Facsimile Product Development Agreement - JetFax Inc. and Xerox Corp.


 
                     CONFIDENTIAL TREATMENT REQUESTED 

FACSIMILE PRODUCT DEVELOPMENT AGREEMENT
BY AND BETWEEN
JETFAX, INC.  AND XEROX CORPORATION


This Facsimile Product Development Agreement (the "Agreement") is entered into
and is effective as of June 9, 1994 (the "Effective Date"), by and between
JetFax, Inc., a Delaware Corporation having its principal place of business at
1376 Willow Road, Menlo Park, California 94025 ("JetFax"), and Xerox
Corporation, a New York corporation having its principal place of business at
800 Long Ridge Road, Stamford, Connecticut 06904-1600 ('Xerox").

WHEREAS, JetFax desires, upon the terms and conditions set forth in this
Agreement, to perform certain Services and provide certain Hardware Designs,
Mechanical Designs, Bill of Materials and Source List and Software (as
hereinafter defined) for purposes of enabling the integration of that certain
Xerox printer product known by the name "Personal Printer 4004" (as hereinafter
defined, the "Printer Mechanism") into the Product (as, hereinafter defined);
and

WHEREAS, Xerox desires to perform certain Services and manufacture the Product
for itself and the JetFax Product (as hereinafter defined) as more fully set
forth herein; and

WHEREAS, JetFax wishes to purchase the JetFax Product and certain replacement
thermal ink jet printing cartridges from Xerox;

NOW, THEREFORE, it is agreed by and between the parties as follows:

1    DEFINITIONS

1.1  "Bill of Materials and Source List" shall mean the identification by
manufacturer and model of certain components and subsystems (such as, by way of
example and not limitation, a modem, an integrated circuit, or a scanner) and
the source from which such materials compliant with the Specifications may be
obtained.

1.2  "Documentation" shall mean the customer and service documentation specified
in Exhibit E.

1.3  "Errors" shall mean: (i) reproducible defects in any Deliverable which
causes it not to function in conformance with the Specifications, (ii) Software
miscoding which results in the Software failing to function in conformance with
the Specifications, if such failure is reproducible, and (iii) defects in the
Documentation which render it inaccurate, erroneous or otherwise unreliable.

1.4  "Hardware Designs" shall mean [*].

1.5  "JetFax Cartridge" shall mean that [*].

1.6  "JetFax Deliverables" shall mean, collectively or individually, JetFax
developed Software, Hardware Designs, Mechanical Designs and Bill of Materials
and Source List.  A more detailed description of the JetFax Deliverables and the
requirements for same are set forth in Exhibit A to this Agreement.


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

1.7  "Mechanical Designs" shall mean those [*].

1.8  "Printer Mechanism" shall mean [*].

1.9  "Product" shall mean the facsimile transceiver device ' based upon the
Printer Mechanism and the JetFax Deliverables, as more fully described in
Exhibit C to this Agreement.

1.10 "Product Acceptance" shall mean the date of acceptance of the Product
pursuant to Section 4.2(c) hereof.

1.11 "Project Schedule" shall mean the schedule of events and coordinate time
for the parties' performance under this Agreement, as set forth in Exhibit D.

1.12 "Prototype Units" shall mean initial working development units of the
Product as specified on Exhibit C. The parties acknowledge that Prototype Units
are intended to but may not fully comply with the applicable Specifications.

1.13 "Services" shall mean the work and labor necessary for the performance of
the respective obligations of the parties to this Agreement.

1.14 "Software" shall mean [*]

1.15 "Specifications" shall mean the mechanical, engineering, operational
and/or functional descriptions, details and requirements for the Product and the
Software, Hardware Designs, Printer Mechanism, JetFax Cartridge and externally
procured components (such as required modems, scanners, etc.) as set forth in
Exhibits A, B and C as the same may be modified as provided herein.  Included
are any standards for performance or operation of the item to which such
Specifications pertain.

1.16 "User Interface" shall mean [*].

1.17 "Xerox Affiliates" shall mean Xerox Canada, Inc., Rank Xerox Ltd.,
Fuji Xerox Ltd., and any subsidiary or affiliate at least 40% of the ownership
of which is held directly or indirectly by Xerox, Xerox Canada Inc., Rank Xerox
Ltd., or Fuji Xerox Ltd.

1.18 "Xerox Deliverables" shall mean units of the Printer Mechanism; units
of the JetFax Cartridge; overall industrial designs of the Product; design of
the control panel and User Interface and a fully functional pre-feed roller
attachment for the automatic document feeder (ADF); and the customer and service
Documentation; all in accordance with the Specifications and as more fully set
forth in Exhibit B to this Agreement.

1.19 "Fax Boards" shall mean any circuit board assemblies which are
designed by or for JetFax for use in the JetFax Product or any Derivative
Product, which such Fax Boards shall be made by or for Xerox.


2.   SCOPE OF WORK

2.1  Services.  Upon the terms and conditions set forth in this Agreement,
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JetFax and Xerox agree to perform the Services in accordance with Exhibits A and
B, respectively.  Each party will be responsible for obtaining all the
technology, labor, material, tooling and facilities necessary for the completion
of its portion of the Services, except as otherwise set forth in this Agreement.

2.2  Progress Reports.  Each party hereto shall provide the other party with
     ----------------
progress reports, as reasonably requested by the other party, starting after the
Effective Date and ending on the date of Product Acceptance.  Each report shall
be in such form and contain such information as may be mutually agreed by the
parties, including but 


 
not limited to, progress to current scheduled milestones, description of any
problems in meeting milestone, and if problems, proposed recovery methods, and
changes in party's estimate of key purchased component and JetFax Product
differentiation costs.

2.3  Agency Approvals.  The parties agree that JetFax shall be responsible
     ----------------                                                     
for any and all engineering and development work with respect to the JetFax
Deliverables


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     necessary for obtaining any required governmental or necessary private
agency approvals or certifications for the Product (such as, by way of example
and not limitation, Underwriter's Laboratories, CSA, U.S. F.C.C. regulations
parts 15 and 68) in the United States and Canada.  The actual costs (including
protesting consultant fees and expenses and testing costs and expenses) and
filing fees for the submission for such approvals in the United States and
Canada and such other jurisdictions as the parties mutually agree in writing
they shall enter are to be borne by Xerox.  In addition to the foregoing,
for the period ending on the date that is 24 months from the Effective Date,
JetFax agrees to use its reasonable efforts to design the JetFax Deliverables to
meet the agency approval requirements of other jurisdictions.  JetFax further
agrees to use its reasonable efforts to provide design services with respect to
the JetFax Deliverables, after such 24 month period, if necessary in conjunction
with any changes required by jurisdictions in which agency approvals have been
obtained during such 24 month period.  In order for JetFax to perform its
reasonable efforts obligations hereunder, Xerox shall provide JetFax with
customary English language summaries of the specifications of each individual
jurisdiction's requirements where agency approval is to be sought.  Xerox shall
provide all reasonable assistance to JetFax for obtaining approvals and
certifications for the JetFax Product, including use by JetFax of any relevant
testing, test results, documents, applications and approvals and certificates
with regard to the Product.  Xerox shall bear the cost of any JetFax travel,
lodging and related expenses incurred in support of approval activities in
connection with the Product.  Except as set forth above, all costs for agency
approvals for other jurisdictions shall be borne fully by the party seeking such
approvals, unless otherwise mutually agreed.  It is further agreed that after
such 24 month period, JetFax agrees to provide such design services as may be
requested by Xerox to meet the requirements of any jurisdiction.  Xerox agrees
to compensate JetFax at customary rates for such design services rendered after
the end of such 24 month period.

2.4  Bill of Materials and Source List Approval.  The Bill of Materials and
     ------------------------------------------                            
Source List shall be subject to review and approval by Xerox, and all component
vendors providing materials set forth on the Bill of Materials shall be subject
to qualification as a vendor to Xerox under Xerox standards for vendor
certification then in effect.  Such approval shall not be unreasonably withheld.
Subject to the terms of Section 5.1 (d), Xerox reserves the right to make final
selection of component vendors.  Notwithstanding anything to the contrary
contained herein, neither such Xerox approval nor such vendor qualification
shall be a basis for any rejection pursuant to Section 4.2(a) or Section 4.3, or
condition precedent to, or a basis for any delay in, Product Acceptance
hereunder.

2.5  Software, Etc.  Escrow.   Promptly after the Effective Date, JetFax
     ----------------------                                             
shall place with an independent third party escrow agent acceptable to Xerox one
complete set, under seal, of source code, object code and supporting
documentation for any and all Software, ASICS, FPGAS, and any other programmable
devices (including their schematic capture and VHDL files, their ACTEL files,
test patterns and test parameters and timing diagrams, to the extent available
to JetFax, used to confirm the design) included in the JetFax Deliverables (the
"Escrowed Materials").  The Escrowed Materials shall be retained in strict
confidence by the chosen escrow agent under the terms of the escrow agreement
(which escrow agreement shall be mutually acceptable to both JetFax and Xerox
and consistent

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with the terms of this Section 2-5) and the escrow agent shall not disclose the
Escrowed Materials to Xerox except pursuant to this Section 2.5. All costs
associated with the escrow, including any fees of the escrow agent, shall be
borne by Xerox.  In the event one of the events set forth below occurs, Xerox
may, at its option, notify the escrow agent of such event and request the
release of the Escrowed Materials to Xerox.  Xerox shall simultaneously notify
JetFax pursuant to Section 14.1 1 of this Agreement of such notification to the
escrow agent, specifying the basis upon which such request for the release of
the Escrowed Materials is based.  In addition, the escrow agent shall notify
JetFax of the Xerox request for the release of the Escrowed Materials.  The
escrow agent shall, only after ten (1 0) calendar days have passed from the date
Xerox' notice to JetFax hereunder is given (pursuant' to Section 14.11 of this
Agreement), release the Escrowed Materials to Xerox unless such action is
prohibited by order of a court of competent jurisdiction.  The only events which
shall entitle Xerox to request the release of the Escrowed Materials are as
follows: (i) JetFax ceases to support and maintain the Software and Hardware
Designs as required pursuant to the terms of Section 4.4 of this Agreement and
such failure remains uncured for a period of sixty (60) days after written
notice thereof from Xerox, or (ii) the specified items of the Software or
Hardware Designs listed on the Project Schedule to be performed by JetFax fail
to be accepted pursuant to Section 4.2(a) and (b) within 90 days of the
applicable due date therefor set forth in the Project Schedule due primarily to
the failure of JetFax to perform its obligations under this Agreement, or (iii)
JetFax grants its prior written consent to such release, or (iv) if a Petition
is filed by or against JetFax under Chapter 7 of the Bankruptcy Act of the
United States and such Petition is not discontinued, vacated or terminated
within sixty (60) days.  Xerox shall use such released Escrowed Materials solely
for the purpose of maintenance, support and production of the Product, or, in
the event subparagraph (ii) of this Section 2.5 shall occur, for the purpose of
maintenance, support and production and Xerox completion of development (with or
without the assistance of other parties) of a replacement product for the
partially completed Product and for the uses stated in the second paragraph of
Section 5.1 (b). Any Xerox use of the Escrowed Materials will be subject at all
times to the terms and conditions of this Agreement. JetFax agrees to update and
maintain monthly the Escrowed Materials held in safekeeping by the selected
Escrow Agent to reflect all changes made to the Escrowed Materials pursuant to
the terms of this Agreement.

2.6  Marketing.  Except as expressly set forth in this Agreement, or in the
     ---------
Supply Agreement of even date herewith by and between Xerox and JetFax (the
"Supply Agreement"), both parties shall be free to market their own respective
versions of the Product (or permitted private label versions of same) through
such marketing channels and in such countries as each party shall independently
determine.

3.   DESIGN REVIEW AND SPECIFICATION CHANGES

3.1  Design Review.  The parties agree to conduct regular program reviews as
     -------------
shown  on the agreed Project Schedule set forth on Exhibit D to this Agreement,
to  ensure their mutual satisfaction with the performance under the Agreement.
Upon reasonable notice, the parties agree to meet at a mutually agreeable time
and

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location to review and discuss the status of the development of the Product.
The parties further agree to promptly meet at the request of either party with
respect to any material issues a party may have with the performance of the
other party of its obligations under this Agreement.

3.2  Changes to the Specification.  Each party is entitled to request
     ----------------------------                                    
modifications in the form of changes or additions to the Specifications at any
time during the term of this Agreement.  Such requests shall be submitted in
writing, and shall not be deemed or considered binding unless accepted by the
other party in writing.  If any such modification of the Specifications is
agreed, the parties will negotiate an equitable adjustment to the Agreement,
including the apportionment of any additional development, testing or tooling
costs.  Upon mutual agreement to any change to the Specifications, both parties
will proceed with the implementation of the prescribed changes, and the
Specifications and other Exhibits to the Agreement shall be modified accordingly
to reflect such agreed upon changes.  Notwithstanding the foregoing, if the
JetFax requested changes to the Specifications involve any change to the Printer
Mechanism, the design responsibility for which is with third parties under
contract with Xerox, Xerox shall use reasonable efforts to effect such
Specification change provided that the same does not increase the cost of such
Printer Mechanism or component thereof, or adversely and materially affect the
Project Schedule or function of the Printer Mechanism, the Product or components
thereof.  In such event JetFax shall be responsible for the payment of all
nonrecurring expenses involved in such change (or such pro rata portion thereof,
in the further event Xerox elects to incorporate the same in its version of the
Product).  Notwithstanding the foregoing, JetFax shall not be responsible for
any such nonrecurring expenses if JetFax requested changes are necessary for the
Product to achieve Product Acceptance or to meet the Specification as changed at
the request of Xerox.  In the event such third party will not agree to such
Specification change, Xerox shall so notify JetFax and Xerox shall have no other
or further liability to JetFax as a result of such request.

3.3  Modification to Specifications.  JetFax and Xerox agree that upon
     ------------------------------                                   
acceptance of each Deliverable pursuant to Section 4.2 and upon Product
Acceptance the Specifications shall be modified as necessary to conform to the
Deliverables and the Product, as applicable, as accepted, excepting mutually
agreed (in writing) deviations from the Specification which require additional
development work to achieve conformance to the Specification.  After and upon
acceptance of each Deliverable pursuant to Section 4.2 and after and upon
Product Acceptance, the term "Specifications" as used herein shall refer in all
cases to the Specifications as so modified.

4.   DELIVERABLES AND DELIVERY; ACCEPTANCE; AND REJECTION

4.1  Deliverables.  Xerox and JetFax agree to use reasonable efforts to
     ------------                                                      
perform their respective Services and deliver their respective Deliverables in
accordance with the Project Schedule (Exhibit D).  Each party's obligation shall
be contingent upon the other party successfully providing any prerequisite
Deliverable in a timely fashion in accordance with the Specifications for same.
All Deliverables shall be delivered by the times set forth in the Project
Schedule and stated dates are date of delivery unless otherwise specified.  The
parties shall use such Deliverables for testing and acceptance and marketing
purposes only and shall not sell, lease

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or transfer the same to any third party.

4.2  Acceptance.
     ---------- 

(a)  Each party, with the reasonable assistance of the other party if requested,
will examine and test each respective Deliverable (and/or item thereof as
specified on the Project Schedule) of the other party upon delivery. Each
receiving party shall, as soon as reasonably practicable following the delivery
of same, but in no event later than fifteen (I 5) business days after receipt of
notice of delivery: (i) accept the Deliverable (or item thereof and so inform
the other party in writing; or (ii) if the Deliverable (or item thereof contains
material Errors, reject the Deliverable (or item thereof and provide the other
party with a written statement of such material Errors. The failure of a party
to respond within the specified fifteen (15) day period shall be deemed
acceptance of the Deliverable (or item thereof, but shall not limit the
provisions of Section 4.4 hereof. Either party may request a reasonable
extension in the time to complete such testing if the same is required under the
circumstances, and both parties shall reasonably consider such requests,
provided that no such extension shall be effective unless in writing and signed
by a duly authorized representative of the party granting such extension.

(b)  The developing party will promptly correct the material Errors set forth in
the statement of material Errors with respect to any Deliverable (or item
thereof and redeliver the Deliverable (or item thereof to the receiving party
within such reasonable period of time as may be agreed upon by JetFax and Xerox
with regard to all circumstances affecting the Product or the Deliverables. The
receiving party shall, as soon as reasonably practicable after such redelivery
but in no event later than fifteen (1 5) business days thereafter, accept or
reject the redelivery in accordance with the procedure set forth in Section
4.2(a), which procedure shall be repeated until the Deliverables are accepted or
the receiving party invokes the provisions of Section 4.3 hereof.

(c)  "Product Acceptance" shall be deemed to occur upon the earlier of (i)
acceptance, pursuant to this Section 4.2, of all JetFax and Xerox Deliverables
and successful completion of the acceptance test procedures with regard to the
Product as set forth in Exhibit F or (ii) the first sale, lease, license or
other distribution or transfer of a unit of Product (not including any Xerox
replacement product as referred to in Section 5.1(a) second paragraph) by Xerox
to a customer or other third party other than solely for test purposes. The date
of such Product Acceptance shall be deemed the "date of Product Acceptance."
Notwithstanding anything to the contrary contained herein, Product Acceptance
shall not be conditioned upon any design or development of the JetFax
Deliverables to meet any criteria of any agency approvals other than those of
the United States or Canada.

(d)  The parties further agree that in the event a dispute arises as to whether
any Deliverable (or item thereof is acceptable under the procedure set forth in
Sections 4.2(a) and 4.2(b), and the parties are unable after good faith
negotiation to resolve such dispute, the parties agree to submit the
acceptability of any such Deliverable (or item thereof to Genoa Technology,
Inc., or other independent third party-mutually acceptable to the parties, who
shall test such Deliverable (or

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item thereof and determine if such Deliverable (or item thereof is acceptable as
set forth in Sections 4.2(a) and 4.2(b). The determination of such independent
third party shall as to the acceptance or rejection of any Deliverable (or item
thereof, be deemed final.  The cost, if any, of employing such independent third
party shall be borne by the losing party.

4.3  Rejection.  Should any Deliverable fail to be accepted after the third
     ---------                                                             
delivery of that Deliverable pursuant to Section 4.2(b) then the parties shall
promptly meet in accordance with Section 3.1 to resolve the problem.  Any
subsequent rejection of the same Deliverable (unless otherwise resolved pursuant
to Section 4.2(d)) shall be deemed a breach of this Agreement by such delivering
party, and the non-breaching party may elect to terminate this Agreement
pursuant to Section 1 1.1 (a) hereof, or may elect to accept further
resubmission of the applicable Deliverable.

4.4  Error Fixes.  JetFax shall at its expense, from the Effective Date
     -----------                                                       
until the date that is eighteen (18) months from the date of Product Acceptance,
use its reasonable efforts promptly to correct documented and reproducible
material Errors in the Software and Hardware Designs which are reported in
writing by Xerox to JetFax.  Provided, however, that prior to Product
Acceptance, this obligation shall apply only to Deliverables (or items thereof
that have been delivered by JetFax in accordance with the Project Schedule.
Xerox shall provide such assistance in correction as JetFax may reasonably
request.  All such corrections to the Software and Hardware Designs shall be
deemed to be included in the licenses granted under section 5,1 hereof, and
copies of any such corrections shall be promptly furnished in source code to the
escrow agent set forth in section 2.5 of this Agreement.  JetFax will have no
obligation under this Section 4.4 with respect to any Error in the Software or
Hardware Designs caused by any person or entity other than JetFax or its sources
identified on the Bill of Materials and Source List and JetFax is not obligated
to correct any Errors in the Software unless such Error or defect causes the
Software to fail to function in conformance with the Specifications as defined
injection 3.3 herein.

4.5  JetFax Support.  JetFax further acknowledges and agrees that, for a
     --------------                                                     
period of one (1) year following Product Acceptance and subject to the
provisions of this Section 4.5, it shall provide Xerox with such reasonable
field and engineering support as Xerox shall reasonably request, necessary for
the manufacture and field support of the Product as more fully set forth in
Exhibit E to the Supply Agreement.  All travel, lodging and associated expenses
(save salary and benefits of JetFax employees) shall be borne by Xerox.  In
addition, after the one (1) year period following Product Acceptance, Xerox
shall pay JetFax the reasonable and customary personnel, service and related
charges for any such support provided by JetFax.

6.   OWNERSHIP RIGHTS AND LICENSES

5.1  Software and Hardware Designs, Etc.
     ----------------------------------
(a)  Subject to the terms and conditions of this Agreement and the Supply
Agreement, JetFax hereby grants to Xerox, effective only upon and after the date
of Product Acceptance, a nonexclusive, perpetual (except if terminated pursuant
to Section

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11.1 herein), worldwide license to the Software, the Hardware Designs, the
Mechanical Designs, and any other JetFax confidential information disclosed to
Xerox and necessary or useful for the following licensed activities (and JetFax
intellectual property corresponding to the above recited items), to manufacture
or have manufactured, the Product (including any enhancements and modifications
as set forth in Sections 3.3 and 8.1 of the Supply Agreement), the Product as
defined in the Supply Agreement (i.e., the "JetFax Product"), and any Derivative
Products (as defined in the Supply Agreement), and to use and distribute and
sell and service the Product, the JetFax Product and any Derivative Products.

Provided however, if the Escrowed Materials are released to Xerox pursuant to
Section 2.5 of this Agreement, the above license as it applies to the Product
shall automatically extend, if and only if there has not been Product
Acceptance, to a Xerox replacement product (and variants thereof for the
partially completed Product and shall automatically encompass all of the
Escrowed Materials.  In such event, the royalty set forth in Section 6.2(a) of
this Agreement in the sum of [*] (reduced, if applicable as set forth in such
Section 6.2(a)) shall also apply to such replacement product license. In such
event, JetFax shall promptly and fully disclose the fully or partially completed
JetFax Deliverables to Xerox, but shall have no further obligations under
Sections 2.1, 2.3, 2.5, 4.1, 4.4 and 4.5 of this, Agreement and Section 3.1 of
the Supply Agreement.

(b)  The Software, the Hardware Designs, and the Mechanical Designs are
confidential information of JetFax, subject to the CDA defined in Section 8.1 of
this Agreement and shall be used by Xerox solely in connection with the Product,
the JetFax Product, and any Derivative Products (as defined in the Supply
Agreement) in accordance with the terms of this Agreement and the Supply
Agreement or as provided in this Article 5. Subject to the terms and conditions
of this Agreement and the Supply Agreement, JetFax hereby grants to Xerox a
nonexclusive, perpetual (except if terminated pursuant to Section 1 1.2(a) of
this Agreement), worldwide license (with the Xerox right to sublicense Xerox
Affiliates) to the Mechanical Designs, the Hardware Designs (excluding the ASICs
and the Field Programmable Gate Arrays (FPGAS) themselves and a majority of the
designs of each such ASIC or FPGA), and any other confidential information of
JetFax disclosed to Xerox (excluding the Software and the above excluded items)
and necessary or useful for the following licensed activities (and JetFax
intellectual property corresponding to the above recited licensed items) to
manufacture or have manufactured any other products (i.e., products other than
the Product (but including any products related to the Product if there is no
Product Acceptance), the JetFax Product, and Derivative Products (as defined in
the Supply Agreement)), and to use and distribute and sell and service such
other products. Provided, however, notwithstanding any sublicense made pursuant
to the above right to sublicense, Xerox shall remain fully liable for compliance
with all of its obligations under this Agreement, including without limitation
the payment of all royalties.

Provided however, if the Escrowed Materials are released to Xerox pursuant to
Section 2.5 of this Agreement, the above license of this Section 5.1(b) shall
automatically extend, if and only if there has not been Product Acceptance, to
include all fully or partially completed JetFax Deliverables including Software,
ASICS,, and FPGAs and shall automatically encompass all of the Escrowed


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Material.  To the extent Xerox uses a material amount of such extended materials
(not already included in the license in the immediately preceding paragraph)
under this extended license, Xerox shall be obligated to pay the royalty as set
forth in the last sentence of Section 6.2(b) of this Agreement.

(c)  Xerox may distribute and sell the JetFax Product and any Derivative Product
only to JetFax and in accordance with the Supply Agreement. For the confidence
period of the CDA defined in Section 8.1 of this Agreement, Xerox shall not
alter (but subject to the provisions of Section 2.5 of this Agreement and the
licenses granted in the second paragraphs of Sections 5.1(a) and 5.1(b)),
reverse engineer, decompile or disassemble the Software or the ASICs and the
FPGAs Included in the Hardware Designs, and Xerox may copy the Software, the
Hardware Designs, the Mechanical Designs and any other confidential information
of JetFax which is disclosed to Xerox only as necessary for the exercise of the
licenses granted in Sections 5.1 (a) and 5.1 (b) and/or the provisions of
Section 2.5. JetFax retains its ownership rights in and to the Software,
Hardware Designs, Mechanical Designs and corresponding intellectual property.

(d)  Subject to the terms and conditions of this Agreement and the Supply
Agreement, Xerox hereby grants JetFax a nonexclusive, perpetual (except if
terminated pursuant to Section I 1. 1 of this Agreement), royalty free and paid
up, worldwide (other than as to the manufacture and have manufactured rights and
units, which are territorially limited below in this Section 5.1(d)) license to
the Xerox Deliverables (excluding the Printer Mechanism, Cartridges, and Printer
Mechanism and/or Cartridge intellectual property) and any other Xerox
confidential information disclosed to JetFax and necessary or useful for the
following licensed activities (and Xerox intellectual property corresponding to
the above recited items) to manufacture and have manufactured and use and
distribute and sell and service the JetFax Product and any Derivative Products.
Provided, however, the manufacture and have manufactured activities of such
license are territorially limited to the People's Republic of China and Hong
Kong, and such activities are limited to assembling Fax Boards with or into
units of JetFax Products (minus Fax Boards) and/or Derivative Products (minus
Fax Boards) (as those terms are defined in the Supply Agreement) made by Xerox
or by a Xerox Affiliate and disassembling and reassembling such units..
Provided, further, however, the use, distribute, and sell activities of such
license with respect to units of JetFax Product and Derivative Product
manufactured pursuant to the foregoing manufacture and have manufactured license
are territorially limited to the People's Republic of China, Hong Kong, Macao,
Singapore, Malaysia, Thailand, Brunei, Indonesia and Philippines, and also
provided that the distribute and sell activities with respect to such units are
for end use only in the People's Republic of China, Hong Kong, Macao, Singapore,
Malaysia, Thailand, Brunei, Indonesia and Philippines. This Section 5.1 (d) does
not grant any license to Printer Mechanisms and Cartridges, n6r Xerox Printer
Mechanism and/or Cartridge intellectual property. For the confidence period of
the CDA defined in Section 8.1 of this Agreement, JetFax shall not alter,
reverse engineer, decompile or disassemble any software provided by Xerox, and
JetFax may copy such software only as necessary for use, distribution, sale, and
service as herein provided.

JetFax has the right to sublicense only to Ailicec the manufacture and have

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                     CONFIDENTIAL TREATMENT REQUESTED = [*]

manufactured license granted to JetFax in the immediately preceding paragraph
and the use, distribute, sell and service license granted to JetFax in the
immediately preceding paragraph with respect to units manufactured pursuant to
such manufacture and have manufactured license.

Any JetFax sublicense pursuant to the immediately preceding paragraph shall: (i)
be in writing; (ii) be nonexclusive, nontransferable, and nonsublicensable and
subject to termination as provided in the immediately following paragraph; (iii)
be subject to all the limitations of the Section 5.1(d) license to JetFax; (iv)
subject Ailicec to obligations to JetFax no less protective of Xerox' rights
than JetFax's obligations to Xerox in Section 5.1 (d), Article 8, and Articles I
1, 12, and 13; and (v) include agreement by the sublicensee Ailicec for the
third party benefit of Xerox, (1) that sublicensee Ailicec receives no warranty
of any kind from Xerox, and (2) that sublicensee agrees not to refer to its
sublicense of rights pursuant to Section 5.1(d) or refer to any provision of or
rights contained in such sublicense or the Xerox name in any publicity,
advertising, or public promotional activity without the express written approval
of Xerox.  Provided, nothing herein shall prohibit sublicensee from exercising
its distribute, sell and service rights through agents or distributors.

Upon the uncured (after 30 days notice) failure of any of the conditions of the
immediately preceding paragraph or sublicensee Ailicec's uncured (after 30 days
notice) failure to perform its obligations contained in such conditions, the
JetFax sublicense to Ailicec shall immediately terminate upon written notice of
Xerox to JetFax (and JetFax shall immediately inform Ailicec of such terminated
rights) and Xerox shall stop supplying JetFax Products (minus Fax Boards) and/or
Derivative Products (minus Fax Boards) to JetFax. No such termination shall
limit or impair in any way any other rights of JetFax under this Agreement or
the Supply Agreement, including the right to purchase JetFax Products and
Derivative Products from Xerox.

(e)  Notwithstanding Xerox' ownership of certain tools for production of common
parts, Xerox hereby grants to JetFax the right to acquire such common parts,
subject to the applicable terms and provisions of the Supply Agreement.

5.2       Product.  Xerox retains its ownership rights in and to any and all
          -------
intellectual property contained in the Xerox Deliverables.

6.        PAYMENTS

6.1       Advance Royalty.
          --------------- 

(a)  In consideration for certain of the Services to be performed by JetFax
hereunder, Xerox has heretofore paid to JetFax the sum of [*]. Such sum shall be
treated by the parties as payment by Xerox to JetFax for the Services performed
by JetFax with respect to the Product connectivity option as described in the
Specifications.

(b)  In further consideration for certain of the Services to be performed by
JetFax hereunder, Xerox agrees to pay to JetFax a nonrefundable advance royalty
payment of [*], payable as follows:

11


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

          The sum of [*] heretofore paid
          by Xerox to JetFax.

          The sum of [*] to be paid by Xerox in those increments as set forth in
          the Milestone Schedule of Exhibit A-2, the payment associated on
          Exhibit A-2 with each such Milestone to be made to JetFax upon the
          successful completion of the specified Milestone.

(c)  JetFax agrees to provide to Xerox, upon request, audited financial
statements for the JetFax accounting year of 1992 as well as quarterly financial
statements (audited if available) for each accounting quarter of 1993 and 1994.
In addition, JetFax shall provide Xerox, upon request, detailed manpower and
cost plans for the development effort. Any and all such information provided to
Xerox is subject to the CDA defined in Section 8.1 of this Agreement.

6.2  Royalty Payments.
     ----------------
(a)  In further consideration of the Services performed hereunder and the
licenses granted herein by JetFax, Xerox shall pay JetFax a royalty, with
respect to each and any sale, lease, license or other distribution or transfer
of a unit of Product (and/or a unit of replacement product as described in the
second paragraph of Section 5.1(a) and/or a unit of product described in Section
5.1(b) if such paragraph of Section 5.1(a) or the second paragraph of Section
5.1(b) is applicable) to a customer or other third party (other than JetFax, but
including any Xerox Affiliates) (and excluding up to [*] production units of
Product to be internally used by Xerox , which units shall be without royalty),
in an amount equal to [*] for each such unit sold, leased, licensed or otherwise
distributed or transferred. [*].

(b)  In further consideration of the Services performed hereunder and the
licenses granted herein, Xerox shall pay JetFax a royalty, with respect to each
and any sale, lease, license or other distribution or transfer to a customer or
other third party (other than JetFax but including Xerox Affiliates) of a unit
of any product (other than the Product or the JetFax Product or Derivative
Products (as defined in the Supply Agreement)) with respect to the design or
manufacture of which: (i) all or part of the Mechanical Designs and/or any
corresponding JetFax intellectual property have been used, in an amount equal to
[*]

12


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

for each such unit sold, leased, licensed or otherwise distributed or
transferred; (ii) all or part of that portion of the Hardware Designs licensed
to Xerox pursuant to Section 5.1 (b) and/or any corresponding JetFax
intellectual property, or any other JetFax confidential information disclosed to
Xerox and/or any corresponding JetFax intellectual property have been used, in
an amount equal to [*] for each such unit sold, leased, licensed or otherwise
distributed or transferred. The above royalty(s) shall be payable for JetFax
information only if the information used was subject to Clause 2. of the CDA
defined in Section 8.1 of this Agreement when suc6 information was first
communicated to Xerox by JetFax (provided, however, all parts drawings and
schematics for circuit boards are, and shall be, deemed to have been subject to
Clause 2 of the CDA when first communicated to Xerox by JetFax), and only for
units sold, leased, licensed or otherwise distributed or transferred within five
(5) years after the Effective Date of this Agreement. The above royalties
described in clauses (i) and (ii) are not exclusive of each other and a total
royalty of [*] per unit will apply with respect to any product to which both
clauses (i) and (ii) above apply. [*]. When the Section 6.2(b) royalties paid to
JetFax reach the sum of [*], the license set forth in Section 5.1(b) to Xerox
shall automatically become royalty free and paid up. For units sold, leased,
licensed or otherwise distributed or transferred after the five (5) year period
referred to above in this Section 6.2(b), the license to Xerox set forth in
Section 5.1(b) shall automatically become royalty free and paid up. No royalties
payable pursuant to Section 6.2(a) shall be subject to, nor included in the
calculation of, the royalty cap of this Section 6.2(b). Provided, further, in
the event Xerox shall use a material amount of any of the Escrowed Materials not
included in the license under the first paragraph of Section 5.1 (b) in products
under the license set forth in the second paragraph of Section 5.1 (b) of this
Agreement, Xerox shall pay to JetFax the royalty amount set forth in Section
6.2(a) and not the royalty set forth in this Section 6.2(b) provided however,
that for uncopyrighted and unpatented such materials the sentence 'The above
royalty(s) . . . of this Agreement.' above in this Section 6.2(b) shall apply.

(c)  All royalty payments as specified in Sections 6.2(a) and (b) shall be paid
by Xerox to JetFax monthly until such time as the prepaid royalty is totally
offset pursuant to Section 6.2(a), and quarterly thereafter (beginning with the
first full calendar quarter) within thirty (30) days after the end of each month
or calendar quarter, as applicable and shall be due and payable with respect to
each and all units sold, leased, licensed, or otherwise distributed or
transferred, without regard to whether or not Xerox shall have received payment
with respect thereto.

(d)  Any amounts owed by JetFax to Xerox which are past due may, at Xerox'
option, be deducted from the royalty due JetFax from Xerox.

(e)  JetFax acknowledges and agrees that Xerox shall have the right, without the
payment of any additional royalty, to remanufacture units of the Product
returned from its customers for, any reason, and to resell or release the same
to its 

13


 
customers.

6.3  Nonrecurring Engineering (NRE) Costs for ASICS.  Xerox shall pay all 
     ----------------------------------------------                      
nonrecurring engineering costs associated with the conversion of the FPGAs to
ASICs and shall pay all consulting fees for test vector generation.


7.   REPRESENTATIONS AND INDEMNIFICATION

7.1  Representations Each party represents that:
     --------------------                       

     (a) it has full right and authority to enter into this Agreement and
the Supply Agreement, to perform its obligations hereunder;

     (b) and it has full right and authority to grant the rights granted to
the other party herein.

7.2  Xerox' Infringement Indemnity.
     -----------------------------

     (a) Subject to the terms hereof, Xerox agrees to indemnify, defend and
hold JetFax and its customers harmless from and against any claim or suit
alleging that the Xerox Deliverables (excluding the Printer Mechanism and the
JetFax Cartridge, the indemnity for which is set forth exclusively in the Supply
Agreement) infringes any patent rights, copyrights or other proprietary rights
of any third party when used for its intended purposes in conjunction with the
Product or the JetFax Product or any Derivative Product; provided that: (i)
JetFax gives Xerox prompt notice in writing of any such suit and permits Xerox,
through counsel of its choice, to answer the charge of infringement and defend
such claim or suit, (ii) Xerox has sole control of the defense and all related
settlement negotiations, (iii) JetFax has not further modified or altered the
Xerox Deliverables following their delivery to JetFax if such claim or suit
would have been avoided if such modification or alteration had not been made,
and (iv) JetFax provides Xerox with the assistance, information and authority to
perform the above.  In the event Xerox agrees to settle the suit, both Xerox and
JetFax agree not to publicize the settlement nor to permit the party claiming
infringement to publicize the settlement without first obtaining the other
party's written permission.

     (b) Duty to Correct.  Notwithstanding Section 7.2 (a), should the
         ---------------                                              
Xerox Deliverables become the subject of a claim of infringement of a third
party's patent right, copyright or other proprietary rights, Xerox shall, at its
option and expense: (i) procure for JetFax the right to use! the applicable
Xerox Deliverable and sell the JetFax Product and any Derivative Product (and
any royalties or other payments required to obtain such rights shall be paid by
Xerox) or (ii) replace or modify the Xerox Deliverable to make it non-
infringing, provided that the. same function is performed by the replacement or
modified Xerox Deliverable.


     (c) Right to Use Study.  Xerox may conduct a right to use study with
         ------------------                                              
respect to the Xerox Deliverables (excluding the Printer Mechanism and the
JetFax Cartridge) when used in conjunction with the JetFax Product or any
Derivative

14


 
Product.  If:

          (I) prior to one (1) month after the design of the JetFax Product or
any Derivative Product is fixed by JetFax and that fact is disclosed by JetFax
to Xerox (and JetFax shall promptly disclose such fact to Xerox) along with
JetFax Product or any Derivative Product information reasonably needed by Xerox
to conduct its right to use study (and JetFax shall promptly disclose such
information to Xerox after such design is fixed);

          (II) Xerox identifies unlicensed third party patent(s) which Xerox
reasonably believes will be infringed by use by or for JetFax or its customers
of the Xerox Deliverables (excluding the Printer Mechanism and the JetFax
Cartridge) when used in conjunction with the JetFax Product or any Derivative
Product and Xerox clearly identifies in writing (including patent or application
numbers and issue or filing dates respectively) to JetFax any such patent(s);
then the parties agree as follows.  If Xerox is unable to promptly obtain a
license under such patents on reasonable terms (and any royalties or other
payments required to obtain such license shall be paid by Xerox) and the parties
are unable to reasonably design around such patent(s);

then the parties shall meet to further work in good faith to resolve this
problem. In the event such resolution cannot be achieved within one (1) month
after the parties first met to further work to try to resolve the problem, such
patent(s) shall be excluded from the indemnity provided by Xerox in this Section
7.2 as it applies to the JetFax Product; however, in such event JetFax shall
have the option to negotiate with Xerox (and Xerox will negotiate in good faith)
for a lower Supply Agreement Article 4 price and/or cancel its JetFax Product
activities.

7.3  (a) JetFax Indemnity.  Subject to the terms hereof, JetFax agrees to
         ----------------                                                
indemnify, defend and hold Xerox harmless from and against any claim or suit
alleging that the Software and/or the Hardware Designs provided by JetFax
pursuant to this Agreement when used for their intended purposes in conjunction
with any of the following items made by or for, Xerox: the Product, the JetFax
Product, or any Derivative Product, infringes the patent rights, copyrights or
other proprietary rights of any third party ; provided that (i) Xerox notifies
JetFax in writing within fifteen (1 5) business days of any claim, (ii) JetFax
has sole control of the defense and all related settlement negotiations and
(iii) Xerox provides JetFax with the assistance, information and authority
necessary to perform the above.  Notwithstanding the foregoing, JetFax shall
have no liability hereunder for any claim or suit based on (i) modifications or
other alterations made to the Software or the Hardware Designs by a party other
than by or for JetFax (other than by Xerox or Xerox Affiliates) or the
combination, operation or use of the Software or the Hardware Designs with other
hardware or software not furnished or developed by or for JetFax (other than by
Xerox or Xerox Affiliates) if such infringement would have been avoided by the
use of the Software and the Hardware Designs without such modification or
alteration or without such other hardware or software or (ii) any Software
related to the User Interface (as included in the Xerox Deliverables) or (iii)
infringement of any proprietary rights of third parties to the extent and for
the time period and activities such proprietary rights are licensed to Xerox
(but JetFax shall reimburse Xerox for any reasonable per unit royalties Xerox is
obligated to pay and does pay for such license(s) to the

15


 
extent Xerox incurs greater cost under such license(s) dub to purchase of units
by JetFax under the Supply Agreement).  In the event that the Software or the
Hardware Designs are the subject of a claim of infringement, JetFax may at its
option and expense (i) modify the same to be non-infringing or (ii) obtain for
Xerox a license (and any royalties required to obtain such license shall be paid
by JetFax) to continue using the same.  The provisions of this Section 7.3 state
the entire liability and obligations of JetFax and the exclusive remedy of Xerox
with respect to any infringement or alleged infringement of proprietary rights
by the Software or the Hardware Designs.  Except as set forth herein, JetFax
assumes no liability for, and expressly disclaim,.,, any liability with respect
to, any infringement or alleged infringement of any proprietary rights by the
Software or the Hardware Designs.

(b)  JetFax Right to Use Study.  JetFax may conduct a right to use study with
respect to the JetFax Deliverables when used in conjunction with the Product.
If:
     (i)  prior to one (1) month after the design of the Product is fixed by
          Xerox and that fact is disclosed by Xerox to JetFax (and Xerox
          shall promptly disclose such fact to JetFax) along with Product
          information reasonably needed by JetFax to conduct its right to
          use study (and Xerox shall promptly disclose such information to
          JetFax);

     (ii) JetFax identifies unlicensed third party patent(s) which JetFax
          reasonably believes will be infringed by use by or for Xerox or
          its customers of the JetFax Deliverables when used in conjunction
          with the Product and JetFax clearly identifies in writing
          (including patent or application numbers and issue or filing
          dates respectively) to Xerox any such patent(s);

then the parties agree as follows.  If JetFax is unable to promptly obtain a
license under such patents on reasonable terms (and any royalties or other
payments required to obtain such license shall be paid by JetFax) and the
parties are unable to reasonably design around such patent(s); then the parties
shall meet to further work in good faith to resolve this problem.  In the event
such resolution cannot be achieved within one (1) month after the parties first
met to further work to try to resolve the problem, such patent(s) shall be
excluded from the indemnity provided by JetFax in this Section 7.3 as it applies
to the Product; however in such event Xerox shall have the option to negotiate
with JetFax (and JetFax will negotiate in good faith) for a lower Section 6.2
royalty and/or cancel its Product activities.

7.4  Xerox for the Xerox Deliverables (excluding the Printer Mechanism and
the JetFax Cartridge), and JetFax for the JetFax Deliverables, shall promptly
identify to the other party any third party patents known by Xerox for its
Deliverables and known by the President and/or CEO of JetFax for its
Deliverables to cover such Deliverables.  Each party has disclosed to the other
prior to the Effective Date all such patents known prior to the Effective Date.

8.   CONFIDENTIALITY

8.1  Each party's information disclosed to the other party pursuant to this
Agreement shall be governed by the terms of the "CONFIDENTIAL DISCLOSURE
AGREEMENT" (the "CDA") between the parties attached as Exhibit G and

16


 
which is entered into and effective as of the Effective Date of this Agreement.

8.2  The provisions of the CDA are hereby adopted by the parties and shall
remain in full force and effect as a part of this Agreement as though fully set
forth herein.

8.3  Without limitation to any other provision of this Agreement, the CDA
referred to in Section 8.1 applies to all source code and supporting
documentation including concepts and algorithms embedded in the source code.  In
addition, Xerox agrees not to make available any part of any program listing
obtained pursuant to Section 2.5 of this Agreement to a third party within the
meaning of the CDA unless that part of the program listing is subject to one or
more provisions of CDA clause 3. (a) - (0, notwithstanding the fact that the
period for this obligation may extend beyond the 3.5 years of the CDA.

8.4  This Agreement shall be deemed Confidential Information and shall not
be disclosed to third parties other than as provided in Section 14.18 of this
Agreement.

9.   PROPRIETARY RIGHTS NOTICES

The Product shall bear any and all reasonable and customary proprietary rights
notices associated with or carried by any of the Deliverables.  Neither party
will remove, cover or deface any such proprietary rights notices.

10   TERM

This Agreement will commence on the Effective Date and will continue to be in
force and effect until such time as it is otherwise terminated as herein
provided.

II.  TERMINATION

11.1      Termination for Cause By Either Party.  Either party may terminate
          -------------------------------------                             
this Agreement:

(a)  Upon sixty (60) days written notice to the other party in the event the
other party breaches any of its material obligations hereunder and fails to cure
same during the notice period, or if it is not reasonable to expect such a cure
within that period, does not take effective action within such period to
promptly cure the material breach; or

(b)  Upon sixty (60) days written notice to the other party in the event a
petition in bankruptcy or similar debtor protection law is filed by or against
the other party, or if the other party makes an assignment for the benefit of
creditors, or a receiver is appointed, and such events are not discontinued,
vacated or terminated during the notice period;

11.2   Effect of Termination.
       --------------------- 
(a)  The licenses set forth in Section 5.1 (t)) hereof are perpetual (and shall
survive a termination under Section 11.1 of this Agreement), subject, however,
to the royalty obligations of Section 6.2 hereof and all title and
confidentiality provisions of this Agreement, provided, however, that the
licenses set forth in

17


 
Section 5.1 (b) are subject to termination upon sixty (60) days written notice
from JetFax to Xerox in the event Xerox breaches any of its material obligations
with respect to such royalty, title or confidentiality provisions as they apply
to such licenses and fails to cure the same during such sixty (60) day notice
period, or if it is not reasonable to expect such a cure within that period,
does not take effective action within such period to promptly cure the material
breach.

(b)  Upon termination of this Agreement each party shall return to the other
party all unlicensed confidential or proprietary information of the other party
and shall make no other or further use of such unlicensed information.


12.  RIGHT TO DEVELOP INDEPENDENTLY

Nothing in this Agreement will impair either party's right to acquire, license,
develop, manufacture or distribute for itself, or have others develop,
manufacture or distribute for it, similar technology performing the same or
similar functions as the technology contemplated by this Agreement except as
provided in Sections 5 and 8, or to market and distribute such similar
technology or products.


13.  DISCLAIMER OF CONSEQUENTIAL DAMAGES AND IMPLIED WARRANTIES

In no event shall either party be liable to the other for any indirect, special,
incidental or consequential damages for breach of or failure to perform under
this Agreement, even if that party has been advised of the possibility of such
damages. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 7.1 OR IN THE SUPPLY
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO ANY DELIVERABLE OR OTHERWISE, INCLUDINIG WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, TECHNICAL PERFORMANCE, OR COMMERCIAL SUCCESS AND HEREBY DISCLAIMS ALL
SUCH OTHER WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED EITHER IN THIS AGREEMENT OR
THE SUPPLY AGREEMENT, NEITHER PARTY ASSUMES ANY RESPONSIBILITIES WHATEVER WITH
RESPECTTOTHE DEVELOPMENT, MANUFACTURE , USE, SALE, LEASE, OR OTHER DISPOSITION
BY THE OTHER PARTY OR ITS VENDEES OF PRODUCTS INCORPORATING DELIVERABLES
LICENSED OR PROVIDED UNDER THIS AGREEMENT OR THE SUPPLY AGREEMENT.

14.  GENERAL

14.1 Force Majeure.  Neither party shall be liable for any failure or
     -------------
delay in its performance under this Agreement due to causes which are beyond its
reasonable control, including, but not limited to, acts of God, acts of civil or
military authority, fires, epidemics, floods, earthquakes, riots, wars,
sabotage, labor shortages or disputes, and governmental actions; provided that
(a) the delayed party: (i) gives the other party written notice of such cause
promptly, and in any event within fifteen (15) days of discovery thereof; and
(II) uses its reasonable efforts to correct such failure or delay in its
performance, and (b) the delayed party's time for performance or cure under
this Agreement shall be

18


 
extended for a period equal to the duration of the cause or sixty (60) days,
whichever is less.

14.2 Relationship of Parties.  Xerox and JetFax are independent
     -----------------------                                   
contractors.  Neither company nor its respective employees, consultants,
contractors or agents are agents, employees or joint venturers of the other, nor
do they have any authority to bind the other by contract or otherwise to any
obligation.  They will not represent to the contrary, either expressly,
implicitly, by appearance or otherwise.  Each party will determine, in its sole
discretion, the manner and means by which the Services are accomplished, subject
to the express condition that each party will at all times comply with
applicable law.

14.3 Use of Name.  Neither party will, without first obtaining the others
     -----------                                                        
prior written consent, be entitled to use the name of the other party in
promotional, advertising and other materials other than as provided in Section
14.18 of this Agreement.

14.4 Personnel.  The respective employees, consultants, contractors and
     ---------                                                         
agents of each party will observe the working hours, working rules and holiday
schedule of the other while working on the other's premises.
Notwithstanding the foregoing, employees of a party shall be and remain
employees of that party and shall not be deemed or claim to be employees of the
other party even when working on such other party's premises.

14.5 Employment Taxes and Benefits.  Each party shall be responsible for
     -----------------------------                                      
any and all employment taxes and benefits payable to its employees,
representatives, contractors, subcontractors and other engaged by it to perform
Services hereunder and in no event shall either party look to the other for such
payments.

14.6 Other Tax Implications.  The purpose of development of the
     ----------------------                                    
Deliverables under this Agreement is to demonstrate that the Product developed
hereunder will conform to the Specifications.  The Deliverables have no
intrinsic value as an item.  As such, no value added, sales, or use taxes have
been assessed or are anticipated to be required as a result of the Services
performed under this Agreement.

14.7 Export Controls.  Both parties shall comply with all applicable United
     ---------------                                                       
States laws and regulations respecting the export, directly or indirectly, of
any technical data acquired from the other under this Agreement or any Product
or Deliverables utilizing any such data.

14.8 Assignment.  Except as expressly provided herein, neither party may
     ----------                                                        
assign or delegate this Agreement, or any of its respective rights or
obligations hereunder without the prior written consent of the other party
hereto; PROVIDED, however, that JetFax may, without Xerox' consent, assign or
delegate this Agreement and JetFax's rights and obligations hereunder to any
successor in interest to JetFax in connection with any sale or transfer of all
or substantially all of its assets or upon any merger, consolidation, or
dissolution.  Either party may, from time to time and upon prior written notice
to the other party, subcontract with one of its subsidiaries for the performance
of certain obligations under this Agreement, provided that-the party so
subcontracting shall remain fully liable for

19


 
performance of its obligations hereunder.  Any attempted assignment in violation
of the provisions of this Section 14.8 shall be void and without force or
effect.  In the event of a permitted assignment hereunder, this Agreement or the
applicable provisions shall be binding upon the successors, executors, and
assigns of the parties hereto.

14.9  Applicable Law.  This Agreement shall be governed by and construed in
      --------------                                                       
accordance with the laws of the State of New York, U.S.A. without giving effect
to the principles of conflicts of law thereunder.

14.10 Severability.  If for any reason a court of competent jurisdiction
      ------------                                                      
finds any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement shall he enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder of
this Agreement shall continue in full force and effect.

14.11 Notices.  All notices required or permitted under this Agreement shall
      -------
be in writing, reference this Agreement and be deemed given when: (i) delivered
personally; (ii) when sent by confirmed telex or facsimile; (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one (1) day after deposit with a commercial
overnight carrier, with written verification of receipt.  All communications
will be sent to the addresses set forth below.  Either party may change its
address by giving notice pursuant to this Section 14.1 1.

JetFax:                                Xerox:
-------                                -------
Mr. Rudy Prince                        Richard D. Bliss
President, Jet Fax, Inc.               Manager, Facsimile Products
1376 Willow Road                       1301 Plideview Drive
Menlo Park, California 94025           Building 100, Lewisville, Texas 75075

With a copy to:
Clifford S. Robbins, Esq.
General Counsel Associates 1891 Landings Drive
Mountain View, California 94043

With a copy to:
Louis Faber, Esq.
Xerox Corp. Office of General Counsel
Xerox Square 21 D
Rochester, New York 14644

14.12  No Waiver.  Failure by either party to enforce any provision of this
       ---------                                                            
Agreement shall not be deemed a waiver of future enforcement of that or any
other provision.

14.13  No Rights in Third Parties.  This Agreement is made for the benefit of
       --------------------------                                            
Xerox and JetFax and not for the benefit of any third parties.

14.14  Counterparts.  This Agreement may be executed in one or more
       ------------                                                
countereach of which shall be deemed an original, but collectively shall
constitute but one and the same instrument.

14.15  Headings and References.  The headings and captions used in this
       -----------------------                                         
Agreement are used for convenience only and. are not to be considered in
construing or

20


 
interpreting this Agreement.

14.16  Construction.  This Agreement has been negotiated by the parties and
       ------------                                                        
their respective counsel.  This Agreement will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either party.

14.17  Trademark Usage.  Neither party shall make any use of any trademark,
       ---------------                                                     
service mark or trade name of the other in connection with its advertising,
promotional material or packaging for the Product without first obtaining the
other party's written consent.

14.18  Non-Publicity.  Neither party shall directly or indirectly, without
       -------------                                                      
the prior written consent of the other party, such consent not to be
unreasonably withheld, make any news release or public announcement or other
public disclosure regarding this Agreement or the existence thereof.
Notwithstanding the foregoing, JetFax shall be free to make disclosures to its
shareholders, directors, officers, employees, attorneys, accountants and other
professional representatives of JetFax and to Ailicec and as necessary or
appropriate for compliance with federal or state securities laws and
regulations.  It is JetFax's intent to make confidential factual disclosures, in
accordance with the terms and conditions of this Section 14.18, to, a limited
number of potential lenders, investors and underwriters.  Neither party shall
disclose information with respect to the other's confidential business plans.


14.19  Complete Agreement.  This Agreement, including all Exhibits, together
       ------------------ 
with the Supply Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and supersedes and replaces all prior
or contemporaneous understandings or agreements, written or oral, regarding such
subject matter.  No amendment to or modification of this Agreement shall be
binding unless in writing and signed by duly authorized representatives of both
parties.  To the extent any terms and conditions of this Agreement conflict with
the terms and conditions of any invoice, purchase order or purchase order
acknowledgement placed hereunder, the terms and conditions of this Agreement
shall govern and control.

14.20  Survival.  The provisions of Sections 5.1(b) (first sentence only),
       --------
5.1(c), 5.1(d) (last sentence of the first paragraph only), 5.2, 8, 11.2, 12 and
13 shall survive the expiration or termination of this Agreement for any reason.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

JETFAX, INC.

BY: /s/ Rudy Prince
NAME: Rudy Prince
TITLE: President

XEROX CORPORATION

BY: /s/ Richard Bliss
NAME:  Richard Bliss
TITLE: Manager, Facsimile Products

21


 
DEVELOPMENT AGREEMENT

LIST OF EXHIBITS
----------------

A              JetFax Deliverables

A - 2          Milestone Schedule

B              Xerox Deliverables

C              Xerox Product Performance Specification

D              Project Schedule

E              Customer and Service Documentation Deliverables

F              Acceptance Test Procedures

G              Confidential Disclosure Agreement


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]


Exhibit A

Development Agreement
JetFax Deliverables
-------------------

JetFax shall provide the following deliverables in accordance with the defined
parameters for quality.

[*- 3 pages redacted]


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

Exhibit A-2

Development Agreement

Milestone Schedule
------------------

                             [*- 4 pages redacted]


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

Exhibit B

Development Agreement
Xerox Deliverables
------------------

Xerox shall provide the following deliverables:

[* - the page following this is also redacted]



 
EXHIBIT C

DEVELOPMENT AGREEMENT
XEROX PRODUCT PERFORMANCE SPECIFICATION
---------------------------------------

Because of its size this exhibit is not included with each copy.  Please see
Xerox specification 156PO6328.


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

Exhibit D

Development Agreement
Project Schedule
----------------


Item                                          Date[*]
----                                          -------

[* - the page following this is also redacted]




 
Exhibit E

Development Agreement

Customer and Service Documentation Deliverables
-----------------------------------------------

Xerox will provide a Globalview electronic version and one set of repro masters
for the Xerox HQ 310 multifunction device.  The electronic data base will be
developed on the 6085 and 6540 using Xerox Globalview.  Electronic art will be
generated using Pro Illustrator and scanned (XPIW) documents.  Deliverables will
include the following items.  Exceptions to the following deliverables will be
considered billable activities and will be charged on a time and material basis.

INSTALLATION INSTRUCTIONS
-------------------------

The Xerox HQ 310 Installation instructions will step the user through the
procedure to unpack and connect the Xerox HQ 310 to a computer to function as a
printer and to a telephone line to function as a Fax machine.

USER GUIDE
----------

The Xerox HQ 310 user guide will provide step by step procedures on the machine
operation both as a printer and a Fax machine.

QUICK REFERENCE GUIDE
---------------------

A Quick Reference guide will provide abbreviated procedures on the commonly used
features.  It is designed for the user that is familiar with the machine.  The
Quick Reference Guide may be part of the user guide or may be a separate item.

SERVICE MANUAL
--------------

The Xerox HQ 310 Service Manual is a multinational document designed to support
Xerox Operating Companies and their target population.  Fault isolation
procedures in the form of System Checks and Raps provide step by step procedures
to isolate a faulty component at the spared level.  Removal and replacement
procedures give detailed instruction as to spared level parts replacement.
Adjustment, procedures, if required, will follow the removal and replacement
procedures.  Parts identification to the spared level is provided by exploded
view drawings.  Connector and wiring information is also contained in the
service manual.  The service manual is designed for use by a Xerox trained
Service Representative.

STUDENT GUIDE
-------------

The Xerox HQ 310 Student guide consists of several training modules written in
the Criterion Referenced Instruction format.     The student guide provides
specific product training on the HQ 310.  The Student Guide is self paced with
typically only minor intervention required of the Instructor or course monitor.

INSTRUCTORS GUIDE
-----------------
The Xerox HQ 31 0 Instructor Guide provides direction to the instructor or
course monitor as to the activities and interaction required during the training
session.

TRANSLATIONS
------------

Xerox will make available to JetFax all translations which have been
accomplished.  The translations will be in either hard copy or in electronic
form using Xerox Global View.


 
EXHIBIT F

Developement Agreement

Acceptance Testing
------------------

Xerox shall conduct acceptance testing of Tejas in accordance with the
following.

[*- 3 PAGES REDACTED]
---------------------


 
EXHIBIT G

DEVELOPMENT AGREEMENT

CONFIDENTIAL DISCLOSURE AGREEMENT
---------------------------------

Xerox Corporation (Xerox) of Stamford, Connecticut. and JetFax, Inc. (JetFax),
of Menlo Park, CA, the parties to this Agreement, hereby agree as follows:

1.   To further the business relationship between the parties, and to
enable the parties to jointly develop a new facsimile product, HQ31 0, it is
necessary and desirable that each party disclose to the other Confidential
Information relating to this project.

2.   The receiving party shall not communicate the disclosing party's
Confidential Information'(all information relating to this project and disclosed
to the receiving party for which the obligations of this Paragraph 2 have not
been terminated by operation of Paragraph 3 hereof to any third party and shall
neither, use the disclosing party's Confidential Information nor circulate it
within its own organization except to the extent necessary for the joint
development of the HQ310 or for any purpose the disclosing party may hereafter
authorize in writing or authorizes pursuant to the terms of a Development
Agreement or a Supply Agreement to which this Confidential Disclosure Agreement
is an Exhibit.  Disclosures to the receiving party's subsidiaries and affiliates
and consultants and suppliers and software developers so long as these entities
are similarly bound shall not be considered disclosure to a third party within
the meaning of the previous sentence.

3.   The obligations of Paragraph 2 hereof shall terminate with respect to
any particular portion of the disclosing party's Confidential Information that:

(a)  was in the public domain at the time of disclosing party's communication
thereof to receiving party,

(b)  entered the public domain through no fault of receiving party subsequent to
the time of disclosing party's communication thereof to receiving party,

(c)  was in receiving party's possession free of any obligation of confidence at
the time of disclosing party's communication thereof to receiving party,


 
(d)  was rightfully communicated to receiving party free of any obligation of
confidence subsequent to the time of disclosing party's communication thereof to
receiving party,

(e)  was developed by employees or agents of receiving party independently of
and without reference to any disclosing party Confidential Information,
when it is communicated by disclosing party to a third party free of any
obligation of confidence; or,

(g)  in any event, 3.5 years after the Effective Date as defined in the parties'
Development Agreement.

When and to the extent the obligations of Paragraph 2 shall not apply to a
particular portion of Information because of the operation of Paragraph 3
hereof, such Information is no longer Confidential Information hereunder.

4.   All materials including, without limitation, documents, specifications,
drawings, software, models, apparatus, sketches, designs, and lists furnished to
receiving party by disclosing party and which are designated in writing to be
the property of the disclosing party shall remain the property of disclosing
party and shall be returned to disclosing party promptly at its request with all
copies made thereof except as disclosing party may otherwise agree in writing or
has otherwise agreed pursuant to the terms of the Development Agreement or
Supply Agreement to which this CDA is an exhibit.

5.   This Agreement shall govern all communications between the parties,
relating to the subject matter of this Agreement that are made from July 7th,
1993.

6.   Communications from disclosing party to personnel and authorized
representatives of receiving party shall not be in violation of' the proprietary
rights of any third party.

7.   This Agreement shall be construed in accordance with the laws of the State
of New York.

8.   This Agreement replaces the CONFIDENTIAL DISCLOSURE AGREEMENT between
the parties signed by Xerox on 7/15/93 and BY JetFax on 7/19/93.


 
Xerox Corporation              JetFax, Inc.

By /s/ Richard Bliss           By /s/ Rudy Prince
Richard Bliss                  Rudy Prince

Manager, Facsimile Products    President




EX-10.35

7

FACSIMILE PRODUCT DEVELOPMENT AGREEMENT- 11/23/94




 
                                                                   EXHIBIT 10.35
                                    REDACTED
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

FACSIMILE PRODUCT DEVELOPMENT AGREEMENT
BY AND BETWEEN
JETFAX, INC.  AND XEROX CORPORATION



This Facsimile Product Development Agreement (the "Agreement") is entered into
and is effective as of November 23, 1994 (the "Effective Date"), by and between
JetFax, Inc., a Delaware Corporation having its principal place of business at
1376 Willow Road, Menlo Park, California 94025 ("JetFax"), and Xerox
Corporation, a New York corporation having its principal place of business at
800 Long Ridge Road, Stamford, Connecticut 06904-1600 ("Xerox").

WHEREAS, JetFax desires, upon the terms and conditions set forth in this
Agreement, to perform certain Services and provide certain Hardware Designs,
Bill of Materials and Source List and Software (as hereinafter defined); and

WHEREAS, Xerox desires to perform certain Services as more fully set forth
herein;

NOW, THEREFORE, it is agreed by and between the parties as follows:

AGREEMENT
1.        DEFINITIONS

1.1       "Acceptance" shall mean the date of acceptance pursuant to Section
4.2(c) hereof.

1.2       "Bill of Materials and Source List" shall mean the identification by
manufacturer and model of certain components and the source from which such
components compliant with the Specifications may be obtained.

1.3       "Errors" shall mean: (i) reproducible defects in any Deliverable which
causes it not to function in conformance with the Specifications, and (ii)
Software miscoding which results in the Software failing to function in
conformance with the Specifications, if such failure is reproducible.

1.4       "Hardware Designs" shall mean those [*].

1.5       "JetFax Deliverables" shall mean, collectively or individually, JetFax
developed Software, Hardware Designs, and Bill of Materials and Source List.  A
more detailed description of the JetFax Deliverables and the requirements for
same are set forth in Exhibit A to this Agreement.

1


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

1.6       "Product" shall mean the [*].

1.7       "Project Schedule" shall mean the schedule of events and coordinate
time for the parties' performance under this Agreement, as set forth in Exhibit
D.

1.8       "Services" shall mean the work and labor necessary for the performance
of the respective obligations of the parties to this Agreement.

1.9       "Software" shall mean software object code, as set forth in Exhibit A,
designed in accordance with the Specifications.

1.10      "Specifications" shall mean the engineering, operational and/or
functional descriptions, details and requirements for the Product and the
Software and Hardware Designs, as set forth in Exhibits A and B as the same may
be modified as provided herein.  Included are any standards for performance or
operation of the item to which such Specifications pertain.

1.11      "User Interface" shall mean a [*].

1.12      "Xerox Affiliates" shall mean Xerox Canada, Inc., Rank Xerox Ltd., 
Fuji Xerox Ltd., and any subsidiary or affiliate at least 40% of the ownership
of which is held directly or indirectly by Xerox, Xerox Canada Inc., Rank Xerox
Ltd., or Fuji Xerox Ltd.

1.13      "Xerox Deliverables" shall mean [*].

2.             SCOPE OF WORK

2.1            Services. Upon the terms and conditions set forth in this
               Agreement, jetfax and Xerox agree to perform the Services in
               accordance with Exhibits A and B, respectively. Each party will
               be responsible for obtaining all the technology, labor, material,
               tooling and facilities necessary for the completion of its
               portion of the Services, except as otherwise set forth in this
               Agreement.

2.2            Progress Reports.
               Each party hereto shall provide the other
               party with progress reports, as reasonably requested by the other
               party, starting after the Effective Date and ending on the date
               of

2


 
Acceptance.  Each report shall be in such form and contain such information as
may be mutually agreed by the parties, including but not limited to, progress to
current scheduled milestones, description of any problems in meeting milestone,
and if problems, proposed recovery methods.

2.3       Agency Approvals.         The parties agree that JetFax shall be
          ----------------                                                
responsible for any and all engineering and development work with respect to the
JetFax Deliverables necessary for obtaining any required governmental or
necessary private agency approvals or certifications for the Product (such as,
by way of example and not limitation, Underwriter's Laboratories, CSA, U.S.
F.C.C. regulations parts 15 and 68) in the United States and Canada.  The actual
costs (including protesting consultant fees and expenses and testing costs and
expenses) and filing fees for the submission for such approvals in the United
States and Canada and such other jurisdictions as the parties mutually agree in
writing they shall enter are to be borne by Xerox.  In addition to the
foregoing, for the period ending on the date that is 24 months from the
Effective Date, JetFax agrees to use its reasonable efforts to design the JetFax
Deliverables to meet the agency approval requirements of other jurisdictions.
JetFax further agrees to use its reasonable efforts to provide design services
with respect to the JetFax Deliverables, after such 24 month period, if
necessary in conjunction with any changes required by jurisdictions in which
agency approvals have been obtained during such 24 month period.  In order for
JetFax to perform its reasonable efforts obligations hereunder, Xerox shall
provide JetFax with customary English language summaries of the specifications
of each individual jurisdiction's requirements where agency approval is to be
sought.  Xerox shall provide all reasonable assistance to Jet Fax for obtaining
approvals and certifications, including use by JetFax of any relevant testing,
test results, documents, applications and approvals and certificates with regard
to the Product.  Xerox shall bear f he cost of any JetFax travel, lodging and
related expenses incurred in support of approval activities in connection with
the Product.  Except as set forth above, all costs for agency approvals for
other jurisdictions shall be borne fully by the party seeking such approvals,
unless otherwise mutually agreed.  If is further agreed that after such 24 month
period, JetFax agrees to provide such design services as may be requested by
Xerox to meet the requirements of any jurisdiction.  Xerox agrees to compensate
JetFax at customary rates for such design services rendered after the end of
such 24 month period.

2.4       Bill of Materials and Source List Approval.  The Bill of Materials and
          ------------------------------------------                            
Source List shall be subject to review and approval by Xerox, and all component
vendors providing materials set forth on the Bill of Materials shall be subject
to qualification as a vendor to Xerox under Xerox standards for vendor
certification then in effect.  Such approval shall not be unreasonably withheld.
Xerox reserves the right to make final selection of component vendors.
Notwithstanding anything to the contrary contained herein, neither

3


 
such Xerox approval nor such vendor qualification shall be a basis for any
rejection pursuant to Section 4.2(a) or Section 4.3, or condition precedent to,
or a basis for any delay in, Acceptance hereunder and any component vendor
approved and/or qualified by Xerox under or in connection with the Facsimile
Product Development Agreement between the parties dated as of June 9, 1994 shall
be deemed to be approved and qualified by Xerox hereunder.

2.5       Software.Etc. Escrow.  Promptly after the Effective Date, JetFax shall
          --------------------                                                  
place with an independent third party escrow agent acceptable to Xerox one
complete set, under seal, of source code, object code and supporting
documentation for any and all Software, ASICS, FPGAS, and any other programmable
devices (including their schematic capture and VHDL files, their ACTEL files,
test patterns and test parameters and timing diagrams, to the extent available
to JetFax, used to confirm the d6sign) included in the JetFax Deliverables (the
"Escrowed Materials").  The Escrowed Materials shall be retained in strict
confidence by the chosen escrow agent under the terms of the escrow agreement
(which escrow agreement shall be mutually acceptable to both JetFax and Xerox
and consistent with the terms of this Section 2.5) and the escrow agent shall
not disclose the Escrowed Materials to Xerox except pursuant to this Section
2.5. All costs associated with the escrow, including any fees of the escrow
agent, shall be borne by Xerox.  In the event one of f he events set forth below
occurs, Xerox may, at its option, notify the escrow agent of such event and
request the release of the Escrowed Materials to Xerox.  Xerox shall
simultaneously notify JetFax pursuant to Section 14.11 of this Agreement of such
notification to the escrow agent, specifying the basis upon which such request
for the release of the Escrowed Materials is based.  In addition, the escrow
agent shall notify JetFax of the Xerox request for the release of the Escrowed
Materials.  The escrow agent shall, only after fen (10) calendar days have
passed from the date Xerox' notice to JetFax hereunder is given (pursuant to
Section 14.11 of this Agreement), release the Escrowed Materials to Xerox unless
such action is prohibited by order of a court of competent jurisdiction.  The
only events which shall entitle Xerox to request the release of the Escrowed
Materials are as follows: (i) JetFax ceases to support and maintain the Software
and Hardware Designs as required pursuant to the terms of Section 4.4 of this
Agreement and such failure remains uncured for a period of sixty (CO) days offer
written notice thereof from Xerox, or (ii) the specified items of the Software
or Hardware Designs listed on the Project Schedule to be performed by JetFax
fail to be accepted pursuant to Section 4.2(a) and (b) within ninety (90) days
of the applicable Milestone Dates therefore set forth in the Project Schedule
due primarily to the failure of JetFax to perform its obligations under this
Agreement, or (iii)JetFax grants its prior written consent to such release, or
(iv) a Petition is filed by or against JetFax under Chapter 7 of the Bankruptcy
Act of the United States and such Petition is not discontinued, vacated or
terminated within sixty (60) days.  Xerox
4


 
          shall use such released Escrowed Materials solely for the purpose of
maintenance and support of the Product or, in the event subparagraph (ii) of
this Section 2.5 shall occur, for the purpose of maintenance, support and
production and Xerox completion of development of the Product and for the uses
stated in the second paragraph of Section 5.1 (b). Any Xerox use of the Escrowed
Materials will be subject at all times to the terms and conditions of this
Agreement. JetFax agrees to update and maintain monthly the Escrowed Materials
held in safekeeping by the selected Escrow Agent to reflect all changes made to
the Escrowed Materials pursuant to the terms of this Agreement.



3.        DESIGN REVIEW AND SPECIFICATION CHANGES

3.1       Design Review.  The parties agree to promptly meet at the request of
          -------------                                                       
either party with respect to any material issues a party may have with the
performance of the other party of its obligations under this Agreement.

3.2       Changes to the Specification.  Each party is entitled to request
          ----------------------------                                    
modifications in the form of changes or additions to the Specifications at any
time during the term of this Agreement.  Such requests shall be submitted in
writing, and shall not be deemed or considered binding unless accepted by the
other party in writing.  If any such modification of the Specifications is
agreed, the parties will negotiate an equitable adjustment to the Agreement,
including the apportionment of any additional development, testing or tooling
costs.  Upon mutual agreement to any change to the Specifications, both parties
will proceed with the implementation of the prescribed changes, and the
Specifications and other Exhibits to the Agreement shall be modified accordingly
to reflect such agreed upon changes.

3.3       Modification to Specifications.  JetFax and Xerox agree that upon
          ------------------------------                                   
acceptance of each Deliverable pursuant to Section 4.2 and upon Acceptance the
Specifications shall be modified as necessary to conform to the Deliverables, as
accepted, excepting mutually agreed (in writing) deviations from the
Specification which require additional development work to achieve conformance
to the Specification.  After and upon acceptance of each Deliverable pursuant to
Section 4.2 and after and upon Acceptance, the term "Specifications" as used
herein shall refer in all cases to the Specifications as so modified.

4.        DELIVERABLES AND DELIVERY; ACCEPTANCE; AND REJECTION

4.1       Deliverables..             Xerox and JetFax agree to use reasonable
          -------------                                                        
efforts to perform their respective Services and deliver their respective
Deliverables in accordance with the Project Schedule (Exhibit D). Each party's
obligation shall be contingent

5


 
upon the other party successfully providing any prerequisite Deliverable (as
specified in the Project Schedule) in a timely fashion in accordance with the
Specifications for same.  All Deliverables shall be delivered by the times set
forth in the Project Schedule and stated dates are date of delivery unless
otherwise specified.  The parties shall use such Deliverables for testing and
acceptance and marketing purposes only and shall not sell, lease or transfer the
same to any third party.

4.2       Acceptance.
          ---------- 

(a)  Each party, with the reasonable assistance of the other party if requested,
     will examine and test each respective Deliverable (and/or item thereof) as
     specified on the Project Schedule of the other party upon delivery.  Each
     receiving party shall, as soon as reasonably practicable following the
     delivery of same, but in no event later than fifteen (15) business days
     offer receipt of notice of delivery: (i) accept the Deliverable (or item
     thereof) and so inform the other party in writing; or (ii) if the
     Deliverable (or item thereof) contains material Errors, reject f he
     Deliverable (or item thereof) and provide the other party with a written
     statement of such material Errors.  The failure of a party to respond
     within the specified fifteen (15) day period shall be deemed acceptance of
     the Deliverable (or item thereof), but shall not limit the provisions of
     Section 4.4 hereof.  Either party may request a reasonable extension in the
     time to complete such testing if the same is required under the
     circumstances, and both parties shall reasonably consider such requests,
     provided that no such extension shall be effective unless in writing and
     signed by a duly authorized representative of the party granting such
     extension.

(b)  The developing party will promptly correct the material Errors set forth in
     the statement of material Errors with respect to any Deliverable (or item
     thereof) and redeliver the Deliverable (or item thereof) to the receiving
     party within such reasonable period of time as may be agreed upon by JetFax
     and Xerox with regard to all circumstances affecting the Product or the
     Deliverables.  The receiving party shall, as soon as reasonably practicable
     after such redelivery but in no event later than fifteen (15) business days
     thereafter, accept or reject the redelivery in accordance with the
     procedure set forth in Section 4.2(a), which procedure shall be repeated
     until the Deliverables are accepted or the receiving party invokes the
     provisions of Section 4.3 hereof.

(c)  "Acceptance" shall be deemed to occur upon the earlier of (i) acceptance,
     pursuant to this Section 4.2, of all JetFax and Xerox Deliverables (as
     specified in the Project Schedule) or (ii) the first sale, lease, license
     or other distribution or transfer of a unit of Product by Xerox to a
     customer or other third party other than solely for test purposes.  The
     date of such Acceptance shall be deemed the "date of Acceptance."
     Notwithstanding anything to the contrary contained herein, Acceptance shall
     not be conditioned upon any

6


 
design or development of the JetFax Deliverables to meet any criteria of any
agency approvals other than those of the United States or Canada.

(d)  The parties further agree that in the event a dispute arises as to whether
     any Deliverable (or item thereof) is acceptable under the procedure set
     forth in Sections 4.2(a) and 4.2(b), and the parties are unable after good
                                                                           ----
     faith negotiation to resolve such dispute, the parties agree to submit the
     acceptability of any such Deliverable (or item thereof) to Genoa
     Technology, Inc., or other independent third party mutually acceptable to
     the parties, who shall test such Deliverable (or item thereof) and
     determine if such Deliverable (or item thereof) is acceptable as set forth
     in Sections 4.2(a) and 4.2(b). The determination of such independent third
     party shall as to the acceptance or rejection of any Deliverable (or item
     thereof), be deemed final.  The cost, if any, of employing such independent
     third party shall be borne by f he losing party.

4.3       Rejection.  Should any Deliverable fail to be accepted after the final
delivery of that Deliverable pursuant to Section 4.2(b) then the parties shall
promptly meet in accordance with Section 3.1 to resolve the problem.  Any
subsequent rejection of the same Deliverable (unless otherwise resolved pursuant
to Section 4.2(d)) shall be deemed a breach of this Agreement by such delivering
party, and the non-breaching party may elect to terminate this Agreement
pursuant to Section ll.l(a) hereof, or may elect to accept further resubmission
of the applicable Deliverable.

4.4       Error Fixes.  JetFax shall at its expense, from the Effective Date
until the date that is eighteen (18) months from the date of Acceptance, use its
reasonable efforts promptly to correct documented and reproducible material
Errors in the Software and Hardware Designs which are reported in writing by
Xerox to JetFax.  Provided, however, that prior to Acceptance, this obligation
shall apply only to Deliverables (or items thereof) that have been delivered by
JetFax in accordance with the Project Schedule.  Xerox shall provide such
assistance in correction as JetFax may reasonably request.  All such corrections
to the Software and Hardware Designs shall be deemed to be included in the
licenses granted under Section 5.1 hereof, and copies of any such corrections
shall be promptly furnished in source code to the escrow agent set forth in
Section 2.5 of this Agreement.  JetFax will have no obligation under this
Section 4.4 with respect to any Error in the Software or Hardware Designs caused
by any person or entity other than JetFax or its sources identified on the Bill
of Materials and Source List and JetFax is not obligated to correct any Errors
in the Software unless such Error or defect causes the Software to fail to
function in conformance with the Specifications as defined in Section 3.3
herein.

4.5       JetFax Support.  JetFax further acknowledges and agrees that, for a
          --------------                                                     
period of one (1) year following Acceptance and subject to

7


 
the provisions of this Section 4.5, it shall provide Xerox with such reasonable
engineering support as Xerox shall reasonably request, necessary for the
manufacture of the Product.  All travel, lodging and associated expenses (save
salary and benefits of JetFax employees) shall be borne by Xerox.  In addition,
after the one (1) year period following Acceptance, Xerox shall pay JetFax the
reasonable and customary personnel, service and related charges for any such
support provided by JetFax.

5         OWNERSHIP RIGHTS AND LICENSES

5.1       Software and Hardware Designs, Etc.
          ---------------------------------- 

(a)  Subject to the terms and conditions of this Agreement, JetFax hereby grants
     to Xerox, effective only upon and after the date of Acceptance, a
     nonexclusive, perpetual (except if terminated pursuant to Section 11.1
     herein), worldwide license to the Software, the Hardware Designs, and any
     other JetFax confidential information disclosed to Xerox under this
     Agreement and necessary or useful for the following licensed activities
     (and JetFax intellectual property corresponding to the above recited
     items), to manufacture or have manufactured, the Product and to use and
     distribute and sell and service the Product.

Provided however, if the Escrowed Materials are released to Xerox pursuant to
Section 2.5 of this Agreement, the above license as it applies to the Product
shall automatically extend, if and only if there has not been Acceptance, to
enable Xerox to complete the Product and shall automatically encompass all of
the Escrowed Materials.  In such event, the royalty set forth in Section 6.2(a)
of this Agreement in the sum of $21.00 (reduced, if applicable as set forth in
such Section 6.2(a)) shall also apply to such license.  In such event, JetFax
shall promptly and fully disclose the fully or partially completed JetFax
Deliverables to Xerox, but shall have no further obligations under Sections 2.1,
2.3, 2.5, 4.1, 4.4 and 4.5 of this Agreement.

(b)  The Software and the Hardware Designs are confidential information of
     JetFax subject to the CDA defined in Section 8.1 of this Agreement and
     shall be used by Xerox solely in connection with the Product in accordance
     with the terms of this Agreement.  Subject to the terms and conditions of
     this Agreement, JetFax hereby grants to Xerox a nonexclusive, perpetual
     (except if terminated pursuant to Section 11.2(a) of this Agreement),
     worldwide license (with the Xerox right to sublicense Xerox Affiliates) to
     the Hardware Designs (excluding the ASICs and the Field Programmable Gate
     Arrays (FPGAS) themselves and a majority of the designs of each such ASIC
     or FPGA), and any other confidential information of JetFax disclosed to
     Xerox under this Agreement (excluding the Software and the above excluded
     items) and necessary or useful for the following licensed activities (and
     JetFax intellectual property corresponding to the above recited licensed

8


 
items) to manufacture or have manufactured any other products (i.e. products
other than the Product) and to use and distribute and sell and service such
other products.  Provided, however, notwithstanding any sublicense made pursuant
to the above right to sublicense, Xerox shall remain fully liable for compliance
with all of its obligations under this Agreement, including without limitation
the payment of all royalties.

Provided however, if the Escrowed Materials are released to Xerox pursuant to
Section 2.5 of this Agreement, the above license of this Section 5.1 (b) shall
automatically extend, if and only if there has not been Acceptance, to include
all fully or partially completed JetFax Deliverables including Software, ASICS,
and FPGAs and shall automatically encompass all of the Escrowed Material.  To
the extent that Xerox uses a material amount of such extended materials (not
already included in the license in the immediately preceding paragraph) under
this extended license, Xerox shall be obligated to pay the royalty as set forth
in the last sentence of Section 6.2(b) of this Agreement.

(c)  For the confidence period of the CDA defined in Section 8.1 of this
     Agreement, Xerox shall not alter, reverse engineer, decompile or
     disassemble the Software or the ASICs and the FPGAs included in the
     Hardware Designs, and Xerox may copy the Software, the Hardware Designs,
     and any other confidential information of JetFax which is disclosed to
     Xerox only as necessary for the exercise of the licenses granted in
     Sections 5.1 (a) and 5.1 (b) and/or the provisions of Section 2.5. JetFax
     retains its ownership rights in and to the Software, Hardware Designs, and
     corresponding intellectual property.

(d)  Subject to the terms and conditions and for the purposes of this Agreement,
     Xerox hereby authorizes JetFax to use the Xerox Deliverables and any other
     Xerox confidential information disclosed to JetFax under this Agreement and
     necessary or useful for the following activity (and Xerox intellectual
     property corresponding to the above recited items) to develop the JetFax
     Deliverables.  During the term of this Agreement, JetFax may reverse
     engineer, decompile or disassemble any software provided by Xerox only as
     necessary for f he development of the JetFax Deliverables.

5.2       Product.  Xerox retains its ownership rights in and to any and all
intellectual property contained in the Xerox Deliverables.

5.3       Third Party Confidential Disclosure Agreements.         Prior to
          ----------------------------------------------                  
disclosing any JetFax Deliverables to any third party (including Goldstar) in
connection with Xerox' "have manufactured" license pursuant to Section 5.1 (a),
Xerox shall procure from such third party a Confidential Disclosure Agreement
(substantially similar to the CDA as defined in Section 8.1) naming JetFax and
such third party as parties thereto.

9


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]
6.        PAYMENTS

6.1       Advance Royalty.
          --------------- 

(a)  In consideration for the Services to be performed by JetFax hereunder,
     Xerox agrees to pay to JetFax a nonrefundable advance royalty payment of
     [*], payable in those increments and upon completion of the C1, C2, C3 and
     C4 Milestones as set forth in the Project Schedule set forth in Exhibit D.

(b)  JetFax agrees to provide to Xerox, upon request, audited financial
     statements for the JetFax accounting year of 1993 as well as quarterly
     financial statements (audited if available) for each accounting quarter of
     1994 and 1995 (prior to the date of Acceptance).  Any and all such
     information provided to Xerox shall be deemed Confidential Information
     subject to the provisions of the CDA as defined in Section 8.1.

(c)  In the event that JetFax fails to meet any of the last three (3) Milestone
     Dates set forth in the Project Schedule by more than fifteen (15) calendar
     days and such failure is due primarily to the fault of JetFax, the amount
     of the incremental advance royalty payment corresponding to such missed
     Milestone Date shall be reduced by [*].

6.2       Royalty Payments.
          ---------------- 

(a)  In further consideration of the Services performed hereunder and the
     licenses granted herein by JetFax, Xerox shall pay JetFax a royalty, with
     respect to each and any sale, lease, license or other distribution or
     transfer of a unit of Product to a customer or other third party (including
     any Xerox Affiliates) (and excluding up to [*] production units of Product
     to be internally used by Xerox, which units shall be without royalty), in
     an amount equal to [*] for each such unit sold, leased, licensed or
     otherwise distributed or transferred.  [*]

10


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

(b)  In further consideration of the Services performed hereunder and the
     licenses granted herein, Xerox shall pay JetFax a royalty, with respect to
     each and any sale, lease, license or other distribution or transfer to a
     customer or other third party (including Xerox Affiliates) of a unit of any
     product (other than the Product) with respect to the design or manufacture
     of which all or part of that portion of the Hardware Designs licensed to
     Xerox pursuant to Section 5.1 (b) and/or any corresponding JetFax
     intellectual property, or any of her JetFax confidential information
     disclosed to Xerox and/or any corresponding JetFax intellectual property
     have been used, in an amount equal to [*] for each such unit sold, leased,
     licensed or otherwise distributed or transferred.  The above royalty shall
     be payable, for JetFax information only if the information used was subject
     to Clause 2 of the CDA defined in Section 8.1 of this Agreement when such
     information was first communicated to Xerox by JetFax (provided, however,
     all parts drawings and schematics for circuit boards are, and shall be,
     deemed to have been subject to Clause 2 of the CDA when first communicated
     to Xerox by JetFax), and only for units sold, leased, licensed or otherwise
     distributed or transferred within five (5) years after the Effective Date
     of this Agreement.  Two-thirds of such royalties payable by Xerox under
     this Section 6.2(b) shall be applied against the prepaid royalty set forth
     in Section 6.1 (b) (and the remaining third of such payment shall be made
     to JetFax) until such time as the prepaid royalty is fully offset.  The
     total of all royalties payable pursuant to this Section 6.2(b) shall not
     exceed [*]  in the aggregate.  When the Section 6.2(b) royalties paid to
     JetFax reach the sum of [*], the license set forth in Section 5.1 (b) to
     Xerox shall automatically become royalty free and paid up.  For units sold,
     leased, licensed or otherwise distributed or transferred after the five (5)
     year period referred to above in this Section 6.2(b), the license to Xerox
     set forth in Section 5.1 (b) shall automatically become royalty free and
     paid up.  No royalties payable pursuant to Section 6.2(a) shall be subject
     to, nor included in the calculation of, the royalty cap of this Section
     6.2(b). Provided, further, in the event Xerox shall use a material amount
     of any of the Escrowed Materials not included in the license under the
     first paragraph of Section 5.1 (b) in products under the license set forth
     in the second paragraph of Section 5.1(b) of this Agreement, Xerox shall
     pay to JetFax the royalty amount set forth in Section 6.2(a) and not the
     royalty set forth in this Section 6.2(b) provided however, that for
     uncopyrighted and unpatented such materials the sentence "the above
     royalty(s) ... of this Agreement," above in this Section 6.2(b) shall
     apply.

(c)  All royalty payments as specified in Sections 6.2(a) and (b) shall be paid
     by Xerox to JetFax monthly until such time as the prepaid royalty is
     totally offset pursuant to Section 6.2(a), and quarterly thereafter
     (beginning with the first full calendar quarter) within thirty (30) days
     after the end of each month or calendar quarter, as applicable and shall be
     due and payable with respect to each and all units sold, leased, licensed,
     or otherwise distributed or

11


 
transferred, without regard to whether or not Xerox shall have received payment
with respect thereto.

(d)  JetFax acknowledges and agrees that Xerox shall have the right, without the
     payment of any additional royalty, to remanufacture units of the Product
     returned from its customers for any reason, and to resell or release the
     same to its customers.

(e)  Xerox shall pay to JetFax interest (at the prime rate of interest as
     published in the Wall Street Journal Eastern edition on the last business
     day of each month plus five percentage points (prime% + 5%)) on any amounts
     payable by Xerox to JetFax hereunder if such amounts are not paid within,
     five (5) business days of the applicable due date thereof.


7.        REPRESENTATIONS AND INDEMNIFICATION

7.1       Representations.         Each party represents and warrants that:
          ---------------                                                  

(a)  if has full right and authority to enter into this Agreement, to perform
     its obligations hereunder; and

(b)  if has full right and authority to grant the rights granted to the other
     party herein.

7.2       Xerox' Infringement Indemnity.
          ----------------------------- 
(a)  Subject to the terms hereof, Xerox agrees to indemnify, defend and hold
     JetFax harmless from and against any claim or suit alleging that the Xerox
     Deliverables and/or the User Interface (including, without limitations the
     interface to the User Interface software as set forth in Exhibit A)
     infringes any patent rights, copyrights or other proprietary rights of any
     third party when used for their intended purposes in conjunction with the
     Product and/or development of the JetFax Deliverables; provided that: (i)
     JetFax gives Xerox prompt notice in writing of any such suit and permits
     Xerox, through counsel of its choice, to answer the charge of infringement
     and defend such claim or suit, (ii) Xerox has sole control of the defense
     and all related settlement negotiations, (iii) JetFax has not further
     modified or altered the Xerox Deliverables'(other than the User Interface)
     following their delivery to JetFax if such claim or suit would have been
     avoided if such modification or alteration had not been made, and (iv)
     JetFax provides Xerox with the assistance, information and authority to
     perform the above.  In the event Xerox agrees to settle the suit, both
     Xerox and JetFax agree not to publicize the settlement nor to permit the
     party claiming infringement to publicize. the settlement without first
     obtaining the other party's written permission.

(b)  Subject to the terms hereof, JetFax will deliver to Xerox, as developed,
     source code of the interface layer between the User Interface software and
     the JetFax firmware which implements the

12


 
functionality as set forth in the Specification.  Xerox shall use such source
code solely for purposes of conducting an intellectual property infringement
search, shall not disclose such source code to any third party and shall
promptly return such source code to JetFax immediately upon the conclusion of
such search.

7.3      JetFax Indemnify and Related Provisions
         ---------------------------------------
(a)      JetFax Indemnity.  Subject to the terms hereof, JetFax agrees
         ----------------                                             
to indemnify, defend and hold Xerox harmless from and against any claim or suit
alleging that the Software and/or the Hardware Designs provided by JetFax
pursuant to this Agreement when used for their intended purposes in conjunction
with the Product, infringes the patent rights, copyrights or other proprietary
rights of any third party; provided that (i) Xerox notifies JetFax in writing
within fifteen (15) business days of any claim, (ii) JetFax has sole control of
the defense and all related settlement negotiations and (iii) Xerox provides
JetFax with the assistance, information and authority necessary to perform the
above. Notwithstanding the foregoing, JetFax shall have no liability hereunder
for any claim or suit based on (i) modifications or other alterations made to
the Software or the Hardware Designs by a party other than by or for JetFax or
the combination, operation or use of the Software or the Hardware Designs with
other hardware or software not furnished or developed by or for JetFax if such
infringement would have been avoided by the use of the Software and the Hardware
Designs without such modification or alteration or without such other hardware
or software or (ii) any infringement or alleged infringement related to or
arising out of the User Interface (including, without limitation, the interface
to the User Interface software as set forth in Exhibit A) or the Xerox
Deliverables, or (iii) any infringement or alleged infringement of any
proprietary rights of third parties to the extent and for the time period and
activities such proprietary rights are licensed to Xerox. In the event that the
Software or the Hardware Designs are the subject of a claim of infringement for
which JetFax is liable under this Section 7.3(a), JetFax may at its option and
expense (i) modify the same to be non-infringing or (ii) obtain for Xerox a
license (and any royalties required to obtain such license shall be paid by
JetFax) to continue using the same. The provisions of this Section 7.3 state the
entire liability and obligations of JetFax and the exclusive remedy of Xerox
with respect to any infringement or alleged infringement of proprietary rights
by the Software or the Hardware Designs. Except as set forth herein, JetFax
assumes no liability for, and expressly disclaims any liability with respect to,
any infringement or alleged infringement of any proprietary rights by the
Software or the Hardware Designs.

(b)       JetFax Right to Use Study.        JetFax may conduct a right to use
          -------------------------                                          
study with respect to the JetFax Deliverables when used in conjunction with
the Product.  If:

          (i) prior to one (1) month after the design of the Product is fixed by
     Xerox and that fact is disclosed by Xerox to JetFax (and Xerox shall
     promptly disclose such fact to JetFax) along

13


 
with Product information reasonably needed by JetFax to conduct its right to use
study (and Xerox shall promptly disclose such information to Jet Fax);

          (ii) JetFax identifies unlicensed third party patent(s) which JetFax
reasonably believes will be infringed by use by or for Xerox or its customers of
the Jet Fax Deliverables when used in conjunction with the Product and JetFax
clearly identifies in writing (including patent or application numbers and issue
or filing dates respectively) to Xerox any such patent(s); then the parties
agree as follows. If JetFax is unable to promptly obtain a license under such
patents on reasonable terms (and any royalties or other payments required to
obtain such license shall be paid by JetFax) and the parties are unable to
reasonably design around such patent(s); then the parties shall meet to further
work in good faith to resolve this problem. In the event such resolution cannot
be achieved within one (1) month after the parties first met to further work to
try to resolve the problem, such patent(s) shall be excluded from the indemnity
provided by JetFax in this Section 7.3; however, in such event Xerox shall have
the option to negotiate with JetFax (and JetFax will negotiate in good faith)
for a lower Section 6.2 royalty and/or cancel its Product activities.

7.4       Xerox for the Xerox Deliverables and JetFax for the JetFax
Deliverables, shall promptly identify to the other party any third party patents
known by Xerox for its Deliverables and known by the President and/or CEO of
JetFax for its Deliverables to cover such Deliverables. Each party has disclosed
to the other prior to the Effective Date all such patents known prior to the
Effective Date.

8.        CONFIDENTIALITY

8.1       Each party's information disclosed to the other party pursuant to this
Agreement shall be governed by the terms of the "CONFIDENTIAL DISCLOSURE
AGREEMENT" (the "CDA") between the parties  attached as Exhibit E and which is
entered into and effective as of the Effective Date of this Agreement.

8.2       The provisions of the CDA are hereby adopted by the parties and shall
remain in full force and effect as a part of this Agreement as though fully set
forth herein.

8.3       Without limitation to any other provision of this Agreement, the CDA
referred to in Section 8.1 applies to all source code and supporting
documentation including concepts and algorithms embedded in the source code. In
addition, Xerox agrees not to make available any part of any program listing
obtained pursuant to Section 2.5 of this Agreement to a third party within the
meaning of the CDA unless that part of the program listing is subject to one or
more provisions of CDA clause 3. (a)- (f), notwithstanding the fact that the
period for this obligation may extend beyond the 3.5 years of the CDA.

14


 
8.4 This Agreement shall be deemed Confidential Information and shall not be
disclosed to third parties other than as provided in Section 14.18 of this
Agreement.

9.             PROPRIETARY RIGHTS NOTICES

The Product shall bear any and all reasonable and customary proprietary rights
notices associated with or carried by any of the Deliverables.  Neither party
will remove, cover or deface any such proprietary rights notices.

10             TERM

This Agreement will commence on the Effective Date and will continue to be in
force and effect until such time as it is otherwise terminated as herein
provided.

11.            TERMINATION

11.1           Termination for Cause By Either Party.  Either party may
               -------------------------------------                   
terminate this Agreement:

(a)  Upon sixty (60) days written notice to the other party in the event the
     other party breaches any of its material obligations hereunder and fails to
     cure same during the notice period, or if it is not reasonable to expect
     such a cure within that period, does not fake effective action within such
     period to promptly cure the material breach; or

(b)  Upon sixty (60) days written notice to the other party in the event a
     petition in bankruptcy or similar debtor protection law is filed by or
     against the other party, or if the other party makes an assignment for the
     benefit of creditors, or a receiver is appointed, and such events are not
     discontinued, vacated or terminated during the notice period.

Xerox may terminate this Agreement in the event JetFax fails to meet any of the
Milestone Dates set forth in the Project Schedule by more than thirty (30)
calendar days and such failure is due primarily to the fault of Jet Fax.

11.2           Effect of Termination.
               --------------------- 

(a) The license set forth in Section 5.1 (b) hereof is perpetual (and shall
survive a termination under Section 1 1.1 of this Agreement), subject, however,
to the royalty obligations of Section 6.2 hereof and all title and
confidentiality provisions of this Agreement, provided, however, that the
license set forth in Section 5.1 (b) is subject to termination upon sixty (60)
days written notice from JetFax to Xerox in the event Xerox breaches any of its
material obligations with respect to such royalty, title or confidentiality
provisions as they apply to such license and fails to cure the same during such
sixty (60) day notice period, or if it is not reasonable to expect such a

15


 
cure within that period, does not take effective action within such period to
promptly cure the material breach.

(b)  Upon termination of this Agreement each party shall return to the other
     party all unlicensed confidential or proprietary information of the other
     party and shall make no other or further use of such unlicensed
     information.  Upon termination of this Agreement pursuant to the second
     sentence of Section I 1.1, Xerox shall pay JetFax advance royalty payments
     in connection with any Milestones met by JetFax under the Project Schedule
     for which JetFax has not yet been paid.


12.            RIGHT TO DEVELOP INDEPENDENTLY

Nothing in this Agreement will impair either party's right to acquire, license,
develop, manufacture or distribute for itself, or have others develop,
manufacture or distribute for it, similar technology performing the same or
similar functions as the technology contemplated by this Agreement except as
provided in Sections 5 and 8, or to market and distribute such similar
technology or products.


13.            DISCLAIMER OF CONSEQUENTIAL DAMAGES AND IMPLIED WARRANTIES

In no event shall either party be liable to the other for any indirect, special,
incidental or consequential damages for breach of or failure to perform under
this Agreement, even if that party has been advised of the possibility of such
damages.  EXCEPT AS EXPRESSLY SET FORTH IN SECTION 7.1, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
DELIVERABLE OR OTHERWISE, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, TECHNICAL PERFORMANCE, OR
COMMERCIAL SUCCESS AND HEREBY DISCLAIMS ALL SUCH OTHER WARRANTIES.  EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY ASSUMES ANY RESPONSIBILITIES
WHATEVER WITH RESPECT TO THE DEVELOPMENT, MANUFACTURE, USE, SALE, LEASE, OR
OTHER DISPOSITION BY THE OTHER PARTY OR ITS VENDEES OF PRODUCTS INCORPORATING
DELIVERABLES LICENSED OR PROVIDED UNDER THIS AGREEMENT.

14.            GENERAL

14.1           Force Maieure Neither party shall be liable for any failure or
               -------------                                                 
delay in its performance under this Agreement due to causes which are beyond its
reasonable control, including, but not limited to, acts of God, acts of civil or
military authority, fires, epidemics, floods, earthquakes, riots, wars,
sabotage, labor shortages or disputes, and governmental actions; provided that
(a) the delayed party: (i) gives

16


 
the other party written notice of such cause promptly, and in any event within
fifteen (15) days of discovery thereof; and (ii) uses its reasonable efforts to
correct such failure or delay in its performance, and (b) the delayed party's
time for performance or cure under this Agreement shall be extended for a period
equal to the duration of the cause or sixty (60) days, whichever is less.

14.2           Relationship of Parties.  Xerox and JetFax are independent
               -----------------------                                   
contractors.  Neither company nor its respective employees, consultants,
contractors or agents are agents, employees or joint venturers of the other, nor
do they have any authority to bind the other by contract or otherwise to any
obligation.  They will not represent to the contrary, either expressly,
implicitly, by appearance or otherwise.  Each party will determine, in its sole
discretion, the manner and means by which the Services are accomplished, subject
to the express condition that each party will at all times comply with
applicable law.

14.3           Use of Name.  Neither party will, without first obtaining the
               -----------                                                  
other's prior written consent, be entitled to use the name of the other party in
promotional, advertising and other materials other than as provided in Section
14.18 of this Agreement.

14.4           Personnel.  The respective employees, consultants, contractors
               ---------------                                               
and agents of each party will observe the working hours, working rules and
holiday schedule of the other while working on the other's premises.
Notwithstanding the foregoing, employees of a party shall be and remain
employees of that party and shall not be deemed or claim to be employees of the
other party even when working on such other party's premises.

14.5           Employment Taxes and Benefits.  Each party shall be responsible
               -----------------------------                                  
for any and all employment taxes and benefits payable to its employees,
representatives, contractors, subcontractors and other engaged by it to perform
Services hereunder and in no event shall either party look to the other for such
payments.

14.6           Other Tax Implications.  The purpose of development of the
               ----------------------                                    
Deliverables under this Agreement is to demonstrate that the Product developed
hereunder will conform to the Specifications.  The Deliverables have no
intrinsic value as an item.  As such, no value added, sales, or use taxes have
been assessed or are anticipated to be required as a result of the Services
performed under this Agreement.

14.7           Export Controls.        Both parties shall comply with all
               ---------------                                           
applicable United States laws and regulations respecting the export, directly or
indirectly, of any technical data acquired from the other under this Agreement
or any product or Deliverables utilizing any such data.

14.8           Assignment.  Except as expressly provided herein, neither party
               ----------                                                     
may assign or delegate this Agreement, or any of its respective rights or

17


 
obligations hereunder without the prior written consent of the other party
hereto; PROVIDED, however, that JetFax may, without Xerox' consent, assign or
delegate this Agreement and JetFax's rights and obligations hereunder to any
successor in interest to JetFax in connection with any sale or transfer of all
or substantially all of its assets or upon any merger, consolidation, or
dissolution.  Either party may, from time to time and upon prior written notice
to the other party, subcontract with one of its subsidiaries for the
performance of certain obligations under this Agreement, provided that the
party so subcontracting shall remain fully liable for performance of its
obligations hereunder.  Any attempted assignment in violation of the provisions
of this Section 14.8 shall be void and without force or effect.  In the event of
a permitted assignment hereunder, this Agreement or the applicable provisions
shall be binding upon the successors, executors, and assigns of the parties
hereto.

14.9      Applicable Law.  This Agreement shall be governed by and construed in
          --------------
accordance with the laws of the State of New York, U.S.A. without giving effect
to the principles of conflicts of law thereunder.

14.10     Severability.  If for any reason a court of competent jurisdiction
          ------------                                                      
finds any provision of this Agreement, or portion thereof, to be unenforceable,
that provision of the Agreement shall he enforced to the maximum extent
permissible so as to effect the intent of the parties, and the remainder of this
Agreement shall continue in full force and effect.

14.11     Notices.  All notices required or permitted under this Agreement shall
          -------
be in writing, reference this Agreement and be deemed given when: (i) delivered
personally; (ii) when sent by confirmed telex or facsimile; (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (iv) one (1) day after deposit with a commercial
overnight carrier, with written verification of receipts All communications will
be sent to the addresses set forth below.  Either party may change its address
by giving notice pursuant to this Section 14.1 1.

JetFax:                                      Xerox:
Mr. Rudy Prince                              Fred Kiremidjian
President, Jet Fax, Inc.                     V. P., Engineering
1376 Willow Road                             3400 Hillview Avenue
Menlo Park, California 94025                 Building 3
                                             Palo Alto, Calif. 94304
With a copy to:
Clifford S. Robbins, Esq.
General Counsel Associates
1891 Landings Drive
Mountain View, California 94043

With a copy to:
Louis S. Faber, Esq.
Xerox Corp. OGC
Xerox Square 21 D
Rochester, N. Y. 14644


18


 
14.12     No Waiver.  Failure by either party to enforce any provision of this
Agreement shall not be deemed a waiver of future enforcement of that or any
other provision.

14.13     No Rights in Third Parties.  This Agreement is made for the benefit of
                    ----------------                                            
Xerox and JetFax and not for the benefit of any third parties.

14.14     Counterparts.  This Agreement may be executed in one or more
          ------------                                                
counterparts, each of which shall be deemed an original, but collectively shall
constitute but one and the same instrument.

14.15     Headings and References.  The headings and captions used in this
                   --------------                                         
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

14.16     Construction.  This Agreement has been negotiated by the parties and
          ------------                                                        
their respective counsel.  This Agreement will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either party.

14.17     Trademark Usage.  Neither party shall make any use of any trademark,
          ---------------                                                     
service mark or trade name of the other in connection with its advertising,
promotional material or packaging for the Product without first obtaining the
other party's written consent.

14.18     Non-Publicity.  Neither party shall directly or indirectly, without f
          -------------                                                        
he prior written consent of the other party, such consent not to be unreasonably
withheld, make any news release or public announcement or other public
disclosure regarding this Agreement or the existence thereof.  Notwithstanding
the foregoing, JetFax shall be free to make disclosures to its shareholders,
directors, officers, employees, attorneys, accountants and other professional
representatives of JetFax and to Ailicec and as necessary or appropriate for
compliance with federal or state securities laws and regulations.  It is
JetFax's intent to make confidential factual disclosures, in accordance with the
terms and conditions of this Section 14.18, to a limited number of potential
lenders, investors and underwriters.  Neither party shall disclose information
with respect to the other's confidential business plans.

14.19     Complete Agreement.  This Agreement, including all Exhibits
          ------------------                                         
constitutes the entire agreement between the parties with respect to the subject
matter hereof, and supersedes and replaces all prior or contemporaneous
understandings or agreements, written or oral, regarding such subject matter.
No amendment to or modification of this Agreement shall be binding unless in
writing and signed by duly authorized representatives of both parties.  To the
extent any terms and conditions of this Agreement conflict with the terms and
conditions of any invoice, purchase order or purchase order acknowledgement
placed hereunder, the terms and conditions of this Agreement shall govern and
control.

19


 
14.20     Survival.  The provisions of Sections 5.1 (b) (first sentence only),
          --------                                                            
5.1 (c), 5.2, 8, 11.2, 12 and 13 shall survive the expiration or termination of
this Agreement for any reason.


IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

JETFAX, INC.                    XEROX CORPORATION

BY:/s/ Edward R. Prince III     BY:/s/ Fred Kiremidjian

NAME: Rudy Prince               NAME: Fred Kiremidjian
TITLE: President                TITLE:    Vice President,
                                Engineering



20


 
A         Jet Fax Deliverables

B         Xerox Deliverables

C         [INTENTIONALLY OMITTED]

D         Project Schedule

E         Confidential Disclosure Agreement


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

EXHIBIT A

DEVELOPMENT AGREEMENT BETWEEN XEROX CORPORATION AND JETFAX INC.


JETFAX DELIVERABLES

[*]

OTHER

                                      [*]


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]
EXHIBIT B

DEVELOPMENT AGREEMENT BETWEEN XEROX CORPORATION AND JETFAX INC.


XEROX DELIVERABLES
[*]

OTHER

Specification
-------------
[*]


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

EXHIBIT D

DEVELOPMENT AGREEMENT BETWEEN XEROX CORP.  AND JETFAX INC.
PROJECT SCHEDULE

C1 MILESTONE - [*]

Xerox Deliverables [*]

JetFax Deliverables [*]

PAYMENT DATE: [*]

C2 MILESTONE - [*]

.   Xerox Deliverables: [*]

.   JetFax Deliverables:  [*]


C3 MILESTONE - [*]

Xerox Deliverables:
.       [*]


 
                     CONFIDENTIAL TREATMENT REQUESTED = [*]

Jet Fax Deliverables: [*]

C4 MILESTONE - [*]

Xerox Deliverables: [*]

JetFax Deliverables: [*]

[*]


 
EXHIBIT E

DEVELOPMENT AGREEMENT BETWEEN XEROX CORP.  AND JETFAX INC.
CONFIDENTIAL DISCLOSURE AGREEMENT

Dated: November 23, 1994

Xerox Corporation (Xerox) of Stamford, Connecticut and JetFax Inc. (JetFax) of
Menlo Park, California, the parties to this Agreement, hereby agree as follows:

1 .      To further the business relationship between the parties, and to enable
JetFax to perform its development obligations pursuant to that certain
Development Agreement of even date herewith (the "Development Agreement"), it is
necessary and desirable that each party disclose to the other Confidential
Information relating to the project described in the Development Agreement.
Included within the definition of Confidential Information shall be all source
code provided by either party to the other.

2.        The receiving party shall not communicate the disclosing party's
confidential information (all information relating to this project and disclosed
to the receiving party for which the obligations of this Paragraph 2 have not
been terminated by operation of Paragraph 3 hereof to any third party and shall
neither use the disclosing party's Confidential Information nor circulate it
within its own organization except to the extent necessary for the development
work set forth in the Development Agreement or for any purpose the disclosing
party may hereafter authorize in writing or authorizes pursuant to the terms of
the Development Agreement.          Disclosures to the receiving party's
subsidiaries and affiliates and consultants and suppliers and software
developers so long as these entities are similarly bound shall not be considered
disclosure to a third party within the meaning of the previous sentence.

3.        The obligations of Paragraph 2 hereof shall terminate with respect to
any particular portion of the disclosing party's Confidential Information that:

(a)  was in the public domain at the time of disclosing party's communication
     thereof to receiving party,

(b)  entered the public domain through no fault of receiving party subsequent to
     the time of disclosing party's communication thereof to receiving party,

(c)  was in receiving party's possession free of. any obligation of confidence
     at that time of disclosing party's communication thereof to receiving
     party,

(d)  was rightfully communicated to receiving party free of any obligation of
     confidence subsequent to the time of disclosing party's communication
     thereof to receiving party,

(e)  was developed by employees or agents of receiving party independently of
     and without reference to any disclosing party Confidential Information,

(f) when it is communicated by disclosing party to a third party free of any
obligation of confidence, or

(g) in any event, 3.5 years after the Effective Date as defined in the
Development Agreement.

When and to the extent the obligations of Paragraph 2 shall not apply to a
particular portion of Information because of the operation of Paragraph 3
hereof, such Information is no longer Confidential Information hereunder.


 
4.        All materials, including, without limitation, documents,
specifications, drawings, software, models, apparatus, sketches, designs, and
lists furnished to receiving party by disclosing party and which are designated
in writing to be the property of the disclosing party shall remain the property
of disclosing party and shall be returned to disclosing party promptly at its
request with all copies made thereof except as disclosing party may otherwise
agree in writing or has otherwise agreed pursuant to the terms of the
Development Agreement to which this CDA is an exhibit.

5.        This Agreement shall govern all communications between the parties,
relating to the subject matter of this Agreement that are made from the 20th day
of October, 1994.

6.        Communications from disclosing party to personnel and authorized
representatives of receiving party shall not be in violation of the proprietary
rights of any third party.

7.        This Agreement shall be construed in accordance with the laws of the
State of New York.

XEROX CORPORATION                 JETFAX, INC.

By:/s/ Fred Kiremidjian           By:/s/ Edward R. Prince III
Fred Kiremidjian                  Rudy Prince
Vice President, Engineering       President


 
CONFIDENTIAL DISCLOSURE AGREEMENT

Xerox Corporation (Xerox) of Stamford, Connecticut and JetFax Inc. (JetFax) of
Menlo Park, California, the parties to this Agreement, hereby agree as follows:

1 .      To further the business relationship between the parties, and to enable
JetFax to perform its development obligations pursuant to that certain
Development Agreement of even date herewith (the "Development Agreement"), it is
necessary and desirable that each party disclose to the other Confidential
Information relating to this product.  Included within the definition of
Confidential Information shall be all source code provided to JetFax by Xerox.

2.        The receiving party shall not communicate the disclosing party's
confidential information (all information relating to this project and disclosed
to the receiving party for which the obligations of this Paragraph 2 have not
been terminated by operation of Paragraph 3 hereof to any third party and shall
neither use the disclosing party's Confidential Information nor circulate it
within its own organization except to the extent necessary for the development
work set forth in the Development Agreement or for any purpose the disclosing
party may hereafter authorize in writing or authorizes pursuant to the terms of
the Development Agreement to which this Confidential Disclosure Agreement is an
Exhibit.  Disclosures to the receiving party's subsidiaries and affiliates and
consultants and suppliers and software developers so long as these entities are
similarly bound shall not be considered disclosure to a third party within the
meaning of the previous sentence.

3.        The obligations of Paragraph 2 hereof shall terminate with respect to
any particular portion of the disclosing party's Confidential Information that:

(a)  was in the public domain at the time of disclosing party's communication
     thereof to receiving party,

(b)  entered the public domain through no fault of receiving party subsequent to
     the time of disclosing party's communication thereof to receiving party,

(c)  was in receiving party's possession free of any obligation of confidence at
     that time of disclosing party's communication thereof to receiving party,

(d)  was rightfully communicated to receiving party free of any obligation of
     confidence subsequent to the time of disclosing party's communication
     thereof to receiving party,

(e)  was developed by employees or agents of receiving party independently of
     and without reference to any disclosing party Confidential Information,

(f)  when it is communicated by disclosing party to a third party free of any
     obligation of confidence, or

(g)  in any event, 3.5 years after the Effective Date as defined in the
     Development Agreement.

When and to the extent the obligations of Paragraph 2 shall not apply to a
particular portion of Information because of the operation of Paragraph 3
hereof, such Information is no longer Confidential Information hereunder.

4.        All materials, including, without limitation, documents,
specifications, drawings, software, models, apparatus, sketches, designs, and
lists furnished to receiving party by disclosing party and which are designated
in writing to be the property of the disclosing party shall remain the


 
property of disclosing party and shall be returned to disclosing party promptly
at its request with all copies made thereof except as disclosing party may
otherwise agree in writing or has otherwise agreed pursuant to the terms of the
Development Agreement to which this CDA is an exhibit.

5.        This Agreement shall govern all communications between the parties,
relating to the subject matter of this Agreement that are made from the 20th day
of October, 1994.

6.        Communications from disclosing party to personnel and authorized
representatives of receiving party shall not be in violation of the proprietary
rights of any third party.

7. This Agreement shall be construed in accordance with the laws of the State of
New York.

XEROX CORPORATION             JETFAX, INC.

By:/s/ Fred Kiremidjian       By:/s/ Edward R. Prince III
Fred Kiremidjian              Rudy Prince
Vice President, Engineering   President




EX-10.36

8

DEVELOPMENT, PURCHASE & DISTRIBUTION LICENSE AGMT.




 
                                                                   EXHIBIT 10.36

                                          [*] = CONFIDENTIAL TREATMENT REQEUSTED
                                                                        REDACTED

                                REV G (3/18/97)
        MASTER DEVELOPMENT,  PURCHASE AND DISTRIBUTION LICENSE AGREEMENT



     THIS AGREEMENT is between JETFAX INC., a Delaware corporation having its
principal place of business at 1376 Willow Road, Menlo Park, California 94025
("JetFax"), and HEWLETT-PACKARD COMPANY, a California corporation with offices
at 3000 Hanover Street, Palo Alto, California 94304 ("HP"). This Agreement is
effective as of January 31, 1997 (the "Effective Date").

                                   AGREEMENT

1.   DEFINITIONS.

     1.1  ACCEPTANCE CRITERIA means mutually acceptable final performance
criteria that the parties agree will be used to determine whether the JetFax
Software and Hardware Design Package performs at a level acceptable for
inclusion in the mass marketed HP Product.

     1.2  DATE OF FIRST COMMERCIAL SHIPMENT means the date HP first ships a
Royalty Generating Unit.

     1.3  DATE OF FIRST MASS PRODUCTION means the date of the first production
run of the HP Product whereby the result of such run is intended to be Royalty
Generating Units.

     1.4  DEVELOPMENT PROJECT means JetFax's efforts to modify its existing
JetFax Software and JetFax Formatter along with JetFax's development of the HP
Exclusive Features all of which is more fully described in EXHIBIT A  ("HP
Product Technical System Specification")  and scheduled per EXHIBIT B
("Development Schedule") such that they can be integrated for use in the HP
Product.

     1.5  DEVELOPMENT SCHEDULE means the list of JetFax milestones and targeted
delivery dates set forth in EXHIBIT B ("Development Schedule").

     1.6  ERROR(S) means a defect in the JetFax Firmware, the  [*] or the JetFax
Formatter which causes such JetFax Firmware, [*] or JetFax Formatter not to
operate substantially in accordance with the applicable Acceptance Criteria.


 
                                          [*] = CONFIDENTIAL TREATMENT REQEUSTED

                                                                               

     1.7  HARDWARE DESIGN PACKAGE means the schematics, bill of materials and
associated documentation for the JetFax Formatter (however, the Hardware Design
Package shall not include the design schematics for the JetFax ASICs). Any
modified version of a Hardware Design Package shall be handled in accordance
with the terms and conditions of this Agreement which apply to the Hardware
Design Package.

     1.8  HP EXCLUSIVE FEATURE(S) shall mean those feature(s) identified as
exclusive to HP and listed in EXHIBIT A ("HP Product Technical System
Specifications") that are developed by JetFax at the request of HP and that the
parties have agreed will be exclusively licensed to HP while such feature(s)
continue to qualify as "HP Exclusive Feature(s)."

     1.9  HP PRODUCT means the HP developed hardware product for which JetFax
undertakes the Development Project and that uses the JetFax Formatter
technology,  JetFax ASICs, JetFax Firmware, [*] along with HP Exclusive Features
as described in EXHIBIT A ("HP Product Technical System Specification").

     1.10 HP TRADEMARKS  means (a) the HP-supplied trademarks, stylistic marks
and distinctive logotypes set forth in EXHIBIT E ("Trademarks") and (b) other
mutually agreed upon  marks and logotypes as HP may from time to time designate
in writing during the term of this Agreement.

     1.11 JETFAX ASICS means the Application Specific Integrated Circuits
designed by JetFax and made available to HP pursuant to this Agreement.

     1.12 JETFAX DELIVERABLES means those items described in the Software
description section listed in EXHIBIT A ("HP Product Technical System
Specifications") that JetFax shall deliver to HP pursuant to this Agreement,
including but not limited to, the Hardware Design Package, the HP Exclusive
Features, the JetFax Formatter, the JetFax ASICs, and the JetFax Software and
Updates.

     1.13 JETFAX DOCUMENTATION means the JetFax supplied online user manual for
the JetFax Software and JetFax ASICs.

     1.14 JETFAX FORMATTER means the JetFax formatter (exclusive of the JetFax
ASICs), or any modified version thereof, which executes or operates with the
JetFax Firmware.

     1.15 JETFAX SOFTWARE means (a) the JetFax Firmware, (b) [*] and (c) any
changes to the above listed software which JetFax may supply to HP.

                                       2.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

                                                                               

          1.15.1  JETFAX FIRMWARE means (a) all or any portion of the JetFax
controller computer programs, compilations thereof, and all associated
documentation which functionality is described in EXHIBIT A ("HP Product
Technical System Specification"), ported by JetFax to the HP Product, and
provided by JetFax to HP pursuant to this Agreement and (b) any changes to such
firmware which JetFax may supply to HP.

          1.15.2   [*] means (a) all or any portion of JetFax's computer
programs and all associated end user documentation commonly known as [*] listed
and described in the Software section of EXHIBIT A ("HP Product Technical System
Specification") provided by JetFax to HP and (b) any changes to such software
which JetFax may supply to HP.

     1.16 JETFAX TRADEMARKS  means (a) the JetFax-supplied trademarks, stylistic
marks and distinctive logotypes set forth in  EXHIBIT E ("Trademarks") and (b)
other mutually agreed upon marks and logotypes as JetFax may from time to time
designate in writing during the term of this Agreement.

     1.17 ROYALTY GENERATING UNIT means [*]

     1.18 TESTING CRITERIA means mutually acceptable working test plans and
procedures that the parties agree will be used to determine the acceptability of
the interim JetFax Deliverables upon delivery pursuant to the Development
Schedule.

     1.19 UPDATES means updated versions of JetFax Software which include all
changes, alterations, corrections and enhancements to such JetFax Software which
JetFax makes generally available to its licensees and that are not provided to
any particular JetFax OEM customer as a feature exclusive to such OEM.

2.   LICENSE GRANTS.

     2.1  MANUFACTURE AND DISTRIBUTION OF JETFAX FORMATTER.  Subject to HP's
compliance with the terms of this Agreement and effective upon HP's final
acceptance of the JetFax Deliverables, JetFax hereby grants to HP a worldwide,
non-exclusive, non-transferable license to (i) manufacture (and have
manufactured), and (ii) market, use, sell and otherwise distribute the JetFax
Formatter, directly and indirectly through HP's usual distribution channels.
The licenses granted above are only for use in connection with the HP Product
specified herein, for the purpose of interfacing the JetFax Firmware to the HP
Product, and to use the Hardware Design Package in connection with such

                                       3.


 
activities. HP agrees that it shall keep the Hardware Design Package
confidential and shall ensure that the same degree of care is used to prevent
the unauthorized use, dissemination or publication of the Hardware Design
Package as HP would use to protect similar information owned by HP.

     2.2  PURCHASE AND DISTRIBUTION OF JETFAX ASICs.

          2.2.1  THIRD-PARTY MANUFACTURER.  JetFax shall enter into agreements
with certain HP-qualified ASIC manufacturers authorizing such manufacturers to
manufacture and sell JetFax ASICs directly to HP, and upon HP's request provide
documentation of such authorization. In addition, in connection with such
agreements, JetFax shall provide engineering support and documentation to such
HP-qualified ASIC manufacturers as reasonably required to enable such
manufacturers to meet their delivery requirements with HP.  HP may purchase
JetFax ASICs only from such authorized HP-qualified ASIC manufacturers, and any
such purchases made by HP shall be subject to the terms and conditions agreed
upon by HP and such authorized HP-qualified ASIC manufacturer.

          2.2.2  DISTRIBUTION.  Subject to HP's compliance with the terms of
this Agreement, JetFax hereby grants HP the right to distribute the JetFax ASICs
as part of the HP Product described herein and to distribute the JetFax ASICs as
spare or replacement parts for the HP Product described herein. HP shall not
distribute JetFax ASICs in any other manner without JetFax's prior written
approval for such distribution.

          2.2.3  ENGINEERING CHANGES.   Subsequent to the acceptance of final
mask for first production, JetFax will not make changes to the ASICs without the
prior written consent of HP. In the event that circumstances beyond  reasonable
control of the parties require changes after the acceptance date of final mask
for first production, the parties will promptly meet and determine, in good
faith, the appropriate changes and timing of such changes.

     2.3  REPRODUCTION AND DISTRIBUTION OF JETFAX FIRMWARE.  Subject to HP's
compliance with the terms of this Agreement, JetFax hereby grants to HP a
worldwide, non-exclusive, non-transferable license to use, reproduce and
distribute directly and indirectly, through HP's usual distribution channels,
the object code version of the JetFax Firmware and JetFax Firmware Updates as a
part of the HP Product or for repair and maintenance of such product.

     2.4  REPRODUCTION AND DISTRIBUTION OF JETFAX DOCUMENTATION.  Subject to
HP's compliance with the terms of this Agreement, JetFax hereby grants to HP a
worldwide, non-exclusive, non-transferable license to use, modify, reproduce and
distribute directly and indirectly, through HP's usual distribution channels,
the JetFax Documentation as a part of the HP Product or in conjunction with such
product.

                                       4.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

                                                                               

     2.5  DISTRIBUTION OF HP EXCLUSIVE FEATURES.  Subject to HP's compliance
with the terms of this Agreement, JetFax hereby grants to HP,  [*]

     2.6  REPRODUCTION AND DISTRIBUTION OF [*]   Subject to HP's compliance with
the terms of this Agreement, JetFax hereby grants to HP a worldwide, non-
exclusive, non-transferable license to, (a) use, reproduce and distribute,
directly and indirectly, through HP's usual distribution channels, [*] and the
[*]  only as part of, or bundled with the HP Product; and (b) sublicense the [*]
to end users for installation with an already installed HP Product.

     2.7  END USER LICENSES.  JetFax is responsible for embedding the HP
Standard Software License Terms as an essential step in the installation of the
Software to ensure end user receipt of the HP Standard Software License, such
license to include terms and conditions substantially equivalent to those set
forth in EXHIBIT F ("HP Software License Terms") to this Agreement.  The terms
of such license will be drafted so as to apply to the JetFax Software.

3.   DEVELOPMENT.  Subject to the terms of this Agreement and the timely receipt
of all associated HP deliverables, JetFax will, in a timely and professional
manner, initiate the Development Project, staff the Development Project as
required, and use reasonable efforts to achieve the milestones listed in the
Development Schedule on or before the dates associated with each such milestone.
HP agrees to designate a technically qualified person to respond to information
requests by JetFax who, when so requested by JetFax, shall use his or her best
efforts to respond.

4.   DELIVERY, TESTING AND ACCEPTANCE.

     4.1  HP DELIVERABLES.  HP shall promptly provide JetFax with an appropriate
number of development HP Products, and any additional software, equipment and
documentation, if any, as necessary for JetFax to complete the Development
Project and for testing and support of the JetFax Firmware in accordance with
Section 4.3 ("Testing")

                                       5.


 
                                          [*] = CONFIDENTIAL TREATMENT REQEUSTED


below.  All equipment loaned by HP to JetFax shall remain the property of HP and
shall be fully insured by JetFax.  HP recognizes that an equipment failure could
result in a delay in the Development Schedule and, while such equipment is in
the possession of JetFax, HP shall assist in maintaining the same in good
working order. At JetFax's request during the term of JetFax's warranty and
continuing support activities hereunder, HP will continue to ensure that at
least one unit on loan to JetFax is the then current production unit of the HP
Product which HP is actually shipping.

     4.2  JETFAX DELIVERABLES.  JetFax will use commercially reasonable efforts
to provide HP with the JetFax Deliverables as described in EXHIBIT A ( "HP
Product Technical System Specification") in accordance with the Development
Schedule as detailed in EXHIBIT B ("Development Schedule").  At JetFax's option,
the JetFax Deliverables will be delivered telephonically from JetFax's place of
business to an HP server in California, provided that JetFax bears the costs of
such telephonic transmission to such server.  For purposes of tax documentation,
coincident with the telephonic transmission of such deliverable items JetFax may
send to HP a certificate containing the date of transmission, the time of such
transmission, the name(s) of JetFax personnel who made the transmission, the
signature(s) of such personnel and a general description of the nature of the
item(s) transmitted sufficient to distinguish the transmission from other
transmissions.  Within fifteen (15) days of receipt of the certificate, HP shall
return such certificate to JetFax, identifying the HP personnel who received
such transmission and, if the information on such certificate is true and
accurate, supply the signature of such receiving personnel verifying the
occurrence of the transmission.

     4.3  TESTING.

          4.3.1  DEVELOPMENT OF TEST PLAN.  The parties will work in good faith
to develop the Testing Criteria.  HP or its manufacturing partner will be
responsible for most of the hardware tests and design issues related to very
high-volume production, and for testing the mechanical performance of the HP
Product.  In addition, HP or its manufacturing partner will also test
environmental and reliability standards of the HP Product.

          4.3.2  INTERIM PERFORMANCE TESTING.  Upon JetFax's delivery of each
interim JetFax Deliverable listed in the Development Schedule, HP [*] in
accordance with the applicable Testing Criteria, for conformity with the
applicable Acceptance Criteria and the Testing Criteria.  HP shall inform JetFax
of the results of such testing and, if HP is unable to accept the interim JetFax
Deliverables, the basis for a finding of nonconformity or failure of such
interim JetFax Deliverables to conform to the Testing Criteria. JetFax shall use
reasonable efforts to promptly correct nonconformities and resubmit the same for

                                       6.


 
                                    [*] = CONFIDENTIAL TREATMENT REQEUSTED

 

retesting by HP. This process shall continue until HP accepts such interim
JetFax Deliverable, or terminates under section 12.2.2.

     4.4  FINAL ACCEPTANCE.  The JetFax Deliverables shall conform to
specifications in EXHIBIT A ( "HP Product Technical System Specifications") and
meet the Acceptance Criteria. HP shall have [*]

     4.5  COMPLIANCE AND CERTIFICATION.  HP shall be responsible for all
compliance testing and certification, in the U.S. and internationally, for
safety, emissions, ESD and other required standards, including but not limited
to "Public Telephone and Telegraph" (PTT) testing and approvals.
Notwithstanding the above, JetFax shall be responsible for [*]  JetFax and HP
will work together to take corrective actions required for problems found in
such testing and JetFax shall make reasonable changes to its designs and
software as required.  All costs for compliance testing and certifications,
including

                                       7.


 
                                          [*] = CONFIDENTIAL TREATMENT REQEUSTED

                                                                               

travel and other reasonable expenses of JetFax personnel requested by HP to
participate in such testing or certification, shall be paid by HP.

5.   PAYMENTS.

     5.1  NON-RECURRING ENGINEERING FEES. As and upon HP's acceptance of each
deliverable in accordance with the milestones listed in EXHIBIT B ("Development
Schedule"), HP shall pay JetFax a non-recurring engineering fee equal to the
amount associated with each such milestone. Notwithstanding the failure of
JetFax to meet such individual milestones, HP shall nonetheless be obligated to
pay to JetFax the associated non-recurring engineering milestone payments on the
targeted date of completion if JetFax's failure to complete the milestone by the
listed date is due to a failure by HP or its designated suppliers, to provide
material support, data and deliverables in a timely manner and HP has received
prompt written notice from JetFax upon JetFax's discovery that such failure by
HP would, in fact, result in JetFax's inability to complete the milestone by the
listed date.

     5.2  ROYALTIES.

          5.2.1   PREPAID ROYALTIES.  HP shall pay to JetFax the following
refundable prepaid royalties in advance of actual sales of the HP Product
according to the following schedule:


                                                                       
                                                           Prepaid   
Payment                                   Targeted Date    Royalty  
Number              Milestone             of Completion    Amount    
------              ---------             -------------    ------
[*]                 [*]                   [*]                     [*]
 
 
TOTAL PREPAID ROYALTIES                                           [*]

                                                                  [*] 

                                       8.


 
                                        [*] = CONFIDENTIAL TREATMENT REQUESTED


     [*]

     The prepaid royalties shall be recovered by HP at the rate of [*]

          5.2.2  ROYALTY RATE.  HP shall pay JetFax a royalty of (i) [*]

          5.2.3  WHEN ROYALTIES EARNED.  Each royalty due hereunder shall be
earned on the date the Royalty Generating Unit is shipped.

     5.3  TAXES.   License fees and prices to HP do not include taxes of any
nature.  HP will pay ordinary sales and property taxes where applicable when
invoiced by JetFax or will supply appropriate tax exemption certificates in a
form satisfactory to JetFax.  Under no circumstances will either party be
responsible for the other parties' income tax, franchise tax or other similar
tax liability.

     5.4  PAYMENT TERMS.   All payments hereunder shall be in U.S. dollars and
shall be paid by HP's U.S. corporate entity. HP shall make payments required
hereunder, without deduction of any tax, duty, fee or commissions.  All NRE
payments and prepaid royalties due in accordance with the terms of the Agreement
shall be paid [*] after the completion of the applicable milestone. All
royalties due in accordance with the terms of the Agreement shall be paid within
[*] after the end of each HP fiscal quarter in which they occur. With each
royalty payment HP shall include a written summary of the records described in
Section 6.1 ("Records") below, broken out by month of sale. [*]  Such oral
communication shall be subject to final adjustment by HP at the end of each
accounting period.

                                       9.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

6.   RECORDS AND AUDIT.

     6.1  RECORDS.  HP shall maintain a complete, clear and accurate record of
the number of Royalty Bearing Units shipped during the fiscal quarter, and any
other information which may be required to determine whether HP is paying the
correct royalty amount hereunder.

     6.2  RIGHT OF AUDIT.  To ensure compliance with the terms of this
Agreement, JetFax shall have the right to have an inspection and audit of all
the relevant accounting and sales books and records of HP conducted by an
independent audit firm reasonably acceptable to both parties whose fee is paid
by JetFax, and shall be conducted during regular business hours at HP's offices
and in such a manner as not to interfere with HP's normal business activities.
In no event shall audits be made hereunder more frequently than every twelve
(12) months. If such inspections should disclose any underreporting, HP shall
promptly pay JetFax such underpayment amount, and if such inspections should
disclose any overreporting, JetFax shall promptly pay HP such overpayment
amount.  In the event such auditor's inspection shows a five percent (5%) or
greater underreporting, HP shall pay such auditor's fees and expenses for such
audit.

7.   TRAINING AND SUPPORT.

     7.1  TRAINING AND SUPPORT.  JetFax agrees to provide the training,
technical assistance and manufacturing support described in EXHIBIT C ("Training
and Support").

     7.2  SUPPORT OF JETFAX FIRMWARE AND [*]   HP shall be free, without
additional payments to JetFax, to distribute to existing customers using the HP
Product only, revisions to the [*] through its distribution channels, via its
websites or its other normal distribution methods.  Following the expiration of
the relevant Warranty Period (as defined in Section 13.1 ("Performance
Warranty"), for up to [*] following the Date of First Commercial Shipment,
JetFax will provide to HP those Updates to the JetFax Software that HP requests
in accordance with the continuing support terms attached hereto as EXHIBIT C
("Training and Support").  HP agrees that all contact regarding continuing
support services shall be handled through up to three designated HP contacts to
be specified by HP.

     7.3  END USER SUPPORT.  HP will have the sole responsibility for supporting
its end users and will provide end users with reasonable end user documentation,
warranty service, and telephone support for the use of HP Product consistent
with HP's practice for supporting its other products.

8.   MARKETING OBLIGATIONS.

                                      10.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

     8.1  PUBLICITY.   Within [*]  following the date HP first announces the HP
Product, the parties shall issue a press release, the terms of which are
mutually acceptable to both HP and JetFax.

     8.2  JETFAX AFTER MARKET PRODUCTS.  HP shall, in good faith, assist JetFax
in marketing certain JetFax after market products through [*]to end users of the
HP Product.

9.   PROPRIETARY RIGHTS.

     9.1  OWNERSHIP.  The parties acknowledge that the other party and its
suppliers have and retain exclusive ownership of all their respective
trademarks, logos and product names, and all rights, title and interest,
including all trademarks, copyrights, patents, mask work rights, trade names,
trade secrets and other intellectual property rights to all of the documentation
and computer-recorded data comprising or included in the JetFax Deliverables
with respect to JetFax ownership and the HP Product other than the JetFax
Deliverables with respect to HP ownership.  All related ideas, developments,
concepts, techniques, know-how, trade secrets and inventions which are conceived
or reduced to practice during the course of this Agreement shall belong
exclusively to the developing party. Except for the rights expressly enumerated
herein, HP is not granted any rights to patents, mask work rights, copyrights,
trade secrets, trade names, trademarks, or any other rights, franchises or
licenses with respect to the JetFax Deliverables.  In the event that HP obtains
the source code versions of the JetFax Deliverables and related materials
pursuant to Section 10 ("Escrow"), HP agrees that such source code and related
materials will be protected as JetFax Deliverables hereunder and that it will
not publish, disclose or otherwise divulge such source code and related
materials to any person, except officers, employees and independent contractors
of HP who have entered into non-disclosure agreements at least as protective of
JetFax's proprietary rights as set forth herein and need access to such source
code or related materials to perform their duties, at any time, either during
the term or after the termination of this Agreement.

     9.2  NO SOURCE CODE.  HP specifically acknowledges that no rights, other
than those contained in Section 10 ("Escrow"), to the human readable, source
code versions of the JetFax Software are granted to it (except resource source
files and message string source files for both host based software and device
firmware for translation purposes only). HP agrees that it will not attempt to
reverse engineer, reverse compile, disassemble or otherwise attempt to create
source code which is derived from the JetFax Software provided to HP solely in
object code form during the term of this Agreement so long as this agreement
remains in force and for one year following termination.  In addition, HP shall
not reverse engineer the JetFax ASICs or any portion thereof so long as this
agree-ment remains in force and for one year following termination.
Notwithstanding the above, the parties agree that HP will use, and it shall not
be considered a breach of this

                                      11.


 
Section 9.2 to employ, in conjunction with JetFax, ordinary techniques available
to debug and resolve problems with the JetFax Software.

     9.3  PROPRIETARY NOTICES.  HP agrees as a condition of its rights
hereunder, not to remove or deface appropriate proprietary JetFax notices
appearing on the JetFax Deliverables for all HP internal distribution
activities.  HP further agrees, to reproduce, in accordance with EXHIBIT E
("Trademarks"), appropriate JetFax copyright notices on the JetFax Software, the
software media, and in any electronic distribution of software, such as drivers
or updates.

     9.4  RESTRICTED RIGHTS.  The JetFax Software is a "commercial item," as
that term is defined at 48 C.F.R. 2.101 (OCT 1995), consisting of "commercial
computer software" and "commercial computer software documentation," as such
terms are used in 48 C.F.R. 12.212 (SEPT 1995).  Consistent with 48 C.F.R.
12.212 and 48 C.F.R. 227.7202-1 through 227.7202-4 (JUNE 1995), HP will identify
and license the JetFax Software to U.S. Government end users (i) only as a
commercial end item and (ii) with only those rights as are granted to all other
end users pursuant to the terms and conditions herein.  In the event that HP
receives a request from any agency of the U.S. Government to provide the JetFax
Software with rights beyond those set forth above, HP will notify JetFax of the
scope of rights requested and the agency making such request and JetFax will
have five (5) business days to, in its sole discretion, accept or reject such
request.

     9.5  FOREIGN GOVERNMENT AGREEMENTS.  HP will take commercially reasonable
steps in making proposals and agreements with foreign governments other than the
United States which involve the JetFax Software and related documentation to
strive for the objective that JetFax's proprietary rights in such JetFax
Software and related documentation receive the maximum protection available from
such foreign government for commercial computer software and related
documentation developed at private expense.

10.  ESCROW.  Concurrently with execution of this Agreement, JetFax , HP and an
escrow agent mutually acceptable to both parties (the "Escrow Agent") shall
enter into an escrow agreement (the "Escrow Agreement") which provides for
JetFax's delivery of the source code version of the JetFax Software and the
specifications of the JetFax ASICs (the "Escrowed Material") to the Escrow Agent
upon execution of this Agreement and periodically thereafter as JetFax provides
new releases of the JetFax Software to HP in accordance with the terms hereof
and release of the Escrowed Material upon the occurrence of release conditions
to be set forth in the Escrow Agreement.  A copy of the Escrow Agreement is
attached hereto as EXHIBIT D ("Escrow Agreement").

                                      12.


 
                                          [*] = CONFIDENTIAL TREATMENT REQEUSTED


11.  LICENSE TO USE TRADEMARKS.

     11.1 HP'S USE OF TRADEMARKS.   HP agrees that it will permanently include
JetFax Trademarks, in a form similar to those included in EXHIBIT E
("Trademarks"), on all copies of the JetFax Software and JetFax ASICs.  HP also
agrees that it will include the JetFax and JetSuite brand names, in a form
similar to those included in EXHIBIT E ("Trademarks"), along with HP logos in
splash screens, installation screens, about boxes, demo pages, help tutorials,
manuals, media labels and marketing collaterals.

     11.2 OWNERSHIP OF TRADEMARKS.  HP acknowledges the ownership of the JetFax
Trademarks in JetFax. HP agrees that it will do nothing inconsistent with such
ownership and that all use of JetFax Trademarks by HP shall inure to the benefit
of and be on behalf of JetFax. HP acknowledges that JetFax Trademarks are valid
under applicable law and that HP's utilization of such JetFax Trademarks will
not create any right, title or interest in or to such trademarks. HP
acknowledges JetFax's exclusive right to use of JetFax Trademarks and agrees not
to do anything contesting or impairing the trademark rights of JetFax.  Any use
of JetFax trademarks must identify JetFax as the owner of such trademarks.  HP
agrees that JetFax will use and reproduce the HP Trademarks for inclusion in the
JetFax Deliverables.  JetFax acknowledges the validity of the HP Trademarks and
agrees the JetFax's utilization of such HP Trademarks will not create any right,
title or interest in or to such trademarks.  JetFax and HP agree that no usage
of Trademarks or commitments in this section shall extend beyond the scope of
activity envisioned by this Agreement.

     11.3 QUALITY STANDARDS.   JetFax is familiar with and approves of the
quality of HP hardware products that are similar to the HP Product. The quality
of the HP Product sold in connection with the JetFax Trademarks shall be
substantially the same as the quality of such other HP hardware products.

12.  TERM AND TERMINATION.

     12.1 TERM.  The initial term of this Agreement shall be [*] from the
Effective Date, unless this Agreement is earlier terminated pursuant to Section
12.2.

     12.2 TERMINATION.

          12.2.1  TERMINATION FOR CAUSE.  A party may terminate this Agreement
in the event of any material breach by the other party which continues uncured
after [*] written notice by the non-breaching party of said breach (which notice
shall, in reasonable detail, specify the nature of the breach) to the breaching
party.

                                      13.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

          12.2.2  TERMINATION FOR CONVENIENCE.  Subject to the provisions of
Section 12.3.6, HP may terminate this Agreement without cause upon [*] written
notice to JetFax.

     12.3 OBLIGATIONS ON TERMINATION OR EXPIRATION.  Upon termination or
expiration of this Agreement:

          12.3.1  LICENSES TERMINATED.  The licenses granted pursuant to
Section 2 ("License Grants") shall terminate immediately.

          12.3.2  CONTINUED SUPPORT; RETURN OR DESTRUCTION OF JETFAX
DELIVERABLES.  Except in the case where this Agreement is terminated prior to
the Date of First Commercial Shipment, HP shall have the right to retain a
reasonable number of copies of the JetFax Software and use such JetFax Software
only to the extent required for support and maintenance purposes.  HP will
immediately discontinue use (except as set forth in the preceding sentence) and
distribution of, and return or destroy all copies of the JetFax Deliverables in
its possession (including copies placed in any storage device under HP's
control). Upon JetFax's request, HP shall warrant in writing to JetFax its
return or destruction of all of JetFax's proprietary information within thirty
(30) days of termination or expiration.

          12.3.3  CONTINUED USE BY END USERS.  End users shall be permitted the
continued and uninterrupted use of the JetFax Software for the balance of the
term of their end user agreements, as specified in such agreements, provided
that and so long as the end users are not in default of their end user
agreements.

          12.3.4  DEFAULT BY END USERS.  HP's rights upon default of the end
users relating to the JetFax Software, as specified in the end user agreement,
shall automatically be assigned to JetFax to the extent relevant to the
enforcement by JetFax of the proprietary rights of JetFax and/or its suppliers
in the JetFax Software.

          12.3.5  SURVIVAL OF TERMS.  The parties' rights and obligations set
forth in Section 9 ("Proprietary Rights"), Section 12.3 ("Obligations on
Termination or Expiration"), Section 13.2 ("Limitation on Warranties"), Section
14 ("Indemnification"), Section 15 ("Limitation of Liability") and Section 16
("General") shall continue after the termination or expiration of this
Agreement.

          12.3.6  LIQUIDATED DAMAGES.  HP AND JETFAX HEREBY ACKNOWLEDGE AND
AGREE THAT IT WOULD BE IMPRACTICAL AND/OR EXTREMELY DIFFICULT TO FIX OR
ESTABLISH THE ACTUAL HARM SUSTAINED BY JETFAX AS A RESULT OF THE TERMINATION OF
THIS AGREEMENT DURING THE DEVELOPMENT PERIOD OR THEREAFTER, AND THAT THE DAMAGES
LISTED BELOW ARE A REASONABLE

                                      14.


 
APPROXIMATION THEREOF.  IN THE EVENT THAT THIS AGREEMENT IS TERMINATED BY HP FOR
CONVENIENCE PURSUANT TO SECTION 12.2.2 ABOVE, HP SHALL PAY JETFAX THE FOLLOWING:
 
              1)  [*]
              2)  [*]
              3)  [*] 

IN THE EVENT THAT THIS AGREEMENT IS TERMINATED BY HP FOR CAUSE UNDER SECTION
12.2.1, HP SHALL PAY THE FOLLOWING:
 
              1)  [*]
              2)  [*] 
 

                                                  
                                                  
Milestone                          Targeted Date               
Number            Milestone        of Completion        Amount
------------      ---------        -------------        ------ 
[*]               [*]              [*]                     [*]
 
 

IN THE EVENT THAT JETFAX TERMINATES THIS AGREEMENT FOR HP'S MATERIAL BREACH
   PURSUANT TO SECTION 12.2.1, JETFAX SHALL, [*]

                                      15.


 
                                          [*] = CONFIDENTIAL TREATMENT REQEUSTED

[*]  HP AND JETFAX AGREE THAT THE LIQUIDATED DAMAGES ARE A REASONABLE
APPROXIMATION OF JETFAX'S DAMAGES AS A RESULT OF ANY TERMINATION OF THIS
AGREEMENT DURING THE DEVELOPMENT PERIOD OR THEREAFTER.  SUCH PAYMENTS SHALL NOT
SERVE TO WAIVE JETFAX'S RIGHTS TO SEEK INJUNCTIVE RELIEF PURSUANT TO SECTION
16.5 ("INJUNCTIVE RELIEF").

13.  WARRANTIES.

     13.1 PERFORMANCE WARRANTY.  JetFax warrants that the JetFax Software and
the Hardware Design Package, for a period of [*]  after the Date of First
Commercial Shipment (the "Warranty Period"), will perform substantially in
accordance with the applicable Acceptance Criteria when used in conjunction with
the HP Product. JetFax shall, at its expense, provide a correction or workaround
for any reproducible Errors which may be discovered in the JetFax Software or in
the Hardware Design Package if they are reported to JetFax by HP during the
Warranty Period and deliver an updated version of the JetFax Software or
Hardware Design Package to HP. This warranty shall not apply to such JetFax
Software or Hardware Design Package if it (i) has been modified by HP or any
third party (ii) is any version other than the most current version of such
JetFax Software or Hardware Design Package shipped by HP hereunder or the
version shipped by HP immediately preceding such current version.  Also, this
warranty shall not apply to the Hardware Design Package if the resulting JetFax
Formatter is not assembled according to JetFax specifications.

     13.2 LIMITATIONS ON WARRANTIES. HP acknowledges that JetFax does not
warrant that the JetFax Software will meet HP's requirements, that operation of
the JetFax Software will be uninterrupted or error free, or that all software
errors will be corrected.  JetFax is not responsible for problems caused by
computer hardware or other computer operating systems (including those making up
other HP products) which are not compatible with the system specifications
required to run the JetFax Software as set forth in the applicable Acceptance
Criteria, or for problems in the interaction of the JetFax Software with non
JetFax software. HP acknowledges that the JetFax Software is of such complexity
that it may have inherent defects, and agrees that JetFax makes no other
warranty, either express or implied, as to any matter whatsoever.  The foregoing
states JetFax's sole and exclusive warranty to HP concerning the JetFax software
and HP's sole and exclusive remedy for breach of warranty. EXCEPT AS EXPRESSLY
SET FORTH ABOVE, THE JETFAX DELIVERABLES ARE PROVIDED STRICTLY "AS IS". Except
for the express warranties stated in this agreement, JetFax makes no additional

                                      16.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

warranties, express, implied, arising from course of dealing or usage of trade,
or statutory, as to the JetFax Deliverables or any matter whatsoever. IN
PARTICULAR, ANY AND ALL WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NONINFRINGEMENT ARE EXPRESSLY EXCLUDED.  HP shall not have the right
to make or pass on, and shall take all measures necessary to ensure that neither
it nor any of its agents or employees shall make or pass on, any express or
implied warranty or representation on behalf of JetFax to any HP customer, end
user, or third party.

14.  INDEMNIFICATION.

     14.1 BY JETFAX.   Subject to Section 15, JetFax agrees to indemnify and
defend HP from any costs, damages, and reasonable attorneys' fees resulting from
any claims by third parties that the uses permitted hereunder of the JetFax
Deliverables  infringe any (i) U.S. copyrights, or U.S. trademarks; or (ii)
patents issued in the Designated Countries provided that, HP gives JetFax prompt
written notice of any such claim, tenders to JetFax the defense or settlement of
such a claim at JetFax's expense, and cooperates with JetFax, at JetFax's
expense, in defending or settling such claim. If JetFax receives notice of an
alleged infringement or if HP's use of the JetFax Deliverables shall be
prevented by permanent injunction, JetFax may, at its sole option and expense,
procure for HP the right to continued use of the JetFax Deliverables as provided
hereunder, modify the JetFax Deliverables so that it is no longer infringing, or
replace the JetFax Deliverables with a deliverable of equal or superior
functional capability. The rights granted to HP under this section shall be HP's
sole and exclusive remedy and JetFax's sole obligation for any alleged
infringement of any patent, copyright, trademark, or other proprietary right.
JetFax will have no liability to HP [*]

     14.2 BY HP.  HP agrees to indemnify and defend JetFax from any costs,
damages, and reasonable attorneys' fees resulting from all claims by third
parties arising from the use, manufacture, and distribution of HP Products by HP
and its direct and indirect customers in [*]  provided that JetFax gives HP
prompt written notice of any such claim, tenders to HP the defense or settlement
of any such claim at HP's expense, and cooperates with HP, at HP's expense, in
defending or settling

                                      17.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

                                                                               

such claim. HP will have no liability to JetFax with respect to any claim as to
which JetFax is liable to HP pursuant to Section 14.1 ("By JetFax") above.

15.  LIMITATION OF LIABILITY.   Neither party will be liable to the other party
or any other party for any loss of use, interruption of business or any
indirect, special, incidental or consequential damages of any kind (including
lost profits) regardless of the form of action whether in contract, tort
(including negligence), strict product liability or otherwise, even if either
party has been advised of the possibility of such damages. The foregoing
limitation of liability is independent of any exclusive remedies for breach of
warranty set forth in this Agreement.  The limitation above shall not apply and
shall be of no force and effect with regard to damages attributable to a breach
of the scope of the licenses granted in Section 2 ("License Grants") or a breach
of the protective provisions set forth in Section 9 ("Proprietary Rights")  [*]

16.  GENERAL.

     16.1 DISPUTE RESOLUTION.  In the event of disputes between the parties
arising from or concerning the subject matter of this Agreement, other than
disputes arising from or the protection of either party's proprietary
information, the parties will first attempt to resolve the dispute through good
faith negotiation: first among and between the program managers assigned to the
Development Project, and if the dispute is not resolved within 3 days,
negotiation between senior officers (having the necessary authority to resolve
the dispute on behalf of such party) of each party .  In the event that the
dispute cannot be resolved through the good faith negotiation of such senior
officers, the parties, within 5 days after written notice, will refer the
dispute to a mutually acceptable mediator, skilled in the technology and
industry relating to the subject matter of this Agreement, for hearing in a
place to be agreed to by the parties.  If a mutually acceptable mediator cannot
be selected by the parties, the parties agree to use a mediator, skilled in the
technology and industry relating to the subject matter of this Agreement,
selected by the American Arbitration Association.

     16.2 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the United States of America and the State of California as such laws
are applied to agreements entered into and to be performed entirely within
California between California residents.

     16.3 CHOICE OF FORUM AND VENUE. All disputes arising under this Agreement
not resolved in accordance with Section 16.1 ("Dispute Resolution") above, shall
be brought in Superior Court of the State of California in Santa Clara County or
the Federal District Court of San Jose, California, as permitted by law.  The
Superior Court of Santa Clara

                                      18.


 
County and the Federal District Court of San Jose shall each have nonexclusive
jurisdiction over disputes under this Agreement.  The parties consent to the
personal jurisdiction of the above courts.

     16.4 NOTICES. All notices or reports permitted or required under this
Agreement shall be in writing and shall be delivered by personal delivery,
telegram, telex, telecopier, facsimile transmission, or by certified or
registered mail, return receipt requested, and shall be deemed given upon
personal delivery, five (5) days after deposit in the mail, or upon
acknowledgment of receipt of electronic transmission. Notices shall be sent to
the signatory of this Agreement at the address set forth at the end of this
Agreement or such other address as either party may specify in writing.

     16.5 INJUNCTIVE RELIEF. It is understood and agreed that, notwithstanding
any other provisions of this Agreement, breach of the provisions regarding the
Scope of the Licenses granted in Section 2 ("License Grants") or protection of
Proprietary Information set forth in Section 9 ("Proprietary Rights") of this
Agreement by either party will cause the other irreparable damage for which
recovery of money damages would be inadequate, and that the damaged party shall
therefore be entitled to seek injunctive relief to protect its rights under this
Agreement in addition to any and all remedies available at law.

     16.6 NO AGENCY. Nothing contained herein shall be construed as creating any
agency, partnership, or other form of joint enterprise between the parties.

     16.7 FORCE MAJEURE. Neither party shall be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder (except for
the payment of money) on account of strikes, shortages, riots, insurrection,
fires, flood, storm, explosions, acts of God, war, governmental action, labor
conditions, earthquakes, material shortages or any other cause which is beyond
the reasonable control of such party.

     16.8 WAIVER. The failure of either party to require performance by the
other party of any provision hereof shall not affect the full right to require
such performance at any time thereafter; nor shall the waiver by either party of
a breach of any provision hereof be taken or held to be a waiver of the
provision itself.

     16.9 SEVERABILITY. In the event that any provision of this Agreement shall
be unenforceable or invalid under any applicable law or be so held by applicable
court decision, such unenforceability or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such event, such
provision shall be changed and interpreted so as to best accomplish the
objectives of such unenforceable or invalid provision within the limits of
applicable law or applicable court decisions.

                                      19.


 
     16.10  HEADINGS. The section headings appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, construe,
or describe the scope or extent of such section or in any way affect this
Agreement.

     16.11  ASSIGNMENT.  Either party shall have the right to assign its rights
and obligations pursuant to this Agreement to a successor entity in the event of
a merger or reorganization in which such party is not the surviving entity or to
a purchase of all or substantially all of its assets.  Except as set forth
above, neither this Agreement nor any rights or obligations of either party
hereunder may be assigned in whole or in part without the prior written approval
of the non-assigning party.

     16.12  EXPORT. HP acknowledges that the laws and regulations of the United
States restrict the export and re-export of commodities and technical data of
United States origin, including the JetFax Deliverables. HP agrees that it will
not export or re-export the JetFax Deliverables in any form, without the
appropriate United States and foreign governmental licenses. HP agrees that its
obligations pursuant to this Section shall survive and continue after any
termination or expiration of rights under this Agreement.

     16.13  FULL POWER. Each party represents and warrants that it has full
power to enter into and perform this Agreement, and the person signing this
Agreement on each party's behalf has been duly authorized and empowered to enter
into this Agreement. Both parties further acknowledge that each has read this
Agreement, understands it and agrees to be bound by it.

     16.14  CONFIDENTIAL AGREEMENT. Neither party will disclose any terms or the
existence of this Agreement except pursuant to a mutually agreeable press
release, with written consent of the other party, or as otherwise required by
law.  However, in no event will a party be responsible for confirming the
veracity of statements made by the other party.  If  required to disclose any
aspect of this agreement by legal requirement such as subpoena or other legal
mandate, each party agrees to use best efforts in each such circumstance to
provide to the other, prior to such party's initial disclosure pursuant to such
legal requirement, a copy of the proposed disclosure (such proposed disclosure
may be a redacted version of this Agreement) showing such party's attempt to
limit, redact, excise and otherwise restrict the disclosure of sensitive
portions of this Agreement.  The nondisclosing party shall then have seven (7)
calendar days to provide its suggested limitations, redactions and restrictions
to the disclosing party's draft disclosure.  The disclosing party shall then in
good faith attempt to include those suggested limitation, redactions and
restrictions, wherever possible in its submission of the disclosure as required
by law, and thereafter in subsequent negotiations with the agency or entity to
which disclosure is made.  If such disclosing party does not receive comments
from the non-disclosing party within the seven (7) day period, such submission
shall be deemed approved by the non-disclosing party.

                                      20.


 
                                          [*] = CONFIDENTIAL TREATMENT REQUESTED

                                                                               

     16.15  COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.

     16.16  ENTIRE AGREEMENT.  This Agreement together with the exhibits
completely and exclusively states the agreement of the parties regarding its
subject matter.  It supersedes, and its terms govern, all prior proposals,
agreements, or other communications between the parties, oral or written,
regarding such subject matter.  This Agreement shall not be changed or modified
except through written mutual agreement signed by officers or program managers
of the parties, and any provision or a purchase order purporting to supplement
or vary the provisions hereof shall be void.  Notwithstanding the above, the
parties agree that the specifications described in EXHIBIT A ("HP Product
Technical System Specification") largely reflect the requirements as understood
by the parties on January 7, 1997.  However, as the development project
progresses, the parties shall, from time to time and by written mutual agreement
signed by officers or program managers, update such specifications to reflect
any changes and shall consider the impact on cost, schedule and performance.

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the Effective Date by their duly authorized representatives.

JETFAX:                             HP:


JETFAX, INC.                        HEWLETT-PACKARD COMPANY

By:/s/ EDWARD R. PRINCE III         By:[*]
   ------------------------                 

Print                               Print
Name:  Edward R. Prince III         Name:[*]
     ----------------------                   

Title:  PRESIDENT                   Title:[*]
      ---------------------                              


Address for Notice:                 Address for Notice:

1376 Willow Road                    3000 Hanover Street
Menlo Park, CA 94025                Palo Alto, CA  94304

                                      21.


 
                                   EXHIBIT A
                   HP PRODUCT TECHNICAL SYSTEM SPECIFICATION


 
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HP PRODUCT TECHNICAL SYSTEM SPECIFICATION

TABLE OF CONTENTS


SUMMARY                                                         7
                                                           
                                                           
CHANGE PROCESS/LOG                                              7
                                                           
   SUBMITTAL PROCESS                                            7
                                                           
   APPROVAL PROCESS                                             7
                                                           
   COMMUNICATION PROCESS                                        7
                                                           
                                                           
GENERAL INFORMATION                                             7
                                                           
   PRODUCT SPECIFICATIONS                                       8
                                                           
                                                           
GENERAL SPECIFICATION                                           9
                                                           
   INTERCONNECTION OVERVIEW                                     9
                                                           
   CONFIGURATION USE MODEL                                      9
                               
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SUMMARY                                                           2


1 GENERAL INFORMATION                                             3

   1.1 PRODUCT OVERVIEW                                           3

   1.2 PROGRAM GOALS                                              5

   [*]             

   1.3 HOST ENVIRONMENT                                           9

   1.5 DOCUMENT SET                                               9

   1.6 OTHER REFERENCES                                           9


2 INSTALLATION                                                   11

   2.1 GENERAL CHARACTERISTICS                                   11

   2.2 INSTALLER DESIGN                                          11

   2.3 UNINSTALLER DESIGN                                        12


3 USER INTERFACE TO FUNCTIONS                                    15

   [*]


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SUMMARY

     [*]




CHANGE PROCESS/LOG

     [*]


SUBMITTAL PROCESS

     [*]


APPROVAL PROCESS

     [*]


COMMUNICATION PROCESS

     [*]



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GENERAL INFORMATION


PRODUCT SPECIFICATIONS

     [*]

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GENERAL SPECIFICATION

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MISCELLANEOUS

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ENVIRONMENTAL SPECIFICATIONS

     [*]


REGULATORY REQUIREMENTS

         [*]


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         REGULATORY TEST SUPPORT REQUIREMENTS

         [*]

         SERVICE REQUIREMENTS

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         HP CUSTOMER SUPPORT

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MANUFACTURING SUPPORT REQUIREMENTS  (TBD)


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APPENDIXES


REPORTS
    
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                               HP PRODUCT SOFTWARE
                         TECHNICAL SYSTEM SPECIFICATION

                              Hewlett-Packard Logo

                                   REVISION 2
                                   MARCH 1997







                    HEWLETT-PACKARD LOGO COMPANY CONFIDENTIAL




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                          DOCUMENT IDENTIFICATION
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LAN LOCATION/FILE NAME               c:\jfcontr\tss.doc                        
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              DRAFT          Various Reviews, 11/96
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              DRAFT          Various Reviews, 12/96
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              REV. 1         Initial Release
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TABLE OF CONTENTS


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SUMMARY


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1        General Information

1.1  Product Overview

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Components:

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1.2  Program Goals

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1.2.6  Customer Usage Model

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1.3  Host Environment

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1.5  Document Set

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1.6  Other References

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2   Installation

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2.1 General Characteristics

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                         [*]
                             
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4        HELP SYSTEM
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4.1      HELP DURING INSTALLATION

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APPENDIX A        FEATURES LIST

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APPENDIX B  USER TASK LIST

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APPENDIX C [*]



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                       APPENDIX D -- HP EXCLUSIVE FEATURES


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                                   EXHIBIT B
                             DEVELOPMENT SCHEDULE


 
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      DEVELOPMENT SCHEDULE AND SCHEDULE OF NON-RECURRING ENGINEERING FEES

Milestone Targeted Date NRE ID Milestone of Completion Payment --------- --------- ------------- ------- 1. [*] [*] 2. [*] [*] 3. [*] [*] [*] 4. [*] [*] [*] 5. [*] [*] [*] 6. [*] [*] [*] 7. [*] [*] [*] 8. [*] [*] [*] 9. [*] [*] [*] 10. [*] [*] [*] 11. [*] [*] [*]
1. 12. [*] [*] [*] 13. [*] [*] 14. [*] [*] TOTAL NRE [*] 2. [*] = CONFIDENTIAL TREATMENT REQUESTED EXHIBIT C TRAINING AND SUPPORT I. SOFTWARE/FIRMWARE TRAINING: o In-depth technical training covering software and firmware to be provided by JetFax to HP Support Personnel. Classes to take place at a mutually agreed upon location. JetFax will provide technical personnel to assist HP in generating a Technical Support Guide, Service Manual, and related training materials. HP shall have the right to use all training documentation when training other HP support organizations. [*] TECHINCAL SUPPORT: o Technical assistance in support of the product launch and ongoing sales shall include: A JetFax support line(s) for HP Technical Marketing. Contact may be via telephone, fax, electronic or regular mail during regular business hours. o Problem Severity will be established by consensus between JetFax and HP Program Manager with input from the HP Technical Support Groups using the following guidelines: Severity 1: Product is unusable by the end user due to software/firmware failure. Severity 2: A major product feature is inoperative, output is grossly deviant from expected output or there is a sensitive customer situation. Severity 3: There is a software/firmware problem that is not inhibiting the usage of the product, a request for information on product usage or other non- product area. Severity 4: Requests for enhancements. JetFax will make every reasonable attempt to maintain the following response and resolution criteria. This will include, but is not limited to, minimally ensuring that a JetFax Service Representative will be available by phone at all business hours 8:00 am - 5:00 pm PST, Monday-Friday, excepting standard US holidays. In the event a JetFax Service Representative is not available by phone, a voicemail system will be active which will, in every best effort, allow for the following: Hewlett-Packard Company Confidential Page 1 JetFax/HP Contract Exhibit C - Training and Support [*] = CONFIDENTIAL TREATMENT REQUESTED
Problem Severity Response Time Resolution Time ------------------- ------------- --------------- 1 [*] [*] 2 [*] [*] 3 [*] [*] 4 [*] [*]
Response time is defined as the time necessary to acknowledge the receipt of a problem and request additional information that may be necessary to analyze the problem. In the case of a problem submitted by telephone it is assumed that the response is immediate in that the call is answered as soon as a JetFax technical support representative is available to answer. Resolution time is defined as the time necessary to provide a software fix bypass explanation of functionality or other such item as to 1) resolve the customer's problem where it is proven to be the fault of JetFax software or, hardware 2) provide reasonable explanation or evidence that the problem is not the result of JetFax hardware or software or 3) request any additional information as is necessary for the JetFax technical support group to resolve the customer's problem, or escalate the problem to the JetFax QA or engineering groups for investigation and resolution. In the event of #3 above the JetFax technical support group will be responsible for monitoring the timeliness of the QA/Engineering response, as well as keeping the HP technical support group updated as to the status of the problem. HP RESPONSIBILITIES -------------------- HP Technical Support will be responsible for the following customer issues: 1) Serve as the sole customer contact point at all times during the sales and product lifecycles. 2) Resolve all JetFax related issues that HP has the technical capacity to resolve. 3) Reproduce and verify JetFax product problems that are reported by customers in a controlled enviorment whenever possible. 4) Report verified product failures to JetFax technical support providing JetFax technical support with a detailed description of the steps necessary to reproduce a problem. 5) Provide JetFax technical support with any materials necessary to reproduce the problem such as input or output materials, specialized software or other computer files deemed necessary for problem resolution. 6) Provide JetFax technical support, when possible, with the following for each problem when initially contacting JetFax about that problem: - A chronology of the incident, data on problem volume, frequency, and on- site meetings with JetFax if they would provide helpful - Take action with customers at JetFax's request to aide in problem investigation and resolution - Attempt to download / fax information on device's status. - Software applications in use at the time of the failure with associated software version numbers - The name, description, and release number of other software that was resident in the computer's memory at the time that the suspected product failure occurred. - Hardware configuration of the machine which the error is occurring including all steps to recreate name of brand of PC, video cards, video drivers, relevant localization settings (US vs International), and other connected and installed 3/27/97 Hewlett-Packard Company Confidential Page 2 JetFax/HP Contract Exhibit C - Training and Support [*] = CONFIDENTIAL TREATMENT REQUESTED peripherals and subsequent drivers - A description of recent changes that have occurred to the hardware and software of the machine where the failure is occurring. - Complete text and identifying number of all error messages - Any customer files necessary to reproduce the problem JETFAX RESPONSIBILITIES ----------------------- JetFax Technical Support will be responsible when addressing the following customer issues for HP: 1) Provide acknowledgment of the receipt of a problem report from HP in the time frame outlined above. 2) Provide the HP representative that initiated the communication with a JetFax problem number for tracking purposes at the time of the problem report. 3) Perform analysis of reported product failures and unresolved problems and undertake any efforts to develop solutions or bypasses within the time frame outline above. 4) Provide to HP technical support any software fixes and documentation that is developed by JetFax as a resolution to this problem. 5) Provide information, where such information is not clearly described in the associated documentation, and consulting assistance regarding the operation of the products in order to enable HP technical support personnel to perform their related duties. 6) Maintain current updated master sets of all software for the product including all programs and documentation. 7) Inform HP of any changes or updates to software or documentation. 8) Provide reports on a quarterly basis to HP on product problems communicated to JetFax from HP as outlined below. REPORTS AND TECHNICAL NOTES --------------------------- JetFax technical support will make every reasonable effort to provide a series of monthly reports to HP technical support consisting of: - JetFax cases logged for HP requests for the month - JetFax software bugs reported by JetFax technical support for HP - Monthly volumes of call received by JetFax technical support for HP requests - Technical notes related to HP product issues - Release notes for products to be distributed by HP - Any incidents of HP customers who have called JetFax technical support directly II. HARDWARE TRAINING AND SUPPORT 1. [*] 2. For HP's convenience, the design of the [*] will be done on HP's design systems and source documentation will reside on those systems throughout product life. Much of HP's manufacturing tooling and programming is based on automated outputs from HP's design systems. JetFax agrees to cooperate with HP in developing methods to make the transition of the design from JetFax's design systems to HP's systems fast and reliable. 3/27/97 Hewlett-Packard Company Confidential Page 3 JetFax/HP Contract Exhibit C - Training and Support [*] = CONFIDENTIAL TREATMENT REQUESTED 3. [*] 4. Suppliers for all components will be subject to HP's standard supplier review and evaluation process. JetFax agrees to cooperate with HP in the supplier evaluation process. 5. At the end of HP's [*] production process, HP will perform extensive electrical tests (production tests) on each [*] manufactured. HP will create the test architecture and test code capable of diagnosing failures to the level of design detail available to HP. JetFax will supply test code sufficient for HP to diagnose failures of any parts of the [*] which are proprietary to JetFax including all of the proprietary ASICS. JetFax test code will, where possible, conform to specifications on the test interface provided by HP so that it can be easily integrated into the production test. In the event that HP requests action from JetFax to diagnose failures of [*], HP will supply JetFax with any diagnostic information generated by the production tests on those [*]. 6. At a separate location from [*] manufacture, HP will install the [*] in a printer and may test operation of the printer (integration test). Software for the integration test will be provided by HP but may incorporate any portions of the production test software, or other JetFaxtest utilities. 7. [*] 8. [*] 9. HP and JetFax agree to establish an escalation process throughout the production life of the [*] to resolve technical problems at three levels as follows: Level 1: -------- HP will designate a product engineer who will be responsible for initial troubleshooting of all technical problems both in the factory and in the field. This engineer will have access to all technical information and documentation on the [*] which is not proprietary to JetFax. JetFax will designate a design engineer, knowledgeable on this product, who will be available to the HP product engineer for non-emergency consultation about the formatter design during business hours. JetFax and HP's contacts will have phones with message capability which will be checked at least daily, Level 2: -------- In the event of an actionable problem under 8. above, escalation will be via the contact established for Level 1. 3/27/97 Hewlett-Packard Company Confidential Page 4 JetFax/HP Contract Exhibit C - Training and Support Level 3: --------- Events actionable under 7. above will be treated as production hold emergencies. JetFax will provide a method for HP to contact a knowledgeable engineer for consultation by phone within one hour at any time. In the event that the problem cannot be resolved by electronic communication within 24 hours, JetFax will provide an engineer physically present in Boise within an additional 24 hours to join with the HP product engineer in troubleshooting the problem to root cause and restoring production. 10. JetFax agrees that all information and software including design specifications and source code required to perform the testing and troubleshooting described above is included in the documentation held in escrow. 11. Technical training on the JetFax design will be provided by JetFax, at times jointly agreed upon by HP and JetFax. 3/27/97 Hewlett-Packard Company Confidential Page 5 EXHIBIT D ESCROW AGREEMENT ESCROW AGREEMENT ---------------- FOR SOURCE CODE AND MANUFACTURING MATERIALS ------------------------------------------- ACCOUNT NUMBER:____________________ This Escrow Agreement is entered into by and among Data Securities International, Inc., ("DSI"), a Delaware corporation with offices at 49 Stevenson Street, Suite 550, San Francisco, CA 94105;_________________ ("Licensor"), a _______________ corporation with offices at __________________________________________; and Hewlett-Packard Company ("HP"), a California corporation with principal offices at 3000 Hanover Street, Palo Alto, CA 94304 ("HP"). RECITALS This Agreement is effective as of _______________. This Agreement is entered into in furtherance of the provisions and objectives of that certain Master Development, Purchase and Distribution License Agreement, effective January 31, 1997, between HP and Licensor ("Master Agreement"). For valuable consideration, the parties agree as follows: 1 DEPOSITS =========== Licensor shall deposit with DSI those materials specified in Exhibit A ("Deposit"). Licensor shall keep the Deposit at the current revision level on a semi-annual basis commencing with the effective date of this Agreement. In addition, Licensor shall update the Deposit at any time during the term or any renewal term of this Agreement that Licensor issues a new version or release of the Deposit or otherwise makes revisions to its manufacturing process requiring changes to the Deposit. Licensor also agrees to comply with DSI's reasonable requests for the deposit or replacement of Deposit materials likely to physically degrade. 2 RETENTION OF REPLACED DEPOSIT ================================ DSI will destroy any replaced Deposit unless HP instructs DSI to retain it within twenty days of notice from DSI of such replacement. Retention of the replaced Deposit may incur an additional fee, as specified in DSI's fee schedule. 3 VERIFICATION AND DELIVERY ============================ The Deposit shall be packaged for storage as reasonably instructed by DSI and accompanied by a cover sheet identifying the contents as indicated in Exhibit A. Risk of loss or damage during shipment of the Deposit shall rest with the party sending it. HP shall have the right to verify each Deposit before shipment. Licensor shall give HP fifteen days advance written 1. notice and opportunity to inspect, compile or otherwise reasonably assure itself of the contents of the Deposit to be shipped. HP may authorize DSI to act in its place. Licensor hereby grants HP or DSI, free of charge, the right to supervised use of the facilities of Licensor, including its computer systems, to verify the Deposit. Licensor shall make available technical support personnel as necessary to verify the deposit. 4 STORAGE OF DEPOSIT ===================== DSI shall safekeep the Deposit in a security vault and exercise the same high standard of care to protect the Deposit which DSI would use to protect items of this nature which DSI might own, but in no event less than that standard of care customary in the industry. 5 USE AND NONDISCLOSURE ======================== Except as provided in this Agreement, DSI shall not disclose or make any use whatsoever of the Deposit, nor shall DSI disclose or make use of any information provided to DSI by Licensor or HP in connection with this Agreement without the prior written consent of Licensor or HP, respectively. These obligations shall continue indefinitely notwithstanding termination of this Agreement. 6 RECORDS AND AUDIT RIGHTS =========================== DSI shall keep complete written records of the activities undertaken and materials prepared pursuant to this Agreement. Upon reasonable notice to DSI during the term of this Agreement, Licensor and HP shall be entitled to inspect and request the records of DSI with respect to this Agreement at reasonable times during normal business hours at DSI's facilities and to inspect the Deposit required then to be held by DSI. 7 RELEASE OF DEPOSIT ===================== If HP notifies DSI of the occurrence of a release condition as defined in Exhibit B, DSI shall immediately notify Licensor and provide Licensor with a copy of the notice from HP. Licensor shall have twenty (20) days from the date Licensor receives the notice from DSI, to in return notify DSI that Licensor (1) disputes HP's claim that a release condition has occurred or (2) has cured the condition that might have triggered such release. Failing such timely notice, DSI shall release a copy of the Deposit to HP. However, if DSI receives timely notice from Licensor, DSI shall not release a copy of the Deposit but shall instead institute the Dispute Resolution Process below within 5 business days of such timely notice from Licensor. 8 DISPUTE RESOLUTION PROCESS ============================= DSI shall first notify Licensor and HP in writing of contrary instructions from HP and Licensor for release of the Deposit. Within five business days after the date the notice is sent by DSI, three referees shall be appointed, one each by Licensor, HP and DSI. Each party shall notify the others of its referee's identify within the five day period or forfeit its right to appoint one. 2. On the tenth business day after the dispute notice from DSI, the referees shall meet at the San Francisco offices of DSI located at 49 Stevenson Street, Suite 550, San Francisco, CA 94105 and shall hear testimony and other evidence that Licensor and HP may wish to present with respect to the dispute. The meetings shall proceed with whatever number of duly appointed referees attend the meetings, and shall be conducted from 8:30am to 5:30pm on no more than five consecutive business days, national holidays excluded. HP shall present up to two days of evidence followed by up to two days of presentation from Licensor, followed by a final day reserved for rebuttal by each party in the morning and afternoon, respectively. Licensor, HP and DSI agree that the evidence and results of the hearings shall not be disclosed to third parties. Within two business days after the close of the presentations, the referees shall resolve the dispute by majority vote. Any refusal to vote shall be deemed an abstention by that referee. In the event of a tie, the Deposit shall not be released. This dispute resolution process shall be the exclusive means for resolving disputes to which it applies, and the decision of the referees shall be final, conclusive and enforceable by a court of competent jurisdiction. All costs of the referees shall be borne by the unsuccessful party. 9 JOINT RELEASE ================ HP and Licensor may, by joint written instruction to DSI, authorize the delivery of the Deposit or a copy of it to the party named in the instruction. 10 RIGHTS IN DEPOSIT ===================== Rights in the Deposit are stated in Exhibit C. 11 TERM AND TERMINATION ======================== This agreement shall have an initial term of one year, renewable upon receipt by DSI of the specified renewal fee. If DSI does not receive the renewal fee by the anniversary date, DSI shall give notice to Licensor and HP. If the fee is not received from Licensor or HP within thirty days of such notice, this Agreement shall expire. Upon expiration of this Agreement, DSI will, at Licensor's option, either destroy or return the Deposit to Licensor. All obligations of DSI under this Agreement shall terminate thereafter, except for those stated in the Use and Nondisclosure Section of this Agreement. 12 FEES ============ All fees shall be invoiced to and due from HP, in full upon receipt of DSI's invoice. Fees shall be those specified in DSI's schedule of fees in effect for the initial term of this Agreement plus taxes. To be effective, DSI must notify Licensor and HP at least ninety days prior to expiration of the initial term (or any renewal term) of this Agreement of any scheduled increase for the succeeding renewal term. 3. 13 ACCOUNT REPRESENTATIVE =========================== Licensor, HP and DSI shall each designate an authorized individual(s) to receive notices and otherwise act on behalf of Licensor in connection with this Agreement, as set forth in Exhibit D. Representatives may be changed by written notice to the other parties. 14 NOTICES =========== All notices in connection with this Agreement shall be in writing addressed to the Account Representatives, shall be sent by certified mail, return receipt requested, and shall be effective forty-eight hours after deposit with the U.S. Postal Service. 15 AUTHENTICITY ================ DSI may act in reliance upon any instruction, instrument or signature believed to be genuine and may assume that it has been duly authorized. 16 HOLD HARMLESS ================= Licensor will hold DSI harmless against any action regarding the release or refusal to release a copy of the Deposit by DSI so long as DSI has acted in good faith and in accordance with this Agreement. 17 GOVERNING LAW =================== This Agreement shall be governed by and construed in accordance with the laws of the State of California. 18 MERGER ============ The Master Agreement and this Agreement, including the Exhibits, constitutes the entire agreement between the parties concerning the subject matter and shall supersede all previous communications, representations, understandings, and agreements, either oral or written, between the parties. 19 SEVERABILITY ================ If any provision of this Agreement is held by any court to be invalid or unenforceable, then that provision will be severed from this Agreement and the remaining provisions shall continue in force. 20 ASSIGNMENT ============== No party may assign any rights or obligations of this Agreement without the prior written consent of the others and any attempt to do so shall be deemed void. 21 WAIVER ========== Waivers of any right under this Agreement shall only be effective if in writing signed by the party possessing the right. 4. 22 EXHIBITS ============ The following Exhibits are made a part of this Agreement by this reference: Exhibit A: Deposit Exhibit B: Release Conditions Exhibit C: Rights in Deposit Exhibit D: Account Representatives Approved and agreed to: ======================= DSI, Inc. LICENSOR (________________) By: ___________________________ By:_____________________________ ___________________________ _____________________________ (Print Name) (Print Name) Title: _________________________ Title:__________________________ HEWLETT-PACKARD COMPANY By:______________________________ ______________________________ (Print Name) Title:___________________________ 5. [*] = CONFIDENTIAL TREATMENT REQUESTED EXHIBIT E TRADEMARKS, BRAND NAMING, SPLASH SCREENS / LOGOS, ICONS, UI GUIDELINES 1. JETFAX TRADEMARKS JetFax/TM/ JetSuite(R) [*] 2. HP TRADEMARKS Hewlett-Packard/TM/ [*] [*] [*] picture of Hewlett Packard logo 3. BRAND NAME AND VERSION NAMING The product name for JetFax developed PC software for the HP Product will include the key word "for" such that any branding which is apparent in the product will read [*] for Hewlett-Packard. The following version naming shall be used for the different planned releases of the [*] for Hewlett-Packard. The JetFax Product naming is only for reference and does not, in anyway, obligate JetFax to use such version naming. However, JetFax will not be allowed to use the same version names for their own products as those listed for the HP versions of the product.
Win 3.x, Win '95 NT 4.0 Win '97 NT 5.0 --------------------------------------------------------------------------------- JetFax Product [*] [*] [*] [*] HP Splash Screen [*] [*] [*] [*] HP "About" JetSuite [*] [*] [*] [*] HP documentation, CD ROM jackets, [*] [*] [*] [*] disk labels ---------------------------------------------------------------------------------
These naming conventions for HP versions will be referenced where applicable within the application (including but not limited to the "About JetSuite" dialog box). Additionally, HP will use this naming structure, where appropriate, in product manuals, on diskette and/or CD ROM packaging and labels, and on promotional pieces. JetFax reserves the right to maintain a parallel version mechanism where not readily visible to users and where necessary to permit proper operation of version-checking program operation. An example would be in records within a file to allow the Viewer to distinguish between *.RCH versions, or in *.DLL files to distinguish software capabilities implemented. 4. SPLASH SCREENS/LOGOS JetFax and HP agree that the same product splash screen design shall be displayed for the all instances in which the splash screen is to be displayed. Those instances are limited to: 1) launch of the main [*] for Hewlett-Packard desktop application, 2) launch of the [*] mini-viewer, 3) installation of the [*] software for the HP Product, 4) on-line Getting Started Guide (if developed for the HP Product), 5) launch into the on-line Help system. All other instances in which the splash screen is to be displayed, must be clearly specified and mutually agreed to by both JetFax and HP prior to any such implementation. 3/27/97 Hewlett-Packard Company Confidential Page 1 JetFax/HP Contract Exhibit E - Trademarks [*] = CONFIDENTIAL TREATMENT REQUESTED In all cases, the splash screen shall not exceed a screen size which is the same as the MS Word 6.0 splash screen. The relative size of the JETSUITE name to the PICTURE OF THE HEWLETT PACKARD LOGO brand will retain an approximate ratio of 1:1. The splash screen shall remain visible for as long as it takes to load the [*] desktop application, the [*] mini-viewer, the beginning installation welcome screen, or the on-line Getting Started Guide, but not to exceed five (5) seconds in any case, and on any platform which is a 486 33mhz processor or faster. HP and JetFax agree to allow HP the opportunity to work with graphic designers of HP's choice in order to arrive at the final splash screen and logo design which is mutually agreeable to both parties. That agreement will include agreement on color scheme, font types, font sizes, and the graphic design. This design, once agreed upon, and the overall look and feel of this design, will remain exclusive to HP and the [*] for Hewlett-Packard software product. As a starting point for discussion of final graphic design, Appendix E1 contains an initial proposal for a design for the splash screen. It is non- binding for either JetFax or HP, but is used as a physical reference for discussion. 5. ICONS Icons shall exist for several of the functions of the HP Product. [*] shall use some standard FUNCTION ICON designs for the Fax, Copy, Print, Scan functions within the desktop function of [*]. The TITLE BAR ICON is found in the upper left corner of the title bar for [*] for Hewlett-Packard when the application, and any of its associated UI dialogs, is active. The design of the FUNCTION ICON and the TITLE BAR ICON icons shall be largely determined by JetFax with approval by HP for the final designs. The DESKTOP ICON is that icon which: 1) is found in the upper left corner of the title bar for JetSuite Pro for Hewlett-Packard when the application, and any of its associated UI dialogs, is active, 12) is the resulting icon on the Windows desktop or tray icon bar once the [*] for Hewlett-Packard has been minimized, and 23) is the icon associated with shortcuts and Windows Explorer program type list of the [*] for Hewlett-Packard. The HP PRODUCT SETUP ICON is that icon which, if this functionality is created for the HP Product 1) is found in the upper left corner of the title bar for the Setup Program associated with [*] for Hewlett-Packard when the setup program, and any of its associated UI dialogs, is active, 2) is the resulting icon on the Windows desktop or tray icon bar once the Setup Program of [*] for Hewlett-Packard has been minimized, and 3) is the icon associated with shortcuts and Windows Explorer program type list of the Setup Program of the [*] for Hewlett-Packard. HP and JetFax agree to allow HP the opportunity to work with graphic designers of HP's choice in order to arrive at the final designs for DESKTOP ICON and HP PRODUCT SETUP ICONS. These designs are to be mutually agreeable to both parties. That agreement will include agreement on color scheme, font types, font sizes, and the graphic design. This design, once agreed upon, and the overall look and feel of this design, will remain exclusive to HP and the [*] for Hewlett-Packard software product. As a starting point for discussion of final graphic design, Appendix E2 contains an initial proposal for designs for the PROGRAM ICON. It is non- binding for either JetFax or HP, but is used as a physical reference for discussion. 3/18/97 Hewlett-Packard Company Confidential Page 2 JetFax/HP Contract Exhibit E - Trademarks [*] = CONFIDENTIAL TREATMENT REQUESTED 6. USER INTERFACE GUIDELINES For consistency, the following guidelines will be applied to the user interfaces associated with [*] for Hewlett-Packard. These include but are not limited to: 1) the appropriate Program Icon or Setup Icon in the upper left corner of the active UI screen, 2) the name [*] (approximately 10 point font), and nothing more, in the title bar for the main desktop program screen for the [*] for Hewlett-Packard, 3) the name HP PRODUCT (approximately 10 point font) preceding the associated function name, in the title bar for all applet dialog boxes which result from activating that function, and whose main function is to interface with the HP Product function. As an example, Fax Option menu, the resulting applet UI title bar would display HP Product - - Fax Option. Color schemes for background of the desktop, wallpaper design, font sizes, and UI dialog designs are specified as much as possible in the HP Product Technical Specification. Absent of this, all other UI guidelines and decisions for the [*] for Hewlett-Packard product will be mutually agreed upon by the JetFax and HP product development and marketing teams. 3/18/97 Hewlett-Packard Company Confidential Page 3 JetFax/HP Contract Exhibit E - Trademarks APPENDIX E1 PROPOSAL OF INITIAL SPLASH SCREEN DESIGN 3/18/97 Hewlett-Packard Company Confidential Page 4 JetFax/HP Contract Exhibit E - Trademarks [*] = CONFIDENTIAL TREATMENT REQUESTED [*] SCREEN WITH HEWLETT PACKARD LOGO AND NEW PRODUCT NAME AND LOGO 3/18/97 Hewlett-Packard Company Confidential JetFax/HP Contract Exhibit E - Trademarks APPENDIX E2 PROPOSAL OF INITIAL PROGRAM ICON DESIGN 3/18/97 Hewlett-Packard Company Confidential Page 5 JetFax/HP Contract Exhibit E - Trademarks [*] = CONFIDENTIAL TREATMENT REQUESTED [*] proposed icon designs for new product 3/18/97 Hewlett-Packard Company Confidential EXHIBIT F HP SOFTWARE LICENSE TERMS ATTENTION: USE OF THE SOFTWARE IS SUBJECT TO THE HP SOFTWARE LICENSE TERMS SET FORTH BELOW. USING THE SOFTWARE INDICATES YOUR ACCEPTANCE OF THESE LICENSE TERMS. IF YOU DO NOT ACCEPT THESE LICENSE TERMS, YOU MAY RETURN THE SOFTWARE FOR A FULL REFUND. IF THE SOFTWARE IS BUNDLED WITH ANOTHER PRODUCT, YOU MAY RETURN THE ENTIRE UNUSED PRODUCT FOR A FULL REFUND. HP SOFTWARE LICENSE TERMS The following License Terms govern your use of the accompanying Software unless you have a separate signed agreement with HP. License Grant. HP grants you a license to Use one copy of the Software. "Use" means storing, loading, installing, executing or displaying the Software. You may not modify the Software or disable any licensing or control features of the Software. If the Software is licensed for "concurrent use", you may not allow more than the maximum number of authorized users to Use the Software concurrently. Ownership. The Software is owned and copyrighted by HP or its third party suppliers. Your license confers no title to, or ownership in, the Software and is not a sale of any rights in the Software. HP's third party suppliers may protect their rights in the event of any violation of these License Terms. Copies and Adaptations. You may only make copies or adaptations of the Software for archival purposes or when copying or adaptation is an essential step in the authorized Use of the Software. You must reproduce all copyright notices in the original Software on all copies or adaptations. You may not copy the Software onto any public network. No Disassembly or Decryption. You may not disassemble or decompile the Software unless HP's prior written consent is obtained. In some jurisdictions, HP's consent may not be required for limited disassembly or decompilation. Upon request, you will provide HP with reasonably detailed information regarding any disassembly or decompilation. You may not decrypt the Software unless decryption is a necessary part of the operation of the Software. Transfer. Your license will automatically terminate upon any transfer of the Software. Upon transfer, you must deliver the Software, including any copies and related documentation, to the transferee. The transferee must accept these License Terms as a condition to the transfer. Termination. HP may terminate your license upon notice for failure to comply with any of these License Terms. Upon termination, you must immediately destroy the Software, together with all copies, adaptations and merged portions in any form. Export Requirements. You may not export or re-export the Software or any copy or adaptation in violation of any applicable laws or regulations. U.S. Government Restricted Rights. The Software and any accompanying documentation have been developed entirely at private expense. They are delivered and licensed as "commercial computer software" as defined in DFARS 252.227-7013 (Oct 1988), DFARS 252.211-7015 (May 1991) or DFARS 252.227-7014 (Jun 1995), as a "commercial item" as defined in FAR 2.101(a), or as "Restricted computer software" as defined in FAR 52.227-19 (Jun 1987)(or any equivalent agency regulation or contract clause), whichever is applicable. You have only those rights provided for such Software and any accompanying documentation by the applicable FAR or DFARS clause or the HP standard software agreement for the product involved. Last Updated On: 19 Aug 96 http://hpweb.corp.hp.com/Publish/legal/terms.htm (C) Copyright 1996 Hewlett-Packard Company 1. No Third Party Warranty. NEITHER HP NOR ANY OF ITS REPRESENTATIVES MAKES OR PASSES ON TO YOU OR OTHER THIRD PARTY, ANY WARRANTY OR REPRESENTATION ON BEHALF OF HP'S THIRD PARTY SUPPLIERS. Third Party Beneficiary. You are hereby notified that JetFax, Inc., a California corporation located at 1376 Willow Road, Menlo Park, California 94025 ("JetFax") is a third party beneficiary to this agreement to the extent that this agreement contains provisions which relate to your use of JetFax supplied software. Such provisions are made expressly for the benefit of JetFax and are enforceable by JetFax in addition to HP.