment Exhibit Effective Date
and shall remain in force until the date established according to the
following schedule:
Effective Date: Expiration Date:
(of each following year)
March 1 - August 31....................August 31
September 1 - February 28..............February 28
It shall be automatically renewed on an annual basis thereafter, unless at
least thirty (30) days prior to any year's Expiration Date, Sun or Partner
tenders Notice of Intention not to renew.
11. STATUTE OF LIMITATIONS
No claim or action, regardless of form, arising out of this Agreement may
be brought by either party more than two (2) years after the claim or cause
of action has arisen, or in the case of non-payment, more than two (2)
years from the date payment was due.
12. GOVERNING LAW
Any claim or cause of action must be brought solely and exclusively in the
courts of the state of California.
IN WITNESS WHEREOF, THE DULY AUTHORIZED REPRESENTATIVES OF THE PARTIES HAVE
EXECUTED THIS AGREEMENT, AS OF THE DATE FIRST ABOVE WRITTEN
SUN MICROSYSTEMS INC.: PARTNER
By: By:
--------------------------------- -------------------------------
Name: Name:
------------------------------- -----------------------------
(print or type) (print or type)
Title: Title:
------------------------------ ----------------------------
Date: Date:
------------------------------- -----------------------------
Page 3 of 6
Sun, Sun Microsystems Inc., ("Sun"), and the Sun Logo are trademarks of Sun
Microsystems, Inc. Products bearing SPARC trademarks are based upon an
architecture developed by Sun Microsystems. Inc.
<PAGE>
ATTACHMENT A
AUTHORIZED LOCATIONS/MASTER RESELLER
Headquarters
MASTER RESELLER
Page 4 of 6
Sun, Sun Microsystems Inc., ("Sun"), and the Sun Logo are trademarks of Sun
Microsystems, Inc. Products bearing SPARC trademarks are based upon an
architecture developed by Sun Microsystems, Inc.
<PAGE>
ATTACHMENT B
BUSINESS PLAN
Attached
Page 5 of 6
Sun, Sun Microsystems Inc., ("Sun"), and the Sun Logo are trademarks of Sun
Microsystems, Inc. Products bearing SPARC trademarks are based upon an
architecture developed by Sun Microsystems, Inc.
<PAGE>
ATTACHMENT C
END USER OBJECT CODE LICENSE
SUN IS WILLING TO LICENSE THE OPERATING SYSTEM SOFTWARE TO YOU ONLY UPON THE
CONDITION THAT YOU ACCEPT ALL OF THE TERMS CONTAINED IN THIS LICENSE AGREEMENT.
READ THE TERMS AND CONDITIONS OF THIS LICENSE CAREFULLY BEFORE USING THE
SOFTWARE. BY USING THE SOFTWARE, YOU AGREE TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT. IF YOU ARE NOT WILLING TO BE BOUND BY THIS AGREEMENT, YOU ARE NOT
AUTHORIZED TO USE THE OPERATING SYSTEM SOFTWARE.
1. License to Use. Customer is granted a non-exclusive and non-transferable
license ("License") for the use of the applicable SolarisR(TM) operating
system software in machine-readable form, together with accompanying
documentation ("Software"), by the number of users and with the class of
computer hardware for which the corresponding fee has been paid.
2. License to Develop. In the event that Customer desires to develop software
programs which incorporate portions of Software ("Developed Programs"), the
following provisions apply, to the extent applicable: Developed Programs are to
have an application programming interface that is the same as that of Software;
fonts within Software are to remain associated with their toolkit or server,
Developed Programs may be used and distributed, but only on computer equipment
licensed to utilize Solaris operating system software, unless an additional
Developer's License Agreement has been executed by Sun and Customer; Customer is
not licensed to develop printing applications or print, unless Customer has
secured a valid printing license; and Customer agrees to indemnify, hold
harmless and defend Sun from and against any claims or suits, including
attorney's fees, which arise or result from distribution or use of Developed
Programs.
3. Restrictions. Software is copyrighted and title to all copies is retained
by Sun and/or its licensors. Customer shall not make copies of Software, other
than a single copy of Software for archival purposes and, if applicable,
Customer may, for its internal use only, print the number of copies of on-line
documentation for which the applicable fee has been paid, in which event all
proprietary rights notices on Software shall be reproduced and applied. Except
as specifically authorized in Paragraph 2 above, Customer shall not modify,
decompile, disassemble, decrypt, extract, or otherwise reverse engineer
Software, except to the extent any of the foregoing limitations are
unenforceable under applicable law. Software is not designed or licensed for use
in on-line control equipment in hazardous environments such as operation of
nuclear facilities, aircraft navigation or control, or direct life support
machines.
4. Confidentiality. Software is confidential and proprietary information of
Sun and/or its licensors. Customer agrees to take adequate steps to protect
Software from unauthorized disclosure or use.
5. Warranty. Sun warrants that the media on which Software is furnished will
be free of defects in materials and workmanship under normal use for a period of
ninety (90) days from the date of purchase, as evidenced by a copy of the
receipt. Otherwise, Software is provided "AS IS," without a warranty of any
kind. This warranty extends only to Customer as the original licensee.
Customer's exclusive remedy and Sun's entire liability under this warranty will
be the correction of defects in media or replacement of the media, or, if
correction or replacement is not reasonably achievable by Sun, the refund to
Customer of the license fee paid, upon return of Software.
6. Disclaimer of Warranty. EXCEPT AS SPECIFIED IN THIS LICENSE AGREEMENT, ALL
EXPRESS OR IMPLIED CONDITIONS, REPRESENTATIONS AND WARRANTIES, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT, ARE HEREBY EXCLUDED TO THE EXTENT ALLOWED BY APPLICABLE LAW.
7. Limitation of Liability. IN NO EVENT WILL SUN BE LIABLE FOR ANY LOST
REVENUE, PROFIT OR DATA, OR FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTIAL OR
PUNITIVE DAMAGES HOWEVER CAUSED AND REGARDLESS OF THEORY OF LIABILITY ARISING
OUT OF THE USE OF OR INABILITY TO USE SOFTWARE, EVEN IF SUN HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. In no event shall Sun's liability to Customer,
whether in contract, tort (including negligence), or otherwise, exceed the
license fee paid by Customer for Software. The foregoing limitations shall apply
even if the above stated warranty fails of its essential purpose.
8. Termination. This License is effective until terminated. Customer may
terminate this License at any time by destroying all copies of Software
including any documentation. This License will terminate immediately without
notice from Sun if Customer fails to comply with any provision of this License.
Upon termination, Customer must destroy all copies of Software.
9. Export Regulations. Software, including technical data, is subject to U.S.
export control laws, including the U.S. Export Administration Act and its
associated regulations, and may be subject to export or import regulations in
other countries. Customer agrees to comply strictly with all such regulations
and acknowledges that it has the responsibility to obtain licenses to export,
re-export, or import Software.
10. U.S. Government Restricted Rights. If Customer is acquiring Software
including accompanying documentation on behalf of the U.S. Government, the
following provisions apply. If Software is supplied to the Department of Defense
("DOD"), Software is subject to "Restricted Rights," as that term is defined in
the DOD Supplement to the Federal Acquisition Regulations ("DFAR") in paragraph
252.227-7013(c)(1). If Software is supplied to any unit or agency of the United
States Government other than DOD, the Govenment's rights in Software will be as
defined in paragraph 52.227-19(c)(2) of the Federal Acquisition Regulations
("FAR"). Use, duplication, reproduction, or disclosure by the Government is
subject to such restrictions or successor provisions. Contractor/Manufacturer
is: Sun Microsystems Computer Company, 2550 Garcia Ave., Mountain View, CA
94043.
11. Governing Law. This Agreement is made under, shall be governed by and
construed in accordance with the laws of the State of California, U.S.A.
excluding its choice of law provisions.
12. Integration. This Agreement is the entire agreement between Customer and
Sun relating to Software and: (i) supersedes all prior or contemporaneous oral
or written communications, proposals and representations with respect to its
subject matter; and (ii) prevails over any conflicting or additional terms of
any quote, order, acknowledgement, or similar communication between the parties
during the term of this Agreement. No modification to this Agreement will be
binding, unless in writing and signed by a duly authorized representative of
each party.
*Solaris is a registered trademark Part No. 501-3229-10
of Sun Microsystems, Inc. Rev. A, May 1994
Sun Microsystems, Inc.
Page 6 of 6
Sun, Sun Microsystems Inc.,("Sun"), and the Sun Logo are trademarks of Sun
Microsystems, Inc. Products bearing SPARC trademarks are based upon an
architecture developed by Sun Microsystems, Inc.
<PAGE>
EXHIBIT 10.15
LEASE
THIS LEASE made and entered into this 7th day of December, 1998, by and
between FERRARI PARTNERS, L.P., hereinafter called "Lessor", and CONNECTED
SOFTWARE SOLUTIONS, LLC, hereinafter called "Lessee".
WITNESSETH:
For and in consideration of the rentals, undertakings and mutual
covenants hereinafter set forth, Lessor hereby leases to Lessee, and Lessee
hereby leases and hires from Lessor, subject to the terms and conditions
hereinafter expressed, the following space in that certain commercial office
building, located in Franklin, Williamson County, Tennessee, at 357 Riverside
Drive (the "Building") a description of the property upon which the Building is
located being attached hereto as Exhibit A. The space being leased to Lessee is
hereinafter referred to as the "Leased Premises." The rentable square feet of
the Leased Premises includes the area to be used exclusively by Lessee, and a
portion of the entrance hallways, elevator shafts and other areas of the
Building which are used in common by all tenants of the Building.
TO HAVE AND TO HOLD the Leased Premises, together with the improvements
and appurtenances thereto belonging, unto Lessee, its heirs, successors and
assigns for a term of five (5) years, commencing January 18, 1999, and ending
January 31, 2004, unless sooner terminated as hereinafter provided.
THE PARTIES HERETO MUTUALLY COVENANT AND AGREE AS FOLLOWS, THIS LEASE
BEING EXPRESSLY SUBJECT TO THE TERMS AND CONDITIONS HEREINAFTER SET OUT:
1. Rent. Lessee agrees to pay to Lessor for the Leased Premises during
the term hereof basic rent at the rate specified at the end of this section,
such rentals being payable in equal monthly installments. All rentals are
payable in advance on the first day of each and every month and shall be payable
without notice or demand and without deduction, set-off or abatement except as
otherwise provided specifically in this Lease. Rent for a partial month at the
beginning or end of the term shall be prorated. The basic monthly rent is as
follows: One Thousand Nine Hundred Ninety-Nine and 73/100 Dollars ($1,999.73)
for the first twelve (12) months and shall increase three percent (3%) for each
successive twelve (12) month period.
2. Operating Expenses. For each calendar year beginning in 2000, and
thereafter, Lessee agrees to pay Lessor, as additional rent, Lessee's
"Proportionate Share" of the excess of actual "Operating Expenses" over the
"Operating Expenses" for calendar year 1999 (the
<PAGE>
"Base Year"). Lessee's Proportionate Share shall be determined by dividing the
rentable square footage of the Leased Premises by the total gross leasable area,
as determined by Lessor from time-to-time, in the Building. "Operating Expenses"
shall be defined as all operating costs of any kind and nature incurred by
Lessee in connection with the operation, maintenance or repair of the Building
and property associated therewith, including but not limited to: all cost of
casualty and liability insurance in connection with the Building, all costs of
water, sewer, electricity, gas and other utility services furnished for or
incurred in connection with the Building, all costs of janitorial and cleaning
services incurred in connection with the Building, all salaries and compensation
of employees performing services in connection with the Building, all cost of
maintenance and repair incurred in connection with the Building, the amortized
portion for the year in question of the cost of installation of capital
investment items which have the effect of reducing Operating Expenses of the
Building, all real property taxes assessed against or by virtue of the Building
and the land upon which the Building is situated, all legal, accounting and
other fees incurred in connection with the administration and operation of the
Building, cost of all ice and snow removal, the cost of parking lot sweeping,
striping and lighting, the cost of any security services provided in connection
with the Building, the cost of all supplies and materials used in connection
with the maintenance, repair and operation of the Building, all wages, including
social security, unemployment compensation, insurance and other employee
benefits and indirect compensation of employees providing services in connection
with the operation, maintenance or repair of the Building, the cost of all
contract services, including trash removal, exterminating services,
directory services, and fire extinguishers, incurred in connection with the
Building, the cost of all landscaping expenses, and an administrative fee
payable to Lessor in the amount of fifteen percent (15%) of all Operating
Expenses, all as reasonably determined by Lessor from time-to-time.
Together with each monthly payment of the basic rental hereunder, Lessee
shall pay the Lessor as additional rent an amount equal to one-twelfth (1/12) of
Lessor's estimate, as determined by Lessor in its sole discretion, of Lessee's
Proportionate Share of the excess of $5.25 per square foot of Operating Expenses
for any year in excess of the Operating Expenses for the Base Year. As soon as
practicable following the end of each calendar year, but in no event later than
one hundred twenty (120) days after the end thereof, a final adjustment shall be
made between Lessor and Lessee based upon the actual Operating Expenses for the
preceding year. Any shortage in such amount shall be paid by Lessee to Lessor.
Any overage shall be paid by Lessor to Lessee.
3. Leasehold Improvements. In the event Lessor and Lessee have agreed
that certain Leasehold Improvements shall be made to the Leased Premises prior
to Lessee's occupancy thereof, then the Leasehold Improvements to be made shall
be those described, if any, on Exhibit B attached hereto (the "Leasehold
Improvements"). Such Leasehold Improvements shall be made prior to the
commencement of the term of this Lease. Payment for the costs of such Leasehold
Improvements shall be made as set forth in Exhibit B. In the event Lessor is
prevented from commencement or completion of the Leasehold Improvements due to
the causes beyond Lessor's control, such as material shortages, inability to
procure contractors or laborers, casualty loss, strikes, or failure of Lessee to
make any decisions or
<PAGE>
directives required by Lessee to be made in connection with the Leasehold
Improvements, then the commencement date of the Lease term shall be extended
until completion of the Leasehold Improvements. Lessor shall have no liability
for failure to complete the Leasehold Improvements by the commencement date of
this Lease. In the event no Leasehold Improvements are to be made, then the
Leased Premises shall be taken by Lessee in its current condition on an AS IS
basis.
4. Security Deposit. Lessee will deposit with Lessor upon the execution
of this Lease a security deposit in an amount equal to one (1) month's basic
rent. Lessee shall not be entitled to interest on the security deposit, and
Lessor may commingle such security deposit with other funds of Lessor. Upon the
termination of this Lease, provided Lessee is not in default hereunder, Lessor
shall refund to Lessee any of the then remaining balance of the deposit without
interest. In the event of a sale of the Building, Lessor may transfer the
deposit to the purchaser and be relieved of any further obligation therefor.
5. Late Charge. Lessee shall pay a late charge equal to five percent
(5%) of any rent or other payment hereunder not paid within ten (10) days of the
due date thereof.
6. Services Furnished. Lessor shall furnish the following services:
(a) Entry to the Leased Premises during normal working hours on
regular business days. On other days and after normal working hours, Lessee may
gain entry to the Leased Premises at such times by a key or card-key system.
(b) Hot and cold water at those points of supply provided for the
general use of other tenants in the Building; central heat and air conditioning
in season from 7:00 a.m. to 7:30 p.m. on business days and 7:00 a.m. to 2:00
p.m. on Saturdays, at such temperatures and in such amounts as are considered
by Lessor to be standard; but service at times during business days other than
normal business hours for the Building, additional hours on Saturdays, Sundays
and holidays or in an amount considered by Lessor to be in excess of standard
(machinery, lighting fixtures or equipment in the Leased Premises having an
electrical load in excess of four (4) watts per square foot of RA or occupancy
in excess of one person per 200 square feet of RA being conclusively presumed
to be in excess of standard) to be furnished only upon the request of Lessee,
who shall bear the entire cost thereof; routine maintenance and electric
lighting service for all public areas and special service areas of the Building
in the manner and to the extent deemed by Lessor to be standard.
(c) Electrical facilities and sufficient power for typewriters, voice
writers, calculating and duplicating machines, desk top and small server-type
computers and other machines of similar low electrical consumption, but not
including electricity required for main frame electronic data processing
equipment and special lighting in excess of building standards, or any item of
electrical equipment which (singularly) consumes more than 0.5 kilowatts at
rated capacity or requires a voltage other than 120 volts single phases. If
Lessee uses any of the services or electrical current as enumerated in this
subsection (d) in an amount greater than 5,000 watt hours annually per square
foot of RAS or such larger amounts as may be deemed
<PAGE>
excessive by Lessor, Lessor reserves the right to charge Lessee as additional
rent a reasonable sum as reimbursement for the direct cost of such added
services. Said additional rent shall be due and payable on the dame day the
monthly basic rental is due and payable as set forth in Section 1 hereof. In the
absence of agreement as to the reasonableness of such charge, the opinion of the
appropriate local utility company or a local independent professional engineer
reasonably selected by Lessor shall prevail. Any additional equipment, feeders
or risers necessary to supply electrical requirements in excess of the amount to
be provided by Lessor pursuant to this subsection shall be supplied by Lessor at
the expense of Lessee, provided such installations will not, in Lessor's
judgment, overload the electrical system of the Building or entail excessive or
unreasonable alterations to the Building or the Leased Premises.
(d) All building standard fluorescent bulb replacements in all areas
and all incandescent bulb replacements in public areas, toilet and restroom
areas and stairwells.
Failure by Lessor to any extent to furnish the services described in
this Section, or any cessation thereof, resulting from the repair or alteration
of the Building or equipment for causes beyond the reasonable control of Lessor,
shall not be construed as an eviction of Lessee, nor cause an abatement of rent,
nor relieve Lessee from fulfillment of any covenant of agreement hereof.
7. Telephone System and Service. Lessee shall use the telephone service
and system in the Building provided by Lessor as Lessee's exclusive telephone
and telecommunications provider. Attached hereto as Exhibit C is a schedule of
charges for such telephone services which shall be paid by Lessee to Lessor.
These charges may be adjusted from time-to-time by Lessor. Lessor shall submit
on a monthly basis, a bill to Lessee for telephone services and charges incurred
by Lessee for the previous month. The amount of such billing shall be payable
as additional rent hereunder within ten (10) days after submission of the bill
to Lessee. Lessee shall pay a late charge equal to five percent (5%) of any such
billing not paid within such ten (10) period.
8. Common Area. For so long as Lessee is not in default hereunder,
Lessor grants Lessee a non-exclusive license to use and occupy, in common with
others so entitled, the common areas of the Building, including, but not limited
to, corridors, stairways, elevators, restrooms, lobbies, entranceways, parking
areas, service roads, loading facilities, sidewalks, and other facilities as may
be designated from time to time by Lessor subject to the terms and conditions of
this Lease.
9. Card Keys. Lessor shall furnish Lessee with a minimum of six card
keys for entering the Leased Premises. Additional card keys will be furnished at
a charge by Lessor on an order signed by Lessee or Lessee's authorized
representative. All such card keys shall remain the property of Lessor. Lessee
shall not change the locks without Lessor's permission, and Lessee shall not
make, or permit to be made, any duplicate card keys, except those furnished by
Lessor. Upon termination of this Lease, Lessee shall surrender to Lessor all
card keys to the Leased Premises and give to Lessor the explanation of the
combination of all locks for safes, safe cabinets and vault doors, if any,
installed in the Leased Premises by Lessee.
<PAGE>
10. Graphics. Lessor shall provide and install, as an Operating Expense,
all letters or numerals on entrance doors to the Leased Premises. All such
letters and numerals shall be in the Building standard graphics, and no other
shall be used or permitted on the Leased Premises.
11. Parking. Lessee shall at all times during the term of this Lease
have the right to park up to six (6) automobiles in the outdoor parking area of
the Building designated by Lessor. Parking shall be on a first come, first serve
basis and Lessor shall not be required to designate parking space for the use of
Lessee.
12. Permitted Uses. Lessee shall use and occupy the Leased Premises only
for the following purpose: computer software development and training. Lessee
shall not occupy or use, or permit any portion of the LEased Premises to be
occupied or used, for any business or purpose which is unlawful, disreputable
or deemed to be hazardous, or permit anything to be done which would in any way
increase the rate of fire or liability or any other insurance coverage on the
Building and/or its contents, cause the load upon any floor of the Building to
exceed the load for which the floor was designed or the amount permitted by law,
or use electrical energy exceeding the capacity of the then-existing feeders or
wiring installations. Lessee shall further conduct its business and control its
agents, employees, invitees, and visitors in such manner as not to create any
nuisance, or interfere with, annoy or disturb any other tenant or Lessor in its
operation of the Building. No food, soft drink or other vending machine shall be
installed within the Leased Premises without the advance written permission of
Lessor.
13. Compliance with Standards. Lessee shall comply with all applicable
laws, ordinances, rules and regulations relating to the use, condition or
occupancy of the Leased Premises and all common areas. Lessee shall comply with
reasonable rules and regulations as may be adopted or modified by Lessor from
time to time for the safety, care and cleanliness of the Leased Premises, the
Building and common areas and for preservation of good order therein. In
addition, the parties agree that (a) the Building is a non-smoking facility and
that no smoking shall be allowed therein at any time, and (b) that no overnight
occupancy, sleeping or lodging will be allowed on the Leased Premises at any
time.
14. Repairs By Lessor. Except as otherwise set forth in this Lease,
Lessor shall not be required to make any improvements to, or repairs of, any
kind or character in the Leased Premises during the term of this Lease, except
such repairs as may be deemed necessary by Lessor for normal maintenance
operations required to maintain the Leased Premises in tenantable condition or
repairs previously agreed to by Lessor. Lessor shall keep in good order,
condition and state of repair the structural portions of the Building, the roof,
the plumbing, heating, air conditioning and electrical system and the common
area facilities provided by Lessor under the provisions hereof; provided,
however, Lessor's obligation to make such repairs shall not relieve Lessee of
the obligation to pay all sums which become due under this Lease. The obligation
of Lessor to maintain and repair the Leased Premises shall be limited to
Building standard items. Lessee shall reimburse Lessor upon demand for the cost
of
<PAGE>
repairing any damage to the Leased Premises or the Building caused by the
deliberate act or negligent act of Lessee or its employees, agents, invitees or
others acting on its behalf. Lessee shall, at its expense, keep in good order,
condition and state of repair all portions of the Leased Premises with the
exception of those to be maintained and repaired by Lessor under the foregoing
provisions.
15. Repairs and Alterations. Lessee shall, at its own cost and expense,
reimburse Lessor on demand for the repair and replacement of any damage or
injury done to the Leased Premises or the Building caused by Lessee or Lessee's
agents, employees, invitees, movers, visitors or others acting on its behalf. No
alterations in the Leased Premises or signs visible from outside the Leased
Premises shall be made or installed by Lessee without the prior written consent
of Lessor, which shall be in Lessor's sole and absolute discretion; and at
Lessor's election such alterations or additions shall become the property of
Lessor upon termination of this Lease.
16. Care of Leased Premises. Lessee shall not commit or allow any waste
or damage to be committed on or to any portion of the Leased Premises, and at
the termination of this Lease, Lessee shall deliver possession of the Leased
Premises to Lessor in as good condition as at date of possession by Lessee, or
as the same may have been improved during the term, ordinary wear and tear or
damage resulting from fire or other unavoidable casualty excepted. If Lessee
installs improvements in the Leased Premises reasonably determined by Lessor to
be special or nonstandard, Lessor may require Lessee to remove such special or
non-standard improvements and restore the Leased Premises to its original
condition at Lessee's sole cost and expense upon the termination of this Lease.
17. Peaceful Enjoyment. Lessee shall have the right to peacefully
occupy, use and enjoy the Leased Premises during the lease term, subject to the
other provisions hereof, provided Lessee pays the rent and other sums herein
required to be paid by Lessee and performs all of Lessee's covenants and
agreements herein contained.
18. Lessor's Right of Entry. Lessor or its agents or representatives
shall have the right to enter into and upon any part of the Leased Premises at
all reasonable hours to inspect the same, clean or make repairs, alterations or
additions thereto, as Lessor may deem necessary or desirable. Lessor further
reserves the right to show the Leased Premises to prospective tenants or brokers
during the last six (6) months of the lease term, and to prospective purchasers
or mortgagees at all reasonable times, provided prior notice is given to Lessee
in each case, and Lessee's use and occupancy of the Leased Premises shall not
thereby be materially inconvenience.
19. Hold Harmless. Lessor shall not be liable to Lessee, or to Lessee's
agents, servants, employees, customers, invitees, or visitors for any damage to
person or property caused by any act, omission or neglect of Lessee or such
persons, and Lessee agrees to indemnify and hold Lessor harmless from all
liability and claims for any such damage. Lessee shall not be liable to Lessor,
or to Lessor's agents, servants, employees, customers, invitees, or visitors for
any damage to person or property caused by any act, omission or neglect of
<PAGE>
Lessor or such persons, and Lessor agrees to indemnify and hold Lessee harmless
from all claims for such damages.
20. Landlord's Rights Upon Default
(a) Each of the following events, at the option of Lessor, shall
constitute a default and breach of this Lease by Lessee: (i) if Lessee shall
fail to pay Lessor any rent or any other amount due under this Lease, within
five (5) days after the due date therefor; (ii) if Lessee shall fail to perform
or comply with any of the other terms or conditions of this Lease within ten
(10) days after notice by Lessor to Lessee specifying the term or condition to
be performed or complied with; (iii) if any proceedings are commenced by or
against Lessee in any court under any bankruptcy or insolvency act or statute,
or for the appointment of a trustee or receiver of Lessee's property; or (iv) if
the Leased Premises shall be deserted or vacated for more than five (5) days.
In the event of any default hereunder, Lessor may, at any time
thereafter and without notice (and without prejudice to any other remedy
available to Lessor), pursue any one or more of the following remedies:
(i) Terminate this Lease at its option and re-enter and repossess the
Leased Premises and dispossess and remove therefrom Lessee, or any other
occupants thereof, and their effects, without being liable for any prosecution
therefor. In such event, Lessee shall be liable to Lessor, immediately and upon
demand, for the amount of all loss and damages suffered by Lessor by reason of
such termination, whether caused by the inability to relet the Leased Premises
on satisfactory terms or otherwise;
(ii) Enter upon and take possession of the Leased Premises without
terminating this Lease and without relieving Lessee of Lessee's obligations to
make all payments of rent and all other sums owed hereunder. In such event,
Lessor may dispossess and remove therefrom Lessee, or any other occupants
thereof, and their effects, without being liable for any prosection therefor;
and Lessor may, at its opinion, relet the Leased Premises or any part thereof,
as the agent of Lessee, and Lessee shall, immediately and upon demand, pay the
difference between the rent and other costs and charges herein reserved and
agreed to be paid by Lessee for the portion of the term remaining at the time of
re-entry or repossession and the amount, if any, received or to be received
under such reletting for such portion of the term; or
(iii) Exercise all other rights and remedies available to Lessor
hereunder and at law or in equity.
All actions taken by Landlord pursuant to this Section shall be without
prejudice to any other remedies that otherwise might be available under this
Lease or applicable law.
(b) Any property which may be removed from the Leased Premises by
Lessor pursuant to the authority of this Lease or of law, to which Lessee is or
may be entitled, may be handled, removed or stored by Lessor at the risk, cost
and the expense of Lessee, and
<PAGE>
Lessor shall in no event be responsible for the value, preservation or
safekeeping thereof. Lessee shall pay to Lessor, upon demand, any and all
expenses incurred in such removal and all storage charges against such property
so long as the same shall be in Lessor's possession or under Lessor's control.
Any such property of Lessee not retaken from storage by Lessee within thirty
(30) days after the end of the lease term, however terminated, shall be
conclusively presumed to have been conveyed by Lessee to Lessor under this
Lease as a bill of sale.
(c) In the event Lessee defaults in the performance of any of the
terms, covenants, agreements or conditions contained in this Lease and Lessor
places the enforcement of this Lease, or any part thereof, or the collection of
any sums due or to become due hereunder, or recovery of the possession of the
Leased Premises, in the hands of an attorney, or files suit upon the same,
Lessee agrees to pay Lessor's reasonable attorneys' fees.
(d) Failure of Lessor to declare any default immediately upon
occurrence thereof, or delay in taking any action in connection therewith, shall
not waive such default, but Lessor shall have the right to declare any such
default at any time and take such action as might be lawful or authorized
hereunder, either at law or in equity.
21. Holding Over. If Lessee retains possession of the Leased Premises or
any part thereof after the termination of this Lease, Lessee shall pay rent at
double the basic rate payable on the month preceding such holding over computed
on a daily basis for each day that Lessee remains in possession. In addition
thereto, Lessee shall be liable for, and pay to Lessor, all damages,
consequential as well as direct, sustained by reason of Lessee's holding over.
22. Condemnation. If the Leased Premises shall be partially taken or
condemned for any public purpose to such an extent as to render a portion of the
Leased Premises untenantable, the rental provided for herein shall abate as to
the portion rendered untenantable. In the event the whole of the Leased Premises
shall be so taken or condemned, this Lease shall terminate as of the date of
taking of possession. All proceeds from any taking or condemnation of the Leased
Premises shall belong to and be paid to Lessor.
23. Damage or Destruction.
(a) Total Destruction. If the Leased Premises are damaged or
destroyed by fire, earthquake or any other casualty to such an extent as to
render the same untenantable in whole or in substantial part, Lessee shall give
Lessor immediate notice of the occurrence of such casualty. Unless Lessor
notifies Lessee within sixty (60) days after receipt of such notice of its
election to repair or to restore the Leased Premises, this Lease shall terminate
at the end of such thirty-day period. If Lessee shall not be in default under
this Lease, then Lessee's liability for rent shall cease as of the day following
the casualty and any rent paid by Lessee in advance and not yet earned as of
the date of termination shall be refunded to Lessee. Should Lessor elect to
repair and/or restore the premises, Lessor must notify Lessee of such decision
within sixty (60) days of date of loss. If Lessor elects to so repair the Leased
Premises it will
<PAGE>
do so within one hundred eighty (180) days and the rent shall be abated during
the period of repair or restoration in the same proportion as the untenantable
portion of the Leased Premises bears to the former leasable area of the Leased
premises. If more than twenty five percent (25%) of the leasable square feet in
the Building are damaged or destroyed by fire, earthquake or any other casualty,
then Lessor, at its sole option, may terminate this Lease upon notice to Lessee.
(b) Partial Destruction. In the event the Leased Premises are
damaged by fire, earthquake or any other casualty to such an extent that it is
not rendered untenantable in whole or in substantial part, then Lessor shall
promptly repair and restore the Premises. The rent shall be abated
proportionately as to the portion of the Leased Premises.
24. Insurance. Lessor shall maintain fire and extended coverage
insurance on the Building in which the Leased Premises are located. Said
insurance shall be maintained with an insurance company authorized to do
business in Tennessee in amounts desired by Lessor and at the expense of Lessor,
and payments for losses thereunder shall be made solely to Lessor. Lessee shall
be responsible for its own insurance coverage on its personal property. If the
premiums to be paid by Lessor shall exceed the standard rates because of
Lessee's operations, or contents of the Leased Premises, or improvements made to
the Leased Premises by Lessee, Lessee shall promptly pay the excess amount of
the premium upon request by Lessor as additional rent.
25. Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, to the extent such a waiver does not void any applicable
insurance coverage, Lessor and Lessee each hereby waive any and all rights of
recovery, claim, action or cause of action, against the other, its agents,
officers, or employees, for any loss or damage that may occur to the Leased
Premises, or any improvements thereto, or to the Building of which the Leased
Premises are a part, or any improvements thereto, or any personal property of
such party therein, by reason of fire, the elements, or any other cause to the
extent that such rights of recovery, claim, action or cause of action are
covered by insurance, regardless of cause or origin, including negligence of the
other party hereto, its agents, officers or employees, and each covenants that
no insurer shall have any right of subrogation against such other party.
26. Assumption of Risk. Lessee shall, and does hereby, assume all risks
of loss or injury to the property or person of all persons at any time coming
upon the Leased Premises during the term hereof, and Lessee shall, and does
hereby agree to, indemnify and save harmless Lessor for and from any and all
claims, demands, suits, judgments, costs or expenses on account of any such loss
or injury; and to that end, Lessee shall, at its own cost and expense, maintain
general public liability insurance for and on the leased premises, naming itself
and Lessor as insured parties, with limits of not less than $1 million combined
single limit for bodily injury and property damage. Such insurance shall be
effected by a valid and enforceable policy issued by an insurance company of
recognized responsibility doing business in the State of Tennessee and shall
contain a provision that coverage cannot be cancelled without ten (10) days'
written notice to Lessor. Lessee shall furnish to Lessor a copy of such
<PAGE>
policy and a certificate evidencing that the required insurance is in full force
and effect and showing Lessor as additional insured thereon.
27. Subordination, Non-Disturbance and Attornment. Lessee agrees that
its rights hereunder shall be subordinate to any mortgage or deed of trust, or
the lien resulting from any other method of financing or refinancing, now or
hereafter in force against the Building. Notwithstanding the forgoing, Lessee's
right to quiet enjoyment of the Leased Premises shall not be disturbed if Lessee
is not in default under the provisions of this Lease. Lessee agrees upon
Lessor's request to execute any subordination agreement requested by Lessor's
mortgage lender(s).
28. Estoppel Certificate. Lessee shall at any time, upon not less than
ten (10) days prior written request, execute and deliver in form and substance
satisfactory to Lessor and any mortgagee or beneficiary under a mortgage or deed
of trust affecting the Leased Premises an estoppel certificate certifying:
(a) The date upon which the lease term commences and expires;
(b) The date to which rent has been paid;
(c) That Lessee has accepted and is occupying the Leased Premises;
(d) That the Lease is in full force and effect and has not been
modified or amended (or if modified or amended, a description of same);
(e) That there are no defaults by Lessor under the Lease nor any
existing condition with respect to which the giving of notice or lapse of time
would constitute a default;
(f) That Lessee has received no notice from any insurance company of
any defects or inadequacies in the Leased Premises;
(g) That Lessee has no options or rights other than as set forth in
this Lease or any amendment thereto described in such letter; and
(h) Such other matters as may be necessary or appropriate to qualify
Lessee's response to any of the foregoing statements or which Lessor may
reasonably request.
If such certificate is to be delivered to a purchaser of the Building, it shall
further include the agreement of Lessee to recognize such purchaser as Lessor
under this Lease, and thereafter to pay rent to the purchaser or its designee in
accordance with the terms of this Lease. Lessee acknowledges that any purchaser
or prospective mortgagee of the Building may rely upon such estoppel letter and
that Lessor may incur substantial damages by reason of any failure on the part
of Lessee to provide such letter in a timely manner.
<PAGE>
29. Environmental Matters. The term "hazardous substances," as used
herein shall mean pollutants, contaminants, toxic or hazardous wastes or any
other substances the use and/or the removal of which is restricted, prohibited
or penalized by any "environmental law," which term shall mean any federal,
state or local law, ordinance or other statute of a governmental authority
relating to pollution or protection of the environment. Lessee hereby agrees
that (a) no activity will be conducted on the Leased Premises that will produce
any hazardous substance; (b) the Leased Premises will not be used in any manner
for the storage of any hazardous substances; (c) Lessee will not install or
place upon the Leased Premises any underground or above ground tanks of any type
and will not store, or allow the storage of, on the Leased Premises any
gasoline, oil, diesel fuel or other petroleum products; (d) Lessee will not
allow any surface of subsurface conditions to exist or come into existence that
constitute or with the passage of time may constitute a public or private
nuisance; and (e) Lessee will not permit any hazardous substances to be brought
into the Leased Premises. If at any time during or after the term of this Lease,
the Leased Premises are found to be in violation of any of the covenants set
forth in this section due to acts or occurrences during the occupancy of Lessee,
or caused by Lessee, then Lessee shall diligently institute proper and thorough
cleanup and remediation procedures at Lessee's sole cost. Lessee agrees to
indemnify and hold Lessor harmless from all claims, demand, actions,
liabilities, costs, expenses (including Lessor's attorney fees), damages and
obligations of any nature arising from or as a result of the use of the Leased
Premises by Lessee. The foregoing indemnification and the responsibilities of
Lessee shall survive the termination or expiration of this Lease. Lessee has
inspected the Leased Premises and to the best of Lessee's knowledge the Leased
Premises are free from environmental contamination at the execution of this
Lease.
30. Limitation of Liability. Notwithstanding any provision in this Lease
to the contrary, under no circumstances shall Lessor's liability or that of its
directors, officers, employees and agents, for failure to perform any
obligations arising out of or in connection with the Lease or for any breach of
the terms or conditions of this Lease (whether written or implied) exceed
Lessor's equity interest in the Building. Any judgments rendered against
Landlord shall be satisfied solely out of proceeds of sale of Lessor's interest
in the Building. No personal judgment shall lie against Lessor upon
extinguishment of its rights in the Building and any judgments so rendered shall
not give rise to any right of execution or levy against Lessor's assets.
31. Lessor's Right to Perform. If Lessee shall default in the
performance of any covenant or condition of this Lease required to be performed
by Lessee, Lessor may, at its option, perform such covenant or condition for the
account and at the expense of Lessee. The amount of any expense so incurred
shall be deemed additional rent and may, at the option of Lessor, be added to
any subsequent installment of the net monthly rent due and payable under this
Lease, in which event Lessor shall have the remedies for default in the payment
thereof provided by this Lease. The provisions of this paragraph shall survive
the termination of this Lease.
32. No Waiver. The failure of Lessor or Lessee to insist upon a strict
performance of any term or condition of this Lease shall not be deemed a waiver
of any right or remedy that
<PAGE>
Lessor or Lessee may have and shall not be deemed a waiver of any subsequent
breach of such term or condition.
33. Landlord-Tenant Relationship. It is expressly agreed and understood
that Lessor shall not be construed or held to be a partner or associate of
Lessee in the conduct of its business, it being expressly understood and agreed
that the sole relationship between the parties hereto is that of landlord and
tenant.
34. Assignment, Sublease, Transfer of Ownership Interest. There shall be
no assignment or subletting of this Lease, and there shall be no transfer of any
ownership interest in Lessee (if Lessee is other than a natural person), without
securing the prior written consent of Lessor, which shall be in Lessor's sole
discretion. It is understood and agreed that Lessee shall remain fully liable on
the Lease in such event and that any assignee or sublessee shall be bound by all
the terms and provisions of this Lease.
35. Notices. All notices and other communications to be given hereunder
by either party shall be in writing and shall be delivered personally, forwarded
by nationally recognized overnight express delivery service, or mailed, postage
prepaid, by first class mail to the other (and the date of any notice by
certified or registered mail shall be deemed to be the date of certification or
registration thereof) delivered or addressed to the parties as follows:
Lessor: Ferrari Partners, L.P.
357 Riverside Drive
Franklin, TN 37064
Lessee: Connected Software Solutions, LLC
357 Riverside Drive
Franklin, TN 37064
or at such other address as either party may later designate in writing.
36. General Provisions. The entire agreement between the parties hereto
is contained in this instrument and it is expressly agreed that no obligations
of Lessor or Lessee shall be implied in addition to those herein expressly
contained. Any amendment to this Lease must be in writing signed by the parties
hereto in order to be binding. The terms and provisions of this Lease shall be
binding upon and inure to the benefit of the parties hereto and to their
respective heirs, successors and assigns. This Lease shall be governed in
accordance with the law of the State of Tennessee. Captions herein are for
convenience only and shall not limit the scope or intent of the provisions of
this instrument. This instrument is severable such that the invalidity or
unenforceability of any provision hereof shall not impair the validity or
enforceability of the remaining provisions.
<PAGE>
IN WITNESS WHEREOF, the parties hereto on the day and date first above
written have executed this Lease in duplicate, with a copy to be retained by
each of the parties.
LESSOR:
FERRARI PARTNERS, L.P.
By: /s/ R. KEITH FERRARI
--------------------------
R. Keith Ferrari
LESSEE:
CONNECTED SOFTWARE SOLUTIONS, LLC
By: /s/ ROGER W. BARNES
--------------------------
Roger W. Barnes
<PAGE>
STATE OF TENNESSEE )
COUNTY OF DAVIDSON )
Personally appeared before me, the undersigned, a Notary Public in and
for said County and State, R. Keith Ferrari, with whom I am personally
acquainted, and who acknowledged that he/she executed the within instrument for
the purposes therein contained, and who further acknowledged that he/she is the
Managing Partner of the maker or a constituent of the maker and is authorized by
the maker or by its constituent, the constituent being authorized by the maker,
to execute this instrument on behalf of the maker.
WITNESS my hand, at office, this 7th day of December, 1998.
/s/ KIMBERLY A. DEVINE
-------------------------------
Kimberly A. Devine
Notary Public
My Commission Expires: 11-27-99
STATE OF TENNESSEE )
COUNTY OF DAVIDSON )
Personally appeared before me, the undersigned, a Notary Public in and
for said County and State, Roger Barnes, with whom I am personally acquainted,
and who acknowledged that he/she executed the within instrument for the purposes
therein contained, and who further acknowledged that he/she is the Chief Manager
of the maker or a constituent of the maker and is authorized by the maker or by
its constituent, the constituent being authorized by the maker, to execute this
instrument on behalf of the maker.
WITNESS my hand, at office, this 7th day of December, 1998.
/s/ KIMBERLY A. DEVINE
-------------------------------
Kimberly A. Devine
Notary Public
My Commission Expires: 11-27-99
<PAGE>
EXHIBIT A
A tract of land in the Ninth (9th) Civil District of Williamson County, City of
Franklin, Tennessee, and being more particularly described as follows:
Beginning at an existing concrete highway monument on the southerly right of way
line of Riverside Drive (formerly Old State Route No. 96) and the westerly right
of way of Frontage Road to I-65 (now called Riverside Drive); thence with the
westerly right of way of Riverside Drive S 42 deg. 34 min. 39 sec. E 126.05
feet to an iron pin; thence S 11 deg. 25 min. 57 sec. E 268.73 feet to an
iron pin, the SE corner of the herein described property; thence N 87 deg. 24
min. 9 sec. W 347.07 feet to an iron pin, the SW corner of the herein described
property; thence N 02 deg. 35 min. 05 sec. E 349.30 feet to an iron pin, the NW
corner of the herein described property, in the S margin of Riverside Drive;
thence with the south margin of Riverside Drive S 87 deg. 28 min. 59 sec. E
192.60 feet to the point of beginning, and containing 2.366 acres or 103,060.18
square feet by survey of Kevin A. Edmonson, Surveyor No. 1515, dated December 9,
1997.
<PAGE>
[MAP OF JACKSON PLACE CONDOS APPEARS ON THIS PAGE]
<PAGE>
EXHIBIT B
[DRAWING OF SECOND FLOOR APPEARS HERE]
<PAGE>
EXHIBIT C
FERRARI 357 BUILDING
- --------------------------------------------------------------------------------
Telecommunications Services
Telephone Numbers and Office Extensions
. Telephone Line & Number Set-up $ 50.00/each
. Telephone Line & Number $ 25.00/month
. Additional Office Extension Set-up $ 50.00/each
. Additional Office Extensions $ 25.00/month
. New Station Line-drop $150.00/each
. Data or Fax Line Set-up $ 50.00/each
. Data or Fax Line $ 25.00/each
. Incoming 800 Service Set-up $ 50.00/each
. ISDN Line Installation $ 50.00/each
. ISDN Line $ 25.00/month
. Direct Cable Internet Access Installation $ 50.00/each
. Direct Cable Internet Access $ 75.00/month
Equipment Rental
. 2008 Eight Button Telephone (Basic) $ 8.00/month
. 2616 Sixteen Button Telephone Speaker Phone $ 16.00/month
. 2616-D Sixteen Button Speaker phone with Display $ 18.00/month
. 2616-D-AOM Sixteen Button Speaker phone with
Display and Add on Module providing
sixteen additional buttons $ 25.00/month
Equipment Purchase (optional)
. 2008 Eight Button Telephone (Basic) $175.00/each
. 2616 Sixteen Button Telephone Speaker Phone $385.00/each
. 2616-D Sixteen Button Speaker phone with Display $500.00/each
. 2616-D-AOM Sixteen Button Speaker Phone with
Display and Add on Module providing
sixteen additional buttons $725.00/each
<PAGE>
FERRARI 357 BUILDING
- --------------------------------------------------------------------------------
Telecommunications Services
Optional Services
. Voice Mail Box Set-up $ 25.00/each
. Voice Mail Box $ 7.00/month
. Modifications to Telecommunications Features $110.00/hour
($) 25.00 minimum charge plus materials)
. Phone Card $ 6.00/month
(plus billed monthly for actual usage)
Telephone Usage
. Long Distance - Billed monthly per usage.
. Phone Card - Billed monthly per usage.
. Incoming 800 Service - Billed monthly per usage.
<PAGE>
GUARANTY
FOR VALUE RECEIVED, and in consideration of the lease of certain premises
by FERRARI PARTNERS, L.P. ("Landlord"), to CONNECTED SOFTWARE SOLUTATIONS, LLC
("Tenant"), pursuant to Lease of even date herewith (the "Lease"), entered into
between Tenant and Landlord, the undersigned Roger Barnes ("Guarantor"), hereby
unconditionally guarantees the full, prompt and faithful performance by Tenant,
its successors and assigns, of the Lease, and all the terms, covenants,
conditions, and obligations thereof, including but not limited to the payment by
Tenant of all sums which shall now or hereafter be due and payable thereunder,
and of all extensions, renewals, modifications and amendments thereof.
Guarantor agrees that this obligation shall be binding upon Guarantor
without any further notice or acceptance hereof, and the obligations herein
expressed shall be deemed to have been accepted by the execution of the Lease.
Upon each and every default by Tenant in the terms and provisions of the Lease,
without any notice or demand being required upon Guarantor, Guarantor shall pay
to the Landlord, in a single payment, six (6) months rent, including any/all
leasing commissions and all costs of Tenant Improvements amortized over five (5)
years, beginning on the anniversary date of year one, and will comply with and
perform all the terms, covenants, conditions, and obligations of the Lease, and
all extensions, renewals and modifications thereof which are binding upon
Tenant, and the successors and assigns thereof. No extension, forebearance, or
leniency extended by Landlord to Tenant shall discharge Guarantor or impair the
liability of Guarantor hereunder, and Guarantor agrees at all times that
Guarantor shall be liable notwithstanding any such extension, forbearance, or
leniency and notwithstanding that Guarantor has been given or received no notice
of any such default or of any forbearance, extension, or leniency. Landlord and
Tenant, and their respective successors and assigns, may enter into such
modifications, extensions, renewals, and amendments, and other covenants
respecting the Lease without any release of Guarantor, or impairment of the
liability of Guarantor hereunder.
Without authorization from or notice to Guarantor, Landlord, its successors
and assigns, may from time to time deal with Tenant, and alter, compromise,
accelerate, extend and change the time or amount of the payment of obligations
of Tenant under the Lease, and Guarantor's obligation and liability hereunder
shall not be thereby released impaired or discharged.
Guarantor hereby waives all rights and defenses which Guarantor may have in
the capacity of a guarantor or surety.
Guarantor shall be bound by each and every covenant, obligation, power and
authorization, without limitation, contained in the Lease, and all extensions,
renewals, modifications and amendments thereof, it being specifically agreed by
Guarantor hereunder that Guarantor's liability hereunder shall be primary, and
that Landlord may, at Landlord's sole option, proceed against the undersigned
with or without having commenced any action against or having obtained any
judgment against the Tenant, or any successor or assign thereof.
This Guaranty inures to the benefit of Landlord, its successors and
assigns, and is binding upon the Guarantor and the heirs, successors, and
assigns thereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 7th
day of December, 1998.
GUARANTOR
/s/ Roger W. Barnes
-----------------------------------
Roger W. Barnes
Sworn and subscribed before me
this 7th day of December 1998.
/s/ Kimberly A. Devine
- ------------------------------
Notary Public
My Commission Expires: 11-27-99
<PAGE>
GUARANTY
FOR VALUE RECEIVED, and in consideration of the lease of certain premises
by FERRARI PARTNERS, L.P. ("Landlord"), to CONNECTED SOFTWARE SOLUTATIONS, LLC
("Tenant"), pursuant to Lease of even date herewith (the "Lease"), entered into
between Tenant and Landlord, the undersigned Roger Barnes ("Guarantor"), hereby
unconditionally guarantees the full, prompt and faithful performance by Tenant,
its successors and assigns, of the Lease, and all the terms, covenants,
conditions, and obligations thereof, including but not limited to the payment by
Tenant of all sums which shall now or hereafter be due and payable thereunder,
and of all extensions, renewals, modifications and amendments thereof.
Guarantor agrees that this obligation shall be binding upon Guarantor
without any further notice or acceptance hereof, and the obligations herein
expressed shall be deemed to have been accepted by the execution of the Lease.
Upon each and every default by Tenant in the terms and provisions of the Lease,
without any notice or demand being required upon Guarantor, Guarantor shall pay
to the Landlord, in a single payment, six (6) months rent, including any/all
leasing commissions and all costs of Tenant Improvements amortized over five (5)
years, beginning on the anniversary date of year one, and will comply with and
perform all the terms, covenants, conditions, and obligations of the Lease, and
all extensions, renewals and modifications thereof which are binding upon
Tenant, and the successors and assigns thereof. No extension, forebearance, or
leniency extended by Landlord to Tenant shall discharge Guarantor or impair the
liability of Guarantor hereunder, and Guarantor agrees at all times that
Guarantor shall be liable notwithstanding any such extension, forbearance, or
leniency and notwithstanding that Guarantor has been given or received no notice
of any such default or of any forbearance, extension, or leniency. Landlord and
Tenant, and their respective successors and assigns, may enter into such
modifications, extensions, renewals, and amendments, and other covenants
respecting the Lease without any release of Guarantor, or impairment of the
liability of Guarantor hereunder.
Without authorization from or notice to Guarantor, Landlord, its successors
and assigns, may from time to time deal with Tenant, and alter, compromise,
accelerate, extend and change the time or amount of the payment of obligations
of Tenant under the Lease, and Guarantor's obligation and liability hereunder
shall not be thereby released impaired or discharged.
Guarantor hereby waives all rights and defenses which Guarantor may have in
the capacity of a guarantor or surety.
Guarantor shall be bound by each and every covenant, obligation, power and
authorization, without limitation, contained in the Lease, and all extensions,
renewals, modifications and amendments thereof, it being specifically agreed by
Guarantor hereunder that Guarantor's liability hereunder shall be primary, and
that Landlord may, at Landlord's sole option, proceed against the undersigned
with or without having commenced any action against or having obtained any
judgment against the Tenant, or any successor or assign thereof.
This Guaranty inures to the benefit of Landlord, its successors and
assigns, and is binding upon the Guarantor and the heirs, successors, and
assigns thereof.
IN WITNESS WHEREOF, the undersigned has executed this instrument this 7th
day of December, 1998.
GUARANTOR
/s/ Lance H. Duke
-----------------------------------
Lance H. Duke
Sworn and subscribed before me
this 7th day of December 1998.
/s/ Kimberly A. Devine
- ------------------------------
Notary Public
My Commission Expires: 11-27-99
<PAGE>
EXHIBIT 10.16
SUN
TRADEMARK
AND
LOGO
POLICIES
Version 7.0
August 1997
These Policies are applicable to all Sun organizations worldwide and to Sun
resellers, developers, customers, advertising agencies, consultants, and
professional writers and editors. These Policies may and should be distributed
freely both within and outside of Sun. This document is not confidential.
[Sun Microsystems Logo appears here]
<PAGE>
I. PREFACE
The Sun Trademark & Logo Policies set forth the authorized legal policies for
using or referring to Sun brands, trademarks, product and service names, logos,
slogans, and trade dress (external product designs and product packaging).
Sun's brands, marks, names, and logos are among the company's most important and
valuable corporate assets. These Policies are important to strengthening and
protecting Sun's brands, marks, names, and logos.
II. CONTENTS
Scope of Policies............................................................ 1
Sun's Trademark Group........................................................ 2
Definitions.................................................................. 2
Proper Trademark Use and Attribution......................................... 3
Trademark Use.......................................................... 3
Trademark Symbols...................................................... 4
Trademark Legends...................................................... 5
Sample Advertising Copy................................................ 6
Sample Press Release Copy.............................................. 7
Third-Party Use of Sun Trademarks...................................... 8
Potential Infringements................................................ 8
References to Sun Products............................................. 8
Compatibility References............................................... 9
Special Program Logos.................................................. 9
Other Branding Programs................................................ 11
Co-Logoing & Re-Logoing................................................ 11
New Marks and Names-Legal Review Process............................... 11
III. SCOPE OF POLICIES
These Policies apply to all Sun organizations worldwide and to Sun resellers,
developers, customers, advertising agencies, consultants, and professional
writers and editors. This document is not confidential to Sun and may be
distributed outside of Sun. Distribution to our business allies is encouraged.
These Policies apply to all external uses of Sun trademarks, service marks,
brands, logos, product names, taglines, slogans, etc. including (but not limited
to) product, product packaging, product labels, product inserts, advertisements,
press releases, all manner of promotional material and collateral, technical
publications, trade show materials, software boot-up screens, Internet postings,
external Web pages, domain names, and the like.
<PAGE>
IV. SUN'S TRADEMARK GROUP
If you have questions or would like further information regarding Sun's
trademark's or its Trademark and Logo Policies, please contact the Sun Trademark
Group in Sun's Corporate Legal Department:
Kate Rundle, Assoc. General Counsel X53386
Shelly Berliner, Counsel X53334
Ruby Zefo, Counsel X53335
Jan O'Dell, Sr. Paralegal X53332
Lisa Glover, Administrator X53331
Angie Maher, Administrator X53336
Address:
Sun Trademark Group
Sun Microsystems, Inc.
901 San Antonio Road, MS-CUP01-303
Palo Alto, CA 94303
Phone: (408) 863-3331
Fax: (408) 863-3354
Internal Group Email: [email protected]
External Group Email: [email protected]
You may also obtain further information at the Trademarks Homepage on the
SunWeb server, accessible via the Netscape tool. Or you may access Tmark, Sun's
on-line trademark database.
Trademark Homepage on the SunWeb Server:
URL: http://razmtaz.eng
Tmark: To access, just type "tmark &" in a shelltool and then
press "return."
V. DEFINITIONS
Sun Companies refers to Sun Microsystems, Inc. and all of its subsidiaries,
business units, and divisions worldwide.
Sun Trademarks refers to all subsidiary, business unit, and division names,
product names, service names, program names, logos, slogans, trade dress, and
all other designations used by any Sun Company, including but not limited to the
Sun Logo, Special Program Logos, and Sun Trade Dress.
Sun Logo is the Sun Corporate Logo consisting of the diamond-shaped graphic (the
"Sun Bug") next to "Sun Microsystems."
<PAGE>
Special Program Logos are the official logos provided by any Sun Company to Sun
developers, resellers, and other third parties participating in Sun marketing
programs, e.g., the Sun Authorized Reseller Logo or the Catalyst Developer Logo.
[For further information regarding use of Special Program Logos, see p. 9.]
Sun Trade Dress refers to the overall appearance of Sun's product packaging and
to the overall external product design of Sun's products, including distinctive
features such as the Sun Blue color, the Solaris sunburst design, and the dimple
pattern, pizza box shape, pedestal feet, and shark fin elements of Sun systems.
VI. PROPER TRADEMARK USE & ATTRIBUTION
A. Rules of Proper Trademark Use
Trademarks are adjectives -- not nouns or verbs. Accordingly, a trademark
should not be used alone, as a noun. Rather, as often as possible, a trademark
should be used as an adjective immediately preceding the generic noun that
describes the product in question. For example:
Sun(TM) workstation
Solaris(TM) software environment
SPARCstation(TM) 20 system
Netra(TM) Internet server
Sun(TM) system
This rule must be followed upon the first use of the mark in text or body copy,
and periodically thereafter. However, it need not be followed in headlines,
package titles, labels, or documentation titles.
To summarize the basic use rules:
Use as an Adjective: A trademark must be used as an
adjective followed by a generic noun
upon first use in text and
periodically thereafter. It need not
be followed by the generic noun in
headlines, package titles, labels, or
documentation titles.
No Possessives: Since a trademark is not a noun, it
must never be used in possessive
form.
No Plurals Since a trademark is not a noun, it
must never be used in plural form.
No Verbs: Since a trademark is not a verb, it
must never be used as a verb.
No Puns: Sun's trademarks are Sun's brands,
the symbols of Sun goodwill
worldwide. They should be treated
with respect as valuable corporate
assets. Accordingly, they should not
be used as the object of puns, e.g.,
"Make your Sun shine."
<PAGE>
B. Proper Trademark Attribution
Trademark ownership is attributed in two ways, with the use of a trademark
symbol(TM, SM) or (R) after the trademark, and with a trademark legend, usually
found at the end of a document in mouseprint following the copyright notice.
Following are Sun's rules for use of its trademark symbols and legends.
Trademark Symbols:
Which Symbol Do I Use?
Even though many of Sun's marks are registered in the U.S. and abroad, Sun uses
the (R) symbol only with the Sun Logo. All other trademarks should have the (TM)
or (SM)symbols for trademarks and service marks, respectively. A trademark is a
mark used on or in connection with a tangible product, e.g., a Sun(TM)
workstation or the Solaris(TM) software environment. A service mark is used in
connection with the provision of services, e.g., the SunSpectrum(SM) service
program.
Where Do I Place the Symbol?
The symbol is placed immediately after the trademark, either in superscript or
subscript. If you don't have the appropriate symbol keys in your word processing
software, then using the symbols in parenthetical form is also okay, e.g., (SM)
or (TM). The symbol is generally placed before any model designation, although
not always. And some marks require more than one symbol. Please consult Tmark,
Sun's on-line trademark database (just type "tmark &" in a shelltool), for a
complete, up-to-date list of Sun trademarks along with their appropriate symbols
and attributions. Updated hard copies of the list are available directly from
the Sun Trademark Group.
When Do I Use the Symbol?
Follow these rules to determine when use of a trademark or service mark symbol
is required:
Most Prominent Uses: All Java based marks must bear a trademark symbol
on all prominent uses, including advertising and press release
headlines. For all other Sun Trademarks, a trademark symbol is
required for all prominent use of the mark, e.g., labels, packaging,
promotional brochures, data sheets, etc., except prominent uses in
press releases and advertisement headlines.
First Use in Text: A trademark symbol is required upon the first use
of the mark in any text or body copy, even though the symbol may have
already been used in the headline or other prominent use.
All Logos: Trademark symbols are required for all Sun Trademarks in
logo format, e.g., The Sun Logo, the Java Coffee Cup Logo, the
UltraSPARC Driven Logo, etc.
<PAGE>
Trademark Legends:
All Sun and SPARC trademarks that are used in a particular piece must be
attributed in an appropriate trademark legend. The legend may be presented in
"mouseprint" but must be large enough to be legible. It generally appears at the
end of a document or on the back of a package, but it may be placed elsewhere,
e.g., the front inside cover of documentation, or the bottom of a Web page.
Sun uses a standard trademark legend that does not change except to add the
marks that are referenced in the text. The legend is constructed out of the
standard copyright notice (consult your OpCo or Geo counsel) followed by two
separate trademark legends: the Sun Legend, and the SPARC Legend where SPARC
trademarks are referenced in the materials.
Sun Legend: Following is the standard Sun Legend to be used in all material
referencing any Sun Trademark:
"Sun, Sun Microsystems, the Sun Logo [insert all other Sun trademarks,
Special Program Logos, Product Names, Service Names, Program Names,
and slogans that are referred to or displayed in the document] are
trademarks or registered trademarks of Sun Microsystems, Inc. in the
United States and other countries."
[Note: The Sun, Sun Microsystems, and Sun Logo marks are included in every
trademark legend regardless of whether they are referenced or displayed and
regardless of the Sun Company preparing the document.]
SPARC Trademark Legend: Following is the standard legend to be used in all
material referencing any SPARC trademark:
"All SPARC trademarks are used under license and are trademarks or
registered trademarks of SPARC International, Inc. in the United
States and other countries. Products bearing SPARC trademarks are
based upon an architecture developed by Sun Microsystems, Inc."
Example Legend: Following is an example of a complete trademark legend where
SPARC trademarks are referenced. Note that the specific Sun marks used in the
document must be inserted into the Sun portion of the legend, whereas the SPARC
portion of the legend never changes.
Sun, Sun Microsystems, the Sun Logo, SunSoft, Solaris, Java and Netra
are trademarks or registered trademarks of Sun Microsystems, Inc. in
the United States and other countries. All SPARC trademarks are used
under license and are trademarks or registered trademarks of SPARC
International, Inc. in the United States and other countries. Products
bearing SPARC trademarks are based upon an architecture developed by
Sun Microsystems, Inc.
<PAGE>
Attribution of Third-Party Marks: Sun's general rule is not to attribute any
third-party marks except in certain special cases, such as where we have
contractually agreed to do so. Accordingly, as a general rule, trademark symbols
and legends should not be used with third-party marks. Similarly, a "generic" or
"catch-all" legend should not be used to attribute third-party marks.
Third-party marks that Sun is required to attribute appear in Tmark. If you
believe a third-party mark should be attributed, consult Tmark. If the mark
appears in Tmark, then use the appropriate trademark symbol and attribute the
mark in the legend. If you believe it may be necessary for Sun to attribute a
third-party mark that does not appear in Tmark, or if you are negotiating a
contract that includes a provision requiring Sun to acknowledge or attribute a
third party's trademarks, please contact the Sun Trademark Group and/or your
OpCo legal counsel right away for further guidance.
VII. Sample Advertising Copy
This example illustrates proper trademark use and attribution in a Sun
promotional brochure or advertisement. The same policies apply to Sun reseller,
developer, or other third-party ads using Sun trademarks. See footnotes for
explanation.
================================================================================
Which Would You Rather Go Through
To Get On The Internet?
The Netra(TM) Internet server.
First in a line of new Netra servers from Sun.
This one's a no-brainer. Buy a Sun(TM) Netra(TM) server. Plug it in. And in
about half an hour your company is on the Internet. You can perform this seeming
sleight of hand because Sun Netra servers are the only servers that come
complete and preconfigured for the Internet.
[Logo of Sun Microsystems appears here]
(c) 1994 Sun Microsystems, Inc. All Rights Reserved. Sun, Sun Microsystems, the
Sun Logo, Netra, and The Network Is The Computer are trademarks or registered
trademarks of Sun Microsystems, Inc. in the United States of America and other
countries.
================================================================================
<PAGE>
Footnotes
The Netra mark is used prominently in a headline, and must therefore have a
trademark symbol after it. It must also be marked with a symbol upon its first
use in body copy, as shown; but not thereafter. Similarly, the Sun mark is
marked with a symbol upon its first use in body copy. The Network is the
Computer is also marked upon its first and most prominent use. The Sun Logo
requires a trademark symbol. All product marks are followed by the appropriate
generic term, e.g. "server" for the Netra mark. Use of the generic "server" is
required on the first reference in body copy, as shown. Here the generic is also
used in the headline and in subsequent references in body copy -- this is
desirable, but not required. The trademark legend attributes all marks used in
the advertisement, as well as the Sun Microsystems mark which is not used but
which is always attributed in every legend (along with the Sun and Sun Logo
marks, whether or not they are actually used). No SPARC marks are attributed
since none are used, but if they were used, the appropriate additions to the
trademark legend would be necessary.
VIII. Sample Press Release Copy
Following are three samples of the same third party press release: the first
demonstrates incorrect trademark use, the second highlights the trademark
misuses, and the third demonstrates proper trademark use.
Incorrect trademark use in a press release
TECHNA GRAPHICS PORTS 3-D MODELING SOFTWARE TO SUN
MOUNTAIN VIEW, Calif. - January 15, 1994 - Sun Microsystems Inc. and Techna
Graphics announced today that Techna Graphics will port its OPEN LOOK 3-D
modeling software to Sun SPARCstations. The Techna Graphics 3-D package for Suns
allows users to import images created with other Sun compatible modeling
software. "We're excited about developing our Sun product on Solaris--any
machine that runs Solaris applications will run Techna Graphics' 3-D system,"
said Techna Graphics' vice president of marketing, Cindy Jones. The Techna
Graphics 3-D modeling system runs on all SPARC compatible systems, in addition
to Suns.
Same press release with trademark misuses shown in brackets
TECHNA GRAPHICS PORTS 3-D MODELING SOFTWARE TO SUN
MOUNTAIN VIEW, Calif. - January 15, 1994 -Sun Microsystems Inc. and Techna
Graphics announced today that Techna Graphics will port [its OPEN LOOK 3-D
modeling software] to Sun [SPARCstations]. The Techna Graphics 3-D package for
[Suns] allows users to import images created with other Sun compatible modeling
software. "We're excited about developing [our Sun product] on [Solaris] -- any
machine that runs [Solaris applications] will run Techna Graphic's 3-D system,"
said Techna Graphic's vice president of marketing, Cindy Jones. The Techna
Graphics 3-D modeling system runs on all SPARC compatible systems, in addition
to [Suns].
Same press release with proper trademark use
TECHNA GRAPHICS PORTS 3-D SOFTWARE TO SUN
MOUNTAIN VIEW, Calif. - January 15, 1994 - Sun Microsystems Inc. and Techna
Graphics announced today that Techna Graphics will port its 3-D modeling
software to Sun(TM) SPARCstation(TM) systems. The Techna Graphics 3-D package,
with the OPEN LOOK graphical interface, allows users to import images created on
Sun systems with other modeling software. "We're excited about porting our 3-D
system in the Solaris(TM) software environment -- any machine that runs
applications compatible with the Solaris environment will run Techna Graphics'
3-D system," said
<PAGE>
Techna Graphics' vice president of marketing, Cindy Jones. The Techna Graphics
3-D modeling system runs on all SPARC(TM) systems, including Sun systems.
IX. Third-Party Use of Sun Trademarks
Only certain, approved uses of Sun Trademarks may be made by Sun business
partners and other third parties. Unauthorized use of Sun Trademarks or of marks
that are confusingly similar to Sun Trademarks may constitute an infringement of
Sun's trademark rights. Following are Sun's general policies regarding third-
party uses of Sun Trademarks.
A. No Use of Sun Marks in Third-Party Company or Product Names.
Third parties generally may not use the Sun mark, the Java mark, the Solaris
mark, or any other Sun Trademark as all or part of their company or product
names. This is especially true of Sun's business allies, such as resellers and
ISVs, who sometimes wish to leverage off of Sun's marks by including Sun or
Java or Solaris in their product or company names. Whether a particular use is
permissible will depend on the circumstances of the use. Accordingly, any such
use or proposed use should be reported immediately to the Trademark Group for
appropriate further action.
B. No Use of Sun Trade Dress by Third Parties. Third parties generally are
prohibited from using Sun Trade Dress (see Definitions) for their own products,
including any of the distinctive ornamental features of Sun products and
packaging such as the Sun Blue color, dimple patterns, blue pedestal feet, shark
fins, the Solaris sunburst design, and the like. Any such use must be approved
by Sun Legal.
C. Promptly Report Suspected Infringements. Promptly report any possible
infringement of Sun Trademarks or Trade Dress to Sun Trademark Counsel. Any
unauthorized use of a Sun Trademark or a mark that is confusingly similar to a
Sun Trademark should be reported immediately. Please provide as much detail as
possible regarding the identity of the possible infringer and well as the
suspected infringing use.
D. Proper References to Sun Products Okay.
Of course, third parties may use Sun Trademarks to refer to Sun products, so
long as Sun's marks are used properly as adjectives and are used with the proper
trademark symbols and legends (as discussed in Section VI above). For example, a
reseller will obviously use Sun Trademarks in its advertisements to advertise
the Sun products that bear those trademarks - this is entirely acceptable so
long as the reseller properly uses the marks and the appropriate trademark
symbols and legend. Similarly, while an ISV is not permitted to indicate that
its software is intended for Sun systems by incorporating Sun or Solaris or Java
in the name of its software product, it may use a tagline that truthfully
states that the product is for Sun systems or for the Solaris or Java
environments. For example:
<PAGE>
Right: Techna/G(TM)
For the Solaris(TM) Software Environment
Techna/G(TM)
Java(TM) Edition
Wrong: Techna/G(TM) for Solaris
Techna/G: Solaris Version 2.3
SunTechna/G
Techna/G
Solaris Compatible
TechnaJava
Techna/G
Java Compatible
When using a tagline to indicate that the product is for use with Sun systems or
software, the tagline must be presented in typeface that is significantly
smaller than that used for the product and/or company names of the third party--
the third party's own product and company names should be displayed much more
prominently than any Sun Trademark referenced.
E. No Use of Sun Logos, except Special Program Logos.
Sun's third-party business allies (e.g., resellers, ISVs, independent sales or
service organizations) may not use the Sun Logo as part of their own logo or
otherwise, except that they may use Special Program Logos ("SPLs") subject to
the following guidelines and restrictions.
l. Approved Format Only. Special Program Logos or SPLs have a consistent
format throughout Sun, cross-OpCo and cross-Geo. In a box, they contain the Sun
Logo and a description of the third-party relationship to Sun. The entire SPL is
always rendered in black (not Sun Blue.) Following are samples of SPLs which an
authorized reseller could use for any Sun business unit:
<PAGE>
[Logo of Sun Microsystems [Logo of Sun Microsystems
appears here] appears here]
AUTHORIZED RESELLER MASTER RESELLER
[Logo of Sun Microsystems [Logo of Sun Microsystems
appears here] appears here]
SYSTEM INTEGRATOR VALUE ADDED RESELLER
New SPLs for new programs may be created by Sun marketing organizations as
needed, as long as the new SPL follows the above format and clearly describes
the relationship between Sun and the ally in the lower half of the box. New SPLs
need to be approved in advance by the Sun Trademark Department.
2. No Alterations. Sun third-party business allies must obtain SPL
camera-ready artwork directly from their Sun marketing representative, and may
not alter SPLs in any way.
3. Pre-Sale Marketing Materials Only. SPLs may be used only in pre-sale
marketing materials such as advertisements and other promotional materials,
e.g., company brochures, catalogs, product collateral, and the like. They may
also be displayed on the ally's business cards and letterhead. SPLs may not be
displayed on products, product labels, product packaging, documentation, or any
materials accompanying products at or after the point of sale.
4. Display of SPLs. Any material in which an SPL is displayed must also
prominently display the business ally's own name and logo. The SPL must be
displayed in a size and manner that is smaller and less prominent than the
business ally's own name and logo.
5. Signed Contract Required. Permission to use an SPL must be granted in
writing in a binding agreement signed by both parties. In most cases, SPL
permission will be granted in the reseller agreement or other agreement
governing the relationship between Sun and the business ally. Contact Sun
Trademark Counsel for the appropriate contract language.
<PAGE>
F. Legal Approval Required for All Other Branding and Logo Programs. Any other
branding or logo programs that do not meet the precise SPL criteria described
above must be approved in advance by the Sun Trademark Group. Specifically, this
includes compatibility logos for ISVs and IHVs and special partner logos that do
not follow SPL format or use rules. It is advisable to involve the Sun Trademark
Group as early as possible in the planning stages for any such program because
such programs present uniquely complex legal issues as well as potentially high
administrative costs. Working through these issues can take time.
G. No Re-Logoing, Co-Logoing, or Logo Removal. Resellers of Sun products may
never alter or modify the Sun Logo or Sun Trademarks that are affixed to or
appear on the Sun products they resell. Similarly, re-logoing (replacing Sun's
Trademarks with the reseller's logo or mark) and co-logoing (adding the
reseller's logo or mark to the Sun product) are generally contrary to Sun policy
and will be approved only in exceptional cases. Advance approval for re-logoing
and co-logoing must be obtained from the Sun Trademark Group and from senior
sales and marketing management. Please contact the Sun Trademark Group for
further information.
X. New Marks and Names -- Legal Review Process
All new names, marks, and logos to be adopted by any Sun OpCo, subsidiary,
division, business unit or Geo must receive legal review before adoption.
Specifically, all of the following must receive legal review by the Trademark
Group:
Product Names
Product Line Names
Company, Opco, and Division Names
Service Names
Name Extensions (extension of an existing name
to additional Sun products)
Names licensed to Sun by others
Program Names
Feature Names
Slogans and Taglines
Catch Phrases
Logos
Package Designs
Model Numbers and other Model Designations
Abbreviations and Acronyms
Internet Domain Names (primary and secondary)
Web GIFs
File Names (for on-line software distribution)
Compatibility Logos
Special Program Logos
Partner Brands
Legal review of new names and marks can easily take up to six months or more
under some circumstances. Accordingly, it is imperative that the legal review
process be started
<PAGE>
EXHIBIT B
General Information
1. Authorized Location(s):
A. General Information:
Company: NET Information Systems, Inc.
Address: 5701 6th Ave. S., Suite 503, Seattle WA, 98108-2521
Phone: (206) 674-0060
Fax: (206) 674-0069
Email: [email protected]
Contact Person: Mark D. Slosberg
B. Brief Description:
Reseller/Database Development since 1981
Commercial UNIX since 1984 (SCO, Intel Xenix, NCR)
TCP/IP Integration since 1985
Oracle Reseller/Integration since 1988
Sun Reseller since 1991 (first commercial reseller in Pacific
Northwest)
2. Territory:
North America
3. Services:
Java Application and Enterprise Architecture
Java Application Development
Oracle Application Development
Routed TCP/IP Infrastructure Engineering/Implementation
SunServer Implementation/Administration
Oracle Server Implementation/Administration
4. Launch Date: July 1, 1998
5. Governing Law: The laws of the state of California.
8
<PAGE>
EXHIBIT C
Staff; Training and Certification
1. Staff:
a. One (1) Senior business executive (as identified below)
b. A minimum of twenty-five (25) full-time employees
c. Two (2) Java Architects
2. Senior Business Executive Contact Information:
Name: Mark D. Slosberg
Company: NET Information Systems, Inc.
Address: 5701 6th Ave. S. Suite 503
Seattle, WA 98108-2521
Telephone: (206) 674-0066
Fax: (206) 674-0069
Email: [email protected]
3. Training/Certification Requirements:
a. Java Developer Training
Company must have at least two (2) staff members attend SunEd Java
Developer training/certification examination. Course number and exam
numbers are:
Course Number: SL-300
Exam Number: 310-321
b. Specialty.
Directory Services
Database Integration
Legacy Integration (3270,5250, VT220...)
9
<PAGE>
EXHIBIT D
SUN CENTER EQUIPMENT
Sun 670 Upgrades
Sparc10
(2) Ultra 1
(2) Ultra 5
T-1 to internet
Sparc2 with Checkpoint Firewall-1
Java Workshop
Java Studio
10
<PAGE>
EXHIBIT E
EQUIPMENT LOAN AND SOFTWARE LICENSE AGREEMENT
(attached)
Blank attached for reference.
11
<PAGE>
PAGE 37
SUN MICROSYSTEMS COMPUTER COMPANY
Equipment Loan & Software License Agreement
Sun agrees to loan to Bailee, free of charge on the terms and conditions of this
Equipment Loan And Software License Agreement, the equipment and/or software
identified herein. Bailee acknowledges and agrees that it may use the loaned
equipment solely in connection with the purposes identified below.
- --------------------------------------------------------------------------------
1. LOANED/LICENSED TO:
Company: Division:
---------------------- --------------------
Address: Country:
---------------------- --------------------
City/State/Zip:
----------------------
2. DESIGNATED SITE:
Company: Division:
---------------------- --------------------
Address: Country:
---------------------- --------------------
City/State/Zip:
----------------------
3. DESIGNATED EQUIPMENT FOR LOANED SOFTWARE:
Model: Serial #:
---------------------- --------------------
4. LOAN PERIOD:
Delivery: Return:
---------------------- --------------------
5. PRIMARY & SECONDARY CONTACTS FOR BAILEE:
Primary Name:
----------------------
Company: Division:
---------------------- --------------------
Address: Country:
---------------------- --------------------
City/State/Zip: Fax:
---------------------- --------------------
Telephone:
----------------------
E-mail:
----------------------
Second Name:
----------------------
Company: Division:
---------------------- --------------------
Address: Country:
---------------------- --------------------
City/State/Zip: Fax:
---------------------- --------------------
Telephone:
----------------------
E-mail:
----------------------
6. SUN SPONSOR:
Name: E'ee#:
---------------------- --------------------
7. DESCRIPTION OF LOANED EQUIPMENT (HARDWARE):
<TABLE>
<S><C>
Product ID Model or Release Part# Serial# Quantity List Price
1. $
2. $
3. $
</TABLE>
8. DESCRIPTION OF LOANED EQUIPMENT (SOFTWARE AND DOCUMENTATION) (FOR SOURCE
CODE, ATTACH LIST OF FILES)
<TABLE>
<S><C>
Product ID Model or Release Part# Serial# Quantity List Price
1. $
2. $
3. $
</TABLE>
See next page or reverse side for terms and conditions of loan
<PAGE>
TERMS AND CONDITIONS
[Partially Illegible] This Agreement is made and entered into as of the Delivery
Date by and between Sun Microsystems, Inc., acting by and through its Sun
Microsystems Computer Company on ("Sun") and the company named on the preceding
page ("Being").
1. USE AND LOCATION OF PRODUCTS
Bailee shall use the Loaned Equipment and [partially illegible] or Loaned
Software (collectively referred to as "Products") solely for the purpose of
____________. Bailee shall be solely responsible for installation of the
Products at the Designated Site.
2. TITLE
Title and full ownership rights to the loaned Equipment are and shall remain
with Sun. Sun hereby reserves, and Bailee hereby agrees that Sun shall have, a
security interest in the Loaned Equipment, and Bailee further agrees to execute
and deliver, upon request, UCC-1 financing statements or any other instruments,
recordings, or filings deemed necessary by Sun to perfect and present its right,
title, and interest in and to the Loaned Equipment under applicable local law.
Bailee shall not move the Loaned Equipment or any portion thereof from the
Designated Site without the prior written approval of Sun.
3. TERM AND TERMINATION
3.1 This Agreement shall be effective upon the first delivery of Products
and it shall remain in force until the Return Date specified on the reverse
side. Either party may terminate this Agreement at any time for any reason.
3.2 Upon the termination of this Agreement for any reason, Bailee shall
immediately terminate use of the Products, and within five (5) days return the
Products to Sun.
4. RISK OF LOSS OR DAMAGE
Bailee shall be responsible for the Products from the time they are delivered to
Bailee or a common carrier, as the case may be, until they are returned to Sun.
Bailee shall reimburse Sun for any damage to the Products sustained during this
time period, except for reasonable wear and tear. Bailee shall insure the
Loaned Equipment against loss or damage during the term of this Agreement, and
shall deliver to Sun, upon request, proof of such insurance. Upon return of the
Products, Sun shall provide Bailee with an invoice for damage to the Products,
payable by Bailee upon receipt. Failure by Sun to provide such an invoice
within sixty (60) days following return of the Products by Bailee shall
constitute acceptance of the Products "as is," and no reimbursements by Bailee
shall be required.
5. SOFTWARE LICENSE
5.1 Sun hereby grants to bailee a nontransferable, nonexclusive, limited
license to use the Loaned Software in machine-readable form on the Loaned
Equipment (or, if applicable, the identified evaluation system) at the
Designated Site. Title to all copies of the Loaned Software remains in Sun or
in the third parties from whom Sun has acquired license rights. No license is
granted for use of the Loaned Software on other than the Loaned Equipment.
5.2 In the event that Products are loaned for the purpose of development
and Bailee desires to develop software programs which incorporate portions of
Loaned Software ("Developed Programs"), the following provisions apply, to the
extent applicable: Developed Programs are to have an application programming
interface that is the same as Software; fonts within Software are to remain
associated with their toolkit or server, Developed Programs may be used and
distributed, but only on computer equipment licensed to utilize Software, unless
an additional Developer's License Agreement has been executed by Sun and Bailee.
Bailee is not licensed to develop printing applications or print, unless Bailee
has secured a valid printing agreement; incorporation of portions of Motif(R) in
Developed Programs may require reporting and payment of royalties to Sun; and
Bailee agrees to indemnify, hold harmless, and defend Sun and its licensors from
and against any claims or suits, including attorneys' fees which arise or result
from distribution or use of Developed Programs to the extent such claims or
suits arise from the development performed by Bailee.
5.3 Loaned Software is confidential and proprietary information of Sun
and/or its licensors. Bailee agrees to take adequate steps to protect Loaned
Software from unauthorized disclosure or use.
5.4 [Partially illegible] Except as specifically authorized in Paragraph 1
above, Bailee shall not modify, decompile, disassemble, decrypt, extract, or
otherwise reverse engineer Loaned Software, except to the extent any of the
foregoing limitations are unenforceable under applicable law. Loaned software
is not designed or licensed for use in on-line equipment in hazardous
environments such as operation of nuclear facilities, aircraft navigation or
control, or direct life support machines, and Bailee shall not use Loaned
Software in such applications.
6. DISCLAIMER OF WARRANTIES & LIMITATIONS OF LIABILITY
6.1 THE PRODUCTS ARE PROVIDED "AS IS." SUN MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE PRODUCTS.
6.2 IN NO EVENT SHALL SUN BE LIABLE FOR ANY DIRECT, SPECIAL, INDIRECT,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES RELATED TO THIS AGREEMENT OR THE USE OF
PRODUCTS. EVEN IF SUN HAS BEEN ADVISED OF OR OTHERWISE HAS REASON TO KNOW OF
THE POSSIBILITY OF SUCH DAMAGES.
7. IMPORT AND EXPORT LAWS
Products and Sun Technology delivered under this Agreement are subject to U.S.
export control laws and may be subject to export or import regulations in other
countries. Bailee agrees to comply strictly with all such laws and regulations
and acknowledges that it has the responsibility to obtain such licenses to
export, re-export, or import as may be required after delivery to Bailee.
8. AIRCRAFT PRODUCTS AND NUCLEAR APPLICATIONS
PRODUCTS AND SUN TECHNOLOGY DELIVERED BY SUN UNDER THIS AGREEMENT ARE NOT
DESIGNED OR INTENDED FOR USE IN 0N-LINE CONTROL OF AIRCRAFT, AIR TRAFFIC,
AIRCRAFT NAVIGATION OR AIRCRAFT COMMUNICATIONS, OR IN THE DESIGN, CONSTRUCTION,
OPERATION OR MAINTENANCE OF ANY NUCLEAR FACILITY. SUN DISCLAIMS ANY EXPRESS OR
IMPLIED WARRANTY OF FITNESS FOR SUCH PURPOSES.
9. MISCELLANEOUS
9.1 This Agreement is the parties' entire agreement relating to loan of the
Products and supersedes all prior or contemporaneous oral or written
communications, proposals, conditions, representations, and warranties, and
prevails over any conflicting or additional terms of any quote, order,
acknowledgement, or other communication between the parties relating to loan of
the Products during the term of this Agreement. No modification to this
Agreement will be binding, unless in writing and signed by an authorized
representative of each party.
9.2 Neither party may assign or otherwise transfer any of its rights or
obligations under this Agreement, without the prior written consent of the other
party, except that Sun may assign its right to payment and may assign this
Agreement to an affiliated company.
9.3 If any term or provision of this Agreement is found to be invalid under
any applicable statute or rule of law, then, that provision notwithstanding,
this Agreement shall remain in full force and effect and such provision shall be
deleted.
9.4 Any action related to this Agreement will be governed by California law
and controlling federal law. No choice of law rules of any jurisdiction will
apply.
9.5 In addition to any other relief, the prevailing party in any action
arising out of this Agreement shall be entitled to attorneys' fees and costs.
9.6 "Sun Trademarks" means all company names, product names, marks, logos,
designs, trade dress, and other designations or brands used by Sun in connection
with Products, including Sun, Sun Microsystems, the Sun Logo, SPARCstation,
SPARCserver, Solaris, etc. and all Sun products designs. Bailee is granted no
right, title, or license to, or interests in any Sun Trademarks. Bailee shall
display Products with the Sun Trademarks as affixed by Sun and shall not remove,
alter, or add to any Sun Trademarks.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.
SUN MICROSYSTEMS, INC. by its division
SUN MICROSYSTEMS COMPUTER COMPANY
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Date:
---------------------------------------
BAILEE
- ----------------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Date:
---------------------------------------
<PAGE>
EXHIBIT F
MARKETING ACTIVITIES
1. Website
Company will be included in Sun-maintained Authorized Java Center websites.
2. Sales Development Events
3. Trade Shows
4. Other:
12
<PAGE>
SUN MICROSYSTEMS IVAR
AGREEMENT
<PAGE>
SUN MICROSYSTEMS INC.
-----------------------------------------------------------------------------
FAX Transmittal [Logo of Sun Microsystems appears here]
16000 North Dallas Parkway, Suite 700
Dallas, TX 75248
FAX: 972.450.1679
Voice: 972.392.5067
- --------------------------------------------------------------------------------
DATE: 1-26-00
- --------------------------------------------------------------------------------
SENT BY: Marla Lewis
- --------------------------------------------------------------------------------
TO: Robert Nelson
- --------------------------------------------------------------------------------
COMPANY: EpicEdge
- --------------------------------------------------------------------------------
FAX NUMBER: 713-784-2486
- --------------------------------------------------------------------------------
NUMBER OF PAGES (WITH COVER): 9
- --------------------------------------------------------------------------------
MESSAGE:
- --------------------------------------------------------------------------------
<PAGE>
EpicEdge
January 26, 2000
Richard Karam
Sun Microsystems
16000 N. Dallas Parkway, Suite 700
Dallas, TX 75248
Dear Mr. Karam:
EpicEdge/Design Automation Systems Inc. is requesting an executed copy of the
IVAR contract. Please fax this executed copy to the attention of Robert Nelson
at 713-784-2486.
Thank you for your immediate attention to this matter.
Sincerely,
/s/ Gary Young
- -------------------------------------
Gary Young
EVP Enterprises Solutions
EpicEdge
<PAGE>
Agreement No.: IVAR JV-002TTP
SUN MICROSYSTEMS COMPUTER CORPORATION
U.S. INDIRECT VALUE ADDED RESELLER ("IVAR") AGREEMENT
This AGREEMENT is effective on July 10, 1992 ("Effective Date") by and between
Sun Microsystems Computer Corporation ("Sun"), a Delaware corporation, having a
place of business at 2550 Garcia Avenue, Mountain View, California 94043 and
Design Automation Systems Inc. ("Reseller") having a place of business at 6100
Corporate Dr., Suite 380, Houston, TX 77036
1. SCOPE
This Agreement governs Reseller's authorization to purchase certain Sun
products ("Products") from a designated Sun Authorized master reseller
("Master Reseller") and to resell those Products in the United States to end
users other than the Federal Government ("End Users"). Products (identified
by "Product Tiers"), approved buying and selling locations, and the identity
of the designated Master Reseller are set out in Exhibit A. Sun may
discontinue any Product upon sixty (60) days' notice.
2. APPOINTMENT
Sun appoints Reseller as a non-exclusive Indirect Value Added Reseller
("IVAR"). IVAR is authorized to purchase Products from its designated Master
Reseller. Products must be (i) sold, leased or rented (collectively referred
to as "sold") as part of a total solution consisting of Products and the
added value set forth in Exhibit B, (ii) sold directly to End Users on a
face-to-face basis, and (iii) installed at an End User site in the United
States ("Authorized Sale"). The sale of Products to resellers and to the
federal government is prohibited unless consented to in writing by Sun.
IVAR's primary business must at all times be the sale and support of computer
systems.
3. RESELLER DEVELOPEMNT FUNDS
IVAR shall receive directly from Sun, Reseller Development Funds ("RDF")
equal to two and thirty-six hundredths percent (2.36%) of the value of its
purchases of Products computed at Sun's list price, excluding Products
purchased from SunExpress and Products not purchased for resale. Sun may
modify this Section upon ninety (90) days' Notice.
4. BUSINESS PLAN
IVAR agrees to market and support Products in compliance with a Business Plan
developed by IVAR and approved by Sun (attached as Exhibit C). Either party
may initiate a review of IVAR's selection of and/or compliance with
objectives, strtegies, and tactics under the Business Plan upon thirty (30)
days' notice, provided that Sun shall initiate no more than one review per
calendar quarter. IVAR's failure to comply with its tactics under the
Business Plan shall constitute a material breach of this Agreement.
5. IVAR REFERENCE GUIDE
Sun's IVAR policies are detailed in its VAR Reference Guide ("Guide"). IVAR
represents that it has read the Guide and will comply with all applicable
rules and procedures. Sun may modify the Guide from time to time upon sixty
(60) days' Notice.
6. RESELLER COMMISSION PROGRAM
IVAR may participate in Sun's Reseller Commission Program as detailed in the
Guide.
7. EXHIBITS
The attached Exhibits may be modified only upon the mutual consent of the
parties, except that Sun may modify Exhibit D (Object Code License) at any
time. The current version of each Exhibit is hereby incorporated by
reference.
8. IVAR's OBLIGATIONS
A. Sale and Support. IVAR shall use its best efforts to promote the sale of
Products, and shall purchase and maintain the demonstration configuraton
identified in the Guide for each authorized Product Tier at each
authorized selling location. IVAR shall provide End User, as detailed in
the Guide and the Business Plan, (i) complete pre- and post-installation
support including complete installation, training, and continuous
technical service and (ii) hardware and software maintenance support.
IVAR must submit and Sun must approve a detailed, location specific
support plan prior to installing Products at any End User site located
more than 200 miles from an authorized selling location. The sale and
direct support of Products must be performed at all times by full-time
employees who are Sun trained and Sun certified, including at least one
full time Sun dedicated sales representative and one full time, Sun
dedicated systems engineer per authorized selling location. Training and
certification may be secured directly from Sun or from any Sun Authorized
training provider. Sun's support options are set out in the Guide.
B. Spare Parts. The use of spare parts purchased under the authority granted
by this Agreement is strictly limited to (i) resale to an IVAR's End User
for internal use, or (ii) the service of Products sold and installed by
IVAR under this Agreement, except that IVAR may use such parts to
service all of an End User's systems if IVAR has sold and installed at
least twenty-five percent (25%) of the systems for which service is being
provided.
C. IVAR Documentation, Business Records, and Reports. IVAR shall furnish to
its End Users, at the time of delivery of Products, a sales receipt
stating the date of sale, and, if applicable, the serial number of
Products sold. IVAR shall, during the term of this Agreement and for five
(5) years thereafter, keep and maintain complete and accurate business
records with respect to its purchase and sale of all Products, including,
all documents relating to or exchanged between IVAR and its End Users,
Master Reseller and Sun, Sun may review these records upon request.
IVAR shall provide monthly Productivity Status Reports ("PSRs")to Sun as
detailed in the Guide. Upon the initial failure to timely submit a
complete PSR, Sun will put IVAR on notice that it is in breach of its
obligation. If IVAR fails to remedy this initial breach or subsequently
fails to timely submit a PSR, Sun may cancel RDF accruals and suspend
participation in other programs. Any subsequent failure to remedy or
timely submit a PSR may result in immediate termination of this
Agreement.
D. Indemnity and Insurance. IVAR agrees to indemnify and hold Sun harmless
from and against all claims from IVAR's End Users or third parties
arising out of any acts and/or omissions of IVAR or its employees or
representatives. IVAR shall carry liability insurance to protect Sun from
all such claims, pay the premiums therefor, and deliver to Sun, upon
request, proof of such insurance (which shall require thirty (30) days'
written notice to Sun in event of modification or termination).
E. Fair Representation. IVAR shall display, demonstrate, and represent
Products fairly and shall make no representations concerning Sun or its
Products which are false, misleading, or inconsistent with those
representations set forth in promotional materials, literature and
manuals published and supplied by Sun. IVAR shall comply with all
applicable laws and regulations in performing under this Agreement.
1
<PAGE>
Agreement No. IVAR
-----------
13. LIMITATION OF LIABILITY
Except for express obligations to indemnify under this Agreement, and/or
breach of Section 9 (High Risk Activity), 11 (Software), or 15
(Confidentiality):
A. Each party's liability to the other for claims related to this
Agreement, whether for breach or in tort, shall be limited to $10,000,
and
B. IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY INDIRECT, PUNITIVE,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGE IN CONNECTION WITH OR
RELATED TO THIS AGREEMENT (INCLUDING LOSS OF PROFITS, USE, DATA, OR
OTHER ECONOMIC ADVANTAGE), HOWSOEVER ARISING, WHETHER FOR BREACH OF THIS
AGREEMENT, INCLUDING BREACH OF WARRANTY, OR IN TORT, EVEN IF THAT PARTY
HAS BEEN PREVIOUSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
14. DISCLAIMER OF WARRANTY
EXCEPT AS SPECIFIED IN THIS AGREEMENT, ALL EXPRESS OR IMPLIED
REPRESENTATIONS AND WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, ARE
HEREBY EXCLUDED.
15. CONFIDENTIALITY
If Sun desires that information provided to IVAR under this Agreement be
held in confidence, Sun agrees to Identify such information as
"Confidential" or "Proprietary" ("Confidential Information"). All Software
is Confidential Information. IVAR will not disclose Confidential Information
and will use it only for purposes specifically related to this Agreement.
This Agreement shall not affect any confidential disclosure agreement
between the parties.
16. NO EXPORTATION
IVAR agrees that it shall resell Products only to End Users in the
continental United States, Alaska, and Hawaii, unless IVAR has been accepted
into Sun's Passport Program and has executed a Passport Addendum to this
Agreement. Products, including technical data, are subject to the U.S.
Export Administration Act and its associated regulations and may be subject
to export or import regulations in other countries. IVAR agrees to comply
strictly with all such regulations and acknowledges that it has the
responsibility to obtain licenses to export or re-export Products.
17. GENERAL
A. Dispute Resolutions. Any action related to this Agreement will be
governed by California law, excluding choice of law rules, and will be
brought exclusively in the United States District Court for Northern
California or the California Superior Court for the County of Santa
Clara. The parties hereby submit to the personal jurisdiction and venue
of such courts.
B. Relationship. The parties are independent contractors under this
Agreement and no other relationship is intended, including a
partnership, franchise, joint venture, agency, employer/employee, or
master/servant relationship. Neither party shall be authorized to bind
the other, or act in a manner which expresses or implies a relationship
other than that of independent contractor.
C. Assignment. IVAR may not assign or otherwise transfer any of its rights
or obligations under this Agreement, without the prior written consent
of Sun.
D. Waiver or Delay. Any waiver of any provision of this Agreement, or a
delay by either party in the enforcement of any right hereunder, shall
neither be construed as a continuing waiver, nor create an expectation
of non-enforcement, of that or any other provision or right.
E. Force Majeure. A party is not liable for non-performance of this
Agreement, to the extent to which the non-performance is caused by
events or conditions beyond that party's control, and the party gives
prompt Notice and makes all reasonable efforts to perform.
F. Notice. All Notice (upper-case "N") under this Agreement must be in
writing and delivered either in person or by a means evidenced by a
delivery receipt, to the address specified, below. Notice will be
effective upon receipt.
If to Sun: Sun Microsystems Computer Corporation
2550 Garcia Avenue, M/S MILO6-20
Mountain View, CA 94043
Attn: Manager, Sales Contracts
If to IVAR Design Automation Systems, Inc
6100 Corporate Dr., Suite 380
Houston, TX 77036
G. Execution. This Agreement shall become effective only after it has been
signed by an authorized officer of IVAR and an authorized officer of
Sun.
H. Entire Agreement. This Agreement, including all attachments incorporated
by reference, is the parties' entire agreement relating to Products and:
(1) supersedes all prior or contemporaneous oral or written
communications, proposals and representations with respect to its
subject matter; and (ii) prevails over any conflicting or additional
terms or any quote, order, acknowledgement, or similar communication
between the parties during the term of this Agreement. No modification
to this Agreement will be binding, unless in writing and signed by a
duly authorized representative of each party.
Sun and IVAR acknowledge that each has read and understood this Agreement and
consents to be bound by its terms.
SUN MICROSYSTEMS
COMPUTER CORPORATION:
By /s/ Linda Gladden
--------------------------------------
Name LINDA GLADDEN
------------------------------------
Title Director USFO Contract Management
-----------------------------------
Date 7/10/92
------------------------------------
IVAR: Design Automotive Systems, Inc.
----------------------------------
By /s/ Carl H. Hose
--------------------------------------
Name Carl H. Hose
------------------------------------
Title President
-----------------------------------
Date 7-1-92
------------------------------------
3
<PAGE>
EXHIBIT A
DESIGN AUTOMATION SYSTEMS, INC.
PRODUCT TIERS/AUTHORIZED LOCATIONS/MASTER RESELLER
PRODUCT TIERS
PT1 Desktop
PT2 Desk Side and Servers
AUTHORIZED LOCATIONS
6100 Corporate Drive, Suite 380
Houston, TX 77036
MASTER RESELLER
Access Graphics
FOR SUN USE ONLY:
AGREEMENT NUMBER IV-0027TP CONTRACT MANAGEMENT CEZ 6/30/92
------------ ------------
EFFECTIVE DATE JUL 14 1992 CONTRACT MANAGEMENT CEZ 7/9/92
------------ ------------
<PAGE>
EXHIBIT B
DESIGN AUTOMATION SYSTEMS, INC.
ADDED VALUE
THIRD PARTY SOFTWARE
CAPABILITIES
- APPLICATIONS EXPERTISE, CONSULTING (FULL RANGE OF REQUIREMENTS ANALYSIS,
DESIGN AND IMPLEMENTATION), INSTALLATION, TRAINING, AND POST-SALES
SUPPORT.
REQUIREMENTS
- RESELLER MUST HAVE THE RIGHT TO DISTRIBUTE AND SUBLICENSE THE SOFTWARE
APPLICATION.
- THE SOFTWARE APPLICATION MUST BE APPROVED BY SUN AS "ADDED VALUE
SOFTWARE".
- THE SOFTWARE APPLICATION MUST BE UNIQUE TO THE TECHNICAL OR COMMERCIAL
MARKETPLACE.
- RESELLER MUST PROVIDE, DIRECTLY OR INDIRECTLY, ALL SOFTWARE MAINTENANCE,
UPDATES, CORRECTIONS, TRAINING, INSTALLATION, AND CUSTOM CONFIGURATIONS.
- THE RESELLER MUST BE THOROUGHLY TRAINED BY THE DEVELOPER IN ALL ASPECTS OF
THE SOFTWARE (SUBJECT TO VERIFICATION BY SUN).
- THE SALE OF EACH SUN SYSTEM MUST INCLUDE THE RIGHT TO USE THE SOFTWARE.
Name of Software Vendor: Name of Application:
Autodesk AutoCAD
FOR SUN USE ONLY:
AGREEMENT NUMBER RV67 CONTRACT MANAGEMENT CEZ 6/30/92
------------- -------------
EFFECTIVE DATE JUL 14 1992 CONTRACT MANAGEMENT CEZ 1/9/92
------------- -------------
<PAGE>
EXHIBIT C
DESIGN AUTOMATION SYSTEMS, INC.
BUSINESS PLAN
BUSINESS PLAN ATTACHED
FOR SUN USE ONLY:
AGREEMENT NUMBER RV67 CONTRACT MANAGEMENT CEZ 6/30/92
------------- -------------
EFFECTIVE DATE JUL 14 1992 CONTRACT MANAGEMENT CEZ 1/9/92
------------- -------------
<PAGE>
ADDENDUM TO THE
SUN MICROSYSTEMS COMPUTER CORPORATION
U.S. INDIRECT VALUE ADDED RESELLER ("IVAR") AGREEMENT
This Addendum, effective on January 1, 1994, is entered into by and between Sun
Microsystems Computer Corporation ("SMCC") and Design Automation Systems, Inc.,
who are parties to a U.S. Indirect Value Added Reseller ("IVAR") Agreement No.
iv-002750TP (the "Main Agreement").
The provisions of the Main Agreement are hereby modified as follows:
A. SECTION 1; SCOPE.
Delete the parenthetical "(identified by 'Product Tiers')" in second
sentence.
B. SECTION 2; APPOINTMENT.
Delete the text of Section 2 and substitute in its place the following:
"Sun appoints Reseller as a non-exclusive Indirect Value Added Reseller
("IVAR"), IVAR is authorized to purchase Product from its designated
Master Reseller. Product must be:
"(i) sold, leased or rented (collectively referred to as 'sold') in
conjunction with the services and/or products set out on Exhibit B
(collectively referred to as 'Value Added Services');
"(ii) sold directly to End Users on a face-to-face basis; and
"(iii) installed at an End User site in the United States ('Authorized
Sale').
"The sale of Products to resellers is prohibited. The sale of [partially
illegible] Products to the Federal Government is prohibited unless IVAR
executes a Government System Integrator (GSI) Addendum. IVAR's primary
business must at all times be the sale and support of computer systems
and related Added Value Services.
"IVAR has executed the "Representation and Warranty" attached as Exhibit
E, thereby representing and warranting that it currently operates under
(or will establish no later than July 1, 1994), and will maintain for
the remainder of the term of this Agreement, a business model so that at
least fifty percent (50%) of IVAR's aggregate revenue for any six month
period is generated by the sales of Value Added Services. IVAR agrees,
upon reasonable notice and at its own expense, to provide to SMCC in
confidence, financial reports and documentation sufficient to establish
that it is in conformity with this Representation and Warranty. SMCC
reserves the right, upon reasonable notice and at SMCC's expense, to
audit IVAR's conformity."
C. SECTION 3; RESELLER DEVELOPMENT FUNDS.
Insert before the period at the end of the first sentence (after the word
'resale'), the following:
"and Products that IVAR's Master Reseller did not purchase from SMCC"
D. SECTION 4; BUSINESS PLAN.
Delete the text from the beginning of the second sentence to the end of the
Section and substitute in its place the following:
"Either party may initiate a review of IVAR's compliance with its
Business Plan upon thirty (30) days' notice, provided that SMCC shall
initiate no more than one review per calendar quarter. IVAR's failure to
comply with its Business Plan will constitute a material breach of this
Agreement."
E. SECTION 8, IVAR'S OBLIGATIONS.
Insert new Subsection C as follows (and redesignate the remaining
Subsections accordingly):
"C. UPGRADES. The list price of upgrades is based upon the return to
SMCC of specified parts from the system(s) being upgraded, as set out in
the U.S. Price List. IVAR is responsible for assuring that the specified
parts are received by SMCC within thirty (30) days after shipment of the
upgrade to IVAR. If the specified parts are not timely received, Master
Reseller will invoice and IVAR agrees to pay Master Reseller (net 20
days) for the non-returned parts, the difference between the list price
of the purchased upgrade(s) and the list price of the upgraded system(s)
if purchased new."
F. SECTION 12; TERM AND TERMINATION
Insert before the period at the end of Subsection B(2) the following:
"or (iv) IVAR fails to maintain the business model as set out in
Section 2."
G. EXHIBIT A; PRODUCT TIERS/AUTHORIZED LOCATIONS/MASTER RESELLER.
Delete all references to "Product Tiers" and related text, and substitute in
its place the following:
"Products IVAR may purchase for resale only Products for which it has,
at the time of purchase, established the required level of training and
certification. SMCC reserves the right to discontinue any Product upon
sixty days' notice."
H. EXHIBIT B; ADDED VALUE
Delete the text of Exhibit B in its entirety and substitute in its place the
following:
"Value 'Added Services' means:
"1. Services such as installation, training, consulting,
integration, system management, and software maintenance.
"2. Products such as proprietary/customized software and
proprietary/customized hardware peripherals/add-one; but NOT
widely available general purpose products that are
undifferentiated by channel, such as word processing and spread
sheet applications, and generic hardware peripherals, such as
printers."
Except as modified herein, the provisions of the Main Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties have caused this Addendum to be executed by
their duly authorized representative.
SUN MICROSYSTEMS COMPUTER CORPORATION:
By: /s/ Linda Gladden
--------------------------------------------
Name LINDA GLADDEN
--------------------------------------------
Title Director USFO Contract Management
-------------------------------------------
Date 11/8/93
--------------------------------------------
IVAR
By: /s/ Carl B. Rose
--------------------------------------------
Name Carl B. Rose
--------------------------------------------
Title President
-------------------------------------------
Date 11-1-93
--------------------------------------------
<PAGE>
EXHIBIT E
REPRESENTATION AND WARRANTY
By executing this document, IVAR hereby represents and warrants (mark and
initial the appropriate box):
[ ]
------ (a) IVAR currently operates under, and will maintain for the
remainder of the term of this Agreement, a business model
so that at least fifty percent (50%) of IVAR's aggregate
revenue for any six month period is generated by the sale
of Value Added Services (as that term is defined in
Exhibit E of the Agreement); or
[X] CBR
------ (b) IVAR will establish by July 1, 1994, and will maintain for
the remainder of the term of this Agreement, a business
model so that at least fifty (50%) of IVARs aggregate
revenue for any six month period is generated by the sale
of Value Added Services (as that term is defined in
Exhibit B of the Agreement).
IVAR acknowledges that it has read and understood this Representation and
Warranty, and caused it to be executed by a duly authorized officer of IVAR.
IVAR NAME: Design Automation Systems, Inc.
-------------------------------------
IVAR AGREEMENT NO. IV-0027TP
-----------------------------
By: /s/ Carl B. Rose
--------------------------------------------
Name: Carl B. Rose
------------------------------------------
Title: President
-----------------------------------------
Date: 11-1-93
------------------------------------------
<PAGE>
IXC COMMUNICATIONS SERVICES, INC.
BROADWING
<PAGE>
[BROADWING LOGO APPEARS HERE]
FACSIMILE
PLEASE DELIVER UPON RECEIPT - THANKS
DATE 1/24/2000
TO: Vic Ellisor
FAX NUMBER: 713-784-2486
ATTN: VIC
FROM: CRYSTAL SCHWABE
NOTE:
PLEASE CONTACT (512)742-5156 IF ALL PAGES ARE NOT RECEIVED.
3 OF PAGES: 13
(INCLUDING THIS COVER PAGE)
BROADWING
1122 CAPITAL OF TEXAS HIGHWAY SOUTH, AUSTIN, TEXAS 78746
FAX (512)328-7902
<PAGE>
ALLIANCE AGREEMENT
BETWEEN
IXC COMMUNICATIONS SERVICES, INC.
AND
EPICEDGE, INC.
October 22, 1999
<PAGE>
TABLE OF CONTENTS
ALLIANCE AGREEMENT TERMS AND CONDITIONS............................ 3
EXHIBIT A - CONTACTS ........................................... 11
EXHIBIT B - ALLIANCE PROJECT PROCESS ........................... 12
CONFIDENTIAL & PROPRIETARY Page 2
IXC Communications Services, Inc. - EpicEdge, Inc.
<PAGE>
ALLIANCE AGREEMENT
Design Automation Systems, Inc. ("EPICEDGE") organized under the laws of the
State of Texas and having a place of business at 3200 Wilcrest Dr., Suite 370,
Houston, TX 77042 and IXC Communications Services, Inc. ("IXC"), a Corporation
organized under the laws of the State of Delaware and having a principal place
of business at 1122 Capital of Texas Highway South, Austin, TX 78746-6426, agree
to enter into this agreement (the "Alliance Agreement") as of the date of last
execution below (the "Effective Date").
1. RELATIONSHIP OBJECTIVES
This Alliance Agreement creates a framework of cooperation under which the
parties can explore potential collaborative opportunities for achieving their
respective objectives. The objectives for each party under this Alliance
Agreement are:
1.1 IXC's Objectives
(a) Maximize the investment in IXC's nationwide, fiber optic
network infrastructure by providing emerging technology
solutions, data and Internet products and services in the
middle and upper market sector.
(b) Gain market and industry recognition in the data and
Internet services arena in the middle market arena by
providing technically sound and profitable products and
services.
(c) Become a major telecommunication's solution for Application
Service Providers.
1.2 EpicEdge's Objectives
(a) Assist in the overall growth of IXC's value added service
offerings in the following areas:
(i) Application Services for small, and middle market sized
organizations, and
(ii) Systems integration services and hardware systems for small
and middle market organizations.
(b) Become the nation's leading online Application Service
Provider (ASP) for focused technical solutions:
(i) Enterprise portal solutions integrating back office and
mission critical information, and
(ii) Extraprise portal solutions serving business to business
application needs.
(c) Lead the eBusiness portal market in providing lower total
dollar costs by implementing affordable IP based delivery
solutions.
2. EXECUTIVE SPONSOR AND MANAGEMENT TEAM
EPICEDGE and IXC each appoint the individuals identified in Exhibit A to this
Alliance Agreement as executive
CONFIDENTIAL & PROPRIETARY Page 3
EXC Communications Service, Inc. - EpicEdge, Inc.
<PAGE>
10/29/99
sponsors responsible for monitoring the relationship, conducting
periodic briefings for each other and their teams, and providing a
defined means of communication with other senior executives.
EPICEDGE and IXC also appoint the individual(s) identified in
Exhibit A to this Alliance Agreement as Corporate Champions
responsible for the day-to-day coordination of efforts.
3. SCOPE OF ALLIANCE
The parties anticipate at the time of the execution of this Alliance Agreement
that the scope of the Alliance will include some or all of the following joint
activities and commitments. All projects will be mutually defined according to
the then current policies and practices of IXC's and EPICEDGE's Marketing
organizations and will be the subject of alliance discussions and ultimately of
specific agreements ("Specific Agreements") according to the process set forth
in Section 4 of this Alliance Agreement. Neither Party is bound hereby to
provide any service, product nor materials to the other except as may be
provided in a Specific Agreement.
3.1 Service Development. IXC is currently undergoing rapid product
definition and product development in relation to Internet, VPN,
VoIP, FoIP, and integrated services (voice, video, data, server
hosting, collocation, messaging, and E-Commerce). Given this rapid
product definition and product development phase, IXC is
interested in having EPICEDGE work with IXC's product management
team in the following areas: product definition, product
development, product roll-out, end-to-end service development, and
joint marketing efforts.
Possible joint services include:
(a) Distributed Web hosting: EPICEDGE and IXC will explore and
develop a model for distributed deployment to serve with
high volume markets where Internet network congestion would
hinder the effectiveness or timeliness of the data content.
(b) Database Administration: EPICEDGE and IXC will develop a
model enterprise database service to support shared and
dedicated ebusiness solutions for 3rd parties.
(c) IXC-EPICEDGE Seminar Program: EPICEDGE and IXC may jointly
develop and conduct technical marketing presentations that
shall encompass EPICEDGE'S and IXC's sales and marketing
objectives in an effort to brand EPICEDGE & IXC's value-
added services. These technical seminars will be targeted
on the jointly defined and developed products and services
that EPICEDGE and IXC is rolling out as its value-added
services.
3.2 Joint Marketing and Promotional Campaigns. The parties agree to
work together in identifying and pursuing promotional activities
designed to enhance the Alliance Agreement. These efforts may
include the promotion of the relationship by each party within
their respective organizations, website promotion, trade show
collaboration, newsletter highlights, participation in public
relations activities, use of each other's trademarks or ingredient
marks (collectively "Marks") on specific targeted creative
advertising executions, press releases, and other promotions that
benefit both parties.
3.3 The initial projects agreed to by the parties are as follows:
(a) Joint Promotion and Press Releases: The Parties agree to
developed a public relations plan to support IXC's service
and marketing launch. Communication content will be develop
jointly by the Parties, and will include, but not limited
to, executive presentations by the Parties, analyst
briefings, press releases, positioning, branding and
messaging. Specifically, EPICEDGE and IXC will develop
joint press releases and
CONFIDENTIAL & PROPRIETARY Page 4
IXC Communications Services, Inc.-EpicEdge, Inc.
<PAGE>
10/29/99
communications that communicate the following messages to the
public, subject to any legal or regulatory requirements:
- Announcement of IXC - EPICEDGE Alliance;
- Announcement of EPICEDGE's use of IXC's data center and
network;
- Announcement of IXC - EPICEDGE joint service development.
(b) Tradeshow Program: As part of the IXC - EPICEDGE Marketing
Program, the parties agree to jointly develop a program to
utilize trade shows and seminars as a vehicle for promoting
IXC's products and services. EPICEDGE will work with IXC to
implement IXC - EPICEDGE's Alliance Tradeshow Program targeted
at the Small-Medium Business market based on the anticipated
roll-out of IXC's data and Internet products and services. The
content and location will be mutually agreed upon by EPICEDGE
and IXC project leads.
(c) Sales Training: EPICEDGE and IXC will produce materials
and training content, and deliver it to their respective sales
forces.
3.4 Branding. The parties agree to individually brand their
respectively develop products under this alliance.
3.5 Training and Education. The parties agree to work together in
identifying training and educational requirements to support the
alliance and to develop a Training and Education plan.
4. ALLIANCE PROJECT PROCESS
4.1 Written Agreements. The terms of projects undertaken by the parties
under Section 3.1 (Service Development) will be set forth in Specific
Agreements to this Alliance Agreement. Each Specific agreement will
contain the applicable information set forth in the template attached
as Exhibit B.
5. COST SHARING, REIMBURSEMENT OR COSTS OR PAYMENTS BETWEEN ALLIANCE MEMBERS
PENDING SPECIFIC AGREEMENTS
All costs incurred by either party in connection with the Alliance Agreement
shall be the sole responsibility of the party incurring the costs.
6. CONFIDENTIAL INFORMATION AND PUBLICITY
6.1 Non-disclosure and Use Restriction. Except as set forth below in
paragraph 6.2, the parties agree to maintain the confidentiality of,
and refrain from using, other than for the express purpose of this
Alliance Agreement or any of the Specific Agreement's confidential or
proprietary information relating to the other party's business,
including without limitation, the contents of this Alliance
Agreement, technical processes and formulas, source code, names,
addresses and information about users and advertisers, product
designs, sales, costs and other unpublished financial information,
product plans, and marketing data, provided that to the extent that
such information is publicly known, already known by, or already in
possession of the non-disclosing party; is independently developed by
the non-disclosing party; is thereafter rightly obtained by the non-
disclosing party from a source other than the disclosing party; or is
required to be disclosed by law, regulation, or court order and then
only after prompt prior notification to the other party of such
required disclosure, then there shall be no restriction on the use or
CONFIDENTIAL & PROPRIETARY Page 5
IXC Communication Services, Inc. - EpicEdge, Inc.
<PAGE>
10/29/99
disclosure of such information. The obligations of this
paragraph shall be in effect during the term of this Alliance
Agreement and for two(2) years following expiration or
termination hereof.
6.2 Publicity. Any marketing, advertising, promotional materials,
press releases or other public announcements regarding this
Alliance Agreement, or any of the Specific Agreements, shall not
be made without prior written consent of both parties, except as
required by law, in which case the other party shall be
consulted, to the extent reasonably practicable, as to the
content and timing of such release, announcement or statement.
7. RIGHTS IN INVENTIONS
Subject to the terms of any contract executed between IXC and EPICEDGE pursuant
to Section 4, any inventions, discoveries or new technology ("Developments")
developed independently by one of the parties pursuant to this Agreement shall
remain the property of the originating party. Any joint Developments shall be
owned as agreed by IXC and EPICEDGE, and no joint Development shall commence
until authorized officials of the Paries have executed such agreement.
8. TERM AND TERMINATION
8.1 The Alliance Agreement commences on the Effective Date and will
continue in effect for three (3) years ("Term").
8.2 (a) Either party may terminate this Alliance Agreement for any
reason or no reason and at any time by providing thirty
(30) days written notice to the other party.
(b) Either party may terminate this Alliance Agreement upon
written notice to the other party in the event of a
material breach, which remains uncured thirty (30) days
after previous written notice, by the nondefaulting party.
8.3 In the event of termination of this Alliance Agreement, all
existing Alliance projects as described in Section 4 shall
survive and continue under the terms specified in each specific
agreement until expiration. Neither party shall have any
obligation to undertake new activities or projects, and all
obligations and rights of the parties shall terminate, with the
exception of Sections 6.1 (Confidential Information), but only
to the extent that section provides for survival of termination
6.2 (Publicity), 7 (Rights in Inventions), 10.4 (Consequential
Damages Waiver) and 10.7 (Dispute Resolution) of this Alliance
Agreement, which provisions shall survive expiration or
termination. Upon termination, the parties agree to promptly
return to each other all proprietary and confidential
information of the other party.
9. PURCHASE OF EPICEDGE OR IXC PRODUCTS AND SERVICES
9.1 In the event IXC contemplates purchase of Products or Services,
and EPICEDGE offers such products or services, then IXC shall
consider in good faith but without obligation such proposals or
service offerings, as EPICEDGE shall submit to IXC for
consideration. IXC agrees, without obligation of any kind, to
consider EPICEDGE, and refer to EPICEDGE as a Training
Technology Program Partner.
9.2 In the event EPICEDGE contemplates purchase of Products or
Services, and IXC offers such product or services, then EPICEDGE
shall consider in good faith but without obligation such
proposals or service offerings, as IXC shall submit to EPICEDGE
for consideration. EPICEDGE agrees, without obligation of any
kind, to consider IXC, and refer to IXC as an Integrated
CONFIDENTIAL & PROPRIETARY Page 6
IXC Communications Services, Inc. - EpicEdge, Inc.
<PAGE>
10/29/99
Services and Telecommunications Service Partner.
10. GENERAL PROVISIONS
10.1 Amendment. No change, AMENDMENT or modification or any provision
of this Alliance Agreement shall be valid unless set forth in a
written instrument signed by both parties.
10.2 Entire Agreement. This Alliance Agreement sets forth the entire
agreement and supersedes any and all prior or contemporaneous
agreements and representations, written or oral, of the parties
with respect to the transactions set forth herein. The parties
acknowledge that as of the date hereof, no binding commitments
exist between the parties with respect to the subject matter of
this Alliance Agreement except as may be provided herein.
10.3 Assignment. Neither this Alliance Agreement, nor any rights
hereunder in whole or in part, shall be assignable or otherwise
transferable by either party without the express written consent
of the other.
10.4 Consequential Damages Waiver. EXCEPT FOR A MATERIAL BREACH OF A
PARTY'S CONFIDENTIALITY OBLIGATION OR A VIOLATION OF A PARTY'S
INTELLECTUAL PROPERTY RIGHTS, NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, NEITHER PARTY SHALL BE LIABLE TO THE OTHER UNDER
ANY CONTRACT, STRICT LIABILITY, NEGLIGENCE OR OTHER LEGAL OR
EQUITABLE THEORY FOR ANY INCIDENTAL, INDIRECT, PUNITIVE, SPECIAL,
OR CONSEQUENTIAL DAMAGES OR ANY KIND, INCLUDING BUT NOT LIMITED TO
ANY LOSS OF USE, LOSS OF BUSINESS OR LOSS OF PROFIT. ALL LIABILITY
UNDER THIS ALLIANCE AGREEMENT IS CUMULATIVE AND NOT PER INCIDENT.
THIS LIMITATION WILL APPLY NOTWITHSTANDING ANY FAILURE OR
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
10.5 Construction. In the event that any provision of this Alliance
Agreement conflicts with the law under which this Alliance
Agreement is to be construed, or if any such provision is held
invalid by a court with jurisdiction over the parties to this
Alliance Agreement, such provision shall be deemed to be restated
to reflect as nearly as possible the original intentions of the
parties in accordance with applicable law, and the remainder of
this Alliance Agreement shall remain in full force and effect.
10.6 Dispute Resolution. Each party agrees that any dispute between
the parties relating to this Alliance Agreement will first be
submitted in writing to a panel of two senior executives of
EPICEDGE and IXC, who shall promptly meet and confer in an effort
to resolve any dispute through good faith consultation and
negotiation. Each party's executives shall be identified by notice
to the other party, and may be changed at any time thereafter also
by notice to the other. In the event the executives are unable to
resolve any dispute within thirty (30) days after submission to
them, either party shall be fee to seek any available remedies it
may have at law or at equity.
10.7 Independent Contractors. The parties to this Alliance Agreement
are independent contractors. Neither party is an agent,
representative, or Partner of the other party. Neither party shall
have any right, power, or authority to enter into any agreement
for, or on behalf of, or incur any obligation or liability of, or
to otherwise bind the other party. This Alliance Agreement shall
not be interpreted or construed to create an association, agency,
joint venture, or Partnership between the parties or to impose any
liability attributable to such a relation ship upon either
party.
10.8 No Waiver. The failure of either party to insist upon or
enforce strict performance by the other
CONFIDENTIAL & PROPRIETARY Page 7
IXC Communications Services, Inc. - EpicEdge, Inc.
<PAGE>
10-29-99
party of any provision of this Alliance Agreement, or to exercise any
right under this Alliance Agreement, shall not be construed as a
waiver or relinquishment of such party's right to enforce any such
provision or right in any other instance.
10.9 Notice. Any notice, approval, request, authorization, direction, or
other communication under this Alliance Agreement shall be given in
writing, directed to the addresses of the parties below, and shall be
deemed to have been delivered and given for all purposes: (i) on the
delivery date if delivered by electronic mail; (ii) on the delivery
date if delivered personally to the party to whom the same is
directed; (iii) one (1) business day after deposit with a commercial
overnight carrier with written verification of receipt; or (iv) five
(5) business days after the mailing date whether or not actually
received, if sent by U.S. mail, return receipt requested, postage and
charges prepaid, or any other means of rapid mail delivery for which a
receipt is available to the Contact at the address of the party to
whom the same is directed.
10.10 Force Majeure. Neither party shall be deemed in violation of this
Alliance Agreement if it is prevented from performing any of the
obligations under this Alliance Agreement by reason of severe weather
and storms, earthquakes or other natural occurrences; strikes or other
labor unrest; power failures; nuclear or other civil or military
emergencies; acts of legislative, judical, executive or administrative
authorities; or any other circumstances which are not within its
reasonable control.
10.11 Governing Law. This Agreement and any action related thereto shall be
governed, controlled, interpreted and defined by and under the laws
of the State of Texas and the United States, without regard to the
conflicts of laws provisions thereof. The Parties specifically
disclaim the UN Convention on Contracts for the International Sale of
Goods.
IN WITNESS WHEREOF, the parties hereto have executed this Alliance Agreement as
of the date first above written.
Design Automation Systems, Inc. IXC COMMUNICATIONS SERVICES, INC.
3200 Wilcrest Dr., Suite 370 1122 Capital of Texas Hwy. South
Houston, TX 77042 Austin, Texas 78745
By:/s/ Jeff Sexton By:/s/ Doug Kellermann
---------------------------- ---------------------------------
Name: Jeff Sexton Name: Doug Kellermann
Title: COO Title: Vice President,
Marketing Alliances
Date: 10-29-99 Date: 10-1-99
-------------------------- -------------------------------
Approved as to Form and Legality
ALJ
CONFIDENTIAL & PROPRIETARY
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<PAGE>
10-29-99
EXHIBIT A
ALLIANCE AGREEMENTS CONTACTS
AS OF EFFECTIVE DATE*
Relationship Element EPICEDGE Systems IXC Contact
Contact
Executive Sponsorship Jeff Sexton Doug Kellermann
Relationship Management Rick Fisher Vic Ellisor
Joint IXC-EPICEDG Projects
Training and Education Suzanne MacLaughlin Armando Flores
Technical Support Robert Ward Glen Bojsza
Investor Relations Sam Dipaola Greta Weichman
Joint Marketing Campaigns
Joint Promotion/Press Releases Clayton Tolley Melissa Jackson/
Vic Ellisor
IXC-EPICEDGE Seminar Program Rick Fisher Ray Bermond
Tradeshows/Events Rick Fisher/ Mary Stricker
Suzanne MacLaughlin
Sales Rick Fisher David Searcy
*The contacts designated above are subject to change. Both parties will promptly
notify the other party of any changes and relevant contact information.
CONFIDENTIAL & PROPRIETARY
IXC Communications Services, Inc. - EpicEdge, Inc.
<PAGE>
10-29-99
EXHIBIT B
IXC - EPICEDGE ALLIANCE PROJECT PROCESS
1. Types of Specific Agreements. The parties may enter into Specific
Agreements which include but are not limited product development,
marketing, services, administration and cooperative studies.
2. Contents of Each Specific Agreements. Each Specific Agreement must contain
(or incorporate as attachments or by reference):
- A reference to the Alliance Agreement;
- Designation of the names, business addresses, and telephone numbers of
the PROGRAM MANAGER of the Specific Agreements;
- Amount, schedule and method of compensation, if any;
- Identification of any development baseline, DELIVERABLES, and/or services
to be provided to either party pursuant to the Specific Agreements and
related license terms; and
- Timetable for performance and completion, including milestones, schedules
and delivery dates, where appropriate.
- In addition, when applicable or appropriate, a Specific Agreement may
contain (or incorporate as attachments or by reference) the following or
any other terms the parties may agree upon:
- Provision for written and oral progress reports by the PROGRAM MANAGER;
- Acceptance standards for deliverables and or reports, including (1)
documentation, specifications and standards, (2) quality standards, (3)
performance specifications and (4) usability and architecture
requirements;
- A list of any equipment, components, and software to be supplied for use
in connection with the Specific Agreements;
- Any limitation on the locations of performance or storage of IXC or
EPICEDGE confidential information;
- Specifications of the DEVELOPMENT ENVIRONMENT with which any CODE was
prepared;
- A description of the facilities, equipment, MATERIALS or resources to be
provided by IXC and/or EPICEDGE;
- Any agreed to restriction on subcontracting;
- Resource requirements, including training and assignment of key
personnel; and
- The term of the Specific Agreements, and any other termination
provisions.
- A list of trademarks, patents, copyrights, trade secrets, and other
intellectual properties (if any) licensed by one party to the other under
the Specific Agreements, and applicable guidelines and restrictions on
any licenses granted.
- A Statement of the ownership of any intellectual property provided by a
party or created, separately or jointly by the parties, under each
Specific Agreement.
- The signatures of the parties.
3. Definitions. Unless the context clearly requires otherwise, the capitalized
terms used herein shall have the same meaning as ascribed to the terms
below.
CONFIDENTIAL & PROPRIETARY Page 10
IXC Communications Services, inc. - EpicEdge, Inc.
<PAGE>
10/29/99
a. DELIVERABLES - shall mean any MATERIALS or other items which result from
performance under a Specific Agreement and which are required to be
delivered by virtue of their description or specification in a Specific
Agreement.
b. DERIVATIVE WORK - shall mean a work which is based upon one or more
preexisting works, such as a revision, enhancement, modification,
translation, abridgment, condensation, expansion, or any other form in
which such a preexisting work may be recast, transformed, or adapted,
and which, if prepared without authorization of the owner of the
copyright in such preexisting work, would constitute copyright
infringement under United States law.
c. DEVELOPMENT ENVIRONMENT - shall mean the devices, programming,
documentation, media and other development tools, including compilers,
workbenches, tools, and higher-level or proprietary languages, used or
required by a party for the development, maintenance and implementation
of any DELIVERABLE.
Procedure for entering into Specific Agreements.
a. Either party may propose a Specific Agreement. The other party shall
provide a preliminary response indicating its willingness to enter into
negotiations of the Specific Agreement within 30 days.
b. Each Specific Agreement entered into under this Alliance Agreement shall
become effective only when executed by authorized representatives of
both parties. For EPICEDGE the authorized representative is the Vice
President, Americas. For IXC, the authorized representative is (To Be
Determined).
c. Neither party is obligated hereby to the issuance or execution of any
Specific Agreement. Each Specific Agreement entered into under this
Alliance Agreement shall be construed to incorporate the provisions of,
and governed by, this Alliance Agreement.
5. Program management. Unless otherwise specified in a Specific Agreement, the
PROGRAM MANAGER shall be responsible for the design and development of
DELIVERABLES developed under a Specific Agreement and shall be responsible
for providing customer requirements and testing the DELIVERABLES. All
communications between the parties relating to technical performance and
the preparation and the delivery of DELIVERABLES under a Specific Agreement
shall take place between PROGRAM MANAGERS named in the Specific Agreements.
the additional responsibilities of the PROGRAM MANAGER with respect to the
applicable Specific Agreement are as follows:
- Arrange meetings, visits and consultations between the parties concerning
matters related to the applicable Specific Agreements;
- Chair periodic status reviews of the applicable Specific Agreements;
- Coordinate amendments (including documenting and signing or initialing
such amendments) to the Specific Agreements.
- Supervise submission and acceptance of all MATERIALS pursuant to the
Specific Agreements, including the delivery, testing and acceptance of
DELIVERABLES;
- Supervise the transfer of any information in accordance with the Specific
Agreements; and
- Prepare written progress reports pursuant to the provisions of the
Specific Agreements.
CONFIDENTIAL & PROPRIETARY Page 11
IXC Communications Services, Inc. - EpicEdge, Inc.
<PAGE>
10-29-99
6. Changes in Coordinators. Either party may replace any of the people
referenced in this Section by delivering written notice of the change to the
other party. The notice must be signed by either the responsible executives
of the party making the change or by an authorized signatory of that party.
The notice shall set forth the name, business address and telephone number
of the replacement.
7. Progress reports. Unless otherwise provided in the applicable Specific
Agreements, the PROGRAM MANAGER of one party shall provide to the PROGRAM
MANAGER of the other party monthly written progress reports for such
Specific Agreements specifying the current work progress level and
identifying any problems that have been resolved and any problems that are
unresolved, along with a projected date of resolution.
The PROGRAM MANAGER of one party shall also notify the PROGRAM MANAGER of
the other party promptly in writing of any factor, event or anticipated
event that may affect the ability to meet the requirements of any Specific
Agreements, including changes in the assignment of its key employees,
strikes and labor unrest, or unavailability of critical resources. Except as
provided in the Force Majuere provisions of this Alliance Agreement, the
issuance of such a notice shall not excuse the party from any default or
performance obligation, unless the other party consents.
8. Subcontractors and Employees. Each party agrees that it will use
commercially reasonable efforts to ensure that all employees, subcontractors
or agents engaged by such party who assist with or contribute to that
party's duties, obligations or performance under any Specific Agreements are
aware of and comply with provisions of this Alliance Agreement.
9. Severability. Each Specific Agreement is intended to constitute an
independent and distinct agreement of the parties, notwithstanding the fact
that each shall be construed to incorporate all applicable provisions of the
Alliance Agreement. If any provisions of any contract document is held by a
court of competent jurisdiction to be contrary to law, the remaining
provisions of the contract document will remain in full force and effect and
shall be interpreted, to the extent possible, to achieve the purpose of this
Alliance Agreement and any affected Specific Agreements as originally
expressed without the invalid, illegal or unenforceable provision.
CONFIDENTIAL & PROPRIETARY Page 12
IXC Communications Services, Inc. - EpicEdge, Inc.
<PAGE>
INTERNATIONAL BUSINESS MACHINES
CORPORATION
<PAGE>
HEWLETT-PACKARD COMPANY
U.S. AGREEMENT FOR AUTHORIZED SOLUTIONS DIRECT RESELLERS
SIGNATURE PAGE
ICN# 031676
LEGAL BUSINESS NAME DESIGN AUTOMATION SYSTEMS
ADDRESS 3200 WILCREST DRIVE SUITE 370
CITY, STATE, ZIP HOUSTON, TX 77042-3366
PHONE, FAX #EMAIL/INTERNET ADDRESS
DBA(s) ________________________________________
EXECUTIVE CONTACT ________________________________________
CORPORATE WEB ADDRESS ________________________________________
All documents marked with a "x" below govern the relationship between HP and you
for the purchase and resale of HP products. HP and Reseller agree that
Reseller's volume level, at Net Reseller price, for HP products on the Exhibits
for the term of this Agreement is:
AGREE ATTACHMENTS:
_x_ HP Reseller Business Terms _x_ HP Warranty & Installation
Information
_x_ U.S. Direct Reseller Program
_x_ HP Solutions Direct Reseller Program
Operations Policy Manual
ADDENDA & EXHIBITS: COMMENT:
_x_ U.S. Software License Terms
_x_ U.S. Solutions Support Options
_x_ U.S. Solutions VAR Compensation Terms
_x_ U.S. Configuration Tools License
___ U.S. Solutions Multinational Release Points
___ U.S. Solutions Multinational Terms
___ U.S. Solutions Multiple Release Points
___ U.S. Solutions VAR Certification
___ U.S. Solutions OEM/VAR Warranty
___ U.S. Solutions VAR Dual Aggregation Terms
_x_ U.S. Direct Reseller Program-RAM Reseller
___ AV20 HP-UX Server Products __$ 3,000,000-and up
___ AV21 Unbundled HP-UX Server Products __$ 3,000,000-and up
___ AV22 HP-UX Workstation Products __$ 1,000,000-and up
___ AV23 Unbundled HP-UX Workstation Products __$ 1,000,000-and up
___ AV24 Enterprise Storage Products __$ 3,000,000-and up
___ AV25 Other Peripheral and HP-UX Related products __$ Meet certification
___ AV26 HP Openview NT and Packaged solutions __$ Meet certification
___ AV27 HP Openview IT Service Management __$ Meet certification
& Electronic Business Software
___ AV28 MPE and Related Products __$ 2,000,000-and up
___ AV30 HP Symmetrix Products
___ AV33 HP UX Visualize Workstations __$ 1,000,000-and up
___ AV35 HP NT Visualize Workstations (RAM VAR ONLY)
_x_ AV40 HP High End Enterprise Server Products
___ AV41 HP High End Enterprise Other Peripheral &
HP Related Products
_x_ AV42 HP ?? Products
STATEMENT OF OWNERSHIP:
Form of Organization: (i.e. Corporation, General Partnership, Limited
Partnership, Sole proprietor):
For a Corporation, specify whether: __Publicly Held: __Privately Held:
State of Incorporation/Organization________________________________________
Identify Company ownership and management structure as follows (attach
additional pages if necessary):
Sole proprietor: Identify all owners, officers and ownership percentages held
Trust: Identify Trustee(s), Administrators and Beneficiaries of Trust
Partnership: Identify all General Partners, Limited Partners, Officers
and ownership percentages held
Specify dollar investment of limited partners
Privately Held
Corporation: Identify all shareholders with class and percentage ownership,
Officers and Board of Director Members
Publicly Held
Corporation: Identify owners of 20% or more of each class of shares with
class of shares with class and percentage ownership, Officers
and Board of Director Members
<TABLE>
<CAPTION>
NAMES TITLES OWNERSHIP INTEREST
Percentage Ownership Type of Ownership Interest
(Dollar Investment in (Assets, Common or
Limited Partners) Preferred Shares)
<S> <C> <C> <C>
Carl R. Rose Director 71% common
- -------------------------------- ------------------------- --------------------------- ----------------------------
Charles H. Leaver President
- -------------------------------- ------------------------- --------------------------- ----------------------------
Robert E. Nelson Secretary
- -------------------------------- ------------------------- --------------------------- ----------------------------
- -------------------------------- ------------------------- --------------------------- ----------------------------
- -------------------------------- ------------------------- --------------------------- ----------------------------
If Company is 100% owned by another corporation, identify the parent corporation's ownership and management structure above and the
identity of the parent corporation below:
- ----------------------------------------------------------------------------------------------------------------------------------
Parent/Owner, including DBA(s)
- ----------------------------------------------------------------------------------------------------------------------------------
Address
( )
- ----------------------------------------------------------------------------------------------------------------------------------
City State Zip Telephone
( )
- ----------------------------------------------------------------------------------------------------------------------------------
State of Parent/Owner's Incorporation Fax
This Reseller Agreement is made and entered into by and between ___________________________, a _________________ Corporation, and
Hewlett-Packard Company, a Delaware Corporation.
- ----------------------------------------------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURES HEWLETT-PACKARD COMPANY
/s/ Robert E. Nelson
- ----------------------------------------------------------- -------------------------------------------------------
Authorized Signature Susan Weatherman
Reseller Contracts & Negotiation Manager
Robert E. Nelson
- ------------------------------------------------------------
Typed Name
Secretary March 31, 2000
- ------------------------------------------------------------ -------------------- ---------------
Title Effective Date Expiration Date
</TABLE>
<PAGE>
HP SOFTWARE LICENSE TERMS ADDENDUM
TABLES OF CONTENTS
1. DEFINITIONS
2. LICENSES
3. GENERAL LICENSE TERMS
<PAGE>
HP SOFTWARE LICENSE TERMS ADDENDUM
1. DEFINITIONS
A. "software" means one or more programs of operating on a controller,
processor or other hardware Product "(Device"). Software is either a separate
Product, included with another Product ("Bundled Software"), or fixed in a
Device and not removable in normal operation ("Firmware").
B. "Use" means storing, loading, installing, executing, or displaying
Software on a Device.
C. "Products" means hardware, Software, documentation, accessories,
supplies, parts and upgrades that are determined by HP to be available from HP
upon receipt of Customer's order. "Custom Products modified, designed or
manufactured to meet Customer requirements.
D. "Software License" means the Use authorization(s) for the Software
specified by HP in its quotation, invoice or other documentation. Each Software
License has a corresponding License Fee.
E. "License Fee" means the fee or fees designated by HP for Use of
Software. Different License Fees may apply to particular Software if more than
one Software License is available for that Software.
2. LICENSES
In return for the License Fee, HP grants Customer a non-exclusive
license to Use the Software listed in Customer's order in conformance with the
applicable Software License. Details of the types of Software Licenses offered
are available from HP on request. If no Software License is specified, then in
return for the applicable fee, HP grants Customer a license to Use one copy of
the Software on one Device at any one time. All Software Licenses will be
perpetual unless terminated, transferred or otherwise specified.
If Customer is an HP Authorized Reseller, Customer may sublicense the
Software to an end-user for its Use, or (if applicable) sublicense the Software
to an HP Authorized Reseller for subsequent distribution to an end-user for its
Use. These sublicenses must incorporate the terms of this license in a written
sublicense agreement, which will be made available to HP upon request.
3. GENERAL LICENSE TERMS
A. Unless otherwise permitted by HP, Customer may only make copies or
adaptations of the Software for archival purposes or when copying or adaptation
is an essential step in the authorized use of the Software on a backup Device,
provided that copies and adaptations are used in no other manner and provided
further that the Use on the backup Device is discontinued when the original or
replacement Device becomes operable.
B. Customer must produce all copyright notices in or on the original
Software on all permitted copies or adaptations. Customer may not copy the
Software onto any public or distributed network.
C. Bundled Software or Firmware provided to Customer may only be used
when operating the associated Device in configurations as sold or subsequently
upgraded by HP. Customers may transfer Firmware only upon transfer of the
associated Device.
D. Updates, upgrades or other enhancements are available under HP
Support Agreements. HP reserves the right to require additional licenses and
fees for Use of the Software on upgraded Devices.
E. The Software is owned and copyrighted by HP or by third-party
suppliers. Customer's license confers no title or ownership and is not a sale
of any rights in the Software, its documentation, or the media on which they are
recorded or printed. Third-party suppliers may protect their rights in the
Software in the event of any infringement.
F. Customer will not disassemble or decompile the Software without HP's
prior written consent. Where customer has other rights under statute, Customer
will provide HP with reasonably detailed information regarding any intended
disassembly or decompilation. Customer will not decrypt the Software unless
necessary for legitimate use of the Software.
G. Customer's Software License is transferable subject to HP's prior
written authorization and payment to HP of any applicable fees. Customer will
immediately upon transfer deliver all copies of the Software to the transferee.
The transferee must agree in writing to the terms of Customer's license. All
license terms will be binding on involuntary transferees, notice of which is
hereby given. Customer's license will automatically terminate upon transfer.
H. HP may terminate Customer's or any transferee's or sublicensee's
Software License upon notice for failure to comply with any applicable license
terms. Immediately upon termination, the Software and all copies of the
Software will be destroyed or returned to HP. Copies of the Software that are
merged into adaptations, except for individual pieces of data in Customer's or
transferee's or sublicensee's data base, will be removed and destroyed or
returned to HP. With HP's written consent, one copy of the Software may be
retained subsequent to termination for archival purposes.
I. In this clause on Licenses to the U.S. Government, the term
"customer" means HP's direct purchaser, any entity sublicensing the Software,
and the end-user.
1. If Software is licensed for use in the performance of a U.S.
government prime contract or subcontract, Customer agrees that Software has been
developed entirely at private expense. Customer agrees that Software, and any
derivatives or modifications, is adequately marked when the Restricted Rights
Legend below is affixed to the Software or to its storage media and is
perceptible directly or with the aid of a machine or device. Customer agrees to
conspicuously put the following legend on the Software media with Customer's
name and address added below the notice:
RESTRICTED RIGHTS LEGEND
Use, duplication or disclosure is subject to HP standard commercial
license terms or to the following restrictions, whichever is applicable.
1. for non-DOD Departments and Agencies of the U.S. Government, as set
forth in FAR 52.227-19(c)(1-2)(Jun 1967)
2. for the DOD and its Agencies, as set forth in DFARS
252.227-7013(c)(1)(ii)(Oct 1988), DFARS 252.211-7015(c)(May 1991),
whichever is applicable.
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304 U.S.A.
Copyright (c) 199_ Hewlett-Packard Company. All
Rights Reserved
2. Customer further agrees that Software is delivered and licensed as
"Commercial computer software" as defined in DFARS 252.227-7013 (Oct
1988), DFARS 252.211-7015 (May 1991) or DFARS 252.227-7014 (Jun 1995),
or as a "commercial item" as defined in FAR 2.101(a), or as "Restricted
computer software" as defined in FAR 52.227-19 (Jun 1987) (or any
equivalent agency regulation or contract clause), whichever is
applicable. The Customer agrees that it has only those rights provided
for such Software by the applicable FAR or DFARS clause or the HP
standard software agreement for the Product involved.
J. Neither party may assign any rights or obligations hereunder without prior
written consent of the other party.
K. Customer who exports, re-exports or imports HP licensed Products, technology
or technical data purchased hereunder, assumes responsibility for complying
with applicable laws and regulations and for obtaining required export and
import authorizations. HP may suspend performance if Customer is in
violation of any applicable laws or regulations.
L. Disputes arising in connection with this Agreement will be governed by the
laws of the country and locality in which HP accepts the order.
M. These HP Software License Terms supersede any previous communications,
representations or agreements between the parties, whether oral or written,
regarding transactions hereunder. Customer's additional or different terms
and conditions will not apply. These HP Software License Terms may not be
changed except by an amendment signed by an authorized representative of
each party.
<PAGE>
U.S SOLUTIONS SUPPORT OPTIONS ADDENDUM
TABLE OF CONTENTS
1. SERVICES INCLUDED
2. PREREQUISITES
3. SERVICE LIMITATIONS
4. CUSTOMER RESPONSIBILITIES
5. SOFTWARE LICENSE AND COPYRIGHTS
6. CHARGES
<PAGE>
U.S SOLUTIONS SUPPORT OPTIONS ADDENDUM
Orders for HP System Support Options are subject to the terms of this
Agreement, including the Support Exhibit or quotation in effect on the date of
order. Direct Reseller is responsible for obtaining the agreement of its
end-user Customer with respect to any Support obligations under this Agreement
that pertain to such Customer.
1. SERVICES INCLUDED
HP System Support Options are offered in one (1) year and three (3) year
increments. HP System Support Options provide the following features for HP
Products. Not all of the features are offered with every option or supported
Product. Features for each option will be provided as described in the
specifications sheet for HP System Support Options. Some service features have
prerequisites. Service features may include one (1) or more of the following:
- On-site hardware support during warranty
- Flexible call submittal
- Phone-in Software assistance
- License to Use Software updates
- Software media and documentation updates
- HP SupportLine electronic support
- Escalation management
- Remote support (for selected HP Products)
- HP PowerPatch tapes (for selected HP Products)
- Assigned account support engineer
- Assigned HP Response Center account advocate
- Patch management assistance
- Operational reviews
- System release planning seminars and assistance
- Installation of Software updates
- Installation, configuration, and verification of systems and
networks
2. PREREQUISITES
HP reserves the right to make the final judgment as to whether Customer
adequately meets the requirements outlined in this document.
A. MINIMUM SYSTEM CONFIGURATION
Except for systems capable of diagnostic self-test, HP System Support
Options require, at a minimum, that a system include a central processing unit
(CPU), a peripheral capable of reading standard HP diagnostics and verification
tests, and a peripheral that allows HP to interact with the covered Products.
B. UNIFORM COVERAGE
All Products that constitute the minimum system configuration must be
covered at the same HP System Support Options service level.
Options OSO - OS6 AND 3YO - 3Y6 may not be combined on the same contract
for software-only Products.
C. CONNECTORS AND CABLES
All Products covered by HP System Support Options must be interconnected
by cables or connectors listed in the appropriate HP documentation as compatible
with the CPU. For HP Products not meeting this requirement, service is
available at HP's standard service rates.
D. SOFTWARE SUPPORT
All HP system for which execution of diagnostic test is
software-dependent must, at a minimum, be covered by an HP System Support Option
that provides periodic software updates.
E. COVERAGE REQUIREMENTS
For HP System Support Options orders that include software support, all
systems supported by one system manager, except PC systems, must be covered by
an HP System Support Option or by existing contractual HP software support
service.
F. RIGHT TO COPY DOCUMENTATION
Customers may copy documentation updates for use with other systems
covered by an HP System Support option that provides Software support.
G. SOFTWARE LICENSES
Customer can purchase HP System Options only for HP software for which
Customer has rightfully acquired an appropriate HP Software License.
H. DESIGNATED CALLERS AND TRAINING REQUIREMENTS
The following contacts for HP must be designated and trained through
completion of the appropriate HP training courses as defined by HP: system
manager and altemate; extended hours altemate; if applicable, application
software manager and altemate. Only the designated callers can use the HP
Response Center.
I. REMOTE SUPPORT
For HP to provide remote support, Customer must give authorization and
provide access to a qualified modem, as well as access to one (1) voice-grade
telephone and one (1) data-quality telephone line or network with terminations
near the system. If HP cannot access a system remotely, HP may charge standard
service rates if on-site service is needed.
J. HP SUPPORTLINE
HP SupportLine electronic support is available via the Worldwide Web,
electronic mail, and a character-mode interface. With a character-mode
interface, Customer can access HP SupportLine electronic support using a modem
or the internet. To use HP SupportLine electronic support through modem access,
Customer must provide one (1) data-quality telephone line, one (1) locally
compatible modem set for 1200, 2400, 9600, or 14,400 baud, and an HP-compatible
terminal or terminal emulator, in addition to the equipment required for remote
support above. Customers who submit HP Response Center calls via HP SupportLine
must meet the same training requirements as the system manager.
K. COUNTRY BOUNDARIES
All systems supported by one (1) system manager must be located within
the same country.
L. PRIORITY PLUS SUPPORT
Products may be covered by the Priority Plus hardware service level if
HP System Support Options charges for a site exceed a minimum amount. If remote
support is available on the Products, Customer must allow remote access to
receive Priority Plus support.
3. SERVICE LIMITATIONS
A. HARDWARE AND SOFTWARE SUPPORT
Any services involving hardware, software or network-related problems
not covered by the HP System Support Options service ordered will be subject to
HP's standard service rates.
B. MAXIMUM USE LIMITATIONS
Products operated in excess of their maximum usage rate (as specified in
the Product's data sheet or operating manual) cannot be covered by HP System
Support Options, but can be serviced at HP's standard service rates.
C. INTERFACES AND ACCESSORIES
HP may cover cables, connectors, accessories, and interfaces under the
same hardware service level purchased for the Products with which they are used.
D. SUPPORTED SOFTWARE VERSIONS
HP provides support only for the current and immediately preceding
versions of HP Software, and only when the Software is used with hardware that
is included in HP-specified configurations. If support coverage lapses,
additional fees may be required to resume support coverage. HP will support
specified versions of selected non-HP software, but will not support the
software any longer than the vendor supports it. For non-HP software, HP
provides support only for software versions that are specifically documented as
supported on a specified configuration.
E. NON-HP SOFTWARE
Support for non-HP software covered by HP System Support Options is
limited to telephone assistance, and if available to HP from the third-party
software vendor, patches, workarounds, and updates. HP's decision on how long
to offer HP support on selected versions of non-HP software is final.
F. NON-HP PRODUCTS
HP is not liable for the performance or non-performance of third-party
software vendors, their products, or their support services including design
flaws in and/or incompatibility with non-HP products.
G. HP SOFTWARE ON NON-HP SYSTEMS
HP System Support Options for specified HP Software Products used with
designated non-HP systems provides the following features: phone-in assistance,
software problem reporting, HP SupportLine electronic information access and
call submittal, license for software updates and patches.
H. ESCALATION MANAGEMENT
On-site assistance for critical software problems is limited to systems
supported by one (1) system manager and situated within one half (1/2) mile,
(one (1) kilometer) radius of each other. Systems situated beyond this limit
that require on-site assistance will be subject to additional charges at HP's
standard service rates.
I. ACCESS TO THE HP RESPONSE CENTER
HP Response Center use is limited to the system manager for the
operating system and subsystem software; if applicable, the application software
manager(s) for each family of HP application software: and if purchased,
additional HP Response Center callers. In the absence of any of these managers,
the HP Response Center is available to their designated altemates and, if
applicable, during after-hours telephone assistance to the designated after-
hours alternate.
J. SOURCE OF CODE SUPPORT
For HP source code Software covered under HP System Support Options,
assistance is limited to problems that can be duplicated on the current version
of the object code of the particular Software. HP changes Customer at HP's
standard service rates for any other assistance required.
K. HP PREDICTIVE SUPPORT (SELECTED SYSTEMS)
HP is not responsible if HP Predictive Support Software does not
identify or remedy system or peripheral problems prior to actual occurrence.
L. NETWORK SOFTWARE COVERAGE
Support for HP network software that provides multi-vendor node
connectivity is limited to product-usage and problem-solving assistance and
software update materials, unless network support is purchased.
M. TRAVEL ZONES
Customer sites located beyond one hundred (100) miles of a primary HP
Support Responsive Office may be subject to travel charges, longer response
times, and reduced coverage hours as specified in HP's Worldwide Customer
Support Travel and Office Director". Availability of some coverage levels is
based on distance from a primary HP Support Responsible office.
N. EXCLUSIONS
HP System Support Options do not include assistance that involves
program development, coding, isolation of coding problems, implementation
assistance, performance consulting, data recovery regardless of the cause of
data loss, hardware malfunctions, or problems and investigation time relating to
the use of privileged code on HP 3000 systems. HP System Support Options do not
include consulting. Consulting may be purchased separately. HP System Support
Options are not a substitute for any formal training offered by HP.
O. AVAILABILITY
Some HP System Support Options service features and coverage levels are
subject to local availability.
P. OUT OF COVERAGE HOURS
Customer requests for hardware and software support services or
installation and configuration services scheduled after HP's normal business
hours may be subject to local availability and additional charges.
4. CUSTOMER RESPONSIBILITIES
A. ACCESS
Customer must provide HP with the following:
1. Access to the Products covered under HP System Support Options.
2. Adequate working space and facilities within a reasonable distance
of the Products.
3. Access to and use of all information, internal resources, and
facilities determined by HP to service the Product.
<PAGE>
B. OPERATING PROCEDURES
Customer must follow routine operating procedures as specified in the HP
Product operating manual.
C. USAGE-LEVEL CHARGES
Customer must allow HP to install or remove usage meters on specified
electromechanical devices. Usage charges may be invoiced separately.
D. DIAGNOSTIC/MAINTENANCE SOFTWARE (SELECTED SYSTEMS)
Customer must allow HP to keep system and network diagnostic and
maintenance programs resident on Customer's system or site for the exclusive
purpose of performing diagnostics and maintenance. Prior to submitting a
Software problem report to HP, Customer may be required to assist HP in running
these HP-supplied programs. Customers with HP Predictive Support Software must
use the electronic data transfer capability it provides to inform HP of events
identified by the Software. Customer acknowledges that Customer has no
ownership interest in diagnostic Software provided by HP and that HP may remove
these diagnostic programs and any HP-loaned modems upon termination of HP System
Support Options.
E. SERVICE REQUESTS
Prior to placing a service request with HP, Customer may be required to
run HP-supplied diagnostic programs.
F. REVISION LEVELS
Customer must maintain all associated system hardware and firmware,
except PC systems, at the latest HP-specified configuration and code revision
level. For PC systems, Customers must maintain all associated system hardware
and firmware at a revision level specified by HP. Customers must maintain
HP-supported non-HP software at a code revision level specified by HP.
G. TELECOMMUNICATIONS CHARGES
Customer is responsible for all telecommunications charges associated
with using HP SupportLine electronic support.
H. TEMPORARY PROCEDURES
Customer is responsible for implementing temporary procedures or
workarounds while permanent solutions are being sought.
5. SOFTWARE LICENSE AND COPYRIGHTS
A. UPDATES
1. HP grants Customer a License to Use software updates provided by HP
under an HP System Support Option.
2. In addition, HP grants Customer a license to use and copy one (1)
copy of the updates received from HP for each HP Software Product license for
which Customer has purchased an HP System Support option that provides Software
support.
3. Customer agrees that the License to use and copy of the updates is
governed by the HP Software License Terms in effect on the date HP ships the
update to Customer. The current version of the HP Software License Terms is
attached as an addendum to this Agreement.
B. HP UPDATE OWNERSHIP
Customer acknowledges that it does not own and has no right to, title
to, or interest in the updates except as set forth in the HP Software License
Terms.
C. COPYRIGHT AND TRADEMARK NOTICES
Customer agrees to reproduce and conspicuously affix those copyright and
trademark notices from the original software on document on each copy of an
update that Customer makes or obtains from an electronic data source, such as HP
SupportLine support.
6. CHARGES
A. CANCELLATION
If HP System Support Options are canceled, Customer will receive a pro
rata refund only for the unused prepaid services. Charges for HP System Support
Options cover a twelve (12) month period for one (1) year options and a
thirty-six (36) month period for three (3) year options.
B. FINANCING
If HP System Support Options are financed as part of an HP Financing
Agreement, the HP Financing Agreement terms and conditions regarding
cancellation will govern.
<PAGE>
HP CONFIGURATION TOOLS LICENSE ADDENDUM
TABLE OF CONTENTS
1. PARTIES AND PRECENDENCE
2. LICENSE GRANT
3. RESTRICTIONS AND CHANNEL
PARTNER RESPONSIBILITIES
4. SUPPORT
5. CONFIDENTIAL INFORMATION
6. OWN RISK
7. TERM AND TERMINATION
<PAGE>
HP CONFIGURATION TOOLS LICENSE ADDENDUM
1. PARTIES AND PRECEDENCE
This Addendum covers Channel Partner's use of certain electronic
configuration tools which consist of HP and third party Software. For purposes
of this Addendum, "Channel Partner" means any direct reseller, indirect reseller
or independent Software Vendor ("ISV") of HP Solutions Products pursuant to a
written Agreement or Certification. This Addendum is incorporated by reference
into such Agreement or Certification, the terms and conditions of which will
continue in full force and effect, provided, however, that in the event of a
conflict with any of the provisions of this Addendum, this Addendum will take
precedence.
2. LICENSE GRANT
A. Subject to the terms and conditions set forth in this Addendum and
in Channel Partner's HP Agreement or Certification HP grants to Channel Partner
an internal, non-exclusive, non-transferable, worldwide license to use one copy
of the following Software plus any other Software designated by HP and agreed
upon by Channel Partner in object code format and including any associated
documentation (collectively, the "configuration Tools"), per each individual
user identified by Channel Partner and approved by HP. For purposes of this
Addendum, "User" means an individual employee or contractor of Channel Partner,
as evidenced by a unique user identifier for such individual.
HP Knowledge Base
SalesBUILDER for Windows
QuoteBUILDER for Windows
RAM Doubler
B. Notwithstanding the foregoing transfer restriction, Channel Partner
may transfer restriction, Channel Partner may transfer copies of the
Configuration Tools, including the associated licenses and documentation,
between similarly situated users, subject to Section 3 below and any related
policies or guidelines issued by HP.
3. RESTRICTIONS AND CHANNEL PARTNER RESPONSIBILITIES
A. Channel Partner will use the Configuration Tools solely for the
purposes of selling, configuring, quoting prices for, ordering, distributing
and/or supporting HP Products and Channel Partner products.
B. Channel Partner will be responsible for the payment of all
registration fees, periodic fees, and any connect time charges associated with
the delivery of the Configuration Tools by HP or its designee via electronic
communications services or other means.
C. Channel Partner must have a valid HP Purchase Agreement for
resellers, ISV Agreement or Certification, with no compliance violations, in
order to be eligible to use the Configuration Tools.
D. Channel Partner will be responsible for controlling the number of
its users of the configuration Tools, and will notify HP or its designee
promptly of any internal transfers of the Configuration Tools, including the
associated licenses and documentation.
E. Channel Partner acknowledges HP's right to change Product information
as reflected in the HP Product Knowledge Base without prior notice to Channel
Partner.
4. SUPPORT
HP will provide direct reselling and ISV Channel Partners with telephone
coverage support regarding SalesBUILDER for Windows only, each Monday through
Friday from 8:00 AM to 8:00 PM Eastern Standard Time, excluding HP holidays
pursuant to this Addendum regarding support. HP has no support obligations
regarding any other software licensed pursuant to this license. The Channel
Partners may contact directly the manufacturers of other software licensed.
5. CONFIDENTIAL INFORMATION
Any information disclosed by HP to Channel Partner in connection with
Channel Partner's use of the Configuration Tools which is labeled confidential
or proprietary will be protected by Channel Partner from unauthorized disclosure
to third parties with the same degree of care as Channel Partner uses for its
own similar information for a period of three (3) years from the date of
disclosure. This restriction will not apply to any information which is (1)
already known by Channel Partner prior to disclosure, (ii) independently
developed by Channel Partner prior to or independent of the disclosure, (iii)
publicly available, (iv) rightfully received from a third party without a duty
of confidentiality, or (v) disclosed by Channel Partner with HP's prior written
approval.
6. OWN RISK
HP IS PROVIDING THESE CONFIGURATION TOOLS ON AN "AS IS" BASIS. CHANNEL
PARTNER'S USE OF THE CONFIGURATION TOOLS IS AT CHANNEL PARTNER'S OWN
RISK, HP, ITS AGENTS, EMPLOYEES, SUBCONTRACTORS AND THIRD PARTY SOFTWARE
SUPPLIERS DISCLAIM ANY AND ALL LIABILITIES FOR AND MAKE NO WARRANTIES,
EXPRESS OR IMPLIED, WITH RESPECT TO THE CONFIGURATION TOOLS INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
7. TERM AND TERMINATION
This Addendum will be effective upon execution by both parties, and will
continue in effect so long as Channel Partner's HP Agreement or Certification is
in effect; provided, however, that HP may terminate Channel Partner's license
immediately upon notice for cause, and that HP may, in HP's sole discretion,
terminate Channel Partner's license upon thirty (30) days notice without cause.
Upon any such termination, Channel Partner will immediately destroy the
Configuration Tools, together with all copies in any form.
<PAGE>
HP WARRANTY AND INSTALLATION INFORMATION
TABLE OF CONTENTS
1. DEFINITIONS
2. WARRANTY STATEMENT
3. PLACE OF PERFORMANCE
4. LIMITATION OF LIABILITY AND REMEDIES
5. WARRANTY AND INSTALLATION CLASSIFICATIONS
6. RESPONSE TIMES
7. INSTALLATION SERVICES
<PAGE>
HP WARRANTY AND INSTALLATION INFORMATION
1. DEFINITIONS
A. "Delivery" means standard HP shipping to and arrival at the receiving
area at the "Ship To" address in the country where Customer's order is placed,
unless otherwise indicated on the quotation.
B. "Products" means hardware, Software, documentation, accessories,
supplies, parts and upgrades that are determined by HP to be available from HP
upon receipt of Customer's order. "Custom Products" means Products modified,
designed or manufactured to meet Customer requirements.
C. "Software" means one or more programs capable of operating on a
controller, processor or other hardware Product ("Device"). Software is either
a separate Product, included with another Product ("Bundled Software") or fixed
in a Device and not removable in normal operation ("Firmware").
D. "Specifications" means specific technical information about HP Products
which is published in HP Product manuals and technical data sheets in effect on
the date HP ships Customer's order.
2. WARRANTY STATEMENT
A. Product warranty period is defined by the warranty code appearing on
quotations, as described in the "Warranty and Installation Classification Table"
below or is available upon request.
B. Products purchased from HP outside the U.S. will receive the standard
warranty in the country of purchase. If customer moves such products to another
country where HP has support presence, then Customer will receive the
destination country standard warranty.
C. Products purchased from HP outside the U.S. based on the U.S. list
prices will only receive standard warranty in the U.S., except for Products with
a global warranty. All Products purchased in the U.S. based on international
prices will include a global warranty. A global warranty means that the Product
will include the destination country's standard warranty in any country where
the Product is moved provided that HP has Support presence in that country.
D. Additional warranty coverage may be purchased and that warranty will be
limited to the country in which the additional coverage was purchased. Customer
may receive a different warranty when the Product is purchased as part of a
system. HP reserves the right to change the warranty. Such changes will affect
only new orders.
E. The warranty period begins on the date of deliver, or the date of
installation if installed by HP. If customer schedules or delays installation
by HP more than 30 days after deliver, the warranty period begins on the 31st
day after delivery.
F. HP warrants HP hardware Products against defects in materials and
workmanship. HP further warrants that HP hardware products conform to
specifications. These warranties do not include periodic recalibration
(recommended for some HP Products), unless specifically covered in the warranty
terms for such Products.
G. HP warrants that Software will not fail to execute its programming
instructions due to defects in materials and workmanship when properly installed
and used on the device designated by HP. HP further warrants that HP owned
standard Software will substantially conform to Specifications. HP does not
warrant that Software will operate in hardware and software combinations
selected by customer, or meet requirements specified by Customer.
H. HP does not warrant that the operation of Products will be
uninterrrupted or error free.
I. HP warrants that each HP hardware, software, and firmware Product
delivered under this Exhibit be able to accurately process date data (including,
but not limited to, calculating, comparing, and sequencing) from, into, and
between the twentieth and twenty-first centuries, and the years 1999 and 2000,
including leap year calculations, when used in accordance with the Product
documentation provided by HP (including any instructions for installing patches
or upgrades), provided that all other products (e.g. hardware, software,
firmware) used in combination with such HP Products) properly exchange date data
with it. If the Specifications require that specific HP Products must perform
as a system in accordance with the foregoing warranty, then that warranty will
apply to those HP Products as a system, and Customer retains sole responsibility
to ensure the Year 2000 readiness of its information technology and business
environment. The duration of this warranty extends through January 31, 2001.
To the extent permitted by local law, this warranty applies only to branded HP
Products and not to products manufactured by others that may be sold or
distributed by HP. This warranty Section 21, applies only to HP Products
shipped after July 01, 1998. The remedies applicable to this Section 21, are
those provided in Section 2J below. Nothing in this warranty will be construed
to limit any rights or remedies provided elsewhere in this Exhibit and HP's
Terms and Conditions of Sales and Service with respect to matters other than
Year 2000 compliance.
J. If HP receives notice of defects or non-conformance to hardware
Specification, or substantial non-conformance to HP owned standard Software
Specifications during the warranty period, HP will, at its option, repair (and
recalibrate only as necessitated by repairs), or replace the affected Products.
If HP is unable, within a reasonable time, to repair, replace or correct a
defect or non-conformance in a Product to a condition as warranted, customer
will be entitled to a refund of the purchase price upon prompt return of the
Product to HP. Customer will pay expenses for return of such Products to HP.
HP will pay expenses for shipment of repaired or replacement Products, except
for Products returned to Customer from another country.
K. HP warrants that HP Support will be provided in a professional and
workmanlike manner. HP will replace, at no charge, parts which are defective
and returned to HP within 90 days of delivery.
L. Some newly manufactured HP Products may contain and warranty service may
use remanufactured parts, which are equivalent to new in performance.
M. The above warranties do not apply to defects resulting from improper or
inadequate maintenance or calibration by Customer; customer or third party
supplied software, interfacing or supplies; unauthorized modification; improper
use or operation outside of the Specifications for the Product;
abuse, negligence, accident, loss or damage in transit; improper site
preparation; or unauthorized maintenance or repair.
N. THE ABOVE WARRANTIES ARE EXCLUSIVE AND NO OTHER WARRANTY, WHETHER
WRITTEN OR ORAL, IS EXPRESSED OR IMPLIED. HP SPECIFICALLY DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
3. PLACE OF PERFORMANCE
A. Within HP service travel areas, HP Products and certain other Products
designated by HP, sold with On Site warranty and installation coverage, will be
installed by HP at the Customer's facility at no charge. Outside HP service
travel areas, warranty and installation services will be performed at Customer's
facility only upon HP's prior agreement; Customer will pay HP's travel expenses
and other applicable expenses for such services.
B. Products with On Site warranty will receive warranty services only at
the Initial Installation site. If Products eligible for On Site warranty and
installation services are moved from the Initial Installation site, the warranty
services will be provided only if the Customer purchases additional inspection
or installation services at the new site.
C. Products with On-Site warranty will receive warranty services outside
the country of initial purchase if global warranty coverage applies. Service
outside the country of initial purchase is subject to the conditions regarding
HP service travel areas and Initial Installation site in Sections 3A. and B.
above.
D. Products with global warranty coverage and return to HP warranty, and
battery-powered Products, may be returned to the closest HP authorized repair
center. All other Products with return to HP warranty must be returned to an HP
authorized repair center within the country of original purchase. Customer will
pay expenses for return of such Products to HP. HP will pay expenses for
shipment of repaired or replacement Products, except for Products returned to
Customer from another country.
4. LIMITATION OF LIABILITY AND REMEDIES
A. To the extent HP is held legally liable to Customer, HP's liability is
limited to:
1) damages for bodily injury;
2) direct damages to tangible property up to a limit of U.S. one
million dollars ($1,000,000).
B. Notwithstanding Section 4A. above, in no event will HP or its
affiliates, subcontractors or suppliers be liable for any of the following:
1) actual loss or direct damage that is not listed in 4A. above;
2) damages for loss of data, or software restoration;
3) damages relating to Customer's procurement of substitute products or
services (i.e., "cost of cover"); or
4) incidental, special or consequential damages (including downtime
costs or lost profits).
C. THE REMEDIES IN THIS EXHIBIT AND HP's TERMS AND CONDITIONS OF SALE AND
SERVICE ARE CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES.
5. WARRANTY AND INSTALLATION CLASSIFICATIONS
Products receive warranty and installation services as defined in the
Warranty Installation Classification Table below. Peripherals, accessories and
interfaces receive the same services as the systems to which they are connected
when:
1) the Products are purchased with the system on a coordinated delivery
and are included in the system configuration; or,
2) the Products are purchased as add-ons to an existing system covered
by a HP service agreement which is extended to include the add-on
Products.
<PAGE>
WARRANTY AND INSTALLATION CLASSIFICATION TABLE
________________________________________________________________________________
WARR WARRANTY SERVICE SUPPORT GLOBAL INSTALL UPGRADE
CODE PERIOD LOCATION LEVEL WARR INC. ELIG.
(13) (4)
________________________________________________________________________________
1A 30 days HP/DEALER Standard Bench (3) No No No
1B 60 days HP Replacement (18) Yes No No
1C 30 days HP/DEALER Replacement (18) Yes No No
1D 30 days HP/DEALER Parts only (16,30) Yes No No
1E 5 years HP/DEALER Parts only (32) Yes No No
1F 90 days HP/DEALER Parts only (16,30) Yes No No
IG 2 years HP/DEALER Parts only (16,30) Yes No No
IH 1 year HP Enhanced Parts only No No Yes
within 48 hrs (33)
IP 30 days HP Replacement (18) No No No
1Q 30 days HP/DEALER Parts only (16,30) No No No
2A 90 days On site 4 hour response (22) No Yes (1) Yes
2B 90 days On site 4 hour response (22) No Yes Yes
2C 90 days On site 4 hour response (22) No No Yes
2D 90 days On site Next day (22) No No Yes
2E 90 days On site Next day (22) No Yes Yes
2F 90 days On site Next day (22) No No No
2G 90 days On site 4 hour response (22) No No No
2H 90 days On site Next day (22 No Yes No
2J 90 days On site Within 3 days (22) No Yes No
2K 90 days HP/DEALER Replacement (2) Yes No No
3A 90 days HP/DEALER Standard Bench (3) No No Yes
3B 90 days HP/DEALER Standard Bench (3) No No No
3C 90 days HP Replacement (2) No No No
3D 90 days HP Standard Bench (3) No No No
3E 6 months On site Within 3 days (22) Yes Yes Yes
3P 90 days HP Replacement (18) No No No
3Q 90 days HP Parts only (16,24) No Yes No
3R 90 days HP Parts only (16,24) No No No
3S 1 year On site Next day (22) Yes No Yes
3T 1 year On site Next day (22) Yes Yes Yes
3U 90 days HP Replacement (2) Yes No No
3V 18 months HP/DEALER Standard Bench (3) Yes No No
3W 1 year On site Within 3 days (22)
Module Exchange (14) Yes No No
3X 1 year HP Replacement (18) Yes No No
4A 1 year HP/DEALER Standard Bench (3) No No No
4B 1 year HP/DEALER Standard Bench (3) No No Yes
4C 1 year HP/DEALER Standard Bench (3) No Yes No
4D 1 year HP/DEALER Standard Bench (3) Yes No No
4E 1 year HP/DEALER Standard Bench (3) Yes No Yes
4F 1 year HP/DEALER Standard Bench (3) Yes Yes No
4G 1 year On site Next Day (22) Yes No No
4H 1 year HP/DEALER Unit Exchange, Yes No No
Next Day (7)
4J 1 year HP/DEALER Exchange, Next Day (7) Yes No No
4K 1 year On site Next day (22) No Yes (1) Yes
4L 1 year On site Next day (22) No Yes Yes
4M 1 year On site Next day (22) No No Yes
4N 1 year On site Within 2 Days (19) Yes No No
4P 1 year HP Parts Only (16) Yes No No
4Q 1 year On site Next Day (22) Yes Yes No
4R 1 year On site Cooperative, Yes Yes Yes
7 Days (11)
4S 1 year On site Cooperative, (11) Yes Yes Yes
4T 1 year On site HW & SW, Next Day (26) Yes No No
4U 1 year HP/DEALER Unit Exchange (7) Yes No Yes
4V 3 years HP/DEALER Parts Only (16) Yes No No
4W 90 days On site Shared, Same Day (20) No No No
4X 1 year HP Replacement (6) No No No
4Y 1 year On site SW Next Day (31) Yes No No
5A 1 year On site Next Day (22) No Yes No
5B 1 year On site Next Day (22) No Yes No
<PAGE>
HP CONFIGURATION TOOLS LICENSE ADDENDUM
1. PARTIES AND PRECEDENCE
This Addendum covers Channel Partner's use of certain electronic
configuration tools which consist of HP and third party Software. For purposes
of this Addendum, "Channel Partner" means any direct reseller, indirect reseller
or independent Software Vendor ("ISV") of HP Solutions Products pursuant to a
written Agreement or Certification. This Addendum is incorporated by reference
into such Agreement or Certification, the terms and conditions of which will
continue in full force and effect; provided, however, that in the event of a
conflict with any of the provisions of this Addendum, this Addendum will take
precedence.
2. LICENSE GRANT
A. Subject to the terms and conditions set forth in this Addendum and
in Channel Partner"s HP Agreement or Certification, HP grants to Channel Partner
an internal, non-exclusive, non-transferable, worldwide license to use one copy
of the following Software plus any other Software designated by HP and agreed
upon by Channel Partner in object code format and including any associated
documentation (collectively, the "Configuration Tools"), per each individual
user identified by Channel Partner and approved by HP. For purposes of this
Addendum, "User" means an individual employee or contractor of Channel Partner,
as evidenced by a unique user identifier for such individual.
HP Knowledge Base
SalesBUILDER for Windows
QuoteBUILDER for Windows
RAM Doubler
B. Notwithstanding the foregoing transfer restriction, Channel Partner
may transfer copies of the Configuration Tools, including the associated
licenses and documentation, between similarly situated Users, subject to
Section 3 below and any related policies or guidelines issued by HP.
3. RESTRICTIONS AND CHANNEL PARTNER RESPONSIBILITIES
A. Channel Partner will use the Configuration Tools solely for the
purposes of selling, configuring, quoting prices for, ordering, distributing
and/or supporting HP Products and Channel Partner products.
B. Channel Partners will be responsible for the payment of all
registration fees, periodic fees, and any connect time charges associated with
the delivery of the Configuration Tools by HP or its designee via electronic
communications services or other means.
C. Channel Partner must have a valid HP Purchase Agreement for resellers,
ISV Agreement or Certification, with no compliance violations, in order to be
eligible to use the Configuration Tools.
D. Channel Partner will be responsible for controlling the number of its
users of the Configuration Tools, and will notify HP or its designee promptly of
any internal transfers of the Configuration Tools, including the associated
licenses and documentation.
E. Channel Partner acknowledges HP's right to change Product information as
reflected in the HP Product Knowledge Base without prior notice to Channel
Partner.
4. SUPPORT
HP will provide direct reselling and ISV Channel Partners with telephone
coverage support regarding SalesBUILDER for Windows only, each Monday through
Friday from 8:00 AM to 8:00 PM Eastern Standard Time, excluding HP holidays
pursuant to this Addendum regarding support. HP has no support obligations
regarding any other software licensed pursuant to this license. The Channel
Partners may contact directly the manufacturers of other software licensed.
5. CONFIDENTIAL INFORMATION
Any information disclosed by HP to Channel Partner in connection with
Channel Partner's use of the Configuration Tools which is labeled confidential
or proprietary will be protected by Channel Partner from unauthorized disclosure
to third parties with the same degree of care as Channel Partner uses for its
own similar information for a period of three (3) years from the date of
disclosure. This restriction will not apply to any information which is
(i) already known by Channel Partner prior to disclosure, (ii) independently
developed by Channel Partner prior to or independent of the disclosure,
(iii) publicly available, (iv) rightfully received from a third party without a
duty of confidentiality, or (v) disclosed by Channel Partner with HP's prior
written approval.
6. OWN RISK
HP IS PROVIDING THESE CONFIGURATION TOOLS ON AN "AS IS" BASIS. CHANNEL
PARTNER'S USE OF THE CONFIGURATION TOOLS IS AT CHANNEL PARTNER'S OWN RISK, HP,
ITS AGENTS, EMPLOYEES, SUBCONTRACTORS AND THIRD PARTY SOFTWARE SUPPLIERS
DISCLAIM ANY AND ALL LIABILITIES FOR AND MAKE NO WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO THE CONFIGURATION TOOLS INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7. TERM AND TERMINATION
This Addendum will be effective upon execution by both parties, and will
continue in effect so long as Channel Partner's HP Agreement or Certification is
in effect; provided, however, that HP may terminate Channel Partner's license
immediately upon notice for cause, and that HP may, in HP's sole discretion,
terminate Channel Partner's license upon thirty (30) days notice without cause.
Upon any such termination, Channel Partner will immediately destroy the
Configuration Tools, together with all copies in any form.
<PAGE>
WARRANTY AND INSTALLATION CLASSIFICATION TABLE
________________________________________________________________________________
WARR WARRANTY SERVICE SUPPORT GLOBAL INSTALL UPGRADE
CODE PERIOD LOCATION LEVEL WARR INC. ELIG.
(13) (4)
________________________________________________________________________________
1A 30 days HP/DEALER Standard Bench (3) No No No
1B 60 days HP Replacement (18) Yes No No
1C 30 days HP/DEALER Replacement (18) Yes No No
1D 30 days HP/DEALER Parts only (16,30) Yes No No
1E 5 years HP/DEALER Parts only (32) Yes No No
1F 90 days HP/DEALER Parts only (16,30) Yes No No
IG 2 years HP/DEALER Parts only (16,30) Yes No No
IH 1 year HP Enhanced Parts only No No Yes
within 48 hrs (33)
IP 30 days HP Replacement (18) No No No
1Q 30 days HP/DEALER Parts only (16,30) No No No
2A 90 days On site 4 hour response (22) No Yes (1) Yes
2B 90 days On site 4 hour response (22) No Yes Yes
2C 90 days On site 4 hour response (22) No No Yes
2D 90 days On site Next day (22) No No Yes
2E 90 days On site Next day (22) No Yes Yes
2F 90 days On site Next day (22) No No No
2G 90 days On site 4 hour response (22) No No No
2H 90 days On site Next day (22 No Yes No
2J 90 days On site Within 3 days (22) No Yes No
2K 90 days HP/DEALER Replacement (2) Yes No No
3A 90 days HP/DEALER Standard Bench (3) No No Yes
3B 90 days HP/DEALER Standard Bench (3) No No No
3C 90 days HP Replacement (2) No No No
3D 90 days HP Standard Bench (3) No No No
3E 6 months On site Within 3 days (22) Yes Yes Yes
3P 90 days HP Replacement (18) No No No
3Q 90 days HP Parts only (16,24) No Yes No
3R 90 days HP Parts only (16,24) No No No
3S 1 year On site Next day (22) Yes No Yes
3T 1 year On site Next day (22) Yes Yes Yes
3U 90 days HP Replacement (2) Yes No No
3V 18 months HP/DEALER Standard Bench (3) Yes No No
3W 1 year On site Within 3 days (22)
Module Exchange (14) Yes No No
3X 1 year HP Replacement (18) Yes No No
4A 1 year HP/DEALER Standard Bench (3) No No No
4B 1 year HP/DEALER Standard Bench (3) No No Yes
4C 1 year HP/DEALER Standard Bench (3) No Yes No
4D 1 year HP/DEALER Standard Bench (3) Yes No No
4E 1 year HP/DEALER Standard Bench (3) Yes No Yes
4F 1 year HP/DEALER Standard Bench (3) Yes Yes No
4G 1 year On site Next Day (22) Yes No No
4H 1 year HP/DEALER Unit Exchange, Yes No No
Next Day (7)
4J 1 year HP/DEALER Exchange, Next Day (7) Yes No No
4K 1 year On site Next day (22) No Yes (1) Yes
4L 1 year On site Next day (22) No Yes Yes
4M 1 year On site Next day (22) No No Yes
4N 1 year On site Within 2 Days (19) Yes No No
4P 1 year HP Parts Only (16) Yes No No
4Q 1 year On site Next Day (22) Yes Yes No
4R 1 year On site Cooperative, Yes Yes Yes
7 Days (11)
4S 1 year On site Cooperative, (11) Yes Yes Yes
4T 1 year On site HW & SW, Next Day (26) Yes No No
4U 1 year HP/DEALER Unit Exchange (7) Yes No Yes
4V 3 years HP/DEALER Parts Only (16) Yes No No
4W 90 days On site Shared, Same Day (20) No No No
4X 1 year HP Replacement (6) No No No
4Y 1 year On site SW Next Day (31) Yes No No
5A 1 year On site Next Day (22) No Yes No
5B 1 year On site Next Day (22) No Yes No
5C 1 year On site Next Day (22) No No No
5D 1 year On site Within 3 Days (22) No No No
5E 1 year HP/DEALER Unit Exchange (7) No No No
5F 1 year HP/DEALER Unit Exchange, No No No
Next day (7)
5G 1 year On site Within 3 Days (22) No Yes(1) Yes
5H 1 year On site Within 3 Days (22) No Yes Yes
5J 1 year On site Within 3 Days (22) No No yes
5K 1 year On site Within 3 Days (22) No No Yes
5L 1 year On site 4 Hour Response (22) No Yes(1) Yes
5M 1 year On site 4 Hour Response (22) No Yes Yes
5N 1 year On site 4 Hour Response (22) No No Yes
5P 1 year HP Replacement (18) No No No
5Q 1 year HP Standard Bench (3) No No No
5R 1 year On site 4 Hour Response (22) No No Yes
5S 1 year On site Within 3 Days (22) Yes Yes Yes
5T 1 year On site Within 3 Days (22) Yes No Yes
5U 1 year On site Within 3 Days (22) No Yes No
5V 1 year On site Cooperative (11) No Yes Yes
5W 1 year On site Next Day, 7 Days (15) Yes Yes No
5X 1 year HP Parts Only (16) No No No
5Y 1 year On site Cooperative, No Yes Yes
7 Days (11)
5Z 1 year HP/DEALER Unit Exchange (7) No No Yes
6A 3 years On site Next Day (22) No No No
6B 2 years HP/DEALER Standard Bench (3) No No No
6C 2 years On site Next Day (22) No No No
6D 2 years On site Next Day (22) No Yes No
6E 2 years HP/DEALER Unit Exchange, No No No
Next Day (7)
6F 2 years HP/DEALER Unit Exchange (7) No No No
6G 2 years HP/DEALER Unit Exchange (7) No No Yes
6H 2 years HP Parts Only (16) No No No
6J 2 years On site Shared, Same Day (2) No Yes No
6L 18 months HP/DEALER Standard Bench (3) No No No
6M 18 months HP Replacement (18) No No No
6N 18 months On site Next Day (22) Yes No No
6P 2 years HP Replacement (16) No No No
6Q 2 years On site Next Day, 7 Days (15) Yes Yes No
6R 2 years On site Next Day (22) Yes No No
6S 2 years HP/DEALER Standard Bench (3) Yes No No
6T 2 years On site Unit Exchange, No Yes No
Next Day (7)
6U 2 years On site Unit Exchange, No No No
Next Day (7)
6V 2 years On site Within 3 Days (22) Yes No No
6W 2 years On site Unit Exchange, No No No
Next Day (7)
6X 2 years HP/DEALER Unit Exchange, Yes No No
Next Day (7)
6Y 2 years On site Unit Exchange, Yes No No
Next Day (7)
6Z 1 year HP Replacement (18) No Yes No
7A 3 years HP/DEALER Standard Bench (3) No No No
7B 3 years HP/DEALER Unit Exchange (7) No No No
7C 3 years On Site Next Day (22) No No No
7D 3 years Site & 1 Year on Site No No No
Bench + 2 Years Bench (1)
7E 3 years HP/DEALER Unit Exchange, No No No
Next Day (7)
7F 3 years Exchange & 1 Year Unit Exchange No No No
Bench + 2 Years Bench (12)
7G 3 years On site Next Day (22) Yes No No
7H 3 years HP/DEALER Replacement (18) No No No
7J 3 years HP/DEALER Module Exchange (14) Yes No No
7K 3 years Site & 1 Year On Site, Yes No No
Bench + 2 Years Bench (10)
7L 3 years HP/DEALER Standard Bench (3) Yes No No
7M 3 years HP/DEALER Unit Exchange (7) No No Yes
7N 3 years On site Next Day (22) No Yes(1) Yes
7P 3 years On site Next Day (22) No Yes Yes
7Q 3 years On site Next Day (22) No No Yes
7R 3 years HP/DEALER Unit Exchange, No No Yes
Next Day(7)
7S 3 years HP/DEALER Bench + Parts Yes No No
Only (21)
7T 3 years On site 1 Year On Site + Yes No No
2 Years Parts Only (23)
7U 3 years On site On Site, Within 3 No Yes No
Days (22)
7V 3 years On site On Site, Within 3 No No Yes
Days (22)
7W 3 years On site On Site, Within 3 No No No
Days (22)
7X 3 years HP/DEALER Unit Exchange (7) Yes No Yes
7Y 3 years On site 5 Hour Response, No No No
24x7 (27)
7Z 3 years HP/DEALER Parts Only (16) No No No
8A 5 years On site Next Day (22) No No No
8B 5 years HP Replacement (18) No No No
8C 5 years HP/DEALER Standard Bench No No No
8D 5 years HP/DEALER Replacement (18) No No Yes
8E 5 years Site & 1 Year on Site + Parts No No No
Parts Only Lifetime (17)
8F 5 years On site Next Day (22) Yes No No
8G 5 years HP Replacement (18) Yes No No
8H 5 years HP/DEALER Unit Exchange, No No No
Next Day (7)
8J 5 years HP/DEALER Unit Exchange, No No Yes
Next Day (7)
8K 5 years HP/DEALER Unit Exchange (7) No No No
8L 5 years HP/DEALER Unit Exchange (7) No No No
8M 3 years Site & 90 Days on Site + Yes No No
Parts 33 Months Parts
Only (28)
8N 3 years Site & 1 Year On Site + 2 Yes No No
Parts Years Parts Only (28)
8P 3 years Site & 1 Year On Site + 2 Yes No No
Parts Years Parts Only
Excluding KB/Mouse(29)
8Q 5 years HP/DEALER Parts Only (16) No No No
8R 3 years HP/DEALER Unit Exchange, Yes No No
Next Day (7)
8S 3 years On site Unit Exchange (7) Yes No No
8T 2 years On site Next Day (22) Yes Yes No
8U 2 years On site Within 3 Days (22) Yes Yes No
8V 3 years Site & 1 Year On Site + 2 No No No
Parts Years Parts Only
Excluding KB/Mouse (29)
9A 6 years On site 4 Hour Response No No No
(Expires: 30 SEP 2001)
9M Lifetime HP Replacement (5) Yes No Yes
9N Lifetime HP Replacement (5) No No Yes
9P Lifetime HP Replacement (5) No No No
9Q 10 years HP Replacement (5) No No No
9R Lifetime HP/DEALER Unit Exchange, Yes No Yes
Next Day (7)
9X 30 years HP/DEALER Replacement (8) No No No
9Y 90 days HP/DEALER Replacement (8) No No No
9Z 90 days HP Replacement (24) No No No
NOTES:
1. Site preparation service included with installation.
2. Warranty service is limited ro repair or replacement of defective Software
media or materials only.
3. Standard Bench warranty means repaired by HP or an HP dealer as its
designated repair center.
4. Upgrade eligibility indicates Product warranty and installation coverage is
eligible to change to match the warranty coverage of the controlling
Product when ordered as a component of a system.
5. Lifetime parts warranty for an item that is warranted throughout the
support life of the Product in which it is used.
6. Products manufactured by another company and distributed by Hewlett-Packard
are not supported by HP. Support is provided by the original product
manufacturer. Software warranty services from HP are limited to replacement
of defective Software media or materials. Customer should contact and/or
register with the product manufacturer to receive any additional warranty
and support coverage information that may be available.
7. Unit Exchange warranty may return to the Customer a repaired exchange
unit, or their original product repaired to HP standards.
8. The Product may be replaced, repaired or the purchase price refunded if
found to be defective during the first thirty (3) years of use.
9. The Product may be replaced if found to be defective during the first ten
(10) years of use.
10. On site warranty with next day response is provided for the first year and
Standard Bench warranty is provided for two additional years. Standard
Bench warranty means repaired by HP or by an HP dealer at its designated
repair center.
11. Cooperative Support involves a sharing of responsibilities for replacement
parts inventory and on site product servicing. Warranty 5V response is
limited to normal working hours. Warranty 5Y response is twenty-four (24)
hours a day, seven (7) days a week.
12. Unit exchange (see #7 above) warranty is provided for the first year and
Standard Bench warranty is provided for two additional years. Standard
Bench warranty means repaired by HP or an HP dealer at its designated
repair center.
13. Warranty coverage is available in all countries where HP has established
local support capabilities. Repairs of products configured to operate in a
different country may be subject to delays.
14. Module Exchange warranty may return to the Customer a refurbished module in
exchange for the Customer's original.
15. Response to a call for support is available seven (7) days a week. On site
response is provided by the next day after receiving a call requesting
warrant support.
16. Parts only warranty means HP will supply the Customer with a replacement
part in exchange for a defective one.
17. Five (5) year on site warranty is supplemented with a lifetime parts
warranty. Lifetime means HP will supply the Customer with a replacement
part in exchange for a defective one throughout the support life of the
Product. Some part restrictions apply.
18. The item is warranted against manufacturing defects in material or
workmanship only.
19. Warranty response is provided within two business days.
20. Shared warranty support responsibility with the original equipment
manufacturer. HP provides the initial contact for the Customer and works
with the original equipment manufacturer the same business day to supply
required warranty suppport if needed.
21. First year receives standard bench repair warranty coverage and years two
and three receive replacement parts warranty coverage only.
22. Responses are based on local standard business days and working hours.
Unless otherwise stated, all responses are measured from the time the
Customer calls until HP has either established a mutually acceptable time
for support to be performed, or HP has begun to provide on site support or
remote diagnosis.
23. First year receives standard On Site, Next Day warranty coverage and years
two and three receive replacement parts warranty coverage only.
24. Products manufactured by another company, distributed by HP and supported
by HP receive minimal warranty coverage of ninety (90) days parts only.
This warranty may be upgraded to one (1) year on site support.
25. Product is serviced on site and if found to be defective is exchanged for a
previously repaired unit by the HP authorized support engineer.
26. HP warrants that both the standard hardware and software will substantially
conform to published specifications.
27. Responses are measured from the time the Customer calls until HP has either
established a mutually acceptable time for support to be performed, or HP
has begun to provide on site support or remote diagnostics. 24x7 refers to
coverage hours of twenty-four (24) hours a day, seven (7) days a week.
28. Two (2) levels of warranty coverage are provided for specified intervals of
time. The two (2) levels can be described as follows: 1) On site support
supplied by the next business day; and 2) Parts only coverage without the
need to return the defective part.
29. Two (2) levels of warranty coverage are provided for specified intervals of
time. The two (2) levels can be described as follows: 1) On site support
supplied by the next business day, and 2) Parts only coverage excluding the
keyboard and mouse.
30. The Customer may accept parts only warranty (see footnote 16) or return the
product to the point of sale for warranty support.
31. HP warrants that the standard software will substantially conform to
published specifications.
32. Keyboard and mouse are covered for the first (1st) year only.
33. The Enhanced Parts only service level means that HP will provide the
Customer with remove resolution assistance, parts diagnosis, replacement
part(s) in return for defective one(s), and remote part installation
assistance. At its option, HP may, but is not obligated to, repair the
product on site.
<PAGE>
HP WARRANTY AND INSTALLATION INFORMATION
1. DEFINITIONS
A. "Delivery" means standard HP shipping to and arrival at the receiving
area at the "Ship To" address in the country where customer's order is placed,
unless otherwise indicated on the quotation.
B. "Products" means hardware, Software, documentation, accessories,
supplies, parts and upgrades that are determined by HP to be available from HP
upon receipt of Customer's order. "Custom Products" means Products modified,
designed or manufactured to meet Customer requirements.
C. "Software" means one or more programs capable of operating on a
controller, processor or other hardware Product ("Device"). Software is either a
separate Product, included with another Product ("Bundled Software"), or fixed
in a Device and not removable in normal operation ("Firmware").
D "Specifications" means specific technical information about HP
Products which is published in HP Product manuals and technical data sheets in
effect on the date HP ships Customer's order.
2. WARRANTY STATEMENT
A. Product warranty period is defined by the warranty code appearing
on quotations, as described in the "Warranty and Installation Classification
Table" below or is available upon request.
B. Products purchased from HP outside the U.S. will receive the
standard warranty in the country of purchase. If customer moves such Products
to another country where HP has Support presence, the Customer will receive the
destination country standard warranty.
C. Products purchased in the U.S. based on the U.S. list prices will
only receive standard warranty in the U.S. except for Products with a global
warranty. All products purchased in the U.S. based on international prices will
include a global warranty. A global warranty means that the Product will
include the destination country's standard warranty in any country where the
Product is moved provided that HP has support presence in that country.
D. Additional warranty coverage may be purchased and that warranty will
be limited to the country in which the additional coverage was purchased.
Customer may receive a different warranty when the Product is purchased as part
of a system. HP reserves the right to change the warranty. Such changes will
affect only new orders.
E. The warranty period begins on the date of delivery, or the date of
installation if installed by HP. If customer schedules or delays installation
by HP more than 30 days after delivery, the warranty period begins on the 31st
day after delivery.
F. HP warrants HP hardware Products against defects in materials and
workmanship. HP further warrants that HP hardware Products conform to
Specifications. These warranties do not include periodic recalibration
(recommended for some HP Products), unless specifically covered in the warranty
terms for such Products.
G. HP warrants that Software will not fail to execute its programming
instructions doe to defects in materials and workmanship when properly installed
and used on the device designated by HP. HP further warrants that HP owned
standard Software will substantially conform to Specifications. HP does not
warrant that software will operate in hardware and software combinations
selected by customer, or meet requirements specified by Customer.
H. HP does not warrant that the operation of Products will be
uninterrupted or error free.
I. HP warrants that each HP hardware, software, and firmware Product
delivered under this Exhibit and HP's Terms and Conditions of Sale and Service
will be able to accurately process date data (including, but not limited to,
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, and the years 1999 and 2000, including leap year
calculations, when used in accordance with Product documentation provided by HP
(including any instructions for installing patches or upgrades), provided that
all other products (e.g. hardware, software, firmware) used in combination with
such HP Product(s) properly exchange date data with it. If the Specifications
require that specific HP products must perform as a system in accordance with
the foregoing warranty, then that warranty will apply to those HP Products as a
system, and Customer retains sole responsibility to ensure the Year 2000
readiness of its information technology and business environment. The duration
of this warranty extends through January 31, 2001. To the extent permitted by
local law, this warranty applies only to branded HP products and not to products
manufactured by others that may be sold or distributed by HP. This warranty
Section 21, applies only to HP products shipped after July 01, 1998. The
remedies applicable to this Section 21, are those provided in Section 2J below.
Nothing in this warranty will be construed to limit any rights or remedies
provided elsewhere in this Exhibit and HP's Terms and Conditions of sales and
Service with respect to matters other than Year 2000 compliance.
J. If HP receives notice of defects or non-conformance to hardware
Specifications, or substantial non-conformance to HP owned standard Software
Specifications during the warranty period, HP will, at its option, repair (and
recalibrate only as necessitated by repairs) or replace the affected Products.
If HP is unable, within a reasonable time to repair, replace or correct a defect
or non-conformance in a Product to a condition as warranted, Customer will be
entitled to a refund of the purchase price upon prompt return of the Product to
HP. Customer will pay expenses for return of such products to HP. HP will
pay expenses for shipment of repaired or replacement Products, except for
Products returned to Customer from another country.
K. HP warrants that HP Support will be provided in a professional and
workmanlike manner. HP will replace, at no charge, parts which are defective
and returned to HP within 90 days of delivery.
L. Some newly manufactured HP Products may contain and warranty service
may use remanufactured parts, which are equivalent to new in performance.
M. The above warranties do not apply to defects resulting from improper
or inadequate maintenance or calibration by Customer; Customer or third party
supplied software, interfacing or supplies; unauthorized modification; improper
use or operation outside of the Specifications for the Product; abuse,
negligence, accident, loss or damage in transit; improper site preparation; or
unauthorized maintenance or repair.
<PAGE>
WARR WARRANTY SERVICE SUPPORT GLOBAL INSTALL UPGRADE
CODE PERIOD LOCATION LEVEL WARR. INC. ELIG.
(13) (4)
____________________________________________________________________________
1A 30 Days HP/DEALER Standard Bench (3) No No No
1B 60 Days HP Replacement (18) Yes No No
1C 30 Days HP/DEALER Replacement (18) Yes No No
1D 30 Days HP/DEALER Parts Only (16,30) Yes No No
1E 5 Years HP/DEALER Parts Only (32) Yes No No
1F 90 Days HP/DEALER Parts Only (16,30) Yes No No
1G 2 Years HP/DEALER Parts Only (16,30) Yes No No
1H 1 Year HP Enhanced Parts Only No No Yes
Within 48 Hrs (33)
1P 30 Days HP Replacement (18) No No No
1Q 30 Days HP/DEALER Parts Only (16,30) No No No
2A 90 Days On Site 4 Hour Response (22) No Yes(1) Yes
2B 90 Days On Site 4 Hour Response (22) No Yes Yes
2C 90 Days On Site 4 Hour Response (22) No No Yes
2D 90 Days On Site Next Day (22) No No Yes
2E 90 Days On Site Next Day (22) No Yes Yes
2F 90 Days On Site Next Day (22) No No No
2G 90 Days On Site 4 Hour Response (22) No No No
2H 90 Days On Site Next Day (22) No Yes No
2J 90 Days On Site Within 3 Days (22) No Yes No
2K 90 Days HP/DEALER Replacement (2) Yes No No
3A 90 Days HP/DEALER Standard Bench (3) No No Yes
3B 90 Days HP/DEALER Standard Bench (3) No No No
3C 90 Days HP Replacement (2) No No No
3D 90 Days HP Standard Bench (3) No No No
3E 6 Months On Site Within 3 Days (22) Yes Yes Yes
3P 90 Days HP Replacement (18) No No No
3Q 90 Days HP Parts Only (16,24) No Yes No
3R 90 Days HP Parts Only (16,24) No No No
3S 1 Year On Site Next Day (22) Yes No Yes
3T 1 Year On Site Next Day (22) Yes Yes Yes
3U 90 Days HP Replacement (2) Yes No No
3V 18 Months HP/DEALER Standard Bench (3) Yes No No
3W 1 Year On Site Within 3 Days (22) Yes No No
Module Exchange (14)
3X 1 Year HP Replacement (18) Yes No No
4A 1 Year HP/DEALER Standard Bench (3) No No No
4B 1 Year HP/DEALER Standard Bench (3) No No Yes
4C 1 Year HP/DEALER Standard Bench (3) No Yes No
4D 1 Year HP/DEALER Standard Bench (3) Yes No No
4E 1 Year HP/DEALER Standard Bench (3) Yes No Yes
4F 1 Year HP/DEALER Standard Bench (3) Yes Yes No
4G 1 Year On Site Next Day (22) Yes No No
4H 1 Year HP/DEALER Unit Exchange, Next Yes No No
Day (7)
4J 1 Year HP/DEALER Exchange, Next Day (7) Yes No No
4K 1 Year On Site Next Day (22) No Yes(1) Yes
4L 1 Year On Site Next Day (22) No Yes Yes
4M 1 Year On Site Next Day (22) No No Yes
4N 1 year On Site Within 2 Days (19) Yes No No
4P 1 Year HP Parts Only (16) Yes No No
4Q 1 Year On Site Next Day (22) Yes Yes No
4R 1 Year On Site Cooperative, Yes Yes Yes
7 Days (11)
4S 1 Year On Site Cooperative (11) Yes Yes Yes
4T 1 Year On Site HW & SW, Next Day (26) Yes No No
4U 1 Year HP/DEALER Unit Exchange (7) Yes No Yes
4V 3 Years HP/DEALER Parts Only (16) Yes No No
4W 90 Days On Site Shared, Same Day (20) No No No
4X 1 Year HP Replacement (6) No No No
4Y 1 Year On Site SW Next Day (31) Yes No No
5A 1 Year On Site Next Day (22) No Yes No
5B 1 Year On Site Next Day (22) No Yes No
<PAGE>
WARRANTY AND INSTALLATION CLASSIFICATION TABLE
7T 3 years On Site 1 Year on Site + 2 Years Yes No No
Parts Only (23)
7U 3 years On Site On Site, Within 3 Days (22) No Yes No
7V 3 years On Site On Site, Within 3 Days (22) No No Yes
7W 3 years On Site On Site, Within 3 Days (22) No No No
7X 3 years HP/DEALER Unit Exchange (7) Yes No Yes
7Y 3 years On Site 8 Hour Response, 24x7 (27) No No No
7Z 3 years HP/DEALER Parts Only (16) No No No
8A 5 years On Site Next Day (22) No No No
8B 5 years HP Replacement (18) No No No
8C 5 years HP/DEALER Standard Bench No No No
8D 5 years HP/DEALER Replacement (18) No No Yes
8E 5 years Site & Parts 1 Year On Site + Parts Only No No No
Lifetime (17)
8F 5 years On Site Next Day (22) Yes No No
8G 5 years HP Replacement (18) Yes No No
8H 5 years HP/DEALER Unit Exchange, Next Day (7) No No No
8J 5 years HP/DEALER Unit Exchange, Next Day (7) No No Yes
8K 5 years HP/DEALER Unit Exchange (7) No No No
8L 5 years HP/DEALER Unit Exchange (7) No No Yes
8M 3 years Site & Parts 90 Days On Site + 33 Months Yes No No
Parts Only (28)
8N 3 years Site & Parts 1 Year On Site + 2 Years
Parts Only (28) Yes No No
8P 3 years Site & Parts 1 Year On Site + 2 Years Parts Yes No No
Only Excluding KB/Mouse (29)
8Q 5 years HP/DEALER Parts Only (16) No No No
8R 3 years HP/DEALER Unit Exchange, Next Day (7) Yes No No
8S 3 years On Site Unit Exchange (7) Yes No No
8T 2 years On Site Next Day (22) Yes Yes No
8U 2 years On Site Within 3 Days (22) Yes Yes No
8V 3 years Site & Parts 1 Year On Site + 2 Years Parts No No No
Only Excluding KB/Mouse (29)
9A 6 years On Site 4 Hour Response (Expires: No No No
30 SEP 2001)
9M Lifetime HP Replacement (5) Yes No Yes
9N Lifetime HP Replacement (5) No No Yes
9P Lifetime HP Replacement (5) No No No
9Q 10 years HP Replacement (9) No No No
9R Lifetime HP/DEALER Unit Exchange, Next Day (7) Yes No Yes
9X 30 years HP/DEALER Replacement (8) No No No
9Y 90 days HP/DEALER Replacement (6) No No No
9Z 90 days HP Replacement (24) No No No
<PAGE>
6. RESPONSE TIMES
Response times for on site repair services are specified in the Response
Time Table below.
RESPONSE TIME TABLE
_______________________________________________________________________________
ZONE NUMBER 1-3 3-5 6 OTHER
_______________________________________________________________________________
Distance (Miles/Km) 0-100/0-160 101-200/161-320 201-300/321/480
_______________________________________________________________________________
Classification Codes 4 8 12 Quote
2A, 2B, 2C, 2G, 4S, Coverage Coverage Hours Coverage Hours
5L, 5M, 5N, 5R, Hours
5V & 9A
________________________________________________________________________________
Classification Codes Next 2 3 Quote
2D, 2E, 2F, 2H, 4G, Coverage Coverage Coverage
4K, 4L, 4M, 4Q, 4T, Day Days Days
5A, 5B, 5C, 5F, 5W,
6A, 6C, 6D, 6N, 6Q,
6R, 7C, 7N, 7P, 7Q,
8A, 8H & 8J
_______________________________________________________________________________
Classification Codes Within 3 2 3 Quote
2J, 5D, 5G, 5H, 5J, Coverage Coverage Coverage
5K, 5S, 5T, 5U, 6V Days Days Days
7U, 7V & 7W
_______________________________________________________________________________
7. INSTALLATION SERVICES
A. SITE PREPARATION
When this service is included in the purchase price of a product, a
representative of HP will contact the customer upon receipt of customer's
purchase order to discuss site preparation requirements. This may be
accomplished either during an on site visit or by telephone, and will encompass
technical site planning, preparation and installation requirements relevant to
Customer's system. Customer will also receive documentation or information
characterizing the physical, electrical and environmental requirements
applicable to Customer's system, as well as any other requirements obtained in
the appropriate HP "Site Preparation Manual" (when available) for the system.
B. SITE SURVEY
All installation sites must be approved by HP. Prior to the scheduled
delivery of Customer's system, an HP representative will verify that the site
has been prepared in conformance with the applicable "Site Preparation Manual"
(when available) and meets all electrical and environmental requirements
contained in that manual. This verification may occur either on site or by
telephone.
C. PURCHASE OF INSTALLATION SERVICES
Standard installation services are included in the price of some system
products. These services may also be obtained from HP for products or systems
which do not include these services in the purchase price of the product for
additional cost which will be specially quoted.
D INSTALLATION OF SYSTEMS AND SELECTED COMPONENTS
When installation is included in the purchase price of a product:
1) HP will install Customer's system(s) at a mutually agreed time
following notification by Customer that all Products of the coordinated shipment
have been delivered to the site and that the site conforms to HP's requirements.
Installations will be performed during HP's normal business hours. Installations
performed outside of business hours at Customer's request may be subject to
additional charges.
2) HP systems, including all accessories, interfaces, peripherals and
terminals ordered with a system on a coordinated delivery and included in HP's
configuration guide and located at the system site, will be installed by HP at
no additional charge.
E. SOFTWARE INSTALLATION
Standard software installation services consist of loading the operating
system and utilities included in the operating system software on the system and
executing applicable verification tests. Software that is Customer installable
will be noted in the applicable data sheet.
F. INSTALLATION RESPONSIBILITIES
During system installation, HP will perform the following tasks:
1. Supervise uncrating, positioning and racking of the Products;
2. Inventory the shipment against the packing list(s);
3. Physically interconnect the Products;
4. Check the primary power line voltage;
5. Connect line power to Products shipped with power cable and
connector, (1)
6. Install operating system and utilities;
7. Execute turn-on procedures;
8. Perform electronic and mechanical adjustments;
9. Perform any repairs which may be required to make the Products
operational; (2)
10. Execute standard HP diagnostic or verification program and tests;
11. Instruct operator on daily care and proper use of Products.
During system installation, Customer will perform the following tasks:
1. Receive, uncrate, rack or move the Products and dispose of the
packaging materials;
2. Rerack or relocate the Products;
3. Reconfigure or regenerate Software systems;
4. Connect line power to Products delivered without power cable and
connector;(1)
5. May install products not supplied by HP;
6. Fabricate or pull cables;
7. Ensure that site, cable runs and power outlets conform to all local
fire and electrical codes;
8. Attach wall and ceiling mounts to building structure;
9. Reconfigure hardware systems, including recabling or relocation of
existing products.
All of the above Customer tasks, except 4 and 8, may be performed by HP
for an additional charge and are subject to availability of resources.
NOTES:
1) Due to variations in local electrical codes, many Products are shipped
without power cables and connectors. These Products must be connected to
power by Customer's electrical contractor who is familiar with local
regulations.
2) Repairs made on Products covered by HP warranty will be accomplished at no
additional charge. Shipment damage related to a Customer initiated
relocation or shipment is not covered under warranty. For Products or damage
not covered by HP warranty, repairs will be made at Customer's expense.
<PAGE>
U.S. SOLUTIONS DIRECT RESELLER PROGRAM OPERATIONS POLICY MANUAL
INTRODUCTION
This Operations Policy Manual ("OPM") describes uniform HP policies applicable
across Products, channel segments, and Direct Resellers. This OPM applies to all
HP Channel Partners that have active purchase agreements containing the U.S.
Direct Reseller Program Exhibit. For convenience and consistency, this OPM
refers generically to "Direct Resellers".
HP has consolidated these policies in the OPM to ensure consistency and to
provide an efficient means for updating changes to HP's policies simultaneously
across all applicable channel segments. All capitalized terms used in this OPM
retain the meanings defined elsewhere in the Agreement, unless specifically
noted to the contrary.
<PAGE>
U.S. SOLUTIONS DIRECT RESELLER OPERATIONS POLICY MANUAL
TABLE OF CONTENTS
1. WARRANTY
2. SUPPORT
3. SOFTWARE LICENSING
4. RETURNS
5. CHANNEL PARTNER INSIGNIA
6. OBSOLETE, USED OR REFURBISHED UNITS
<PAGE>
U.S. SOLUTIONS DIRECT RESELLER OPERATIONS POLICY MANUAL
1. WARRANTY
A. WARRANTY STATEMENTS
1. HARDWARE. HP warrants hardware Products against defects in
materials and workmanship. HP further warrants that HP products conform to
Specifications effect on the date HP ships the Product.
2. DESIGNATED SOFTWARE AND FIRMWARE. HP warrants Software and
Firmware Products which are designated by HP for use with a hardware
Product and are properly installed on that hardware Product, against
failures to execute their programming instructions due to defects in
materials and workmanship.
3. HP OWNED STANDARD SOFTWARE. HP warrants that HP owned standard
Software will substantially conform to Specifications. HP does not warrant
that Software will operate in hardware and software combinations selected
by Direct Reseller and/or Customers, or meet requirements specified by
Direct Resellers and/or Customers, or that the operation of Products will
be uninterrupted or error free.
4. YEAR 2000. HP warrants that each HP hardware, Software and
firmware Product shipped by HP will be able to accurately process date data
(including, but not limited to, calculating, comparing, and sequencing)
from, into, and between the twentieth and twenty-first centuries, and the
years 1999 and 2000, including leap year calculations, when used in
accordance with the Product documentation provided by HP (including any
instructions for installing patches or upgrades), provided that all other
products (e.g. hardware, software, firmware) used in combination with such
HP product(s) properly exchange date data with it. If the Specifications
require that specific HP Products must perform as a system in accordance
with the foregoing warranty, then that warranty will apply to those HP
Products as a system, and warranty recipients retain sole responsibility to
ensure the Year 2000 readiness of their information technology and business
environments.
5. OTHER WARRANTIES. HP may provide Product specific warranties,
either with such Products or via the following HP web site: http://
partner.americas.hp.com/. HP revisions to such warranties will be the
date specified by HP. These warranties will take precedence over any
conflicting terms contained in this Section 1.
B. WARRANTY PERIODS AND PASS THROUGH PROCESSES
1. WARRANTY PERIODS. Product warranty period and additional
information is available with Products, on quotations, or upon request. If
Direct Reseller does not pass through its HP warranties, the warranty
period begins on the date of delivery, or the date of installation if
installed by HP. If Customer schedules or delays installation by HP more
than thirty (30) days after delivery, the warranty period begins on the
thirty-first (31st) day after delivery.
2. PASS THROUGH PROCESSES. Except as expressly provided in this
Agreement, Direct Reseller may pass through the warranties provided under
the Agreement to their end-user customers, so long as such warranty terms
and conditions obligate HP to no greater than the following:
a. Warranty coverage for defective Products no greater than
that provided in this Warranty Section and any associated Product
Exhibit or Product Category.
b. Warranty exclusions and disclaimers no less than those set
forth in this Warranty Section and any associated Product Exhibit.
c. A duration of warranty expiring no later than the date of
expiration of HP's warranty as provided under this Agreement; and
d. Limitations of remedies and liability no less than those
provided in the limitation of Remedies and Liability Section of this
Agreement.
Direct Reseller must provide a copy of the currently effective
HP warranty to its end-user Customer prior to the downstream
sale. A copy of the current version of HP's Warranty and
Installation Information (also known as "E-26") is attached as
an addendum to this Agreement and may be provided by Direct
Reseller to its end-user Customer, provided that Direct
Reseller is responsible for ensuring that it provides the
current version of E-26. In addition, Direct Reseller may
provide more extensive warranty coverage to its end-user
customers, so long as HP has no responsibility for fulfilling
the associated obligations.
3. PASS THROUGH WARRANTY PERIOD. Where Direct Reseller uses the pass
through processes described above, products ordered by Direct Reseller and
temporarily retained in inventory are warranted beginning with the shipment
date from HP and ending with shipment to the end-user Customer, for a
period not to exceed one hundred (180) days from date of original purchase
from HP by Direct Reseller. "User-Warranties" apply only to end-user
purchasers of Products. End-user Customer warranties begin upon purchase by
the end-user Customer and must be verified by proof of acquisition by such
Customer.
4. YEAR 2000 WARRANTY PERIOD. The duration of the Year 2000 warranty
set forth in subsection 1.A.4 above extends through January 31, 2001.
C. REMEDIES
If HP receives notice of defects or non-conformance to the warranties
provided in this Agreement during the applicable warranty period, HP will, at
its option, repair, or replace the affected products. If HP is unable, within a
reasonable time, to repair, replace or correct a defect or non-conformance in a
Product to a condition as warranted, Customer will be entitled to a refund of
the purchase price upon prompt return of such Products to HP. HP will pay
expenses for shipment of repaired or replacement Products.
D. WARRANTY EXCEPTIONS
1. HP does not warrant that the operation of Products will be
uninterrupted or error free.
2. The warranties provided in subsections 1.A through 1.B above do not
include periodic recalibration, recommended for some Products, unless
specifically covered in the warranty terms for such Products.
3. Some newly manufactured Products may contain, and in supporting such
Products HP may use, remanufactured parts which are equivalent to new in
performance.
4. The Year 2000 warranty provided in subsection 1.A.4 above applies
only to branded HP Products and not to products manufactured by others that may
be sold or distributed by HP.
E. WARRANTY EXCLUSIONS
The warranties provided in subsections 1.A. through 1.H. above will not
apply to damages resulting from abuse, misuse, negligence, accident, loss or
damage in transit, or other Product warranty exclusion, or from attempted repair
by an unauthorized technician. Direct Reseller will reimburse HP for all freight
expenses for any of the foregoing Products returned to HP, or for any returned
Products determined by HP to be free from defect. Such HP Products may be
shipped back to Direct Reseller, and Direct Reseller will be responsible for
associated freight charges. Title to the Products and risk of loss will pass to
Direct Reseller at HP's shipping point (Free On Board at Origin; "F.O.B.
Origin").
F. WARRANTY DISCLAIMERS
THE ABOVE WARRANTIES ARE SOLE AND EXCLUSIVE, AND NO OTHER WARRANTY,
WHETHER WRITTEN OR ORAL, IS EXPRESSED OR IMPLIED HP SPECIFICALLY DISCLAIMS THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
2. SUPPORT
A. Direct Reseller may order Support from HP's then current Support
offering, which is set forth in the attached U.S. Solutions Support Options
Addendum. Orders for Support are subject to the terms of this Agreement,
including the Support Exhibit or quotation in effect on the date of order.
Direct Reseller is responsible for obtaining the agreement of its end-user
Customer with respect to any Support obligations under this Agreement that
pertain to such Customer.
B. To be eligible for Support, Products must be at current specified
revision levels and, in HP's reasonable opinion, in good operating condition.
C. HP may, at no additional charge, modify Products to improve
operation, supportability and reliability, or to meet legal requirements.
D. Relocation of Products is the end-user Customer's responsibility.
Relocation may result in additional Support charges and modified service
response times. Support of Products moved to another country is subject to
availability.
E. HP will provide Support for products not supplied by HP when approved
by HP in writing. HP will provide Support for HP Products when the end-user
Customer allows HP to perform modifications if requested by HP under Section
2.C. above. Such Customer is responsible for removing any products not eligible
for Support to allow HP to perform Support services. If Support services are
made more difficult because of such product(s), HP will charge such Customer for
the extra work at HP's standard rates.
F. Support does not cover any damage or failure caused by:
1. Use of non-HP media, supplies and other products; or
2. Site conditions that do not confirm to HP's site specifications;
or
3. Neglect, improper use, fire or water damage, electrical
disturbances, transportation by Direct Reseller or its end-user
Customer, work or modification by people other than HP employees or
subcontractors, or other causes beyond HP's control; or
4. Inability of any non-HP products in the end-user Customer's
environment to correctly process, provide or receive date data (i.e.,
representations for month, day, and year), and to properly exchange date
data with the Products supplied by HP.
G. The end-user Customer is responsible for maintaining a procedure
external to the Products to reconstruct lost or altered Customer files, data or
programs. Such Customer will have a representative present when HP provides
Support services at Customer's site. Customer will notify HP if Products are
being used in an environment which poses a potential health hazard to HP
employees or subcontractors; HP may require Customer to maintain such Products
under HP supervision.
H. The end-user Customer may delete Products under Support or cancel
Support orders upon thirty (30) days written notice. Upon sixty (60) days
written notice, HP may cancel Support orders or delete Products no longer
included in HP's Support offering.
3. SOFTWARE LICENSING
A. Unless prior written consent is obtained from HP, Direct Reseller
will not copy or modify any materials supplied under this Agreement, except that
Software may be copied for archival purposes, to replace a defective copy, or
for program error verification. Direct Reseller will not remove, omit, or alter
any label or copyright notice on or in these materials.
B. Direct Reseller is granted the right to distribute Software and
related materials supplied by HP in accordance with the HP Software License
Terms in effect on the date of shipment by HP. The current version of the HP
Software License Terms are attached as an addendum to this Agreement. Direct
Reseller may also use the materials for demonstration purposes in accordance
with those license terms.
1. Where an end-user agreement is supplied with the Software, the
user must sign the agreement or indicate acceptance by opening the media
package in order to obtain a license to use it. Use of the Software will
be subject to the terms of the agreement.
2. Where the Software is designated as confidential or a trade
secret in its license terms, Direct Reseller will safeguard the Software
in accordance with industry standards and applicable law, using the same
degree of care to prevent unauthorized disclosure as they use with their
own trade secrets and those of other suppliers.
C. Direct Reseller is granted a license to use certain electronic
configuration tools, subject to and in accordance with the terms and conditions
set forth in the attached HP Configuration Tools License and HP Software License
Terms.
4. RETURNS
A. INTRODUCTION
1. The procedures provided in this Agreement for return and repair,
replacement, or credit are the exclusive remedies of Direct Reseller for
any claim related to any alleged defect, nonconformity, or customer
dissatisfaction in Products.
2. Some Products may be returned under different terms and
conditions than those set forth in this Section 4; the terms and
conditions applicable to such Products are noted in the specific Product
Exhibits and Program Exhibits related to such Products.
B. DEFECTIVE UNIT RETURNS
1. Products eligible for defective unit returns are designated on
the Product Exhibits.
<PAGE>
C. Display of HP Marks is at all times subject to HP's standards, policies and
guidelines. HP reserves all rights under law or in equity for misuse of HP
trademarks.
6. OBSOLETE, USED OR REFURBISHED UNITS
A. HP may, from time to time, offer Direct Reseller obsolete, used or
refurbished products and/or certain products on special promotional terms. Such
purchases may be subject to discounts different than those shown in the Product
Exhibits, and on terms which may not include eligibility for Price Protection,
stock adjustment, promotional accrual fund allowance or credit towards Direct
Reseller's volume commitment levels.
<PAGE>
HP HIGH-END ENTERPRISE SERVER PRODUCTS EXHIBIT AV40
Products listed on this Exhibit and applicable standard options that are
determined by HP to be available from HP upon acceptance of Customer's order
earn discounts based on the total shipments by HP in accordance with the
following Discount Schedule(s) when purchased in accordance with provisions of
this Agreement including all attachments. Custom Product and option discounts
are subject to agreement between Customer and HP prior to each order. All
language versions of Products listed on this Exhibit qualify.
DISCOUNT
Each product is categorized for discount rate into a "Discount Percentage
Schedule" column as shown in the "Products Subject to Discount" table.
DISCOUNT PERCENTAGE SCHEDULE
UNITED STATES I
US DOLLAR NET .
0 - + 33.0
PRODUCTS SUBJECT TO DISCOUNT
<PAGE>
[HEWLETT PACKARD LOGO APPEARS HERE]
HP HIGH-END ENTERPRISE SERVER PRODUCTS Exhibit AV40
PRODUCT NUMBER COLUMN WTY DESCRIPTION
CODE
A3725A I 5L V2200/2250 Enterprise Server S
A3725AR I 5L Rmkt HP9000 V2200 Enterprise S
A3726A I 5L V2200 Base System Configuration
A3726AN I
A3726AR I 5L Rmkt V2200 Base System Configuration
A3727A I 5L 200 MHz PA8200 Processor with
A3727AN I 5H V2200 CPU Rebate
A3727AR I 5L Rmkt 200MHz PA8200 Processor w
A3729A I 5L 6 slot PCI card cage for V Cla
A3729AR I 5L Rmkt 6 slot PCI card cage for
A3730A I 5L Memory Carrier for V2200
A3730AN I 5H V22x0 Memory Board Return Cred
A3730AR I 5L Rmkt Memory Carrier for V2200
A3732A I 5L 1GB memory, set of 8 128MB Dim
A3733A I 5L V Class power supply
A3733AR I 5L Rmkt V Class power supply
A3734A I 5K HP 9000 Localized V Class HW M
A3734AR I 5K Rmkt HP9000 Localized V Class
A3746A I 5L V Class field Stacking Kit
A4801A I 5L V Class base system, technical
A4801AR I 5L Rmkt V Class base sys, technic
A4802B I 5L System Mgmt Station with Software
A4805AR I 5L Rmkt Disk tray for V class tech
A4886A I 5G 4M V Class UPS DB9 Cable
A5066A I 5L V Class 240MHz PA8200 CPU w 4M
A5066AN I 5H V2250 CPU Return Credit
A5066AR I 5L Rmkt V Class 240MHz, PA8200 CPU
A5068A I 5L SCSI - 3 Cable, internal disk to
A5073A I 5L V2500 Enterprise Server Solution
A5074A I 5L V2500 Base System Configuration
A5075A I 5K Localized V2500 HW Manual Kit
A5078A I 5L V2500 Memory Controller Board,
A5081A I 5L V2250 Base System Configuration
A5081AN I
A5081AR I 5L Rmkt V2250 Base System Configuration
A5082A I 5L V2500 2GB memory, set of 8 256
A5083A I 5L HP 9000 V2250 Server Upgrade
A5085A I 5L 2GB SCA memory, set of 8 256MB
A5086A I 5L V2500 Base System Configuration
A5199A I 5L 1GB SCA memory, set of 8 128MB
A5489A I 5L V2500 Service Support Processor
A5491A I 5L V2500 440MHz PA8500 Single CPU
A5492A I 5L V2500 440MHz PA8500 Dual CPU B
A5502A I 5L V2500 Single to Dual CPU Board
A5517A I 5L V2500 SCA Mem Controller Brd,
A5532A I 5L V2500 SCA Base System Configuration
B6044AA I 5L Test Station SW for system con
B6257AA I 3C Hyperfabric Media
B7148AA I 3C V2500 Svc Support Proc. Diagnostic
<PAGE>
EXHIBIT AV42
HP SURESTORE E DISK ARRAY MC256 PRODUCTS
A. Products listed on this Exhibit and applicable standard options that are
determined by HP to be available from HP upon acceptance of Reseller's order
earn discounts based on the total shipments by HP in accordance with the
following Discount Schedule(s) when purchased in accordance with the provisions
of this Agreement including all attachments. Custom product and option discounts
are subject to agreement between Reseller and HP prior to each order. All
language versions of products listed on this Exhibit qualify.
B. DISCOUNT
Each product is categorized for discount rate into a "Discount Percentage
Schedule" column as shown in the "Products Subject to Discount" table.
Products categorized in discount column II, which is not reflected on the
following "Discount Percentage Schedule," will receive 0% discount.
_____________________________________________________________________________
DISCOUNT PERCENTAGE SCHEDULE
United States 1
US dollar net
0 - + 33.0
_____________________________________________________________________________
C. SPECIAL TERMS
The following terms are required to take precedence over the indicated
terms contained in the HP Reseller Business Terms and current version of the
applicable Operations Policy Manual (OPM).
1) Add the following to section 6 of HP Reseller Business Terms, Orders and
Delivery, subsection (c) as follows: MC256 Products are classified as Custom
Products that are manufactured to meet Reseller's requirements and, are subject
to a return fee after shipment of up to five percent (5%) of list price if the
return occurs within one hundred twenty (120) days of the shipment date.
Products on this Exhibit receive no return credit after one hundred twenty (120)
days of the shipment date. Prior to any return, Reseller must obtain a Return
Materials Authorization ("RMA") number by calling Reseller's HP customer support
representative.
2) Clarify section 13 of HP Reseller Business Terms, Intellectual Property
Protection, subsection (a) as follows: MC256 Products are not considered Custom
Products for purposes of this section 13 and are included under the Intellectual
Property Protection section and subparagraphs.
3) Add the following to section 4 of OPM, Returns: MC256 Products are
classified as Custom Products that are manufactured to meet end-user customers'
requirements and are not qualified or covered for inventory adjustment programs.
D. ADDITIONAL OBLIGATIONS
Reseller agrees to comply with the following additional obligations with
respect to the products sold under this Agreement.
1) Reseller must identify a central contact for HP business development,
information dissemination and problem resolution. The individual identified may
be an existing HP 9000 and/or HP 3000 contact.
2) Reseller must have at least one (1) sales representative per HP
authorized sales location, capable of representing Products in face-to-face
selling to the customer. The individual identified may be an existing HP 9000
and/or HP 3000 contact.
3) Reseller must have at least one (1) engineer capable of doing
pre-sales support for HP Products, according to the standards defined by HP.
In order to provide and maintain the appropriate HP Product knowledge,
above sales representatives and engineers must attend training as offered and
must be certified according to the criteria and guidelines defined by HP.
4) Reseller will not actively market the MC256 Products identified in
this Exhibit for attachment solely to "System 390 Mainframe" (or compatible)
computer systems, or in end-user environments where the only type of computer
system attached or planned to be attached to the applicable MC256 Product is a
System 390 Mainframe.
5) Reseller may, however, actively market MC256 Products identified in
this Exhibit for attachment to at least one computer system other than a System
390 Mainframe (or compatible) computer system.
6) Reseller may sell only those Products that correspond to the
certifications they have achieved.
7) Reseller must provide detailed end-user information to HP to ensure
appropriate installation and support services.
8) Reseller must notify its end-user customers that HP requires modem
access to Products supplied under this Exhibit, in order to facilitate warranty
and post-warranty support services. If modem access is denied, the associated
warranty will be deemed null and void.
9) Service processors for the Products supplied under this Exhibit may
only be accessed by HP personnel. In the event of access by any other
personnel, the associated warranty will be deemed null and void.
<PAGE>
PRODUCTS SUBJECT TO DISCOUNT
PRODUCT NUMBER COLUMN WTY DESCRIPTION
CODE
A5700A I NA
A5701A I 1J
A5702A I 1J
A5072U I 1J
A5703A I 1J
A5703U I 1J
A5704A I 1J
15704U I 1J
A5705A I 1J
A5705U I 1J
A5706A I 1J
A5707A I 1J
A5708A I 1J
A5709A I 1J
A5710A I 1J
A5710U I 1J
A5711A I 1J
A5711U I 1J
A5712A I 1J
A5712U I 1J
A5719A I 1J
A5719U I 1J
A5721L1 I 1J
A5721L2 I 1J
A5721R1 I 1J
A5721R2 I 1J
A5721U I 1J
A5723L1 I 1J
A5723L2 I 1J
A5723R1 I 1J
A5723R2 I 1J
A5723U I 1J
A5731S I 1J
A5731U I 1J
A5732U I 1J
A5733S I 1J
A5733U I 1J
A5740A I 1J
A5740U I 1J
A5745A I 1J
A5745U I 1J
A5746A I 1J
A5746U I 1J
A5750A I 1J
A5751A I 1J
A5752A I 1J
B7905A I NA
B7905AU I NA
B7906A I NA
B7906AU I NA
B7907A I NA
B7907AU I NA
B7908A I NA
B7908AU I NA
B7909A I NA
B7910A I NA
B7911A I NA
B7912A I NA
B7912AU I NA
B7913A II NA
B7914A I NA
B7914AU I NA
B7915A I NA
B7916A I NA
B7917A I NA
<PAGE>
HEWLETT-PACKARD COMPANY
U.S. AGREEMENT FOR AUTHORIZED SOLUTIONS
DIRECT RESELLERS
<PAGE>
IBM BUSINESS PARTNER AGREEMENT/
IBM SOLUTIONS PROVIDER
AGREEMENT
<PAGE>
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 Users 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 complementary
marketing relationship. If we approve you to market the same Product and
Service under both remarketer and complementary marketing terms, all
transactions or business segment by providing your IBM Distributor a 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.
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 and not for resale.
Enterprise is any legal entity and the subsidiaries it owns by more than
50%.
Machine is 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 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 access to 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 th e 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
Users 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. neither 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
without 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
Page 1 of 7
<PAGE>
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 services otherwise required by
your relationship is not applicable when you acquire products for internal use.
You must retain 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 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 eac 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. that the products and deliverables you market in conjunction with
IBM Products and Services are Year 2000 Ready. A product (for example, a
machine or program) or a deliverable is Year 2000 Ready if the product of
deliverable, when used in accordance with its associated documentation, is
capable of correctly processing, providing and/or receiving date data within and
between the twentieth and twenty-first centuries, provided that all products
used with the product or deliverable properly exchange accurate date data with
it;
13. 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
14. 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 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 licence 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;
Page 2 of 7
<PAGE>
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 required) 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 of 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 you End User of these terms, in
writing. Warranty information is available from your IBM Distributor.
10. IBM 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 Service 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 months.
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.
Page 3 of 7
<PAGE>
12. Marketing of Financing
We may approve you in this Agreement, to 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 document including invoices, with serial numbers if
applicable, 2)the supplier will transfer clear title to us, and 3) you will not
transfer to us any obligations under your agreements with the End User.
We will make payment for the items to be financed when the End User has
initiated financing and acknowledged acceptance of the items being financed.
Payment will be made to you, your Distributor, or the supplier, as appropriate.
13. Export
You may actively market Products and Services only within the geographic
scope specified in this Agreement. You may not market outside this scope, and
you agree not to use anyone else to do so. If a customer acquires a Product for
export, our responsibilities, if any, under this Agreement no longer apply to
that Product unless the Product's warranty or license terms state otherwise. You
agree to use your best efforts to ensure that your customer complies with all
export laws and regulations including those of the United States and the country
specified in the Governing Law Section of this Agreement, and agree to provide
us with the customer's name and address, Machine type/model, and serial number
if applicable, date of sale, and destination country. We exclude these Products
from any of your attainment objectives and qualification for applicable
promotional offerings and marketing funds.
14. Licensed Internal Code
Machine ("Specific Machines") containing Licensed Internal Code will be
identified to you by the IBM Distributor. We grant the rightful possessor of a
Specific Machine a license to use the code (or any replacement we provide) on,
or in conjunction with, only the Specific Machine, designated by serial number,
for which the code is provided. We license the code to only one rightful
possessor at a time. You agree that you are bound by the terms of the separate
license agreement that is provided to you.
Your Responsibilities
You agree to inform your customer and record on the sales receipt, that
the Machine you provide is a Specific Machine. The license agreement must be
provided to the customer before the sale is finalized.
15. Machine Code
For certain Machines we may provide basic input/output system code,
utilities, diagnostics, device drivers, or microcode (collectively called
"Machine Code"). This Machine Code is licensed under the terms of the ageement
provided with it. You agree to ensure the End User is provided such agreement.
16. Trademarks
We will notify you in written guidelines of the IBM Business Partner
title and emblem which you are authorized to use. You may not modify the emblem
in any way. You may use our Trademarks (which include the title, emblem, IBM
Trademarks and service marks) only:
1. within the geographic scope of this Agreement;
2. in association with Products and Services we approve you to market;
and
3. as described in the written guidelines provided to you.
The royalty normally associated with non-exclusive use of the Trademarks
will be waived, since the use of this asset is in conjunction with marketing
activities supporting sales of Products and Services.
You agree to promptly modify any advertising or promotional materials
that do not comply with our guidelines. If you receive any complaints about
your use of a Trademark, you agree to promptly notify us. When this Agreement
ends, you agree to promptly stop using our Trademarks. If you do not, you agree
to pay any expenses and fees we incur in getting you to stop.
You agree not to register or use any mark that is confusingly similar
to any of our Trademarks.
Our Trademarks, and any goodwill resulting from your use of them, belong
to us.
17. Liability
Circumstances may arise where, because of a default or other liability,
one of us is entitled to recover damages from the other. In each such instance,
regardless of the basis on which damages can be claimed, the following terms
apply as your exclusive remedy and our exclusive liability.
We are responsible for the amount of any loss or damage, up to the
greater of $100,000 or the charges (if recurring, 12 months' charges apply) for
the Product that is the subject of the claim.
Page 4 of 7
<PAGE>
Under no circumstances (except as required by law) are we liable for
third-party claims against you for damages, or for special, incidental, or
indirect charges, or for any economic consequential damages (including lost
profits or savings) even if we are informed of their possibility.
In addition to damages for which you are liable under law and the terms
of this Agreement, you will indemnify us for claims made against us by others
(particularly regarding statements, representations or warranties not authorized
by us) arising out of your conduct under this Agreement or as a result of your
relations with anyone else.
18. Electronic Communications
Each of us may communicate with the other by electronic means, and such
communication is acceptable as a signed writing to the extent permissible under
applicable law. Both of us agree that for all electronic communications, an
identification code (called a "user ID") contained in an electronic document is
sufficient to verify the sender's identity and the document's authenticity.
19. Confidential Information
This section comprises a Supplement to the IBM Agreement for Exchange of
Confidential Information (AECI). "Confidential Information" means:
1. all information IBM marks or otherwise states to be confidential
2. any of the following prepared or provided by IBM:
a. sales leads,
b. information regarding End Users,
c. unannounced information about Products and Services,
d. business plans or,
e. market intelligence, and
3. any of the following written information you provide to us on our
request and which you mark as confidential
a. reporting data,
b. financial data, or
c. the business plan.
All other information exchanged between us is nonconfidential, unless
disclosed under a separate Supplement to the IBM Agreement for Exchange of
Confidential Information.
20. Ending the Agreement
Regardless of the contract duration specified in the "Details of Our
Relationship" Section, or any renewal period in effect, either of us may
terminate this Agreement, with or without cause, on three months' written
notice. If, under applicable law, a longer period is mandatory, then the notice
period is the minimum notice period allowable.
If we terminate for cause we may, at our discretion, allow you a
reasonable opportunity to cure. If you fail to do so, the date of termination
is that specified in the notice.
However, if either party breaches a material term of the Agreement, the
other party may terminate the Agreement on written notice. Examples of such
breach by you are if you do not maintain customer satisfaction; if you repudiate
this Agreement; or if you make any material misrepresentations to us. You agree
that our only obligation is to provide the notice called for in this section and
we are not liable for any claims or losses if we do so.
If the relationship between you and your named IBM Distributor ends, or
the relationship between IBM and that Distributor ends, and you reapply with a
new IBM Distributor to continue as our Business Partner, you must notify us
within two months of the name of your new IBM Distributor. We will review your
application to acquire Products from this IBM Distributor and advise the new IBM
Distributor when the application is approved.
You agree that if we permit you to perform certain activities after this
Agreement ends, you will do so under the terms of this Agreement.
21. Geographic Scope
All the rights and obligations of both of us are valid only in the
United States and Puerto Rico.
22. Governing Law
The laws of the State of New York, without regard to conflict of laws
principles, govern this Agreement.
The "United Nations Convention on th International Sale of Goods" does
not apply.
Page 5 of 7
<PAGE>
DETAILS OF OUR RELATIONSHIP
Contract Start Date 06/01/99 Duration 24 months
Unless we specify otherwise in writing, the Agreement will be renewed
automatically for subsequent two year periods. Each of us is responsible to
provide the other three months' written notice if the Agreement will not be
renewed.
Products and Services you are approved to market:
You acquire Products and Services you market from the IBM Distributors
specified (personal computer Products may be acquired from IBM approved
Distributor).
Products
<TABLE>
<CAPTION>
Approved to
Value Added Approved to Market Under
Enhancement Market Under Complementary
Required Remarketer Marketing Distributor Name
(yes/no) Terms Terms and Effective Date
RS/6000 yes yes no PIONEER-STANDARD ELECTRO
------- ---------- ----------- ------------- ------------------------
<S> <C> <C> <C> <C>
</TABLE>
Services
If you are approved to market the following Services, you may do so
without the requirement to have marketed a Machine or Program to the End User.
- ----------------------------------- -----------------------------------------
- ----------------------------------- -----------------------------------------
Additional Terms
For each Attachment for which you are approved, each of us agrees to the
terms of the following by signing this Agreement. Copies of the Attachments are
included.
<TABLE>
<CAPTION>
Approved Attachment
(yes/no)
<S> <C> <C>
Attachment for Services Marketing for Solution Provider or Reseller yes Z125-5749-00 11/97
Complementary Marketing Terms Attachment for Solution Provider no Z125-5776-00 03/98
Attachment for Finance Services from IBM Credit Corporation yes Z125-5795-02 05/99
Federal Remarketer Attachment yes Z125-5514-01 02/99
Federal Certification Attachment no Z125-5515-02 04/99
</TABLE>
Minimum Annual Attainment
When the following Section is completed, you agree to meet the
following:
Product Minimum Annual Measurement
Attainment Period Dates
Volume/Revenue
RS/6000 $100,000 06/01/99 to 05/31/00
$100,000 06/01/99 to 05/31/00
Value Added Enhancement
Value added enhancement description:
- --------------------------------------------------------------------------------
See attached (VAEATT)
- --------------------------------------------------------------------------------
Page 6 of 7
<PAGE>
Locations:
Loc. ID Location (street address, city, state,ZIP code)
19498 3200 Wilcrest Suite 370
Houston, TX 77042
Loc. ID Location (street address, city, state, ZIP code)
26761 701 Brazos Suite 500
Austin, TX 78701
Loc. ID Location (street address, city, state, ZIP code)
26752 555 Republic Drive #200
Dallas, TX 75074
This Agreement is the complete agreement regarding this relationship,
and replaces any prior oral or written communications between us. Once this
Agreement is signed, 1) any reproduction of this Agreement made by reliable
means (for example, photo copy or facsimile) is considered an original, to
extent permissible under applicable law, and 2) all Products and Services you
market and Services you perform under this Agreement are subject to it. If you
have already signed an Agreement for Exchange of Confidential Information
(AECI), your signature on this Agreement includes your acceptance of the AECI.
Date received by IBM_________ Revised Agreement(Y/N) No
Agreed to: Design Automation Systems Agreed to: IBM Corporation
(IBM Business Partner name) (IBM Corporation)
/s/ Gary A. Reece
By:__________________________ By:___________________________
(Authorized Signature) (Authorized Signature)
Name (type or print): Name (type or print)
Gary A. Reece Carol Russell
Date: 08-25-99 Date:
IBM Business Partner Address: IBM Address:
3200 Wilcrest Suite 370 4111 Northside Parkway
Houston, TX 77042 Atlanta, GA 30327
Page 7 of 7
<PAGE>
IBM Business Partner Agreement
Attachment for Services Marketing
for Solution Provider or Reseller
The following terms govern your marketing of Services you acquire from
your IBM Distributor and which the End User purchases from you and which we
perform under the terms of the IBM Agreement for Services Acquired from an IBM
Business Partner (IBM Service Agreement). We provide additional terms to you,if
any, in specific Service Attachments, or transaction documents.
1. IBM Services
Services may be either standard offerings or customized to the End
User's specific requirements. Each Service transaction may include one or more
Services that:
1. expire at task completion or an agreed date;
2. automatically renew as another transaction with a specified contract
period. Renewals will continue until the service is terminated; or
3. do not expire and are available for use until either of us
terminates the Service, or we withdraw the Service.
If we make a change to the terms of a renewable Service that affects the
End Users current Service Agreement contract period and the End User considers
it unfavorable and you advise your Distributor, who is responsible to advise us
in writing, we will defer the change until the end of the contract period.
2. Service Charges
Prepaid Services must be used within the applicable contract period. If
we withdraw a Service which has been prepaid,and we have not fully provided such
Service, we will give a prorated refund to your Distributor. Otherwise, we do
not give credits or refunds for unused prepaid Services.
If an End User is eligible for a credit under the terms of the IBM
Service Agreement (for example,a satisfaction guarantee credit, or a credit for
withdrawn Services not fulfilled), you agree to ensure the applicable credit is
issued to the End User. Your Distributor will issue the appropriate credit to
you.
You may market Services we make available to your Distributor on a
recurring-charge basis, only on a recurring charge basis.
3. Notices
Each of us agrees to give the other a copy, through your Distributor, of
notices or requests received from or sent to an End User, applicable to the IBM
Service Agreement.
You agree to ensure certain Service Attachments and transaction
documents, if any, are made available to End Users for their signature, if
required. Such documents may have terms in addition to those we specify in the
IBM Service Agreement.
4. Services Requirements Changes
During the Service period you may update the requirements, including
adding Products to be covered by the Service requirements. We will adjust our
invoicing to you Distributor accordingly. Check with your Distributor to
determine if you will incur an additional charge.
Page 1 of 2
<PAGE>
5. Termination of Services
If either IBM or the End User does not meet its obligations concerning a
Service, the other party may terminate the Service. We will inform your
Distributor of any such termination.
You may terminate an expiring or renewable Service transaction. Check
with your Distributor to determine if you will incur a charge for such
termination.
For a Service the End User terminates, you agree to ensure we are provided
one month's written notice from the End User. For a Service you decide to
terminate, you agree to provide one month's written notice to us and the End
User.
Page 2 of 2
<PAGE>
IBM Business Partner Agreement
Attachment for Financing Services
From IBM Credit Corporation
The terms of this Attachment modify or are in addition to a prevail over
the IBM Business Partner Agreement-General Terms, the IBM Business Partner
Agreement for Solution Providers, and the IBM Business Partner Agreement for
Resellers, as applicable. "We" refers to IBM Credit Corporation.
If you are an IBM Distributor, any term regarding your activities or
responsibilities with an End User may be performed by you. Alternatively, such
activities may be performed by your IBM approved Solution Provider or Reseller,
as applicable. In such case, you are responsible to ensure the Solution
Provider or Reseller has been approved under the terms of this Attachment.
1. Appointment as Agent
We appoint you as our agent under the terms of this Attachment solely
for the purpose of offering to End Users IBM Credit Corporation financial
products ("Financing Services")for Products and Services and any associated
products and services you market, and to advertise availability of our
offerings; both subject to terms in this Attachment including its attached
Exhibit "A".
This relationship between you and us is that of agent and principal,
and is not a joint venture, partnership, employer/employee relationship or a
joint enterprise of any kind. Except as specifically permitted herein, neither
of us is permitted to represent the other, bind the other by its own acts, or
control the manner, means or prices of such other's business.
2. Our Relationship
Responsibilities
Each of us agrees that:
a. we reserve the right, without liability to you, to discontinue or
vary availability of Financing Services to you, a specific End User or End Users
generally;
b. we reserve the right for any reason not to accept all or part of any
proposed Financing Services proposal;
c. we may issue, without notice under this Attachment, additional
Exhibits, which will apply to Financing Services proposals you submit to us
following the effective date of such Exhibit;
d. we have no right to affect your pricing of Products and items which
are to be financed under this Agreement
e. you will not make any representations, warranties or promises of any
type on our behalf to End Users or any other parties, unless specifically
authorized by us; and
f. you have no authority to negotiate terms or conditions of our
financing agreements, or to change or alter any prices provided by us.
Other Responsibilities
You Agree:
a. to designate a point of contact within your organization who will
serve as the primary point of contact for matters relating to the business
relationship with us;
b. to present to each End User interested in obtaining financing for
information technology equipment and related programs and services, a Financing
Services proposal approved in advance by us. You will ensure that the End User
clearly understands that Financing Services are being provided directly from us
as lessor or, in the case of government or government sub-contractor End Users,
as financier. Unless we specify otherwise you will also attach a copy of our
standard financing agreement and make certain that the End User agrees that only
our terms will apply to the Financing Services being provided;
Page 1 of 3
<PAGE>
c. to encourage participation in education which we provide for your
employees involved in the selling of our Financing Services;
d. to assist us in obtaining financial information we require from a
potential End User in order to perform a credit evaluation;
e. to provide administrative assistance to ensure completion of
transaction, e.g., provide us with information required to generate financing
rates and financing contracts, including hardware configurations and
descriptions of charges for programs and services, and ensure that documentation
we require to initiate the financing transactions is executed by the End User;
f. to make End Users aware that their signature on our financing
agreement is an offer looking to financing from us and is not binding on us
unless and until accepted by us in writing;
g. to comply with our procedures relating to financing originations,
including providing End Users, before obtaining their signatures, with the
current version of any financing agreement and documentation we supply, and
relevant IBM Credit customer brochures;
h. to resolve any End User issues or questions relating to supply and
performance of Machines, Programs, or Services arising during your relationship
with the End User;
i. to warrant to us that products to be sold by you and financed by us
are new and if not new, then identified as such and conveyed to us with good and
valid title, free of all encumbrances;
j. to warrant to us that you will remain fully responsible for
all warranty and similar obligations to the End User, in the same manner and to
the same extent as if the End User acquired the products from you without any
financing from us;
k. if you request that program costs or fees be included in the
Financial Services proposal and we approve and pay you directly, that all
obligations concerning the program and its use, remain between the End User and
either you or the program provider, and not us;
l. that, aside from the End User's obligation to pay us, no rights or
duties as to the program apply to us and you will take no action which
contradicts this;
m. to provide us with, or assist us in obtaining, your invoices and
invoicing documentation for all machines, programs and services being provided
to End User and financed by us. Invoices must accurately provide description of
the machines, programs and services, End User name, invoice number, purchase
amount and payee name and address;
n. to ensure your invoices or invoicing documentation accurately
provides machine's serial number, and the detail of the machines, programs and
services you have sold, along with the specific End User price associated with
each;
o. to report, collect and remit any taxes you are responsible for
levied in connection with your licensing programs, selling machines and
providing services;
p. to warrant to us that all services to be performed by you or your
designees and financed by us were bargained for by the End User and if for any
reason the services are not performed you will immediately notify us and we will
negotiate appropriate adjustments with you or the End User;
q. to ensure that no misleading or false representations are made in
relation to the Financing Services arrangements; and
r. to ensure that all advertising which references our offerings
conforms to the IBM Credit Advertising Guidelines for Business Partners, and to
review with us any advertising not conforming to such guidelines prior to
presentation.
We agree to:
a. designate a point of contact within our financing organization to
serve as the primary point of contact for you;
b. provide financing to your IBM Credit approved End Users for their
information technology equipment and related programs and services'
c. deliver financing proposals to you in a timely fashion;
d. provide appropriate educational offerings for your personnel in
order to help them more effectively market our Financing Service; and
e. provide payment of the documented purchase price and programs and
services charges for any financing transaction with the End User. Payment will
be made during the settlement period upon our receipt of the required
documentation.
Page 2 of 3
<PAGE>
3. Remuneration
If we offer you fees for End User financing transactions under the terms
of this Attachment, we will specify such fees in Exhibit A.
4. Trademarks
Neither party shall have, without the other party's prior consent, the
right to use the other's trademarks or trade names, or to refer to the other
party directly or indirectly in connection with any product, promotion or
publication.
5. Termination of Appointment
You may terminate this appointment at any time by providing written
notice to us. We may terminate this appointment at any time by providing you
with 30 days prior written notice. We may terminate this Attachment if the
Business Partner Agreement between you and IBM ends. No further Financing
Services transaction initiated by you and submitted to us after we provide such
notice will qualify for the terms in this Attachment.
Page 3 of 3
<PAGE>
IBM Business Partner Agreement
Federal Government Remarketer Attachment
These terms are in addition to or modify the Remarketer Terms
Attachment, the Remarketer Terms Attachment for Workstation Software, the
Business Partner Agreement for Solution Providers and the Business Partner
Agreement for Resellers. These terms apply only when you market Products and
Services to a Federal Government End User.
1. FEDERAL GOVERNMENT END USER
"Federal Government End User" includes federal government agencies or
any other entity listed in G8A Order ADM 4800.2D, including those entities
listed in Appendices A, B and C of the Order, and any successor Order which may
be published by the GSA in the Federal Register. The term Federal Government
End User also includes federal government cost reimbursement prime contractors
and management and operating contractors that receive proper authorization under
FAR part 51 from federal agencies to make federal purchases or acquisitions
where licenses granted and title to equipment vest in the Federal Government End
User.
2. TITLE
You may propose an integrated solution through a higher-tier federal
contractor in fulfillment of a specific government procurement where title to
the Machine passes ultimately to the federal government. In no event shall you
permit transfer of title for any Machine purchased under this Agreement to other
than federal government. Under no circumstances may you assign any of your
responsibilities under this Agreement to the Federal Government End User.
3. BUY AMERICAN ACT/TRADE AGREEMENTS ACT (BAA/TAA)
We make no representation or certification regarding the domestic or
foreign origin of Products we provide.
4. EXPORT OF PRODUCTS
When the federal government purchases Products and Services for its own
use outside the United States, (i.e., an embassy or military installation) they
count 1) toward your minimum annual attainment 2) toward determination of your
discount price if the Products and Services were acquired directly from IBM by
you or 3) for determining your marketing or promotional funds. Also, your
future allocations from IBM, if applicable, will not be affected. The warranty
for such Products will be voided unless the Product is returned to the United
States for warranty service. Title to the Products must reside with the United
States government, and the United States government must be responsible for the
Program licenses.
5. ENDING THE AGREEMENT
If we terminate the Agreement without cause, we will permit you to
continue to market under the terms of the Agreement for 90 days after the
termination date. You agree to promptly withdraw any bids that include Products
and Services which were anticipated to have been obtained under this Attachment
unless we agree to terms and conditions under the Federal Systems Integrator
(FSI) Program (or similar or successor program) for the bid as offered.
Page 5 of 5
<PAGE>
IBM
VALUE-ADDED ENHANCEMENT ATTACHMENT
The following listing confirms the IBM approved Value-Added Enhancement
you are approved to remarket under the terms and conditions of your Business
Partner Agreement and Profile.
Design Automation System, Inc.
Product VAE Approval
Exhibit Date
------- ------------
RS60 08-20-99
SERVER CONSOLIDATION
VAE NAME: SERVER CONSOLIDATION
VAE NUMBER: T007
VAE CATEGORY: TECHNOLOGY SOLUTION
ELIGIBLE PRODUCTS:
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* NO MES UPGRADES
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALE AND IMPLEMENTATION OF AN APPROPRIATE SERVER WITH AT LEAST THREE
OF THE FOLLOWING SERVICES:
- WORKLOAD BALANCING AND SYSTEMS DESIGN/REQUIREMENTS
- CONSOLIDATION OF INTERNAL LOCAL AREA NETWORKS
- CONSOLIDATION OF EXTERNAL LOCAL AREA NETWORKS
- SIZING AND CONSOLIDATION OF APPLICATIONS
- CENTRALIZATION OF SYSTEMS MANAGEMENT FUNCTIONS
(I.E. SECURITY, BACKUP & RECOVERY)
- CENTRALIZATION OF SYSTEM MANAGEMENT TOOLS (I.E. TIVOLI, PSSP ON
CWS, CLUSTER SERVICES, ETC.)
- EACH SERVER CONSOLIDATION SERVICE MUST RESULT IN CONSOLIDATION
FROM MULTIPLE SERVERS TO A SINGLE LOGICAL SYSTEM OR A REDUCED
NUMBER OF LOGICAL SYSTEMS.
* BILLED VALUE MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR THIS
VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM ELIGIBILITY
REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL INFORMATION. VAE
ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY OR IN IBMLINK. THIS VAE WAS ANNOUNCED
AS A CHANNEL COMMUNICATION, CC9807-118, AND ALSO AS AN IBM US BUSINESS PARTNER
ANNOUNCEMENT, 598-153.
Page 1 of 8
<PAGE>
RS60 12-30-98
E-BUSINESS ELECTRONIC COMMERCE SOLUTIONS
VAE NAME: E-BUSINESS ELECTRONIC COMMERCE SOLUTION
VAE NUMBER: T003
VAE CATEGORY: TECHNOLOGY SOLUTION
ELIGIBLE PRODUCTS:
* AS/400 ENTRY AND GROWTH MODELS
* RS/8000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO
RS/6000 SP MODELS)
* MES UPGRADES
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALE AND IMPLEMENTATION OF AN ELIGIBLE PRODUCT WITH ELECTRONIC
COMMERCE SOLUTION:
- WEB SITE DESIGN AND DEVELOPMENT
- COMPLETION OF NETWORK SECURITY DESIGN PLAN
- INTERNET CONNECTIVITY
* BILLED VALUE MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION. VAE ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY ON IMBLINK.
THIS VAE WAS ANNOUNCED AS A CHANNEL COMMUNICATION, CC9807-115, AND
ALSO AS AN IBM US BUSINESS PARTNER ANNOUNCEMENT, 598-150 AND 598-226.
____________________________________
RS60 12-30-98
BUSINESS INTELLIGENCE
VAE NAME: BUSINESS INTELLIGENCE
VAE NUMBER: T001
VAE CATEGORY: TECHNOLOGY SOLUTION
ELIGIBLE PRODUCTS:
* AS/400 ENTRY AND GROWTH MODELS
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* MES UPGRADES
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<PAGE>
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALE AND IMPLEMENTATION OF AN ELIGIBLE IBM PRODUCT WITH A BUSINESS
INTELLIGENCE SOLUTION, THAT INCLUDES AT LEAST TWO OF THE FOLLOWING
BUSINESS INTELLIGENCE FUNCTIONS:
- METADATA MANAGEMENT
- DATA EXTRACTION, TRANSFORMATION, AND REPLICATION
- DATA CLEANSING
- DATA WAREHOUSE OR DATA MART GENERATION AND MANAGEMENT
- DATA ACCESS VIA GRAPHICAL ANALYSIS
- OLAP (ONLINE ANALYTICAL PROCESSING)
- DATA MINING
* QUALIFIED AS/400 BUSINESS INTELLIGENCE ISV OFFERINGS ARE LISTED
IN ANNOUNCEMENT 598-226. ISV OFFERINGS NOT INCLUDED IN THE LIST
REQUIRE PRIOR APPROVAL BY IBM.
* QUALIFIED AS/6000 BUSINESS INTELLIGENCE ISV OFFERINGS ARE LISTED
IN ANNOUNCEMENT 598-226. ISV OFFERINGS NOT INCLUDED IN THE LIST
REQUIRE PRIOR APPROVAL BY IBM.
- VELOCITY FROM SYSTEMSOURCE
- INTELLIGENT MINER FOR AS/400
* QUALIFIED RS/6000 BUSINESS INTELLIGENCE APPLICATION TOOLS ARE TOO
NUMEROUS TO LIST. BUSINESS PARTNER APPLICATIONS MUST STATE ANY
APPLICABLE TOOLS AND THESE WILL BE REVIEWED AND APPROVED BY IBM.
* BILLED VALUE MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION. VAE ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY ON IBMLINK.
THIS VAE WAS ANNOUNCED AS A CHANNEL COMMUNICATION, CC9807-114, AND
ALSO AS AN IBM US BUSINESS PARTNER ANNOUNCEMENT, 598-149 AND 598-226.
_____________________________
RS60 08-20-99
COMPETITIVE SYSTEM CONVERSION
VAE NAME: COMPETITIVE SYSTEM CONVERSION
VAE NUMBER: G002
VAE CATEGORY: CUSTOMER GROWTH
ELIGIBLE PRODUCTS:
* AS/400 ENTRY AND GROWTH MODELS
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* MES UPGRADES
Page 3 of 8
<PAGE>
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALES AND IMPLEMENTATION OF AN ELIGIBLE PRODUCT AND ASSOCIATED
OPERATING SYSTEM AT A CUSTOMER ENTERPRISE WHERE OPERATIONAL
PROGRAMS ARE CONVERTED AND PORTED FROM COMPETITIVE VENDOR'S
SYSTEM
* BILLED VALUE MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION. VAE ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY ON
IBMLINK. THIS VAE WAS ANNOUNCED AS A CHANNEL COMMUNICATION,
CC9807-113, AND ALSO AS AN IBM US BUSINESS PARTNER ANNOUNCEMENT.
598-148.
__________________________
RS60 12-31-98
NEW CUSTOMER
VAE NAME: NEW CUSTOMER
VAE NUMBER: G003
VAE CATEGORY: CUSTOMER GROWTH
ELIGIBLE PRODUCTS:
* AS/400 ENTRY AND GROWTH MODELS
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* NO MES UPGRADES
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALE AND IMPLEMENTATION OF AN ELIGIBLE PRODUCT AND ASSOCIATED
OPERATING SYSTEM AT A CUSTOMER ENTERPRISE WHERE THERE IS NO IBM
REQUISITE SYSTEM CURRENTLY INSTALLED OR ON ORDER
* REQUISITE SYSTEMS INCLUDE:
- AS/400
- RS/8000
- S/390
- S/36, S/38
* BILLED VALUE MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION. VAE ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY ON IBMLINK.
Page 4 of 8
<PAGE>
THIS VAE WAS ANNOUNCED AS A CHANNEL COMMUNICATION, CC9807-113, AND
ALSO AS AN IBM US BUSINESS PARTNER ANNOUNCEMENT, 598-148.
_____________________________________
RS60 12-31-98
SOLUTION DEVELOPMENT
VAE NAME : SOLUTION DEVELOPMENT
VAE NUMBER: G004
VAE CATEGORY: CUSTOMER GROWTH
ELIGIBLE PRODUCTS:
* AS/400 ENTRY AND GROWTH MODELS
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* MES UPGRADES
MINIMUM VAE SOLUTION REQUIREMENTS:
THE BUSINESS PARTNER MUST COMPLETE AT LEAST TWO OF THE FOLLOWING:
* IMPLEMENTATION, CUSTOMIZATION, TUNING/OPTIMIZATION AND INTEGRATION
OF APPLICATIONS DEVELOPED BY THE BUSINESS PARTNER, THE CUSTOMER,
OR AN INDEPENDENT SOFTWARE DEVELOPER, INTO AN END-USER'S
OPERATIONAL PROCESSES
* INTERFACE WITH AN EXISTING OR DEVELOP A NEW, LAN/WAN NETWORK
CONFIGURATION, AND DESIGN ASSOCIATED NETWORK SECURITY MEASURES
TO ENSURE SYSTEM INTEGRITY
* DESIGN, CONFIGURATION, INTEGRATION AND IMPLEMENTATION OF ELIGIBLE
PRODUCTS INTO A TWO OR THREE-TIER CLIENT/SERVER ENVIRONMENT
UTILIZING THE ELIGIBLE PRODUCTS AS A PRIMARY DATABASE SERVER.
(AN AS/400 IMPLEMENTATION MUST USE IPCS IN THIS SOLUTION.)
IN ADDITION, THE BUSINESS PARTNER MUST:
* PREPARE A DOCUMENTED PROPOSAL SPECIFYING ALL ELEMENTS OF THE VALUE
ADDED OFFERING, AND,
* DOCUMENT A PLAN FOR IMPLEMENTATION THAT INCLUDES INSTALLATION
SCHEDULES, APPLICATIONS, INTEGRATION WITH END USER OPERATIONAL
PROCESSES, USER AND OPERATIONS TRAINING, CONNECTION TO NETWORK
SERVICE PROVIDER, CUSTOMIZATION AND OPTIMIZATION, ETC.
* BILLED VALUE MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION. VAE ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY ON
IMBLINK. THIS VAE WAS ANNOUNCED AS A CHANNEL COMMUNICATION,
CC9807-113, AND ALSO AS AN IBM US BUSINESS PARTNER ANNOUNCEMENT,
Page 5 of 8
<PAGE>
598-148.
_________________________
RS60 02-04-99
IBM SYSTEM MIGRATION AND UPGRADE
VAE NAME: IBM SYSTEM MIGRATION AND UPGRADE
VAE NUMBER: G001
VAE CATEGORY: CUSTOMER GROWTH
ELIGIBLE PRODUCTS:
* AS/400 ENTRY AND GROWTH MODELS
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* MES UPGRADES
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALE AND IMPLEMENTATION OF AN ELIGIBLE PRODUCT AND ASSOCIATED
OPERATING SYSTEM AT A CUSTOMER ENTERPRISE WHERE OPERATIONAL
PROGRAMS ARE MIGRATED AND/OR PORTED FROM OLDER TECHNOLOGY IBM
SYSTEMS' TO A CURRENT TECHNOLOGY IBM SYSTEM, OR THE PROCESSOR
UPGRADE OF AN OLDER TECHNOLOGY IBM SYSTEM
* BILLED VALUE MEASUREMENT REQUIRED: NO
* FACE-TO-FACE COVERAGE REQUIRED: YES
* OLDER TECHNOLOGY IBM SYSTEMS INCLUDE:
- AS/400 SYSTEMS', INCLUDING MACHINE TYPES 9402, 9404 & 9406
AND MODELS BXX, CXX, DXX, EXX, FXX, TXX*
(*TSP MODELS), 2XX, 3XX, 400, 40s and 5XX
- RS/6000 SYSTEMS THAT ARE WITHDRAWN 18 MONTHS OR LONGER FROM THE
WITHDRAWAL ANNOUNCEMENT DATE
- SERIES/1
- SYSTEM/3X
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION.
________________________________
RS60 08-18-99
STORAGE MANAGEMENT
VAE NAME: STORAGE MANAGEMENT
VAE NUMBER: T008
VAE CATEGORY: TECHNOLOGY SOLUTION
Page 6 of 8
<PAGE>
ELIGIBLE PRODUCTS:
* RS/6000 ALL MODELS (SOLUTION PROVIDER MUST BE APPROVED TO MARKET
RS/6000 SP MODELS)
* MES UPGRADES
MINIMUM VAE SOLUTION REQUIREMENTS:
* SALE AND IMPLEMENTATION OF AN APPROPRIATE ADDITIONAL SYSTEM OR
SYSTEM UPGRADE, EACH WITH ONE OF THE PRODUCTS LISTED BELOW.
PRODUCTS NOT INCLUDED IN THIS LIST REQUIRE PRIOR APPROVAL BY IBM.
- ADSTAR (TM) DISTRIBUTED MANAGER (ADSM) FOR AIX
* PERFORM CUSTOM SERVICES FOR STORAGE MANAGEMENT SOLUTIONS TO INCLUDE
THE FOLLOWING:
- CENTRALIZED BACKUP AND ARCHIVAL
- ON-LINE DISASTER RECOVERY
- WORKLOAD BALANCING ACROSS MULTIPLE SERVERS
- CENTRALIZED SYSTEM LOGGING AND REPORTING OF OPERATIONAL INFORMATION
* BILLED VALUED MEASUREMENT REQUIRED: YES
* FACE-TO-FACE COVERAGE REQUIRED: YES
MINIMUM FIRM ELIGIBILITY REQUIREMENTS:
BUSINESS PARTNERS ARE REQUIRED TO READ THE ANNOUNCEMENT LETTER FOR
THIS VAE TO OBTAIN IMPORTANT INFORMATION RELATING TO "MINIMUM FIRM
ELIGIBILITY REQUIREMENTS" AND CERTIFICATION AND OTHER APPROVAL
INFORMATION. VAE ANNOUNCEMENTS ARE AVAILABLE IN BPLIBRARY ON IBMLINK.
THIS VAE WAS ANNOUNCED AS A CHANNEL COMMUNICATION, CC9807-119, AND
ALSO AS AN IBM US BUSINESS PARTNER ANNOUNCEMENT, 598-154.
______________________________________
____________________________________________________________________________
The following listing confirms the IBM approved Value-Added Enhancements
you are approved to remarket under the terms and conditions of your IBM Business
Partner Agreement and Profile at each of your authorized and certified
locations. Only those Value-Added Enhancements which require certification are
listed. Non-certifiable Value-Added Enhancements can be remarketed by all of
your authorized sales locations under the terms and conditions of your IBM
Business Partner Agreement, Profile and applicable Attachments and Exhibits.
Location ID Product Location VAE
(LOC/ID) Exhibit Approval Date VAE Title
___________ _______ _____________ _________
19498 RS60 01-01-99 COMPETITIVE SYSTEM CONVERSION
19498 RS60 01-01-99 NEW CUSTOMER
19498 RS60 01-01-99 SOLUTION DEVELOPMENT
19498 RS60 01-01-99 IBM SYSTEM MIGRATION AND UPGRADE
19498 RS60 08-18-99 STORAGE MANAGEMENT
26751 RS60 01-01-99 COMPETITIVE SYSTEM CONVERSION
26751 RS60 01-01-99 NEW CUSTOMER
26751 RS60 01-01-99 SOLUTION DEVELOPMENT
26751 RS60 08-18-99 STORAGE MANAGEMENT
Page 7 of 8
<PAGE>
26752 RS60 01-01-99 COMPETITIVE SYSTEM CONVERSION
26752 RS60 01-01-99 NEW CUSTOMER
26752 RS60 01-01-99 SOLUTION DEVELOPMENT
26752 RS60 01-01-99 IBM SYSTEM MIGRATION AND UPDATE
26752 RS60 08-18-99 STORAGE MANAGEMENT
Page 8 of 8
<PAGE>
EXHIBIT 10.19
HEWLETT-PACKARD COMPANY
U.S. AGREEMENT FOR AUTHORIZED SOLUTIONS DIRECT RESELLERS
SIGNATURE PAGE
ICN# 031676
LEGAL BUSINESS NAME DESIGN AUTOMATION SYSTEMS
ADDRESS 3200 WILCREST DRIVE SUITE 370
CITY, STATE, ZIP HOUSTON, TX 77042-3366
PHONE, FAX#E-MAIL/INTERNET ADDRESS
DBA(s) ____________________________
EXECUTIVE CONTACT ____________________________
CORPORATE WEB ADDRESS ____________________________
All documents marked with a "x" below govern the relationship between HP and you
for the purchase and resale of HP product. HP and Reseller agree that Reseller's
volume level, at Net Reseller price, for HP Products on the Exhibits for the
term of this Agreement is:
<TABLE>
<CAPTION>
<S> <C>
AGREEMENT: ATTACHMENTS:
- -x- HP Reseller Business Terms -x-HP Warranty & installation information
- -x- U.S Direct Reseller Program
- -x- HP Solutions Direct Reseller Program
Operations Policy Manual
ADDENDA & EXHIBITS: COMMITMENT
_x_ U.S Software License Terms
_x_ U.S Solutions Support Options
__ U.S Solutions VAR Compensation Terms
_x_ U.S Configuration Tools License
__ U.S Solutions Multinational Release Points
__ U.S Solutions Multinational Terms
__ U.S Solutions Multiple Release Points
__ U.S Solutions VAR Certification
__ U.S Solutions OEM/VAR Warranty
__ U.S Solution VAR Dual Aggregation Terms
_x_ U.S Direct Reseller Program-RAM Reseller
__ AV20 HP-UX Server Products __$ 3,000,000-and up
__ AV21 Unbundled HP-UX Server Products __$ 3,000,000-and up
__ AV22 HP-UX Workstation Products __$ 1,000,000-and up
__ AV23 Unbundled HP-UX Workstation Products __$ 1,000,000-and up
__ AV24 Enterprise Storage Products __$ 3,000,000-and up
__ AV25 Other Peripheral and HP-UX Related Products __$ Meet Certification
__ AV26 HP Openview NT and Packaged Solutions __$ Meet Certification
__ AV27 HP Openview IT Service Management __$ Meet Certification
& Electronic Business Software
__ AV28 MPE and Related Products __$ 2,000,000-and up
__ AV30 Symmetrix Products
__ AV33 HP UX Visualize Workstations __$ 1,000,000-and up
__ AV35 HP NT Visualize Workstations (RAM VAR ONLY)
_x_ AV40 HP High End Enterprise Server Products
__ AV41 HP High End Enterprise Other Peripheral &
HP Related Products
_x_ AV42 HP ?? Products
</TABLE>
Page 1 of 1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF OWNERSHIP:
Form of Organization: (i.e. Corporation,General Partnership, Limited Partnership, Sole Proprietor):
For a Corporation, specify whether: __Publicly Held: State of Incorporation/Organization______________________
Identify Company ownership and management structure as follows (attach additional pages if necessary):
Sole proprietor: Identify all owners, officers and ownership percentages held
Trust: Identify Trustee(s), Administrators and Beneficiaries of Trust
Partnership: Identify all General Partners, Limited Partners, Officers and ownership percentages held
Specify dollar investment of limited partners
Privately Held Corporation: Identify all shareholders with class and percentage ownership, Officers and Board of Director
Members
Publicly Held Corporation: Identify owners of 20% or more of each class of shares with class and percentage ownership,
Officers and Board of Director Members
NAMES TITLES OWNERSHIP INTEREST
Percentage Ownership Type of ownership interest
(Dollar Investment in (Assets, Common or
Limited Partners) Preferred Shares)
Carl R. Rose Director 71% Common
Charles H. Leaver President ________________ ___________________
Robert E. Nelson Secretary _______________ ___________________
_________________ ______________ ________________ ___________________
_________________ ______________ ________________ ___________________
If company is 100% owned by another corporation, identify the parent corporation's ownership and management structure above and the
identify of the parent corporation below:
___________________________________________________________________________________________________________________________________
Parent/Owner, including DBA(s)
__________________________________________________________________________________________________________________________________
Address
( )
__________________________________________________________________________________________________________________________________
City State Zip Telephone
( )
_________________________________________________________________________________________________________________________________
State of Parent/Owner's Incorporation Fax
This Reseller Agreement is made and entered into by and between________________.a______________________Corporation and
Hewlett-Packard Company, a Delaware Corporation.
________________________________________________________________________________________________________________________________
AUTHORIZED SIGNATURES HEWLETT-PACKARD COMPANY
/s/ [Signature Appears Here] /s/ [Signature Appears Here]
_______________________________ __________________________________
Authorized Signature Susan Weatherman
Reseller Contracts & Negotiation Manager
Robert E. Nelson
__________________________
Type Name
Secretary March 31,2000
__________________________ _______________ ______________
Title Effective Date Expiration Date
Page 2 of 2
</TABLE>
<PAGE>
HP RESELLER BUSINESS TERMS
TABLE OF CONTENTS
1. DEFINITIONS
2. APPOINTMENT
3. STATUS CHANGE
4. RELATIONSHIP
5. PRICES
6. ORDERS AND DELIVER
7. PAYMENT
8. WARRANTY
9. PRODUCT MODIFICATION
10. SUPPORT
11. SOFTWARE
12. TRADEMARKS
13. INTELLECTUAL PROPERTY PROTECTION
14. CONFIDENTIALITY
15. LIMITATION OF LIABILITY AND REMEDIES
16. RECORD-KEEPING AND AUDIT
17. CHANGES AND AMENDMENTS
18. TERM AND TERMINATION
19. POLICIES AND PROGRAMS
20. GENERAL
<PAGE>
HP RESELLER BUSINESS TERMS
1. DEFINITIONS
A. "Agreement" means the Signature Page containing the signature of HP and
Reseller, these HP Reseller Business Terms, any attached Agreement,
Product Exhibits, Addenda, Product Categories, and the applicable
Operations Policy Manual.
B. "Delivery" means standard HP shipping to and arrival at the receiving
area at the "Ship To" address in the country where Reseller's order is
placed, unless otherwise indicated on the quotation.
C. "Exhibits" are documents attached to, incorporated by reference in, or
added to this Agreement at a later date which describe the Reseller
relationship, Products, Support, marketing programs or other business
terms. "Product Exhibits" and "Product Categories" refer to the
Products available for purchase under this Agreement. "Addenda" refer
to particular Reseller relationships, Support offerings and marketing
programs.
D. "Operations Policy Manual" ("OPM") is a document which further
describes the specific relationship and obligations between HP and
Reseller under this Agreement.
E. "Net Reseller Price" for Products purchased under this Agreement means
the HP List Price in effect at the time an order from Reseller is
received by HP, less the applicable discounts based on Reseller's
volume, other commitments or elections specified in Exhibits and this
Agreement.
F. "Products means hardware, Software, documentation, accessories,
supplies, parts and upgrades that HP authorizes Reseller to purchase or
license under this Agreement, and that are determined by HP to be
available from HP upon receipt of Reseller's order. "Custom Products"
means Products modified, designed or manufactured to meet Reseller or
end-user customer requirements.
G. "Software" means one or more programs capable of operating on a
controller, processor or other hardware Product ("Device"). Software is
either a separate Product, included with another Product ("Bundled
Software"), or fixed in a Device and not removable in normal operation
("Firmware").
H. "Specifications" means specific technical information about HP Products
which is published in HP Product manuals and technical data sheets in
effect on the date HP ships Reseller's order.
I. "Support means hardware maintenance and repair: Software updates and
maintenance; training; and other standard Support services provided by
HP. "Custom Support" means any agreed upon non-standard Support,
including consulting and custom project services.
2. APPOINTMENT
A. HP appoints Reseller as an authorized, non-exclusive Reseller for the
purchase and resale or sublicense of Products subject to the terms and
conditions of this Agreement.
B. The nature and scope of Reseller's authorization, including any
geographic, vertical market or other restrictions, are mainly detailed
in the attached Agreement and Addenda. The Products covered by
Reseller's authorization, including any discounts and commitment levels,
are detailed in the attached Addenda, Product Exhibits and Product
Categories. Other policies, procedures, terms and conditions applicable
to this Agreement are contained in the OPM.
C. Reseller accepts appointment on these terms and conditions.
3. STATUS CHANGE
A. if Reseller wishes to:
1. Change its name;
2. Add, close or change an HP-approved shipment, delivery or other
HP-authorized location;
3. Undergo a merger, acquisition, consolidation or other
reorganization with the result that any entity controls twenty-five
percent (25%) or more of Reseller's capital stock or assets after
such transaction, or assumes management of Reseller operations;
then Reseller will notify HP in writing at least ten (10) working
days prior to the intended date of change and provide HP all
information and documents requested by HP for the purpose of
evaluating such status change.
B. HP will promptly notify Reseller of its consent to the continuation of
Reseller's authorization following such a change in status, provided
that HP may terminate this Agreement immediately upon notice in the
event HP does not consent to such change. Pending HP's notification, HP
will have no obligation to perform under this Agreement.
4. RELATIONSHIP
A. Reseller and HP are independent contractors for purposes of this
Agreement. This Agreement does not establish a franchise, joint venture
or partnership, or create any relationship of employer and employee,
master and servant, or principal and agent between the parties.
B. Neither party will have, nor represent that it has, any power, right, or
authority to bind the other party, or to assume or create any obligation
or responsibility, express or implied, on behalf of the other party
without such other party's express written consent. Reseller acknowledges
that any commitment made by Reseller to its customers with respect to
price, quantities, delivery, specifications, warranties, modifications,
interfacing capability or suitability will be Reseller's sole
responsibility, and Reseller will indemnify HP from liability for any
such commitment by Reseller.
C. This Agreement applies only to the Products listed on the Product
Exhibits, and the relationship between the parties is non-exclusive.
Reseller acknowledges that HP may market other products, including
products in competition with those listed on the Product Exhibits,
without making them available to Reseller. HP acknowledges that
Reseller may market other products, including those in competition with
those listed on the Product Exhibits. Each party reserves the right to
advertise, promote and sell any product, including Products listed on
the Product Exhibits, in competition with the other party.
D. HP will not be deemed a party to any agreement between Reseller and any
subsequent purchaser or licensee.
5. PRICES
A. Net Reseller Price includes shipment arranged by HP, unless otherwise
indicated on the quotation. HP reserves the right to charge Reseller for
any special routing, packing, handling or insurance requested by
Reseller and agreed to by HP. Orders
<PAGE>
shipped under special routing instructions must be separately agreed
upon and may be subject to additional charges.
B. Prices are exclusive of, and Reseller will pay, applicable sales, use,
service, value added or like taxes unless Reseller has provided HP with
an appropriate exemption certificate for the Delivery jurisdiction, or
HP agrees the transaction is otherwise exempt.
C. HP reserves the right to change prices and discounts upon reasonable
notice or as specified in Exhibits or the OPM. If Reseller is unsure of
the List Price to use in calculating Net Reseller Price for any Product,
Reseller should contact its HP sales representative or relationship
manager.
D. List prices are suggested prices for resale to end-user customers and a
basis for calculating Net Reseller Price. Reseller has the right to
determine its own resale prices, and no HP representative will require
that any particular resale price be charged by Reseller or grant or
withhold any benefits to Reseller based on Reseller's resale pricing
policies. Reseller agrees that it will promptly report any effort by HP
personnel to interfere with its pricing policies directly to an HP
officer or senior sales manager.
E. Upon request from Reseller, HP may at its discretion grant special
pricing for particular end-user customer transactions. In good faith HP
may retract the special pricing at any time before acceptance by the end-
user customer. HP may extend the pricing on an exclusive or non-exclusive
basis and may condition the pricing on a pass-through of all or part of
the non-standard offering extended by HP.
F. HP may, from time to time, offer Reseller certain Products on special
promotional terms and conditions. All such offerings may be subject to
pricing or discounts different from those provided for in this Agreement.
Such offerings may not, in some cases, apply towards Reseller's volume
or other commitments, and may not be eligible for other standard
benefits, including but not limited to promotional allowance funds,
price protection or stock adjustments. Except as specifically altered by
HP in a promotional offering under this section, all other terms and
conditions will remain unaltered.
6. ORDERS AND DELIVERY
A. HP will honor written orders from Reseller unless other methods are
agreed upon in writing. Reseller's orders must reference this Agreement
and comply with the minimum order, release, destination ("Shipment"
address) and other requirements specified in Addenda, Exhibits and/or
the OPM. Orders must also specify Delivery dates within periods specified
in the OPM.
B. Reseller will issue orders from approved locations within its
organization and will specify HP authorized "Ship To" addresses within
the country where the order is placed, unless otherwise agreed. Reseller
is responsible for ensuring that only authorized employees place, change
or delete orders and that the orders conform to all requirements of this
Agreement.
C. All orders are subject to acceptance by HP.
D. Delivery is subject to Product availability at the time Reseller's order
is received. HP will make every reasonable effort to meet delivery dates
quoted or acknowledged. If Products are in short supply, HP will allocate
them at HP's discretion.
E. Title to hardware Products and risk of loss and damage for any Product
will pass to Reseller at destination, provided however, that if Products
are shipped under Reseller's shipping instructions, title and risk of
loss and damage will pass to Reseller at HP's shipping dock.
F. Transactions may be conducted through Electronic Data Interchange ("EDI")
or other electronic methods, as agreed.
G. Neither party will be responsible for failure or delay in performance
due to circumstances beyond its reasonable control, such as labor
disputes, natural disaster, shortage of or inability to obtain labor,
energy, and materials, war, riot, embargo, fire, or any other act or
condition beyond the reasonable control of the non-performing party.
Notwithstanding the foregoing, nothing shall relieve the Reseller from
any payment obligations under this Agreement.
7. PAYMENT
A. Reseller will pay invoices within thirty (30) days from the date of HP's
invoice. HP reserves the right to specify payment in advance or other
payment terms for credit reasons, or when Reseller's financial condition
or relationship with HP so warrants, with respect to any new or unshipped
orders.
B. If Reseller fails to pay any sum when due or fails to perform under this
or any other Agreement with HP after ten (10) days written notice, HP may
discontinue performance under this or any other Agreement between HP and
Reseller.
C. Any Reseller claim for adjustment of an invoice is deemed to be waived if
Reseller fails to present such claim within ninety (90) days from the
date of the invoice. No claims, credits, or offsets may be deducted
from any invoice.
8. WARRANTY
Product warranty terms, conditions, exceptions, exclusions and disclaimers
are contained in the OPM, Exhibits and where applicable with Products.
9. PRODUCT MODIFICATION
A. HP reserves the right to make change in the design or Specifications of
Products.
B. Reseller is responsible for any modification it makes to Products or for
any commitment made with respect to special interfacing, compatibility
or suitability of Products for specific applications.
C. If HP believes Reseller's modifications may have an adverse effect on
Product support, marketing and technical specifications, HP reserves the
right to modify this Agreement.
10.SUPPORT
Reseller maybe eligible to participate in HP Support programs. Support terms
and conditions are contained in the OPM and/or Exhibits, and Program guides
which may be supplied separate from this Agreement.
11.SOFTWARE
Software distribution rights and license terms are contained in the OPM
and/or Exhibits, and where applicable with Products.
12.TRADEMARKS
A. From time to time, HP may authorize Reseller to display one or more
designated HP trademarks, logo types, trade names and insignia ("HP
Marks"). Reseller may display HP Marks solely to promote Products. Any
display of HP Marks, must be in good taste, in manner that preserves
their value as HP Marks, and in accordance with standards provided by HP
for their display. Reseller will not use any name or symbol in a way which
may imply that Reseller is an agency or branch of HP; Reseller will
discontinue any such use of a name or mark as requested by HP. Any rights
or purported rights in any HP Marks acquired through Reseller's use
belong solely to HP.
B. Reseller grants HP the non-exclusive, royalty free right to display
Reseller's trademarks in advertising and promotional material solely for
directing prospective purchasers of products
<PAGE>
to Reseller's selling locations. Any display of the trademarks must be in good
taste, in a manner that preserves their value as Reseller's trademarks, and in
accordance with standards provided by Reseller for their display. Any rights or
purported rights in any Reseller trademarks acquired through HP's use belong
solely to Reseller.
13. INTELLECTUAL PROPERTY PROTECTION
A. HP will defend or settle any claim against Reseller (or end-user
customer, or third parties to whom Reseller is authorized by HP to
resell or sublicense), that Products or Support (excluding Custom
Products and Custom Support),delivered under this Agreement infringe a
patent, utility model, industrial design, copyright, trade secret, mask
work or trademark in the country where Products are used, sold or
receive Support, provided Reseller.
1. Promptly notifies HP in writing;
2. Cooperates with HP in, and grants, HP sole control of the defense or
settlement; and
3. Sold said Products or Support in complete compliance with this
Agreement.
B. HP will pay infringement claim defense costs, settlement amounts and
court-awarded damages. If such a claim appears likely, HP may modify the
Product, procure any necessary license, or replace it. If HP determines
that none of these alternatives is reasonably available, HP will refund
Reseller's purchase price upon return of the Product if within one (1)
year of Delivery, or the Product's net book value thereafter.
C. HP has no obligation for any claim of infringement arising from:
1. HP's compliance with Reseller's designs, specifications or
instructions;
2. HP's use of technical information or technology provided by
Reseller;
3. Product modifications by Reseller or a third party;
4. Product use prohibited by Specifications or related application
notes; or
5. Use of the Product with products not supplied by HP.
D. These terms state HP's entire liability to Reseller and its customers
for claims of intellectual property infringement.
14. CONFIDENTIALITY
A. In the event that confidential information is exchanged, each party will
protect the confidential information of the other in the same manner in
which it protects its own like proprietary, confidential, and trade
secret information. If the party claiming the benefit of the provision
furnishes such information in writing and marks such information as
"Confidential" or if such information is provided orally, then the
transmitting party ("Discloser") will confirm in writing to the
receiving party ("Recipient") that it is confidential within thirty (30)
days of its communication. Such information will remain confidential for
three (3) years after the date of disclosure.
B. This Section imposes no obligation upon a Recipient with respect to
confidential information which (a) was in the Recipient's possession
before the Disclosure; (b) is or becomes a matter of public knowledge
through no fault of the Recipient; (c) is rightfully received by the
Recipient from a third party without a duty of confidentiality; (d) is
disclosed by the Discloser to a third party without a duty of
confidentiality on the third party; (e) is independently developed by
the Recipient; (f) is disclosed by the Recipient with the Discloser's
prior written approval.
15. LIMITATION OF LIABILITY AND REMEDIES
A. Products are not specifically designed, manufactured or intended for
sale as parts, components or assemblies for the planning, construction,
maintenance, or direct operation of a nuclear facility. Reseller is
solely liable if Products or Support purchased by Reseller are used for
these applications. Reseller will indemnify and hold HP harmless from
all loss, damage, expense or liability in connection with such use.
B. To the extent HP is held legally liable to Reseller, HP's liability is
limited to:
1. Payments arising from warranty claims and as described in Section 13
above;
2. Damages for bodily injury;
3. Direct damages to tangible property up to a limit of U.S. one
million dollars ($1,000,000); and
4. Other direct damages for any claim based on a material breach of
Support services, up to a maximum of twelve (12) months of the
related Support charges paid by Reseller during the period of
material breach.
5. Other direct damages for any claim based on a material breach of any
other term of this Agreement, up to a limit of U.S. one million
dollars ($1,000,000) or the amount paid to HP for the associated
Product, whichever is less.
C. Notwithstanding Section 15.B. above, in no event will HP or its
subsidiaries, affiliates, subcontractors or suppliers be liable for any
of the following:
1. Actual loss or direct damage that is not listed in Section 15.B.
above;
2. Damages for loss of data, or software restoration;
3. Damages relating to Reseller's procurement of substitute products or
services (i.e., "cost of cover"); or
4. Incidental, special or consequential damages (including downtime
costs or lost profits).
D. THE REMEDIES IN THIS AGREEMENT ARE RESELLER'S SOLE AND EXCLUSIVE
REMEDIES.
16. RECORD-KEEPING AND AUDIT
A. For purposes such as Product safety notification, operational problem
correction and contract compliance, Reseller will maintain records of
second-tier reseller and/or customer purchases, which at a minimum must
include such purchaser's name, address, phone number, date of sale,
Product numbers, quantities, serial numbers, and shipment address.
B. HP may, from time to time, give notice to Reseller of its intention to
verify and audit Reseller's compliance with this Agreement or with
related marketing program terms and conditions. The auditor will be
given prompt access, either on-site or through other means, to Reseller's
customer inventory or other records.
C. Further record-keeping and audit requirements may be contained in
Agreement, Addenda and/or the OPM.
17. CHANGES AND AMENDMENTS
A. From time to time, HP may add Products to or delete them from Product
Exhibits; obsolete Products; change List Prices or discounts; implement
or change HP policies or programs; or otherwise amend this Agreement at
HP's discretion, after reasonable notice to Reseller in writing.
<PAGE>
B. Any amendment will automatically become a part of this Agreement on the
effective date specified in the notice, unless Reseller provides HP
with written notice of its objection to such amendment within fifteen
(15) days of Reseller's receipt of the notice. If agreement of the
Amendment is not reached by both HP and Reseller within thirty (30)
days after HP's receipt of Reseller's objection, either party may
terminate this Agreement.
C. Each party agrees that the other has made no commitments regarding the
duration or renewal of this Agreement beyond those expressly stated in
this Agreement.
18. TERM AND TERMINATION
A. Subject to applicable law, either party may terminate this Agreement
without cause at any time upon sixty (60) days' written notice or with
cause at any time upon thirty (30) days' written notice to the other
party. Unless earlier terminated as provided herein, this Agreement
will expire on March 31, 2000, but will continue to apply to orders
previously accepted by HP.
B. If either party becomes insolvent, is unable to pay its debts when due,
files for bankruptcy, is the subject of involuntary bankruptcy, has a
receiver appointed, or has its assets assigned, the other party may
terminate this Agreement without notice and may cancel any unfulfilled
obligations.
C. If either party gives the other notice of termination or advises the
other of its intent not to renew this Agreement, HP may require that
Reseller pay cash in advance for additional shipments during the
remaining term, regardless of Reseller's previous credit status, and
may withhold all such shipments until Reseller pays its outstanding
balance.
D. Upon termination or expiration, Reseller will immediately cease to be
an authorized HP Reseller and will refrain from representing itself as
such and from using any HP Trademark or name. Authorization of Reseller
and its Authorized Resellers to use any HP Mark will cease upon such
termination or expiration.
E. Upon any termination or expiration, HP may require that Reseller
return, against outstanding balance or for repurchase, any HP Products
purchased under this Agreement on HP's then current Product Exhibits,
which are in their unopened, original packaging and marketable as new
merchandise.
The repurchase price shall be the lower of either the Net Reseller
Price on the date of termination or expiration or Reseller's original
purchase price, in each case less any promotional or other discounts or
price protection or other Credits extended by HP to Reseller for the HP
Product. Reseller should contact its HP sales representative for
information about the items eligible for repurchase and instructions
for information about the items eligible for repurchase and
instructions for their return at HP's expense.
F. Upon termination or expiration, all rights to any accrued HP
promotional allowance funds and HP promotional services will
automatically lapse.
G. All obligations concerning outstanding transactions, warranties,
Support, Software, intellectual property protection, limitations of
liability and remedies, confidentiality, and the general terms and
conditions will survive termination or expiration, except that the
provisions for confidentiality and Support will survive only through
the periods set forth in this Agreement.
19. POLICIES AND PROGRAMS
From time to time, HP may offer or change HP policies and promotional or
other marketing programs, including but not limited to programs involving
promotional allowances, Product demonstration and development unit
purchases, and Support. Participation in such programs will be subject to
the then current terms and conditions of those programs.
20. GENERAL
A. Neither party may assign or transfer any rights or obligations hereunder
without prior written consent of the other party, provided that HP may
assign or transfer all such rights and obligations to other HP
entities, and the right to receive payments to third parties, without
consent.
B. Neither party's failure to enforce any provision of this Agreement will
be deemed a waiver of that provision or of the right to enforce it in
the future.
C. Reseller and HP will conduct all its activities relating to their
respective business in accordance with the highest standards of ethics
and fairness as well as compliance with applicable law. Either party may
immediately terminate this Agreement if the other party fails to do so.
D. Reseller who is expressly authorized by HP in writing to export, re-
export or import Products, technology or technical data purchased
hereunder, assumes responsibility for complying with applicable laws and
regulations and for obtaining required export and import authorizations.
HP may suspend performance if Reseller is in violation of any applicable
laws or regulations.
E. This Agreement will be governed by the laws of the State of California.
F. To the extent that any provision of this Agreement is determined to be
illegal or unenforceable in a particular country, the remainder of the
Agreement will remain in full force and effect. The offending provision
will be deemed amended by the parties so as to make it enforceable and,
to the extent possible, have consequences which are substantially the
same as what was intended by the parties.
G. The united Nations Convention on Contracts for the International Sale of
Goods will not apply to this Agreement or to transactions processed
under this Agreement.
H. All notices that are required under this agreement and OPM will be in
writing and will be considered given as of twenty-four (24) hours after
sending by electronic means, facsimile transmission, overnight courier,
or hand delivery, or as of five (5) days of certified mailing and
appropriately addressed to 5301 Stevens Creek Boulevard, Santa Clara, CA
95052-8059, M/S54U HC.
I. This Agreement constitutes the entire understanding between HP and
Reseller, and supersedes any previous communications, representations or
agreements between the parties, whether oral or written, regarding
transactions hereunder. Reseller's additional or different terms and
conditions will not apply. Except as provided in Section 17 above, no
modification of this Agreement will be binding on either party unless
made in writing and signed by both parties.
J. In the event of a conflict, the following order of precedence will
apply: OPM, Agreement, Addenda, Product Exhibits, HP Reseller Business
Terms, unless otherwise expressly agreed upon in a specific Section or
Sections or Sections of this Agreement.
<PAGE>
U.S DIRECT RESELLER PROGRAM EXHIBIT
TABLE OF CONTENTS
1. FURTHER APPOINTMENT
2. RESELLER RESPONSIBILITIES
3. MULTIPLE AGREEMENT DISCOUNTS
4. PAYMENT
5. ORDERS AND DELIVERY
6. RECORD-KEEPING AND AUDIT
7. TERM AND TERMINATION
8. GENERAL
<PAGE>
U.S. DIRECT RESELLER PROGRAM EXHIBIT
1. FURTHER APPOINTMENT
In addition to the terms set forth in Section 2 of the HP Reseller
Business Terms, the following will apply:
A. HP appoints Reseller as an authorized, non-exclusive direct reseller
(sometimes referred to in this Exhibit as "Direct Reseller"), for marketing the
Products listed on the Product Exhibits.
B. Direct Reseller will resell Products directly to customer (sometimes
referred to in this Exhibit as "Customers") for end use only, unless otherwise
permitted under this Agreement.
2. RESELLER RESPONSIBILITIES
A. Shipments of Products to unauthorized Customers will constitute a
breach of this Agreement and may result in termination of this Agreement. In
addition, Direct Reseller agrees to pay to HP an amount equivalent to the
discount received from HP for such shipments.
B. Shipments of Products to non-authorized resellers, or to HP
authorized resellers who sell such HP Products in violation of any eligibility
criteria, qualifications, added value requirements, or any other limitations on
Direct Reseller activity as set forth in this Agreement, will constitute a
breach of this Agreement and may result in termination this Agreement. In
addition, Direct Reseller agrees to pay to HP an amount equivalent to the
discount received from HP for such shipments.
C. Direct Reseller agrees to:
1. Advertise, promote, demonstrate and sell Products on a face-to-face
basis as required by this Agreement, including all Product Exhibits, and provide
pre-sales support and post-sales technical support to all customers.
2. Represent Products fairly.
3. Forward promptly to Customers all technical sales and promotional
materials, suggested price lists and other information provided by HP for the
purpose of reshipment to Customers.
4. Provide Customers with a written invoice stating the Customer's
name and address, the date of purchase, and serial numbers, if any, of Products.
Direct Reseller will retain such records, or their equivalent, to enable Direct
Reseller to notify Customers of Products safety information, corrections for
operational problems, and the like.
5. Provide Customers with any HP ergonomics information, including,
where applicable, HP Working in Comfort materials (in paper and electronic form)
and any warning or advisory tags, labels or other information relating to the
use of Products containing keyboards.
6. Maintain or make available such qualified personnel as necessary
to provide timely and acknowledgeable support services.
7. Use catalogs and telemarketing sales techniques only in
conformity with current HP policies and only as a complement to face-to-face
sales activity unless nationwide advertising for the Product is permitted in
this Agreement.
8. Ensure that no sale, advertising, promotion, display or disclosure
of any features, availability or pricing of any new HP product takes places
before HP's public announcement of that product.
9. Respond promptly to all Customer inquiries or requests related to
Products.
10. Authorize HP's representatives to call on Customers for Product
training and other objectives.
11. Report promptly to HP all suspected defects in Products.
12. Ensure that its employees complete any training courses and
certification programs designated by HP. In some cases, successful completion of
such training and/or certification may be required before Direct Reseller is
authorized to sell specific Products or participate in specific programs.
13. Confer periodically with HP at HP's request on matters relating
to market conditions, sales forecasting, and Product planning.
3. MULTIPLE AGREEMENT DISCOUNTS
Unless otherwise specified by HP in writing, purchases of Products under
this Agreement and purchases under any other HP agreement are exclusive of each
other for the purpose of calculating volume commitment and discount levels.
4. PAYMENT
In addition to the terms set forth in Section 7 of the HP Reseller
Business Terms, the following will apply:
A. Direct Reseller will furnish HP with copies of its financial
reports, including but not limited to Direct Reseller's latest balance sheet,
profit and loss statement, and other pertinent financial information as HP deems
necessary to determine Direct Reseller's credit worthiness.
B. Upon request, HP will provide Direct Reseller with invoice copies
accounting for sales of goods and services by HP to Direct Reseller. Direct
Reseller will have ninety (90) days from date of HP's invoice to raise any
questions or objections to this statement of account.
C. In the event that Direct Reseller and HP are unable to resolve any
questions or objections to the statement of Direct Reseller's account or
invoice, Direct Reseller may file suit against HP at any time up to one (1) year
after the date of HP invoice in question.
D. Direct Reseller grants and HP reserves a purchase money security
interest in each Product purchased under this Agreement and in any proceeds
thereof for the amount of the purchase price from HP. Upon request by HP, Direct
Reseller will sign any document required to perfect such security interest.
Payment in full of the purchase price of a Product will release the security
interest in that product.
5. ORDERS AND DELIVERY
In addition to the terms set forth in Section 6 of the HP Reseller
Business Terms, the following will apply:
A. HP will honor electronic, written, fax and telephone orders from the
following Direct Reseller location:
Direct Reseller is responsible for ensuring that only authorized
employees place, change or delete orders and that the orders conform to all
requirements of this Agreement.
B. HP reserves the right to schedule and reschedule any order, at HP's
discretion, and to decline any order for credit reasons or because the order
specifies an unreasonably large quantity or makes an unreasonable shipment
request.
C. Direct Reseller agrees to accept all deliveries of HP product as
scheduled. If Direct Reseller fails to accept a scheduled delivery, or takes
any action which delays or hinders HP's ability to meet any delivery schedule,
HP reserves the right to charge Direct Reseller for any costs resulting from
such action, including return freight fees and restocking charges. In addition,
HP reserves the right to cancel any order connected to a shipment which Direct
Reseller refuses to accept or delays, and to reallocate such order.
6. RECORD-KEEPING AND AUDIT
In addition to the terms set forth in Section 16 of the HP Reseller
Business Terms, the following will apply:
A. Direct Reseller is required to provide HP with accurate HP product
sell-through, sell-to, and inventory data in a format and frequency defined by
HP in the data management guidelines provided by HP. Participation in HP
programs will be reliant on Direct Reseller's ability to comply with program
reporting requirements.
B. Daily sell-through, sell-to and inventory reports must be received
consistently at the time agreed upon by HP and the Direct Reseller.
C. Direct Reseller warrants that the information transmitted to HP is
accurate. Such information may provide for benefits under HP programs which
link the provision of benefits to accurate sell-through, sell-to or inventory
information. Failure to report accurate daily data for each approved location
and to incorporate the previous day's data for each approved location will be
considered a violation of this Agreement and will result in penalties equal to
HP's cost to correct such errors.
D. Direct Reseller must respond to and resolve any data integrity
issues within seven (7) calendar days of HP's request for verification.
E. Direct Reseller must identify a specific contact for data integrity
and reporting issues.
F. Any changes to the format, frequency, or type of data provided by
Direct Reseller to HP must be made following HP's written request to Direct
Reseller, which request must be signed by one of HP's authorized data management
representatives, or following HP's written agreement to a letter documenting
Direct Reseller's request for such changes. Such agreement may be made only by
one of HP's authorized data management representatives. A list of such
authorized representatives may be obtained from Direct Reseller's HP account
manager. HP reserves the right to deny Direct Reseller any HP financial
benefits for purchases or sales made for which Direct Reseller's provision of
data is not in compliance with the provisions of this subsection.
G. Direct Reseller is responsible for the accuracy of data provided to
HP for benefits under any HP program which links the provision of benefits to
sell-through, sell-to or inventory information.
H. HP reserves the right to refuse to review disputed benefit claims
which are made outside the allotted time frame referenced in the program
documentation or which are based on late, inaccurate or otherwise discrepant
data supplied by Direct Reseller. If HP agrees to review a disputed benefit,
claim, then HP may charge and deduct from any credits owed to Direct Reseller
for all expenses HP incurs in reviewing the claims.
I. Any expense incurred in the process of meeting the reporting
requirements set forth in this Agreement or related materials is the sole
responsibility of the Direct Reseller.
J. Direct Reseller must comply with any reporting requirements for HP
marketing and promotional programs. Such programs may impose a twenty-five
dollar ($25) minimum benefit per transaction requirement.
K. HP may recover all reasonable actual costs associated with
compliance verification procedures, by deducting equivalent amounts from any
promotional funds, rebate funds or any other HP accrued funds held for Direct
Reseller's use.
L. HP may debit Direct Reseller for all wrongfully claimed discounts,
rebates, promotional allowances or other amounts determined as a result of HP's
audit.
M. HP may, from time to time, send to Direct Reseller a list of serial
numbers of designated products for which HP tracks unauthorized sales. Direct
Reseller agrees to identify to which customer each serial number was shipped and
to forward this information to its HP representative within a period of not more
than twenty-one (21) days from the date of HP's notice.
7. TERM AND TERMINATION
In addition to and notwithstanding Section 18 of the HP Reseller
Business Terms:
A. Either party may terminate this Exhibit or the entire Agreement
without cause at any time upon thirty (30) days' written notice to the other
party, or with cause at any time upon fifteen (15) days' written notice to the
other party.
8. GENERAL
In addition to the terms set forth in Section 20 of the HP Reseller
Business Terms, the following will apply:
A. U.S. GOVERNMENT
1. Unless Direct Reseller has obtained HP's prior written consent,
Direct Reseller is prohibited from issuing any "Letter of Supply", from
guaranteeing to supply, or from selling, supplying, or providing any person with
Products for resale under any GSA contract. Unless Direct Reseller has first
received a Letter of Supply or other written authorization from HP, Direct
Reseller is prohibited from listing, and will not list, HP products on any GSA
schedule or contract.
2. No U.S. government procurement regulations will be deemed included
in this Agreement or binding on either party unless specifically accepted in
writing and signed by both parties.
3. HP has a specific published process for identifying Defense Priority
Allocation System (DPAS) orders, which HP will provide to Reseller upon request.
Orders placed by Direct Reseller that do not follow this process will not be
recognized as DPAS orders and may be rejected. HP will not be liable for
improperly placed DPAS orders.
B. INTERNATIONAL SALES
Notwithstanding Section 20.F of the HP Reseller Business Terms, Direct
Reseller will not export Products to any purchaser outside the U.S., nor will
Direct Reseller sell Products for export outside the U.S., without HP's prior
written consent. HP's consent to Direct Reseller's export of Products does not
relieve Direct Reseller of its obligation to obtain any required licenses from
the United States Department of Commerce, or any other agency or department of
the United States government, or any other required approvals from any other
government required by any applicable law or regulation, prior to exporting HP
products directly or indirectly.
<PAGE>
U.S. DIRECT RESELLER PROGRAM:
RAM VAR EXHIBIT
TABLE OF CONTENTS
1. FURTHER APPOINTMENT
2. RESELLER ACCOUNT MANAGER INTERFACE
3. CERTIFICATION
4. CONDITIONS
<PAGE>
U.S. DIRECT RESELLER PROGRAM:
RAM VAR EXHIBIT
1. FURTHER APPOINTMENT
A. HP appoints Direct Reseller as an authorized, non-exclusive reseller
(sometimes referred to in this Exhibit as "RAM VAR") of the Products identified
with a check mark on the signature page of this Agreement.
B. Except as expressly modified by this Exhibit, all other terms and
conditions in this Agreement remain in full force and effect, and apply to all
RAM VAR purchases under this Exhibit.
2. RESELLER ACCOUNT MANAGER INTERFACE
A. HP will designate a "Reseller Account Manager" to act as HP's agent
in connection with all product purchased by RAM VAR under this Exhibit and the
associated Product Exhibits. The Reseller Account Manager will act as RAM VAR's
primary interface with respect to the fulfillment of HP's obligations in the
following areas, plus any others designated by HP: Product marketing, Agreement
compliance, pre-sales and post-sales technical support, Product orders,
invoices, credit and collection.
B. Reseller Account Manager may require additional terms and conditions
with RAM VAR in connection with this Exhibit, including additional credit terms.
Such additional terms and conditions will be subject to HP's prior review and
approval, and if so approved will take precedence over any conflicting terms and
conditions in this Agreement.
3. CERTIFICATION
RAM VAR certifies:
A. It is experienced in the use and operation of the products to be
purchased hereunder and will be primarily responsible for the marketing and
support of the products to end-user customers. RAM VAR may request marketing
assistance from HP. HP will only be obligated to provide such assistance as is
specifically and mutually agreed upon by both parties.
B. It will take sole responsibility for any representations it makes or
agreements it executes.
C. The products purchased under this Agreement for RAM VAR purposes will
be incorporated in a system consisting of a substantial amount of other
services, hardware and/or software which RAM VAR manufactures, develops,
provides or, in the case of software, acquires the right to license or
sublicense ("added value") and which RAM VAR sells or leases to end-user
customers (other than RAM VAR's corporate parent, division, or any subsidiary of
corporate parent) in the regular course of business. This added value represents
a significant functional and value enhancement to the products RAM VAR
furnishes. If RAM VAR's added value consists of software, the software solves a
major application need for the system being purchased.
D. It is responsible for maintaining ongoing support services for the
added value portion of the system.
E. It is responsible for complying with all training requirements
designated by HP and provided to RAM VAR, concerning each eligible product RAM
VAR carries.
F. For the term of this Agreement, RAM VAR will only be authorized to
purchase HP products associated with this Exhibit from Reseller Account Manager
with which RAM VAR applies and is approved by HP.
4. CONDITIONS
A. Whenever products are being purchased for RAM VAR purposes, RAM VAR
will so specify in its order.
B. RAM VAR will not advertise, promote, or resell Products to customers
outside the vertical market(s) designated in writing by HP.
C. RAM VAR will not advertise, promote, or resell Products to customers
outside the geographic area(s) designated in writing by HP.
D. RAM VAR will not resell HP products without the added value
described in this Agreement.
E. RAM VAR will have no claim against HP for compensation or commission
from any purchase of HP products from HP or a third party by RAM VAR's end-user
customers or prospective end-user customers.
F. RAM VAR will qualify for RAM VAR discounts on add-on Products and
upgrades to Products previously purchased by RAM VAR under this Exhibit if: (1)
RAM VAR initially resold the Product or system being enhanced or upgraded (the
"Initial System") with added value in accordance with the terms of this Program
Exhibit, including, but not limited to any added value or other requirements set
forth in the Reseller's application, and RAM VAR has provided and continues to
provide ongoing support on Initial System, or (2) RAM VAR did not initially
resell the Initial System but RAM VAR sells the upgrade or add-on with the
added value specified in this Program Exhibit.
<PAGE>
HP SOFTWARE LICENSE TERMS ADDENDUM
TABLE OF CONTENTS
1. DEFINITIONS
2. LICENSES
3. GENERAL LICENSE TERMS
<PAGE>
HP SOFTWARE LICENSE TERMS ADDENDUM
1. DEFINITIONS
A. "Software" means one or more programs capable of operating on a
controller, processor or other hardware Product ("Device"). Software is
either a separate Product, included with another Product ("Bundled
Software"), or fixed in a Device and not removable in normal operation
("Firmware").
B. "Use" means storing, loading, installing, executing, or displaying
Software on a Device.
C. "Products" means hardware, Software, documentation, accessories,
supplies, parts and upgrades that are determined by HP to be available
from HP upon receipt of Customer's order. "Customer Products" means
Products modified, designed or manufactured to meet Customer
requirements.
D. "Software License" means the Use authorization(s) for the Software
specified by HP in its quotation, invoice or other documentation. Each
Software License has a corresponding License Fee.
E. "License Fee" means the fee or fees designated by HP for Use of
Software. Different License Fees may apply to particular Software if
more than one Software is available for that Software.
2. LICENSES
In return for the License Fee, HP grants Customer a non-exclusive license to
Use the Software listed in Customer's order in conformance with the
applicable Software License. Details of the types of Software Licenses
offered are available from HP on request. If no Software License is
specified, then, in return for the applicable fee, HP grants Customer a
license to Use one copy of the Software on one Device at any one time. All
Software Licenses will be perpetual unless terminated, transferred or
otherwise specified.
If Customer is an HP Authorized Reseller, Customer may sublicense the
Software to an end-user for its Use, or (if applicable) sublicense the
Software to an HP Authorized Reseller for subsequent distribution to an end-
user for its Use. These sublicenses must incorporate the terms of this
license in a written sublicense agreement, which will be made available to
HP upon request.
3. GENERAL LICENSE TERMS
A. Unless otherwise permitted by HP, Customer may only make copies or
adaptations of the Software for archival purposes or when copying or
adaptation is an essential step in the authorized Use of the Software on
a backup Device, provided that copies and adaptations are used in no
other manner and provided further that the Use on the backup Device is
discontinued when the original or replacement Device becomes operable.
B. Customer must reproduce all copyright notices in or on the original
Software on all permitted copies or adaptations. Customer may not copy
the Software onto any public or distributed network.
C. Bundled Software or Firmware provided to Customer may only be used when
operating the associated Device in configurations as sold or
subsequently upgraded by HP. Customer may transfer Firmware only upon
transfer of the associated Device.
D. Updates, upgrades or other enhancements are available under HP Support
Agreements. HP reserves the right to require additional licenses and
fees for Use of the Software on upgraded Devices.
E. The Software is owned and copyrighted by HP or by third-party suppliers.
Customer's license confers no title or ownership and is not a sale of
any rights in the Software, its documentation, or the media on which
they are recorded or printed. Third-party suppliers may protect their
rights in the Software in the event of any infringement.
F. Customer will not disassemble or decompile the Software without HP's
prior written consent. Where Customer has other rights under statute,
Customer will provide HP with reasonably detailed information regarding
any intended disassembly or decompilation. Customer will not decrypt the
Software unless necessary for legitimate use of the Software.
G. Customer's Software License is transferable subject to HP's prior
written authorization and payment to HP of any applicable fees. Customer
will immediately upon transfer deliver all copies of the Software to the
transferee. The transferee must agree in writing to the terms of
Customer's license. All license terms will be binding on involuntary
transferees, notice of which is hereby given. Customer's license will
automatically terminate upon transfer.
H. HP may terminate Customer's or any transferee's or sublicensee's
Software License upon notice for failure to comply with any applicable
license terms. Immediately upon termination, the Software and all copies
of the Software will be destroyed or returned to HP. Copies of the
Software that are merged into adaptations, except for individual pieces
of data in Customer's or transferee's or sublicensee's data base, will
be removed or destroyed or returned to HP. With HP's written consent,
one copy of the Software may be retained subsequent to termination for
archival purposes.
I. In this clause on Licenses to the U.S. Government, the term "Customer"
means HP's direct purchaser, any entity sublicensing the Software, and
the end-user.
1. If Software is licensed for use in the performance of a U.S.
government prime contract or subcontract, Customer agrees that
Software has been developed entirely at private expense. Customer
agrees that Software, and any derivatives or modifications, is
adequately marked when the Restricted Rights Legend below is
affixed to the Software or to its storage media and is perceptible
directly or with the aid of a machine or device. Customer agrees to
conspicuously put the following legend on the Software media with
Customer's name and address added below the notice:
RESTRICTED RIGHTS LEGEND
Use, duplication or disclosure is subject to HP standard commercial
license terms or to the following restrictions, whichever is
applicable;
<PAGE>
1. for non-DOD Departments and Agencies of the U.S. Government,
as set forth in FAR 52.227-19(c)(1-2)(Jun 1987)
2. for the DOD and its Agencies, as set forth in DFARS 252.227-7013
(c) (1) (ii) (Oct 1988), DFARS 252.211-7015 (c) (May 1991),
whichever is applicable.
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304 U.S.A.
Copyright (c) 199_ Hewlett-Packard Company.
All Rights Reserved
2. Customer further agrees that Software is delivered and licensed as
"Commercial computer software" as defined in DFARS 252.227-7013 (Oct
1988), DFARS 252.211-7015 (May 1991) or DFARS 252.227-7014 (Jun
1995), or as a "commercial item" as defined in FAR 2.101(a), or as
"Restricted computer software" as defined in FAR 52.227-19 (Jun
1987) (or any equivalent agency regulation or contract clause),
whichever is applicable. The Customer agrees that it has only those
rights provided for such Software by the applicable FAR or DFARS
clause or the HP standard software agreement for the Product
involved.
J. Neither party may assign any rights or obligations hereunder without
prior written consent of the other party.
K. Customer who exports, re-exports or imports HP licensed Products,
technology or technical data purchased hereunder, assumes responsibility
for complying with applicable laws and regulations and for obtaining
required export and import authorizations. HP may suspend performance if
Customer is in violation of any applicable laws or regulations.
L. Disputes arising in connection with this Agreement will be governed
by the laws of the country and locality in which HP accepts the order.
M. These HP Software License Terms supersede any previous communications,
representations or agreements between the parties, whether oral or
written, regarding transactions hereunder. Customer's additional or
different terms and conditions will not apply. These HP Software
License Terms may not be changed except by an amendment signed by an
authorized representative of each party.
<PAGE>
U.S. SOLUTIONS SUPPORT OPTIONS ADDENDUM
TABLE OF CONTENTS
1. SERVICES INCLUDED
2. PREREQUISITES
3. SERVICE LIMITATIONS
4. CUSTOMER RESPONSIBILITIES
5. SOFTWARE LICENSE AND COPYRIGHTS
6. CHARGES
<PAGE>
U.S. SOLUTIONS SUPPORT OPTIONS ADDENDUM
Orders for HP System Support Options are subject to the terms of this Agreement,
including the Support Exhibit or quotation in effect on the date of order.
Direct Reseller is responsible for obtaining the agreement of its end-user
Customer with respect to any Support obligations under this Agreement that
pertain to such Customer.
1. SERVICES INCLUDED
HP System Support Options are offered in one (1) year and three (3) year
increments. HP System Support Options provide the following features for HP
Products. Not all of the features are offered with every option or supported
Product. Features for each option will be provided as described in the
specifications sheet for HP System Support Options. Some service features
have prerequisites. Service features may include one (1) or more of the
following:
-On-site hardware support during warranty
-Flexible call submittal
-Phone-in Software assistance
-License to Use Software updates
-Software media and documentation updates
-HP SupportLine electronic support
-Escalation management
-Remote support (for selected HP Products)
-HP PowerPatch tapes (for selected HP Products)
-Assigned account support engineer
-Assigned HP Response Center account advocate
-Patch management assistance
-Operational reviews
-System release planning seminars and assistance
-Installation of Software updates
-Installation, configuration, and verification of systems and networks
2. PREREQUISITES
HP reserves the right to make the final judgment as to whether Customer
adequately meets the requirements outlined in this document.
A. MINIMUM SYSTEM CONFIGURATION
Except for systems capable of diagnostic self-test, HP System Support
Options require, at a minimum, that a system include a cental processing
unit (CPU), a peripheral capable of reading standard HP diagnostics and
verification tests, and a peripheral that allows HP to interact fully
with the covered Products.
B. UNIFORM COVERAGE
All Products that constitute the minimum system configuration must be
covered at the same HP System Support Options service level.
Options OSO-OS6 AND 340-3Y6 may not be combined on the same contract
for software-only Products.
C. CONNECTORS AND CABLES
All Products covered by HP System Support Options must be interconnected
by cables or connectors listed in the appropriate HP documentation as
compatible with the CPU. For HP Products not meeting this requirement,
service is available at HP's standard service rates.
D. SOFTWARE SUPPORT
All HP systems for which execution of diagnostic tests is software-
dependent must, at a minimum, be covered by an HP System Support Option
that provides periodic Software updates.
E. COVERAGE REQUIREMENTS
For HP System Support Options orders that include software support, all
systems supported by one system manager, except PC systems, must be
covered by an HP System Support Option or by an existing contractual HP
software support service.
F. RIGHT TO COPY DOCUMENTATION
Customer may copy documentation updates for use with other systems
covered by an HP System Support option that provides Software support.
G. SOFTWARE LICENSES
Customer can purchase HP System Support Options only for HP software for
which Customer has rightfully acquired an appropriate HP Software
License.
H. DESIGNATED CALLERS AND TRAINING REQUIREMENTS
The following contacts for HP must be designated and trained through
completion of the appropriate HP training courses as defined by HP:
system manager and alternate; extended hours alternate; if applicable,
application software manager and alternate. Only the designated callers
can use the HP Response Center.
I. REMOTE SUPPORT
For HP to provide remote support, Customer must give authorization and
provide access to a qualified modem, as well as access to one (1) voice-
grade telephone and one (1) data-quality telephone line or network with
terminations near the system. If HP cannot access a system remotely, HP
may charge standard service rates if on-site service is needed.
J. HP SUPPORTLINE
HP SupportLine electronic support is available via the Worldwide Web,
electronic mail, and a character-mode interface. With a character-mode
interface, Customer can access HP SupportLine electronic support using a
modem or the Internet. To use HP SupportLine electronic support through
modem access, Customer must provide one (1) data-quality telephone line,
one (1) locally compatible modem set for 1200, 2400, 9600, or 14,400
baud, and an HP-compatible terminal or terminal emulator, in addition to
the equipment required for remote support above. Customers who submit HP
Response Center calls via HP SupportLine must meet the same training
requirements as the system manager.
K. COUNTRY BOUNDARIES
All systems supported by one (1) system manager must be located within
the same country.
L. PRIORITY PLUS SUPPORT
Products may be covered by the Priority Plus hardware service level if
HP System Support Options charges for a site exceed a minimum amount. If
remote support is available on the Products, Customer must allow remote
access to receive
<PAGE>
Priority Plus support.
3. SERVICE LIMITATIONS
A. HARDWARE AND SOFTWARE SUPPORT
Any services involving hardware, software or network-related problems
not covered by the HP System Support Options service ordered will be
subject to HP's standard service rates.
B. MAXIMUM USE LIMITATIONS
Products operated in excess of their maximum usage rate (as specified in
the Product's data sheet or operating manual) cannot be covered by HP
System Support Options, but can be serviced at HP's standard service
rates.
C. INTERFACES AND ACCESSORIES
HP may cover cables, connectors, accessories, and interfaces under the
same hardware service level purchased for the Products with which they
are used.
D. SUPPORTED SOFTWARE VERSIONS
HP provides support only for the current and immediately preceding
versions of HP Software, and only when the Software is used with
hardware that is included in HP-specified configurations. If support
coverage lapses, additional fees may be required to resume support
coverage. HP will support specified versions of selected non-HP
software, but will not support the software any longer than the vendor
supports it. For non-HP software, HP provides support only for software
versions that are specifically documented as supported on a specified
configuration.
E. NON-HP SOFTWARE
Support for non-HP software covered by HP System Support Options is
limited to telephone assistance and, if available to HP from the third-
party software vendor, patches, workarounds, and updates. HP's decision
on how long to offer HP support on selected versions of non-HP software
is final.
F. NON-HP PRODUCTS
HP is not liable for the performance or non-performance of third-party
software vendors, their products, or their support services including
design flaws in and/or incompatibility with non-HP products.
G. HP SOFTWARE ON NON-HP SYSTEM
HP System Support Options for specified HP Software Products used with
designated non-HP system provides the following features: phone-in
assistance, software problem reporting, HP SupportLine electronic
information access and call submittal, license for software updates, and
patches.
H. ESCALATION MANAGEMENT
On-site assistance for critical software problems is limited to systems
supported by one (1) system manager and situated within one half (1/2)
mile (one (1)kilometer) radius of each other. Systems situated
beyond this limit that require on-site assistance will be subject to
additional charges at HP's standard service rates.
I. ACCESS TO THE HP RESPONSE CENTER
HP Response Center use is limited to the system manager for the
operating system and subsystem software; if applicable, the network
operator for the network; if applicable, the application software
manager(s) for each family of HP application software; and if purchased,
additional HP Response Center callers. In the absence of any of these
managers, the HP Response Center is available to their designated
alternates and, if applicable, during after-hours telephone assistance
to the designated after-hours alternate.
J. SOURCE CODE SUPPORT
For HP source code Software covered under HP System Support Options,
assistance is limited to problems that can be duplicated on the current
version of the object code of the particular Software. HP charges
Customer at HP's standard service rates for any other assistance
required.
K. HP PREDICTIVE SUPPORT (SELECTED SYSTEMS)
HP is not responsible if HP Predictive Support Software does not
identify or remedy system or peripheral problems prior to actual
occurrence.
L. NETWORK SOFTWARE COVERAGE
Support for HP network software that provides multi-vendor node
connectivity is limited to product-usage and problem-solving assistance
and software update materials, unless network support is purchased.
M. TRAVEL ZONES
Customer sites located beyond one hundred (100) miles of a primary HP
Support Responsible Office may be subject to travel charges, longer
response times, and reduced coverage hours as specified in HP's
"Worldwide Customer Support Travel and Office Directory." Availability
of some coverage levels is based on distance from a primary HP Support
Responsible Office.
N. EXCLUSIONS
HP System Support Options do not include assistance that involves
program development, coding, isolation of coding problems,
implementation assistance, performance consulting, data recovery
regardless of the cause of data loss, hardware malfunctions, or problems
and investigation time relating to the use of privileged code on HP 3000
systems. HP System Support Options do not include consulting. Consulting
may be purchased separately. HP System Support Options are not a
substitute for any formal training offered by HP.
O. AVAILABILITY
Some HP System Support Options service features and coverage levels
are subject to local availability.
P. OUT OF COVERAGE HOURS
Customer requests for hardware and software support services or
installation and configuration services scheduled alter HP's normal
business hours may be subject to local availability and additional
charges.
4. CUSTOMER RESPONSIBILITIES
A. ACCESS
Customer must provide HP with the following:
1. Access to the Products covered under HP System Support Options.
2. Adequate working space and facilities within a reasonable distance
of the Products.
3. Access to and use of all information, internal resources, and
facilities determined necessary by HP to service the Products.
<PAGE>
B. OPERATING PROCEDURES
Customer must follow routine operating procedures as specified in
the HP Product operating manual.
C. USAGE-LEVEL CHARGES
Customer must allow HP to install or remove usage meters on
specified electromechanical devices. Usage charges may be invoiced
separately.
D. DIAGNOSTIC/MAINTENANCE SOFTWARE (SELECTED SYSTEMS)
Customer must allow HP to keep system and network diagnostic and
maintenance programs resident on Customer's system or site for the
exclusive purpose of performing diagnostics and maintenance. Prior
to submitting a Software problem report to HP, Customer may be
required to assist HP in running these HP-supplied programs.
Customers with HP Predictive Support Software must use the
electronic data transfer capability it provides to inform HP of
events identified by the software. Customer acknowledges that
Customer has no ownership interest in diagnostic Software provided
by HP and that HP may remove these diagnostic programs and any HP-
loaned modems upon termination of HP System Support Options.
E. SERVICE REQUESTS
Prior to placing a service request with HP, customer may be required
to run HP-supplied diagnostic programs.
F. REVISION LEVELS
Customer must maintain all associated system hardware and firmware,
except PC systems, at the latest HP-specified configuration and code
revision level. For PC systems, Customer must maintain all
associated system hardware and firmware at a revision level
specified by HP. Customers must maintain HP-supported non-HP
software at a code revision level specified by HP.
G. TELECOMMUNICATIONS CHARGES
Customer is responsible for all telecommunications charges
associated with using HP SupportLine electronic support.
H. TEMPORARY PROCEDURES
Customer is responsible for implementing temporary procedures or
workarounds while permanent solutions are being sought.
5. SOFTWARE LICENSE AND COPYRIGHTS
A. UPDATES
1. HP grants Customer a License to use software updates provided by
HP under an HP System Support Option.
2. In addition, HP grants Customer a license to use and copy one
(1) copy of the updates received from HP for each HP Software
Product License for which Customer has purchased an HP System
Support option that provides Software support.
3. Customer agrees that the License to Use and copy of the updates
is governed by the HP Software License Terms in effect on the
date HP ships the update to Customer. The current version of the
HP Software License Terms is attached as an addendum to this
Agreement.
B. HP UPDATE OWNERSHIP
Customer acknowledges that it does not own and has no right to,
title to, or interest in the updates except as set forth in the HP
Software License Terms.
C. COPYRIGHT AND TRADEMARK NOTICES
Customer agrees to reproduce and conspicuously affix those copyright
and trademark notices from the original software or documentation on
each copy of an update that Customer makes or obtains from an
electronic data source, such as HP SupportLine support.
6. CHARGES
A. CANCELLATION
If HP System Support Options are canceled, Customer will receive a
pro rata refund only for the unused prepaid services. Charges for HP
System Support Options cover a twelve (12) month period for one (1)
year options and a thirty-six (36) month period for three (3) year
options.
B. FINANCING
If HP System Support Options are financed as part of an HP Financing
Agreement, the HP Financing Agreement terms and conditions regarding
cancellation will govern.
<PAGE>
HP CONFIGURATION TOOLS LICENSE ADDENDUM
TABLE OF CONTENTS
1. PARTIES AND PRECEDENCE
2. LICENSE GRANT
3. RESTRICTIONS AND CHANNEL
PARTNER RESPONSIBILITIES
4. SUPPORT
5. CONFIDENTIAL INFORMATION
6. OWN RISK
7. TERM AND TERMINATION
<PAGE>
HP CONFIGURATION TOOLS LICENSE ADDENDUM
1. PARTIES AND PRECEDENCE
This Addendum covers Channel Partner's use of certain electronic
configuration tools which consist of HP and third party Software. For purposes
of this Addendum, "Channel Partner" means any direct reseller, indirect reseller
or Independent Software Vendor ("ISV") or HP Solutions Products pursuant to a
written Agreement or Certification. This Addendum is incorporated by reference
into such Agreement or Certification, the terms and conditions of which will
continue in full force and effect; provided, however, that in the event of a
conflict with any of the provisions of this Addendum, this Addendum will take
precedence.
2. LICENSE GRANT
A. Subject to the terms and conditions set forth in this Addendum and
in Channel Partner's HP Agreement or Certification, HP grants to Channel Partner
an internal, non-exclusive, non-transferable, worldwide license to use one copy
of the following Software plus any other Software designated by HP and agreed
upon by Channel Partner in object code format and including any associated
documentation (collectively, the "Configuration Tools"), per each individual
user identified by Channel Partner and approved by HP. For purposes of this
Addendum, "User" means an individual employee or contractor of Channel Partner,
as evidenced by a unique user identifier for such individual.
HP Knowledge Base
SalesBUILDER for Windows
QuoteBUILDER for Windows
RAM Doubler
B. Notwithstanding the foregoing transfer restriction, Channel Partner
may transfer copies of the Configuration Tools, including the associated
licenses and documentation, between similarly situated Users, subject to
Section 3 below and any related policies or guidelines issued by HP.
3. RESTRICTIONS AND CHANNEL PARTNER RESPONSIBILITIES
A. Channel Partner will use the Configuration Tools solely for the
purposes of selling, configuring, quoting prices for, ordering, distributing
and/or support HP Products and Channel Partner products.
B. Channel Partner will be responsible for the payment of all
registration fees, periodic fees, and any connect time charges associated with
the delivery of the Configuration Tools by HP or its designee via electronic
communications services or other means.
C. Channel Partner must have a valid HP Purchase Agreement for
resellers, ISV Agreement or Certification, with no compliance violations, in
order to be eligible to use the Configuration Tools.
D. Channel Partner will be responsible for controlling the number of
its users of the Configuration Tools, and will notify HP or its designee
promptly of any internal transfers of the Configuration Tools, including the
associated licenses and documentation.
E. Channel Partner acknowledges HP's right to change Product
information as reflected in The HP Product Knowledge Base without prior notice
to Channel Partner.
4. SUPPORT
HP will provide direct reselling and ISV Channel Partners with telephone
coverage support regarding SalesBUILDER for Windows only, each Monday through
Friday from 8:00 AM to 8:00 PM Eastern Standard Time, excluding HP holidays
pursuant to this Addendum regarding support. HP has no support obligations
regarding any other software licensed pursuant to this license. The Channel
Partners may contact directly the manufacturers of other software licensed.
5. CONFIDENTIAL INFORMATION
Any information disclosed by HP to Channel Partner in connection with
Channel Partner's use of the Configuration Tools which is labeled confidential
or proprietary will be protected by Channel Partner from unauthorized disclosure
to third parties with the same degree of care as Channel Partner uses for its
own similar information for a period of three (3) years from the date of
disclosure. This restriction will not apply to any information which is
(i) already known by Channel Partner prior to disclosure, (ii) independently
developed by Channel Partner prior to or independent of the disclosure,
(iii) publicly available, (iv) rightfully received from a third party without a
duty of confidentiality, or (v) disclosed by Channel Partner with HP's prior
written approval.
6. OWN RISK
HP IS PROVIDING THESE CONFIGURATION TOOLS ON AN "AS IS" BASIS. CHANNEL
PARTNER'S USE OF THE CONFIGURATION TOOLS IS AT CHANNEL PARTNER'S OWN RISK. HP,
ITS AGENTS, EMPLOYEES, SUBCONTRACTORS AND THIRD PARTY SOFTWARE SUPPLIERS
DISCLAIM ANY AND ALL LIABILITIES FOR AND MAKE NO WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO THE CONFIGURATION TOOLS INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
7. TERM AND TERMINATION
This Addendum will be effective upon execution by both parties, and will
continue in effect so long as Channel Partner's HP Agreement or Certification is
in effect; provided, however, that HP may terminate Channel Partner's license
immediately upon notice for cause, and that HP may, in HP's sole discretion,
terminate Channel Partner's license upon thirty (30) days notice without cause.
Upon any such termination, Channel Partner will immediately destroy the
configuration Tools, together with all copies in any form.
<PAGE>
HP WARRANTY AND INSTALLATION INFORMATION
TABLE OF CONTENTS
1. DEFINITIONS
2. WARRANTY STATEMENT
3. PLACE OF PERFORMANCE
4. LIMITATION OF LIABILITY AND REMEDIES
5. WARRANTY AND INSTALLATION CLASSIFICATIONS
6. RESPONSE TIMES
7. INSTALLATION SERVICES
<PAGE>
HP WARRANTY AND INSTALLATION INFORMATION
1. DEFINITIONS
A. "Delivery" means standard HP shipping to and arrival at the receiving
area at the "Ship to" address in the country where customer's order is placed,
unless otherwise indicated on the quotation.
B. "Products" means hardware, software, documentation, accessories,
supplies, parts and upgrades that are determined by HP to be available from HP
upon receipt of Customer's order. "Custom Products" means products modified,
designed or manufactured to meet customer requirements.
C. "Software" means one or more programs capable of operating on a
controller, processor or other hardware product ("Device"). Software is either a
separate product, included with another product ("Bundled Software"), or fixed
in a device and not removable in normal operation ("Firmware").
D. "Specifications" means specific technical information about HP
products which is published in HP product manuals and technical data sheets in
effect on the date HP ships Customer's order.
2. WARRANTY STATEMENT
A. Product warranty period is defined by the warranty code appearing on
quotations, as described in the "Warranty and Installation Classification Table"
below or is available upon request.
B. Products purchased from HP outside the U.S. will receive the standard
warranty in the country of purchase. If customer moves such products to another
country where HP has support presence, then customer will receive the
destination country standard warranty.
C. Products purchased in the U.S. based in the U.S. list prices will
only receive standard warranty in the U.S., except for products with a global
warranty. All products purchased in the U.S. based on international prices will
include a global warranty. A global warranty means that the product will include
the destination country's standard warranty in any country where the Product is
moved provided that HP has support presence in that country.
D. Additional warranty coverage may be purchased and that warranty will
be limited to the country in which the additional coverage was purchased.
Customer may receive a different warranty when the product is purchased as part
of a system. HP reserves the right to change the warranty. Such changes will
affect only new orders.
E. The warranty period begins on the date of delivery, or the date of
installation if installed by HP. If Customer schedules or delays installation by
HP more than 30 days after Delivery, the warranty period begins on the 31st day
after Delivery.
F. HP warrants HP hardware Products against defects in materials and
workmanship. HP further warrants that HP hardware Products conform to
specifications. These warranties do not include periodic recalibration
(recommended for some HP Products), unless specifically covered in the warranty
terms for such Products.
G. HP warrants that Software will not fail to execute its programming
instructions due to defects in materials and workmanship when properly installed
and used on the Device designated by HP. HP further warrants that HP owned
standard Software will substantially conform to Specifications. HP does not
warrant that software will operate in hardware and software combinations
selected by Customer, or meet requirements specified by Customer.
H. HP does not warrant that the operation of Products will be
uninterrupted or error free.
I. HP warrants that each HP hardware, software, and firmware Product
delivered under this Exhibit and HP terms and conditions of Sale and Service
will be able to accurately process date data (including, but not limited to,
calculating, comparing, and sequencing) from, into, and between the twentieth
and twenty-first centuries, and the years 1999 and 2000, including leap year
calculations, when used in accordance with the Product documentation provided by
HP (including any instructions for installing patches or upgrades), provided
that all other products (e.g. hardware, software, firmware) used in combination
with such HP product(s) properly exchange date data with it. If the
specifications require that specific HP Products must perform as a system in
accordance with the foregoing warranty, then that warranty will apply to those
HP products as a system, and customer retains sole responsibility to ensure the
year 2000 readiness of its information technology and business environment. The
duration of this warranty extends through January 31, 2001. To the extent
permitted by local law, this warranty applies only to branded HP products and
not to products manufactured by others that may be sold or distributed by HP.
This warranty Section 2I. applies only to HP Products shipped after July 01,
1998. The remedies applicable to this Section 2I., are those provided in Section
2J. below. Nothing in this warranty will be construed to limit any rights or
remedies provided elsewhere in this Exhibit and HP's Terms and Conditions of
Sale and Service will respect to matters other than year 2000 compliance.
J. If HP receives notice of defects or non-conformance to hardware
Specifications, or substantial non-conformance to HP owned standard Software
Specifications during the warranty period, HP will, at its option, repair (and
recalibrate only as necessitated by repairs), or replace the affected Products.
If HP is unable, within a reasonable time, to repair, replace or correct a
defect or non-conformance in a product to a condition as warranted, customer
will be entitled to a refund of the purchase price upon prompt return of the
Product to HP. Customer will pay expenses for return of such Products to HP.
HP will pay expenses for shipment of repaired or replacement Products, except
for Products returned to customer from another country.
K. HP warrants that HP Support will be provided in a professional and
workmanlike manner. HP will replace, at no charge, parts which are defective
and returned to HP within 90 days of delivery.
L. Some newly manufactured HP Products may contain and warranty service
may use remanufactured parts, which are equivalent to new in performance.
M. The above warranties do not apply to defects resulting from improper
or inadequate maintenance or calibration by Customer; Customer or third party
supplied software, interfacing or supplies; unauthorized modification; improper
use or operation outside the specifications for the product, abuse, negligence,
accident, loss or damage in transit; improper site preparation; or unauthorized
maintenance or repair.
N. THE ABOVE WARRANTIES ARE EXCLUSIVE AND NO OTHER WARRANTY, WHETHER
WRITTEN OR ORAL, IS EXPRESSED OR IMPLIED. HP SPECIFICALLY DISCLAIMS THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
3. PLACE OF PERFORMANCE
A. Within HP service travel areas, HP Products and certain other
Products designated by HP, sold with On-Site warranty and installation coverage,
will be installed by HP at the Customer's facility at no charge. Outside HP
service travel areas, warranty and installation services will be performed at
Customer's facility only upon HP's prior agreement; Customer will pay HP's
travel expenses and other applicable expenses for such services.
B. Products with On-Site warranty will receive warranty services
only at the initial installation site. If Products eligible for On-Site
warranty and installation services are moved from the initial installation site,
the warranty services will be provided only if the Customer purchases additional
inspection or installation services at the new site.
C. Products with On-Site warranty will receive warranty services
outside the country of initial purchase if global warranty coverage applies.
Service outside the country of initial purchase is subject to the conditions
regarding HP service travel areas and initial installation in Sections 3A. and
B. above.
D. Products with global warranty coverage and return to HP warranty,
and battery-powered Products, may be returned to the closest HP authorized
repair center. All other products with return to HP warranty must be returned
to a HP authorized repair center within the country of original purchase.
Customer will pay expenses for return of such Products to HP. HP will pay
expenses for shipment of repaired or replacement Products, except for Products
returned to Customer from another country.
4. LIMITATION OF LIABILITY AND REMEDIES
A. To the extent HP is held legally liable to customer, HP's liability
is limited to:
1) damages for bodily injury;
2) direct damages to tangible property up to a limit of U.S. one
million dollars ($1,000,000).
B. Notwithstanding Section 4A, above, in no event will HP or its
affiliates, subcontractors or suppliers be liable for any of the following:
1) Actual loss or direct damage that is not listed in 4A. above;
2) damages for loss of data, or software restoration;
3) damages relating to Customer's procurement of substitute products or
services (i.e. "cost of cover"); or
4) Incidental, special or consequential damages (including downtime
costs or lost profits).
C. THE REMEDIES IN THIS EXHIBIT AND HP's TERMS AND CONDITIONS OF SALE
AND SERVICE ARE CUSTOMER'S SOLE AND EXCLUSIVE REMEDIES.
5. WARRANTY AND INSTALLATION CLASSIFICATIONS
Products receive warranty and installation services as defined in the
Warranty and Installation Classification Table below. Peripherals, accessories
and interfaces receive the same services as the systems to which they are
connected when:
1) the Products are purchased with the system on a coordinated
delivery and are included in the system configuration; or,
2) the Products are purchased as add-ons to an existing system covered
by a HP service agreement which is extended to include the add-on Products.
<PAGE>
WARRANTY AND INSTALLATION CLASSIFICATION TABLE
_______________________________________________________________________________
WARR WARRANTY SERVICE SUPPORT GLOBAL INSTALL UPGRADE
CODE PERIOD LOCATION LEVEL WARR INC. ELIG.
(13) (4)
______________________________________________________________________________
1A 30 Days HP/DEALER Standard Bench (3) No No No
1B 60 Days HP Replacement (18) Yes No No
1C 30 Days HP/DEALER Replacement (18) Yes No No
1D 30 Days HP/DEALER Parts Only (16,30) Yes No No
1E 5 Years HP/DEALER Parts Only (32) Yes No No
1F 90 Days HP/DEALER Parts Only (16,30) Yes No No
1G 2 Years HP/DEALER Parts Only (16,30) Yes No No
1H 1 Year HP Enhanced Parts Only No No yes
within 48hrs (33)
1P 30 Days HP Replacement (18) No No No
1Q 30 Days HP/DEALER Parts Only (16,30) No No No
2A 90 Days On Site 4 Hour Response (22) No Yes(1) Yes
2B 90 Days On Site 4 Hour Response (22) No Yes Yes
2C 90 Days On Site 4 Hour Response (22) No No Yes
2D 90 Days On Site Next Day (22) No No Yes
2E 90 Days On Site Next Day (22) No Yes Yes
2F 90 Days On Site Next Day (22) No No No
2G 90 Days On Site 4 Hour Response (22) No No No
2H 90 Days On Site Next Day (22) No Yes No
2J 90 Days On Site Within 3 Days (22) No Yes No
2K 90 Days HP/DEALER Replacement (2) Yes No No
3A 90 Days HP/DEALER Standard Bench (3) No No Yes
3B 90 Days HP/DEALER Standard Bench (3) No No No
3C 90 Days HP Replacement (2) No No No
3D 90 Days HP Standard Bench (3) No No No
3E 6 Months On Site Within 3 Days (22) Yes Yes Yes
3P 90 Days HP Replacement (18) No No No
3Q 90 Days HP Parts Only (16,24) No Yes No
3R 90 Days HP Parts Only (16,24) No No No
3S 1 Year On Site Next Day (22) Yes No Yes
3T 1 Year On Site Next Day (22) Yes Yes Yes
3U 90 Days HP Replacement (2) Yes No No
3V 18 Months HP/DEALER Standard Bench (3) Yes No No
3W 1 Year On Site Within 3 Days (22) Yes No No
Module Exchange (14)
3X 1 Year HP Replacement (18) Yes No No
4A 1 Year HP/DEALER Standard Bench (3) No No No
4B 1 Year HP/DEALER Standard Bench (3) No No Yes
4C 1 Year HP/DEALER Standard Bench (3) No Yes No
4D 1 Year HP/DEALER Standard Bench (3) Yes No No
4E 1 Year HP/DEALER Standard Bench (3) Yes No Yes
4F 1 Year HP/DEALER Standard Bench (3) Yes Yes No
4G 1 Year On Site Next Day (22) Yes No No
4H 1 Year HP/DEALER Unit Exchange, Next Yes No No
Day (7)
4J 1 Year HP/DEALER Exchange, Next Yes No No
Day (7)
4K 1 Year On Site Next Day (22) No Yes(1) Yes
4L 1 Year On Site Next Day (22) No Yes Yes
4M 1 Year On Site Next Day (22) No No Yes
4N 1 Year On Site Within 2 Days (19) Yes No No
4P 1 Year HP Parts Only (16) Yes No No
4Q 1 Year On Site Next Day (22) Yes Yes No
4R 1 Year On Site Cooperative, Yes Yes Yes
7 Days (11)
4S 1 Year On Site Cooperative (11) Yes No Yes
4T 1 Year On Site HW & SW, Next
Day (26) Yes Yes No
4U 1 Year HP/DEALER Unit Exchange (7) Yes No Yes
4V 3 Years HP/DEALER Parts Only (16) Yes No No
4W 90 days On Site Shared, Same No No No
Day (20)
4X 1 Year HP Replacement (6) No No No
4Y 1 Year On Site SW Next Day (31) Yes No No
5A 1 Year On Site Next Day (22) No Yes No
5B 1 Year On Site Next Day (22) No Yes No
<PAGE>
WARRANTY AND INSTALLATION CLASSIFICATION TABLE
5C 1 Year On Site Next Day (22) No No No
5D 1 Year On Site Within 3 Days (22) No No No
5E 1 Year HP/DEALER Unit Exchange (7) No No No
5F 1 Year HP/DEALER Unit Exchange, Next Day (7) No No No
5G 1 Year On Site Within 3 Days (22) No Yes(1) Yes
5H 1 Year On Site Within 3 Days (22) No Yes Yes
5J 1 Year On Site Within 3 Days (22) No No Yes
5K 1 Year On Site Within 3 Days (22) No No Yes
5L 1 Year On Site 4 Hour Response (22) No Yes(1) Yes
5M 1 Year On Site 4 Hour Response (22) No Yes Yes
5N 1 Year On Site 4 Hour Response (22) No No Yes
5P 1 Year HP Replacement (18) No No No
5Q 1 Year HP Standard Bench (3) No No No
5R 1 Year On Site 4 Hour Response (22) No No Yes
5S 1 Year On Site Within 3 Days (22) Yes Yes Yes
5T 1 Year On Site Within 3 Days (22) Yes No Yes
5U 1 Year On Site Within 3 Days (22) No Yes No
5V 1 Year On Site Cooperative (11) No Yes Yes
5W 1 Year On Site Next Day, 7 Days (15) Yes Yes No
5X 1 Year HP Parts Only (16) No No No
5Y 1 Year On Site Cooperative, 7 Days (11) No Yes Yes
5Z 1 Year HP/DEALER Unit Exchange (7) No No Yes
6A 3 Years On Site Next Day (22) No No No
6B 2 Years HP/DEALER Standard Bench (3) No No No
6C 2 Years On Site Next Day (22) No No No
6D 2 Years On Site Next Day (22) No Yes No
6E 2 Years HP/DEALER Unit Exchange, Next No No No
Day (7)
6F 2 Years HP/DEALER Unit Exchange (7) No No No
6G 2 Years HP/DEALER Unit Exchange (7) No No Yes
6H 2 Years HP Parts Only (16) No No No
6J 2 Years On Site Shared, Same Day (20) No Yes No
6L 18 Months HP/DEALER Standard Bench (3) No No No
6M 18 Months HP Replacement (18) No No No
6N 18 Months On Site Next Day (22) Yes No No
6P 2 Years HP Replacement (18) No No No
6Q 2 Years On Site Next Day, 7 Days (15) Yes Yes No
6R 2 Years On Site Next Day (22) Yes No No
6S 2 Years HP/DEALER Standard Bench (3) Yes No No
6T 2 Years On Site Unit Exchange, Next No Yes No
Day (7)
6U 2 Years On Site Unit Exchange, Next No No Yes
Day (7)
6V 2 Years On Site Within 3 Days (22) Yes No No
6W 2 Years On Site Unit Exchange, Next No No No
Day (7)
6X 2 Years HP/DEALER Unit Exchange, Yes No No
Next Day (7)
6Y 2 Years On Site Unit Exchange Yes No No
Next Day (7)
6Z 1 Year HP Replacement (18) No Yes No
7A 3 Years HP/DEALER Standard Bench (3) No No No
7B 3 Years HP/DEALER Unit Exchange (7) No No No
7C 3 Years On Site Next Day (22) No No No
7D 3 Years Site & Bench 1 Year On Site + 2 Years No No No
Bench (10)
7E 3 Years HP/DEALER Unit Exchange, No No No
Next Day (7)
7F 3 Years Exchange & 1 Year Unit Exchange + No No No
Bench 2 Years Bench (12)
7G 3 Years On Site Next Day (22) Yes No No
7H 3 Years HP/DEALER Replacement (18) No No No
7J 3 Years HP/DEALER Module exchange (14) Yes No No
7K 3 Years Site & Bench 1 Year On Site + Yes No No
2 Years Bench (10)
7L 3 Years HP/DEALER Standard Bench (3) Yes No No
7M 3 Years HP/DEALER Unit Exchange (7) No No Yes
7N 3 Years On Site Next Day (22) No Yes(1) Yes
7P 3 Years On Site Next Day (22) No Yes Yes
7Q 3 Years On Site Next Day (22) No No Yes
7R 3 Years HP/DEALER Unit Exchange, Next No No Yes
Day (7)
7S 3 Years HP/HEADER Bench + Parts Only (21) Yes No No
<PAGE>
WARRANTY AND INSTALLATION CLASSIFICATION TABLE
<TABLE>
<S> <C> <C> <C>
7T 3 Years On Site 1 Year On Site + 2 Years Parts Yes No No
Only (23)
7U 3 Years On Site On Site, Within 3 Days (22) No Yes No
7V 3 Years On Site On Site, Within 3 Days (22) No No Yes
7W 3 Years On Site On Site, Within 3 Days (22) No No No
7X 3 Years HP/DEALER Unit Exchange(7) Yes No Yes
7Y 3 Years On Site 8 Hour Response, 24x7 (27) No No No
7Z 3 Years HP/DEALER Parts Only (16) No No No
8A 5 Years On Site Next Day (22) No No No
8B 5 Years HP Replacement (18) No No No
8C 5 Years HP/DEALER Standard Bench No No No
8D 5 Years HP/DEALER Replacement (18) No No Yes
8E 5 Years Site & Parts 1 Year On Site + Parts Only No No No
Lifetime (17)
8F 5 Years On Site Next Day (22) Yes No No
8G 5 Years HP Replacement (18) Yes No No
8H 5 Years HP/DEALER Unit Exchange, Next Day (7) No No No
8J 5 Years HP/DEALER Unit Exchange, Next Day (7) No No Yes
8K 5 Years HP/DEALER Unit Exchange (7) No No No
8L 5 Years HP/DEALER Unit Exchange (7) No No Yes
8M 3 Years Site & Parts 90 Days On Site + 33 Months Yes No No
Parts Only (28)
8N 3 Years Site & Parts 1 Year On Site + 2 Years Parts Yes No No
Only (28)
8P 3 Years Site & Parts 1 Year On Site + 2 Years Parts Yes No No
Only Excluding KB/Mouse (29)
8Q 5 Years HP/DEALER Parts Only (16) No No No
8R 3 Years HP/DEALER Unit Exchange, Next Day (7) Yes No No
8S 3 Years On Site Unit Exchange (7) Yes No No
8T 2 Years On Site Next Day (22) Yes Yes No
8U 2 Years On Site Within 3 Days (22) Yes Yes No
8V 3 Years Site & Parts 1 Year On Site + 2 Years Parts No No No
Only Excluding KB/Mouse (29)
9A 6 Years On Site 4 Hour Response (Expires: 30 No No No
SEP 2001)
9M Lifetime HP Replacement (5) Yes No Yes
9N Lifetime HP Replacement (5) No No Yes
9P Lifetime HP Replacement (5) No No No
9Q 10 Years HP Replacement (9) No No No
9R Lifetime HP/DEALER Unit Exchange, Next Day (7) Yes No Yes
9X 30 Years HP/DEALER Replacement (8) No No No
9Y 90 Days HP/DEALER Replacement (6) No No No
9Z 90 Days HP Replacement (24) No No No
Page 7 of 10
</TABLE>
<PAGE>
NOTES:
1. Site preparation service included with installation.
2. Warranty service is limited to repair or replacement of defective Software
media or materials only.
3. Standard Bench warranty means repaired by HP or an HP dealer at its
designated repair center.
4. Upgrade eligibility indicates Product warranty and installation coverage is
eligible to change to match the warranty coverage of the controlling
Product when ordered as a component of a system.
5. Lifetime parts warranty for an item that is warranted throughout the
support life of the Product in which it is used.
6. Products manufactured by another company and distributed by Hewlett-Packard
are not supported by HP. Support is provided by the original products
manufacturer. Software warranty services from HP are limited to replacement
of defective Software media or materials. Customer should contact and/or
register with the product manufacturer to receive any additional warranty
and support coverage information that may be available.
7. Unit Exchange warranty may return to the Customer a repaired exchange unit,
or their original product repaired to HP standards.
8. The Product may be replaced, repaired or the purchase price refunded if
found to be defective during the first thirty (30) years of use.
9. The Product may be replaced if found defective during the first ten (10)
years of use.
10. On site warranty with next day response is provided for the first year and
Standard Bench warranty is provided for two additional years. Standard
Bench warranty means repaired by HP or by an HP dealer at its designated
repair center.
11. Cooperative Support involves a sharing of responsibilities for replacement
parts inventory and on site product serving. Warranty 5V response is
limited to normal working hours. Warranty 5Y response is twenty-four (24)
hours a day, seven (7) days a week.
12. Unit exchange (see #7 above) warranty is provided for the first year and
Standard Bench warranty is provided for two additional years. Standard
Bench warranty means repaired by HP or an HP dealer at its designated
repair center.
13. Warranty coverage is available in all countries where HP has established
local support capabilities. Repairs of products configured to operate in a
different country may be subject to delays.
14. Module Exchange warranty may return to the Customer a refurbished module in
exchange for the Customer's original.
15. Response to a call for support is available seven (7) days a week. On site
response is provided by the next day after receiving a call requesting
warranty support.
16. Parts only warranty means HP will supply the Customer with a replacement
part in exchange for a defective one.
17. Five (5) year on site warranty is supplemented with a lifetime parts
warranty. Lifetime means HP will supply the Customer with a replacement
part in exchange for a defective one throughout the support life of the
Product. Some part restrictions apply.
18. The item is warranted against manufacturing defects in material or
workmanship only.
19. Warranty response is provided within two business days.
20. Shared warranty support responsibility with the original equipment
manufacturer. HP provides the initial contact for the Customer and works
with the original equipment manufacturer the same business day to supply
required warranty support if needed.
21. First year receives standard bench repair warranty coverage and years two
and three receive replacement parts warranty coverage only.
22. Responses are based on local standard business days and working hours.
Unless otherwise stated, all responses are measured from the time the
Customer calls until HP has either established a mutually acceptable time
for support to be performed, or HP has begun to provide on site support or
remote diagnostics.
23. First year receives standard On Site, Next Day warranty coverage and years
two and three receive replacement parts warranty coverage only.
24. Products manufactured by another company, distributed by HP and supported
by HP receive minimal warranty coverage of ninety (90) days parts only.
This warranty may be upgraded to one (1) year on site support.
25. Products is serviced on site and if found to be defective is exchanged for
a previously repaired unit by the HP authorized support engineer.
26. HP warrants that both the standard hardware and software will substantially
conform to published specifications.
27. Responses are measured from the time the Customer calls until HP has either
established a mutually acceptable time for support to be performed, or HP
has begun to provide on site support or remote diagnostics. 24 x 7 refers
to coverage hours of twenty-four (24) hours a day, seven (7) days a week.
28. Two (2) levels of warranty coverage are provided for specified intervals of
time. The two (2) levels can be described as follows: 1) On site support
supplied by the next business day; and 2) Parts only coverage without the
need to return the defective part.
29. Two (2) levels of warrant coverage are provided for specified intervals of
time. The two (2) levels can be described as follows: 1) On site support
supplied by the next business day; and 2) Parts only coverage excluding the
keyboard and mouse.
30. The Customer may accept parts only warranty (see footnote 16) or return the
product to the point of sale for warranty support.
31. HP warrants that the standard software will substantially conform to
published specifications.
32. Keyboard and mouse are covered for the first (1st) year only.
33. The Enhanced Parts Only service level means that HP will provide the
Customer with remote resolution assistance, parts diagnosis, replacement
part(s) in return for defective one(s), and remote part installation
assistance. At its option, HP may, but is not obligated to, repair the
product on site.
<PAGE>
6. RESPONSE TIMES
Response times for on site repair services are specified in the Response
Time Table below.
<TABLE>
<CAPTION>
RESPONSE TIME TABLE
ZONE NUMBER 1-3 3-5 6 Other
<S> <C> <C> <C> <C>
Distance (Miles/Km) 0-100/0-160 101-200/161-320 201-300/321/480
Classification Codes 2A 4 8 12 Quote
2B,2C,2G,4S,5L,5M,5R,5V & Coverage Coverage Coverage
9A Hours Hours Hours
Classification Codes 2D Next Day 2 3 Quote
2E,2F,2H,4G,4K,4L,4M,4Q Coverage Coverage Days Coverage Days
4T,5A,5B,5C,5F,5W,6A,6C,6D,
6N,6Q,6R,7C,7N,7P,7Q 8A,8H & 8J
Classification Codes 2J Within 3 3 3 Quote
5D,5G,5H,5J,5K,5S,5T,5U Coverage Coverage Days Coverage Days
6V,7U,7V & 7W Days
</TABLE>
7. INSTALLATION SERVICES
A. SITE PREPARATION
When this services is included in the purchase price of the Product, a
representative of HP will contact the Customer upon receipt of
Customer's purchase order to discuss site preparation requirements. This
may be accomplished either during an on site visit or by telephone, and
will encompass technical site planning, preparation and installation
requirements relevant to Customer's system. Customer will also receive
documentation or information characterizing the physical, electrical and
environmental requirements applicable to Customer's system, as well as
any other requirements obtained in the appropriate HP "Site Preparation
Manual" (when available) for the system.
B. SITE SURVEY
All installation sites must be approved by HP. Prior to the scheduled
delivery of Customer's system, an HP representative will verify that
the site has been prepared in conformance with the applicable "Site
Preparation Manual" (when available) and meets all electrical and
environmental requirements contained in the manual. This verification
may occur either on site or by telephone.
C. PURCHASE OF INSTALLATION SERVICES
Standard installation services are included in the price of some system
Products. These services may also be obtained from HP for Products or
systems which do not include these services in the purchase price of
the Product for additional cost which will be specifically quoted.
D. INSTALLATION OF SYSTEMS AND SELECTED COMPONENTS
When installation is included in the purchase price of a Product:
1) HP will install Customer's system(s) at a mutually agreed time
following notification by Customer that all Products of the
coordinated shipment have been delivered to the site and that the
site conforms to HP's requirements. Installation will be performed
during HP's normal business hours. Installations performed outside
of business hours at Customer's request may be subject to
additional charges.
2) HP systems, including all accessories, interfaces, peripherals and
terminals ordered with a system on a coordinated delivery and
included in HP's configuration guide and located at the system
site, will be installed by HP at no additional charge.
E. SOFTWARE INSTALLATION
Standard Software installation services consist of loading the
operating system and utilities included in the operating system
Software on the system and executing applicable verification tests.
Software that is Customer installable will be noted in the applicable
data sheet.
F. INSTALLATION RESPONSIBILITIES
During system installation, HP will perform the following tasks:
1. Supervise uncrating, positioning and racking of the following
Products;
2. Inventory the shipment against the packing list(s);
3. Physically interconnect the Products;
4. Check the primary power line voltage;
5. Connect line power to Products shipped with power cable and
connector; (1)
6. Install operating system and utilities
7. Execute turn-on procedures;
8. Perform electronic and mechanical adjustments;
9. Perform any repair which may be required to make the Products
operational; (2)
10. Execute standard HP diagnostic or verification programs and test;
Page 9 of 10
<PAGE>
11. Instruct operator on daily care and proper use of Product.
During system installation, Customer will perform the following tasks:
1. Receive, uncrate, rack or move the Products and dispose of the packing
materials;
2. Rerack or relocate the Products;
3. Reconfigure or regenerate Software systems;
4. Connect line power to Products delivered without power cable and
connector; (1)
5. May install products not supplied by HP;
6. Fabricate or pull cables;
7. Ensure that site, cable runs and power outlets conform to all local
fire and electrical codes;
8. Attach wall and ceiling mounts to building structure;
9. Reconfigure hardware system, including recabling or relocation of
existing products.
All of the above Customer tasks, except 4 and 8, may be performed by HP
for an additional charge and are subject to availability of resources.
NOTES:
1) Due to variations in local electrical codes, many Products are shipped
without power cables and connectors. These Products must be connected
to power by Customer's electrical contractor who is familiar with local
regulations.
2) Repairs made on Products covered by HP warranty will be accomplished at
no additional charge. Shipment damage related to a Customer initiated
relocation to shipment is not covered under warranty. For Products or
damage not covered by HP warranty, repairs will be made at Customer's
expense.
Page 10 of 10
<PAGE>
U.S. SOLUTIONS DIRECT RESELLER PROGRAM OPERATIONS POLICY MANUAL
INTRODUCTION
This Operations Policy Manual ("OPM") describes uniform HP policies applicable
across Products, channel segments, and Direct Resellers. This OPM applies to
all HP Channel Partners that have active purchase agreements containing the U.S.
Direct Resellers Program Exhibit. For convenience and consistency, this OPM
refers generally to "Direct Resellers".
HP has consolidated these policies in the OPM to ensure consistency and to
provide an efficient means for updating changes to HP's policies simultaneously
across all applicable channel segments. All capitalized terms used in this OPM
retain the meanings defined elsewhere in the Agreement, unless specifically
noted to the contrary.
<PAGE>
U.S. SOLUTIONS DIRECT RESELLER OPERATIONS POLICY MANUAL
TABLE OF CONTENTS
1. WARRANTY
2. SUPPORT
3. SOFTWARE LICENSING
4. RETURNS
5. CHANNEL PARTNER INSIGNIA
6. OBSOLETE, USED OR REFURBISHED UNITS
<PAGE>
U.S. SOLUTIONS DIRECT RESELLER OPERATIONS POLICY MANUAL
1. WARRANTY
A. WARRANTY STATEMENTS
1. HARDWARE. HP warrants hardware Products against defects in materials
and workmanship. HP further warrants that HP Products conform to Specifications
in effect on the date HP ships the Product.
2. DESIGNATED SOFTWARE AND FIRMWARE. HP warrants Software and Firmware
Products, which are designated by HP for use with a hardware Product and are
properly installed on that hardware Product, against failures to execute their
programming instructions due to defects in materials and workmanship.
3. HP OWNED STANDARD SOFTWARE. HP warrants that HP owned standard Software
will substantially conform to Specifications. HP does not warrant that Software
will operate in hardware and software combinations selected by Direct Reseller
and/or Customers, or that the operation of Products will be uninterrupted or
error free.
4. YEAR 2000. HP warrants that each HP hardware, Software and firmware
Product shipped by HP will be able to accurately process date data (including,
but not limited to, calculating, comparing, and sequencing) from, into, and
between the twentieth and twenty-first centuries, and the years 1999 and 2000,
including leap year calculations, when used in accordance with the Product
documentation provided by HP (including any instructions for installing patches
or upgrades), provided that all other products (e.g.hardware, software,
firmware) used in combination with such HP Product(s) properly exchange date
data with it. If the Specifications require that specific HP Products must
perform as a system in accordance with the foregoing warranty, then that
warranty will apply to those HP Products as a system, and warranty will apply
to those HP Products as a system, and warranty recipients retain sole
responsibility to ensure the Year 2000 readiness of their information
technology and business environments.
5. OTHER WARRANTIES. HP may provide Product specific warranties, either
with such Products or via the following HP web site:
http://partner.americas.hp.com/. HP revisions to such warranties will be
effective on the date specified by HP. These warranties will take precedence
over any conflicting terms contained in this Section 1.
B. WARRANTY PERIODS AND PASS THROUGH PROCESSES
1. WARRANTY PERIODS. Product warranty period and additional information
is available with Products, on quotations, or upon request. If Direct Reseller
does not pass through its HP warranties, the warranty period begins on the date
of Delivery, or the date of installation if installed by HP. If Customer
schedules or delays installation by HP more than thirty (30) days after
Delivery, the warranty period begins on the thirty-first (31st) day after
Delivery.
2. PASS THROUGH PROCESSES. Except as expressly provided in this
Agreement, Direct Reseller may pass through the warranties provided under the
Agreement to their end-user Customers, so long as such warranty terms and
conditions obligate HP to no greater than the following:
a. Warranty coverage for defective Products no greater than that
provided in this Warranty Section and any associated Product Exhibit or Product
Category.
b. Warranty exclusions and disclaimers no less than those set forth
in this Warranty Section and any associated product exhibit.
c. A duration of warranty expiring no later than the date of
expiration of HP's warranty as provided under this Agreement; and
d. Limitations of remedies and liability no less than those provided
in the Limitation of Remedies and Liability Section of this Agreement.
Direct Reseller must provide a copy of the currently effective HP
warranty to its end-user Customer prior to the downstream sale. A copy of the
current version of HP's Warranty and Installation Information(also known as
"E-26") is attached as an addendum to this Agreement and may be provided by
Direct Reseller to its end-user Customer, provided that Direct Reseller is
responsible for ensuring that it provides the current version of E-26. In
addition, Direct Reseller may provide more extensive warranty coverage to its
end-user Customers, so long as HP has no responsibility for fulfilling the
associated obligations.
3. PASS THROUGH WARRANTY PERIOD. Where Direct Reseller uses the pass
through processes described above, Products ordered by Direct Reseller and
temporarily retained in inventory are warranted beginning with the shipment date
from HP and ending with shipment to the end-user Customer, for a period not to
exceed one hundred eighty (180) days from date of original purchase from HP by
Direct Reseller. "User-Warranties" apply only to end-user purchasers of
Products. End-user Customer warranties begin upon purchase by the end-user
Customer and must be verified by proof of acquisition by such Customer.
4. YEAR 2000 WARRANTY PERIOD. The duration of the year 2000 warranty
set forth in subsection 1.A.4 above extends through January 31, 2001.
C. REMEDIES.
If HP receives notice of defects or no-conformance to the warranties
provided in this Agreement during the applicable warranty period, HP will, at
its option, repair, or replace the affected Products. If HP is unable, within a
reasonable time, to repair, replace or correct a defect or non-conformance in a
Product to a condition as warranted, Customer will be entitled to a refund of
the purchase price upon prompt return of the Product to HP. Customer will pay
expenses for return of such Products to HP. HP will pay expenses for shipment of
repaired or replacement Products.
D. WARRANTY EXCEPTIONS
1. HP does not warrant that the operation of Products will be
uninterrupted or error free.
2. The warranties provided in subsections 1.A. through 1.H. above do not
include periodic recalibration, recommended for some Products, unless
specifically covered in the warranty terms for such Products.
3. Some newly manufactured Products may contain, and in supporting such
Products HP may use, remanufactured
<PAGE>
parts which are equivalent to new in performance.
4. The Year 2000 warranty provided in subsection 1.A.4 above applies only
to branded HP Products and not to products manufactured by others that may be
sold or distributed by HP.
E. WARRANTY EXCLUSIONS
The warranties provided in subsections 1.A. through 1.H. above will not
apply to damages resulting from abuse, misuse, negligence, accident, loss or
damage in transit, or other Product warranty exclusion, or from attempted repair
by an unauthorized technician. Direct Reseller will reimburse HP for all
freight expenses for any of the foregoing Products returned to HP, or for any
returned Products determined by HP to be free from defect. Such HP Products may
be shipped back to Direct Reseller, and Direct Reseller will be responsible for
associated freight charges. Title to the Products and risk of loss will pass to
Direct Reseller at HP's shipping point (Free On Board at Origin, "F.O.B.
Origin").
F. WARRANT DISCLAIMERS
THE ABOVE WARRANTIES ARE SOLE AND EXCLUSIVE, AND NO OTHER WARRANTY,
WHETHER WRITTEN OR ORAL, IS EXPRESSED OR IMPLIED. HP SPECIFICALLY DISCLAIMS THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
2. SUPPORT
A. Direct Reseller may order Support from HP's then current Support
offering, which is set forth in the attached U.S. Solutions Support Options
Addendum. Orders for Support are subject to the terms of this Agreement,
including the Support Exhibit or quotation in effect on the date of order.
Direct Reseller is responsible for obtaining the agreement of its end-user
Customer with respect to any support obligations under this Agreement that
pertain to such Customer.
B. To be eligible for Support, Products must be at current specified
revision levels and, in HP's reasonable opinion, in good operating condition.
C. HP may, at no additional charge, modify Products to improve
operation, supportability and reliability, or to meet legal requirements.
D. Relocation of Products is the end-user Customer's responsibility.
Relocation may result in additional Support charges and modified service
response times. Support of Products moved to another country is subject to
availability.
E. HP will provide Support for products not supplied by HP when approved
by HP in writing. HP will provide Support for HP Products when the end-user
Customer allows HP to perform modifications if requested by HP under Section
2.C. above. Such Customer is responsible for removing any products not eligible
for Support to allow HP to perform Support services. If support services are
made more difficult because of such product(s), HP will charge such Customer for
the extra work at HP's standard rates.
F. Support does not cover any damage or failure caused by:
1. Use of non-HP media, supplies and other products, or
2. Site conditions that do not conform to HP's site specifications;
or
3. Neglect, improper use, fire or water damage, electrical
disturbances, transportation by Direct Reseller or its end-user Customer, work
or modification by people other than HP employees or subcontractors, or other
causes beyond HP's control; or
4. Inability of any non-HP products in the end-user Customer's
environment to correctly process, provide or receive date data (i.e
representations for month, day and year), and to properly exchange date data
with the products supplied by HP.
G. The end-user Customer is responsible for maintaining a procedure
external to the Products to reconstruct lost or altered customer files, data or
programs. Such customer will have a representative present when HP provides
Support services at Customer's site. Customer will notify HP if Products are
being used in an environment which poses a potential health hazard to HP
employees or subcontractors; HP may require Customer to maintain such Products
under HP supervision.
H. The end-user Customer may delete Products under Support or cancel
Support orders upon thirty (30) days written notice. Upon sixty (60) days
written notice, HP may cancel Support orders or delete Products no longer
included in HP's Support offering.
3. SOFTWARE LICENSING
A. Unless prior written consent is obtained from HP, Direct Reseller
will not copy or modify any materials supplied under this Agreement, except that
Software may be copied for archival purposes, to replace a defective copy, or
for program error verification. Direct Reseller will not remove, omit, or alter
any label or copyright notice on or in these materials.
B. Direct Reseller is granted the right to distribute Software and
related materials supplied by HP in accordance with the HP Software License
Terms in effect on the date of shipment by HP. The current version of the HP
Software License terms are attached as an addendum to this Agreement. Direct
Reseller may also use the materials for demonstration purposes in accordance
with those license terms.
1. Where an end-user agreement is supplied with the Software, the user
must sign the agreement or indicate acceptance by opening the media package in
order to obtain a license to use it. Use of the Software will be subject to the
terms of the agreement.
2. Where the Software is designated as confidential or a trade secret in
its license terms, Direct Reseller will safeguard the Software in accordance
with industry standards and applicable law, using the same degree of care to
prevent unauthorized disclosure as they use with their own trade secrets and
those of other suppliers.
C. Direct Reseller is granted a license to use certain electronic
configuration tools, subject to and in accordance with the terms and conditions
set forth in the attached HP Configuration Tools License and HP Software License
Terms.
4. RETURNS
A. INTRODUCTION
1. The procedures provided in this Agreement for return and repair,
replacement, or credit are the exclusive remedies of Direct Reseller for any
claim related to any alleged defect, nonconformity, or customer dissatisfaction
in Products.
2. Some Products may be returned under different terms and conditions
than those set forth in this Section 4; the terms and conditions applicable to
such Products are noted in the specific Product Exhibits and Program Exhibits
related to such Products.
B. DEFECTIVE UNIT RETURNS
1. Products eligible for defective unit returns are designated on the
Product Exhibits.
<PAGE>
C. Display of HP Marks is at all times subject to HP's standards,
policies and guidelines. HP reserves all rights under law or in equity for
misuse of HP trademarks.
6. OBSOLETE, USED OR REFURBISHED UNITS
A. HP may, from time to time, offer Direct Reseller obsolete, used or
refurbished Products and/or certain Products on special promotional terms. Such
purchases may be subject to discounts different than those shown in the Product
Exhibits, and on terms which may not include eligibility for Price Protection,
stock adjustment, promotional accrual fund allowance or credit towards Direct
Reseller's volume commitment levels.
<PAGE>
2. HP will repair, provide a replacement unit, or refund credit to Direct
Reseller, at HP's election, for any Product HP finds defective ("Defective
Unit Return"). Such Product must be on HP's then current, applicable Product
Exhibit, and Direct Reseller must be authorized under this Agreement to
resell such Product.
3. HP may inspect Defective Unit Returns to verify they are eligible for repair
or replacement. All packaging must be saved for inspection purposes so HP
can determine cause of defect. HP will not be obligated to repair, replace
or provide credit for Products returned as defective but damaged from abuse,
misuse, negligence, accident, loss or damage in transit, or other Product
warranty exclusion, or from attempted repair by an unauthorized technician.
Direct Reseller will reimburse HP for all freight expenses for any of the
foregoing Products returned to HP, or for any returned Products determined
by HP to be free from defect. Such HP Products may be shipped back to Direct
Reseller, and Direct Reseller will be responsible for associated freight
charges. Title to the HP Products and risk of loss will pass to Direct
Reseller F.O.B. Origin.
4. Prior to any return, Direct Reseller must verify the Product is eligible to
be returned. Direct Reseller must obtain a Return Material Authorization
("RMA") number by calling Direct Reseller's HP customer support
representative. Products may be shipped freight collect, using a carrier
designated by HP, and must be accompanied by a packing slip which identifies
the HP Product numbers, quantities, Direct Reseller's internal customer
tracking number, HP customer base number, number of boxes, and specifies
return as a Defective Unit Return. The RMA number must appear on the outside
of all boxes returned to HP and on the packing slip.
5. Direct Reseller is responsible for ensuring the Defective Unit Return is
properly packaged.
6. Direct Reseller must centralize Defective Unit Returns on behalf of their
Customers. HP will not accept Product returns from Direct Resellers who do
not have a valid direct buying Agreement for the specific Products they
return to HP.
7. Repaired and replaced Products will be covered for the balance of the
original HP warranty. In supporting such Products, HP repair personnel may
use remanufactured parts which are equivalent to new in performance.
8. Eligible Products must be returned to HP within ninety (90) days of original
shipment by HP to Direct Reseller. Products returned to Direct Reseller as
defective by end-user Customers more than ninety (90) days after HP's
general notice of obsolescence may be returned to HP only if the Products
are covered by HP's warranty and only for repair under the associated
warranty repair.
9. At HP's discretion, HP will repair or replace any Product to a condition as
warranted, or Direct Reseller will be entitled to a refund of the purchase
price upon return of the Product to HP.
10. Direct Reseller will contact HP to report defective Products, and will
encourage its end user Customers to do the same. In the event a Product
requires return to HP, the return must be made through Direct Reseller.
13. Defective Returns, combined with Customer Satisfaction Returns, may not
exceed the aggregate return cap of three percent (3%) of the HP shipments
to Direct Reseller during the previous Quarter. Quarters are calculated as
follows: February through April, May through July, August through October,
and November through January ("Quarters").
C. CUSTOMER SATISFACTION RETURNS
1. At HP's sole discretion, HP will provide credit to the Direct Reseller
for Products returned by dissatisfied end-user Customers ("Customer
Satisfaction Returns").
2. Products must be on HP's then current, applicable Product Exhibit, and
Direct Reseller must be authorized under this Agreement to resell such
Product.
3. HP will not accept defective or damaged Products as customer
satisfaction returns. Demonstration units, consignment units, and
remarketed Products are not included in the scope of this policy. All
software Products must be removed from any hardware Product prior to
its return to HP.
4. Prior to any return, Direct Reseller must verify the Product is
eligible to be returned. Direct Reseller must obtain an RMA number by
calling Direct Reseller's HP customer support representative for each
return. Products may be shipped freight collect, using a carrier
designated by HP and must be accompanied by a packing slip which
identifies the Product numbers, quantities, number of boxes, Direct
Reseller's internal customer tracking number, HP customer base number,
and specifies the return as a Customer Satisfaction Return. The RMA
number must appear on the packing slip, and on the outside of all boxes
returned to HP.
5. Direct Reseller is responsible for ensuring the Customer Satisfaction
Return is properly packaged.
6. HP must receive Customer Satisfaction Returns within forty-five (45)
days of the Direct Reseller's receipt of an RMA number.
7. HP will not accept Product returns Direct Resellers who do not have a
valid direct buying Agreement for the specific Products with HP.
8. HP will provide credit to Direct Reseller for Products returned by
dissatisfied Customers, provided that such Products shipped by HP
within the United States are returned to HP within sixty (60) days of
shipment to Direct Reseller or end-user Customers, or within ninety
(90) days of shipment by HP for Products shipped from outside the
United States. Product Returns for customer satisfaction purposes may
not exceed two percent (2%) of HP shipments to Direct Reseller during
the previous Quarter.
9. At HP's discretion, HP will repair or replace any Product to a
condition as warranted, or Direct Reseller will be entitled to a refund
of the purchase price upon return of the Product to HP.
10. Customer Satisfaction Returns, combined with Defective Returns, may not
exceed the aggregate Return Cap of three percent (3%) of the HP
shipments to Direct Reseller during the previous Quarter.
5. CHANNEL PARTNER INSIGNIA
A. Pursuant to Section 12 of the HP Reseller Business Terms, Direct
Reseller may identify itself as an HP Authorized Direct Reseller only
for those Products Direct Reseller is authorized to sell and only to
describe the relationship Direct Reseller has with HP.
B. Direct Reseller may describe itself as an "HP Channel Partner", and may
utilize the HP Mark known as the "HP Channel Partner Insignias", subject
to the usage guidelines provided by HP in connection with such insignia.
<PAGE>
EXHIBIT AV42
HP SURESTORE E DISK ARRAY MC256 PRODUCTS
A. Products listed on this Exhibit and applicable standard options that are
determined by HP to be available from HP upon acceptance of Reseller's order
earn discounts based on the total shipments by HP in accordance with the
following Discount Schedule(s) when purchased in accordance with the provisions
of this Agreement including all attachments. Custom Product and option discounts
are subject to agreement between Reseller and HP prior to each order. All
language versions of Products listed on this Exhibit qualify.
B. DISCOUNT
Each Product is categorized for discount rate into a "Discount Percentage
Schedule" column as shown in the "Products Subject to Discount" table.
Products categorized in discount column II, which is not reflected on the
following "Discount Percentage Schedule," will receive 0% discount.
_______________________________________________________________________________
DISCOUNT PERCENTAGE SCHEDULE
United States I
US Dollar Net
0- + 33.0
________________________________________________________________________________
C. SPECIAL TERMS
The following terms are required to take precedence over the indicated terms
contained in the HP Reseller Business Terms and current version of the
applicable Operations Policy Manual (OPM).
1) Add the following to section 6 of HP Reseller Business Terms, Orders And
Delivery, subsection (c) as follow: MC256 Products are classified as Custom
Products that are manufactured to meet Reseller's requirements and, are subject
to a return fee after shipment of up to five percent (5%) of list price if the
return occurs within one hundred twenty (120) days of the shipment date.
Products on this Exhibit receive no return credit after one hundred twenty (120)
days of the shipment date. Prior to any return, Reseller must obtain a Return
Materials Authorization ("RMA") number by calling Reseller's HP customer support
representative.
2) Clarify section 13 of HP Reseller Business Terms, Intellectual Property
Protection, subsection (a) as follows: MC256 Products are not considered Custom
Products for purposes of this section 13 and are included under the Intellectual
Property Protection section and subparagraphs.
3) Add the following to section 4 of OPM, Returns: MC256 Products are
classified as Custom Products that are manufactured to meet end-user customer's
requirements and are not qualified or covered for inventory adjustment programs.
D. ADDITIONAL OBLIGATIONS
Reseller agrees to comply with the following additional obligations with
respect to the Products sold under this Agreement.
1) Reseller must identify a central contact for HP business development,
information dissemination and problem resolution. The individual identified may
be an existing HP 9000 and/or HP 3000 contact.
2) Reseller must have at least one (1) sales representative per HP authorized
sales location, capable of representing Products in face-to-face selling to the
customer. The individual identified may be an existing HP 9000 and/or HP 3000
contact.
3) Reseller must have at least one (1) engineer capable of doing pre-sales
support for HP Products, according to the standards defined by HP.
In order to provide and maintain the appropriate HP Product
knowledge, above sales representatives and engineers must attend training as
offered and must be certified according to the criteria and guidelines defined
by HP.
4) Reseller will not actively market the MC256 Products identified in this
Exhibit for attachment solely to "System 390 Mainframe" (or compatible) computer
systems, or in end-user environments where the only type of computer system
attached or planned to be attached to the applicable MC256 Product is a System
390 Mainframe.
5) Reseller may, however, actively market MC256 Products identified in this
Exhibit for attachment to at least one computer system other than a System 390
Mainframe (or compatible) computer system.
6) Reseller may sell only those Products that correspond to the
certifications they have achieved.
7) Reseller must provide detailed end-user information to HP to ensure
appropriate installation and support services.
8) Reseller must notify its end-user customers that HP requires modem access
to Products supplied under this Exhibit, in order to facilitate warranty and
post-warranty support services. If modem access is denied, the
associated warranty will be deemed null and void.
9) Service processors for the Products supplied under this Exhibit may only
be accessed by HP personnel. In the event of access by any other will be deemed
null and void.
<PAGE>
PRODUCTS SUBJECT TO DISCOUNT
PRODUCT NUMBER COLUMN WTY DESCRIPTION
CODE
_________________________________________________________________
A5700A 1 NA
A5701A 1 1J
A5702A 1 1J
A5702U 1 1J
A5703A 1 1J
A5703U 1 1J
A5704A 1 1J
A5704U 1 1J
A5705A 1 1J
A5705U 1 1J
A5706A 1 1J
A5707A 1 1J
A5708A 1 1J
A5709A 1 1J
A5710A 1 1J
A5710U 1 1J
A5711A 1 1J
A5711U 1 1J
A5712A 1 1J
A5712U 1 1J
A5719A 1 1J
A5719U 1 1J
A5721L1 1 1J
A5721L2 1 1J
A5721R1 1 1J
A5721R2 1 1J
A5721U 1 1J
A5723L1 1 1J
A5723L2 1 1J
A5723R1 1 1J
A5723R2 1 1J
A5723U 1 1J
A5731S 1 1J
A5731U 1 1J
A5732U 1 1J
A5733S 1 1J
A5733U 1 1J
A5740A 1 1J
A5740U 1 1J
A5745A 1 1J
A5745U 1 1J
A5746A 1 1J
A5746U 1 1J
A5750A 1 1J
A5751A 1 1J
A5752A 1 1J
B7905A 1 NA
B7905AU 1 NA
B7906A 1 NA
B7906AU 1 NA
B7907A 1 NA
B7907AU 1 NA
B7908A 1 NA
B7908AU 1 NA
B7909A 1 NA
B7910A 1 NA
B7911A 1 NA
B7912A 1 NA
B7912AU 1 NA
B7913A 11 NA
B7914A 1 NA
B7914AU 1 NA
B7915A 1 NA
B7916A 1 NA
B7917A 1 NA
<PAGE>
EXHIBIT 10.20
LEASE AGREEMENT FOR OFFICE SPACE
LESSOR: JOHN L. McARDLE, JR.
LESSEE: EpicEdge
BUILDING NAME: McARDLE BUILDING
SUITE: 302B, 311 Ranch Road 620 South
CITY, STATE, ZIP: Austin, TX 7734
DATE OF LEASE: March 8, 2000
DATE OF LEASE COMMENCEMENT: March 8, 2000
1
<PAGE>
OFFICE SPACE LEASE
ARTICLE I
This is a Lease Agreement made and entered into between John L. McArdle,
Jr., hereinafter referred to as "Lessor," and, EpicEdge, as "Lessee," whether
one or more.
1.1 The Leased Premises. Lessor hereby leases to Lessee, and Lessee
hereby leases from Lessor, the "Leased Premises" which consists of all of the
following:
[a] Office Space. Exclusive rights to Suite 302B. The Street
Address of the building is 317 Ranch Road 620 South, Austin, Texas 78734.
[b] Interior Common Area. Non-exclusive rights to use the interior
common area located in the above-described building, i.e., areas normally
accessible to Lessees such as the hallways, stairwells, elevators, lobby, rest
rooms, and snack bar areas.
[c] Exterior Common Area. Non-exclusive rights to use the exterior
common area located outside the building on the above described land, i.e.,
loading areas, sidewalks, driveways, parking garage, parking areas, and other
open areas (if any). Lessee is entitled to one marked (at lessee's expense)
parking spot.
The term "leased premises" shall mean Lessee's office space and the common
area of which Lessee has non-exclusive use. The term "office space," "common
areas," "building," and "land," as used in this lease shall have the meanings
set forth above.
1.2 Use. Lessee's office space shall be used only for: General Office.
ARTICLE II
2.1 Base Rent. Lessee shall pay to Lessor a base rent of $291.60 per
calendar month.
2.2 Place and Time of Payment. All rents due under the lease are due upon
the execution of this Agreement, and may be paid in equal monthly installments
of $291.60, in advance, on the 1st day of each calendar month.
2.3 Late Payment of Rent. If any rent payment is not received by Lessor
within 5 days after its due date, Lessee shall pay a late charge of Five (5%) of
such rent payment, plus One (1%) of such rent payment for each day thereafter
(for up to Thirty days) until such rent is paid. Such late payment charges are
due immediately when incurred without notice or demand. All payments
2
<PAGE>
for any purpose shall be by check or money order, not cash. Lessee agrees to
pay $20.00 for each returned check. Payments of any kind received by Lessor on
behalf of Lessee shall be applied first to non-rent items, then to rent.
Payment of rent by Lessee shall be an independent covenant, without right of
set-off. Lessee's right of possession and all of Lessor's obligations hereunder
are expressly contingent on the prompt payment of rent, and the use of the
premises is obtained only on the condition that rent is paid on time. In the
event Lessee has not timely paid rentals and other sums due on two or more
occasions, or in the event of a returned check for insufficient funds or no
account, Lessor may for the next Twelve months require that all rent and other
sums due be paid by cashier's check, certified check, or money orders, without
prior notice.
ARTICLE III
3.1 Security Deposit. At the time of execution of this Lease, Lessee will
pay a deposit of $291.60 which secures performance of Lessee's obligations
under this lease during the initial term and renewal or extension periods. If
Lessee fails to pay rent or other sums when due, the security deposit may at
Lessor's option be applied to such unpaid amounts. If the security is drawn
against in whole or in part, Lessee shall restore the security deposit to its
original amount immediately upon written request by Lessor. The security
deposit (or an accounting thereof) shall be returned to Lessee within Thirty
days after surrender of the leased premises by Lessee, less lawful deductions
for damages and other sums due under this lease.
ARTICLE IV
4.1 Term, Commencement, and Anniversary. The initial lease term shall be
for SIX full calendar months from commencement date. The commencement date of
this lease shall be March 8, 2000, or the date Lessee occupies all of any part
of Lessee's office space, whichever occurs first and the lease shall terminate
on September 8, 2000. If Lessor delays in delivering possession until after the
above stated date, the commencement date shall be delayed until delivery of
possession. The annual anniversary date of this lease shall be the first day of
the first full month following commencement date.
4.2 Lessor Finish-Out. Lessor shall provide standard finish-out, if any,
in accordance with the work letter attached hereto. Costs of such finish-out
shall be paid pursuant to such exhibit.
ARTICLE V
5.1 Services to be Furnished by Lessor. (a) Lessor shall use all
reasonable efforts to furnish, subject to the Building Rules and Regulations
(hereinafter defined) and Lessee's
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<PAGE>
performance of its obligations hereunder, the following services:
(1) Air conditioning and heating of common areas in season, during
Normal Building Operating Hours (hereafter defined), at such temperatures and
in such amounts as are considered by Lessor to be standard.
(2) Water at those points of supply provided for lavatory and
drinking purposes only;
(3) Access to and egress from the Leased Premises;
(4) Lessor shall see that electric utilities are available at the
demised premises but Lessee shall pay all required deposits and monthly charges
for such services. Lessor shall also see that Lessee shall have full use of
air-conditioning and heating daily; air conditioning and heating of the Leased
Premises shall be at Lessee's cost.
(b) "Normal Building Operating Hours" shall be from 8:00 a.m. to 5:30
p.m. Monday through Friday, exclusive of "holidays". "Holidays" shall refer,
without limitation, to New Year's Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, Christmas Day, and other holidays commonly
observed by a majority of the Lessees of the Building.
(c) Failure by Lessor to any extent to furnish services hereunder or any
cessation thereof shall not render Lessor liable in any respect for damages to
either person or property, nor be construed as an eviction of Lessee, nor work
an abatement of Rent, nor relieve Lessee from fulfillment of any covenant or
agreement hereof. Should any of such services be interrupted, Lessor shall use
reasonable diligence to restore the same promptly, but Lessee shall have no
claim for rebate of Rent, damages, or eviction on account thereof.
5.2. Access by Lessee Prior to Commencement of Term. Lessor, at its
discretion, may permit Lessee and its employees, agents and suppliers to enter
the Leased Premises prior to the Commencement Date to enable Lessee to do such
things as may be required by Lessee to make the Leased Premises ready for
Lessee's occupancy. If such permission is granted, such parties will not
interfere with or delay the performance of any activities by Lessor or other
occupants of the Building. Lessor may withdraw such permission upon twenty-four
(24) hours notice to Lessee if Lessor determines that any such interference or
delay has been or may be caused. Any such entry into the Leased Premises shall
be at Lessee's risk and Lessor shall not be liable in any way for personal
injury, death, or property damages which may be suffered in or about the Leased
Premises or the Building by Lessee or its employees, agents, contractors,
suppliers or workmen, and Lessee hereby indemnifies
4
<PAGE>
Lessor therefrom.
5.3. Repair and Maintenance by Lessor. Lessor shall not be required to
make any improvements or repairs of any kind or character to the Leased Premises
or the Complex, except such repairs as may be required to the Building corridors
and lobbies and structural members of the Building, and such repairs as may be
deemed necessary solely by Lessor for normal maintenance operations for the
Complex. This Section 5.3 shall not apply in the case of damage or destruction
by fire or other casualty (as to which Section 7.2 shall apply), or damage
resulting from an eminent domain taking (as to which Section 7.1 shall apply).
ARTICLE VI
6.1. Payments by Lessee. Lessee agrees to timely pay the Rent and all
rents and sums provided to be paid to Lessor hereunder at the times and in the
manner herein provided and to at all times occupy and conduct business in the
Leased Premises.
6.2. Certain Taxes. Lessee shall pay all ad valorem taxes on all
improvements installed in the Leased Premises that are in excess of those
installed by Lessor from time to time as Building Standard or in excess of the
items to be installed by Lessor as Lessor's cost under the Work letter to be
specified in Section 4.2 hereof.
6.3. Repairs by Lessee. Lessee shall, at its cost, repair or replace any
damage to the Building and grounds, or any part thereof, caused by Lessee or
Lessee's agents, employees, Invitees or visitors, provided if Lessee fails to
make such repairs or replacements, the cost thereof shall be payable by Lessee
on demand as a part of the Rent hereunder, and failure of Lessee to pay such
costs within ten (10) days shall constitute a failure to pay Rent when due and
an Event of Default by Lessee hereunder.
6.4. Care of the Leased Premises. Lessee shall maintain the Leased
Premises in a clean, attractive condition, and not commit or allow any waste or
damage to be committed on or to any portion of the Leased Premises, and at the
expiration or termination of this Lease shall deliver the Leased Premises to
Lessor in as good condition as at date of possession by Lessee, ordinary wear
and tear excepted. Lessor will not provide janitorial services.
6.5. Lessee Floor Plans. Lessee shall cooperate with Lessor in the
preparation of space plans and working drawings for the Leased Premises.
5
<PAGE>
6.6. Assignment or Sublease. Lessee shall not assign this lease or
sublease the Leased Premises or any part thereof or mortgage, pledge or
hypothecate its leasehold interest or grant any concession or license within the
Leased Premises (any such assignments, subleases, mortgage, pledge,
hypothecation, or grant of a concession or license being hereinafter referred to
in this Section 4.06 as a "Transfer") without the prior express written
permission of Lessor, and any attempt to effect a Transfer without such
permission of Lessor shall be void and of no effect.
6.7. Alterations, Additions, Improvements. Lessee will make no
alteration, change, improvement, repair, replacement or addition to the Leased
Premises without the prior written consent of Lessor. Lessee may remove its
trade fixtures, office supplies and movable office furniture and equipment not
attached to the Building provided (i) such removal is made prior to the
termination or expiration of the Term; (ii) Lessee is not then in default in the
timely performance of any obligation or covenant under this Lease: and (iii)
Lessee promptly repairs all damage caused by such removal. All other property
at the Leased Premises and any alteration or addition to the Leased Premises and
any other articles attached or affixed to the floor, wall, or ceiling of the
Leased Premises is a part of the property of Lessor and shall be surrendered
with the Leased Premises as part thereof at the termination or expiration of
this Lease, without payment or compensation therefor. If, however, Lessor so
requests in writing, Lessee will, prior to termination or expiration of this
Lease, remove any and all alterations, additions, fixtures, equipment and
property placed or installed by Lessee or installed by Lessor at Lessee's
expense in the Leases Premises and will repair any damage caused by such
removal.
6.8. Compliance with Laws and Usage; Liens. Lessee, at its cost, shall
comply with all federal, state, municipal and other laws and ordinances
applicable to the Leased Premises and the business conducted therein by Lessee,
and with the Building Rules and Regulations; will not engage in any activity
which would cause Lessor's fire and extended coverage insurance to be cancelled
or the rate thereof to be increased (or, at Lessor's sole option, will pay any
such increase); and will not commit any act which is a nuisance or annoyance to
Lessor or to other Lessees in the Building or which might, in the exclusive
judgment of Lessor, appreciably damage Lessor's goodwill or reputation, or tend
to injure or depreciate the value of the Complex. Lessee has no authority to
encumber the Complex or Leased Premises with any lien, and Lessee shall not
suffer or permit any such lien to exist. Should any such lien hereafter be
filed, Lessee shall promptly discharge the same at its sole cost.
6.9. Access by Lessor. Lessee shall permit Lessor or its agents or
representatives to enter into and upon any part of the
6
<PAGE>
Leased Premises at all reasonable hours to inspect same, to clean, to make
repairs, alterations or additions thereto, as Lessor may deem necessary or
desirable, to show the Leased Premises to prospective purchasers or Lessees, or
for any other purpose deemed reasonable by Lessor; and Lessee shall not be
entitled to any abatement or reduction or Rent by reason thereof.
6.10 Subordination. This Lease and all rights of Lessee hereunder are
subject and subordinate to any mortgage or mortgages and any deed or deeds of
trust, blanket or otherwise, which are now or may hereafter be placed on the
Land and any and all increases, renewals, indemnifications, consolidation,
replacements and extension of any of such mortgages and deeds of trust. This
provision shall be self-operative and no further instrument shall be required to
effect subordination of this Lease. Lessee shall, however, upon demand at any
time or times, execute, and acknowledge and deliver to Lessor any and all
instruments and certificates that may be necessary or proper to more effectively
document the subordination of this Lease and all rights of Lessee hereunder to
any such mortgage or mortgages and/or deed or deeds of trust or to confirm or
evidence such subordination. In the event Lessee shall fail or neglect to
execute, acknowledge, and deliver any such subordination instrument or
certificate, Lessor, in addition to any other remedies it may have, may, as
Agent and Attorney-In-Fact of Lessee, execute, acknowledge and deliver the same
and Lessee hereby irrevocably nominates and constitutes and appoints Lessor as
Lessee's proper and legal Agent and Attorney-In-Fact for such purposes. Lessee
covenants and agrees, in the event any proceedings are brought for the
foreclosure of any such mortgage or if the Building be sold pursuant to any such
Deed of Trust, to attorn to the purchaser upon any such foreclosure sale or
trustee's sale if so requested by such purchaser and to recognize such purchaser
as the Lessor under this Lease. Lessee agrees to execute and deliver at any
time and from time to time, upon request of Lessor or of any holders of any
indebtedness or other obligation secured by any such mortgages and deeds of
trust any instrument or certificate which, in the sole judgment of Lessor or of
such holders, may be necessary or appropriate in any such foreclosure
proceedings or otherwise to evidence such attornment. Lessee hereby irrevocably
appoints Lessor and the holders of the indebtedness or other obligation secured
by the aforesaid mortgages and/or deeds of trust jointly and severally the
Agent and Attorney-In-Fact of Lessee to execute and deliver for and on behalf of
Lessee any such instrument or certificate. Lessee further waives the provisions
of any statute or rule of law, now or hereafter in effect, which may give or
purport to give Lessee any right to elect to terminate or otherwise adversely
affect this Lease and the obligations of Lessee hereunder in the event any such
foreclosure proceeding is brought or trustee's sale occurs, and agrees that this
Lease shall not be effected in any way whatsoever by any such foreclosure
proceeding or trustee's sale unless the holders of the
7
<PAGE>
indebtedness or other obligations secured by said mortgages and/or deeds of
trust shall declare otherwise.
Article VII
7.1. Condemnation, Loss or Damages. If the Leased Premises, Building, or
any part thereof shall be taken or condemned for any public purpose (or conveyed
in lieu or in settlement thereof) to such an extent as to render the remainder
of the Building or Leased Premises, in the opinion of Lessor, not reasonably
suitable for occupancy, this Lease shall, at the option of either party,
forthwith cease and terminate, and all proceeds from any taking or condemnation
of the Building and the Leased Premises shall belong to and be paid to Lessor.
If this Lease is not so terminated, Lessor shall repair any damage resulting
from such taking, to the extent and in the manner provided in Section 8.02, and
Base Rental hereunder shall be abated to the extent the Leased Premises are
rendered unleasable during the period of repair and thereafter be adjusted on an
equitable basis considering the areas of the Leased Premises taken and
remaining.
7.2. Damage by Fire or Other Casualty. If the Premises or any part
thereof shall be damaged by fire or other casualty, Lessee shall give prompt
written notice thereof to Lessor. In case the Building shall be so damaged by
fire or other casualty that substantial alteration or reconstruction of the
Building shall, in Lessor's sole opinion, be required (whether or not the
premises have been damaged by such fire or other casualty), or in the event any
mortgagee under a mortgage or deed of trust covering the Building should
require that the insurance proceeds payable as a result of said fire or other
casualty be used to retire the mortgage debt, Lessor, may, at its option,
terminate this Lease and the term and estate hereby granted by notifying Lessee
in writing of such termination within sixty (60) days after the date of such
damage, in which event the rent hereunder shall be abated, and this Lease shall
be deemed terminated, as of the date of such damage. In the event Lessor
decides to terminate this Lease and Lessee has paid rent for a one month period
subsequent to the deemed termination date, then Lessor shall refund a prorata
portion of such rental payment(s) within ten (10) days of such notice of
termination. If Lessor does not thus elect to terminate this Lease, Lessor
shall within seventy-five (75) days after the date of such damage commence to
repair and restore the Building and shall proceed with reasonable diligence to
restore the Building (except that Lessor shall not be responsible for delays
outside its control) to substantially the same condition in which the property
was in immediately prior to the happening of the casualty, except that Lessor
shall not be required to rebuild, repair or replace any improvement or additions
made to the Premises by Lessee or any part of Lessee's furniture, furnishings,
fixtures, equipment or other personal property unless such damage was caused by
Lessor's gross
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negligence or willful act. Lessor shall not be liable for any inconvenience or
annoyance to Lessee or injury to the business of Lessee resulting in any way
from such damage or the repair thereof, except that, subject to the provisions
of the next sentence, Lessor shall allow Lessee a fair diminution of rent during
the time and to the extent the Premises are unfit for occupancy. If the
premises or any other portion of the Complex be damaged by fire or other
casualty resulting from acts or omission of Lessee or any of Lessee's agents,
employees, or Invitees, the rent hereunder shall not be diminished during the
period of such damage, and Lessee shall be liable to Lessor for the cost and
expense of the repair and restoration of the Building caused thereby to the
extent such cost and expense is not covered by insurance proceeds, and also for
rents from other Lessees lost by Lessor, as well as all other damages allowed by
law.
7.3. Security Interest. In consideration for the mutual benefits arising
under this Lease, and as security for Lessee's performance of all its
obligations under this Lease, Lessee hereby grants to Lessor a lien and security
interest in and on all property of Lessee now or hereafter placed in or upon the
Leased Premises, and such property shall be and remain subject to such lien and
security interest of Lessor for payment of all rent and other sums agreed to be
paid by Lessee herein. The provisions of this Section 7.3 shall constitute a
security agreement under the Texas Uniform Commercial Code so that Lessor shall
have and may enforce a security interest on all property of Lessee now or
hereafter placed in or on the Leased Premises, including, but not limited to all
fixtures, machinery, equipment, furnishing and other articles of personal
property now or hereafter placed in or upon the Leased Premises by Lessee.
Lessor may, at its election, at any time file a copy of this Lease as a
financing statement. Lessor, as secured party, shall be entitled to all of the
rights and remedies afforded to a secured party under the Texas Uniform
Commercial Code, which rights and remedies shall be in addition to and
cumulative to the Lessor's liens and rights provided by law or by the other
terms and provisions of this Lease. Promptly upon request, and without further
consideration, Lessee agrees to execute as debtor such additional financing
statement or statements as Lessor may now or hereafter reasonably request in
order that Lessor's security interests may be protected by the Texas Uniform
Commercial Code.
7.4. Holding Over. If Lessee should remain in possession of the Leased
Premises after the termination or expiration of the Term without the execution
by Lessor and Lessee of a new lease, then Lessee shall be deemed to be occupying
the Leased Premises as a Lessee-at-sufferance, subject to all the covenants and
obligations of this Lease, except that the daily Rent shall be twice the per day
Rent in effect immediately prior to such expiration or termination, but such
holding over shall not extend
9
<PAGE>
the Term.
7.5. Assignment by Lessor. Lessor shall have the right to transfer and
assign, in whole or in part, all its rights and obligations hereunder and in the
Building and property referred to herein, and upon any such transfer or
assignment, no further liability or obligation shall thereafter accrue against
Lessor hereunder.
7.6. Recourse Limitation. Lessee specifically agrees to look solely to
Lessor's interest in the Building for the recovery of any judgment from Lessor,
it being agreed that Lessor shall never be personally liable for any such
judgment. The provision contained in the foregoing sentence shall not limit any
right that Lessee might otherwise have to obtain injunctive relief against
Lessor.
7.7. Control of Common Areas and Parking Facilities by Lessor. All
automobile parking areas including (without limitation), driveways, entrances,
and exits thereto, and other facilities furnished by Lessor, including all
parking areas, truck ways, loading areas, pedestrian walkways, ramps, landscaped
areas, stairways and other areas and improvements provided by Lessor for the
general use, in common, of Lessees, their officers, agents, employees, Invitees,
licensees, visitors and customers shall be at all times subject to the exclusive
control and management of Lessor, and Lessor shall have the right from time to
time to establish, modify and enforce reasonable rules and regulations (herein
called the "Building Rules and Regulations") with respect to all facilities and
areas mentioned in this Section. The initial Building Rules and Regulations are
set out in the Addendum attached hereto.
7.8. Default By Lessee. If Lessee defaults in the payment of rent, or any
additional rent, or defaults in the performance of any of the other covenants or
conditions hereof, Lessor may, at its option and without further written notice
to Lessee, in addition to all the other remedies given hereunder or by law or
equity, do any one or more of the following:
[1] Terminate this Lease, in which event Lessee shall immediately
surrender possession of the Leased Premises to Lessor;
[2] Enter upon and take possession of the Leased Premises and expel
or remove Lessee and any other occupant therefrom with or without having
terminated the Lease;
[3] Apply all or any portion of the Security Deposit to cure such
Event of Default; and
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<PAGE>
[4] Alter locks and other security deposits at the Leased Premises.
(A) Exercise by Lessor of any one or more remedies shall not constitute
an acceptance of surrender of the Leased Premises by Lessee, it being understood
that such surrender can be effected only by the written agreement of Lessor and
Lessee.
(B) If Lessor terminates this Lease by reason of an Event of Default,
Lessee shall pay to Lessor the sum of all Rent and other indebtedness accrued
hereunder to the date of such termination, the amounts stated in Section 7.08(f)
hereof, plus, as liquidated damages, an amount equal to the then present value
of the Rent and all other indebtedness as would otherwise have been required to
be paid by Lessee to Lessor during the period following the termination of the
Term measured form the date of such termination to the date of expiration stated
in Section 1.02, less the then present fair market rental value of the Leased
Premises for such period; because of the difficulty of ascertaining the fair
market rental value of the Leased Premises and the costs and time associated
with reletting the Leased Premises, the Lessor and Lessee stipulate that such
fair market rental value shall in no event be deemed to exceed seventy-five
(75%) of the then present value of the Rent reserved for such period.
(C) If Lessor repossesses the Leased Premises without terminating the
Lease, then Lessee shall pay to Lessor all Rent and other indebtedness accrued
to the date of such repossession, plus Rent and other sums required to be paid
by Lessee during the remainder of the Term, diminished by any net sums
thereafter received by Lessor through reletting the Leased Premises during said
period (after deducting expenses incurred by Lessor as provided below); reentry
by Lessor will not affect the obligations of Lessee for the unexpired Term.
Lessee shall not be entitled to any excess of any Rent obtained by reletting
over the Rent herein reserved. Actions to collect amounts due by Lessee may be
brought on one or more occasions, without the necessity of Lessor's waiting
until expiration of the Term.
(D) In case of an Event of Default, to the extent the same were not paid
or deducted, as appropriate, under Section 7.08(b) or (c), Lessee shall also pay
to Lessor: all costs and expenses incurred by Lessor in enforcing Lessor's
remedies, including reasonable attorney's fees and costs.
(E) Upon termination or repossession of the Leased Premises for an Event
of Default, Lessor shall not be obligated to relet or attempt to relet the
Leased Premises, but Lessor shall have the option to relet or attempt to relet.
In the event of reletting,
11
<PAGE>
Lessor may relet the whole or any portion of the Leased Premises for any period,
to any Lessee, and for any use an purpose.
(F) If Lessee should fail to make any payment, perform any obligation, or
cure any default hereunder, Lessor may at its sole option, make such payment,
perform such obligation, and/or remedy such other default for the account of
Lessee (and enter the Leased Premises for such purpose), and Lessee shall pay
upon demand all costs, expenses and disbursements (including reasonable
attorney's fees) incurred by Lessor in taking such remedial action, plus
interest thereon at the highest rate of interest permitted by law.
7.9 Non-Waiver. No failure to enforce any term shall be deemed to be a
waiver of any Lessor's rights hereunder.
7.10 Time of Essence. In all instances where any act is required at a
particular indicated time or within an indicated period, it is understood and
stipulated that time is of the essence.
7.11 Remedies Cumulative. Lessor may restrain or enjoin any breach or
threatened breach of any covenant, duty, or obligation of Lessee herein
contained without the necessities or proving the inadequacy of any legal remedy
or irreparable harm. The remedies of Lessor hereunder shall be deemed
cumulative and no remedy of Lessor, whether exercised by Lessor or not, shall be
deemed to be in exclusion of any other.
7.12 Insurance, Subrogation, Liability, Indemnity, and Waiver.
(a) Lessee shall maintain at its sole expense fire and extended coverage
insurance with vandalism and Malicious mischief endorsements and a sprinkler
leakage endorsement (where applicable), on all of its personal property,
including removable trade fixtures, located in the Leased Premises on
non-Building Standard leasehold improvements and all additions and improvements
made by Lessee.
(b) Lessee shall, at its sole expense, maintain in effect at all times
comprehensive general liability insurance, including contractual liability
coverage, naming Lessor as an additional insured, issued by and binding upon
some solvent insurance company authorized to do business in Texas and
satisfactory to Lessor, with bodily injury limits of not less than $500,000.00
for each occurrence and property damage liability limits of not less than
$100,000.00 for each occurrence. Lessee shall provide to Lessor (i) copies of
such insurance policies prior to the Commencement Date of the Term, (ii)
certificates of renewal at least thirty (30)
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<PAGE>
days prior to the expiration date of any such policies, and (iii) copies of new
policies at least thirty (30) days prior to terminating, or changing insurance
companies for, any such policies.
(c) Anything herein to the contrary notwithstanding, each party hereto
hereby releases and waives all claims, rights of recovery, and causes of action
that either party or any party claiming by, through, or under such party by
subrogation or otherwise, may now or hereafter have against the other party or
any of the other party's partners, directors, officers, or employees or agents
for any loss or damage that may occur to the Complex, Leased Premises, Lessee
improvements, or any of the contents of any of the foregoing by reason of fire
or other casualty, or any other cause except gross negligence or willful
misconduct (but including negligence of the parties hereto or their partners,
directors, officers, employees, or agents) that could have been insured against
under the terms of (i) any standard fire and extended coverage insurance
policies required under the terms of this Lease, or (ii) any other loss covered
by insurance required to be maintained under the terms of this Lease; provided,
however, that this waiver shall be ineffective against any insurer of Lessor or
Lessee to the extent that such waiver (i) is prohibited by the law and insurance
regulations of The State of Texas, or (ii) would invalidate any insurance
coverage of Lessor or Lessee. The waiver set forth in this Section 7.12(c)
shall not apply to any deductibles on policies carried by Lessor not to any
coinsurance penalty which Lessor might sustain.
(d) Except for any of the claims, rights of recovery, and causes of
action that Lessor has released and waived pursuant to Section 5.12(c), Lessee
hereby releases, indemnified, defends, and holds harmless Lessor and Lessor's
partners, agents, directors, officers, employees, Invitees, and contractors,
form all claims, losses, costs, damages or expenses (including, but not limited
to, attorney's fees) resulting or arising from any and all injuries or death of
any person or damage to any property occurring during the Term caused or alleged
to have been caused by any act, omission, or neglect of Lessee or Lessee's
directors, officers, employees, agents, Invitees or guests, or any parties
contracting with Lessee relative to the Leased Premises.
(e) Lessee and Lessor agree that each shall not be responsible or liable
to the other, or to their agents, customers, or Invitees, for bodily injury,
(fatal or non-fatal) or property damage occasioned by the acts or omissions of
any other Lessee or any other Lessee's employees, agents, contractors,
customers or Invitees within the Complex, or for any loss or damage to any
property or persons occasioned by theft, fire, act of God, public enemy,
injunction, riot, strike, insurrection, war, court order, requisition or order
of any governmental body or authority, (except
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<PAGE>
Addendum to Lease
for
EpicEdge, Inc.
1. Lessee can cancel the lease any time, during the six month period, with
a 30 day notice.
<PAGE>
"Lessor or Lessor's Representative"
By: /s/ John McArdle
-----------------------------------
John McArdle
325 Ranch Road 620 South, Ste. 200
Austin, Texas 78734-4732
(512) 263-2110
"Lessee"
EpicEdge
By: /s/ Heather Crouch
-----------------------------------
EpicEdge
(512) 261-3346
(Signature page to Lease Agreement dated March 8, 2000, between John L. McArdle,
Jr. as Lessor, and EpicEdge, as Lessee.
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<PAGE>
EXHIBIT 10.21
TEXAS ASSOCIATION OF REALTORS
COMMERCIAL LEASE
This lease agreement is made and entered into by and between CONTI
BUILDING LTD (Landlord) and COAD SOLUTIONS (Tenant). Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord that certain property with the
improvements thereon, containing approximately 263 square feet, hereinafter
called the "leased premises", known as TEJAS CONTI BUILDING 1150 Lakeway Dr. Ste
218 & 219 (Address), Lot________, Block________, ___________Addition, City of
LAKEWAY, TRAVIS County, Texas; or as more particularly described below or on
attached exhibit:
The primary term of this lease shall be 1 YEAR commencing on the 1ST day
of JANUARY, 1999, and ending on the 31ST day of DECEMBER 1999,______, upon the
following terms, conditions, and covenants:
1. TAXES. each year during the term of this lease, Landlord shall pay real
estate taxes assessed against the leased premises in an amount equal to the
total real estate taxes assessed against the leased premises in the base year.
Each year during the term of this lease, Tenant shall pay as additional rental,
upon receipt of a statement from Landlord together with tax statements or other
verification from the proper taxing authority, his pro rata share of any
increase in real estate taxes over the base year on the property of which the
leased premises is part. Any increase in real estate taxes for a fractional
year shall be prorated. The base year shall be ________________.
2. UTILITIES. Tenant shall pay all charges for utility service to the leased
premises except for WATER/WASTE WATER which will be paid by the Landlord.
3. HOLDING OVER. Failure of Tenant to surrender the leased premises at the
expiration of the lease constitutes a holding over which shall be constructed as
a tenancy from month to month at a rental of $BASERENT +100 per month.
4. RENT. Tenant agrees to and shall pay Landlord at 2101 LAKEWAY BLVD., County
of TRAVIS, Texas, or at such other place Landlord shall designate from time to
time in writing, as rent for leased premises, the total sum of $7878.00, payable
without demand in equal monthly payments of $656.00 each in advance on or before
the 1ST day of each month, commencing on JANUARY 1, 1999, and continuing
thereafter until the total sum shall be paid. Adjustments to the rent, if any,
for rent, escalators, for percentage of net rent, or for increases in building
operation costs (including but not limited to insurance, custodial services,
maintenance and utilities) shall be as set forth in an attached addendum. Rent
received after the first day of the month shall be deemed delinquent. If rent
is not received by Landlord by the 5TH of each month, Tenant shall pay a late
charge of $25.00 plus penalty of $25.00 per day until rent is received in full.
Tenant shall pay $25.00 for each returned check.
5. USE. Tenant shall use the leased premises for the following purpose and no
other: GENERAL OFFICE SPACE
6. SECURITY DEPOSIT. Tenant shall pay the Landlord a security deposit in the
sum of $829.60, payable on or before the commencement of this lease for Tenant's
faithful performance hereunder. Refund therof shall be made upon performance of
this lease agreement by Tenant, minus any assessments or damages unless Landlord
and Tenant provide otherwise in Special Provisions.
7. INSURANCE. LANDLORD shall pay for fire and extended coverage insurance on
the buildings and other improvements on the leased premises in an amount not
less than $1,000,000.00, which amount shall be increased yearly in proportion to
the increase in market value of the premises. If Landlord provides any
insurance herein, Tenant shall pay to Landlord, during the term hereof, the
amount of any increase in premiums for the insurance required over and above
such premiums paid during the first year of this lease. Tenant shall provide
public liability and property damage insurance for its business operations on
the leased premises in the amount of $__________ which policy shall cover the
Landlord as well as the Tenant. Said insurance policies required to be provided
by Tenant herein shall name Landlord as an insured and shall be issued by an
insurance company approved by Landlord. Tenant shall provide Landlord with
certificates of insurance evidencing the coverage required herein. Tenant shall
be solely responsible for fire and casualty insurance on Tenant's property on or
about the leased premises. If Tenant does not maintain such insurance in full
force and effect, Landlord may notify Tenant of such failure and if Tenant does
not deliver to Landlord within 15 days after such notice certification showing
all such insurance to be in full force and effect, Landlord may at his option,
take out the necessary insurance to comply with the provision hereof and pay the
premiums on the items specified in such notice, and Tenant covenants thereupon
on demand to reimburse and pay Landlord any amount so paid or expended in the
payment of the insurance premiums required hereby and specified in the notice,
with interest thereon at the rate of 10% percent per annum from date of such
payment by Landlord until repaid by Tenant.
8. CONDITIONS OF PREMISE. Tenant has examined and accepts the leased premises
in its present as is conditions as suitable for the purpose for which the same
are leased, and does hereby accept the leased premises regardless of reasonable
deterioration between the date of this lease and the date Tenant begins
occupying the leased premises unless Landlord and Tenant agree to repairs or
refurbishment as noted in Special Provisions.
9. MAINTENANCE AND REPAIRS. Landlord shall keep the foundation, the exterior
walls (except glass; windows; doors; door closure devices; window and door
frames, molding, locks, and hardware; and interior painting or other treatment
of exterior walls), and the roof of the leased premises in good repair except
that Landlord shall not be required to make any repairs occasioned by the act or
negligence of Tenant, its employees, subtenants, licensees and concessionaires.
LANDLORD is responsible for maintenance of the common area and common area
equipment. If Landlord is responsible for any such repair and maintenance,
Tenant agrees to give Landlord written notice of needed repairs. Landlord shall
make such repairs within a reasonable time. Tenant shall notify Landlord
immediately of any emergency repairs. Tenant shall keep the leased premises in
good, clean condition and shall at its sole cost and expense, make all needed
repairs and replacements, including replacement of cracked or broken glass,
except for repairs and
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<PAGE>
replacements required to be made by Landlord under this section. If any repairs
required to be made by Tenant hereunder are not made within ten (10) days after
written notice delivered to Tenant by Landlord, Landlord may at its option make
such repairs without liability to Tenant for any loss or damage which may result
by reason of such repairs, and Tenant shall pay to Landlord upon demand as
additional rent hereunder the cost of such repairs plus interest. At termination
of this lease Tenant shall deliver the leased premises in good order and
condition, reasonable wear and tear excepted.
10. ALTERATIONS. All alterations, additions and improvements, except trade
fixtures, installed at expense of Tenant, shall become the property of Landlord
and shall remain upon and be surrendered with the leased premises as a part of
thereof on this lease. Such alterations, additions and improvements may only be
made with prior written consent of Landlord, which consent shall not be
unreasonably withheld. If consent is granted for the making of improvements or
alterations to the leased premises, such improvements and alterations shall not
commence until Tenant has furnished to Landlord a certificate of insurance
showing coverage in an amount satisfactory to Landlord protecting Landlord from
liability for injury to any person and damage to any personal property, on or
off the leased premises, in connection with the making of such improvements or
alterations. No cooling tower, equipment, or structure of any kind shall be
placed on the roof or elsewhere on the leased premises by Tenant without prior
written permission of Landlord. If such permission is granted, such work or
installation shall be done at Tenant's expense and in such a manner that the
roof shall not be damaged thereby. If it becomes necessary to remove such
cooling tower, equipment or structure temporarily, so that repairs to the roof
can be made, Tenant shall promptly repair at its expense any damages resulting
from such removal. At the termination of this lease, Tenant shall deliver the
leased premises in good order and condition, natural deterioration only
excepted. Any damage caused by the installation or removal of trade fixtures
shall be repaired at Tenant's expense prior to the expiration of the lease term.
All alterations, improvements, additions, and repairs made by Tenant shall be
made in good workmanlike manner.
11. COMPLIANCE WITH LAWS AND REGULATIONS. Tenant shall, at its own expense,
comply with all laws, orders, and requirements of all governmental entities with
reference to the use and occupancy of leased premises. Tenant and Tenant's
agents, employees and invitees shall fully comply with any rules and regulations
governing the use of the buildings or other improvements to the leased premises
as required by Landlord. Landlord may make reasonable changes in such rules and
regulations from time to time as deemed advisable for the safety, care and
cleanliness of the leased premises, provided same are in writing and are not in
conflict with the lease.
12. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this lease nor sublet
the leased premises or any interest therein without first obtaining the written
consent of Landlord. An assignment or subletting without the written consent of
Landlord shall be void and shall, at the option of Landlord, terminate this
lease.
13. DESTRUCTION. In the event the leased premises is partially damaged or
destroyed or rendered partially unfit for occupancy by fire or other casualty,
Tenant shall give immediate notice to Landlord. Landlord may repair the damage
and restore the leased premises to substantially the same condition as
immediately prior to the occurrence of the casualty. Such repairs shall be made
at Landlord's expense unless due to Tenant's negligence. Landlord shall allow
Tenant a fair reduction of rent during the time the leased premises are
partially unfit for occupancy. If the leased premises are totally destroyed
or deemed by Landlord to be rendered unfit for occupancy by fire or other
casualty, or if Landlord shall decide not to repair or rebuild, this lease shall
terminate and the rent shall be paid to the time of such casualty.
14. TENANT DEFAULT AND REMOVAL OF ABANDONED PROPERTY. If Tenant abandons the
premise or otherwise defaults in the performance of any obligations or covenants
herein, Landlord may enforce the performance of this lease in any manner
provided by law. This lease may be terminated at Landlord's discretion if such
abandonment or default continues for a period of 10 days after Landlord notifies
Tenant of such abandonment or default and of Landlord's intention to declare
this lease terminated. Such notice shall be sent by Landlord to Tenant to
Tenant's last known address by certified mail. If Tenant has not completely
removed or cured default within the 10-day, this lease shall terminate.
Thereafter, Landlord or its agents shall have the right, without further notice
or demand, to enter the leased premises and remove all property without being
deemed guilty of trespass and without waiving any other remedies for arrears of
rent or breach of covenant. Upon abandonment or default by the Tenant, the
remaining unpaid portion of the rental from paragraph 4 herein, shall become due
and payable. For purposes of this section, Tenant is presumed to have abandoned
the premises if goods, equipment, or property, in an amount substantial enough
to indicate a probable intent to abandon the premises, is being or has been
removed from the premises and removal is not within the normal course of
Tenant's business. Landlord shall have the right to store any property of Tenant
that remains on premises that are abandoned; and, in addition to Landlord's
other rights, Landlord may dispose of the stored property if Tenant does not
claim the property within 60 days after the date the property is stored,
provided Landlord delivers by certified mail to Tenant at Tenant's last known
address a notice stating that Landlord may dispose of Tenant's property if
Tenant does not claim property within 60 days after the date property is stored.
15. INTERRUPTION OF UTILITIES. Landlord or Landlord's agent may not interrupt or
cause the interruption of utility service paid directly to the utility company
by Tenant unless interruption results from bona fide repairs, construction, or
an emergency. If any utility services furnished by Landlord are interrupted and
continue to be interrupted despite the good faith efforts of Landlord to remedy
same, Landlord shall not be liable in any respect for damages to the person or
property of Tenant of Tenant's employees, agents, or guests, and same shall not
be constructed as grounds for constructive eviction or abatement of rent.
Landlord shall use reasonable diligence to repair and remedy such interruption
promptly.
16. EXCLUSION OF TENANT. Landlord may not intentionally prevent Tenant from
entering the leased premises except by judicial process unless the exclusion
results from:(a) bona fide repairs, construction, or an emergency: (b) removing
the contents of premises abandoned by Tenant: (c) changing the locks of Tenant
in the event Tenant is delinquent in paying at least part of the rent. If
Landlord or Landlord's agent changes the door lock of Tenant, in the event
Tenant is delinquent in paying rent, Landlord or Landlord's agent must place a
written notice on Tenant's front door stating the name and address or telephone
number of the individual or company from which the new key may be obtained. The
new key is required to be provided only during Tenant's regular business hours.
17. LIEN. Landlord is granted an express contractual lien, in addition to any
lien provided by law, and a security interest in all property of Tenant found on
the leased premises to secure the compliance by Tenant with all terms of the
lease.
18. SUBORDINATION. Landlord is hereby irrevocably vested with full power and
authority to subordinate this lease to any mortgage, deed of Trust, or other
lien hereafter placed on the demised premises and Tenant agrees on demand to
execute such further instruments subordinating this lease as Landlord may
request, provided such subordination shall be on the express condition that this
lease shall be recognized by the mortgagee, and the rights of Tenant shall
remain in full force and effect during the term of this lease so long as Tenant
shall continue to perform all of the covenants and conditions of this lease.
19. INDEMNITY. Landlord and its employees and agents shall not be liable to
Tenant or to Tenant's employees, patrons, visitors, invitees, or any other
persons for an injury to any such persons or for any damage to personal property
caused by an act, omission, or neglect of Tenant or Tenant's agents or any other
tenant of the premises of which the leased premises is a part. Tenant agrees to
indemnify and hold Landlord and its employees and agents harmless from any and
all claims for such injury and damages, whether the injury occurs on or off the
leased premises.
20. SIGNS. Tenant shall not post or paint any signs at, on, or about the
leased premises or paint the exterior walls of the building except
Page 2 of 4
<PAGE>
with the prior written consent of the Landlord. Landlord shall have the right
to remove any sign or signs in order to maintain the leased premises or to make
any repairs or alterations thereto.
21. TENANT BANKRUPTCY. If Tenant becomes bankrupt or makes voluntary
assignment for the benefit of creditors or if a receiver is appointed for
Tenant, Landlord may terminate this lease by giving five (5) days written notice
to Tenant of Landlord's intention to do so.
22. CONDEMNATION. If the whole or any substantial part of the leased premises
is taken for any public or quasi-public use under any governmental law,
ordinance or regulation or by right of eminent domain or should the leased
premises be sold to a condemning authority under threat of condemnation, this
lease shall terminate and the rent shall be abated during the unexpired portion
of the lease effective from the date of the physical taking of the leased
premises.
23. HAZARDOUS MATERIALS. Landlord warrants and represents that the Property does
not contain "Hazardous Materials", as that phrase is defined herein. For purpose
of this provision, the phrase "Hazardous Materials" shall mean and include any
toxic contaminants or other hazardous materials including, without limitation
asbestos, PCB, transformers, underground storage containers, materials
containing any radioactive substances, petroleum base products, paints,
solvents, lead, cyanide, DDT, acids, pesticides, ammonium compounds, and any
other substance forming a component part of the improvements which has
heretofore or may in the future be determined to contain toxic wastes, hazardous
materials, or undesireable substances injurious to the health of occupants
living or working in or around the subject Property. Landlord acknowledges that
current, past, and future federal, state, and local laws and regulations may
have had or continue to have interest in the Property including, but not limited
to, current, past and future owners and users, including tenants, of the
Property. The cost and expense of such clean up may be substantial. Landlord
further acknowledges that the Real Estate Brokers and their agents involved in
the negotiation of this transaction have no expertise with respect to any such
Hazardous Materials. Landlord acknowledges and agrees that Landlord shall look
solely to experts and professionals selected by Landlord to advise Landlord with
respect to the condition of the Property and shall not hold the Real Estate
Brokers or their agents responsible for Hazardous Materials condition or problem
relating to the Property. Landlord hereby agrees to indemnify, defend, and hold
the Real Estate Brokers and their agents participating in this transaction
harmless of and from any and all liability, claim, debt, damage, cost, or
expense, including reasonable attorneys' fees, related to or arising out of in
any way connected to Hazardous Materials and/or toxic wastes and/or any other
undesirable substances affecting the Property.
24. BROKER'S FEE. NA Broker and NA Co-Broker, as Real Estate Broker (the
Broker), has negotiated this lease and Landlord agrees to pay Broker in NA
County, Texas upon commencement of this lease, a negotiated fee of $ 0 or 0% of
the total rental provided for in this lease to be divided as follows: NA. In
the event this lease is extended, expanded or renewed, Landlord agrees to pay
Broker an additional negotiated fee of $0 or 0% of the total rental for such
extension, expansion or renewal period, payable at the time of commencement of
such extension, expansion or renewal, said fee to be divided as follows: NA.
Tenant warrants that it has had no dealings with any real estate broker or
agents in connection with the negotiation of this lease excepting only TEJAS
LAKEWAY REAL ESTATE and it knows of no other real estate broker or agent who is
entitled to a commission in connection with this Lease. If Tenant during the
term of this Lease, or any extension or renewal period thereof or within _____
days of the expiration of this Lease, or any extension, expansion or renewal
period thereof, purchases the property herein leased. Landlord agrees to pay
Broker, NA in NA County, Texas, a negotiated fee of $0 or 0% of the sales price
upon closing of the sale of this property.
25. NOTICES. Notices to Tenant shall be certified mail or other delivery to
the leased premises. Notices to Landlord shall be by certified mail to the
place where rent is payable.
26. DEFAULT BY LANDLORD. In the event of breach by Landlord of any covenant,
warranty, term or obligation of this lease, then Landlord's failure to cure same
or commence a good faith effort to cure same within 10 days after written notice
thereof by Tenant shall be considered a default and shall entitle Tenant either
to terminate this lease or cure the default and make the necessary repairs and
any expense incurred by Tenant shall be reimbursed by the Landlord after
reasonable notice of the repairs and expenses incurred. If any utility services
furnished by Landlord are interrupted and continue to be interrupted despite
good faith efforts of Landlord to remedy same, Landlord shall not be liable in
any respect for damages for the person or property of Tenant or Tenant's
employees, agents, or guests, and same shall not be construed as grounds for
constructive eviction or abatement of rent. Landlord shall use reasonable
diligence to repair and remedy such interruption promptly.
27. SIGNS. During the last 60 days of the lease, a "For Sale" sign and/or a
"For Lease" sign may be displayed on the leased premises and the leased premises
may be shown at reasonable times to prospective purchasers or tenants.
28. RIGHT OF ENTRY. Landlord shall have the right during normal business
hours to enter the demised premises; a) to inspect the general condition and
state of repair thereof, b) to make repairs required or permitted under this
lease, or c) for any other reasonable purpose.
29. WAIVER OF BREACH. The waiver by Landlord of any breach of any provision of
this lease shall not constitute a continuing waiver or a waiver or any
subsequent breach of the same or a different provision of this lease.
30. TIME OF ESSENCE. Time iss expressly declared to be of the essence in this
lease.
31. BINDING OF HEIR AND ASSIGNS. Subject to the provisions of this lease
pertaining to assignment of Tenant's interest, all provisions of this lease
shall extend to and bind, or inure to the benefit not only of the parties to
this lease but to each and every one of the heirs, executors, representatives,
successors, and assigns of Landlord or Tenant.
32. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies by this lease
agreement are cumulative and the use of any one right or remedy by either party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance, or otherwise.
33. TEXAS LAW TO APPLY. This agreement shall be constructed under and in
accordance with the laws of the State of Texas.
34. LEGAL CONSTRUCTION. In case any one or more of the provisions contained
in this agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof and this agreement shall be
construed as if such invalid, illegal, or unenforceable provision had never been
contained herein.
35. PRIOR AGREEMENTS SUPERSEDED. This agreement constitutes the sole and only
agreement of the parties to this lease and supersedes any prior understandings
or written or oral agreements between the parties respecting the subject matter
of this lease.
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<PAGE>
36. AMENDMENT. No amendment, modification, or alteration of the terms hereof
shall be binding unless it is in writing, dated subsequent to the date hereof,
and duly executed by the parties.
37. ATTORNEY'S FEES. Any signatory to this lease agreement who is the prevailing
party in any legal proceeding against other signatory brought under or with
relation to this lease agreement or this transaction shall be additionally
entitled to recover court costs, reasonable attorney fees, and all other out-of-
pocket costs of litigation, including deposition, travel and witness costs, from
the nonprevailing party.
38. SPECIAL PROVISIONS. (This section to include additional factual data not
included above.) TENANT WILL PAY AN ADD ON FACTOR OF 10.37% OF ELECTRIC UTILITY
BILL MONTHLY.
THE TEXAS ASSOCIATION OF REALTORS (r) AND THE AUSTIN BOARD OR REALTORS (r) DO
NOT FIX, CONTROL, RECOMMEND, SUGGEST OR MAINTAIN COMMISSION RATES OR FEES FOR
SERVICES TO BE RENDERED BY THEIR MEMBERS OR THE DIVISION OF COMMISSIONS OR FEES
BETWEEN COOPERATING PARTICIPANTS OR BETWEEN PARTICIPANTS AND NON-PARTICIPANTS.
THE AMOUNT OF COMPENSATION AND CONTRACT TERMS HEREIN ARE NOT PRESCRIBED BY LAW
AND ARE SUBJECT TO NEGOTIATION BETWEEN BROKER AND SUBLESSOR.
THIS IS A LEGAL DOCUMENT, READ IT CAREFULLY. IF YOU DO NOT UNDERSTAND THE
EFFECT OF ANY PART OF THIS AGREEMENT, SEEK COMPETENT LEGAL ADVICE.
EXECUTED this 29th day of December , 1998.
____________________________ _____________________________
TENANT or TENANTS SIGNATURE(S) LANDLORD SIGNATURE
____________________________ _____________________________
ADDRESS ADDRESS
____________________________ _____________________________
____________________________ _____________________________
TELEPHONE TELEPHONE
____________________________
BROKER SIGNATURE
By:__________________________
AGENT SIGNATURE
_____________________________
ADDRESS
_____________________________
_____________________________
TELEPHONE
[Note: This form is furnished by the Texas Association of REALTORS(r) for the
convenience of its members]
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<PAGE>
TEXAS ASSOCIATION OF REALTORS
COMMERCIAL LEASE
This lease agreement is made and entered into by and between CONTI
BUILDING LT. (Landlord) and COAD Solutions (Tenant). Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord that certain property with
improvements thereon, containing approximately ___________ square feet,
hereinafter called the "leased premises" known as TEJAS CONTI BUILDING, 1150
Lakeway Dr. Suite 218, 219 & 220 (Address), Lot,__________, Block__________,
_____________Addition, City of AUSTIN, TRAVIS County, Texas; or as more
particularly described below or on attached exhibit:
1150 Lakeway Drive Suite 218, 219 & 20
Austin, TX 78734
The primary term of this lease shall be MONTH TO MONTH commencing on the
1ST day of January, 2000, and ending on the ____ day of ______, ______, upon the
following terms, conditions, and covenants:
1. TAXES. each year during the term of this lease, Landlord shall pay real
estate taxes assessed against the leased premises in an amount equal to the
total real estate taxes assessed against the leased premises in the base year.
Each year during the term of this lease, Tenant shall pay as additional rental,
upon receipt of a statement from Landlord together with tax statements or other
verification from the proper taxing authority, his pro rata share of any
increase in real estate taxes over the base year on the property of which the
leased premises is a part. Any increase in real estate taxes for a fractional
year shall be prorated. The base year shall be 1999.
2. UTILITIES. Tenant shall pay all charges for utility services to the leased
premises except for WATER/WASTEWATER which shall be paid by the Landlord.
3. HOLDING OVER. Failure of Tenant to surrender the leased premises at the
expiration of the lease constitutes a holding over which shall be construed as a
tenancy from month to month at a rental of $ BASERENT +100 per month.
4. RENT. Tenant agrees to and shall pay Landlord at 2101 LAKEWAY BLVD.,County
of TRAVIS, Texas, or such other place Landlord shall designate from time to time
in writing, as rent for the leased premises, the total sum of $___________,
payable without demand in equal monthly payments of $1210.00 each in advance on
or before the 1ST day of each month, commencing on January 1, 2000, and
continuing thereafter until the total sum shall be paid. Adjustment to the rent,
if any, for rent escalators, for percentage of net rent, of for increases in
building operation costs (including but not limited to insurance, custodial
services, maintenance and utilities) shall be as set forth in an attached
addendum. Rent received after the first day of the month shall be deemed
delinquent. If rent is not received by Landlord by the 5TH of each month, Tenant
shall pay a late charge of $25.00 plus a penalty of $25.00 per day until rent is
received in full. Tenant shall pay $25.00 for each returned check.
5. USE. Tenant shall use the leased premises for the following purpose and no
other: GENERAL OFFICE SPACE
6. SECURITY DEPOSIT. Tenant shall pay to Landlord a security deposit in the
sum of $__________, payable on or before the commencement of this lease for
Tenant's faithful performance hereunder. Refund thereof shall be made upon
performance of this lease agreement by Tenant, minus any assessments or damages
unless Landlord and Tenant provide otherwise in Special Provisions.
7. INSURANCE. LANDLORD shall pay for fire and extended coverage insurance on the
buildings and other improvements on the leased premises in an amount not less
than $1,000,000, which amount shall be increased yearly in proportion to the
increase in market value of the premises. If Landlord provides any insurance
herein, Tenant shall pay Landlord, during the term hereof, the amount of any
increase in premiums for the insurance required over and above such premiums
paid during the first year of this lease. Tenant shall provide public liability
and property damage insurance for its business operations on the leased premises
in the amount of $1,000,000 which policy shall cover Landlord as well as Tenant.
Said insurance policies required to be provided by Tenant herein shall name
Landlord as an insured and shall be issued by an insurance company approved by
Landlord. Tenant shall provide Landlord with certificates of insurance
evidencing the coverage required herein. Tenant shall be solely responsible for
fire and casualty insurance on Tenant's property on or about the leased
premises. If Tenant does not maintain such insurance in full force and effect,
Landlord may notify Tenant of such failure and if Tenant does not deliver to
Landlord within 15 days after such notice certification showing all such
insurance to be in full force and effect, Landlord may at his option, take out
the necessary insurance to comply with the provision hereof and pay the premiums
on the items specified in such notice, and Tenant covenants thereupon on demand
to reimburse and pay Landlord any amount so paid or expended in the payment of
the insurance premiums required hereby and specified in the notice, with
interest thereon at the rate of 10% percent per annum from the date of such
payment by Landlord until repaid by Tenant.
8. CONDITION OF PREMISES. Tenant has examined and accepts the leased premises in
its present as is condition as suitable for the purposes for which the same are
leased, and does hereby accept the leased premises regardless of reasonable
deterioration between the date of this lease and the date Tenant begins
occupying the leased premises unless Landlord and Tenant agree to repairs or
refurbishment as noted in Special Provisions.
9. MAINTENANCE AND REPAIRS. Landlord shall keep the foundation, the exterior
walls (except glass, windows, doors, door closure devices, window and door
frames, molding, locks, and hardware, and interior painting or other treatment
of exterior walls), and the roof of the leased premises in good repair except
that Landlord shall not be required to make any repairs occasioned by the act or
negligence of Tenant, its employees, subtenants, licensees and concessionaires.
Landlord is responsible for maintenance of common area and common area
equipment. If Landlord is responsible for any such repair and maintenance,
Tenant agrees to give Landlord written notice of needed repairs. Landlord
shall make such repairs within a reasonable time. Tenant shall notify Landlord
immediately of any emergency repairs. Tenant shall keep the leased premises in
good, clean condition and shall at its sole cost and expense, make all needed
repairs and replacements, including replacement of cracked or broken glass,
except for repairs and
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<PAGE>
replacements required to be made by Landlord under this section. If any repairs
required to be made by Tenant hereunder are not made within ten (10) days after
written notice delivered to Tenant by Landlord, Landlord may at its option make
such repairs without liability to Tenant for any loss or damage which may result
by reason of such repairs, and Tenant shall pay to Landlord upon demand as
additional rent hereunder the cost of such repairs plus interest. At the
termination of this lease, Tenant shall deliver the leased premises in good
order and condition, reasonable wear and tear excepted.
10. ALTERATIONS. All alterations, additions and improvements, except trade
fixtures, installed at expense of Tenant, shall become the property of Landlord
and shall remain upon and be surrendered with the leased premises as a part of
thereof on this lease. Such alterations, additions, and improvements may only be
made with the prior written consent of Landlord, which consent shall not be
unreasonably withheld. If consent is granted for the making of improvements or
alterations to the leased premises, such improvements and alterations shall not
commence until Tenant has furnished to Landlord a certificate of insurance
showing coverage in an amount satisfactory to Landlord protecting Landlord from
liability for injury to any person and damage to any personal property, on or
off the leased premises, in connection with the making of such improvements or
alterations. No cooling tower, equipment, or structure of any kind shall be
placed on the roof or elsewhere on the leased premises by Tenant without prior
written permission of Landlord. If such permission is granted, such work or
installation shall be done at Tenant's expense and in such a manner that the
roof shall not be damaged thereby. If it becomes necessary to remove such
cooling tower, equipment or structure temporarily, so that repairs to the roof
can be made, Tenant shall promptly repair at its expense any damages resulting
from such removal. At the termination of this lease, Tenant shall deliver the
leased premises in good order and condition, natural deterioration only
excepted. Any damage caused by the installation or removal of trade fixtures
shall be repaired at Tenant's expense prior to the expiration of the lease term.
All alterations, improvements, additions, and repairs made by Tenant shall be
made in good and workmanlike manner.
11. COMPLIANCE WITH LAWS AND REGULATIONS. Tenant shall, at its own expense,
comply with all laws, orders, and requirements of all governmental entities with
reference to the use and occupancy of the leased premises. Tenant and Tenant's
agents, employees and invitees shall fully comply with any rules and regulations
governing the use of the buildings or other improvements to the leased premises
as required by Landlord. Landlord may make reasonable changes in such rules and
regulations from time to time as deemed advisable for the safety, care and
cleanliness of the leased premises, provided same are in writing and are not in
conflict with the lease.
12. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this lease nor sublet
the leased premises or any interest therein without first obtaining the written
consent of Landlord. An assignment or subletting without the written consent of
Landlord shall be void and shall, at the option of Landlord, terminate this
lease.
13. DESTRUCTION. In the event the leased premises is partially damaged or
destroyed or rendered partially unfit for occupancy by fire or other casualty,
Tenant shall give immediate notice to Landlord. Landlord may repair the damage
and restore the leased premises to substantially the same condition as
immediately prior to the occurrence of the casualty. Such repairs shall be made
at Landlord's expense unless due to Tenant's negligence. Landlord shall allow
Tenant a fair reduction of rent during the time the leased premises are
partially unfit for occupancy. If the leased premises are totally destroyed or
deemed by Landlord to be rendered unfit for occupancy by fire or other casualty,
or if Landlord shall decide not to repair or rebuild, this lease shall terminate
and the rent shall be paid to the time of such casualty.
14. TENANT DEFAULT AND REMOVAL OF ABANDONED PROPERTY. If Tenant abandons the
premises or otherwise defaults in the performance of any obligations or
covenants herein, Landlord may enforce the performance of this lease in any
manner provided by law. This lease may be terminated at Landlord's discretion if
such abandonment or default continues for a period of 10 days after Landlord
notifies Tenant of such abandonment or default and of Landlord's intention to
declare this lease terminated. Such notice shall be sent by Landlord to Tenant
to Tenant's last known address by certified mail. If Tenant has not completely
removed or cured default within the 10-day period, this lease shall terminate.
Thereafter, Landlord or its agents shall have the right, without further notice
or demand, to enter the leased premises and remove all property without being
deemed guilty of trespass and without waiving any other remedies for arrears of
rent or breach of covenant. Upon abandonment or default by the Tenant, the
remaining unpaid portion of the rental from paragraph 4 herein, shall become due
and payable. For purposes of this section, Tenant is presumed to have abandoned
the premises if goods, equipment, or other property, in an amount substantial
enough to indicate a probable intent to abandon the premises, is being or has
been removed from the premises and the removal is not within the normal course
of Tenant's business. Landlord shall have the right to store any property of
Tenant that remains on premises that are abandoned; and, in addition to
Landlord's other rights, Landlord may dispose of the stored property if Tenant
does not claim the property within 60 days after the date the property is
stored, provided Landlord delivers by certified mail to Tenant at Tenant's last
known address a notice stating that Landlord may dispose of Tenant's property if
Tenant does not claim the property within 60 days after the date the property is
stored.
15. INTERRUPTION OF UTILITIES. Landlord or Landlord's agent may not interrupt
or cause interruption of utility service paid directly to the utility company
by Tenant unless interruption results from bona fide repairs, construction, or
an emergency. If any utility services furnished by Landlord are interrupted and
continue to be interrupted despite the good faith efforts of Landlord to remedy
same, Landlord shall not be liable in any respect for damages to the person or
property of Tenant or Tenant's employees, agents, or guests and shame shall not
be construed as grounds for constructive eviction or abatement of rent. Landlord
shall use reasonable diligence to repair and remedy such interruption promptly.
16. EXCLUSION OF TENANT. Landlord may not intentionally prevent Tenant from
entering the leased premises except by judicial process unless the exclusion
results from: (a) bona fide repairs, construction, or an emergency: (b) removing
the contents of premises abandoned by Tenant or (c) changing the door locks of
Tenant in the event Tenant is delinquent in paying at least part of the rent.
If Landlord or Landlord's agent changes the door lock of Tenant, in the event
Tenant is delinquent in paying rent, Landlord or Landlord's agent must place a
written notice on Tenant's front door stating the name and address or telephone
number of the individual or company from which the new key may be obtained. The
new key is required to be provided only during Tenant's regular business hours.
17. LIEN. Landlord is granted an express contractual lien, in addition to any
lien provided by law, and a security interest in all property of Tenant found on
the leased premises to secure the compliance by Tenant with all terms of this
lease.
18. SUBORDINATION. Landlord is hereby irrevocably vested with full power and
authority to subordinate this lease to any mortgage, deed of Trust, or other
lien hereafter placed on the demised premises and Tenant agrees on demand to
execute such further instruments subordinating this lease as Landlord may
request, provided such subordination shall be on the express condition that this
lease shall be recognized by the mortgagee, and the rights of Tenant shall
remain in full force and effect during the term of this lease so long as Tenant
shall continue to perform all of the convenants and conditions of this lease.
19. INDEMNITY. Landlord and its employees and agents shall not be liable to
Tenant or to Tenant's employees, patrons, visitors, invitees, or any other
persons for an injury to any such persons of for any damage to personal
property caused by an act, omission, or neglect of Tenant or Tenant's agents or
of any other tenant of the premises of which the leased premises is a part.
Tenant agrees to indemnify and hold Landlord and its employees and agents
harmless from any and all claims for such injury and damages, whether the injury
occurs on or off the leased premises.
20. SIGNS. Tenant shall not post or paint any signs at, on, or about the
leased premises or paint the exterior walls of the building except
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<PAGE>
with the prior written consent of the Landlord. Landlord shall have the right
to remove any sign or signs in order to maintain the leased premises or to make
any repairs or alterations thereto.
21. TENANT BANKRUPTCY. If Tenant becomes bankrupt or makes voluntary
assignment for the benefit of creditors or if a receiver is appointed for
Tenant, Landlord may terminate this lease by giving five (5) days written notice
to Tenant of Landlord's intention to do so.
22. CONDEMNATION. If the whole or any substantial part of the leased premises
is taken for any public or quasi-public use under any governmental law,
ordinance or regulation or by right of eminent domain or should the leased
premises be sold to a condemning authority under threat of condemnation, this
lease shall terminate and the rent shall be abated during the unexpired portion
of the lease effective from the date of the physical taking of the leased
premises.
23. HAZARDOUS MATERIALS. Landlord warrants and represents that the Property
does not contain "Hazardous Materials", as that phrase is defined herein. For
purpose of this provision , the phrase "Hazardous Materials" shall mean and
include any toxic contaminants or other hazardous materials including, without
limitation, asbestos, PCB, transformers, underground storage containers,
materials containing any radioactive substances, petroleum base products,
paints, solvents, lead, cyanide, DDT, acids, pesticides, ammonium compounds, and
any other substances forming a component part of the improvements which has
heretofore or may in the future be determined to contain toxic wastes, hazardous
materials, or undesireable substances injurious to the health of occupants
living or working in or around the subject Property. Landlord acknowledges that
current, past, and future federal, state, and local laws and regulations may
have had or continue to have any interest in the Property including, but not
limited to, current, past, and future owners and users, including tenants, of
the Property. The cost and expenses of such clean up may be substantial.
Landlord further acknowledges that the Real Estate Brokers and their agents
involved in the negotiation of this transaction have no expertise with respect
to any such Hazardous Materials. Landlord acknowledges and agrees that Landlord
shall look solely to experts and professionals selected by Landlord to advise
Landlord with respect to the condition of Property and shall not hold the Real
Estate Brokers or their agents responsible for any Hazardous Materials condition
or problem relating to the Property. Landlord hereby agrees to indemnify,
defend, and hold the Real Estate Brokers and their agents participating in this
transaction harmless of and from any and all liability, claim, debt, damage,
cost, or expense, including reasonable attorneys' fees, related to or arising
out of or in any way connected to Hazardous Materials and/or toxic wastes and/or
any other undesirable substances affecting the Property.
24. BROKER'S FEE. NA Broker and NA Co-Broker, as Real Estate
Broker (the Broker), has negotiated this lease and Landlord agrees to pay Broker
in NA County, Texas, upon commencement of this lease, a negotiated fee of
$0 or 0% of the total rental provided for in this lease to be divided as
follows: NA. In the event this lease is extended, expanded or renewed,
Landlord agrees to pay Broker an additional negotiated fee of $0 or 0% of the
total rental for such extension, expansion or renewal period, payable at the
time of commencement of such extension, expansion or renewal, said fee to be
divided as follows: NA. Tenant warrants that it has had no dealings with any
real estate broker or agents in connection with the negotiation of this lease
excepting only TEJAS LAKEWAY REAL ESTATE and it knows of no other real estate
broker or agent who is entitled to a commission in connection with this Lease.
If Tenant during the term of this Lease, or any extension, expansion or renewal
period thereof, or within ____ days of the expiration of this Lease, or any
extension, expansion or renewal period thereof, purchases the property herein
leased. Landlord agrees to pay Broker NA in NA County, Texas, a
negotiated fee of $0 or 0% of sales price upon closing of the sale of this
property.
25. NOTICES. Notices to Tenant shall be by certified mail or other delivery to
the leased premises. Notices to Landlord shall be by certified mail to the
place where rent is payable.
26. DEFAULT BY LANDLORD. In the event of breach by Landlord of any covenant,
warranty, term or obligation of this lease, then Landlord's failure to cure same
or commence a good faith effort to cure same within 10 days after written notice
thereof by Tenant shall be considered a default and shall entitle Tenant either
to terminate this lease or cure the default and make the necessary repairs and
any expense incurred by Tenant shall be reimbursed by the Landlord after
reasonable notice of the repairs and expenses incurred. If any utility services
furnished by Landlord are interrupted and continue to be interrupted despite the
good faith efforts of Landlord to remedy same, Landlord shall not be liable in
any respect for damages to the person or property of Tenant or Tenant's
employees, agents, or guests, and same shall not be construed as grounds for
constructive eviction or abatement of rent. Landlord shall use reasonable
diligence to repair and remedy such interruption promptly.
27. SIGNS. During the last 60 days of lease, a "For Sale" sign and/or "For
Lease" sign may be displayed on the leased premises and leased premises may be
shown at reasonable times to prospective purchasers or tenants.
28. RIGHT OF ENTRY. Landlord shall have the right during normal business hours
to enter the demised premises; a) to inspect the general condition and state of
repair thereof, b) to make repairs required or permitted under this lease, or
c) for any other reasonable purpose.
29. WAIVER OF BREACH. The waiver by Landlord of any breach of any provision
of this lease shall not constitute a continuing waiver or a waiver of any
subsequent breach of the same or a different provision of this lease.
30. TIME OF ESSENCE. Time is expressly declared to be of the essence in this
lease.
31. BINDING OF HEIRS AND ASSIGNS. Subject to the provisions of this lease
pertaining to assignment of the Tenant's interest, all provisions of this lease
shall extend to and bind, or inure the benefit not only of the parties to this
lease but to each and everyone of the heirs, executors, representatives,
successors, and assigns of Landlord or Tenant.
32. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies by this lease
agreement are cumulative and the use of any one right or remedy by either party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance, or otherwise.
33. TEXAS LAW TO APPLY. This agreement shall be construed under and in
accordance with the laws of the State of Texas.
34. LEGAL CONSTRUCTION. In case any one or more provisions contained in this
agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof and this agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been contained
herein.
35. PRIOR AGREEMENTS SUPERSEDED. This agreement constitutes the sole and only
agreement of the parties to this lease and supersedes any prior understandings
or written or oral agreements between the parties respecting the subject matter
of this lease.
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<PAGE>
36. AMENDMENT. No amendment, modification, or alteration of the terms hereof
shall be binding unless it is in writing, dated subsequent to the date hereof,
and duly executed by the parties.
37. ATTORNEY'S FEES. Any signatory to this lease agreement who is the
prevailing party in any legal proceeding against any other signatory brought
under or with relation to this lease agreement or this transaction shall be
additionally entitled to recover court costs, reasonable attorney fees, and all
other out-of-pocket costs of litigation, including deposition, travel and
witness costs, from the nonprevailing party.
38. SPECIAL PROVISIONS. (This section to include factual data not included
above.) TENANT WILL PAY AN ADD ON FACTOR OF 10.37% OF ELECTRIC UTILITY BILL
MONTHLY.
THE TEXAS ASSOCIATION OF REALTORS(r) AND THE AUSTIN BOARD OF REALTORS(r) DO NOT
FIX, CONTROL, RECOMMEND, SUGGEST OR MAINTAIN COMMISSION RATES OR FEES FOR
SERVICES TO BE RENDERED BY THEIR MEMBERS OR THE DIVISION OF COMMISSIONS OR FEES
BETWEEN COOPERATING PARTICIPANTS OR BETWEEN PARTICIPANTS AND NON-PARTICIPANTS.
THE AMOUNT OF COMPENSATION AND THE CONTRACT TERMS HEREIN ARE NOT PRESCRIBED BY
LAW AND ARE SUBJECT TO NEGOTIATION BETWEEN BROKER AND SUBLESSOR.
THIS IS A LEGAL DOCUMENT, READ IT CAREFULLY. IF YOU DO NOT UNDERSTAND THE
EFFECT OF ANY PART OF THIS AGREEMENT, SEEK COMPETENT LEGAL ADVICE.
EXECUTED this 29th day of December, 1998.
_____________________________ ______________________
TENANT or TENANTS SIGNATURE LANDLORD SIGNATURE
_____________________________ _______________________
ADDRESS ADDRESS
_____________________________ _______________________
TELEPHONE TELEPHONE
_____________________________
BROKERS SIGNATURE
By:___________________________
AGENT SIGNATURE
______________________________
ADDRESS
______________________________
______________________________
TELEPHONE
[Note: This form is furnished by the Texas Association of REALTORS(r)
for the convenience of its member]
Page 4 of 4
<PAGE>
Conti Building, LTD
2101 Lakeway Blvd., Suite 100
Austin, TX 78734
January 6, 1998
Coad Solutions
Mr. Jeff Sexton
1150 Lakeway Drive, Suite 218
Austin, TX 78734
Re: New Building Management
Dear Mr. Sexton:
Conti Building LTD is pleased to have you as a tenant in the Conti
Building. To serve you better, we have hired a Property Management Company to
manage our building. Lakeway Property Management Company will be managing the
property as of January 1, 1999. They are a local company in Lakeway that will
be able to promptly see to any needs or concerns that you may have. Roselea
Payne is the Property Manager for our account. Please contact her on any
matters concerning the building, maintenance items, services, rent payments,
etc. You may reach her at the following mailing address and phone numbers:
Lakeway Property Management Company
Roselea Payne
2101 Lakeway Blvd., Suite 220
Austin, TX 78734
(512)261-7599 Direct or (512)261-7500 Main Office
Fax (512)261-7574
Please note that all future rent payments and lease agreements should be
sent directly to her.
Sincerely,
/s/ NICHOLAS CONTI
Nicholas Conti
Conti Building LTD
nc:bk
cc: Roselea Payne
<PAGE>
[FLOOR PLAN APPEARS HERE]
<PAGE>
EXHIBIT 10.22
ASSIGNMENT AND ASSUMPTION OF
LESSEE'S INTEREST AND LESSOR'S CONSENT
This Assignment and Assumption of Lessee's interest and Lessor's Consent
(the "Assignment"), entered into this 9th day of December 1999, by and between
Bay West Design Center, LLC, successor in interest to Pacific Northwest Group B,
a joint venture (the "Lessor"), and Net Information Systems, Inc., a Washington
corporation ("Assignor"), and Design Automation System, Inc., a Texas
corporation, dba EpicEdge ("Assignee").
Whereas, Lessor and Assignor entered into a Lease agreement dated August
28, 1996, for Suite 503, ("the Lease") located in the Seattle Design Center,
Seattle, Washington (the "Premises"), as more fully described in the Lease; and
Whereas, Assignee desires to assume and be bound by the terms of the
Lease as a tenant;
Now Therefore, in consideration of the covenants and agreements
contained herein, the parties hereby mutually agree as follows:
1. The above recitations are true and correct.
2. Effective as of November 29, 1999 Assignor hereby sets over and
transfers to Assignee all of its rights, title and interest in and to the Lease
and any deposits held under the Lease.
3. All of the terms, convenants and conditions of the Lease are hereby
ratified and reaffirmed by all parties hereto.
4. Assignee hereby accepts this Assignment and agrees to assume and be
bound by all of the terms of the Lease, a copy of which is attached hereto.
5. Assignor confirms that this Assignment does not release it from any
liability under the Lease.
6. As of the effective date, Assignor waives its right to any notice to
be given by Lessor shall be sufficient if given only to Assignee at the address
below:
5701 6th Avenue South Design Automation System, Inc.
Suite 503 copy to 3200 Wilcrest, Suite 370
Seattle, Washington 98108 Houston, TX 77042
7. Assignor and Lessor hereby stipulate and agree that they have no
claims or actions against each other under the Lease or against the Assignee
whatsoever.
8. Assignor and Assignee warrant that all necessary corporate actions
against each other have been duly taken to permit Assignor and Assignee to enter
into this Lease and that each undersigned officer has been duly authorized and
instructed to execute the Lease.
9. Lessor consents to this Assignment. However, such consent shall not
constitute consent to any future Assignments. If Lessor executes this document
prior to execution by Assignee and Assignor, it is understood that Lessor's
execution shall not be deemed to be effective until Assignor and Assignee both
execute this document and Lessor is provided with a fully executed copy.
In Witness Whereof, the parties have executed this Assignment as of the
day and year first above written.
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Assignor: Assignee:
Net Information Systems, Inc., Design Automation Systems, Inc.,
a Washington corporation a Texas corporation, dba EpicEdge
By: /s/ Mark Slosberg By: /s/ Charles Leaver
________________________ __________________________
Mark Slosberg, President Charles Leaver, President
Lessor:
Bay West Design Center, LLC
a Delaware limited liability company
By: BW Seattle Corp.,
a Washington corporation
its manager
By: /s/ Timothy Treadway
__________________________________________
Timothy Treadway, Executive Vice President
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SEATTLE DESIGN CENTER
LEASE
THIS LEASE made this 28th day of August, 1996, by and between PACIFIC
NORTHWEST GROUP B, a joint venture, hereinafter called LESSOR, and NET
INFORMATION SYSTEMS, INC., a Washington corporation, hereinafter called LESSEE.
1. PREMISES. Lessor does hereby lease to Lessee those certain premises
being space in those certain buildings known as Seattle Design Center, (formerly
the Design Center Northwest), (herein referred to as "the building") to wit:
approximately 3,000 square feet of space, being suite 503, located at
5701 Sixth Avenue South, Seattle, Washington
as outlined in blue on Exhibit B attached hereto (hereinafter called "Premises")
being situated upon land described in Exhibit A attached hereto.
2. TERM. This Lease shall be for a term of five (5) years commencing
November 1, 1996, and terminating October 31, 2001.
3. RENT. Lessee convenants and agrees to pay Lessor, at department
3073 P.O. Box C-34936, Seattle, Washington 98124, or to such other party or at
such other place as Lessor may hereafter designate, monthly rent in advance
without offset or deduction, on or before the first day of each month of the
Lease term in the following amount: Two Thousand Two Hundred Fifty and no/100
Dollars (2,250.00). See Paragraph 36.
Lessor hereby acknowledges receipt of the following sum to be applied to
first month's rent and security deposit. Five Thousand Six Hundred Seventy and
no/100 Dollars (5,670.00)
4. USE. The Premises shall be used only for the purpose of an office
for the sale of computer equipment and computer networking services.
Lessee shall at its own expense obtain any and all licenses and permits
necessary for such use, and shall comply with all governmental laws, ordinances,
regulations, orders, and directives applicable to the use of the Premises.
Lessee shall not occupy or use, or permit any portion of the Premises to be
occupied or used, for any purpose which would increase the rate of fire
insurance coverage on said Premises, the buildings or their contents. In the
event Lessee shall cause any increase above normal rates, Lessee agrees to pay
the Lessor, as additional rental, an amount equal to all such increases.
5. RULES AND REGULATIONS. Lessee agrees to comply with the Rules and
Regulations attached hereto, as well as such other reasonable rules
and regulations as may from time to time be adopted by Lessor or, with Lessor's
approval, by the Design Center Northwest Association, for the management and
safety of common areas, the buildings, and tenants. Lessee shall be responsible
for the compliance with such rules and regulations by its employees, agents,
and invitees. The failure of Lessor to enforce any of such rules and
regulations against Lessee or any other tenant of the buildings shall not be
deemed to be a waiver of same.
6. MAINTENANCE. Lessee agrees by taking possession that the Premises are
in tenantable and good condition and that Lessor has made no promises,
agreements, or representations as to the decoration, repair or alteration of the
Premises or any other portion of the buildings except as expressly set forth
herein or as may otherwise be mutually agreed upon in writing. Lessor shall
maintain the heating and air conditioning systems, roof, exterior walls
(excluding windows, plate glass and all doors in and to the Premises), grounds,
parking areas, public restrooms, hallways, entrances and other portions of the
buildings used in common by all tenants in good repair and condition, reasonable
wear and tear excepted, and the costs of such maintenance shall be shared as
provided in paragraph 8,below. Lessee shall be responsible for all other
maintenance and repairs required in connection with the Premises and shall
maintain the Premises in a neat, clean and sanitary condition. Lessee shall also
be responsible for repair or replacement of any damage or injury to the Premises
or the buildings caused by Lessee, its agents,
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employees or invitees; provided, however, if Lessee fails to make such repairs
or replacements promptly, Lessor may do so, and the cost thereof shall be
additional rent due on the first of the following month.
7. UTILITIES AND SERVICES. Lessor shall furnish electricity for light,
heat and air conditioning to the Premises, and in addition shall furnish water,
janitorial services, sewer and toilet facilities to common areas in the
Buildings, and the cost of such utilities and services shall be shared as
provided in paragraph 8, below. Lessor shall not be liable for any injury or
damages suffered as a result of the interruption of utilities or services by
fire, or other casualty, strike, riot, vandalism, the making of necessary
repairs or improvements, or any other cause.
8. MONTHLY OPERATING EXPENSES ADJUSTMENTS. Lessee shall pay as
additional monthly rent Lessee's pro-rata share of expenses incurred by Lessor
for operation of the land and buildings described on Exhibit A hereto during the
term of lany extension hereof, as follow:
(a) Real estate taxes and assessments including taxes, if any, direct
or indirect, in whole or in part, upon the rents or the income derived from real
estate or rental property (excluding Federal or State taxes on net income);
(b) Usual and necessary costs of operation, maintenance and repair as
determined by standard accounting practices, including without limitation, all
utilities and services not metered or charged directly to Lessee, insurance,
painting, upkeep and repair of building exterior, roofing, parking, landscaping,
and all common areas and facilities, and Lessor's fee for supervision and
administration of the items set forth in this sub-paragraph, currently at 10%,
but excluding depreciation, loan payments, and replacement of major building
structural elements.
Lessor shall from time to time estimate to Lessee its monthly pro-rata
share of such expenses based upon existing costs. Lessee's pro-rata share shall
be that percentage of the total expenses as the square footage of Lessee's
Premises bears to the total applicable net rentable square footage of the
buildings or such other equitable apportionment as may be adopted. Such monthly
estimated amount shall be paid by Lessee on or before the first day of each
month. Lessor, annually or upon termination hereof, shall compute Lessee's
actual pro-rata share of such expenses. Any overpayment shall be refunded or
credited to Lessee, at its option, and any deficiency shall be paid by Lessee
within fifteen (15) days after date of Lessor's statement. Lessor's records
showing expenditures made for such expenses shall be available for Lessee's
inspection at any reasonable time.
9. LESSOR'S RESERVATIONS. Lessor reserves the right without liability to
Lessee: (a) to inspect the Premises, to show them to prospective tenants, and if
they are vacated to prepare them for reoccupancy; (b) to retain at all times and
to use in appropriate instances keys to which only authorized building personnel
have access to doors within and into the Premises; (c) to make repairs,
alterations, additions or improvements, whether structural or otherwise, in or
about the buildings, and for such purposes to enter upon the premises and during
the continuance of any work, to close common areas and to interrupt or
temporarily suspend building services and facilities, all without affecting any
of Lessee's obligations hereunder, so long as the Premises are reasonably
accessible; and (d) generally to perform any acts relating to the safety,
protection and preservation of Premises or building.
10. POSSESSION. If Lessor fails to deliver possession of the Premises
at commencement date of the term hereof, Lessee may give Lessor written notice
of its intention to cancel this Lease unless possession is delivered within
sixty (60) days after receipt of such notice by Lessor; provided such
commencement date shall be extended a period of time equal to the period of any
delays resulting from causes beyond Lessor's control. Lessor shall not be
liable for any damages caused by failure to deliver possession of Premises and
Lessee shall not be liable for any rent until such time as Lessor delivers
possession. A delay in possession shall not extend the term of the termination
date. If Lessor offers possession of the Premises prior to the commencement
date of the term of this Lease, and if Lessee accepts such early possession,
both parties shall be bound by the terms hereof during such period, including
the payment of rent, which shall be prorated.
11. ASSIGNMENT AND SUBLETTING. Lessee shall not either voluntarily or
by operation of law assign, transfer, convey or encumber this Lease or any
interest under it, or sublet the Premises or any part thereof, or allow any
other person to occupy or use the Premises without Lessor's prior written
consent. Lessor reserves the right to recapture within twenty (20) days after
receipt of a written request for assignment of subletting. Such recapture shall
terminate this Lease as of the proposed date of assignment or subletting, which
shall be the last day of a calendar month and not earlier than ninety (90) days
after receipt of Lessee's request hereunder.
In the event that Lessor shall not elect to recapture the Premises and
shall thereafter give its consent, Lessee shall pay Lessor a reasonable fee, not
to exceed $500.00, to reimburse Lessor for processing costs. Lessor's consent,
if given, shall not release or discharge Lessee from any liability under this
Lease and shall not be deemed consent to any future assignment or sublease. Any
assignment or
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subletting without Lessor's consent shall be void, and shall constitute a
default under this Lease. A transfer by the present majority shareholders of
ownership or control of a majority of the voting stock of a corporate Lessee
shall be deemed an assignment for the purposes of this paragraph. Lessor
acknowledges that from time to time Lessee may require the services of an
independent contractor for which space in the Premised would be provided by
Lessee. Provided said contractor shall not occupy more than 500 square feet,
Lessor's written approval per the terms of this paragraph shall not be required.
In any event, prior to occupancy of any independent contractor for 500 square
feet or less, Lessee shall notify Lessor in writing as to the name of the
contractor and the term of its occupancy in the Premises.
12. ALTERATIONS. After prior written consent of Lessor, Lessee may but
is not obligated to make minor alterations, additions and improvements in the
Premises at its sole cost and expense. In the performance or such work, Lessee
shall save Lessor harmless from any damage, loss, or expense and shall comply
with all laws, ordinances, rules and regulations of any proper public authority.
Upon termination of this Lease, such alterations, additions and improvements
made in, to or on the Premises (including without limitation partitions,
draperies, carpeting, lighting and other physically attached fixtures) shall
remain upon and be surrendered as a part of the Premises; provide, however, that
upon Lessor's written request, Lessee shall promptly remove such additions,
alterations, or improvements, repair any damage caused thereby and restore the
Premises to its original condition at Lessee's sole cost and expense.
13. SIGNS. Lessee shall not paint or install any signs or symbols on
the exterior doors, plate glass or walls of the premises or install any
electrically lighted signs in or upon the Premises, without the prior written
consent of Lessor. No showcases or other fixtures or objects shall be placed by
Lessee inside or outside of the buildings, in the corridors, or elsewhere in or
about the buildings, other than within the Premises. No sign, tag, label,
picture, advertisement, or notice (other than price tags of customary size used
in marking samples) shall be displayed, distributed, inscribed, painted or
affixed by Lessee on any part of the outside or inside of the buildings or the
Premises without the prior written consent of Lessor.
14. ACCIDENTS AND LIABILITY. Lessor or its agents shall not be liable
for any injury or damage to persons or property sustained by Lessee or others in
and about the Premises or the buildings, except to the extent caused by Lessor's
negligence, if any. Lessee agrees to defend and hold Lessor and its agents
harmless from any claim, action and/or judgement for injury or damage to persons
or property suffered in or about the Premise by any person, firm or corporation,
except to the extent caused by Lessor's negligence, if any. Lessee shall, at
its expense, carry public liability insurance to afford minimum protection to
the combined limit of not less than Five Hundred Thousand Dollars ($500,000.00)
or such other reasonable amount as Lessor may require in respect to injury or
damage to persons or property. Lessee shall submit a certificate of such
insurance to Lessor and such insurance shall not be cancelable without thirty
(30) days prior written notice thereof to Lessor.
15. DAMAGE OR DESTRUCTION. If the Premises or the building shall be
damaged or destroyed by fire or other casualty, Lessor shall have the option
either (a) to repair or rebuild within one hundred eighty (180) days, or (b)
not to repair or rebuild, and to cancel this Lease on thirty (30) days notice.
If Lessor fails to give Lessee written notice of its election within thirty (30)
days from the date of damage, or if the restoration of the Premises cannot be
completed within one hundred eighty (180) days from date of notice, Lessee may
cancel this Lease on thirty (30) days notice. During the period of
untenantability, rent shall abate in the same ratio as the portion of the
Premises rendered untenantable bears to the whole of the Premises.
16. EMINENT DOMAIN. If the whole of the Premises shall be taken by any
public authority under the power of eminent domain, or purchased by the
condemnor in lieu thereof, the term of this Lease shall cease as of the date
possession is taken by such public authority. If only a part of the Premises
shall be so taken, the Lease shall terminate only as to the portion taken, and
shall continue in full force and effect as to the remainder of said Premises,
and the monthly rent shall be reduced proportionately; provided, however, if the
remainder of the Premises cannot be made tenantable for the purposes for which
Lessee has been using the Premises or if more than twenty-five percent (25%) of
the rental square footage of the Premises shall be so taken, either party by
written notice to the other, given at least thirty (30) days prior to the date
that possession must be surrendered to the public authority, may terminate this
Lease effective as of such surrender of possession. If any part of the buildings
other than the Premises shall be so taken so as to render in Lessor's opinion
the termination of this Lease beneficial to the remaining portion of the
buildings, Lessor shall have the right within sixty (60) days of said taking to
terminate this Lease upon thirty (30) days written notice to Lessee. In the
event of any taking, whether whole or partial, Lessor shall be entitled to all
awards, settlement, or compensation which may be given for the land and
buildings. Lessee shall have no claim against Lessor for the value of any
unexpired term of this Lease.
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17. LIENS AND INSOLVENCY. Lessee shall keep the Premises and Lessee's
interest therein free from any liens arising out of any work performed for,
materials furnished to, or obligations incurred by Lessee and shall hold Lessor
harmless therefrom. If Lessee shall be declared insolvent or bankrupt, or if
Lessee's leasehold interest herein shall be levied upon or seized under writ of
any court of law, or if a trustee, receiver or assignee be appointed for the
property of Lessee, whether under operation of State or Federal statutes, then
Lessor may, at its option, immediately (notice being expressly waived) terminate
this Lease and take possession of said Premises, without terminating Lessee's
obligations hereunder.
18. DEFAULT AND REENTRY. If Lessee fails to keep or perform any of the
covenants and agreements herein contained, then the same shall constitute a
breach hereof. If Lessee has not remedied such breach within three (3) days
after written notice thereof from Lessor if the breach is non-payment of rent or
other charges, or within twenty (20) days after written notice thereof from
Lessor in event of the breach of any other covenant, then Lessor may, at its
option, without further notice or demand:
(a) Cure such breach for the account and at the expense of Lessee and
such expense shall be deemed additional rent due on the first of the following
month or:
(b) Reenter the premises, remove all persons therefrom, take possession
of the Premises and remove all equipment, fixtures, and personal therein at
Lessee's risk and expense, and (1) terminate this Lease, or (2) without
terminating the Lease or in any way affecting the rights and remedies of Lessor
or the obligations of Lessee, re-let the whole or any part of the Premises as
agent for Lessee, upon such terms and conditions and for such term as Lessor may
deem advisable. In either event, the rents received and any last month's rent
deposit held under this Lease may first be applied by Lessor to the costs and
expenses of re-letting, including without limitation, cleaning and necessary
renovation and alteration, and the balance of such rent shall be applied toward
payment of all sums due or to become due to Lessor hereunder, and Lessee shall
pay to Lessor any deficiency; however, Lessor shall not be required to pay any
excess to Lessee. The above remedies of Lessor are cumulative and in addition
to any other remedies now or hereafter allowed by law or elsewhere provided for
in this Lease.
19. REMOVAL OF PROPERTY. Any goods or fixtures of Lessee removed by
Lessor in accordance with paragraph 18 above may be stored by Lessor at the cost
and expense of Lessee or may be deposited on any sidewalk or delivery area
adjacent to the buildings, at the sole risk of the Lessee and without any
further responsibility on the part of Lessor and Lessor may without removing
said goods or fixtures or dispose of the same at public or private sale for the
account of Lessee, in which event the proceeds may be applied by Lessor upon any
indebtedness due from Lessee to Lessor. Lessee hereby waives all claims for
damages that may be cause by Lessor re-entering and taking possession of the
Premises and removing or disposing of said goods and fixtures as herein
provided.
20. COSTS AND ATTORNEY'S FEES. If by reason of any default or breach
on the part of either party in the performance of any of the provisions of this
Lease, a legal action is instituted, the prevailing party shall be entitled to
all reasonable costs and attorney's fees in connection therewith. Any action
brought hereunder shall be maintained in the Superior Court in King County,
Washington.
21. SUBROGATION WAIVER. Lessor and Lessee each herewith and hereby
releases and relieves the other and waives its entire right of recovery against
the other for loss or damage arising out of or incident to the perils described
in "all risk" insurance policies, including earthquake and flood insurance
endorsements, approve for use in the State of Washington which occurs in, on or
about the Premises, whether due to the negligence of either party, their agents,
employees or otherwise.
22. RELOCATION OF PREMISES. Lessee agrees that Lessor may at any time
during the term or any extension hereof after at least ninety (90) days prior
written notice, require Lessee to move to other space elsewhere in the buildings
at the cost of Lessor. In lieu of such relocation, Lessee shall have the option
to terminate this lease, effective on the date Lessee is required to move, by
written notice to Lessor within fifteen (15) days after delivery of Lessor's
notice.
23. HOLDING OVER. If Lessee, with the implied or express consent of
Lessor, shall hold over after the expiration of the term of this Lease, Lessee
shall remain bound by all the covenants and agreements herein, except that the
tenancy shall be from month to month, and the monthly rent shall be in
accordance with the then-current schedule published by Lessor for the buildings.
24. SUBORDINATION. Lessee agrees that this Lease shall be subordinate
to the lien of any mortgages or deeds of trust now or hereafter placed against
the real property of which the Premises comprise a part, and to all renewals and
modifications, supplements, consolidations and extensions thereof; provided,
however, in the event that any mortgage or beneficiary shall elect to
subordinate its lien to this
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Lease, Lessor reserves the right to subordinate said mortgage lien to this Lease
upon the terms required by such mortgagee or beneficiary.
25. SURRENDER OF POSSESSION. Lessee, prior to the termination of this
Lease or of Lessee's right to possession, shall remove from the Premises all of
Lessee's furniture, trade fixtures and other unattached personal property, and
such alterations, additions, improvements or signs required by Lessor to be
removed, and shall repair or pay for all damage to the Premises caused by such
removal. All such property remaining and every interest of Lessee in the same
shall be conclusively presumed to have been conveyed by Lessee or Lessor under
this Lease as a bill of sale, without compensation, allowance, or credit to
Lessee. Lessee shall upon termination of this Lease or of Lessee's right of
possession, deliver all keys to Lessor and peacefully quit and surrender the
Premises without notice, neat and clean, and in as good condition as when Lessee
took possession, except for reasonable wear and tear as determined by Lessor.
26. LATE PAYMENT AND INTEREST. If any amount due from Lessee is not
received in the office of Lessor on or before the fifth (5th) day following the
date upon which such amount is due and payable, a late charge of five percent
(5%) of said amount shall become immediately due and payable, which late charge
Lessor and Lessee agree represents a fair and reasonable estimate of the
processing and accounting costs that Lessor will incur by reason of such late
payment. All past due amounts owing to Lessor under this Lease, including rent,
shall be assessed interest at the annual percentage rate of eighteen percent
(18%) from the date due or date of invoice, whichever is earlier, until paid.
27. NOTICE. Any notice required to be given by either party to the
other pursuant to the provisions of this Lease or any law, present or future,
shall be in writing and shall be deemed to have been duly given or sent if
delivered personally or if properly deposited in the United States Mail by
registered or certified mail, return receipt requested, addressed to the Lessor
at P.O. Box C-34936, Dept.3073, Seattle, WA 98124 or to Lessee at the following
address, or to such other address as either party may designate to the other in
writing from time to time:
5701 Sixth Avenue South, Suite 503, Seattle, WA 98108
30. NO WAIVER OF COVENANTS. Time is of the essence of this Lease. Any
waier by either party of any breach hereof by the other shall not be considered
a waiver of any future similar or other breach. This Lease contains all the
agreements between the parties; and there shall be no modification of the
agreements contained herein except by written instrument.
31. BINDING OF HEIRS, SUCCESSORS AND ASSIGNS. The covenants and
agreements of this Lease shall be binding upon the heirs, executors,
administrations, successors and assigns of both parties hereto, except as
hereinabove provided.
32. ASSIGNMENT OF LEASE. Lessee acknowledges that Lessor, in connection
with its mortgage financing upon the real property of which the Premises are a
part, may assign this Lease for additional security purposes, and that pursuant
to the terms of that assignment, unless and until the Lessee shall have received
notice from such lender to the contrary, Lessee shall pay all rents and other
monies due under this Lease to Lessor as specified herein.
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33. PAYMENTS TO LESSOR. In the event any payment due from Lessee to
Lessor is made by a party other than Lessee, such payments shall be deemed to
have been made by and for the account of Lessee, and the party making such
payment shall have no rights under this Lease.
34. CORPORATE AUTHORITY. Lessee warrants that al necessary corporate
actions have been duly taken to permit Lessee to enter into this Lease and that
each undersigned officer has been duly authorized and instructed to execute this
Lease.
35. LIABILITY OF LESSOR. Lessee agrees that no trustee, officer,
employee, agent, or individual partner of Lessor, or its constituent, entitles,
shall be personally liable for any obligation of Lessor hereunder, and that
Lessee must look solely to the interest of Lessor or its constituent entities in
the subject real estate for the enforcement of any claims against Lessor arising
hereunder.
36. RENT WAIVER. Provided Lessee is fully current in all of Lessee's
obligations under this Lease throughout the term hereof, the monthly rent as
provided in Paragraph 3 shall be waived for the month of November 1996 provided
that this Lease does not terminate prior to April 30, 2000. If for any reason
this Lease does not terminate prior to April 30, 2000, Lessee shall be required
to promptly pay to Lessor, in addition to other charges that may be due, one (1)
month's base rent in the amount of Two Thousand Two Hundred Fifty and no/100
Dollars ($2,250.00) for the month of November 1996.
37. RENT ADJUSTMENT. Effective November 1, 1999, the monthly rent as
provided for in Paragraph 3 shall be Two Thousand Five Hundred Twenty and no/100
Dollars ($2,520.00).
38. TENANT IMPROVEMENTS. Lessor agrees to provide up to Fifty Six
Thousand Two Hundred Five and no/100 Dollars ($56,205.00) so that Lessor can
complete the following improvements to the Premises:
1. Demising of the Premises from adjoining space, including
framing, wall board, fire exit door, store doors, basic
electrical service and sprinkler revisions.
2. Interior space improvements, framing wall board, doors
and hardware, relites, drop ceiling in two (2) offices,
fire sprinklers, HVAC revisions, electrical circuits,
window covering per plans and specifications.
Prior to Lessor commencing work on these improvements, Lessor shall
provide to Lessee two (2) copies of plans detailing the design and plan of
improvements. Lessee shall return signed plans to Lessor within five (5) days.
In the event that the plans are not approved by Lessee, Lessee shall inform
Lessor of the reasons for such disapproval and Lessee shall have five (5) days
in which to submit revised plans to Lessor for approval. Lessee shall not
unreasonably refuse to satisfy any objections made by Lessor to said plans and
specifications. Any objections Lessee has to Lessor's objection shall be
submitted to Lessor in writing within such five (5) day period. A failure of
one party to give any notice to the other party within such five (5) day period
shall be deemed to constitute approval of the plans and specifications or the
objections thereto, as appropriate.
Upon Lessee's approval of Lessor's plans, Lessor shall promptly enter
into a construction contract with a licensed bonded contractor. The
construction of all improvements to be made on the Premises shall be performed
in a first-class, workmanlike manner and in conformity with all applicable
governmental laws, ordinances, rules, orders, regulations, and other
requirements.
The Fifty Six Thousand Two Hundred Five and no/100 Dollars ($56,205.00)
for tenant improvements shall include but not be limited to contractor's profit
which shall not exceed 7%, construction costs, construction management fees,
permit fees, architectural fees, and Washington State Sales Tax.
Any additional tenant improvements that exceed the scope of work
described above, for which the Lessee is responsible or has requested, shall be
at the sole expense of the Lessee. Lessor shall invoice Lessee for any costs
associated with additional tenant improvements required above and beyond Fifty
Six Thousand Two Hundred Five and no/100 Dollars ($56,205.00). Prior to Lessor
commencing work on any additional improvements, Lessee shall pay Lessor 75% of
the Lessor's good faith estimate with the balance due within ten (10) days of
receipt by Lessee or Lessor's request following the completion of additional
improvements. In the event Lessee does not pay Lessor when such invoice is due,
Lessee shall, upon demand, reimburse Lessor for any such amount so paid together
with interest thereon at 18% per annum until paid.
6
<PAGE>
39. ONE-TIME OPTION TO TERMINATE. Provided Lessee is current at the
time of notice and throughout the notice period, Lessor grants to Lessee an
option to terminate this Lease on April 30, 2000. This option to terminate may
be exercised by Lessee providing Lessor, on October 31,1999, its intent to
exercise its option to terminate the Lease and subsequent payment to Lessor, on
February 28, 2000 a termination penalty, in addition to other charges that may
be due under this Lease, of Nineteen Thousand Five Hundred Three and 77/100
Dollars ($19,503.77).
40. PARKING. Lessor will not charge Lessee or its employees for parking
in the building for the duration of this Lease. however, Lessee understands that
if Lessor intends to install parking control system in the building's parking
garage, Lessee shall be allocated three (3) unreserved parking spaces.
41. USE OF ELEVATORS. At all times, the transport of supplies, test
equipment, inventory, sales merchandise or any other "freight" type materials to
and from the Premises must be transported via the buildings freight elevator.
42. NON-DISCLOSURE. Neither Lessee, nor any of its officers,
shareholders, directors, employees, or representatives, shall disclose, divulge,
communicate or otherwise reveal to any person the existence, or any of the
provisions or contents, of this Agreement, except and only to the extent, Lessee
becomes legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process) to disclose the
existence, or any of the provisions or contents, of requirement so that Lessor
may seek a protective order or other appropriate remedy and/or waive compliance
with terms of this Paragraph. Lessee warrants and represents that neither the
provisions nor the intention of this Paragraph have been violated at any time
prior to the execution by Lessee of this Agreement. The violation of the
provisions or the intention of this Paragraph, whether said violation occurred
or occurs prior to, on, or after the execution by Lessee of this Agreement,
shall be deemed an "Event of Default" under the Lease, and shall entitle Lessor
to exercise any or all of its rights and remedies under the Lease, at law or in
equity.
LESSOR: LESSEE:
PACIFIC NORTHWEST GROUP B, NET INFORMATION SYSTEMS, INC.,
a Joint Venture a Washington corporation
by MARKET CENTER MANAGEMENT, INC.,
its Property Manager
By:_____________________ By:______________________
By:_____________________
William G. Williams, III,
Vice President, Equitable Real
Estate Investment Management, Inc.,
as Advisor to California State
Teachers' Retirement System,
Venturer and as Advisor to State of
California Public Employees'
Retirement Systems, Venturer
7
<PAGE>
GUARANTY OF LEASE
THIS GUARANTY OF LEASE is attached to and is hereby made a part of that
certain Lease dated August 28, 1996 between PACIFIC NORTHWEST GROUP B, a joint
venture, ("Lessor"), and NET INFORMATION SYSTEMS, INC., a Washington corporation
("Lessee").
FOR VALUE RECEIVED and in consideration of and as in inducement to
lessor entering into the Lease, the undersigned guarantor ("Guarantor")
unconditionally and continuously guarantees to Lessor, its successors and
assigns, the full and timely performance and observance by Lessee of all the
terms and conditions of the Lease to be performed and observed by Lessee.
This Guaranty and the obligations of Guarantor hereunder shall not be
terminated or impaired by reason of the granting by Lessor and any indulgences
to Lessee or the assertion by Lessor against Lessee of any of Lessor's rights or
remedies under the Lease, or by the relief of Lessee from any of Lessee's
obligations under the Lease by operation of law or otherwise, whether or not
Guarantor has received notice of same. Guarantor waives all suretyship defenses
and waives notice of any breach by Lessee.
This Guaranty shall continue in full force and effect as to any renewal,
amendment, modification, extension, assignment or transfer of the Lease or any
subletting of the Lease premises, whether or not Guarantor shall have received
notice of or consented to the same. The liability or Guarantor under this
Guaranty is primary and absolute, and Lessor may at its option proceed against
Guarantor without proceeding against Lessee. Any action against Guarantor maybe
brought in the county in which the Lease premises are located, or in King
County, Washington, at Lessor's option.
Lessor's delay or failure to insist upon the strict performance or
observation of any obligation of Lessee under the Lease or to exercise any right
or remedy available under the Lease or at law or inequity, shall not be
construed to be a waiver of Lessor's prerogative to insist upon such strict
performance or observance or to exercise any such right or remedy. Receipt by
Lessor of rent or other payment with knowledge of a breach of any term or
condition of the Lease shall not be construed to be a waiver of such breach.
The liability of Guarantor hereunder shall not be affected or limited
by: the release or discharge of Lessee in any creditors', receivership,
bankruptcy or other proceedings, the impairment, limitation or modification of
the liability of the Lessee or the estate of the Lessee in bankruptcy, or of any
remedy for the enforcement of Lessee's said liability under the Lease, resulting
from the operation of any present or future provision of the federal bankruptcy
laws or other statutes or from the decision in any court; the rejection or
disaffirmance of the Lease in any such proceedings; any disability or other
defense of Lessee; or the cessation, from any cause whatsoever, of the liability
of Lessee.
Until all terms, conditions and agreements of the Lease are fully
performed and observed by Lessee, Guarantor hereby waives the right to enforce
any claim, right or remedy which Guarantor now has or hereafter shall have
against Lessee by reason of any one or more payments or acts of performance in
compliance with obligations of Guarantor hereunder, and Guarantor hereby
subordinates any liability or indebtedness of Lessee now or hereafter held by
Guarantor to the obligations of Lessee to Lessor under the Lease.
This Guaranty shall inure to the benefit of the Lessor, its affiliates,
successors and assigns, and shall be binding upon the successors and assigns of
Guarantor.
This Guaranty is irrevocable and may not be changed, affected,
discharged or terminated other than by an agreement in writing signed by
Guarantor and Lessor.
Guarantor shall pay all court costs and expenses paid or incurred by
Lessor in enforcing either the Lease or this Guaranty, including court costs and
a reasonable amount for legal services performed by counsel, whether employed or
retained by Lessor.
DATED this 28th day of August, 1996
HOME ADDRESS;
5534 S. Holly
Seattle, WA 98118 By:____________________
Mark D. Slosberg
HOME TELEPHONE: (206)722-1503
<PAGE>
LESSEE:
STATE OF WASHINGTON)
)SS.
COUNTY OF KING )
On this 28th day of August 1996, personally appeared before me Mark
Slosberg, to me known tobe the _____________ of the corporation that executed
the within instrument, and acknowledged to me that ____ was authorized to sign
the same on behalf of the corporation as its free and voluntary act and deed for
the uses and purposes therein mentioned.
______________________
NOTARY PUBLIC in and for the
State of Washington, residing
at____________________
My commission expires: 1-19-97
LESSOR:
STATE OF WASHINGTON)
)SS.
COUNTY OF KING )
On this 4th day of September 1996, before me personally appeared Timothy
Treadway, to me known to be the Exec.VP of Market Center Management, Inc.,
property manager for Pacific Northwest Group B, Lessor, that executed the within
and foregoing instrument, and acknowledged the said instrument to be the free
and voluntary act and deed of said property manager, for the uses and purposes
therein mentioned, and on oath stated that he was authorized to execute the said
instrument.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the
day and year above written.
_______________________
NOTARY PUBLIC in and for the State
of Washington, residing at
_______________________
My commission expires: 1-19-97
<PAGE>
LESSOR:
STATE OF WASHINGTON)
)SS.
COUNTY OF KING )
I CERTIFY that I know or have satisfactory evidence that William G.
Williams III, is the person who appeared before me, and said person acknowledged
that he signed this instrument, on oath stated that he was authorized to execute
the instrument and acknowledged it as the Vice President of Equitable Real
Estate Investment Management Inc., as Advisor to State of California Public
Employees' Retirement System, Venturer, and California State Teachers'
Retirement System, Venturer, to be the free and voluntary act of such party for
the uses and purposes mentioned in the instrument.
DATED: 8/30/96 _____________________
NOTARY PUBLIC in and for the
State of Washington, residing at
_____________________
My commission expires: 4-7-98
<PAGE>
RULES AND REGULATIONS
Any directories provided by Lessor for the Buildings will be for the display of
the name and location of tenants only unless otherwise approved by Lessor.
Lessee shall not place any new or additional locks any doors of the Premises,
nor rekey any existing locks without the consent of Lessor.
Lessor reserves the right to close and keep locked all common entrances and
exits during such hours as lessor may deem advisable. Entrance by tenants to
the Buildings on Building holidays and weekends, other than Snow Days, shall be
limited to those doors designated by Lessor.
Lessor reserves the right to exclude or expel from the Buildings any person who,
in the judgement of Lessor, is intoxicated, under the influence of drugs or
whose conduct is otherwise disturbing to others, or who shall in any of the
rules and regulations.
Lessee shall not do or permit to be done within the Premises anything which
would unreasonably annoy or interfere with the rights of other tenants of the
Buildings.
Lessor will not be responsible for lost or stolen personal property, equipment
or money from the Buildings at any time.
Lessee shall not permit its employees or invitees to loiter in or about the
common areas, to obstruct any of the entries, passages, corridors or common
areas, nor to place any rubbish, litter, merchandise or material of any nature
into any Building, delivery, parking, traffic or other common areas except as
designated by Lessor.
Canvassing, soliciting, or peddling in and about the Buildings are prohibited,
and Lessee shall cooperate to prevent such activity.
During non-business hours and days, Lessor may refuse access to the Buildings or
the Premises by master key controlled by Lessor unless the person seeking access
is known to Lessor's employees, has a pass, or is properly identified. Lessor
shall not be liable for damages for any error in admitting or excluding any
person from the Building or Premises.
0. Lessee shall not make or permit any use of the Premises which may be
dangerous to life, limb, or property, nor permit any noise, odor, or vibrations
to emit from the Premises which are objectionable to Lessor or to other
occupants of the Buildings. Lessee shall not cause a nuisance or violation of
any regulation of any governmental agency within the Premises or the Building.
1. Lessee shall not commit any waste, damage, or injury to the Premises,
the Buildings or parking, loading, and other common areas.
2. Lessee shall not at any time display a "For Rent" sign upon the
Premises.
3. No vehicles or animals shall be brought into the Building.
4. Lessee and its employees shall park only in such areas as may be
designated by Lessor.
5. Lessee shall not use any person or contractor who has not been approved
by Lessor to perform window washing, cleaning, decorating, repair or other work
in the Premises.
6. Lessor reserves the right to prescribe the weight, size and position of
all safes and other heavy equipment brought into the Buildings and also the time
and manner of moving such items, merchandise, furniture and similar items in and
out of the Buildings. Movements of Lessee's property in, out, or within
Buildings are entirely at the risk and responsibility of Lessee.
17. Lessee shall not keep or use in or upon the Premises any oil, burning
fluid, gasoline, or other combustible or explosive materials.
18. Lessee agrees that it will install on its entrance door decals supplied
by Lessor that shall read "Showrooms are not open to the public. Authorized
professional buyers only."
19. Lessee shall at all times keep clean the glass of all showroom windows
and doors. Lessor reserves the right to require window treatments of specified
types on windows of the Premises which are visible from Atriums or Common Areas.
20. Lessee shall not waste electricity or water and shall cooperate fully
with Lessor to assure the most effective and economical operation of the
Buildings' lighting, heating, air conditioning, and other utilities systems.
Lessee shall refrain from adjusting any controls other than room thermostats
installed for Lessee's use.
21. Lessor reserves the right to approve the installation or use of any
light fixtures, office or showroom equipment which would cause the electrical
usage within the Premises to exceed a maximum allowable electrical load of 2.35
watts per square foot of Premises. Lessor also reserves the right to approve
connections to electric current other than through existing electrical outlets
provided for Lessee's use.
22. Lessee shall keep Lessor advised of the current telephone number(s) of
Lessee's employees who may be contacted in an emergency, i.e., fire, break-in,
vandalism, etc. If Lessor shall deem it necessary to respond to such emergency
in Lessee's behalf in order to protect the Premises or the Buildings, Lessee
shall pay all reasonable costs incurred, including any time spent by Lessor's
employees in responding to such emergency.
23. Lessor is not responsible to any tenant for the non-observance or
violation of the rules and regulations by any other tenant.
<PAGE>
LEGAL DESCRIPTION
SEATTLE DESIGN CENTER
Those portions of Blocks 1 and 2, Georgetown Riverfront Addition, and Blocks 26
and 27, Commerical Street Steam Motor Addition, City of Seattle, King County,
Washington, described as follows:
Beginning at the northwest corner of Lot 1, Block 27, of the Plat of
Commercial Street Stream Motor Addition, according to plat recorded in Volume 3
of Plats, page 85, in King County, Washington; thence N 00 (degrees) 46'18" E
along the northerly extension of the west line of said Lot 1 a distance of 10.00
feet to the south margin of South Orcas Street as established by Vacation
Ordinance No. 60786, records of the City of Seattle; thence S 89 (degrees)
05'18" E along said south margin a distance of 567.58 feet; thence along a curve
to the right having a radius of 15.00 feet, an arc distance of 24.47 feet
through a central angle of 93 (degrees) 29'10" to the west margin of Sixth
Avenue South as established by Acceptance Ordinance No. 98789 and Vacation
Ordinance No. 98793, records of the City of Seattle; thence S 04 (degrees)
23'52" W along said west margin a distance of 196.42 feet; thence along a curve
to the right having a radius of 15.00 feet an arc distance of 22.65 feet through
a central angle of arc distance of 22.65 feet through a central angle of 86
(degrees) 31'59" to the south line of Block 2 of the Plat of Georgetown
Riverfront Addition, according to plat recorded in Volume 11 of Plats, page 5,
in King County, Washington; thence N 89 (degrees) 04'09" W along said south line
of Block 2 and of Block 1 of said Plat of Georgetown Riverfront Addition a
distance of 514.75 feet to the east line of Lot 1 of said Block 1; thence
N 00 (degrees) 48'13" E along said east line of Lot 1 and its northerly
extension a distance of 107.93 feet to the alley centerline 8 feet north of the
north line of said Lot 1; thence N 89 (degrees) 04'09" W along said centerline a
distance of 40.36 feet to the southerly extension of the west line of said Lot
1, Block 27, Plat of Commercial Street Steam Motor Addition; thence N 00
(degrees) 46'18" E along the southerly extension of said Lot 1 and along the
west line of said Lot 1 of Block 27 of the Plat of Commercial Street Steam Motor
Addition, a distance of 107.95 feet to the point of beginning.
Also, Lots 1 through 18 inclusive of Block 17 of the plat of Commercial Street
Steam Motor Addition to the City of Seattle, recorded in Volume 3 of Plats, page
85, in King County, Washington, together with vacated alley and portion of South
Findlay Street adjoining, vacated per City Ordinance No. 110210.
EXHIBIT A
<PAGE>
[FLOOR PLAN APPEARS HERE]
<PAGE>
GUARANTY OF LEASE
This guaranty of Lease is attached to and is hereby made a part of that
certain Lease dated August 28, 1996 between Bay West Design Center, LLC, a
Delaware limited liability company, successor in interest to Pacific Northwest
Group B, a joint venture, ("Lessor"), and Net Information Systems, Inc. a
Washington corporation, which has been assigned to Design Automation Systems,
Inc., a Texas corporation dba EpicEdge ("Lessee"), pursuant to the Assignment
and Assumption of Lessee's Interest and Lessor's Consent dated December 9, 1999
(the "Assignment").
For value received and in consideration of and as in inducement to
Lessor entering into the Lease and consenting to the Assignment, the undersigned
guarantor ("Guarantor") unconditionally and continuously guarantees to Lessor,
its successors and assigns, the full and timely payment, performance and
observance by Lessee of all terms and conditions of the Lease to be paid,
performed and observed by Lessee.
This Guaranty and the obligations of Guarantor hereunder shall not be
terminated or impaired by reason of the granting by Lessor of any indulgences
to Lessee or the assertion by Lessor against Lessee of any of Lessor's rights or
remedies under the Lease, or by the relief of Lessee from any of Lessee's
obligations under the Lease by operation of law or otherwise, whether or not
Guarantor has received notice of same. Guarantor waives all suretyship defenses
and waives notice of any breach by Lessee.
This Guaranty shall continue in full force and effect as to any renewal,
amendment, modification, extension, assignment or transfer of the Lease or any
subletting of the Lease premises, whether or not Guarantor shall have received
notice of or consented to the same. The liability of Guarantor under this
Guaranty is primary and absolute, and Lessor may at its option proceed against
Guarantor without proceeding against Lessee. Any action against Guarantor may
be brought in the county in which the Lease premises are located, or in King
County, Washington, at Lessor's option.
Lessor's delay or failure to insist upon the strict performance or
observance of any obligation of Lessee under the Lease or to exercise any right
or remedy available under the Lease or at law or in equity, shall not be
construed to be a waiver of Lessor's prerogative to insist upon such strict
performance or observance or to exercise any such right or remedy. Receipt by
Lessor of rent or other payment with knowledge of a breach of any term or
condition of the Lease shall not be construed to be a waiver of such breach.
The liability of Guarantor hereunder shall not be affected or limited
by: the release or discharge of Lessee in any creditor's, receivership,
bankruptcy or other proceedings, the impairment, limitation or modification of
the liability of the Lessee or the estate of the Lessee in bankruptcy, or of any
remedy for the enforcement of Lessee's said liability under the Lease, resulting
from operations of any present or future provision of the federal bankruptcy
laws or other statutes or from the decision in any court; the rejection or
disaffirmance of the Lease in any such proceedings; any disability or other
defense of Lessee; or the cessation, from any cause whatsoever, of the liability
of Lessee.
Until all the terms, conditions and agreements of the Lease are fully
performed and observed by Lessee, Guarantor hereby waives the right to enforce
any claim, right or remedy which Guarantor now has or hereafter shall have
against Lessee by reason of any one or more payments or acts of performance in
compliance with the obligations of Guarantor hereunder, and Guarantor hereby
subordinates any liability or indebtedness of Lessee now or hereafter held by
Guarantor to the obligations of Lessee to Lessor under the Lease.
This Guaranty shall inure to the benefit of the Lessor, its affiliates,
successors and assigns, and shall be binding upon the successors and assigns of
Guarantor.
This Guaranty is irrevocable and may not be changed, affected,
discharged or terminated other than by an agreement in writing signed by
Guarantor and Lessor.
Guarantor shall pay all costs and expenses paid or incurred by Lessor in
enforcing either the Lease or this Guaranty, including court costs and a
reasonable amount for legal services performed by counsel, whether employed or
retained by Lessor.
Dated this 20 day of January, 2000.
Design Automation Systems, Inc.
________________________ 3200 Wilcrest, Suite 370, Houston, TX
By: Charles Leaver, President (713)784-2374
<PAGE>
ASSIGNOR:
STATE OF WASHINGTON)
)SS.
COUNTY OF KING )
On this 19th day of January 2000, personally appeared before me Mark
Slosberg, to me known to be the President of the corporation that executed the
within instrument, and acknowledged to me that he was authorized to sign the
same on behalf of the corporation as its free and voluntary act and deed for the
uses and purposes therein mentioned.
____________________
NOTARY PUBLIC in and for the
State of Washington, residing
at Seattle
My commission expires: 12/09/02
ASSIGNEE:
STATE OF TEXAS )
)SS.
COUNTY OF HARRIS)
On this 20th day of January 2000, personally appeared before me Charles
Leaver, to me known to be the President of the corporation that executed the
within instrument, and acknowledged to me that he was authorized to sign the
same on behalf of the corporation as its free and voluntary act and deed for the
uses and purposes therein mentioned.
____________________
NOTARY PUBLIC in and for the
State of Texas, residing
at Houston
My commission expires: 11/24/03
LESSOR:
STATE OF WASHINGTON)
)SS.
COUNTY OF KING )
On this 17th day of February 2000, before me personally appeared Timothy
Treadway, to me known to be the Executive Vice President of BW Seattle Corp., a
Washington corporation, which is manager of Bay West Design Center,LLC, a
Delaware limited liability liability company, Lessor, that executed the within
and foregoing instrument, and acknowledged the said instrument to be the free
and voluntary act and deed of said property manager, for the uses and purposes
therein mentioned, and an oath stated that he was authorized to execute the said
instrument.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the
day and year first above written
____________________
NOTARY PUBLIC in and for the
State of Washington, residing
at Seattle
My commission expires: 12/09/02
<PAGE>
EXHIBIT A
FLOOR PLAN
PARTIAL THIRD FLOOR PLAN
130 BUILDING
130 South Bemiston Avenue
Clayton, Missouri 63105
SUITE* INSIGNIA
303 COMMERCIAL GROUP, INC.
DRAIN 50 SOUTH BEMISTON AVENUE
8-25-98 CLAYTON, MISSOURI 63105
REVISED (314) 723-1134
SCALE
<PAGE>
EXHIBIT B
CERTIFICATE OF OCCUPANCY
TENANT: COAD SOLUTIONS, INC.
LANDLORD: CLAYTON INVESTORS ASSOCIATES LLC
BUILDING: 130 BUILDING
PREMISES: SUITE 303
DATE OF ORIGINAL LEASE EXECUTION:_________________
This Certificate of Occupancy is executed by Tenant and Landlord
pursuant to the provisions of the Lease referenced above, and shall be attached
thereto and become a part thereof for all purposes.
1. Tenant hereby acknowledges that it has inspected the Premises and
finds same to be substantially complete, in a tenantable condition and now
suitable for Tenant's intended use.
2. Tenant and Landlord hereby agree that all work to be done to the
Premises is acceptable and that the only work remaining to be done to the
Premises, all of which is of a minor nature, is as follows:
____________________________________________________
Such work is the responsibility of _____________ (insert Tenant or Landlord, as
the case may be) to complete and said party hereby agrees to promptly undertake
the completion of same. Tenant hereby agrees that such work may be completed
after it has taken occupancy of the Premises and the term of the Lease has
commenced; and further, that Tenant shall not be entitled to any abatement of
Tenant's Rent or other compensation as a result thereof.
3. Tenant and Landlord hereby agree, pursuant to Section 3.2 of the
Lease, that the actual Commencement Date of the term of the Lease shall be
_____________________ and that the Rent, as provided for in the Lease, shall
commence as of such date, and further, that the Lease will terminate at Midnight
(local time) on __________________, if not otherwise terminated pursuant to the
provisions of the Lease.
Executed this _________ day of _____________, 19____.
TENANT:
COAD SOLUTIONS, INC.
By:_________________________
Title:______________________
Date:_______________________
LANDLORD:
CLAYTON INVESTORS ASSOCIATES LLC
By: Insigna/ESG, Inc.
a Delaware corporation
Its: Agent
By: signature appears here
_________________________
Title: Vice President
______________________
Date: 1/22/99
_____________________
<PAGE>
EXHIBIT C
FORM 1
CONTRACTOR'S LIEN WAIVER
STATE OF MISSOURI)
)SS. WAIVER OF ACKNOWLEDGMENT
CITY OF ST.LOUIS )
WHEREAS,__________________("Contractor") has/have been employed by
____________________, as Tenant of the Premises described below, to perform
construction as a general contractor upon the following described premises,
to-wit:
("the Premises"), the specific terms and conditions of such employment being
governed by that certain Agreement dated the________ day of _______________,
19______, and
WHEREAS, Clayton Investors Associates LLC ("Landlord") is Landlord of
the Premises.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt of which is
hereby acknowledged, Contractor does hereby waive any right it may have to file
any and all mechanic's liens, claim of lien or right of lien against Landlord or
Landlord's interest in the Premises, provided by the statutes of the State of
Missouri, upon the above described Premises or any portion thereof. Further,
Contractor hereby acknowledges that Landlord has not contracted for or agreed to
pay for the work or materials called for in the contract described above.
Contractor agrees to look solely to Tenant or Tenant's interest in the Premises
to satisfy any mechanic's lien, right, claim or causes of action which
Contractor may have against Tenant arising out of the above referenced contract.
Contractor shall obtain a similar waiver and acknowledgment from all
subcontractors and suppliers.
EXECUTED this ______ day of _______________, 19_______.
CONTRACTOR:
______________________
By:___________________
Subscribed and sworn to before me this _________ day of _________, 19____.
My commission expires:_____________________________
_______________________
Notary Public
<PAGE>
EXHIBIT C
FORM 2
PARTIAL WAIVER OF LIEN
(Subcontractor of Material Supplier)
STATE OF MISSOURI)
)SS.
CITY OF ST.LOUIS )
WHEREAS, __________________("Contractor") has/have been employed by
_______________________, as Tenant of the Premises described below, to perform
construction as a general contractor upon the following described premises,
to-wit:
("the Premises"), the specific terms and conditions of such employment being
governed by that certain Agreement dated the ______ day of ____________,
19_____, and
WHEREAS, under authority of the above mentioned Agreement,_______
has/have employed as a subcontractor material supplier, to perform labor, to
furnish materials or to do both upon the Premises or some portion thereof, the
specific terms and conditions of such employment being governed by that certain
Agreement dated the ____________ day of _______________, 19_____, and
WHEREAS, Clayton Investors Associates LLC ("Landlord") is Landlord of
the Premises.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt of which is
hereby acknowledged, subcontractor or material supplier does hereby waive any
right it may have to file any and all mechanic's liens, claim of lien or rights
of lien against Landlord or Landlord's interest in the Premises, provided by the
statutes of the State of Missouri, upon the above described Premises or any
portion thereof. Further, subcontractor or material supplier hereby
acknowledges that Landlord has not contracted for or agreed to pay for the work
or materials called for in the contract described above. Subcontractor or
material supplier agrees to look solely to Tenant to satisfy any mechanic's
lien, right, claim or cause of action which subcontractor or material supplier
may have against Tenant arising out of the above referenced contract.
EXECUTED this _____day of ____________, 19____.
SUBCONTRACTOR OR
MATERIAL SUPPLIER:
_____________________
By:__________________
<PAGE>
_________________________________________________________________
130 BUILDING
STANDARD OFFICE LEASE
FOR
COAD SOLUTIONS, INC.
_________________________________________________________________
<PAGE>
130 BUILDING
STANDARD OFFICE LEASE
TABLE OF CONTENTS
ARTICLE INDEX PAGE
Article 1 Parties and Reference Data 1
Article 2 Demising Clause 1
Article 3 Term and Possession 2
Article 4 Rent and Other Charges 2
Article 5 Security Deposit 3
Article 6 Services by Landlord 3
Article 7 Repair and Maintenance 4
Article 8 Tenant Improvements 4
Article 9 Surrender Upon Termination 4
Article 10 Tenant's Default 4
Article 11 Right of Entry 5
Article 12 Fire and Other Casualty 5
Article 13 Insurance and Waiver of Recovery 5
Article 14 Condemnation 5
Article 15 Assignment and Subletting 6
Article 16 Liability 6
Article 17 Restrictions on Use 6
Article 18 Substitute Premises 6
Article 19 General Provisions 7
Exhibit A Floor Plan
Exhibit B Certificate of Occupancy
Exhibit C Lien Waivers
<PAGE>
130 BUILDING
STANDARD OFFICE LEASE
ARTICLE 1
PARTIES AND REFERENCE DATA
________________________________________________________
As used in the Lease, the following terms shall have the following
meanings:
1.1 Landlord: Clayton Investors Associates LLC, a Delaware Limited
liability company, having as its address for notice purposes 50 South Bemiston
Avenue, Suite 100, Clayton, Missouri 63105, Attn: J. John Reis.
1.2 Tenant: COAD Solutions, Inc, a Missouri Corporation, having as its
address for notice purposes 130 South Bemiston Avenue, Suite 303, Clayton,
Missouri 631105, Attn:: Mr. Tom Scheifler.
1.3 Date of this Lease: January 8, 1999
1.4 Date of final space plan: N/A
Landlord's plan submitted date: N/A
Tenant's plan approval N/A
1.5 Lease commencement date: February 12, 1999
Rent commencement date: February 12, 1999
Lease expiration date: February 29, 2004
1.6 Term: Five (5) years and seventeen (17) days.
1.7 Building: The office building in the City of Clayton, County of St.
Louis, known and numbered as the 130 Building, 130 South Bemiston Avenue,
Clayton, Missouri 63105, including all facilities and improvements thereon.
1.8 Premises: The Premises shall be located on floor 3, and shall be known
as Suite 303, located in the building as depicted on Exhibit A of this lease.
Landlord shall, at Landlord's expense, install building standard carpeting
throughout the premises and paint all previously painted wall surfaces.
1.9 Permitted Use: The premises shall be used and occupied by Tenant for
general office use and for no other purpose whatsoever; provided, however, that
Tenant shall not use or occupy the premises for any unlawful business use or
purpose.
1.10 Annual Base Rent and Monthly Base Rent Installment:
From 02/12/1999 - 02/28/1999: Annually $6,252.00; Monthly $521.00.
From 03/01/1999 - 02/29/1999: Annually $11,040.00; Monthly $920.00.
1.11 Public Liability Insurance Required: $1,000,000.00.
1.12 Security Deposit: $920.00
1.13 Expense Stop Amount: The Expense Stop Amount shall be based upon the
expenses, as defined in Section 4.2 of the lease of the building for 1998
(01/01/98 - 12/31/98) calendar year.
1.14 Brokers: Insignia Commercial Group, Inc.
Party responsible for payment: Landlord.
1.15 Addendum: One (1) page
1.16 Exhibits: The following Exhibits attached to this lease are
incorporated herein by this reference:
Exhibit A. Floor Plan
Exhibit B. Certificate of Occupancy
Exhibit C. Lien Waivers
ARTICLE 2
DEMISING CLAUSE
_________________________________
Landlord, for and in consideration of the rents, covenants and
agreements hereinafter mentioned and hereby agreed to be paid, kept and
performed by Tenant, does hereby lease to Tenant, and Tenant does hereby lease
from Landlord, the premises on the terms and conditions contained herein.
<PAGE>
ARTICLE 3
TERMS AND POSSESSION
_______________________
3.1 Term: The term shall commence on the lease commencement date and
shall continue for the term, unless earlier terminated as provided for herein.
3.2 Possession: If the Premises are not available or ready for occupancy
on the Lease Commencement Date, and such unavailability or unreadiness is not
occasioned or caused by Tenant (such as Tenant's failure to promptly approve
plans, make material or color selections, make improvements to the premises
which are to be made by Tenant or make other decisions which are necessary to
prepare the premises for occupancy), then the Lease Commencement Date shall be
the first day after the premises is available and ready for occupancy, and the
Lease Expiration Date shall be adjusted accordingly. Subject to the availability
of the premises and with the prior approval of Landlord, Tenant shall have the
right prior to the Lease Commencement Date to enter upon the premises at
reasonable times for the purpose of preparing the premises for its intended use.
The premises shall be deemed ready for occupancy if only insubstantial details
of construction, decoration or mechanical adjustments remain to be done. The
determination of Landlord's tenant finish representative for the building shall
be final as to whether the premises are ready for occupancy. Tenant's taking
possession of any portion of the premises shall be conclusive evidence that such
portion of the premises was in good order and satisfactory condition when Tenant
took possession of the premises, except as to damage caused by Tenant or
Tenant's agents. On the date on which Tenant takes possession of the premises,
the parties shall execute a Certificate of Occupancy in the form attached hereto
as Exhibit B confirming the lease and rent commencement dates and setting forth
any incomplete items (if any), but failure to execute such document shall not in
any manner affect the obligations of the parties hereunder. Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the premises or the building, or with respect to the
suitability of either for the conduct of Tenant's business. If by mutual consent
of Landlord and Tenant, Tenant takes possession of the premises prior to the
lease commencement date, then during such pre-term period, Tenant shall pay rent
as herein established on a prorata basis and such occupancy shall be under all
of the terms and conditions of this lease, but such pre-term occupancy shall not
affect this lease as herein otherwise established.
3.3 Common Areas: Tenant shall have the nonexclusive right to use, in
common with other tenants in the building and subject to the building rules, the
common areas in the Building.
ARTICLE 4
RENT AND OTHER CHARGES
______________________________
4.1 Rent:
Commencing on the rent commencement date, Tenant shall pay to Landlord
the annual base rent, payable in the monthly base rent installment specified in
Article 1.10 to Landlord at the location designated in Article 1.1 or at the
place designated from time to time by Landlord in advance and without demand on
the first day of each and every month throughout the term of this lease. The
rent for any partial month shall be prorated on the basis of thirty (30) days to
the month and shall be paid on the first day of such partial period. In
addition, Tenant shall pay to Landlord all charges for any services, goods or
materials furnished by Landlord under this lease, within thirty (30) days after
Landlord renders a statement therefore to Tenant. All sums hereunder are payable
without deduction, abatement or setoff of any nature whatsoever. All past due
obligations of Tenant shall bear interest at the rate of 1.833% per month or, if
such rate be unlawful, at the highest lawful rate.
4.1 Operating Cost Reimbursement:
The annual base rent shall be adjusted from time to time in accordance
with this section to reflect increases in the expense of operating the building
("Operating Costs"). The annual base rent, including the adjustments made
pursuant to this section, is referred to in this lease as the "Rent". Landlord,
during the last month of the building's fiscal year or as soon as thereafter as
practical, shall given Tenant written notice of Landlord's estimate of increases
in operating costs for the ensuing fiscal year as compared to the Expense Stop
Amount. As used herein ("Tenant's Prorata Share") shall be the ratio of the
premises to the total leasable are of the building. On or before the first day
of each and every month during the ensuing fiscal year, tenant shall pay to
Landlord 1/12th of Tenant's prorata share of each estimated amount. If at any
time(s) it appears to Landlord that the actual costs for the current fiscal year
will vary from Landlord's estimate by more than ten percent (10%), Landlord may,
by written notice to Tenant, revise Landlord's estimate for such year and revise
the 1/12th billing accordingly.
As soon as practical after the end of each fiscal year where estimated
increases in operating costs are required by this lease to be paid, Landlord
shall send to Tenant a statement of the actual amount of the preceding fiscal
year's increase (if any) over the Expense Stop Amount. If the estimated amount
exceeded the actual amount paid by Tenant, such excess amount shall be credited
to Tenant within thirty (3) days from the date of the statement. If the
estimated amount was less that the actual amount owed to Landlord, then Tenant
shall pay to Landlord such difference within thirty (30) days from the date of
the statement. If at the end of the building's fiscal year less than twelve (12)
months remain on this lease, the final estimated increase being paid by Tenant
in the final lease year shall prevail to the end of this lease.
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Operating costs shall include all costs of administration, operation, repairs,
maintenance, utilities, insurance and taxes, but shall not include federal or
state income taxes, tenant alterations, leasing commissions, interest expense,
debt service, capital items, or depreciation. If the Building is not fully
leased or if Landlord is not providing standard Building services to all tenants
during any calendar year, actual Expenses shall be adjusted to reflect a fully
serviced and leased Building for the purpose of making the adjustment to Annual
Base Rent. In order to avoid distortion and inequity, the following items shall
be considered operating expenses and amortized over the life of the items: (i)
capital items made after the commencement of this Lease that produce a reduction
in energy consumption or Operating Costs; (ii) capital items caused by
governmental requirements imposed after the commencement of this Lease.
4.3 Inspection. Tenant may inspect the books of the Building with
respect only to the Operating Costs of the Building at the office of the
property manager for the Building during normal business hours, provided such
inspection is requested within thirty (30) days from the statement date. Such
inspection, however, shall not extend the due date for payment. Unless Tenant
asserts specific error(s) within forty-five (45) days of statement date, the
statement shall be deemed to be correct. In the event of any dispute under this
paragraph, the determination of the independent certified public accountant then
servicing Landlord's books relating to the Building shall be binding on all
parties.
ARTICLE 5
SECURITY DEPOSIT
______________________
Simultaneous, with the execution of this Lease, Tenant shall deposit
with Landlord the Security Deposit as specified in Article 1.12 to be held to
guarantee the faithful performance by Tenant of all of Tenant's obligations
under this Lease. Any interest earned thereon shall be the property of
Landlord. Upon the occurrence of any event of default by Tenant, Landlord may,
from time to time, without prejudice to any other remedy, use the Security
Deposit to the extent necessary to cure such default, the remaining balance to
be returned by Landlord to Tenant after termination of this Lease. Such
Security Deposit shall not be considered an advance payment of Rent or a measure
of Landlord's damage in case of default.
ARTICLE 6
SERVICES BY LANDLORD
_____________________
Landlord covenants and agrees:
a. to furnish heat and air conditioning to provide a seasonable
temperature (subject to governmental regulations) for normal occupancy and use
of the Premises (defined as a density not to exceed one (1) person per 175
usable square feet in the Premises) under normal business operations daily from
8:00 A.M. to 6:00 P.M., Saturdays from 8:00 A.M. to 1:00 P.M., Sundays and legal
holidays excepted ("Normal Business Hours");
b. to provide elevator service during normal business hours and to
have at least one (1) elevator subject to call at all other times;
c. to provide water for lavatory and drinking purposes in places
designated by Landlord;
d. to provide maintenance services to keep the public areas of the
Building in good order and to cause the Premises to be cleaned by sweeping
floors, dusting the surfaces of normal office furniture, and emptying
wastebaskets on each business day, and to cause the floors of the public areas
and the Premises to be waxed or vacuumed and the windows to be cleaned at
reasonable intervals;
e. to furnish the labor necessary to relamp all fluorescent light
fixtures installed by Landlord in the Premises;
f. to provide electrical service at those points of connection
provided and installed by Landlord and in the manner and to the extent deemed by
Landlord to be standard. Tenant shall report to Landlord any material
deficiency in the services provided by Landlord or Landlord's Agents. Normal
electrical consumption on the Premises is as follows: electricity consumed by
Tenant for normal use of fluorescent lighting and small office machines
aggregating not more that four (4) watts per square foot per hour for normal
business hours. Tenant will not be allowed to exceed any of the amounts of
electricity in the Premises as herein referenced without Landlord's prior
written approval. If Tenant receives Landlord's written approval, Tenant is
responsible for all expenses associated with such excess electrical consumption.
Landlord reserves the right to install submeters or to conduct an electric
consumption audit to determine electrical consumption on the Premises at the
expense of Landlord. If desired by Tenant, a master meter may be installed at
Tenant's expense. Landlord shall have access to such metering devices at all
reasonable times and shall prepare a separate monthly statement of the excess
utilities used by such equipment based on the utility rates established from
time to time by the public utility furnishing such service. Tenant shall pay
the amounts shown on such statements to Landlord within thirty (30) days of
receipt.
Tenant acknowledges that any one or more such services may be suspended by
reason of accident, repair, alterations or improvements necessary to be made,
strikes, governmental restrictions, regulations or controls or causes beyond
the reasonable control of Landlord. No interruption, change or malfunction of
any of the services to be furnished by Landlord hereunder shall constitute an
eviction or disturbance of Tenant's use and possession of the Premises or the
Building or a breach by Landlord of any of Landlord's obligations hereunder or
render Landlord liable for damages or entitle Tenant to be relieved from any of
Tenant's obligations hereunder or grant Tenant any right of setoff or
recoupment. Landlord will however, use reasonable diligence to restore any such
interrupted service except where such event is required or recommended by
government authority.
<PAGE>
ARTICLE 7
REPAIR AND MAINTENANCE
Landlord will, at Landlord's own cost and expense, except as may be
provided elsewhere herein, make the necessary repairs of damage to the
Building's corridors, lobby, structural members and equipment used to provide
services furnished by Landlord hereunder, unless any such damage is caused by
acts or omissions of Tenant, Tenant's agents, or employees, in which event
Tenant will bear the cost of such repairs. Tenant will not injure the Premises
or the Building, but will maintain the Premises in a clean, attractive condition
and in good repair, except as to damage to be repaired by Landlord as provided
above and except for the cleaning services to be rendered by Landlord as
provided in Article 6.
ARTICLE 8
TENANT IMPROVEMENTS
Tenants shall not, without the prior written consent of Landlord, make
any alterations, improvements or additions to the Premises (hereinafter referred
to as a "Change"). If Landlord consents to a Change it may impose such
conditions with respect thereto as Landlord deems appropriate, including without
limitation, requiring Tenant to furnish Landlord security for the payment of all
costs to be incurred in connection with the Change, insurance against
liabilities, which may arise out of such work and the plans and specifications
together with all necessary permits for such Change. The work necessary to make
the Change shall be done at Tenant's expense by employees or contractors hired
by Landlord except to the extent that Landlord may agree otherwise, and shall be
performed in such manner and at such times as Landlord shall direct to minimize
disturbance to other tenants. Tenant shall promptly pay, when due, the cost of
all such work and of all decorating required by reason thereof. Tenant shall
also pay to Landlord a percentage of the cost of such work (such percentage to
be established on a uniform basis for the Building) sufficient to reimburse
Landlord for all expenses arising from Landlord's involvement with such work.
Upon completion of such work, Tenant shall deliver to Landlord, if payment is
made directly to contractors, evidence of payment, contractors affidavits and
full and final waivers of all liens for labor, services or materials (in the
form attached hereto as Exhibit C). Tenant shall indemnify, defend and hold
harmless Landlord and Building from all costs, damages and liens and expenses
related to such work. In connection with such work Tenant shall never be deemed
an agent of Landlord. All work done by Tenant or Tenant's contractors shall be
done in a first class workmanlike manner using only good grades of materials and
shall comply with all union and insurance requirements and all Conditions. Any
Change shall (without compensation to Tenant) become Landlord's property at the
termination of the Term, and shall, unless Landlord requests otherwise, be
relinquished to Landlord in good condition,ordinary wear excepted.
ARTICLE 9
SURRENDER UPON TERMINATION
9.1 Surrender. At the expiration of this Lease, Tenant shall surrender
the Premises broom cleaned and in good condition as it was at the beginning of
the Term, reasonable use and wear and tear excepted. Tenant shall also surrender
to Landlord all keys to their Premises and the Building. Prior to the expiration
of this Lease, Tenant shall remove all personal property. If Tenant fails to
remove personal property or fails to leave the Premises in the condition
described above, Landlord may remove such personal property and restore the
Premises and charge Tenant for such removal and restoration.
9.2 Holding Over. If Tenant without the consent of Landlord retains
possession of the Premises or any part thereof after termination of the Term,
Tenant shall pay to Landlord Rent at a rate equal to two hundred percent (200%)
for the Rent payable for the month immediately preceding the commencement of
said holding over computed on a per month basis for each month or part thereof,
Tenant shall pay Landlord all direct and consequential damages sustained by
reason of Tenant's retention of possession. Such retention of possession shall
constitute a month to month lease terminable in accordance with law.
ARTICLE 10
TENANT'S DEFAULT
If Tenant defaults in the payment of Rent, or any other monetary
obligation hereunder,for more than five (5) business days after written notice
of such default by Landlord, or if Tenant defaults in the performance of any
other covenant, agreement, condition, rule or regulation herein contained or
provided for, or hereafter established for more than twenty (20) days after
written notice of such default by Landlord, then (in addition to and as an
alternative to all other legal remedies) Landlord shall have the right either to
(i) terminate this Lease and Tenant's right to possession to the Premises, or to
(ii) terminate only Tenant's right to possession of the Premises, and either
such event, Landlord shall have the right to re-enter and/or repossess the
Premises, and dispose and remove therefrom Tenant, or other occupants thereof.
and their effects, and alter the locks and other security devises at the
Premises all without being liable for any prosecution or damages therefore. In
either event Landlord shall be entitled to recover from Tenant, in addition to
the Rent, all expenses incurred in connection with such default, including
repossession costs, legal expenses and attorney's fees (whether or not suit is
filed), and all expenses incurred in connection with efforts to relet the
Premises,including cleaning, altering,advertising and brokerage commissions; and
all such expenses shall be reimbursed by Tenant as additional "Rent, whether or
not such default is subsequently cured. If Landlord elects to terminate only
Tenant's right to possession, then Landlord may, at Landlord's option,
accelerate the entire amount then remaining unpaid under this Lease and recover
same forthwith from Tenant, together with all other charges recoverable
hereunder, and thereafter Landlord shall pay over to Tenant the net proceeds of
any total or partial reletting. If Landlord terminates only Tenant's right to
possession, then Landlord may relet the Premises for the account of Tenant
(either in the name of the Landlord or Tenant). Except as otherwise provided
herein, Tenant waives demand for Rent, demand for possession, notice of
forfeiture, notice of termination, and any all other demands or notices required
by law.
<PAGE>
ARTICLE 11
RIGHT OF ENTRY
Landlord and Landlord's representatives may enter the Premises at any
reasonable time for the purpose of inspecting the Premises, performing
Landlord's obligations under this Lease, performing any work which Landlord
elects to undertake for the safety, preservation, benefit or welfare of the
Building or other tenant's default, or exhibiting the Building or Premises for
sale, lease or financing during the last year of the Term of this lease.
ARTICLE 12
FIRE AND OTHER CASUALTY
If at any time during the Term of this Lease, the Premises or any
portions of the Building shall be damaged or destroyed by fire or other casualty
so as to render the Building unquestionably untenantable for 120 days or render
the Premises unquestionably untentantable for 120 days or twenty percent (20%)
of the unexpired term, whichever is less, then either party may elect, within
thirty (30) days from the date of casualty, to terminate this Lease on the tenth
(10th) day after such election. Any dispute hereunder shall be determined by an
independent architect selected by Landlord.
In any of the aforesaid circumstances, Rent shall abate proportionately
during the period and to the extent that the Premises is unfit for use by Tenant
in the ordinary conduct of Tenant's business. If this Lease is not terminated by
reason of such casualty, then Landlord shall repair and restore the Building
and Premises at Landlord's expense, with all reasonable speed and promptness,
subject to delays arising from shortage of labor or material, acts of god, war
or other conditions beyond Landlord's reasonable control; provided, however,
that Landlord shall not be required to restore andy alterations, additions or i
provements made by or for Tenant which would not belong to Landlord upon the
expiration of this Lease.
ARTICLE 13
INSURANCE AND WAIVER OF RECOVERY
13.1 Insurance. Tenant shall at all times during the Term maintain in
full force and effect with respect to the Premises public liability insurance
having the limits set forth in Article 1.11 hereof, all risk property insurance
upon all property owned or used by Tenant in the Premises in an amount not less
than ninety percent (90%) of the full replacement cost thereof, worker's
compensation and employer's liability insurance in form and amount required by
law, and such other coverage as may be reasonably required by Landlord or any
mortgagee of the Building, each in the standard form generally of use in the
State of Missouri in a company satisfactory ot Landlord. The amount of such
insurance coverage shall be subject ot increase upon the reasonable request of
Landlord. Such insurance shall be subject to modification or cancellation only
upon ten (10) day's notice to each certificate holder. Tenant,at or prior to
the Lease Commencement Date, and thereafter not less than thirty (30) days prior
to the expiration of any such policy, shall furnish Landlord with a certificate
of insurance n such coverage, such certificate to be in form acceptable to
Landlord and mortgagee the Building and, at the request of Landlord, to name
Landlord and any such mortgagee as an additional insured as their interests may
appear (or in the case of a mortgagee, by means of a standard mortgagee
endorsement).
13.2 Waiver of Recovery. Notwithstanding anything herein to the
contrary, Landlord and Tenant and all parties claiming under them herby mutually
release and discharge the other from all claims and liabilities arising from or
caused by any hazard covered by insurance on the Building or Premises, or
covered by insurance in connection with property on or activities conducted at
the Building or Premises, regardless of the cause of the damage or loss. This
release shall apply only to the extent that such loss or damage is covered by
insurance and only so long as the applicable insurance policies contain a clause
to the effect that this release shall not effect the right of the insured to
recover under such policies.
ARTICLE 14
CONDEMNATION
If all of the Premises is taken by condemnation, this Lease shall
terminate on the date when the Premises shall be so taken and Rent shall be
apportioned as of that date. If part of the Building or Premises is taken by
condemnation and the Building or Premises is thereby rendered not reasonably
suitable for the continued conduct of Landlord's or Tenant's business, taking
into consideration the nature, size and scope of such business immediately prior
to the taking, then either party may elect by giving written notice to the
other, to terminate this Lease. In the event of such termination, all charges
and Rent shall be apportioned as of the date of taking. If the taking involves a
part of the Premises and if neither party elects to terminate this Lease, then
with respect to the part not taken the Rent shall be reduced by the value that
the condemned part bears to the total value of this Premises, in which event
Landlord shall restore the Premises to an architecturally complete unit. No part
of any award shall belong to Tenant, except for amounts awarded directly to
Tenant by the condemning authority.
<PAGE>
ARTICLE 15
ASSIGNMENT AND SUBLETTING
Tenant shall not assign, mortgage or encumber this Lease, nor Sublet or
permit the Premises or any part thereof to be used by others, without the prior
written consent of Landlord in each instance, and any attempt ot do any of the
foregoing without Landlord's consent shall be void. Landlord, however, shall not
unreasonably withhold the consent to an assignee or subtenant provided the
assignee's or subtenant's occupancy and use of the space,in the reasonable
judgment of Landlord, is similar to that of other tenants in the Building and is
not detrimental to the Building or any other tenants of the Building. In no
event shall this Lease be assigned or the Premises sublet for a rent less than
Landlord's schedule or rents for comparable space in the Building at the time.
Tenant's request for Landlord's consent to an assignee for subtenant shall be in
writing and accompanied by: (i) a true copy of the documents of assignment or
subletting, (ii) information respecting the responsibility, reputation,
financial condition and business of the proposed assignee or subtenant. Such
request shall create in Landlord an option to terminate this Lease as to
portion of the Premises covered by the request and reduce Tenant's rental in
proportion to the space to be deleted. Said termination option must be exercised
within fifteen (15) days after receipt of such request. Notwithstanding any
consent by Landlord to and assignment or subtenancy, Tenant shall remain jointly
and severally liable (along with each approved assignee or subtenant who shall
automatically become liable for obligations of Tenant hereunder), and Landlord
shall be permitted to enforce the provisions of this instrument directly against
the undersigned Tenant and/or assignee or subtenant without proceeding in any
way against any other person. In any case where Landlord consents to any such
assignment, sublease or other transaction, Landlord may require that Tenant pay
Landlord a reasonable sum for attorney's fees arising incident to such
transaction. In no event shall any assignee or subtenant have any right to make
alterations in the Premises without the prior written consent of Tenant and
Landlord. If Tenant is permitted to sublease or assign at a Base Rent in excess
of that provided for herein, such excess shall be paid by Tenant to Landlord as
received.
ARTICLE 16
LIABILITY
Notwithstanding any other provision hereof to the contrary, Landlord or
Landlord's agents shall not be liable for any damage to property entrusted to
employees or agents of Landlord, nor for loss of or damage to damage to any
property by theft or otherwise, nor for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Building or from
the pipes, appliances or plumbing works therein or from the roof, street or
sub-surface or from any other place or resulting from dampness or any other
cause whatsoever. Landlord or Landlord's agents shall not be liable for
interference with the light or other incorporeal hereditaments, nor shall
Landlord be liable for any latent defect in the Premises or in the Building.
Tenant shall give prompt notice to Landlord in case of fire or accidents in the
Premises or in the Building or of defects therein or in the fixtures or building
equipment.
ARTICLE 17
RESTRICTIONS ON USE
Tenant shall not smoke nor allow, permit or suffer any noise or odor to
escape from the Premises in a manner which will disturb other occupants of the
Buildings, or occupy the Premises in such manner to disturb the peaceful and
quiet occupancy of the other tenants of the Building or constitute a public or
private nuisance, or keep open any exterior or corridor door thereto, or permit
any portion of the Premises visible from the exterior thereof to become
unsightly or in disrepair, or to bring into the Building any hazardous material,
or permit any unsafe or hazardous condition to exist in the Premises.
No sign, fixture, advertisement or notice shall be displayed, inscribed, painted
or affixed by Tenant on any part of the inside or outside of the Building
without the prior written consent of Landlord. Tenant shall not install any
draperies, shades or blinds visible from the exterior of the Building, unless
the color, materials, shape, style and size have the prior approval of Landlord.
Tenant shall not install or permit the installation of vending machines or other
special equipment in the Premises without prior written consent of Landlord.
Movement in and out of the Building of furniture or office equipment, or
dispatch or receipt by Tenant of any merchandise or materials, shall be done
only during the hours designated by Landlord and by means of elevator and exit
designated by Landlord. Tenant shall cooperate with Landlord in securing the
Building during non-normal business hours.
ARTICLE 18
SUBSTITUTE PREMISES
If, during the Term, Landlord requires the Premises for use in
conjunction with another suite or for other reasons connected with the Building
planning program, upon notifying Tenant in writing, Landlord shall have the
right to move Tenant to a substitute premises in the Building, at the Landlord's
sole cost and excepting that a revised Exhibit A shall become part of this Lease
and shall reflect the Location of the new space and Article 1 of this Lease
shall be amended to include all correct data as to the new space. Landlord shall
give Tenant at least sixty (60) days notice of Landlord's intention to relocate
the Premises. Tenant shall have thirty (30) days from the date of Landlord's
notice to accept or reject the substitute premises. If Tenant refuses to accept
the substitute premises or fails to reply to Landlord's notice within the time
stated, this Lease shall terminate upon Tenant vacating the Premises or upon
three (3) months from the dated of Landlord's notice to Tenant, Whichever occurs
first.
<PAGE>
ARTICLE 19
GENERAL PROVISIONS
19.1. Notices: Any notice under this Lease shall be in writing and
shall be deemed to be duly given only when mailed by certified mail, addressed
to Landlord at the address at which it receives rent or addressed to Tenant at
the Premises.
19.2. Successors And Assigns: The covenants, conditions and agreements
contained in this Lease shall run with the land and be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and such assigns and subtenants as may be permitted
hereunder; provided however, that upon the transfer of Landlord's interest
hereunder the transferor shall have no liability for causes of action or
defaults accruing thereafter.
19.3. Whole Contract: This Lease, together with all the Exhibits
referenced in Article 1 and Addendum, if any, constitutes the sole and entire
contract between the parties relative to the Premises, and shall be binding upon
the parties hereto and their respective heirs, personal representatives,
executors, successors and permitted assigns, as the case may be. No
representations as to the Premises have been made by Landlord to Tenant either
directly or indirectly prior to or at the execution of this Lease that are not
herein expressed.
19.4. Applicable Law and Partial Invalidity: This Lease shall be
governed by and enforced in accordance with the laws of the State of Missouri.
The invalidity or unenforceability of any provision of this Lease shall not
affect or impair any other provision.
19.5. Amendment: This Lease may not be altered, amended, modified,
or extended except by written instrument signed by Landlord and Tenant.
19.6. Waiver: The Waiver by Landlord of any breach of any term,
condition or covenant of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any term, condition or covenant of this Lease.
No failure by Landlord to take action against Tenant on account of any failure
by Tenant to perform any of Tenant's obligations under this Lease shall be
deemed to be a waiver by Landlord, except only where Landlord has provided to
Tenant a written waiver, signed by Landlord.
19.7. Brokerage: Each of the parties hereto warrants to the other that,
except as set forth in Article 1 hereof, such party has not obligated the other
party for any finders', brokers' or other agents' commission, fees or other
remuneration in connection with this Lease; and Tenant shall indemnify and hold
Landlord harmless from and against any and all claims for such fees alleged to
have been incurred by Tenant.
19.8. Estoppel: Within ten (10) days after request by Landlord or any
mortgagee of Landlord or any proposed purchaser of the Building, Tenant shall
deliver to Landlord or any proposed mortgagee or purchaser of the Building, a
Lease Estoppel Certificate in the Building standard form, certifying, if such be
the case, that this Lease is in full force and effect, and unmodified (or
stating any modifications), that Tenant is in possession of the Premises, that
Tenant has commenced the payment of Rent required under this Lease, that there
are no defenses or offsets to this Lease claimed by Tenant as of the date of
such Lease Estoppel certificate, that to the best of Tenant's knowledge,
Landlord is not in default hereunder, the dates to which any Rent or other
charge has been paid in advance, and such other information as may be
requested.
19.9. Subordination: The Lease is hereby made subject, junior and
subordinate to the Mortgage or Deed of Trust and to all renewals, modifications,
consolidations, replacements and extensions of the Mortgage or Deed of Trust so
that all rights of the Tenant under the Lease shall be subject, junior and
subordinate to the rights of the Mortgage or beneficiary of a Deed of Trust and
to all renewals, modifications, consolidations, replacements and extensions of
the Mortgage or Deed of Trust as fully as if such instruments had been executed,
delivered and recorded prior to the Lease, all on the conditions and subject to
the other provisions of this Agreement.
19.10. Attornment: Tenant agrees to recognize the Mortgagee lender
or holder under the Mortgage or beneficiary of a Deed of Trust or any purchaser
at a foreclosure sale involving the Mortgage or Deed of Trust as its landlord
under the Lease without the necessity of any other or further attornment than in
this paragraph contained (and this paragraph shall be considered an attornment).
Tenant hereby waives any and all rights to termination of the Lease by reason of
the foreclosure of the Mortgage or Deed of Trust, and if any court holds the
lease to be terminated by reason of a foreclosure of the Mortgage or Deed of
Trust, this Agreement shall be deemed to be a new lease between the purchaser at
such foreclosure, as landlord, and Tenant, as tenant, for the balance of the
term of the Lease for the same demised premises at the same rental therein
provided and upon the identical terms and conditions as therein provided. Also
in the event of any such holding, at the written request of Tenant or the
purchaser at the foreclosure, Tenant and such purchaser at foreclosure shall
execute and deliver to each other a new lease for the balance of the term of the
Lease for the same demised premises at the same rental therein provided and upon
the same terms and conditions as therein provided.
19.11. Authority: Tenant, in the event that it is a Corporation,
hereby covenants and warrants that (a) it is duly authorized to do business in
the State of Missouri; (b) the person executing this lease on behalf of Tenant
is an officer of Tenant duly authorized by Tenant to sign and execute this Lease
on Tenant's behalf; and (c) this Lease is a valid and binding obligation of
Tenant, enforceable in accordance with the Lease's terms.
19.12. Non-Binding Unless Signed: Submission of the form of this Lease
for examination shall not bind Landlord in any manner, and no lease or other
obligation of Landlord shall arise until this instrument is signed by both
Landlord and Tenant, approved by the holder of any mortgage, deed of trust or
other financial encumbrance on the Building having such approval rights, and
delivery is made to each party.
7
<PAGE>
19.13. Rights: No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person are granted to
Tenant by this Lease.
19.14. Requirements of Lender: If a lender requires as a condition to
lender's lending funds, the repayment of which is to be secured by financial
encumbrance on the Building, that certain modifications be made to this Lease,
which modifications will not require Tenant to pay any additional amounts or
otherwise materially change the rights or obligations of Tenant hereunder,
Tenant shall, upon Landlord's reasonable request, execute appropriate
instruments effecting such modifications.
19.15. Confidentiality: The terms and conditions of this Lease are
confidential and may not be disclosed by Tenant or Tenant's Representatives to
any third parties without the prior written consent of Landlord.
19.16. Landlord's Default: In the event of any default on the part of
Landlord, Tenant shall give notice by certified mail to any holder of a
financial encumbrance covering the Building, whose address shall have been
furnished to the Tenant, and shall offer such holder a reasonable opportunity to
cure the default, including time to obtain possession of the Building by power
of sale or a judicial foreclosure, if such should prove necessary to affect a
cure.
19.17. Landlord's Rights: Landlord shall, from time to time, have the
right ot change the name of the Building and to make, establish and promulgate
reasonable rules and regulations for the Building, and the occupants and tenants
thereof, and Tenant shall observe, keep and comply with such rules and
regulations. In no event shall Landlord be liable to Tenant for consequential or
incidental damages arising out of or relating to this Lease.
19.18. Property Taxes: Tenant shall be liable for and shall pay before
delinquency, taxes levied against any personal property or trade fixtures placed
by Tenant in the Premises.
19.19. Headings: The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
19.20. Interpretation Of Words: All words which refer to Landlord and
Tenant shall be considered to be of the gender and number required, and if
Tenant be more than one person, the provisions hereof shall apply to them
jointly and severally.
19.21. Time Of The Essence: Time is of the essence with respect to the
performance and observance of all of the terms, covenants and conditions hereof
by Tenant.
*19.22 *19.22
IN WITNESS WHEREOF, the parties have executed this Lease as of the day
and year first above written.
Landlord: Tenant:
Clayton Investors Associates LLC COAD Solutions,Inc.
By: Insignia/ESG,Inc.
a Delaware corporation
Its: Agent
By: /s/ [Signature Appears Here] By: /s/ [signature Appears Here]
____________________________ ____________________________
Title: Vice President Title: Vice President
___________________________ __________________________
<PAGE>
Addendum To
THE 130 BUILDING STANDARD OFFICE LEASE
Date: January 8, 1999
By And Between
CLAYTON INVESTORS ASSOCIATES LLC (LANDLORD)
And
COMPETITIVE ADVANTAGE SOLUTIONS (TENANT)
This Addendum amends and supplements the Lease and shall govern in the event of
any inconsistency between the Lease and this Addendum. The terms defined in the
Lease shall have the same meaning in th Addendum.
ARTICLE 19
GENERAL PROVISIONS
*19.22 Add the following language at the asterisk 19.22 (page 8):
Expansion-Larger Quarters
(To Another Insignia Commercial Group Building)
Landlord agrees that if during the term of this Lease, Tenant leases office
facilities in any of the following buildings: The 130 Building, The 222
Building, The Aragon Place Building, The Clayton Tower Building or The Town &
Country Building, this Lease shall be terminated simultaneously with the
commencement of the new lease.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EPICEDGE,
INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<SECURITIES> 0
<RECEIVABLES> 4,514,736
<ALLOWANCES> (37,000)
<INVENTORY> 0
<CURRENT-ASSETS> 6,316,418
<PP&E> 684,139
<DEPRECIATION> (198,878)
<TOTAL-ASSETS> 15,675,685
<CURRENT-LIABILITIES> (9,654,776)
<BONDS> 0
0
0
<COMMON> (217,862)
<OTHER-SE> (5,803,047)
<TOTAL-LIABILITY-AND-EQUITY> (15,675,685)
<SALES> 29,439,569
<TOTAL-REVENUES> 29,439,569
<CGS> (26,342,696)
<TOTAL-COSTS> (26,342,696)
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> (98,781)
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<INCOME-CONTINUING> (5,937,376)
<DISCONTINUED> (430,078)
<EXTRAORDINARY> 0
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<NET-INCOME> (6,367,454)
<EPS-BASIC> (0.32)
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