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Sample Business Contracts

OEM Agreement - SDL Communications Inc. and NetScout Systems Inc.

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SDL Communications                                        Effective Date: 2/3/98
46 Eastman Street
Easton, Massachusetts  02375
USA

                            SDL COMMUNICATIONS, INC.
                                  OEM AGREEMENT
                      Dated as of February 3, 1998 between


                            SDL Communications, Inc.
      with its principal place of business at 46 Eastman St., Easton, 02375
                     (referred to in this Agreement as SDL)
                                       and


                             NetScout Systems, Inc.
                    with its principal place of business at 4
                    Technology Park Drive, Westford, MA 01886
                   (referred to in this Agreement as Customer)


                               TERMS OF AGREEMENT

SECTION:

         1.       SCOPE OF CUSTOMER'S LICENSE
         2.       OBLIGATIONS OF SDL
         3.       OBLIGATIONS OF CUSTOMER
         4.       PRICING & PAYMENT TERMS
         5.       ORDERS, SHIPMENTS & RETURNS
         6.       WARRANTIES, INDEMNITIES & REMEDIES
         7.       CONFIDENTIAL INFORMATION
         8.       TERM & TERMINATION
         9.       GENERAL

EXHIBITS:

         A.       PRODUCT UNDER OEM AGREEMENT
         B.       PRODUCT PRICING
         C.       DELIVERY SCHEDULES

SDL COMMUNICATIONS, INC.                   NETSCOUT SYSTEMS, INC.


By: [ILLEGIBLE SIGNATURE]                  By: /S/ CHARLES TILLETT

Title: SENIOR V. PRESIDENT                 Title: VP FINANCE & ADMINISTRATION


<PAGE>


1.   SCOPE OF CUSTOMER'S LICENSE

     1.01 GRANT OF LICENSE. SDL grants to Customer a non-transferable right and
          OEM license to SDL's product or products listed in the statement of
          the Terms of Agreement beginning on the first page of this Agreement
          (referred to in this Agreement as the Products). The right and license
          granted by this Agreement is effective on the date of this Agreement
          and will continue in effect by this Agreement, unless terminated in
          accordance with Section 8. No right or license to manufacture, copy,
          alter, modify or repair the Products is granted to Customer under this
          Agreement. SDL will assist the Customer in private labeling options
          for the products described in Exhibit A.

     1.02 NON-EXCLUSIVE LICENSE. The license granted by SDL to Customer under
          this Agreement is nonexclusive. This Agreement shall not limit the
          right of SDL to manufacture, market, distribute, sell or promote
          anywhere in the world, directly or indirectly, any or all of the
          Products being supplied to Customer under this Agreement, or to
          license, appoint, hire, or otherwise engage others to do so.

     1.03 ESCROW ACCOUNT. SDL will maintain at SDL's expense in an escrow
          account, technical information relating to the products in Exhibit A,
          solely for the following purpose:

          In the event of a filing by or against SDL of a petition for relief
          under the United States Bankruptcy Code or similar petition under the
          insolvency laws of any jurisdiction, Customer shall have the right to
          manufacture all the products being supplied to Customer at that time
          under Exhibit A or other products being supplied by SDL to Customer
          for a license fee equal to [CONFIDENTIAL TREATMENT REQUESTED]** per
          unit of the most recent unit price paid by the Customer.

     The "technical information" will include the following:

     a)   Manufacturing drawings and specifications of raw materials and
          components comprising such parts.

     b)   Manufacturing drawings and specifications covering any special tooling
          and the operation thereof.

     c)   A detailed list of all commercially available parts and components
          purchased by SDL on the open market, disclosing the part number, name
          and location of the supplier thereof and the price.

     d)   One (1) complete copy of the then current diagnostics software source
          code and all tools used to build the object code from the source code
          used in the preparation of any software acquired by Customer by
          license or otherwise from SDL.


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


<PAGE>



     e)   All relevant design and user documentation.

     f)   This information will be updated as design changes occur.

2.   OBLIGATIONS OF SDL

     2.01 TECHNICAL SUPPORT. Customer will be entitled to ongoing technical
          support from SDL, ongoing technical support will be available to
          Customer from SDL at no charge. Customer's technical personnel will be
          allowed access to all necessary technical documentation and the
          appropriate SDL Technical personnel. SDL will make its best efforts to
          respond to all technical questions within 8 (eight) business hours. If
          deemed necessary by Customer, Customer and SDL will establish a bug
          reporting and tracking mechanism that is acceptable to both parties.
          SDL will assist Customer with on-site service calls when mutually
          agreed upon.

     2.02 FULFILLMENT OF PURCHASE ORDERS. SDL shall make it's best effort to
          fulfill Customer's purchase orders, this best effort shall be
          consistent with the delivery schedule outlined in Exhibit C of this
          agreement. In the event there is an event that forces deviation from
          the delivery schedule, SDL will inform Customer within 24 hours of
          such an event to establish a mutually agreeable next best delivery
          date pertaining to the specific product and quantity being delivered.
          SDL and Customer will mutually review the delivery schedule for
          adjustments, updates,, new products, and agreed upon enhancements at 6
          (six) month intervals from the Effective Date of this agreement.

     2.03 COMMERCIALLY AVAILABLE PRODUCTS. SDL shall make available all future
          non-customized and commercially available products to Customer. SDL
          will provide sufficient notification to Customer of the availability
          of such products as to allow Customer a reasonable period of time to
          integrate such products into Customer, s product offerings. SDL will
          also make the relevant technical resources available to Customer to
          assist Customer in this product integration process. These products
          will be available to Customer for the entire term of this agreement.
          Customer will have the right to integrate and utilize such
          commercially available SDL products as deemed necessary to Customer's
          business interest. SDL will notify Customer on all future commercially
          available products within 30 days of the initiation of design by SDL
          of all such produces.

     2.04 CUSTOMIZED PRODUCTS. SDL may develop mutually defined customized
          products for Customer on a forward going basis. SDL and Customer will
          define the NRE (Non Recurring Engineering) cost SDL will charge
          Customer prior to initiation of the development of such products. In
          addition to such costs, Customer will agree to purchase [CONFIDENTIAL
          TREATMENT REQUESTED]** upon [CONFIDENTIAL TREATMENT REQUESTED]** of
          such customized products from SDL.

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



<PAGE>


     2.05 ENGINEERING CHANGE ORDERS. In the event SDL determines an Engineering
          Change Order (ECO) implementation necessary that does not affect in
          any way Customer's end-product (finished product) reliability,
          functionality or performance (for all the products listed in Exhibit
          A, Commercially Available Products defined in Section 2.03 or
          Customized Products as defined in Section 2.04), SDL will inform
          Customer within 24 hours of the completion of such an Engineering
          Change Order (ECO). Whenever requested by Customer, SDL will make
          available to Customer, sample products with such ECO changes to allow
          customer to verify that such changes do not affect in any way
          Customer's end-product reliability, functionality or performance. SDL
          will forward an Electronic copy of this ECO detailing the change.
          Whenever possible, SDL shall make an effort to inform Customer in
          advance of implementation of such ECOs that do not affect the
          Customer's end-product reliability, functionality or performance. SDL
          will not implementation any ECOs that affect in any way the Customer's
          end-product reliability, functionality or performance without prior
          approval of Customer. SDL will make its technical personnel available
          to assist Customer in fully understanding the nature of any and all
          ECOs implemented to the related products. Upon Customer's request, SDL
          shall supply Customer sample products for acceptance testing after
          completion of ECOs that affect Customer's end-product reliability,
          functionality or performance.

     2.06 FUNCTIONALITY, MANUFACTURING & QUALITY. In the event SDL is unable to
          meet Customer's needs on mutually agreed upon functionality, or
          Customer's needs in manufacturing quantity and or reasonable quality
          standards in light of volume and other considerations relevant to the
          manufacture of the nonconforming shipments of the products listed in
          Exhibit A. Customer and SDL will define a mutually agreeable time
          period in which SDL will attempt to meet Customer's requirements. If
          SDL is still unable to meet Customer's requirements at the end of this
          negotiated period, Customer will then receive the manufacturing rights
          for that specific nonconforming product, subject, however, to payment
          by Customer of a licensing fee to SDL equal to [CONFIDENTIAL TREATMENT
          REQUESTED]** per unit of the last purchase price paid by Customer for
          such product.

     2.07 CONTINUITY OF PRODUCT SUPPLY. SDL will make all reasonable efforts to
          supply products listed in Exhibit A to Customer for a period of
          [CONFIDENTIAL TREATMENT REQUESTED]** . If discontinuance of a critical
          component from SDL's vendors deems it impossible for SDL to
          manufacture a specific product, SDL will inform Customer within 24
          hours of receipt of such information by SDL. In this event, SDL will
          make all reasonable efforts, upon Customer's approval, to initiate
          design of a replacement product that is similar to the product in
          jeopardy, taking into account that the replacement product matches the
          form, functionality and pricing of the product being replaced.
          Customer will 

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


<PAGE>

          make all reasonable efforts to commit the necessary resources to
          integrate the replacement product into Customer's product offerings.

     2.08 [CONFIDENTIAL TREATMENT REQUESTED]** CUSTOMER. SDL hereby represents
          that [CONFIDENTIAL TREATMENT REQUESTED]** for the entire term of this
          agreement will [CONFIDENTIAL TREATMENT REQUESTED]** as those that will
          be [CONFIDENTIAL TREATMENT REQUESTED]** to any of its other
          [CONFIDENTIAL TREATMENT REQUESTED]**. Further, if at any time in the
          future, SDL [CONFIDENTIAL TREATMENT REQUESTED]** another [CONFIDENTIAL
          TREATMENT REQUESTED]** , SDL shall immediately make those
          [CONFIDENTIAL TREATMENT REQUESTED]** to Customer.

     2.09 NOTIFICATION OF CHANGE OF CONTROL. SDL will inform Customer within 24
          hours of the consummation of a purchase of all or substantially all of
          SDL's business by a Third Party. (for purposes hereof, all or
          substantially all of SDL's business shall include, the sale of all or
          a substantial portion of SDL's right, title and interest in and to the
          products listed in Exhibit A or any products being supplied to
          Customer at that time.)

     2.10 QUALITY ASSURANCE. SDL will establish within 60 days of the effective
          date of this Agreement documented quality assurance procedures that
          provide the following:

          a.   Incoming inspection criteria for acceptance, rejection and
               purging of material.

          b.   A product ship or product hold quality process.

          c.   Minimum Statistical techniques to measure and monitor process
               yield.*

          d.   A signature authority ECO process.*

          e.   A revision control system for assembly Bill of Materials.*

          f.   A segregated rejected material location.*

          g.   The latest test procedures are available to operators.*

     *    Items c through g have been in place at SDL since November 1, 1997.

     2.11 COMPLIANCE. On all products that are developed under Section 2.03
          Commercially Available Products and Section 2.04 Customized Products,
          SDL will complete the minimum FCC & CE mark Compliance tests necessary
          and

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


<PAGE>

          customary in providing such products to its present OEM Customers.
          Wherever applicable, SDL's Engineering design methodologies
          incorporate consideration for the above minimum FCC & CE mark
          compliance tests in the design process. When requested by Customer,
          SDL will present a schedule that provides Customer with the expected
          compliance testing completion dates for the above stated compliance
          tests for products under Section 2.03 and 2.04. If, due to Customer's
          urgent need of completion of the above mentioned Compliance tests,
          Customer requests that such compliance test be expedited, and if such
          request for action is agreed to by SDL, then Customer will reimburse
          SDL for all related expenses specific to such compliance testing, not
          including the cost of utilizing SDL's technical personnel in the
          conducting or completion of such compliance tests. In the event,
          Customer requires Compliance testing for products developed under
          Section 2.03 and 2.04 that is above and beyond the minimum FCC and CE
          mark compliance testing as described above, Customer will be
          responsible for all costs associated with such compliance tests
          relating to these products. SDL will, however, provide the necessary
          technical personnel in assisting Customer with the completion of such
          compliance tests for SDL products incorporated into Customers
          end-products (finished products).

     2.12 FORCE MAJEURE. Except as to payment due and owing under this
          Agreement, neither SDL nor Customer shall be liable to the other party
          for failure or delay in performance of any obligation hereunder or for
          any damage caused thereby if such delay is due to any cause beyond the
          reasonable control of the party. Such cause may, include but is not
          limited to natural disasters, war accidents, strikes or utility
          shortage or curtailment, governmental regulations, or to any other
          cause or causes beyond the control, or without the fault or
          negligence, of either party.

     2.13 END-USER WARRANTY AND LICENSE. SDL warrants that at the time of
          shipment the Product shall be free from defect in material and
          workmanship. SDL warrants that the Product will meet the standard
          specifications of each product listed in Exhibit A hereto at the time
          of shipment. This warranty excludes damage resulting from mishandling,
          tampering, improper installation and misuse by the purchaser. SDL
          warrants all Products for a period of 12 months from the date of
          Invoice.

3.   OBLIGATIONS OF CUSTOMER

     3.01 TRADEMARKS.

          (a)  SDL grants to Customer a nonexclusive license to use SDL's trade
               name and those of SDL's trademarks and service marks that pertain
               to any of the Products, solely in Customer's advertising and
               other promotion of the Products. SDL will assist the Customer in
               private labeling options for the prouducts described in Exhibit
               A. SDL will allow Customer to use its trademark for private
               labeling purposes.



<PAGE>


          (b)  Whenever Customer uses in writing a registered trademark of SDL,
               it shall place next to that trademark, at least the first time
               that it appears in any given advertisement or publication, an
               encircled "R" in superscript and a footnote stating that
               trademark is a registered trademark of SDL. Whenever Customer
               uses in writing a trademark of SDL for which SDL has applied for
               registration, it shall place next to that trademark, at least the
               first time that it appears in any given advertisement or
               publication, the letters "TNF' in superscript and a footnote
               stating that that trademark is a trademark of SDL.

          (c)  This Agreement shall not provide Customer any interest in SDL's
               name or any of its trademarks or service marks except as
               expressly provided in this Agreement. Customer's license to use
               SDL's name and its trademarks and service marks shall cease upon
               the termination of this Agreement.

     3.02 END-USER WARRANTY AND LICENSE. Customer shall not make or grant,
          orally or in writing, expressly or by implication, any other warranty
          or license other than that which SDL has stated in the End-user
          warranty and license.

     3.03 COMPLIANCE WITH LAWS. Customer shall not, nor shall Customer permit
          any other reseller of any of the Products supplied by SDL under this
          Agreement, to export any of the Products, directly or indirectly, to
          any foreign country in violation of any United States statute or
          regulation in effect at the time of export. Customer shall be
          responsible for obtaining all required agency, governmental or safety
          certifications for the Products listed in Exhibit A.

4.   PRICING AND PAYMENT TERMS

     4.01 PRODUCT PRICING. Product Pricing to Customer shall be consistent with
          the pricing reflected in Exhibit B of this Agreement. Pricing and
          Terms for all other products to be supplied by SDL to Customer will be
          negotiated separately. SDL will not be responsible for any
          International Duties and Taxes relating to the shipment of SDL
          products by Customer.

     4.02 PURCHASE ORDER CHANGES AND CANCELLATIONS. All changes, rescheduling of
          shipment, or cancellations of the Purchase Order must be made in
          writing. Customer will be allowed to reschedule a specific Purchase
          Order one-time without incurring any rescheduling penalty. Beyond
          this, orders rescheduled within [CONFIDENTIAL TREATMENT REQUESTED]**
          of shipping date are subject to a rescheduling fee of [CONFIDENTIAL
          TREATMENT REQUESTED]** of the net Purchase Order amount. Orders
          canceled within [CONFIDENTIAL TREATMENT REQUESTED]** of shipping date
          are subject to a restocking charge of [CONFIDENTIAL TREATMENT
          REQUESTED]** of the net Purchase Order amount of the items restocked.
          Orders that are 

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

<PAGE>

          rescheduled or canceled outside of [CONFIDENTIAL TREATMENT
          REQUESTED]** shall not be subject to any charges.

     4.03 PRICE CHANGES. SDL may change the prices of any of the Products being
          supplied under this Agreement at upon [CONFIDENTIAL TREATMENT
          REQUESTED]** prior written notice to customer. In the event there is a
          price increase for a specific product or products, SDL will honor all
          outstanding orders on existing Purchase Orders from Customer at prices
          prior to any and all such price increases.

     4.04 RESALE PRICES. SDL shall have no control of the price or prices at
          which Customer actually resells SDL's products, which Customer shall
          determine without the involvement of SDL.

     4.05 CUSTOMER'S FAILURE TO PAY. Customer's failure to pay after a 90 day
          period following the due date of any undisputed Invoice shall
          constitute a material breach of this Agreement. Before a material
          breach can be declared, SDL shall notify Customer in writing of the
          outstanding Invoices & amounts due within 45 days after the due date
          of such Invoices & allow customer 30 days from date of such notice or
          90 days after the due date to pay all such undisputed Invoices in
          full. Interest shall accrue on all unpaid amounts at the rate of
          [CONFIDENTIAL TREATMENT REQUESTED]** per month, compounded daily, or
          the highest rate then permitted by law (whichever is the lower) from
          the date on which payment was due through the date on which SDL
          receives payment and SDL, at its option, may cancel or defer shipment
          of any previously accepted or future orders until it has received
          payment in full of all amounts due from Customer, whether or not
          overdue.

     4.06 CREDIT LIMIT. The maximum amount of credit that SDL is required to
          extend to Customer is [CONFIDENTIAL TREATMENT REQUESTED]**. This
          Credit Limit can be increased by SDL upon receipt of relevant
          Financial Information from Customer allowing SDL to make such a
          decision.

     4.07 TERMS OF PAYMENT. All Products sold hereunder shall be invoiced in
          full upon shipment. Unless otherwise specified. terms of payment are
          net thirty (30) days on approved credit. Any undisputed amounts owing
          after thirty (30) days shall accrue interest at the rate of
          [CONFIDENTIAL TREATMENT REQUESTED]** per month from date of shipment.
          SDL shall have the right to change credit terms of the Customer with
          60 days prior notice, and to hold up shipment of Products if payment
          for a previous order has not been received.

5.   ORDERS, SHIPMENTS AND RETURNS

     5.01 PURCHASE ORDERS. Purchase Orders shall specify shipment dates no later
          than 12 months from the issuance thereof. Customer will provide SDL
          with a [CONFIDENTIAL

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


<PAGE>


          TREATMENT REQUESTED]** of products required for a given Quarter
          (90-Day period), no later than Forty Five (45) days before the
          beginning of the Quarter in which these purchases are to take place.

     5.02 ACKNOWLEDGMENTS. Any terms or conditions specified in the Purchase
          Order which differ from or conflict with the terms of this Agreement
          in any material respect shall be void unless specifically accepted by
          SDL.

     5.03 SHIPMENT AND DELIVERY. Shipment shall be F.O.B. from SDL's location in
          Easton. Massachusetts, by the method specified by the Customer. If any
          conditions arise which prevent compliance with delivery schedules, SDL
          will not be liable for any damage for delay in delivery. SDL will,
          however, use its best efforts to notify Customer of delays,. SDL will
          not make shipment ahead of schedule without Customer's approval. All
          freight charges on shipments will be billed to Customer.

     5.04 RETURNS. Customer may return Products to SDL only if Customer has
          first requested and obtained from SDL a Return Merchandise
          Authorization number, to which Customer shall refer in the shipping
          documents accompanying the returned Products.

6.   WARRANTIES, INDEMNITIES AND REMEDIES

     6.01 WARRANTIES. SDL product Warranty is specified in Section 2.13 . SDL
          shall repair or replace free of charge any Product that does not
          comply with that warranty. Customer may replace any defective SDL
          products that it has sold, and SDL shall replace in Customer's
          inventory, free of charge, the same number of Products that Customer
          has had to replace pursuant to the Warranty specified in Section 2.13.

     6.02 INDEMNITY OF SDL. Customer shall Indemnify SDL and hold it harmless
          from any and all actions, claims, damages. expenses (including
          attorney's fees) and liabilities that arise from Customer's act,
          omission or misrepresentation in the marketing, OEM, sale or promotion
          of all Products supplied under this Agreement, including particularly
          those that arise from Customer's breach of it's obligations.

     6.03 INDEMNITY OF CUSTOMER. SDL shall indemnify and hold harmless Customer
          from and against any damages, liabilities, costs and expenses
          (including reasonable attorneys' fees and court costs) arising out
          third party claims alleging that the products being provided in
          Exhibit A or any other products supplied by SDL to Customer infringe
          on any Patent, Trademark, Copyright or trade secret. Should any of the
          products in Exhibit A or any product being supplied by SDL to Customer
          become the subject of a claim of infringement, SDL shall (a) obtain
          for SDL the right to continue using such specific products pursuant to
          the terms and conditions of this Agreement, or (b) replace or modify
          the products so that they become non-infringing but functionally
          equivalent.


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

<PAGE>


     6.04 LIMITATIONS OF WARRANTY AND LIABILITY. THE WARRANTY STATED IN THIS
          SECTION IS A LIMITED WARRANTY AND IS THE ONLY WARRANTY, EXPRESS OR
          IMPLIED, MADE BY SDL. ANY AND ALL OTHER WARRANTIES, INCLUDING
          SPECIFICALLY WARRANTIES, OF MERCHANTABILITY AND FITNESS FOR A
          PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. NEITHER SDL NOR CUSTOMER
          SHALL BE LIABLE OR OBLIGATED TO THE OTHER IN ANY MANNER FOR ANY MANNER
          FOR ANY CONSEQUENTIAL OR INDIRECT DAMAGES EVEN IF IT HAS BEEN ADVISED
          OF THE POSSIBILITY OF SUCH DAMAGES.

7.   CONFIDENTIAL INFORMATION

     7.01 SDL and Customer each acknowledges that, during the course of
          performing its duties under this agreement, it may obtain information
          relating to the business or products of the other that is confidential
          and proprietary ("Confidential Information"). Each party shall use the
          Confidential Information for the sole purpose of exercising its rights
          and performing its duties under this Agreement and shall not disclose
          any of the other party's Confidential Information to anyone other than
          those of its employees, agents or consultants who (i) have a need to
          know the Confidential Information in order to enable the receiving
          party to exercise its rights and perform its duties under this
          agreement; and (ii) who have signed an agreement with the receiving
          party obligating them (a) not to disclose any of the Confidential
          Information to anyone other than other employees or agents of the
          receiving party who have signed similar agreements with the receiving
          party and (b) not to use any of the Confidential Information for any
          purpose other than to enable the receiving party to exercise its
          rights and perform its duties under this Agreement. Before disclosing
          any of the disclosing party's Confidential Information to any of its
          employees or agents, the receiving party shall advise each employee or
          agent that the disclosing party's Confidential Information is
          confidential and subject to the restriction stated in this Agreement.

     7.02 The receiving party and its employees and agents shall return to the
          disclosing party all of its Confidential Information, including the
          originals and copies of documents containing any of the disclosing
          party's Confidential Information, upon the termination of this
          Agreement. Nothing in this Agreement, nor the disclosure of any
          Confidential Information by the disclosing party, shall be construed
          to grant to the receiving party any rights of any kind in any of the
          Confidential Information.

     7.03 This Agreement shall not apple to information that (I) on the date of
          this Agreement was already known to the receiving party or available
          to the public; (II) after the date of this Agreement becomes known to
          the receiving party or available to the public other than unauthorized
          disclosure; or (III) was or is developed by the receiving party
          Independently without any use of any of the disclosing party's
          Confidential Information.

<PAGE>

     7.04 The terms and conditions of this Agreement cannot be disclosed by
          either party to a third party entity or individual without the express
          written consent of the party to this agreement (either SDL or
          Customer) that is not initiating this disclosure. The Customer's
          trademark cannot be used in any shape or form by SDL without the prior
          written consent of the Customer. This agreement shall not provide SDL
          any interest in Customer's name or any of its trademarks or service
          marks.

8.   TERM AND TERMINATION. Subject to the other provisions of this Section 8,
     this Agreement shall have a duration of 60 months. Either party may cancel
     this Agreement for breaching the obligations of this contract by giving
     written notice to the other party at least 60 days before effective date of
     the cancellation. Upon termination of this Agreement, (a) each party shall
     immediately return to the other all copies of Confidential Information of
     the other then in its possession, custody or control and shall cease to use
     any of the other party's Confidential Information for any purpose; and (b)
     the license granted by this Agreement shall be terminated Immediately.
     Customer shall cease to market, distribute, sell or promote any of the
     Products, to use SDL's name or any of its trademarks or service marks or
     otherwise hold itself out as a customer of SDL's Products.

     RIGHTS UPON TERMINATION. Termination of any Purchase Order of this
     Agreement shall not affect SDL's right to be paid for undisputed invoices
     for Products already shipped. The termination of this Agreement shall not
     affect any of the SDL's warranties, indemnification's or obligations
     relating to returns, credits or any other matters set forth in this
     Agreement that are to survive this termination in order to carry out their
     intended purpose all of which shall survive this agreement. Upon
     termination of this Agreement, Customer shall discontinue holding itself
     out as a Customer of SDL's products. The expiration of the term of this
     Agreement shall not affect the obligations of either party to the other
     party pursuant to any Purchase Order previously forwarded to SDL.

9.   GENERAL

     9.01 ASSIGNMENT; BINDING EFFECT. No party may assign any or all of its
          rights or delegate any or all of its duties under this Agreement
          without the written consent of the other party. A change in control of
          the ownership, or a transfer of all or substantially all of the
          assets, of SDL or the Customer shall not be deemed an assignment of
          this Agreement and shall not require the other party's consent.

     9.02 MISCELLANEOUS. The laws of the Commonwealth of Massachusetts,
          excluding the conflicts-of-law principles thereof shall govern the
          validity and construction of this Agreement. This Agreement states the
          entire agreement and understanding of the parties on the subject
          matter of the Agreement, and supersedes all previous agreements,
          arrangements, communications and understanding relating to that
          subject matter. This Agreement may be amended, modified, superseded or
          canceled, and any of the terms thereof may be waived, only by a
          written document signed by each party to this Agreement or, in case of
          waiver, by the party or parties waiving compliance. No person not a
          party to this Agreement (including 


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

<PAGE>

          any employee of any party to this Agreement) shall have or acquire any
          rights by reason of this Agreement, nor shall any party by this
          Agreement have any obligations or liabilities to such other person by
          reason of this Agreement. Nothing in this Agreement shall be deemed to
          constitute any party a partner, joint venture, employer, employees
          master, servant, principal or agent of any other party or any other
          person.

<PAGE>




                     EXHIBIT A: PRODUCTS UNDER OEM AGREEMENT





 SDL PRODUCTS                PRODUCT DESC.                     SDL PART NUMBER
                                                         

                  [CONFIDENTIAL TREATMENT REQUESTED]**





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






<PAGE>


                           EXHIBIT B: PRODUCT PRICING




                                                              QUANTITY (UNITS)

SDL PRODUCTS        PRODUCT DESC.         SDL PART NUMBER      100-299      300+

                                                                

                    [CONFIDENTIAL TREATMENT REQUESTED]**






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


<PAGE>


                          EXHIBIT C: DELIVERY SCHEDULES





BASED ON PRODUCTS REQUIRED PER SHIPMENT
---------------------------------------

                                                                                           
[CONFIDENTIAL TREATMENT REQUESTED]**
Quantity(units):                                        1-100           101-250         251-500         501+
Delivery Schedule (in working days):                          30              35              40             50

[CONFIDENTIAL TREATMENT REQUESTED]**
Quantity(units):                                        1-100           101-250         251-500         501+
Delivery Schedule (in working days):                          30              35              40             50

[CONFIDENTIAL TREATMENT REQUESTED]**
Quantity(units):                                        1-100           101-250         251-500         501+
Delivery Schedule (in working days).                          30              35              40             50

[CONFIDENTIAL TREATMENT REQUESTED]**
Quantity(units):                                        1-100           101-250         251-500         501+
Delivery Schedule (in working days):                          30              40              50             50

[CONFIDENTIAL TREATMENT REQUESTED]**
Quantity(units):                                        1-100           101-250         251-500         501+
Delivery Schedule (in working days):                          30              40              50             50

[CONFIDENTIAL TREATMENT REQUESTED]**
Quantity(units):                                        1-100           101-250         251-500         501+
Delivery Schedule (in working days):                          30              35              40             50





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