Document:

<PAGE>

                                                                   EXHIBIT 10.33

CONTRACT AND SERVICES

THIS AGREEMENT, between Caspian Consortium-K whose mailing address is, *
(hereinafter called COMPANY) and IDS Engineering, Inc. (hereinafter called
CONTRACTOR) whose address is 600 Century Plaza Drive Building 140, Houston, TX
77073 USA, provides for the performance CONTRACTOR of the work and services
stipulated below on the terms and conditions set forth.  Unless otherwise
provided herein, all notices shall be given writing to the addresses stated
above or addresses given in writing to the other party from time to time.

1. WORK TO BE PERFORMED:

1.1. CONTRACTOR shall perform the work services which are described in Exhibit A
attached hereto, and made a part hereof, or by supplement or amendment by
written Work Order issued pursuant hereto (whether or not any Exhibit A be
attached), at the price or rates and on the terms described in either Exhibit A
or in such Work Orders. Work Orders (distinguished from oral or written field
work orders) may be issued only by COMPANY management personnel. Such work and
services shall be done in accordance with the plan specifications, instructions,
and other provisions which are either attached hereto and made a part hereof, or
are separately identified by signatures and incorporated herein by reference and
consistent with COMPANY standards. If such standards are not provided,
acceptable industry practice, local codes, or CONTRACTOR'S standards may be
employed, each with COMPANY prior written approval

2. ENVIRONMENT

2.1. CONTRACTOR shall exercise due diligence prevent pollution and any other
type of environmental damage during performance under this Contract.  At all
times CONTRACTOR shall exercise great care and due caution regarding
CONTRACTOR'S engagement in ultrahazardous activities or use of ultrahazardous
materials during performance under this Contract, including but not limited to
activities involving the use of radioactive sources or explosive substances or
corrosive substances.

2.2. CONTRACTOR shall observe and comply with all applicable laws, rules,
orders, decrees and regulations concerning environmental protection as well as
COMPANY'S requirements regarding environmental protection.  Further, in those
cases where has provided CONTRACTOR with a copy of an environmental protection
policy and/or made reference to a set of environmental guidelines, CONTRACTOR
shall comply with, or cause its employees, agents, servants, and subcontractors
to comply with said environmental protection policy and/or Guidelines.

3. CHANGES:

3.1. COMPANY reserves the right during the progress of the work to make any
changes, additions, or deletions in the original plans and specifications. All
changes shall be made in writing and accepted by both parties before CONTRACTOR
proceeds with the work thereon.  Provisions permitting such alterations without
specific consent of the insurer shall be included in the terms of any
performance bond required hereunder, so that the validity of such bond shall not
be affected thereby. No bills for extras will be allowed unless ordered and
authorized by COMPANY, irrespective of any terms which may be contained in any
published price list, field work order, delivery ticket, or other paper (other
than Work Order) which may be issued in connection with the performance of the
work hereunder (whether specific reference is made to this contract or not), the
terms and conditions of this contract shall apply in determining the rights and
liabilities of the parties.

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

4. COMMENCEMENT AND TERM:

4.1. CONTRACTOR shall commence performance of the work and services contemplated
by this contract and thereafter prosecute the same diligently to completion
consistent with good industry practices and within the period of time prescribed
by COMPANY hereunder, or if none are specifically set forth, within a reasonable
time under the circumstances.  Any Work Order issued hereunder may be canceled
by either party by written notice given at least fifteen (15) days previous to
the date provided for commencement of work and services thereunder.  If no
specific term is stated in Exhibit A, this Contract and Services Agreement shall
continue in effect until terminated by written notice by either party given at
any time when there is no outstanding work in progress or under order.

5. SUPERVISION, INSPECTION AND DIRECTION:

5.1. COMPANY shall have no power or authority to direct, supervise or control
CONTRACTOR with respect to the means, manner or method of performance of the
work or services performed or rendered hereunder, and CONTRACTOR in the exercise
of his independent employment and as an independent contractor, shall select the
means, manner and method of performance thereof CONTRACTOR is responsible to
COMPANY only for the results to be obtained, but the work and services performed
or rendered hereunder shall meet with the approval of COMPANY or its designated
representative who shall be entitled to inspection to the extent necessary to
assure such results.  At all times when work is in progress, there shall be a
foreman or head workman on the grounds as representative of the CONTRACTOR, and
also copies of the plans and specifications if such are part of the agreement.
Instructions given to such foreman or head workman shall be considered as having
been given to the CONTRACTOR. COMPANY'S failure to make inspection or test, or
to discover defective workmanship, material or equipment, shall not relieve
CONTRACTOR from any responsibility.  Payment of any funds by COMPANY shall not
constitute a waiver or acceptance of defects.

6. RECORDS AND AUDIT:

6.1. CONTRACTOR agrees to keep accurate records on a daily basis of the names of
the employees, starting and ending time for each length of lunch period, travel
time, the type of work performed by each, the materials used and other relevant
information COMPANY expressly requests, and to preserve same for at least two
years after the completion of each separate job under this Contract.  COMPANY
shall have the right and from time to during reasonable business hours to
inspect and audit all of CONTRACTOR'S books and records bearing directly or
indirectly on the work and services performed hereunder and the prices and rates
charged therefore.

7. MATERIALS AND PERSONNEL:

7.1 CONTRACTOR shall furnish at its own expense any labor, superintendence,
bonds, permits, machinery equipment, tools, fuel, supplies, facilities
materials, transportation and all other things necessary for the performance and
completion of any work services hereunder, except such items as COMPANY
specifically agrees to furnish.  Unless otherwise specified, all materials shall
be new and of a grade and quality deemed by COMPANY to be adequate for the
required use.

7.2. To the extent possible, in providing services hereunder, CONTRACTOR shall
utilize National personnel, suppliers and service contractors whose price,
quality, availability, and times of delivery are comparable to International
price, quality, availability, and times of delivery.

8. RISK OF LOSS:

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

8.1. CONTRACTOR: CONTRACTOR shall assume liability at all times for damage to or
destruction of CONTRACTOR'S equipment including, but not limited to, all tools,
machinery, and appliances regardless of when or how such damage or destruction
occurs. COMPANY shall be under no liability to CONTRACTOR for any such loss.

8.2. COMPANY: Until written acceptance by COMPANY of construction or
installation work, or work and other services, all risk of loss, damage or
destruction by any cause of such work or of such materials or equipment of
CONTRACTOR used in such work shall be borne by CONTRACTOR.

9. INSURANCE:

9.1. CONTRACTOR and sub-contractors shall provide insurance specified on
Exhibit B attached hereto, covering all operations hereunder, with companies
forms and amounts acceptable to COMPANY, and shall furnish such evidence thereof
as may be required by COMPANY.

10. INDEMNITY:

10.1. CONTRACTOR agrees to release COMPANY from all liability for, and shall
protect, defend, indemnify and hold free and harmless COMPANY, its shareholders,
and their officers, directors, and employees from and against any and all
claims, demands and causes of action of every kind and character arising out of,
incident to, or in connection with this Contract or performance of work or
services hereunder, regardless of whether the liability therefore is based upon
some alleged act or omission of COMPANY or of some third or other party, whether
negligent or not, and including without limitation by enumeration all taxes,
claims, debts, fines, penalties, forfeitures, patent infringements, loss of use,
death, injury and damages to all CONTRACTOR personnel and property, together
with the amount of judgments, penalties, interest, court costs, legal and other
fees and expenses in connection therewith.

10.2. COMPANY agrees to release CONTRACTOR from all liability for, and shall
protect, defend, indemnify and hold free and harmless CONTRACTOR and the
officers, directors, and employees of CONTRACTOR from and against any and all
claims, demands and causes of action of every kind and character arising out of,
incident to, or in connection with this Contract or performance of work or
services hereunder, regardless of whether the liability therefore is based upon
some alleged act or omission of COMPANY or CONTRACTOR or of some third or other
party, whether negligent or not, and including without limitation by enumeration
all taxes, claims, debts, fines, penalties, forfeitures, patent infringements,
loss of use, death, injury and damages to all COMPANY personnel and property,
together with the amount of judgments, penalties, interest, court costs, legal
and other fees and expenses in connection therewith.

11. FAILURE TO PROSECUTE WORK:

11.1. Time and quality of work shall be of the essence of this Contract.  In
case CONTRACTOR at any time shall fail in any way to prosecute the work herein
provided for with reasonable diligence and in a good, workmanlike and safe
mariner, COMPANY at its option upon three days written notice delivered to
CONTRACTOR, or its representative, or deposited in a registered mail or courier
service for which receipt is returned, terminate the work hereunder and
thereafter proceed with action for damages, or in the alternative, by its own
employees, or by separate independent contract, take control of this work for
the purpose of completing the same, furnishing all additional; labor, materials
and equipment required except for that equipment or materials which were
previously furnished by or bought by COMPANY for CONTRACTOR'S performance of
work and services hereunder.  In the latter event, CONTRACTOR

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

shall be entitled, upon completion of the work, to the difference between the
Contract price and the reasonable cost and expense incurred by COMPANY in
finishing said work. If such cost of completion should exceed the Contract
price, CONTRACTOR agrees to pay the excess to COMPANY as liquidated damages
agreed upon by the parties hereto in consideration of the difficulty of
ascertaining the actual damages by other means. If Contractor contends that its
performance is being delayed by COMPANY in any way, it shall notify COMPANY in
writing immediately of the exact nature of such claim or be held to have waived
same.

12. COMPLIANCE:

12.1 CONTRACTOR agrees to comply with COMPANY'S safety rules and procedures
while working on or near COMPANY'S premises and with all valid applicable
federal, republic, state and local laws, decrees, orders rules and regulations.
Identification of specific laws, orders, rules and regulations, which may be
made in an Exhibit C attached hereto, shall not limit the general applicability
of this compliance provision.  If CONTRACTOR is a licensed contractor, the
provisions of this Contract shall not apply to the extent that services of the
CONTRACTOR performed hereunder are subject to conflicting requirements under its
license issued by the appropriate governmental regulatory body.  Such services
shall be governed by the CONTRACTOR'S license and any published regulatory
requirements referred to therein. This Contract shall be construed under and in
accordance with the laws of the state of Texas, U.S.A., with jurisdiction in
Harris County.  CONTRACTOR waives its right to claim COMPANY has no
jurisdictional right of access to such court system in the event that COMPANY
seeks adjudication of a claim, controversy or dispute between the Parties hereto
(including the enforcement of a subsequent award); and COMPANY waives its right
to claim lack of jurisdiction as a defense in such court system in the event
CONTRACTOR files such an action.  Titles to the provisions herein shall not be
interpretive of the Contract terms.

12.2 CONTRACTOR shall observe and comply with all applicable laws, rules,
orders, decrees regulations and orders concerning health and safety, including
but not limited to those of the Russian Federation and any political subdivision
thereof, as well as the COMPANY'S requirements, if any.  Further, in those cases
where COMPANY has provided CONTRACTOR with a copy of the health and safety
policy and/or made reference to a set of health and safety guidelines,
CONTRACTOR shall comply with, and cause its employees, servants, agents, and
subcontractors to comply with said health and safety policy and/or health and
safety guidelines.

13. SETTLEMENT AND PAYMENT:

13.1 CONTRACTOR agrees to perform the work hereunder for not to exceed sum of, *
excluding Value Added Tax (VAT).  Before final settlement, CONTRACTOR shall show
payment and release of all debts, taxes, liens, claims, charges and obligations
arising by operation of law or otherwise out of its performance of the work
hereunder.  COMPANY may withhold funds due CONTRACTOR hereunder or otherwise,
without interest, to assure itself of all such obligations, or the obligations
of CONTRACTOR to COMPANY in connection with any other between COMPANY or any of
its affiliated companies and CONTRACTOR, or to satisfy any provisions of
relating to claims against CONTRACTOR.

CONTRACTOR shall invoice COMPANY monthly for the services performed. Upon
completion of the work in accordance with the terms hereof and in accordance
with Exhibit A, and after final acceptance thereof by COMPANY'S authorized
representatives, COMPANY agrees to pay CONTRACTOR the final invoice.  All
payments shall be made to CONTRACTOR's bank by wire transfer:

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

*
*
*
*
*
*

Payment will be made within thirty days of invoice.  Payment is deemed to be
made when COMPANY instructs its bank to wire transfer the funds to the
CONTRACTOR.  Each party pays its own banking costs.

13.2 Except as otherwise provided in the contract or a supplemental Contract,
all income and other applicable taxes, levies or assessments now or hereafter
imposed upon or with respect to, or measured by, the compensation paid to
CONTRACTOR, or the materials, equipment, work or services furnished or performed
hereunder by CONTRACTOR, shall be for the account of, and promptly paid by
CONTRACTOR to the appropriate governmental authority.  To the extent that the
COMPANY is required to withhold taxes from payments due CONTRACTOR under this
Contract, COMPANY is authorized to do so and shall promptly notify Contractor of
such withholding.

14. CONFIDENTIALITY

Except as to information provided to COMPANY's contractor Valmet, CONTRACTOR
hereby agrees to keep confidential and not to disclose or make any use of any
confidential or proprietary information, knowledge, data or other information of
the COMPANY relating to any business of the COMPANY or any of its clients,
except as the COMPANY may otherwise consent in writing.  Such written consent by
COMPANY must be given prior to any disclosure by CONTRACTOR.  This restriction
pertains not only to documents and information generated by the CONTRACTOR
itself, but also to all documents and information provided to him by others in
the COMPANY or otherwise acquired during, the course of this Contract.  The
CONTRACTOR further agrees not to deliver, reproduce, or in any way allow such
information, or any documentation relating thereto, to be delivered or to be
used by any third parties without the specific prior decision or consent of a
duly authorized representative of the COMPANY.  It is understood by CONTRACTOR
that the economic information regarding the Work and Services to be Performed is
sensitive information and disclosure of same could cause significant damage to
the COMPANY.

15. ASSIGNMENT:

15.1. This Contract may not be assigned by CONTRACTOR without the express
written permission of the COMPANY.  Any Assignment made without prior written
approval of the COMPANY is null and void.

16. MISCELLANEOUS CONTRACT
PROVISIONS:

16.1. CONTRACTOR agrees that it will comply with all valid, applicable laws,
orders, decrees, rules and regulations presently in force, or which may be
enacted in the future if they regulate the work and services performed
hereunder.

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

16.2. CONTRACTOR agrees that neither it nor any subcontractor, employee, agent
or other entity shall, directly or indirectly, in connection with the
performance of services for COMPANY: (A) Make any payment to any officer or
employee of any government, or to any political party or official thereof, where
such payment either (1) is unlawful under laws applicable thereto, or (2) would
be unlawful under the Foreign Corrupt Practices Act of 1977 as amended (the
"Act"), of the United States of America, if CONTRACTOR were a "domestic concern"
within the meaning of such Act, (B) Make any payment to any person, if such
payment constitutes an illegal bribe, illegal kickback or other illegal payment
under laws applicable thereto; or (C) commit, directly or indirectly, any other
act or omission having the same effect under the law.

16.3 This Contract, including all Exhibits, Work Orders, oral orders, plans,
specifications, instructions, and other provisions which are issued pursuant
hereto and attached hereto or incorporated herein by reference, constitutes the
entire agreement between the parties.  No other representations, bids,
memoranda, or other matter shall vary, alter or interpret the terms hereof. In
the event there is a conflict between the terms of this Contract and the
provisions of Exhibit A, Work Order, oral orders, plans, specifications,
instructions, and other provisions, the terms of this Contract shall prevail.
Failure of the COMPANY to exercise by option, right, or privilege hereunder, or
to demand compliance as to any obligation or covenant shall not constitute a
waiver of the same, or any such succeeding right, privilege, or option, or of
strict performance of the same or any succeeding obligation or covenant.

EXECUTED in duplicate Russian and English originals on this 24 day of January,
2000.

CONTRACTOR
IDS Engineering, Inc.

By:       /s/ William A. Coskey

Title:    President

Name:     William A. Coskey

COMPANY
Caspian Pipeline Consortium-K

By:         *                   By:         *

Title:      *                   Title:      *

Name:       *                   Name:       *

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

                                  EXHIBIT "B"

                              CONTRACTOR INSURANCE
                                  REQUIREMENTS

                             CONSULTING AND GENERAL

CONTRACTOR shall, at its expense, maintain or cause to be maintained the
insurance coverages set forth below with insurance companies acceptable to
COMPANY. Prior to commencement of work and services hereunder, CONTRACTOR shall
deliver to certificates (a) evidencing the issuance of insurance containing the
coverages required herein and (b) providing that the insurance shall not be
canceled or materially changed without thirty (30) days prior written notice to
COMPANY. Commencement or performance of services without delivering the
certificate(s) of insurance shall not constitute a waiver of CONTRACTOR'S
obligation to provide the required coverages. Failure to obtain such insurance
shall be a breach of the Contract.

1. Comprehensive General Liability Insurance, including coverage for Contractual
liability for this Contract, and Cross-liability, in the amount of $1,000,000
combined single limit each occurrence for body injury and property damage. If
CONTRACTOR'S General Liability Insurance is written on a "claims-made" form it
must provide for (i) a retroactive date prior to, or coincident with, the
commencement of work and services under this Contract and (ii) a minimum
extended claims reporting period of one (1) year.

2. If automobiles are to be furnished by CONTRACTOR in performance of work and
services under this Contract, Comprehensive Automobile Liability Insurance,
covering all vehicles owned, non-owned, or hired, in the amount of $500,000
combined single limit occurrence for bodily injury and property damage.

3. If aircraft, including helicopters, are to be furnished by CONTRACTOR in
performance of work and services under this Contract, CONTRACTOR must obtain
Aircraft Liability Insurance, with contractual liability provisions, covering
bodily injury including passenger liability and property damage, hangerkeepers
liability and ground liability including products and completed operations in
the amount of at least $10,000,000 combined single limit each occurrence.

4. If watercraft is to be furnished by CONTRACTOR in performance of the work and
services under this Contract, then a supplement this Exhibit shall be executed
by the parties.

GENERAL CONDITIONS FOR INSURANCE

A. CONTRACTOR hereby waives its right of subrogation against the COMPANY to the
extent of liabilities assumed under this Contract and shall cause its insurers
to waive any rights of subrogation against COMPANY. With regard to insurance to
be taken out by CONTRACTOR hereunder, all insurance under polices taken out by
CONTRACTOR shall be primary insurance because such insurance applies to the
obligations assumed hereunder.

B. With respect to insurance maintained hereunder by CONTRACTOR, all insurance
coverages afforded by policies of insurance maintained by CONTRACTOR shall be
primary insurance as such coverages apply the liabilities assumed under this
Contract.

C. Where use of subcontractors has been approved by the COMPANY, CONTRACTOR
shall require all such contractors to obtain, maintain, and keep in force during
the time which they are engaged, adequate

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

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                                                                   EXHIBIT 10.33

insurance coverage and shall furnish COMPANY acceptable evidence of such
insurance upon request. Any deficiencies in such coverage shall be the sole
responsibility of CONTRACTOR.

D. No form of CONTRACTOR liability self-insurance, including but not limited to
insuring with a parent, subsidiary, or affiliate organization, is acceptable or
allowable under the terms of this Contract, unless AGREED TO BY COMPANY PRIOR TO
COMMENCEMENT OF WORK AND SERVICES HEREUNDER.

CONTRACTOR
IDS Engineering, Inc.

By:             /s/ William A. Coskey

Title:          President

Name:           William A. Coskey

COMPANY
Caspian Pipeline Consortium-K

By:             *

Title:          *

Name:           *

By:             *

Title:          *

Name:           *

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                                                          Page 8
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

                                   Exhibit A
                              Programming Services

A.  Scope of Work:

     Part 1: Work
     Caspian Pipeline Consortium-R (CPC-R) and Caspian Pipeline Consortium-K
     (CPC-K) are together building a unitary crude oil pipeline from Tengiz,
     Kazakhstan to the Black Sea.  Initial design will include five pump
     stations, a tank farm, a marine terminal and SPM.  The design of the
     pipeline will include a SCADA system for the control and monitoring of the
     pipeline system from Tengiz pump station to the Black Sea Marine Terminal
     Facility.  SCADA will maintain overall surveillance and control
     responsibilities of the pipeline, inclusive of the Pump Stations, Pipeline
     Block Valves, Marine Terminal, Tank Farm and SPM.  The pipeline will be
     controlled and monitored from an Operations Control Center located at the
     Marine Terminal, Primary, real time local control of the pump stations and
     Marine Terminal Facilities will be accomplished by using Programmable Logic
     Controllers (PLCs).  The PLCs will be monitored and controlled by the
     Primary SCADA system and by a Human Machine Interface (HMI) in the local
     control rooms.

     A single scope of work has been written herein to provide for the uniform
     and homogenous working of this single computer control system.  Work to be
     performed by the Contractor for the system in Russia shall be performed
     under contract with CPC-R; and work to be performed for the system in
     Kazakhstan shall be performed under contract with CPC-K.  All programming
     work by Contractor shall be performed in the United States.  Any additional
     work to be performed later by Contractor in either Russia or Kazakhstan
     shall be governed by separate service contracts with CPC-R or CPC-K,
     respectively, at the rates set forth herein in Part 2 of this Scope of
     Work.

     Contractor is to provide the assembly and programming of the PLC systems
for five (5) pump stations in Russia and Kazakhstan.  There will be five (5) ESD
PLCs and approximately a total of thirty (30) General Purpose PLCs for five (5)
pump stations.  Contractor will assemble the PLC hardware that will be supplied
by the Company's contractor, Valmet.  The Contractor will program the systems as
per Company's requirement and specifications.  The five (5) pump stations are
Tengiz, Atyrau (in Kazakhstan), and Astrakhan, Komsomolsk and Kropotkin (in
Russia).  General Purpose PLCs and specialty systems will be Allen Bradley
ControlLogix and ESD PLC will be Hima. PLC hardware be provided by the Company's
contractor, Valmet, to the Contractor.

1. Contractor to program PLCs as per the following listed documents provided by
   Company.

     .  P&ID
     .  Control Narrative
     .  Cause & Effect
     .  Flow Chart
     .  Project Standard
     .  Location of system (cabinet/HMI/etc.)
     .  I/0 loading (for each PLC)
     .  "Package Vendor" interface data
     .  Wiring/Communication architecture

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                                                          Page 9
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

  .  CPC Standard for PLC Controllogix Program and Data File Structure

2. Hardware to be supplied by Company's contractor, Valmet, directly to
   Contractor:

  .  Cabinets (as per size and quantity recommended by Contractor)
  .  ESD PLC modules, processors, communication, I/Os, Power Supplies, Hima
     Cables, etc.
  .  General Purpose PLC modules, processors, communication, I/Os, Power
     Supplies, Allen Bradley cables, etc.
  .  Remote I/0 modules
  .  Remote I/0 cabinets

3. Contractor shall layout the cabinets as per industry common practice and
   from the following information from the Company:

   3.1  Bill of material for each PLC

   3.2  Brand, style, color, finish, maximum depth (preference, 600 mm) of
        Cabinet. Company will specify height of cabinet (2 meters). Cable entry
        into the cabinet shall be through the top, 200 mm top clearance, use
        compression type terminals.

   3.3  Limits of space at job site.

4.  Contractor to determine if multiple PLCs of like functions (for example:
    mainline motor driven pumps) could be mounted in one cabinet.

5.  Contractor will select the size of cabinets (width and depth only).
    Contractor will inform the Company of the cabinet sizes. Company will
    instruct Valmet to purchase and deliver the cabinets directly to the
    Contractor. Note that all cabinets are to be of the same depth.

6.  Contractor to provide the wiring drawing and cabinet layout drawings to
    Company as early as possible. Company will use drawings to complete loop
    drawings and other design documents.

7.  Contractor will provide the temporary communication cables (company supplied
    specification) to connect the systems in their shop. Communication cables
    (supplied by others) external to cabinets will be available only at the job
    site.

8.  For required hardware missed by Company the Contractor is responsible to
    inform Company to provide or cause to provide such in an expeditious manner.
    If the missed items are minor and the Contractor can provide them in a more
    expeditious manner, Contractor shall provide and charge the Company as long
    as Company has given prior approval for the purchase.

9.  Contractor shall verify that system hardware is complete.

10. Contractor shall be responsible for assembling the hardware and ensuring
    all assemblies are complete and work as a system.

11. Contractor to interface the PLC system with SCADA.

12. Contractor to supply to Company the following documents as a minimum;

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                    Page 10
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

     12.1  Assembly drawings
     12.2  Logic diagrams of software
     12.3  Functional description of software
     12.4  Original copies of all software generated by Contractor

13.  All software developed under this contract is and shall remain the sole
     property of the Company. Contractor may not use such software for any
     other applications.

14.  Contractor to provide five (5) lap top PLC based computers for interface
     and programming the PLC systems.  One lap top computer per pump station
     with the following minimum configuration; Pentium 111, 64 Meg RAM,
     6 Gigabyte Hard Drive, Window 98 operating system.

15.  A functional test to ensure proper operation of all devices and components
     shall be performed prior to shipment.  Company reserves the right to
     witness and approve the functional test.**

     15.1  Contractor to submit Factory Acceptance Procedure for Company's
           approval.
     15.2  FAT to include coordinated test with SCADA supplier.
     15.3  Company to be given two weeks notice before test.
     15.4  Contractor to supply simulated input/outputs used in testing.

16.  Contractor to inform Company of the location where hardware is to be
     delivered and assembled.  Delivery of system to job site will be by Valmet.
     Coordination between Contractor and Valmet is required.*

17.  Contractor to inform Company of the location where programming will be
     performed.**

**Note: Contractor is advised that it may be necessary to ship PLCs to schedule-
------  critical locations prior to completion of logic coding and testing.
        Contractor shall assure that he has enough available PLC and support
        hardware at his premises to complete all programming and testing without
        interruption should the object hardware require shipment prior to
        software completion.

18.  Schedule:

     18.1 System for Tengiz and Astrakhan pump stations should be at job
          site by*

     18.2 System for the other Pump Stations should be at job site by at a
          later "supplied dates".

     18.3  Loop Checking
           18.3.1  Tengiz - *
           18.3.2  Astrakhan - *
           18.3.3  Atyrau - *
           18.3.4  Komsomolsk - *
           18.3.5  Kropotkin - *

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                                                         Page 11
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

     18.4  Start-up
          18.4.1  Tengiz - *
          18.4.2  Astrakhan - *
          18.4.3  Atyrau -  *
          18.4.4  Komsomolsk - *
          18.4.5  Kropotkin - *

19.  Contractor to provide a complete and detailed design, manufacturing,
     delivery schedule

20.  All software and PLC programs shall be Y2K compliant.

21.  Cabinets will be located at an environmentally-controlled room at job site.
     Remote I/0 units will not be necessarily in a controlled environment.

22.  ESD and General Purpose PLC system shall be assembled, wired, and tested,
     within respective cabinets.

23.  Contractor is to ensure all assemblies are in compliance with applicable
     Russian and Kazakhstan regulations.

24.  Preparation for shipment:

     24.1 Contractor shall submit procedures for the cleaning, preservation,
          packing, handling, lifting, shipping and storage of the material and
          equipment under this order.

     24.2 Contractor shall ensure all equipment is adequately packed, crated,
          boxed skidded or otherwise protected and prepared for shipment in such
          a manner as to prevent loss and damage during handling, transportation
          and storage.

25.  Hardware count: (Preliminary)

     25.1  Tengiz (Kazakhstan)

       .  Analog Input modules
       .  Analog Output module
       .  Discrete Input modules
       .  Discrete Output modules
       .  Control Net Boards
       .  Ethernet boards
       .  Processors
       .  Chassis
       .  Power supplies
       .  General Purpose PLC cabinets (number will change depending on Vendor
          recommendation)
       .  Remote 1/0 cabinets
       .  ESD PLC system, with a cabinet

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                    Page 12
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

   25.2  Astrakhan (Russia)

    .  Analog Input modules
    .  Analog Output module
    .  Discrete Input modules
    .  Discrete Output modules
    .  Control Net Boards
    .  Ethernet boards
    .  Processors
    .  Chassis
    .  Power supplies
    .  General Purpose PLC cabinets (number will change depending on Vendor
       recommendation)
 .  Remote 1/0 cabinets
 .  ESD PLC system, with a cabinet

     25.3  Atyrau (Kazakhstan) - estimate same as Astrakhan pump station

     25.4  Komsomolsk (Russia) - estimate same as Astrakhan pump station

     25.5  Kropotkin (Russia)  - estimate same as Astrakhan pump station

Part 2: Rates for Work Performed

All Rates for work (programming services) performed outside Kazakhstan under
this contract shall be at the Standard or Overtime Rates shown below.

Contractor is expected to provide site support during installation,
commissioning and startup.  In the event that Contractor is requested to perform
any of the following work inside Kazakhstan, a separate services contract will
be entered into by the parties for such work at the Overseas Rates contained
below.  VAT will be added to each invoice as a separate line item for work
performed inside Kazakhstan (Overseas Rate) under the separate contract

Rates for Engineering, Services:

These rates include all Contractor's charges for insurance, taxes, overhead and
profit.  These rates also include Contractor's overhead costs of Computer work
stations and software for normal engineering and drafting projects.

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                                                         Page 13
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

CLASSIFICATION                  Std. Rate   O.T. Rate   Overseas Rate

Sr. Project Engineer                 *           *           *

Project Engineer                     *           *           *

Sr. Engr/Programming Spec.           *           *           *

Engineer                             *           *           *

Project Control Engineer             *           *

Designer                             *           *

Operator/Draftsperson                *           *

Project, Clerk/Translator            *           *

Senior Clerk                         *           *

Clerk/Secretary                      *           *

Company written approval will be required before authorizing overtime hours.
Contractor shall not work over 16 hours in a 24-hour day.  The overtime rate
shall apply to all hours worked over 40 hours per week, or on Contractor
holidays, or on weekends if worked at Company's request.

Travel and Expenses
Contractor project-related travel expenses will only be incurred when required
and authorized in advance by Company, and will be billed at cost plus * percent.
For prolonged assignments performed outside the Houston office area, a
reasonable per them allowance will be agreed upon by the parties in lieu of
certain expenses and charges for applicable personnel.

Reproduction
All third party reproduction costs will be billed at cost plus * percent. Plots
issued to Company whether preliminary or final will be billed at * per 22" x 34"
sheet. Laser print drawings or copies (11" x 17", letter or legal size) issued
to Company will be billed at * each sheet. Binders (including tabs) issued to
Company will be billed at * each .

Subcontracts/Miscellaneous Costs
All miscellaneous and third party costs will be billed at cost plus *
percent.

Reimbursable Equipment
In the event that Contractor procures hardware and equipment under Item 8,
Part 1, Contractor shall be reimbursed by Company at cost.

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                                                         Page 14
<PAGE>

Client Name:                Caspian Pipeline Consortium-K          January, 2000
Proj. Name:                 *
Project Number:             *

B.  Payment Schedule

The compensation paid to Contractor for Programming Services shall be based upon
the rates above and shall be based upon the labor hours necessary to complete
the Scope of Work.  Contractor shall submit invoices on a monthly basis,
indicating the hours worked, for these services.

Compensation to be paid to Contractor for hardware and equipment supplied by
Contractor, if any, shall be invoiced by Contractor not more than ninety days
before delivery of the SCADA system to the Company.

All invoices should be sent to the Company in care of-.

                    Caspian Pipeline Consortium-Kc/o Caspian Pipeline
                    Consortium-R
                    *
                    *
                    *
                    *
                    *
                    *
                    *
All payments shall be made thirty days after receipt of invoice. Contractor's
invoices are subject to withholding tax payable by Company to the Republic of
Kazakhstan.

C.  Cost Estimate of W

This contract is a "not-to-exceed contract' for the value of * which estimate is
set forth on the attached Cost Estimate, A-1. Because the cost of the services
has been estimated, it is imperative that when the Contractor's costs reach
eighty-percent of the value of the contract * Contractor shall notify the
Company of the status of the work.

                                END OF EXHIBIT A

*CONFIDENTIAL TREATMENT REQUEST
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.

                                                                         Page 15
<PAGE>

                                      A-1

                             COST ESTIMATE - CPC-R

<TABLE>
<CAPTION>

 ACCOUNT       DESCRIPTION               MATERIALS  IDS LABOR   IDS    EXPENSES   Sub-total-RUSSIA  Sub-total-KAZAKHSTAN    TOTALS
-----------------------------------------------------------------------------------------------------------------------------------
<C>         <S>                          <C>        <C>         <C>    <C>        <C>               <C>                     <C>

      1-0   Project Management                *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------

      2-0   General PLC                       *           *        *        *               *                   *               *
            Program/Doc/QA-QC
------------------------------------------------------------------------------------------------------------------------------------

      3-0   Pump PLC Programming (2           *           *        *        *               *                   *               *
            sta. Only)
------------------------------------------------------------------------------------------------------------------------------------

      4-0   ESD PLC Programming & Doc         *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------

      5-0   Hardware Design & Specs.          *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------

      6-0   Control Rack Fabrications         *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------

      7-0   Miscellaneous                     *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------

      8-0   Taxes                                                                                                *               *
------------------------------------------------------------------------------------------------------------------------------------

             TOTALS WITHOUT CONTINGENCY        *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------

           TOTALS INCLUDING CONTINGENCY        *           *        *        *               *                   *               *
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Note: Contingency is * on materials and expenses and nearly * on IDS labor.

Key Points and Assumptions:

 .  Completed drawings for the Tengiz and Astrakhan will be delivered to IDS
   Engr. By *.
 .  Similarities between the three grassroots pump stations will help to make a
   streamless approach to some of the programming duties.
 .  No significant delays in hardware deliveries.
 .  Includes five (5) lap-top computers as specific in your scope document with
   the Allan Bradley and HIMA software packages loaded.
 .  Includes FAT at Valmet-Houston as stated in your scope of work document.
 .  Includes all items listed as deliverables in your scope of work item #13,
   plus required control cabinets.
 .  Includes one project manager (native Russian) and also one lead programmer,
   to insure good communications and programming efficiency.

Items that may reduce the job costs:

 .  Although it is expected to incur some similarities in the stations, more
   similarities could reduce the project costs
 .  Time spent on documentation efforts of programs could be reduced on specific
   requirements for each station

                                                                         Page 16<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

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