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Software License Agreement - Novell Inc. and Bitstream Inc.

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CONFIDENTIAL                     NOVELL, INC
--------------------------------------------------------------------------------
                                

                                  NOVELL, INC.

                           SOFTWARE LICENSE AGREEMENT

     This Software License Agreement ("Agreement"), having an Effective Date of
September 6, 1996, is agreed to by Novell, Inc., a Delaware corporation, with a
place of business at 1555 North Technology Way, Orerm, Utah 84057 ("Novell"),
and Bitstream Inc., a Delaware corporation, with a place of business at 215
First Street, Cambridge, Massachusetts 02142 (Licensee).

1.   PREVIOUS AGREEMENT. Bitstream and Novell have executed that certain
     Software License Agreement, dated February 23, 1996 (the "Existing
     License"). The parties desire to amend and restate the Existing License in
     its entirety. Upon its execution, this Agreement shall supersede and
     replace the Existing License. Notwithstanding anything to the contrary in
     the Existing License, all rights and obligations under tile Existing
     License shall terminate and be replaced by file rights and obligations
     under this Agreement.

2.   PURPOSE. Novell has developed and is the owner of, or otherwise has
     authority to license the Envoy technology. Novell and Licensee are
     interested in satisfying the needs of their respective customers and in
     increasing use and commercialization of the Envoy technology. Subject to
     payment of royalties, Licensee will then be able to license customized
     development tools for the Envoy technology and value added solutions
     developed from the Envoy technology to Licensee's OEMs. Licensee will also
     be able to bundle Novell's generally available Envoy Application Product
     with Licensee's products as well as sell the Envoy Application Product on a
     stand-alone basis. This Agreement describes the relative rights and
     obligations of Novell and Licensee with respect to development, use, and
     distribution of the Envoy Technology by Licensee.

3.   BITSTREAM FONTS. As part of the consideration for this Agreement, Novell
     and Licensee shall execute Amendment I to the Bitstream License Agreement
     immediately upon execution of this Agreement, a copy of which amendment is
     attached hereto as Exhibit A.

4.   DEFINITIONS. Capitalized terms in this Agreement have the meanings stated
     below or defined elsewhere in this Agreement. A reference to a particular
     exhibit is to an exhibit to this Agreement and a reference to a particular
     section is to a section of this Agreement unless stated otherwise.

     a.   Annual Royalty Period shall mean each sequential one year period from
          the earlier of (i) the date of first customer ship of the Level 2 SDK,
          or (ii) November 1, 1996.

     b.   Bundled Products means (i) the combination of the Envoy Application
          Product and Licensee's hardware or software products that Licensee
          will market and sell as a single product offering, and (ii) the
          combination of the Envoy Application Product and the hardware or
          software products of Licensee's OEMs that Licensee's OEM will market
          and sell as a single product offering.

     c.   Binary Code shall mean Code that loads and executes without further
          processing by a software compiler or linker or that results when
          Source Code is processed by a software compiler.

                                                               SEPTEMBER 5, 1996

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CONFIDENTIAL                     NOVELL, INC
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     d.   Code means computer programming code. Unless specifically stated
          otherwise, Code shall include Binary Code, Source Code, and any
          Maintenance Modifications to Code or Enhancements to Code in existence
          from time to time.

     e.   Confidential Information. "Confidential Information" means the terms
          of this agreement and any information and materials which are marked
          or identified by Novell as confidential or proprietary, and any trade
          secrets or know-how of Novell disclosed to Licensee under this
          Agreement, but does not include information that has been publicly
          known or available without breach of this Agreement or independently
          developed without reference to Confidential Information.

     f.   Core Libraries means the compiled binary library file(s), supporting
          dlls and header files that expose Envoy API functions through static
          or latent bindings.

     g.   Derivative Works means a work that is based on one or more preexisting
          works (such as a revision, enhancement, modification, translation,
          abridgement, condensation, expansion, or any other form in which such
          preexisting work may be recast, transformed, or adapted) and that, if
          prepared without authorization of the copyright owner of such
          preexisting work, would constitute copyright infringement under US
          law.

     h.   End User means an entity who acquires a product for internal use. "End
          User" does not include an entity which resells, sells, licenses,
          rents or leases products to other parties in the regular course of
          business.

     i.   Enhancement means changes, additions or new releases, other than
          Maintenance Modifications, to Code and to related documentation that
          improve functions, add new functions, or improve performance by
          changes to system design or coding.

     j.   Envoy Application Product means Novell's Envoy product on all
          platforms available (including Envoy 7 for Windows 95), including any
          accompanying documentation and any updates, upgrades, and interim
          releases that Novell makes generally available to the public during
          the term of this Agreement. Envoy Application Product includes both
          the Envoy Viewer and the Envoy Driver.

     k.   Envoy Driver means the printer driver that is designed to function
          only with the standard system print calls, such as the Graphical
          Driver Interface (GDI) in the MS Windows operating systems, to enable
          applications to create Envoy Files on disk, save to a runtime
          executable, spool the print process, and launch the Envoy Viewer.

     1.   Envoy Files means files in Envoy format usually identified with a .evy
          extension.

     m.   Envoy Viewer means a viewer that allows a user to view and manipulate
          Envoy Files and/or the runtime viewer that, when bound to an Envoy
          File, creates an executable that enables the user to view Envoy Files.

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CONFIDENTIAL                     NOVELL, INC
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     n.   Envoy API Layer means the Envoy application programming interface
          (API) to which programmers develop programs that communicate with the
          Core Libraries to create, modify, save, or render Envoy Files.

     o.   Level 2 SDK means the software developer kit that identifies and
          contains all the Envoy API calls to view an Envoy File as well as to
          create an Envoy File using the Envoy Driver functions and includes
          sample source code, and information that enables a developer to (i)
          create customized Envoy Viewers for distribution with electronic
          content, (ii) embed the Envoy Viewer technology into the developer's
          applications, and (iii) embed the Envoy Driver technology for creating
          Envoy Files into the developer's application.

     p.   Licensee Products means Licensee's software products that Licensee
          makes available from time to time.

     q.   Maintenance Modification means any modification or revision to Code or
          to documentation, other than an Enhancement, that corrects an error or
          provides another incidental correction.

     r.   Minimum Guaranteed Payment shall mean the minimum royalty amounts set
          forth in Section 12.e that Licensee will be required to pay Novell for
          each Annual Royalty Period.

     s.   Novell Products means collectively Level 2 SDK and Envoy Application
          Product.

     t.   OEM means any legal entity or person that receives from Licensee the
          right to bundle the Novell Products with products of OEM and
          distribute the Bundled Product to End-Users directly or through other
          OEMs.

     u.   Payment Target shall mean an amount equal to    [*]
          for the corresponding Annual Royalty Period.

     v.   Revenues shall mean gross revenues derived from the Novell Products
          (or Bundled Product if so specified), minus returns (and the related
          uncollectible receivable), without deduction for costs of product,
          rebates or collection or adjustments.

     w.   Source Code shall mean the human-readable form or the Code and related
          system documentation, including all comments and any procedural
          language.

5. SDK DISTRIBUTION.

     a.   DISTRIBUTION LICENSE GRANT. Subject to the terms and conditions of
          this Agreement and payment of the royalties and fees identified in
          Section 12, Novell hereby grants Licensee a world-wide,
          non-transferable, exclusive (except as to any licenses Novell has
          granted or may grant to Corel Corporation) license under copyright
          during the term of this Agreement to reproduce and distribute to OEMs,
          by any method or medium of distribution, either directly or through
          distributors, copies of Level 2 SDKs.

---------
* Certain confidential information has been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a Request for Confidential
  Treatment.

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CONFIDENTIAL                     NOVELL, INC
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          The exclusivity of this license is expressly conditioned upon the
          following requirements. Should Licensee fail to substantially achieve
          the requirements set forth below, Novell may terminate the
          exclusivity of this license grant upon 90 days written notice and
          Licensee's license set forth in this Section 5 shall become a
          non-exclusive license.
          i.   Licensee shall submit its formal marketing and launch program to
               Novell for review and approval;
          ii.  On a quarterly basis, Licensee will review with Novell its
               activities, goals, objectives and marketing plans for the next
               calendar year quarter;
          iii. Both parties will mutually agree upon Licensee's goals and
               objectives in writing, which goals and objectives will be
               established in such a manner that they can be quantitatively
               reviewed and evaluated; and
          iv.  Licensee shall make all Minimum Guaranteed Payments as and when
               due and payable.

     b.   OEM LICENSE. Licensee agrees to license each Level 2 SDK to its OEMs
          by means of a written sublicense signed by both Licensee and OEM. The
          license shall provide the same level of protection for Novell's
          interests in the SDKs as Licensee seeks by agreement to provide for
          its own software of similar nature. Notwithstanding the foregoing, the
          licenses under which Licensee makes the SDKs available will provide a
          level of protection which is customary for similar software in the
          United States and will be provided to Novell for review and approval
          prior to any distribution.

     c.   RESTRICTIONS. Licensee shall only distribute or sublicense Level 2
          SDKs (including pre-release versions) that have been approved by
          Novell as evidenced by a written letter from Novell signed by the
          Project Manager stating that the SDK is approved for distribution.
          Each Enhancement, update, or upgrade to the SDK's must be approved by
          Novell. Novell's approval shall not be construed as an endorsement of
          the product by Novell. Licensee shall not authorize OEMs to distribute
          or sublicense the Level 2 SDK.

     d.   SUPPORT. Licensee shall provide all support to OEMs of the Level 2
          SDK. Licensee shall not refer OEMs to Novell for support. Licensee
          shall report to Novell in writing any bugs, coding errors, or any
          general deficiency that takes away or limits the functionality of the
          product as delivered. Novell will respond within five (5) working days
          that it acknowledges receipt and will provide a written explanation of
          its intended course of action within ten (10) working days of receipt
          of the reported problem from Licensee.

     e.   OWNERSHIP. Novell shall own the Level 2 SDK and all modifications and
          Derivative Works thereto. To the extent Licensee may own any
          copyright, patent, or other interest in the above, Licensee agrees to
          assign and hereby assigns to Novell, and Novell accepts, Licensee's
          entire world-wide right, title and interest therein. Licensee shall
          retain ownership of all value add tools Licensee bundles with the
          Level 2 SDK.

     f.   DEVELOPMENT OF LEVEL 2 SDK. If Novell does not complete development of
          the Level 2 SDK, then Licensee agrees to accept the Level 2 SDK as
          currently available and complete development of the Level 2 SDK as
          mutually agreed upon by the parties and in accordance with all
          standards and formats associated with Envoy.

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                                                               SEPTEMBER 5, 1996


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CONFIDENTIAL                     NOVELL, INC
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6. ENVOY APPLICATION PRODUCT DISTRIBUTION.

     a.   LICENSE GRANT. Subject to the terms and conditions of this Agreement
          and payment of the royalties and fees identified in Section 12, Novell
          hereby grants to Licensee a non-exclusive, non-transferable license
          under copyright during the term of this Agreement:
          i.   to reproduce and distribute externally to End Users, either
               directly or through distributors, copies in Binary Code form only
               of the Envoy Application Product bundled with Licensee Product
               and as a stand-alone product; and
          ii.  to sublicense to Licensee's OEMs the right to reproduce and
               distribute the Envoy Application Product bundled with OEM's
               product.

     b.   END USER LICENSE. The End User's use of the Envoy Application Product
          shall be governed by the Novell license agreements included with the
          Envoy Application Product. Licensee and Licensee's OEMs shall not
          modify the Envoy Application Product or the accompanying license
          agreements.

     c.   SUPPORT. Licensee is responsible to provide support to End Users that
          acquire the Envoy Application Product through Licensee or Licensee's
          OEMs.

7.   POINT OF SALE REPORTS. Licensee agrees to provide Novell, by no later than
     the tenth (10th) day of each calendar month, a Point of Sale report for the
     previous calendar month. "Point of Sale Report" means, for purposes of the
     Agreement, a report provided by Licensee to Novell which is in a
     Novell-specified format and which includes, among other things, (i) a list
     of Novell Products sold, (ii) the regional designation required by Novell,
     to the extent that Licensee and/or its OEMs can identify the regional
     designation, (iii) Licensee's part numbers of the Novell Products sold, and
     (iv) the amount of on-hand inventory of all Novell Products by product
     number (including products listed in the POS Report and any other Novell
     Products in inventory not otherwise included in the POS Report). The Point
     of Sale Report may only be used by Novell to provide compensation to
     Novell's sales force and to concentrate marketing activities to promote
     greater sales.

8.   RECORDS EXAMINATIONS. Licensee agrees to allow Novell to examine its
     records to determine compliance or noncompliance with the Agreement. Any
     examination will be at the expense of Novell and will be solely for the
     purpose of ensuring compliance with the Agreement. Any examination will be
     conducted by Novell, and will occur during regular business hours at
     Licensee's offices and will not interfere unreasonably with Licensee's
     business activities. Examinations will be made no more frequently than once
     a year, and Novell will give Licensee ten (10) days or more prior written
     notice of the date of the examination and the name of the Novell authorized
     representative who will be conducting the examination. All information
     obtained by the Novell authorized representative conducting the audit will
     be maintained confidential by Novell. If such examination indicates that
     Licensee is delinquent in assessing or paying royalties by more than 3% of
     the amounts actually owed, Licensee shall pay all of Novell's expenses of
     the examination.

9.   AGREEMENTS WITH LICENSEES, END USERS, AND DISTRIBUTORS. Licensee will
     require Licensee's distributors and Licensee's Licensees to enter into a
     written agreement with Licensee prior to providing any Novell Product to
     such distributor or Licensee. The agreement shall include provisions
     consistent with the agreements Licensee uses with respect to the licensing
     of its own

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                                                                September 5,1996


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CONFIDENTIAL                     NOVELL, INC
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     hardware and software products. Furthermore, the agreement shall include
     provisions consistent with the provisions of this Agreement and must be
     materially no less protective of Novell's rights in the Novell Products
     than are tile terms and conditions of this Agreement. Licensee agrees to
     use commercially reasonable efforts to enforce its agreements with
     Licensees and distributors to ensure compliance. Licensee shall use best
     efforts to protect Novell's copyright, shall notify Novell of any breach of
     a material obligation under an End User license agreement or an Licensee
     agreement, and will use best efforts to cooperate with Novell in any legal
     action to prevent or stop unauthorized use, reproduction or distribution of
     the Novell Products.

10.  RESTRICTIONS. Notwithstanding any licenses granted to Licensee herein,
     Licensee shall not create, or allow others to create, a system print driver
     or any technology duplicating or substantially duplicating the function of
     the Envoy Driver. Furthermore, Licensee is not authorized to and shall not
     modify the Envoy Driver or the Envoy Application Product. Licensee will
     include and/or not alter Novell's or Novell's licenser's copyright, trade
     secret, proprietary and/or other legal notices contained on or in copies of
     the Novell Products.

11.  TRADEMARKS. Licensee agrees to include the "Envoy" logo on all packaging
     for the Novell Products and attribute ownership of the logo to Novell. All
     use of the Envoy trademark and Envoy logo shall be in accordance with
     Novell's then current trademark usage policies. Licensee is not authorized
     to use any Novell trade names without the prior written consent of Novell.
     Upon the expiration or termination of this Agreement, Licensee agrees to
     cease all display, advertising and use of any and all Novell trade names
     and trademarks. Licensee agrees not to alter, erase or overprint any notice
     provided by Novell and not to attach any additional trademarks without the
     prior written consent of Novell or affix any Novell trademarks to any
     non-Novell product. Licensee recognizes Novell's ownership and title to the
     trade names and trademarks and the goodwill attaching to the trade names
     and trademarks. Licensee agrees that any goodwill which accrues because of
     its use of the trade names and/or trademarks will become Novell's property.
     Licensee agrees not to contest Novell's Marks or trade names, or make
     application for registration of any Novell trademarks or trade names
     without Novell's prior written consent. Licensee agrees not to use, employ
     or attempt to register any trademarks or trade names which are confusingly
     similar to Novell's trademarks or trade names. Prior to use, Licensee
     agrees to submit a specimen or first article copy of all art, packaging and
     advertising, including print advertisements, brochures, collateral, direct
     mail, labels, data sheets, that makes use of any of the Novell trademarks
     or trade name to Novell for approval.

12.  ROYALTIES. Licensee shall pay Novell royalties at the royalty rates listed
     below. Royalty payments shall be due to Novell in U.S. funds no later than
     thirty (30) days after the end of each calendar quarter for all Novell
     Products distributed during such quarter. Each royalty payment shall be
     accompanied by a statement showing the basis on which such payment was
     calculated. Payments which are more than thirty (30) days overdue shall be
     subject to a late payment charge of one percent (1%) per month or any part
     thereof, accrued monthly, commencing on the original date due; provided
     however, that if the amount of such late payment charge exceeds the maximum
     allowed by law, such charge will be automatically reduced to the maximum
     legal amount.

     a.   LEVEL 2 SDK. Licensee will pay Novell a royalty of [*] on Revenues
          received on account of or derived from any and all copies distributed
          of the Level 2 SDK. Once aggregate royalties

----------
* Certain confidential information has been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a Request for Confidential
  Treatment.
                                        6
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<PAGE>   7
CONFIDENTIAL                     NOVELL, INC
--------------------------------------------------------------------------------


          paid to Novell under Sections 12.a, 12.b, 12.c, and 12.d equal the
          Payment Target for that Annual Royalty Period, Licensee's royalty
          percentage shall be reduced to [*] of Revenues for the duration of
          that Annual Royalty Period. Upon the commencement of the next Annual
          Royalty Period, Licensee's royalty percentage shall once again be [*].

     b.   PRODUCTS BASED ON OR DERIVED FROM THE LEVEL 2 SDK.
          Licensee will pay Novell a royalty of [*] on Revenues received on
          account of or derived from products based on or derived from the
          Level 2 SDK. Once aggregate royalties paid to Novell under Sections
          12.a, 12.b, 12.c, and 12.d equal the Payment Target for that Annual
          Royalty Period, Licensee's royalty percentage shall be reduced to
          [*] of Revenues for the duration of that Annual Royalty Period. Upon
          the commencement of the next Annual Royalty Period, Licensee's
          royalty percentage shall once again be [*].

     c.   STAND-ALONE ENVOY APPLICATION PRODUCT.
          [*] per copy for all copies of the Envoy Application Product
          created.

     d.   BUNDLED AND OEM ENVOY APPLICATION PRODUCT.
          Licensee will pay Novell a royalty of [*] on Revenues received on
          account of or derived from any and all copies of the OEM and bundled
          Envoy Application Product. Once aggregate royalties paid to Novell
          under Sections 12.a, 12.b, 12.c, and 12.d equal the Payment Target
          for that Annual Royalty Period, Licensee's royalty percentage shall
          be reduced to [*] of Revenues for the duration of that Annual        
          Royalty Period. Upon the commencement of the next Annual Royalty
          Period, Licensee's royalty percentage shall once again be [*]. In
          addition, Novell agrees to consider periodic requests for quotation
          for pricing relief with respect to specific accounts.


     e.   MINIMUM GUARANTEED PAYMENT. Licensee shall pay Novell minimum, annual,
          aggregate royalties for the Envoy Application Product and the Level 2
          SDK as specified below. If the aggregate royalties owed to Novell
          pursuant to Sections 12.a, 12.b, 12.c, and 12.d during each Annual
          Royalty Period of this Agreement amount to less than the Minimum
          Guaranteed Payment, Licensee agrees to pay Novell the difference
          within thirty (30) days of the end of each Annual Royalty Period.

                MINIMUM GUARANTEED PAYMENT
                                                            
                First Annual Royalty Period                     [*]
                Second Annual Royalty Period                    [*]
                Third Annual Royalty Period                     [*]
                Fourth Annual Royalty Period                    [*]
                Fifth Annual Royalty Period                     [*]
                Each subsequent Annual Royalty Period:          [*] increase over previous year's Minimum
                                                                Guaranteed Payment

13.  OWNERSHIP. No title to or ownership of the Novell Products acquired under
     the Agreement or proprietary technology in hardware acquired under the
     Agreement is transferred to Licensee. Notwithstanding any provision of the
     Agreement to the contrary, Novell, or the licensor through which Novell
     obtained the rights to distribute the Novell Products, owns and retains all
     title and

----------
* Certain confidential information has been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a Request for Confidential
  Treatment.

                                        7
                                                               September 5, 1996




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     ownership of all intellectual property rights in the Novell Products,
     including all software, firmware, software master diskettes, copies of
     software, master diskettes, documentation and related materials which are
     acquired, produced or shipped by Novell under the Agreement, and all
     modifications to and derivative works from software acquired under the
     Agreement made by Licensee, Novell or any third party. Novell does not
     transfer any portion of such title and ownership, or any of the associated
     goodwill, to Licensee, and the Agreement should not be construed to grant
     Licensee any right or license, whether by implication, estoppel or
     otherwise, except as expressly provided. Licensee agrees to be bound by and
     observe the proprietary nature of the Novell Products acquired under the
     Agreement. Licensee agrees to take appropriate action by instruction or
     agreement with its employees. agents, contractors and sublicensees who are
     permitted access to the Novell Products to fulfill Licensee's obligations
     under the Agreement. Except as set forth in the Agreement, or as may be
     permitted in writing by Novell. Licensee agrees not to provide Novell
     Products or any part or copies thereof to any third party without the prior
     written consent of Novell.

     All rights not explicitly granted herein shall remain solely and
     exclusively in Novell. To the extent such rights are not deemed, as a
     matter of law, to be the sole and exclusive property of Novell, Licensee
     hereby assigns and Novell hereby receives all right, title, and interest
     therein, and agrees to execute at Novell's request subsequent decimation as
     further evidence of this assignment.

     Upon request, Licensee shall promptly complete Novell's then current form
     of Intellectual Property Rights Questionnaire ("IPRQ") for any Code or
     documentation developed by or for Licensee in which ownership is held by
     Novell. Licensee represents and warrants that the information contained in
     any such IPRQ is accurate and complete.

14.  SUPPORT. Novell shall have no support obligations to Licensee except as
     expressly identified in this Agreement. Licensee shall provide support to
     End Users and OEMs who acquire Novell Products by or through Licensee.
     Licensee agrees that end user support is a condition of its continued
     authorization by Novell. Although Novell has granted Licensee a worldwide
     license to market and sell the Novell Products under the terms of this
     Agreement, Licensee agrees that it will not market and sell the Novell
     Products in areas where it does not have the ability to support the Novell
     Products.

15.  PRODUCT MANAGEMENT COUNCIL.

     a.   FORMATION. Novell and Licensee will form an Envoy Product Management
          Council (the "Council"). The parties may add additional members to the
          Council as mutually agreed. The purpose of the Council will be to
          provide Licensee an opportunity to guide and direct the future
          direction of the Envoy SDK and the Envoy Application Product by making
          proposals to Novell. The Council will endeavor to; (i) collectively
          establish a base level of compatibility amongst all parties, (ii)
          establish and prioritize specific development efforts, (iii) formalize
          the product management process to represent the interests of each
          party, (iv) establish a means by which to measure and gauge the
          progress of the product development, and (v) to establish a formal
          means of communication between all parties. Notwithstanding the
          foregoing, no proposals of the Council will be initiated without
          Novell's prior written consent. All work performed by or for Licensee
          with respect to the Envoy technology shall be done pursuant to a
          separate development agreement which will grant development licenses
          and allocate the rights

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          of the respective parties. Among other things, such development
          agreement will include provisions to the effect that all work derived
          from Novell's intellectual or other proprietary property shall be
          owned by Novell. This Agreement shall in no way grant any license
          rights to Licensee in relation to the Council work proposed by the
          Council or work created by the Council.

     b.   PRODUCT DEVELOPMENT. During title term of this Agreement, Licensee
          will assume the funding of the development efforts agreed to by Novell
          and the Council. Such funding will amount to Licensee's provision of
          development services equivalent during the first year of this
          Agreement to a minimum of approximately [*], where
          "approximately" means [*]. Each subsequent year, the
          Council will meet prior to the next fiscal year to establish an
          appropriate development budget for that year. It is Licensee's
          intention to contract these development activities to Tumbleweed
          Software Corporation after obtaining appropriate license rights from
          Novell. However, Licensee reserves the right to develop with another
          vendor, including its own development team, if it so chooses.

     c.   FIRST DELIVERABLE. The first development deliverable to be funded by
          Licensee will be the completed Level 2 SDK. Licensee will contract
          such development to Tumbleweed as a work for hire to be owned by
          Novell.

16. TERM, TERMINATION, RETURN OF TECHNOLOGY.

     a.   TERM. This Agreement shall terminate at the end of the fifth Annual
          Royalty Period, unless terminated earlier by either party in
          accordance with the provisions of this Section. Such term shall
          automatically renew for successive one year periods unless terminated
          in accordance with this Section.

     b.   TERMINATION FOR CONVENIENCE. Either party may terminate this Agreement
          at any time, with or without cause, after the end of the fifth Annual
          Royalty Period by providing the other party with 90 days prior written
          notice.

     c.   EARLY TERMINATION. Either party may terminate the Agreement at any
          time upon the other party's failure to cure a material breach of this
          Agreement following thirty (30) days prior written notice of the
          breach. In addition, Novell (or its permitted assignee of this
          Agreement) may terminate this Agreement by providing written notice to
          Licensee at any time upon occurrence of any one or more of the
          following:

          i.   Licensee fails to pay Minimum Guaranteed Payments as and when due
               and payable.
          ii.  Upon one year prior written notice given after Novell
               discontinues the Envoy Application Product.
          iii. Upon one year prior written notice given after Novell sells the
               Envoy Application Product.
          iv.  Licensee develops, markets or sells, or materially assists in the
               development, marketing or sale of, a software product that
               directly competes with the Envoy Application Product, Envoy
               Driver, or Level 2 SDK in the geographic areas in which such are
               marketed (a "Competitive Product"); including without limitation
               providing material consulting

----------
* Certain confidential information has been omitted and filed separately with
  the Securities and Exchange Commission pursuant to a Request for Confidential
  Treatment.
                                        9
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               services, owning, managing, operating, materially participating
               in, controlling, or being connected as a majority stockholder,
               partner, or other similiar relationship with any business,
               individual or entity that creates, develops or markets a
               Competitive Product. Competitive Product shall not be construed
               to include complementary products that do not take away from
               sales of the Envoy Application Product or Envoy Driver themselves
               and shall not apply to a passive investment in another company or
               entity.
          v.   In the event Licensee undergoes a Change of Control. For purposes
               of this Section 16.c, "Change of Control" shall mean when (i)
               substantially all of Licensee's assets are acquired, or (ii) any
               person or group (within the meaning of Rule 13d-5 under the
               Securities Exchange Act as in effect on the date hereof) shall
               come to own, directly or indirectly, beneficially or of record,
               voting securities representing more than 50% of the total voting
               power of Licensee, or (iii) Licensee becomes a Subsidiary of some
               third-party. Licensee shall be considered a Subsidiary of a third
               party if(i) fifty percent (50%) of Licensee's outstanding shares
               or securities (representing the right to vote for the election of
               directors or other managing authority) is owned or controlled,
               directly or indirectly, by another company, person, group or
               entity, or (ii) if Licensee does not have outstanding shares or
               securities, fifty percent (50%) of Licensee's ownership interest
               representing the right to make the decisions for Licensee is
               owned or controlled, directly or indirectly, by another company,
               person, group or entity.

     d.   OTHER TERMINATION. Should the Novell Products, or the operation
          thereof, become, or in Novell's option be likely to become, the
          subject of infringement of any U.S. trademark, U.S. copyright or U.S.
          patent, Licensee agrees to permit Novell, at its option and expense,
          either to procure for Licensee the right to continue using the Novell
          Products, or to replace or modify them so that they become
          non-infringing, or to terminate this Agreement.

     e.   EFFECT OF TERMINATION. Licensee will discontinue its distribution and
          use of the Novell Products following termination once its then current
          inventory has been exhausted; provided, however, that if this
          Agreement is terminated due to a breach by Licensee, Licensee will
          cease distribution of the Novell Products immediately. No Minimum
          Guaranteed Payments will be required after notice of termination of
          this Agreement is given in accordance with Section 16.c.ii or Section
          16.c.iii.

     f.   RETURN OF TECHNOLOGY. Within 30 business days after termination of
          this Agreement, Licensee shall either deliver to Novell or destroy all
          copies of the Novell Products (except as otherwise stated herein) and
          any other materials provided by Novell to Licensee hereunder.
          Notwithstanding the foregoing, and provided Licensee fulfills its
          obligations specified in this Agreement, Licensee may continue to use
          and retain copies of the Novell Products to the extent, but only to
          the extent, necessary to support and maintain the Novell Products
          rightfully distributed by Licensee prior to termination of this
          Agreement. Notwithstanding the termination of this Agreement, all End
          User sublicenses which have been properly granted by Licensee pursuant
          to this Agreement prior to its termination shall survive.

     g.   BUY OUT OPPORTUNITY. In the event Novell discontinues or sells the
          Envoy technology, Novell shall offer to sell the Envoy technology to
          Licensee as follows. Novell will provide to Licensee's CFO and
          President, in accordance with the notice provisions of this Agreement,
          a

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          written proposal of the terms and conditions for purchase of the
          Envoy technology by Licensee ("Proposal"). Licensee will have ten
          (10) business days to accept the Proposal in writing or to provide
          Novell with a counter offer, after which time Novell shall either
          accept or reject Licensee's counter offer within ten (10) business
          days. During this period, Novell shall not actively engage in
          negotiations with third parties regarding the sale of the Envoy
          Technology. If Licensee has not accepted the Proposal as specified
          within ten (10) business days, then the Proposal shall be revoked and
          Novell shall be free to offer the Envoy technology to other parties.
          However, if Novell offers to sell, or engages in discussions to sell,
          the Envoy technology to other parties on terms materially different
          than the Proposal made to Licensee, then Novell will continue to
          engage Licensee in negotiations regarding the potential purchase of
          the Envoy technology by Licensee to the extent Licensee's interest in
          doing so continues, and Novell will evaluate in good faith any
          counter-offers made by Licensee. The parties acknowledge that Novell
          shall have no obligation whatsoever to give preferential treatment to
          Licensee's offer to purchase the Envoy technology after
          non-acceptance by Licensee of the original Proposal, and that Novell
          shall be free to sell the Envoy Technology to whichever potential
          buyer best meets Novell"s interests and needs, as determined by
          Novell.

     h.   TRANSITION OPTION. In the event Novell sells the Envoy technology and
          assigns this Agreement to the buyer thereof, either Novell or the
          buyer may, at its option, waive the Minimum Guaranteed Payments that
          Licensee would otherwise be required to make and the exclusive license
          with respect to the Level 2 SDK granted to Licensee pursuant to this
          Agreement shall become non-exclusive. The foregoing option may only be
          exercised within 90 days of the closing date of the sale of the Envoy
          technology.

17. WARRANTIES.

     Performance. Novell warrants only to Licensee that the Envoy Application
     Product will substantially conform to the specifications in the published
     documentation for such product in effect when the Envoy Application Product
     is provided to Licensee. If Licensee finds what Licensee believes to be
     errors or a failure of the Envoy Application Product to meet specifications
     which significantly affect performance, and promptly provides Novell with a
     written report, Novell will use reasonable efforts to correct, any such
     errors or failures. This is Licensee's sole and exclusive remedy for any
     express or implied warranties hereunder. Novell's warranty and obligation
     shall extend for a period of six months from the date Novell first delivers
     the Envoy Application Product to Licensee. Novell's warranty and obligation
     is solely for Licensee's benefit. Licensee has no authority to extend this
     warranty to any other person or entity.

     NOVELL MAKES NO OTHER WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED,
     INCLUDING ANY WARRANTY THAT THE NOVELL PRODUCTS ARE FREE OF ERRORS. EXCEPT
     AS SPECIFICALLY PROVIDED IN THIS SECTION, NOVELL AND ITS LICENSORS DO NOT
     MAKE, AND HEREBY DISCLAIM, ANY EXPRESS OR IMPLIED WARRANTIES INCLUDING, BUT
     NOT LIMITED TO, THE WARRANTIES OF DESIGN, MERCHANTABILITY OR FITNESS FOR A
     PARTICULAR PURPOSE, OR ARISING FROM COURSE OF DEALING, USAGE OR TRADE
     PRACTICE.

18. LIMITATION OF LIABILITY.

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     Notwithstanding any other provision of this Agreement, Novell's liability
     for damages will be limited to the aggregate paid by Licensee to Novell
     under this Agreement. IN NO EVENT WILL NOVELL OR ITS LICENSORS BE LIABLE
     FOR ANY INDIRECT, INCIDENTAL, SPECIAL PUNITIVE, OR CONSEQUENTIAL DAMAGES,
     LOST REVENUES OR PROFITS, DATA, OR USE, INCURRED BY EITHER PARTY OR ANY
     THIRD PARTY HOWEVER CAUSED, NO MATTER WHAT THEORY OF LIABILITY, EVEN IF
     LICENSEE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

19. INDEMNIFICATION BY NOVELL.

     a.   Novell agrees to indemnify, defend and hold Licensee harmless from any
          and all damages, liabilities, costs and expenses incurred by Licensee
          as a result of any claim, judgment or adjudication against Licensee
          which provides that the Novell Products, trade names or the trademarks
          appropriately used by Licensee in connection with marketing the Novell
          Products infringe any U.S., EEC, Middle East, Japan, Korea, or Taiwan
          trademark, copyright or patent of any third party, provided: (i)
          Licensee promptly notifies Novell in writing of the claim; and (ii)
          Licensee agrees that Novell will have the sole control of the defense
          of any action and all negotiations for settlement and compromise.

     b.   Novell shall have no liability for any claim based upon (a) use of
          other than a current unaltered version of the Novell Products, (b)
          use, operation or combination of the Novell Products with non-Novell
          programs, data, equipment or if such infringement would have been
          avoided but for such use, operation or combination, (c) Licensee's or
          its agent's activities after Novell bas notified Licensee that Novell
          believes such activities may result in such infringement, or (d)
          Licensee's use of any trademark or logo other than those authorized by
          Novell.

     c.   Should the Novell Products, or the operation of the Novell Products,
          become, or in Novell's opinion be likely to become, the subject of
          infringement of any trademark, copyright or patent, Licensee agrees to
          permit Novell, at its option and expense, either to procure for
          Licensee the right to continue using the Novell Products, to replace
          or modify them so that they become non-infringing, or to terminate
          this Agreement upon notice to Licensee.

     d.   NOVELL'S AGGREGATE INDEMNIFICATION TO LICENSEE SHALL BE LIMITED TO THE
          AGGREGATE SUM PAID BY LICENSEE TO NOVELL UNDER THIS AGREEMENT. THE
          ABOVE STATES THE ENTIRE LIABILITY OF NOVELL WITH RESPECT TO
          INFRINGEMENT OF PATENTS, COPYRIGHTS, TRADEMARKS OR ANY OTHER FORM OF
          INTELLECTUAL PROPERTY BY NOVELL PRODUCTS SUPPLIED BY NOVELL UNDER THIS
          AGREEMENT. NOVELL SHALL NOT BE LIABLE FOR ANY CLAIM BY LICENSEE BASED
          ON ANY THIRD PARTY CLAIM, EXCEPT AS STATED IN THIS SECTION 19 OF THIS
          AGREEMENT.

20. INDEMNIFICATION BY LICENSEE.

     Licensee agrees to indemnify, defend and hold Novell harmless from any and
     all damages, liabilities, costs and expenses incurred by Novell as a result
     of any claim, judgment or adjudication

                                       12
                                                               September 5, 1996



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     against Licensee arising out of Licensee's distribution of the Novell
     Products, except to the extent that such claims arise from intellectual
     property infringement by the Novell Products.

21. GENERAL PROVISIONS.

     a.   Force Majeure. If either party is prevented from performing any
          portion of this Agreement by causes beyond its control (excluding
          payment), including labor disputes, civil commotion, war, governmental
          regulations or controls, casualty, or acts of God, the defaulting
          party will be excused from performance for the period of the delay and
          for a reasonable time following the delay.

     b.   Jurisdiction. This Agreement will in all respects be governed by and
          interpreted in accordance with the laws of the State of California as
          applied to transactions taking place in California between California
          residents. Any action or proceeding brought by either party against
          the other arising out of or related to this Agreement may be brought
          in a state or federal court of competent jurisdiction located within
          Santa Clara County, California, and Novell and Licensee each consents
          to the personal jurisdiction of those courts.

     c.   Waiver. No waiver of any right or remedy on one occasion by either
          party will be deemed a waiver of that right or remedy on any other
          occasion.

     d.   Entire Agreement; Amendments. This Agreement sets forth the entire
          agreement and understanding between the parties as to the subject
          matter of this Agreement and merges all prior discussions. Neither
          party will be bound by any conditions, definitions, warranties,
          understandings, or representations with respect to the subject matter
          other than as expressly provided in this Agreement, or as duly set
          forth on or subsequent to the Effective Date in writing and signed by
          a proper and duly authorized representative of the party to be bound
          thereby. No provision appearing on any form originated by either party
          will be applicable unless the provision is expressly accepted in
          writing by the other party.

     e.   Assignment. Neither party may assign its rights or delegate its duties
          under this Agreement, in whole or in part, without the other's prior
          written consent. Any attempted assignment without written consent will
          be void. Notwithstanding, Novell may, without further consent from
          Licensee, assign its rights and delegate its duties under this
          Agreement in the event of a sale or spin-off of Novell's product line
          that includes the Envoy Products.

     f.   Notice. Unless otherwise agreed to by the parties, all notices
          required under this Agreement (except those relating to product
          pricing, changes, and upgrades) must be (A) registered mail or
          certified mail, return receipt requested, (B) overnight mail, or (C)
          personal delivery addressed and sent to the address first above
          written and to the attention of the party executing this Agreement or
          that person's successor. Notices will be effective on the earlier of
          receipt or three business days after dispatch. Either party may change
          its address for receipt of notice by notifying the other party.

     g.   Severability. If any provision of this Agreement is declared to be
          invalid, Novell and Licensee agree that the invalidity will not affect
          the validity of the remaining provisions of this

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          Agreement and further agree to substitute for the invalid provision a
          valid provision which most closely approximates the intent and
          economic effect of the invalid provision.

     h.   Independent Contractors. Each party acknowledges that both parties to
          this Agreement are independent contractors and that neither party will
          represent itself as an agent or legal representative of the other.

     i.   Cumulative Remedies. The remedies under this Agreement will be
          cumulative and not alternative and the election of one remedy for
          breach will not preclude pursuit of other remedies.

     j.   Attorneys' Fees. If any dispute arises between the parties with
          respect to the matters covered by this Agreement which leads to a
          proceeding to resolve the dispute, the prevailing party in the
          proceeding will be entitled to receive its reasonable attorneys' fees,
          expert witness fees, and out-of-pocket costs incurred in connection
          with the proceeding, in addition to any other relief it may be
          awarded.

     k.   Publicity. This Agreement is confidential and neither party will issue
          press releases or engage in other types of publicity of any nature
          dealing with commercial and legal details of this Agreement or its
          subject matter without the other's prior written approval, which will
          not be unreasonably withheld.

     l.   Compliance with Laws. Licensee will comply, at its own expense, with
          all statutes, regulations, rules, ordinances, and orders of any
          governmental body, department or agency which apply to or result from
          Licensee's obligations under this Agreement. Licensee agrees to not
          export Envoy Products directly or indirectly, separately or as part of
          a system, without first obtaining proper authority to do so from the
          appropriate governmental agencies or entities, as may be required by
          law. In particular, Licensee, absent any required prior authorization
          from the Office of Export Licensing, U.S. Department of Commerce, 14th
          and Constitution Avenue, Washington, D.C. 20230, will not export or
          reexport (as defined in Section 779 of the Export Administration
          Regulations, as amended ("Regulations")) the Envoy Products, any
          technical data or other confidential information, or direct product of
          any of the foregoing, to Afghanistan, Iraq, Iran, Syria, the People's
          Republic of China, Yugoslavia (Serbia and Montenegro), or any Group Q,
          S, W, Y, or Z country specified in Supplement No. 1 to Section 770 of
          the Regulations.

     m.   Survival. Sections 12, 13, 14 and 16-21 of this Agreement shall
          survive expiration or termination of this Agreement and will remain in
          effect.

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NOVELL, INC.                                    BITSTREAM INC.

By: /s/ Robert A. Krauss                       By: /s/ C. Ray Boelig
   --------------------------------               ----------------------------
Name: Robert A. Krauss                         Name: C. Ray Boelig
     ------------------------------                 --------------------------
Title:  Acting Vice President - ATD            Title: President & CEO
      -----------------------------                  -------------------------
Date: September 6, 1996                        Date: September 6, 1996
     ------------------------------                 --------------------------

                                     15
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                                  EXHIBIT A
                                  AMENDMENT
                                  ********
                                 AMENDMENT 1
                                     TO
                         BITSTREAM LICENSE AGREEMENT

This Amendment amends that certain Bitstream License Agreement, dated June 30,
1995 (the "Agreement"), by and among Bitstream Inc. ("Bitstream") and Novell,
Inc. ("Novell"). This Amendment is effective when executed by authorized
representatives of both parties. Capitalized terms used but not otherwise
defined herein shall have the meanings assigned thereto in the Agreement.

The parties agree to amend the Agreement as follows:

     1.   In addition to the Licensed Products set forth in Exhibit A-2 of this
          Agreement, Exhibit A-2 is amended to provide to Novell a total of
          twenty (20) Outline fonts in both TrueType and Type One format for the
          PC and Macintosh. Licensee's distribution of the font products with
          its own products shall be royalty-free.

     2.   Notwithstanding anything to the contrary in the Agreement, all
          licenses granted by the Agreement or by this Amendment shall extend to
          all divisions of Novell at no further charge.

     3.   The three (3) year term specified in Schedule 2-B is deleted and
          replaced with a term of five (5) years from August 1, 1996.

     4.   Section 3 of Schedule 2-B is deleted in its entirety. Licensee will
          have access to and Bitstream will provide at no additional charge all
          updates and upgrades to the Licensed Products.

     4.   The phrase "three years from the effective date" in line 3 of Section
          8.1 is deleted and replaced with "five (5) years from August 1, 1996".

Except as otherwise set forth herein, all terms and conditions of the Agreement
shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the
Agreement as of the date executed by all parties below.

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NOVELL, INC.                                    BITSTREAM INC.

By: /s/ Robert A. Krauss                       By: /s/ C. Ray Boelig
   --------------------------------               ----------------------------
Name: Robert A. Krauss                         Name: C. Ray Boelig
     ------------------------------                 --------------------------
Title:  Acting Vice President - ATD            Title: President & CEO
      -----------------------------                  -------------------------
Date: September 6, 1996                        Date: September 6, 1996
     ------------------------------                 --------------------------

                                       17
                                                               September 5, 1996