Agreement for ASIC Design and Purchase of Products - IBM Microelectronics and Juniper Networks


               Agreement for ASIC Design and Purchase of Products

                                    between

                              IBM Microelectronics
                               1000 River Street
                            Essex Junction, Vermont

                                      and

                                Juniper Networks

Agreement Number V1967
Commencement Date: At Signoff

IBM Customer Account
Representative: Ed Buturla

Name and Address of Buyer:

Juniper Networks
385 Ravendale Drive
Mountain View, CA 94043

This agreement ('Agreement') is entered into by and between International 
Business Machines Corporation, incorporated under the laws of the State of New 
York ('IBM') and Juniper Networks, ('Buyer'), incorporated under the laws of 
the State of California.

This Agreement and its attachments ('Attachments') sets forth the terms and 
conditions pursuant to which semiconductor products will be designed, 
manufactured, sold and purchased. The terms and conditions by which IBM 
licenses to Buyer the IBM Design Kits specified in Attachment A are governed by 
the IBM Design Kit License initially executed by the parties on April 14, 1997.

1.0  DEFINITIONS

1.1  'ASIC(S)' means application specific integrated circuits.

1.2  'ASIC TOOL KITS' means any computer aided design software and data provided
     by IBM and used by Buyer for the purpose of designing or checking ASIC
     designs, as updated or enhanced from time to time by IBM.

1.3  'BUYER DELIVERABLE ITEMS' means any information and materials supplied to
     IBM by Buyer, as set forth in Attachment B, including, without limitation,
     software, schematics, netlists, microcode, designs or techniques, as
     accepted by IBM and utilized in the design of or otherwise incorporated
     into a Product.

1.4  'ENGINEERING CHANGE' means a mechanical or electrical change to the 
     Product which affects form, fit, function or maintainability.

1.5  'IBM DELIVERABLE ITEMS' means the information, materials and tools supplied
     to Buyer by IBM, as set forth in Attachment B, including, without
     limitation, IBM Design Kits, ASIC Tool Kits and Prototype devices.

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1.6  'IBM DESIGN KITS' means any IBM computer aided design software and data 
     (including libraries) provided to Buyer for the purpose of designing or 
     testing ASIC designs, as updated and enhanced from time to time. The term 
     'IBM Design Kits' includes ASIC Tool Kits.

1.7  'INITIAL ASIC DESIGN REVIEW CHECKLIST' ('IDR') means a report in form and 
     content as regularly used by IBM to make a preliminary assessment of the 
     feasibility of Buyer's proposed Product design.

1.8  'MILESTONES' means completion of the (i) initial design review ('IDR 
     Milestone'), (ii) pre-layout and timing analysis ('RTL Milestone'), and 
     (iii) the release to manufacturing ('RTM Milestone') stages of work.

1.9  'NON-RECURRING ENGINEERING CHARGES' ('NRE CHARGES') means the costs for 
     NRE Services.

1.10 'NON-RECURRING ENGINEERING SERVICES' ('NRE SERVICES') means engineering 
     services provided by IBM to develop Products to be manufactured under this 
     Agreement, which shall include delivery of Prototypes as specified in 
     Attachment C.

1.11 'PRODUCT(S)' means production units of the ASIC product(s) to be sold and 
     purchased under this Agreement as specified in Attachment A and as may be 
     amended by the parties to include additional Products. Products shall not 
     include Prototypes.

1.12 'PRODUCT SPECIFICATIONS' means the specifications for each Product 
     including, without limitation, the post-layout electronic data interchange 
     format ('EDIF') and timing requirements (including clock skew 
     requirements), a statement of post-layout test coverage and I/O placement; 
     as documented in the RTM, expressly or by specific incorporation.

1.13 'PROTOTYPE ACCEPTANCE' means Buyer's written approval that Buyer's 
     Prototype evaluation demonstrates Prototype conformance to Product 
     Specifications.

1.14 'PROTOTYPE DEVICE(S)' OR 'PROTOTYPES' means a preliminary version of a 
     Product which may or may not be functional and which is not suitable for 
     production in commercial quantities.

1.15 'PURCHASE ORDER LEAD TIME' means the required minimum amount of time 
     between IBM's receipt of the Purchase Order issued by Buyer and the 
     requested shipment date necessary to accommodate manufacturing cycle time, 
     as specified in Attachment C.

1.16 'RELEASE TO LAYOUT CHECKLIST' ('RTL') means a performance approval report
     in form and content as regularly used by IBM to document completion of the
     pre-layout Level Sensitive Scan Design ('LSSD') and timing analysis
     milestone of the SOW.

1.17 'RELEASE TO MANUFACTURING CHECKLIST' ('RTM') means a performance approval 
     report in form and content as regularly used by IBM to document the design 
     review milestone at the completion of the post-layout timing analysis.

1.18 'SCHEDULED SHIPMENT DATE' means the date for shipment of Product requested 
     by Buyer in a Purchase Order.

1.19 'SHIPMENT DATE' means the date for shipment of Product requested by Buyer 
     in a Purchase Order.

1.20 'STATEMENT OF WORK' or 'SOW' means a statement of work as set forth in 
     Attachment A that identifies the respective design obligations that the 
     parties agree to complete for the development of particular Products.
 
2.0  TERM OF AGREEMENT

     This Agreement shall become effective on the date it is executed by Buyer 
     and IBM (the 'Commencement Date'). The term of this Agreement will begin 
     on the Commencement Date and will be effective for a period of three (3) 
     years after the date of execution (the 'Contract Period'), subject, 
     however, to earlier termination as permitted under Section 13.0.


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3.0  WORK SCOPE

3.1  IBM will provide Buyer with engineering support and assistance and Buyer
     will provide IBM with the Buyer Deliverable items and cooperate with IBM in
     the use of IBM Deliverable Items to enable IBM to manufacture Products, in
     accordance with the SOW. The Products are designed for verification on IBM
     ASIC tools and to be manufactured by IBM under this Agreement. The terms
     and conditions by which IBM licenses the IBM Design Kits are exclusively
     governed by the IBM Design Kit License Agreement, which is hereby
     incorporated by reference.

3.2  In the event that multiple Products are developed under this Agreement or
     this Agreement is amended to include other Products, each such Product
     shall be developed under and subject to a separate SOW, separate
     development checklist and separate Product pricing.

4.0  ASIC PRODUCT DESIGN

4.1  IBM'S ASIC development checklists shall document the development of each of
     Buyer's Product design(s).

     4.1.1 The IDR will be used to make a preliminary feasibility assessment of
     each of Buyer's proposed Product design and to advise Buyer of any areas
     where Buyer's design(s) do not conform to IBM design requirements.

     4.1.2 The RTL shall include, expressly or by specific incorporation, the
     design specifications for each Product required by Buyer to successfully
     place, route, time and conform to LSSD and provide static timing analysis.
     The RTL shall also document the fact that such information is available to
     Buyer and has been communicated to Buyer before each Product netlist is
     released to layout. Buyer's signature on the RTL shall record Buyer's
     acknowledgment of satisfactory completion of all work on such Product
     through such Milestone.

     4.1.3 Buyer's signature on the RTM shall record Buyer's acknowledgment of
     (i) satisfactory completion of all work on such Product through the RTM
     Milestone and (ii) the specifications to which IBM's warranty obligations,
     set forth in Section 14.0, apply. To the extent that specifications and
     test parameters contained in the RTM vary those set forth in the RTL, the
     specifications contained in the RTM shall govern.

     4.1.4 Buyer's signature on the RTL and RTM checklists shall not be
     unreasonably withheld.

4.2  All Milestone and Prototype delivery schedules are estimates only.

4.3  Any data relating to a Product design that Buyer is to furnish to IBM must
     be compatible with IBM tools, with which IBM will verify all design and
     engineering work for conformance to IBM's technology groundrules.

4.4  Buyer may request changes to any Product design during the course of the
     SOW by submitting a written request to IBM. Upon receipt by IBM of any such
     request, IBM shall promptly inform Buyer of the effect of the requested
     change on the SOW including estimated completion of the design work to
     incorporate any requested changes and applicable price increase(s), if any.
     IBM may, however, continue work without regard to the requested change
     until both parties have agreed in writing to adjustment in price and
     estimated completion date terms, unless Buyer specifically notifies IBM in
     writing to halt work.

4.5  Buyer may, for the applicable unit price specified in Section 4.0 of
     Attachment C, order Prototypes in addition to the quantity included in the
     NRE Charges at any time before five (5) working days prior to RTM signoff.
     Subject to the RTM signoff and adequate yield from the initial wafer lot,
     IBM shall use reasonable efforts to deliver such additional Prototypes
     within two (2) weeks of the estimated delivery date for Prototypes.

4.6  Subject to the terms and conditions of this Agreement, both parties will
     exercise reasonable diligence in performing the design activities set forth
     in the SOW for each Product.

4.7  IBM agrees to provide Products to Buyer as requested by Buyer and accepted
     by IBM subject to the provisions of Section 5.0 and Section 6.0.

4.8  All computer data provided to IBM by Buyer will be free from any virus,
     worm or other routines that would permit unauthorized access or otherwise
     harm software, hardware or data.

5.0  PRODUCT DEMAND FORECASTS

5.1  The first Product demand forecast agreed to by Buyer and IBM is set forth
     in Attachment C. The forecast covers twelve (12) months broken out by
     Product and month. During the term of this Agreement, Buyer will provide
     IBM with updated Product demand forecasts on a monthly basis covering a
     rolling twelve (12) month period (not to extend beyond the Contract
     Period), which will be reviewed for approval by IBM within ten (10) days of
     receipt by IBM. Updated forecasts shall be in substantially the same format
     as the first forecast in Attachment C. Forecasts shall be provided to IBM's
     Customer Account Representative as identified above.


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     Forecasts shall constitute good faith estimates of Buyer's anticipated
     requirements for Products for the periods indicated based on current market
     conditions, and IBM's acceptance shall constitute IBM's good faith
     intention to quote and supply such requirements if requested and ordered by
     Buyer in accordance with this Section 5.0. Notwithstanding the foregoing,
     Product demand forecasts accepted by IBM shall not contractually obligate
     IBM to supply, nor contractually obligate Buyer to purchase, the quantities
     of units of Product set forth in such forecasts.

5.2  Buyer may request Products that exceed Product demand forecasts previously
     accepted by IBM. Such requests are subject to rejection by IBM for any
     reason, including, without limitation, resource availability.

6.0  PURCHASE ORDERS

6.1  Buyer shall order NRE Services by issuing written purchase orders. Purchase
     orders for NRE Services will be deemed accepted by IBM unless rejected in
     writing by IBM, specifying the reasons for rejection, within fourteen (14)
     calendar days after IBM's receipt of such purchase order.

6.2  Buyer shall order Products by issuing written purchase orders. Purchase
     orders for Products must be received by IBM in advance, with at least the
     Purchase Order Lead Time specified in Attachment C, to allow IBM to meet
     Buyer's requested Shipment Date. Requested Shipment Dates will be deemed
     accepted (subject to the Purchase Order Lead Time) by IBM if the purchase
     order requesting such Shipment Date is accepted by IBM. If so accepted, a
     requested Shipment Date shall constitute a Scheduled Shipment Date. Subject
     to IBM's written acceptance, Buyer may request an improved Scheduled
     Shipment Date. Such acceptance shall not be unreasonably withheld by IBM.

6.3  Purchase orders for Products will be deemed accepted by IBM unless rejected
     in writing by IBM, specifying the reasons for rejection, within fourteen
     (14) calendar days after IBM's receipt of such purchase order. Purchase
     orders for Products may be rejected by IBM if such purchase order requests
     a quantity of Products that (i) exceeds the most recent Product demand
     forecast accepted by IBM or (ii) a Shipment Date IBM deems unacceptable, or
     (iii) does not comply with the terms and conditions of this Agreement, or
     if Buyer is in breach of this Agreement.

6.4  Purchase orders issued to IBM shall include the following:

          6.4.1 NRE Services and/or Product(s) being ordered;

          6.4.2 quantity of units of Product requested (in increments of the
          minimum ship pack quantity ('SPQ') only);

          6.4.3 NRE charges and/or unit price per Attachment C;

          6.4.4 billing address;

          6.4.5 shipping instructions, including carrier, destination address
          and requested shipment dates;

          6.4.6 reference to this Agreement and Agreement Number.

6.5  This Agreement shall take precedence over and govern in case of any
     additional, different or conflicting terms and conditions in any purchase
     order(s) or any other form of either party. Purchase orders and other forms
     of either party may not vary the terms of this Agreement. Additional,
     different or conflicting terms and conditions on a purchase order or other
     form shall be of no effect.

6.6  Notwithstanding any other provision of this Agreement, in the event that
     IBM's ability to supply the Product is constrained (except as caused by
     Buyer) for reasons which include, but are not limited to, component
     availability, and the Scheduled Shipment Date cannot be met, IBM will
     reduce the quantities of Products to be supplied to Buyer in proportion to
     the reduction in quantities of products of the same technology or utilizing
     the same manufacturing process to be supplied to satisfy others. Receipt of
     such allocated supply and later delivery of all undelivered ordered
     quantities after the constraint ends shall constitute Buyer's exclusive
     remedy in the event of such supply constraint.

7.0  PRICING

7.1  Buyer shall pay IBM the NRE Charge applicable to such Product as set forth
     in Attachment C, as well as other sums for special services as are
     separately listed or referenced in Attachment C.


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7.2  The unit price for each unit of Product ordered shall be calculated at the
     time the applicable purchase order is accepted using the Product's Price
     Quantity Matrix set forth in Attachment C. The quantity used as an input
     into such Price Quantity Matrix shall be the yearly cumulative quantity of
     units of a Products determined by the purchase orders accepted by IBM
     within such calendar year after the Commencement Date, including the units
     of Product requested in the purchase order that is the subject of such
     price calculation.

8.0  TITLE AND SHIPMENT

8.1  Title and risk of loss for a Product pass to Buyer when IBM delivers the
     Product to the carrier.

8.2  Products shall be shipped from the manufacturing location FOB for domestic
     U.S. destinations and ExWorks (as defined in the 1990 INCO Terms) for
     international shipments.

8.3  In no event shall IBM be deemed to assume any liability in connection with
     any shipment, nor shall the carrier be construed as an agent of IBM.

9.0  INVOICING, PAYMENT TERMS, TAXES

9.1  NRE Charges shall accrue and be invoiced on the schedule set forth in
     Section 2.0 of Attachment C. IBM shall invoice Buyer for all units of
     Product upon shipment. All payments under this Agreement shall be due
     [***]. If Buyer's account becomes in arrears or if Buyer exceeds its credit
     limit with IBM, in addition to any other right under this Agreement, [***]
     IBM reserves the right to cease development work or stop shipment to Buyer
     or ship to Buyer on a cash-in-advance basis until Buyer's account is again
     current.

9.2  IBM reserves a purchase money security interest in Products purchased under
     this Agreement in the amount of the price and in Buyer's proceeds from the
     same, including, without limitation, accounts receivable. Purchase money
     security interests will be satisfied by payment in full. Buyer agrees to
     execute UCC-1 financing statements or other appropriate documents to be
     filed in order to perfect IBM's security interest.

9.3  Buyer is responsible for all taxes related to Products except for taxes
     based on IBM's net income.

9.4  Buyer shall provide IBM with a copy of a valid reseller's exemption
     certificate for Products purchased for resale for each applicable taxing
     jurisdiction. Based on such certificate, and where the law permits, IBM
     will treat Buyer as exempt from applicable state and local sales tax for
     Products purchased hereunder. Buyer shall notify IBM promptly in writing of
     any modification or revocation of its exempt status. Buyer shall reimburse
     IBM for any and all assessments resulting from a refusal by a taxing
     jurisdiction to recognize any Buyer reseller's exemption certificate, or
     from Buyer's failure to have a valid reseller's exemption certificate. If
     Buyer purchases Product under this Agreement for internal use, Buyer agrees
     to notify IBM and pay applicable sales tax.

10.0 INTEREST ON OVERDUE PAYMENTS

     Buyer will be liable for interest on any overdue payment under this
     Agreement, [***] commencing on the date such
     payment becomes due at an annual rate equal to the maximum legal rate in
     the jurisdiction where the claim is asserted [***].

11.0 CANCELLATION CHARGES, RESCHEDULING AND ORDER CHANGE PROVISIONS

11.1 Buyer may cancel a purchase order or any portion thereof upon written
     notice to IBM. If Buyer cancels a purchase order for NRE Services or
     Prototypes, or if Buyer unreasonably withholds its signature from the RTL
     or RTM, IBM will cease further work in connection with the Product and
     invoice Buyer for the total of all unpaid NRE Charges applicable to the
     next development Milestone (Section 2.0 of Attachment C), an NRE
     cancellation charge pursuant to Section 3.0 of Attachment C and the
     applicable unit price for any canceled Prototype devices that were ordered
     pursuant to Section 4.5 of this Agreement. For purchase orders for units of
     Product, if the written notice is less than the Purchase Order Lead Time
     then a cancellation charge, as specified in Section 9.0 of Attachment C
     will immediately become due for each canceled unit.


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11.2     For a purchase order for production units which is more than thirty 
         (30) days, but less than the Purchase Order Lead Time, from its 
         Scheduled Shipment Date, Buyer may request in writing a one-time 
         deferral of the Scheduled Shipment Date for not more than ninety (90) 
         days, with no cancellation charge imposed. However, if this purchase 
         order is subsequently deferred or canceled, then the cancellation 
         charge specified in Section 9.0 of Attachment C will be due.

12.0     ENGINEERING CHANGES

12.1     IBM may implement Engineering Changes required to satisfy governmental
         standards, protect Product, system or data integrity, or for
         environmental, health or safety reasons ('Mandatory Engineering
         Changes').

12.2     For all previously shipped Product not incorporating Mandatory
         Engineering Changes, IBM may provide replacement Products (including
         parts, materials and documentation) at the expense of the party at
         fault. Buyer must use reasonable effort to install Mandatory
         Engineering Changes on all Buyer installed Products and Products in
         its inventory. If IBM requests the return of Products displaced by
         installation of replacement Products, Buyer will promptly return any
         displaced Products to IBM after installation of such replacement
         Products, at IBM's expense.

12.3     In addition to Mandatory Engineering Changes, IBM may implement
         Engineering Changes that result in cost reductions to the Product
         ('Elective Engineering Changes') with prior approval from Buyer. Such
         approval shall not be unreasonably withheld. IBM shall give Buyer
         prompt notice of Elective Engineering Changes.

12.4     IBM may make available other Engineering Changes ('Optional Engineering
         Changes'). The cost of any Optional Engineering Changes that Buyer
         desires to implement will be borne by Buyer and will be determined
         through a request for quote process.

13.0     TERMINATION OF AGREEMENT

13.1     If either party is in material default of a provision of this Agreement
         and such default is not corrected within (30) days of receipt of
         written notice, this Agreement may be terminated by the party not in
         default.

         13.1.1 If Buyer terminates due to IBM default, all previously accepted
         purchase orders shall be automatically without charge to Buyer, except
         for any specific purchase order(s) that the parties mutually agree not
         to cancel.

         13.1.2 If IBM terminates due to Buyer default at IBM's discretion, all
         previously accepted purchase orders shall be automatically canceled and
         adjustment changes and cancellation charges will apply in addition to
         any other amounts then due.

13.2     Notwithstanding the provisions of Section 13.1, either party shall have
         the right to terminate this Agreement immediately if:

         13.2.1 The other party flies a petition in bankruptcy, undergoes a
         reorganization pursuant to a petition in bankruptcy, is adjudicated a
         bankrupt, becomes insolvent, becomes dissolved or liquidated, files a
         petition for dissolution or liquidation, makes an assignment for
         benefit of creditors, or has a receiver appointed for its business; or 

         13.2.2 The other party is subject to property attachment or court
         injunction or court order which has a substantial negative effect on
         its ability to fulfill its obligations under this Agreement.

13.3     IBM may terminate this Agreement, or its obligation with respect to 
         specifically affected Products, immediately if:

         13.3.1 Buyer unreasonably withholder its consent of IBM to make
         Elective Engineering Changes under Section 12.0; or

         13.3.2 IBM receives a claim or charge, and [***] otherwise has a
         reasonable basis to believe any time during the term of this Agreement,
         that any of the Buyer Deliverable items infringe third party
         intellectual property rights. [***]

13.4     In the event this Agreement is terminated pursuant to Section 13.1.2,
         13.2 or 13.3, all amounts due and payable to the non-terminating party
         as of the date of such termination shall become immediately due and
         payable.

13.5     Either party may terminate this Agreement without cause upon one (1)
         year's prior written notice to the other. If Buyer is the terminating
         party, all previously accepted 

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purchase orders will be filed, but IBM shall not be obligated to accept further
purchase orders after receiving notice. If IBM is the terminating party, IBM
will continue to accept new purchase orders pursuant to Section 6.0 during the
notice period.

13.6    All Products shipped against accepted purchase orders will be subject to
        the terms and conditions of this Agreement notwithstanding any
        termination or expiration of the term of this Agreement.

14.0    WARRANTIES

14.1    IBM warrants that each unit of Product after delivery will be free from
        defects in material and workmanship and will conform to the Product
        Specifications as set forth in the RTM for the applicable period set
        forth in Attachment C. Delivery to Buyer of each unit of Product is
        deemed to occur five (5) days after shipment from IBM. Buyer
        acknowledges that the functionality of Products is contingent upon
        Buyer's designs and, therefore, the warranty of this Section 14.1 does
        not apply to the functionality of Products fabricated hereunder. This
        warranty does not include repair of damage resulting from failure to
        provide a suitable installation environment, or any use for other than
        the intended purpose, accident, disaster, neglect, misuse,
        transportation, alterations, or non-IBM repairs or activities.

14.2    Any unit of Product that fails to conform to the warranty of Section
        14.1, while under warranty, may be returned, transportation prepaid by
        Buyer, to the location IBM designates for repair, replacement or credit,
        at IBM's discretion. [***] IBM will repair or replace such units or
        provide a credit to Buyer for the purchase price paid for such units by
        Buyer. IBM will ship replacement units back to Buyer, transportation
        prepaid by IBM, and such units of Product will be considered newly
        delivered for warranty purposes.

14.3    Should any unit of Product returned to IBM hereunder be found by IBM to
        be free from defects or non-conformities, IBM will return such unit of
        Product to Buyer transportation prepaid by IBM. Payment for such unit of
        Product will be due and payable by Buyer upon receipt of the invoice.
        [***]

14.4    Prototypes provided by IBM under this Agreement are provided on an 'AS
        IS' basis, without warranty of any kind.

14.5    No course of dealing, course of performance, usage of trade, Product or
        Prototype description shall be deemed to establish a warranty, express
        or implied. 

14.6    THE FOREGOING WARRANTIES MADE BY IBM ARE EXCLUSIVE AND IN LIEU OF ANY
        OTHER WARRANTIES FROM IBM, EXPRESS OR IMPLIED INCLUDING, WITHOUT
        LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
        PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTIES OF NON-INFRINGEMENT.

15.0    CONFIDENTIAL INFORMATION

        All information exchanged under this Agreement will be deemed to be
        non-confidential. If a party wishes to exchange confidential
        information, the exchange will be made under the terms of the separate
        agreement for exchange of confidential information (Agreement Number
        V0903) as executed between the parties on 4/27/96.

16.0    TRADEMARKS AND TRADE NAMES

16.1    Neither this Agreement, nor the sale of Products hereunder, shall be
        deemed to give either party any right to use the other party's
        trademarks or any of the other party's trade names without specific,
        prior written consent.

17.0    INTELLECTUAL PROPERTY RIGHTS

17.1    Buyer represents, and IBM acknowledges Buyer's representation, that all
        Buyer Deliverable items for the Products are the property of Buyer.
        Buyer represents and warrants it is the rightful owner, or authorized
        licensee (with all requisite rights to sublicense) of the Buyer
        Deliverable Items and all other designs, information, and materials
        supplied to IBM hereunder, and that no part of such materials knowingly
        incorporate or infringe the intellectual property of any third party.

17.2    IBM or its licensors shall retain and have all intellectual property
        right (including, without limitation, mask work rights) associated with
        any intellectual property furnished by IBM

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         in connection with this Agreement, including without limitation, (i)
         all base array layers, (ii) all IBM-licensed library elements
         (including, without limitation, any megafunctions or cores), (iii) all
         design methodologies and tools [***]. To the extent Buyer has access
         to such intellectual property, Buyer shall use such intellectual
         property solely for the purpose of designing Prototypes and Products
         for manufacture pursuant to this Agreement. Buyer hereby conveys to IBM
         any intellectual property rights it may acquire therein.

17.3     IBM shall own any masks made by IBM using logic data provided by Buyer.
         IBM will use any tangible netlist tape(s), and tangible GDS II tape(s)
         received from Buyer or generated exclusively for Buyer hereunder, and
         any masks made from such GDS II tape(s), only to manufacture Products
         for sale to Buyer.

17.4     If in the course of performance under this Agreement either party
         discovers or invents any process, pattern, device or other invention,
         that party shall be deemed the owner of such discovery or invention. In
         the event any such invention is jointly discovered or invented by the
         parties, the parties shall be deemed joint owners of such discovery or
         invention without any duty of accounting.

17.5     The parties understand and agree that no license or other right is
         granted herein to either party, directly or by implication, estoppel or
         otherwise, with respect to any know-how, inventions, patents, trade
         secrets, copyrights, mask works or other intellectual property rights,
         except as may be required by IBM to manufacture the Product(s). No
         additional license or other right, express or implied, shall arise from
         the consummation of this Agreement, or from any acts, statements or
         dealings leading to such consummation.

18.0     INTELLECTUAL PROPERTY INDEMNIFICATION

18.1     IBM shall indemnify Buyer from and against any damages finally settled
         or awarded by a court of competent jurisdiction resulting from any
         direct infringement of any patents or copyrights of a third party in
         any country in which IBM sells similar products that expose IBM to
         similar liabilities as the Product, arising as a result of any of IBM's
         manufacturing process, equipment or testing, that is not specifically
         required by Buyer's designs, specifications or instructions. IBM shall
         defend at its own expense, including attorney's fees, any suit brought
         against Buyer alleging such infringement. In the event that Buyer
         becomes enjoined from using Product in its inventory due to such
         infringement, IBM at its option and expense, will secure for Buyer the
         right to continue to use and market the Product, or modify or replace
         the Product with a non-infringing product. If IBM determines that
         neither of the foregoing alternatives is reasonably available, Buyer
         may return the Product in Buyer's inventory to IBM for a credit equal
         to the price paid for the units of Product affected. IBM shall have no
         obligation regarding any claim based upon modification of the Product
         by Buyer or its customers, use of the Product in other than its
         intended operating environment or the combination, operation or use of
         the product with non-IBM products or equipment.

18.2     Buyer shall indemnify IBM from and against any damages finally settled
         or awarded by a court of competent jurisdiction resulting from any
         direct infringement of any patents or copyrights of a third party in
         any country where Buyer uses or distributes the Product, arising as a
         result of IBM's compliance with any of Buyer's design, specifications,
         instructions or modifications of the Product by Buyer and shall defend
         at its own expense, including attorney's fees, any suit brought against
         IBM alleging any such infringement.

18.3     The rights provided in Sections 18.1 and 18.2 are contingent upon the
         parties seeking to enforce indemnification by giving prompt written
         notice to the indemnifying party regarding any claim, demand or action
         for which the indemnified party seeks indemnification. The indemnified
         party is required to fully cooperate with the indemnifying party at the
         indemnifying party's expense and shall allow the indemnifying party to
         control the defense or settlement of any such claim, demand or action,
         including obtaining the written consent of the indemnifying party prior
         to any settlement proposal or settlement. IBM shall have the right to
         waive Buyer's obligations under Section 18.2 and provide for its own
         defense, at IBM's sole discretion and expense, which shall not
         significantly impact Buyer financially.

18.4     The purchase, receipt or possession of the Product from or through IBM
         carries no license or immunity, express or implied, under any patent of
         IBM covering the combination of the Product with other products or the
         use of any such combination, or under any patent or other intellectual
         property right of any third party relating to the Product or its
         combinations with any other products.

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                                                                         8/21/97

18.5 Except as expressly stated in this Agreement, this Section 18.0 states the
     entire liability of the parties and their exclusive remedies with respect
     to infringement and all other warranties against infringement of any
     intellectual property rights, statutory, express or implied are hereby
     disclaimed.

19.0 INDEPENDENT PARTIES
     Each party hereto is an independent contractor and is not an agent of the 
     other party for any purpose whatsoever. Neither party shall make any 
     warranties or representations on the other party's behalf, nor shall it 
     assume or create any other obligations on the other party's behalf. IBM 
     and Buyer agree to indemnify from and against any damages finally awarded 
     by a court of competent jurisdiction resulting from any violation of 
     this Section 19.0.

20.0 LIMITATION OF REMEDIES

20.1 IBM's entire liability and Buyer's exclusive remedy are set forth in this 
     Section:

     20.1.1 In all situations involving non-conforming or defective Products 
     furnished under this Agreement as set forth in Section 14.1, Buyer's 
     exclusive remedy is the replacement of the Products or a credit to Buyer of
     the purchase price paid for such units by Buyer, at IBM's sole discretion.

     20.1.2 IBM's liability for actual damages for any cause whatsoever (other
     than as set forth in Section 20.1.1), shall be limited to the greater of
     fifty thousand dollars ($50,000) or the applicable unit price for the
     specific units of Product that caused the damages or that are the subject
     matter of, or are directly related to, the cause of action. This limitation
     will apply, except as otherwise stated in this Section, regardless of the
     form of action, whether in contract or in tort, including negligence. This
     limitation will not apply to the payment of costs, damages and attorney's
     fees referred to in Section 18.0. This limitation will also not apply to
     claims by Buyer for bodily injury or damage to real property or tangible
     personal property caused by IBM's negligence. [***]

     20.1.3 In no event will either party be liable to the other party for any 
     lost profits, lost savings, incidental damages or other consequential 
     damages, even if advised of the possibility of such damages, except as 
     provided in Section 18.0. In addition IBM will not be liable for any claim 
     based on any third-party claim, except as provided in Section 18.0. In no 
     event will IBM be liable for any damages caused by Buyer's failure to 
     perform Buyer's responsibilities.

     20.1.4 In addition, IBM shall have no liability when the Products are used 
     in conjunction with (a) any medical implantation or other direct life 
     support applications where malfunction may result in direct physical harm 
     or injury to persons or (b) commercial aviation, nuclear materials, or 
     other ultra-hazardous activities.

21.0 SUBCONTRACT AND ASSIGNMENT

21.1 IBM has the right to subcontract its responsibilities under this 
     Agreement, provided that any subcontractor retained by IBM is obligated in 
     writing to the same obligations as set forth herein with respect to IBM. 
     In the event that IBM does subcontract certain portions of its 
     responsibilities, the term 'employee' as used herein shall be deemed to 
     include such subcontractor and/or its employees.

21.2 Neither party to this Agreement may assign its rights or delegate its
     duties, in whole or in part, without the prior written consent of the other
     party, which shall not be unreasonably withheld, except that IBM may assign
     its rights to payment. Additionally, if the assets or stock of that portion
     of IBM to which this Agreement pertains hereafter becomes owned or
     controlled, directly or indirectly, by a third party, IBM may assign its
     entire right, title and interest in this Agreement to such third party. Any
     act in derogation of the foregoing will be null and void.

21.3 During the term of this Agreement and for one (1) year thereafter, Buyer 
     shall not solicit any IBM employee who is directly engaged in performing 
     activities under this Agreement to fill out an application for employment; 
     nor shall Buyer solicit the employees of any third party engaged on behalf 
     of IBM in performing activities that are related to this Agreement.


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                                                                        08/21/97

22.0    COMPETITIVE PRODUCTS AND SERVICES

        Neither this Agreement nor any activities hereunder will impair any 
        right of IBM or Buyer to design, develop, manufacture, market, service, 
        or otherwise deal in, directly or indirectly, other products or 
        services including those which are competitive with those offered by 
        IBM or Buyer.

23.0    PROMOTIONAL ACTIVITY

        Press releases and other like publicity, advertising or promotional 
        material which mention the other party by name, this Agreement or any 
        term hereof shall be agreed upon by both parties in writing prior to 
        any release.

24.0    FORCE MAJEURE

        Except for payments due IBM, neither party shall be in default or 
        liable for any delay or failure of compliance with this Agreement due 
        to an act of nature, public enemy, freight embargo, or other cause if 
        such act of nature, public enemy, freight embargo, or other cause is 
        beyond the control of the non-performing party. A non-performing party 
        shall cure as soon as practicable.

25.0    NOTICES

25.1    All notices shall be in writing and shall be deemed delivered when sent 
        by certified mail return receipt requested.

                IBM                             JUNIPER
                Address                         Address
                1055 Joaquin Road               385 Ravendale Drive
                Mountain View, CA 94043         Mountain View, CA 94043
                Attn:                           Attn:
                Archna Nigam/Brian McDonnell    Marcel Gani

25.2    Day to day activities under this Agreement will be directed by the 
        Technical Coordinators identified in Attachment A, who will be 
        responsible for maintaining technical liaison between the parties. 
        Either party may change its respective representative designated for 
        receipt of notices, or its Technical Coordinator and their addresses 
        designated for notices by notifying the other party in the same manner 
        as any other notice.

26.0    GENERAL PROVISIONS

26.1    This Agreement may be executed in any number of identical counterparts, 
        each of which shall be deemed to be an original, and all of which 
        together shall be deemed to be one and the same instrument when each 
        party has signed one such counterpart.

26.2    The activities of each party and its employees, agents or 
        representatives while on the other party's premises (including any 
        design center) shall comply with the host company's policies and 
        procedures for such facilities, including security procedures and 
        visitation guidelines.

26.3    Each party will comply with all applicable federal, state and local 
        laws, regulations and ordinances including, without limitation, the 
        regulations of the U.S. Government relating to the export of 
        commodities and technical data insofar as they relate to the activities 
        under this Agreement. Buyer agrees that machines, commodities, and 
        technical data provided under this Agreement are subject to 
        restrictions under the export control laws and regulations of the 
        United States of America, including, without limitation, the U.S. 
        Export Administration Act and the U.S. Export Administration 
        Regulations. Buyer hereby gives its written assurance that neither 
        machines, commodities or technical data provided by IBM under this 
        Agreement, nor the direct product thereof, will be exported, or 
        re-exported, directly or indirectly, to prohibited countries or 
        nationals thereof without first obtaining applicable government 
        approval. Buyer agrees it is responsible for obtaining required 
        government documents and approvals prior to export of any machine, 
        commodity, or technical data.

26.4    This Agreement shall be construed, and the legal relations between the 
        parties hereto shall be determined, in accordance with the substantive 
        laws of the State of New York, without regard to the conflict of laws 
        principles thereof. The parties hereto expressly 



Juniper ASIC Agreement           Page 10 of 20                  IBM Confidential

        waive any right they may have to a jury trial and agree that any
        proceeding under this Agreement shall be tried by a judge without a
        jury.

26.5    If any section or subsection of this Agreement is found by competent
        judicial authority to be invalid, illegal or unenforceable in any
        respect, the validity, legality and enforceability of any such section
        or subsection in every other respect and the remainder of this Agreement
        shall continue in effect so long as the redacted Agreement still
        expresses the intent of the parties. If the intent of the parties cannot
        be preserved, this Agreement shall be either renegotiated or terminated.

26.6    Irrespective of nonpayment, no actions, regardless of form, arising out
        of this Agreement, may be brought by either party more than two (2)
        years after the cause of action has arisen

26.7    This Agreement may be modified only by a written amendment signed by
        persons authorized to do so bind Buyer and IBM. This Agreement shall not
        be supplemented or modified by any course of dealing, course of
        performance or trade usage. The term 'this Agreement' as used herein
        includes any applicable Attachments or future written amendment(s) made
        in accordance with this Section.

26.8    Failure by either party to insist in any instance on strict conformance
        by the other to any term of this Agreement or failure by either party to
        act in the event of a breach will not be construed as a consent to or
        waiver of any subsequent breach of the same or of any other term
        contained in this Agreement.

26.9    All obligations and duties which by their nature survive the expiration
        or termination of this Agreement shall remain in effect beyond any
        expiration or termination, including, without limitation, Sections 8.0,
        9.0, 10.0, 13.6, 14.0, 15.0, 16.0, 17.0, 18.0, 19.0 and 20.0.

26.10   The headings in this Agreement are for convenience only and are not
        intended to affect the meaning or interpretation of this Agreement.

27.0    SOLE AGREEMENT
        The parties acknowledge that each has read this Agreement and its
        Attachments, understands them, and agrees to be bound by their terms and
        conditions. Further, the parties agree that this Agreement and its
        Attachments and the IBM Design Kit License Agreement, are the complete
        and exclusive statement of the agreement between the parties, which
        supersedes all proposals and all prior agreements, oral or written, and
        all other communications between the parties relating to the subject
        matter hereof.



        Agreed to:                            Agreed to: 
        INTERNATIONAL BUSINESS                JUNIPER NETWORKS
        MACHINES CORPORATION

   

        By:  [Illegible]                     By:  /s/ Marcel Gani
             -------------------------          -------------------------
             Authorized Signature               Authorized Signature  

             Name                               Name: Marcel Gani
             Title                              Title: Chief Financial Officer

   
             Dated:                             Dated:  8/26/97
                   --------------------               --------------------



 -----------------------------------------------------------------------------
 This agreement shall not bind either party to any obligations unless and until 
 it is executed in writing by both parties.

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                                                                        08/21/97


                                  ATTACHMENT A

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                                  ATTACHMENT B

                               Deliverable Items
                     [to be customized to the transaction]


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                                  ATTACHMENT C

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                                     [***]


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                                                                        08/21/97


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