<PAGE>   1
                             CONFIDENTIAL TREATMENT

*****[Omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission]





                                                                    Exhibit 10.7


                            MASTER LICENSE AGREEMENT


          THIS AGREEMENT is dated 16 January 1996, between EATON CORPORATION, a
corporation organized and existing under the laws of the State of Ohio, United
States of America, and having its principal place of business at Eaton Center,
1111 Superior Avenue, Cleveland, Ohio 44114, United States of America
(hereinafter called "EATON") and SUMITOMO EATON NOVA KABUSHIKI KAISHA (SUMITOMO
EATON NOVA CORPORATION), a corporation organized and existing under the laws of
Japan and having its principal place of business at 13-16, Mita 3 Chome,
Minato-ku, Tokyo 108, Japan, (hereinafter called "SEN").

                                  WITNESSETH:

          WHEREAS, EATON manufactures certain Products (as hereinafter defined)
in the United States of America under various patents and patent applications
and sells such Products throughout the world;

          WHEREAS, EATON has developed, through substantial research and
development and many years of successful manufacture of such Products, valuable
and confidential technical information, know-how and data relating to the
design, manufacture and assembly of the Products;

          WHEREAS, SEN is a joint venture company organized by EATON and
SUMITOMO HEAVY INDUSTRIES, LTD., a company organized and existing under the laws
of Japan and having its principal place of business at 9-11, 5 Chome,
Kitashinagawa, Shinagawa-ku, Tokyo 141, Japan (hereinafter called "SUMITOMO"),
for the purpose of manufacturing, using and selling the Products in the
Territory (as hereinafter defined); and

          WHEREAS, SEN has manufactured and sold certain of the Products under
License Agreements dated April 1, 1983 and February 24, 1989 including
applicable amendments, which agreements shall terminate as of the effective date
of this Agreement; and

          WHEREAS, SEN desires to acquire from EATON, and EATON is willing to
grant to SEN, a license to manufacture, use and sell the Products in the
Territory under EATON's applicable patents and patent applications and through
the use of EATON's Technical Information (as hereinafter defined);

          NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:


                                      -1-


<PAGE>   2


I.        DEFINITIONS:

          1.01 "Affiliated Company" as used herein shall mean any corporation or
          other legal entity in which EATON, SUMITOMO or a Related Company (as
          defined later in this Article I) of either owns less than the majority
          of the outstanding voting stock.

          1.02 "Related Company" as used herein shall mean any corporation or
          other legal entity (a) which owns, directly or indirectly, the
          majority of the outstanding voting stock of a party hereto, (b) the
          majority of the outstanding voting stock of which is owned by a party
          hereto, or (c) the majority of the outstanding voting stock of which
          is owned, directly or indirectly, by any corporation or other legal
          entity described in clauses (a) and (b) of this sentence.

          1.03 "Effective Date" as used herein shall mean 1 October 1995.

          1.04 "Territory" as used herein shall mean Japan.

          1.05 "Net Sales" as used herein shall mean the aggregate sums invoiced
          by SEN for any and all sales of Products, less:

                (a) actual returns, applicable discounts, sales commissions,
                freight allowances, packing and crating costs, insurance
                costs, and local sales or turnover taxes, if any, relating
                to individual Product sales and separately stated in
                SEN's invoices to its customers or otherwise documented to
                EATON's satisfaction: and

                (b) the FOB factory invoiced amounts charged to SEN for the
                Products purchased by SEN from the Semiconductor Equipment
                Operations of Eaton Corporation.

          1.06 "Patents" as used herein shall mean (a) patent applications which
          EATON has filed or will hereafter file in the Territory relating to
          the Products, and (b) patents in the Territory which hereafter issue
          on such patent applications, and (c) patents relating to the Products
          to which EATON acquires the right to grant licenses during the term of
          this Agreement.

          1.07 "Products" as used herein shall mean the ion implantation systems
          defined in Appendix A attached hereto as part of this Agreement,
          including software, components and parts therefor. Other Products may
          be added to Appendix A upon agreement of the parties as to their
          inclusion and applicable royalty schedule.

          1.08 "Technical Information" as used herein shall mean confidential
          and secret technical information, know-how, engineering drawings,
          data, processes, bills of materials, detailed drawings and
          specifications, descriptions of assembly and manufacturing procedures,
          computerized production control systems, software and related source
          code, quality and inspection standards, drawings of jigs and fixtures,
          sales


                                       -2-


<PAGE>   3
                             CONFIDENTIAL TREATMENT

*****[Omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission]





          literature and reports relating to the design, assembly and
          manufacture of the Products owned or to be owned by EATON and which
          EATON has the right to furnish to SEN during the term of this
          Agreement.

          1.09 "Existing Technical Information" as used herein shall mean the
          Technical Information which EATON has developed or acquired (whether
          pursuant to a license agreement or otherwise) and has owned for at
          least twelve (12) months prior to the effective date of this
          Agreement.

          1.10 "Future Technical Information" as used herein shall mean the
          Technical Information which EATON (a) has developed or acquired
          (whether pursuant to a license agreement or otherwise) during the
          twelve (12) month period immediately preceding the effective date of
          this Agreement or (b) develops, or acquires (whether pursuant to a
          license agreement or otherwise), and under which EATON is entitled to
          grant licenses during the term of this Agreement.

II.       GRANT

          EATON hereby grants to SEN the following license, subject to the
          terms and conditions set forth hereinafter:

                (a) An exclusive license to utilize the Existing and Future
                Technical Information, and an exclusive license under the
                Patents to manufacture, use and sell the Products in the
                Territory; and

                (b) A non-exclusive license to sell the Products outside the
                Territory, provided such sales are made pursuant to the terms
                of the Export Sales Agreement as entered into between SEN and
                EATON on 16 January 1996.

III.      PAYMENTS:

          In consideration of the license rights granted under Section II above,
          SEN shall pay to EATON the following percentage royalties based on Net
          Sales:

                (a) For Products designated as High Current Products in Appendix
                A, [*] from the Effective Date of this Agreement until March 31,
                1998 and [*] thereafter;

                (b) For Products designated as Medium Current Products in
                Appendix A, [*] from the Effective Date of this Agreement until
                February 28, 1999 and [*] thereafter; and

                (c) For Products designated as High Energy Products in Appendix
                A, [*] from the Effective Date of this Agreement until March 31,
                1998 and [*] thereafter.


                                       -3-


<PAGE>   4



IV.       TIME AND METHOD OF PAYMENT:

          4.01 The royalty payments to be paid to EATON pursuant to Section III
          above shall be paid within thirty (30) days after the close of each
          calendar semi-annual period ending on the last day of September and
          March, respectively, of each year during the term of this Agreement,
          including any extensions thereof.


          4.02 All amounts to be paid to EATON under Section III above, unless
          EATON shall have previously otherwise notified SEN in writing, shall
          be payable in U.S. Dollars converted from Japanese Yen at the lawful
          exchange rate of an authorized foreign exchange bank in Japan
          favorable to EATON, prevailing on the date when payment of such
          amounts is made. Payments shall be made by telegraphic transfer to
          EATON's account at Chase Manhattan Bank, One Chase Manhattan Plaza,
          New York, New York 10081, U.S.A., Account Number 910-1-419894. Upon
          termination of this Agreement for any reason whatsoever, any unpaid
          royalty payments shall become immediately due and payable to EATON.


V.        RECORD KEEPING AND REPORTS:

          5.01 SEN shall keep complete and accurate records and books relating
          to the manufacture, use and sale of the Products. EATON, through its
          representatives and employees, shall have the right to inspect and
          audit such records and books for the purpose of determining the
          sufficiency and accuracy thereof and the correctness of any payments
          made hereunder.

          5.02 Each sale of Products shall be deemed made when invoiced to the
          customer. Accompanying each semi-annual royalty payment due under
          Section III hereof, SEN shall furnish to EATON a statement in writing
          showing in reasonable detail the following information:

                (a) Net Sales, including quantity, description and price of
                all Products invoiced to customers during the preceding
                semi-annual period;

                (b) A computation of the gross amount of the semi-annual
                royalty payment due EATON;

                (c) Taxes levied in the Territory with respect to each such
                payment;

                (d) A computation of the net amount to be paid to EATON; and

                (e) Every schedule of any prices established by SEN for the
                sale of the Products, including any and all amendments,
                changes or supplements to such schedules.

VI.       TAXES:

          SEN shall be entitled to withhold any taxes required by Japanese law
to be withheld from payments made to EATON hereunder and shall promptly remit
such taxes to the Japanese Government on behalf of EATON. SEN shall promptly
furnish to EATON a tax withholding



                                       -4-
<PAGE>   5

receipt acknowledging the payment of any such withholding tax when such receipt
is received by SEN from the Japanese Government.

VII.      DISCLOSURE OF EXISTING TECHNICAL INFORMATION:

          7.01 Within thirty (30) days after the signing of this Agreement,
          EATON shall begin to disclose and supply to SEN all Existing Technical
          Information which is not already in SEN's possession. However,
          notwithstanding anything in the preceding sentence to the contrary,
          in no event shall EATON furnish any Existing Technical Information to
          SEN on or after the date of any notice of termination of this
          Agreement. All Existing Technical Information to be supplied under the
          terms of this Agreement shall be in the language and the system of
          measures commonly used by EATON or its Affiliated or Related Company
          supplying the Existing Technical Information.

          7.02 The Existing and Future Technical Information to be furnished by
          EATON hereunder is confidential and secret, and title to all such
          Technical Information shall remain vested in EATON. SEN shall preserve
          and protect the confidential nature of the Technical Information and
          shall not disclose the Technical Information to any parties outside
          SEN's organization without the written consent of EATON except
          suppliers, subcontractors and customers to the extent necessary to
          enable SEN to manufacture, use and sell the Products in accordance
          with the licenses granted to SEN hereunder. Any and all drawings,
          blueprints, specifications and other written materials produced by or
          at the request or direction of SEN disclosing Technical Information to
          any such party shall be marked with the following language in the
          English and/or Japanese languages:

          Notice to persons receiving this information:

          The technical information disclosed herein is the confidential
          property of Eaton Corporation, Cleveland, Ohio, U.S.A., and is issued
          in confidence for engineering information only. It may not be
          reproduced or used in any way without an express written license from
          Eaton Corporation.

          7.03 The disclosures permitted under Paragraph 7.02 above shall not
          relieve SEN of its obligation to maintain the confidentiality of the
          Technical Information, and SEN shall be liable for any unauthorized
          disclosure by it or by those to whom SEN has made any disclosure.

          7.04 During the term of this Agreement, EATON shall not convey any of
          the Technical Information to any party in the Territory other than SEN
          and shall not use the Technical Information in the manufacture of the
          Products in the Territory.



                                       -5-


<PAGE>   6

VIII.     TECHNICAL ASSISTANCE:

          8.01 During an initial period after the Effective Date of this
          Agreement and from time to time thereafter, EATON shall furnish, upon
          the written request of SEN, the services of qualified engineers or
          technicians of EATON, its Affiliated or Related Companies to assist
          SEN for reasonable periods of time in acquiring knowledge and training
          relating to the Technical Information and the design, manufacture,
          assembly and marketing of the Products. The final decision as to the
          availability of such EATON personnel shall be made exclusively by
          EATON, and EATON shall exercise every reasonable effort to furnish
          such personnel for the period requested by SEN insofar as such request
          does not interfere with the activities of EATON, its Affiliated or
          Related Companies.

          8.02 EATON shall permit SEN's employees to make a reasonable number of
          routine visits to certain facilities of EATON, its Affiliated or
          Related Companies that manufacture the Products to enable SEN to gain
          knowledge with respect to the manufacture of the Products. EATON and
          SEN shall agree upon the number of SEN's employees to make such visits
          prior to any such visit. Any and all expenses, including salaries, of
          SEN's personnel making such visits shall be paid solely by SEN.

IX.       PARTS AND COMPONENTS:

          It is the intention of the parties that the Products, parts and
components to be sold by SEN under the licenses granted herein will be
manufactured and/or purchased by SEN using the most economical sources available
to SEN, and the parties understand that due to economies of scale and/or
currency relationships EATON may be such most economical source at any given
time during the term of this Agreement. Accordingly, Eaton shall, to the best of
its ability and capacity, sell and supply to SEN Products, parts and components
when requested by SEN. The price to SEN for such Products, parts and components
shall be mutually agreed upon by the parties.

X.        PURCHASE OF PRODUCTS BY EATON FROM SEN:

          SEN shall, to the best of its ability and capacity, sell and supply
Products, parts and components to EATON and its Affiliated or Related Company
when requested by Eaton. The price to Eaton or any such Affiliated or Related
Company for such Products, parts and components shall be mutually agreed upon by
the parties. Purchases from SEN under this section shall be paid for in the
currency specified by SEN.

XI.       MODIFICATIONS OF PRODUCTS:

          11.01 It is the intention of the parties that the Products to be
          manufactured by SEN under this Agreement shall meet the needs of the
          worldwide markets addressed by EATON and SEN, thus such products shall
          conform to EATON's basic designs and specifications for the Products
          and shall be of substantially the same quality and serviceability as
          the Products manufactured by EATON.


                                       -6-
<PAGE>   7

          11.02 Any modifications to the Products which SEN deems to be required
          to further conform them to the Japanese market and/or to satisfy
          special customer needs may be made by SEN without prior approval by
          EATON, provided however, that such modifications are consistent with
          and conform to Eaton's specifications. SEN shall within two (2) weeks
          after releasing such modifications to production provide EATON with
          details of such modifications in the English language sufficient for
          EATON to verify their consistency with and conformity to Eaton's
          specifications.

          11.03 Any modifications to the Products which SEN deems to be required
          and which are not consistent with and in conformity with the
          specifications shall be reviewed by appropriate representatives of
          EATON and SEN to determine if they are to be made. If the parties
          agree that such modifications are to be made, EATON shall at its sole
          discretion either carry out such modifications itself, or shall
          subcontract such modifications to SEN under terms and conditions to be
          agreed upon by the parties.

XII.      DISCLOSURE OF FUTURE TECHNICAL INFORMATION:

          12.01 During the term of this Agreement, EATON shall, at its sole
          expense, fully disclose to SEN any Future Technical Information and
          Patents in the Territory resulting from such Future Technical
          Information which are developed by EATON or any of its Affiliated and
          Related Companies if EATON then owns and has the right to furnish SEN
          such Future Technical Information. Effective as of a date twelve (12)
          months after EATON's acquisition of such Future Technical Information,
          the exclusive license granted under Section II hereof shall be deemed
          to apply to such Future Technical Information.

          12.02 During the term of this Agreement, SEN shall, at its sole
          expense, fully disclose in the English language to EATON all Technical
          Information improvements and modifications, and patents in the
          Territory resulting from such improvements and modifications, which
          are developed by SEN relating to the Products, SEN hereby grants to
          EATON and its Affiliated and Related Companies during the term of this
          Agreement, a non-exclusive, royalty-free license to manufacture, have
          manufactured, use and sell the Products in any country of the world
          outside the Territory utilizing such Technical Information
          improvements and modifications developed by SEN, subject to SEN's
          exclusive right to use such improvements and modifications in the
          Territory. If any such Technical Information improvements and
          modifications developed by SEN during the term of this Agreement
          constitute patentable subject matter, SEN shall have the right, at its
          sole expense, to file patent applications and obtain patents therefor
          in its own name in any country of its choice; provided, however, that
          SEN, at its sole expense, shall furnish to EATON a copy of each such
          patent application immediately after filing such application. All such
          applications and patents resulting therefrom on Technical Information
          modifications and improvements of SEN shall be the property of SEN.
          SEN hereby grants to EATON, during the term of this Agreement, a
          non-exclusive, royalty-free license with the right to grant
          sublicenses to manufacture, have manufactured, use


                                       -7-
<PAGE>   8

          and sell the Products under such applications and patents resulting
          therefrom in all countries of the world outside the Territory.

          12.03 During the term of this Agreement, EATON shall have the right at
          its sole expense, to file patent applications in its own name in any
          country of the world in which SEN does not file such applications with
          respect to any and all Technical Information improvements and
          modifications developed by SEN relating to the Products. SEN shall,
          upon the request of EATON, and without any cost to EATON, promptly
          execute and procure the execution of any and all documents necessary
          or desirable to enable EATON to file such applications in countries in
          which SEN does not file such applications. EATON hereby grants to SEN
          (a) an exclusive, royalty-free license in the Territory during the
          effective period of said patents and (b) a non-exclusive, royalty-free
          license in any other country of the world during the effective period
          of said patents to manufacture, use and sell the Products under such
          applications and patents resulting therefrom with respect to Technical
          Information improvements and modifications developed by SEN.

XIII.     RIGHT TO SUBLICENSE AND SUBCONTRACT:

          Notwithstanding anything to the contrary contained in this Agreement,
SEN shall not have the right to sublicense the rights granted or to be granted
under this Agreement without the prior written consent of EATON. SEN shall have
the right to subcontract the manufacture of parts and components for the
Products from time to time.

XIV.      SIMILAR TRADEMARKS:

          The parties have entered into a separate Trademark Agreement governing
the use of EATON trademarks on the Products. If such Trademark Agreement is
terminated for any reason, the following provisions of this Section XIV shall
apply: SEN shall not use any of the Trademarks (as defined in the Trademark
Agreement) or any trademark which is confusingly similar to any of the
Trademarks. If SEN during the term of this Agreement asserts ownership in any
trademark which, in the opinion of EATON, is the same as or confusingly similar
to any of the Trademarks, SEN will, upon the written request of EATON,
immediately (1) transfer and assign all right, title and interest which it
asserts in such trademark to EATON or EATON's designee, and (2) discontinue the
use of such trademark. SEN shall not file or cause to be filed any trademark
application in any country of the world covering any trademark which, in the
opinion of EATON, is confusingly similar to any of the Trademarks.

XV.       QUALITY CONTROL:

          All rights and privileges granted or to be granted under this
Agreement to SEN are expressly conditioned upon the maintenance by SEN of the
standards of quality and reliability for the Products established worldwide by
EATON and its Affiliated and Related Companies. SEN shall manufacture the
Products in accordance with the Technical Information supplied or to be supplied
hereafter by EATON. SEN shall permit EATON, through its representatives, at all


                                       -8-
<PAGE>   9

reasonable times to inspect the plant, equipment, manufacturing and assembly
techniques of SEN which relate to the Products, and EATON shall have the right
to test, at its sole expense, regular production specimens of the Products on
the premises of SEN at any time so as to determine whether SEN is manufacturing
the Products in conformity with the established quality standards and
specifications of EATON and its Affiliated and Related Companies. EATON shall
promptly advise SEN of any features of the quality standards and specifications
of the Products manufactured by SEN which are not substantially the same as
EATON's quality standards and specifications for the Products, and SEN, upon
receipt of such advice, shall correct any such sub-quality features to the
satisfaction of EATON within a reasonable period of time, not to exceed one
hundred twenty (120) days after the receipt of such advice.

XVI.      PRODUCT IDENTIFICATION:

          Unless otherwise directed by EATON, SEN shall see that the following
statement, in the English and/or Japanese language, is contained in all of SEN's
advertising and promotional materials and on a name plate prominently displayed
on each of the Products manufactured hereunder:

          Manufactured under license from Eaton Corporation, U.S.A.

          SEN's use of the foregoing statement or any subsequently authorized
statement shall apply only to the Products manufactured by SEN which are under
complete quality control and which meet the standards of quality specified by
EATON, its Affiliated and Related Companies, as provided for in Section XV
hereof.

XVII.     RECORDING OF DOCUMENTS:

          The parties shall execute or have executed all papers and documents
which may be necessary or desirable to record SEN as a licensee or sub-licensee
user of said Patents, Technical Information, improvements and modifications of
Technical Information and related patents in the different jurisdictions of the
world where such recording is necessary in order to protect the rights of either
party in and to said Patents, Technical Information, improvements and
modifications and related patents.

XVIII.    INFRINGEMENT OF THIRD PARTY RIGHTS:

          18.01 If SEN is charged with infringement of third parties' patents in
          the Territory or any other jurisdiction of the world and/or is made a
          defendant in a lawsuit as a result of the manufacture, use or sale of
          the Products under the provisions of this Agreement, SEN shall (a)
          assume all cost, expenses, damages and other obligations for payments
          incurred as a consequence of such charge of infringement and/or
          lawsuit and (b) indemnify and hold EATON harmless from any and all
          liability resulting from such charge of infringement and/or lawsuit or
          any such charge and/or lawsuit against SEN's customers.


                                       -9-
<PAGE>   10

          18.02 At the request of SEN, EATON shall lend SEN the assistance of
          EATON, its Affiliated and Related Companies in the defense of any such
          infringement charge and/or lawsuit, but any expense incurred by such
          parties in such undertaking shall be borne solely by SEN and shall be
          paid by SEN to EATON within thirty (30) days after receipt of an
          itemization of such expenses from EATON.

XIX.      INFRINGEMENT OF PATENTS BY THIRD PARTIES:

          19.01 If SEN becomes aware of any infringement or alleged infringement
          in the Territory of any of the Patents, it shall immediately notify
          EATON in writing of the name and address of each infringer or alleged
          infringer and the acts or alleged acts of infringement of the Patents.
          EATON shall have the first right, consistent with the law of the place
          of infringement, to bring an infringement action against any or all
          such infringers or alleged infringers of the Patents. In the event
          that EATON elects to bring any such infringement action in its own
          name, EATON shall bear any and all expenses incurred in maintaining
          such infringement action and shall retain for itself any and all
          moneys or other benefits derived from such infringement action. If
          EATON shall deem it necessary or desirable to join SEN as a party
          plaintiff in any infringement action against an infringer or alleged
          infringer of the Patents, EATON shall consult with and obtain the
          approval of SEN prior to institution of such infringement action. In
          the event that EATON and SEN so agree jointly to bring such an
          infringement action, the parties shall (a) bear equally any and all
          expenses incurred in maintaining such infringement action, and (b)
          share equally any and all moneys or other benefits derived from such
          infringement action.

          19.02 If EATON does not bring an infringement action within six (6)
          months after notification from SEN of infringement or alleged
          infringement of the Patents, SEN shall have the first right,
          consistent with the law of the place of infringement, to bring an
          infringement action in its own name after the expiration of said six
          (6) month period. The total cost of any such infringement action
          brought by SEN shall be borne solely by SEN, and SEN shall retain for
          itself any and all moneys or other benefits derived from such
          infringement action. Each party shall indemnify and hold the other
          harmless from any and all damages, costs or expenditures arising
          directly or indirectly as a result of any infringement action
          undertaken solely in the name of such party hereunder.

          19.03 If at any time during the term of this Agreement EATON or SEN
          shall be unable to enforce the Patents against any alleged infringer,
          EATON shall not be responsible for the validity or for the
          enforceability of the Patents.

          19.04 The parties shall keep each other fully informed as to the
          progress of any infringement action under this Section brought in the
          names of either or both parties. The parties shall cooperate with each
          other in the prosecution of any infringement action undertaken under
          this Section, and each shall provide the other with all data in its
          possession which may be helpful in the prosecution of such action.



                                      -10-


<PAGE>   11

          19.05 Any party bringing any infringement action under this Section in
          its own name and without joining the other party shall have the right
          to dispose of such action in whatever reasonable manner it determines
          to be in the best interest of the parties. In any infringement action
          brought under this Section by either party without the other, the
          party not bringing such action shall have the right to be represented
          at its own expense by its own counsel in such action.

          19.06 The parties shall cooperate and confer from time to time as may
          be necessary and shall agree upon a method or procedure for defending
          any proceedings for the revocation of any of the Patents.


XX.       EFFECTIVE DATE:

          The effective date of this Agreement shall be 1 October 1995.

XXI.      TERM:

          21.01 The term of this Agreement, unless sooner terminated as provided
          for in Section XXII, shall commence upon the Effective Date of this
          Agreement and shall continue for an initial term extending to December
          31, 2004, and shall be automatically renewed thereafter for additional
          five (5) year periods unless either of the parties provides written
          notice to the other of its intention to terminate the Agreement at
          least one (1) year prior to the end of the then current term.

          21.02 Both parties shall have the additional right, which must be
          exercised at least one (1) year prior to the end of the then current
          term, to provide a written notification to the other of an intention
          to renew with modifications. In the event a written notification of an
          intention to renew with modifications is properly provided, both
          parties will undertake to renegotiate, in good faith, the terms and
          conditions of this Agreement.

          21.03 In the event a written notification of an intention to renew
          with modifications pursuant to Section 21.02 above is properly
          provided and no agreement has been reached at the end of the then
          current term, the Agreement will be continuously extended until
          agreement as to modifications is reached or either of the parties
          provides written notice to the other of its intention to terminate.
          Such termination shall take effect at the end of one (1) year
          following the written notice. In the event agreement as to
          modifications is reached, then the appropriately modified Agreement
          will continue to the end of a five (5) year period as if renewed
          pursuant to 21.01.

XXII.     TERMINATION:

          22.01 Either party may have the right to terminate this Agreement by
          sending written notice of termination to the other if the other shall
          fail to observe the terms, covenants


                                      -11-


<PAGE>   12

          and conditions hereof and shall fail to cure or substantially cure
          such default within ninety (90) days after written notice thereof,
          such termination will take effect immediately upon written notice to
          the defaulting party after the expiration of said ninety (90) day
          period.

          22.02 In the event of bankruptcy, insolvency, or dissolution of either
          party, the other may terminate this Agreement in its entirety,
          effective immediately, by sending written notice to the bankrupt,
          insolvent or dissolved party.

          22.03 EATON shall be entitled to terminate this Agreement, upon ninety
          (90) days' written notice to SEN, in the event of either of the
          following events:

                (a) Exercise of authority by a supervening power resulting in
                the appropriation or confiscation of SEN's plants, facilities,
                other assets, Technical Information or Patents; or

                (b) Denial at any time by any governmental authority of the
                right of SEN to make the remittances provided for in this
                Agreement.

XXIII.    RIGHTS AFTER TERMINATION:

          23.01 Within thirty (30) days after the termination of this Agreement
          for any reason whatsoever, SEN shall furnish EATON the following
          information and shall permit EATON access to the records and
          facilities of SEN during regular working hours to verify such
          information:

                (a) Full details of all orders for the Products in the
                Territory, accepted by SEN and not yet completed, including a
                description of work to be done regarding such orders; and

                (b) A statement showing the amounts due EATON from SEN up to the
                date of termination. SEN shall have the right, after
                termination of this Agreement, to complete sales of all orders
                for Products in the Territory, accepted but not completed
                prior to the date of termination; provided, however, that
                royalty payments shall be due and payable on such uncompleted
                sales of Products when completed in accordance with the terms
                and conditions hereof.

          23.02 Any and all proprietary rights in the Patents shall remain
          exclusively with EATON, its Affiliated or Related Companies, and
          nothing in this Agreement shall be construed to confer any proprietary
          interest other than the license rights granted hereunder in the
          Patents to SEN or to any other party. All rights granted hereunder in
          the Patents shall revert immediately and automatically to EATON upon
          termination of this Agreement. If EATON shall terminate this Agreement
          as a result of a default of any provision hereof by SEN or the other
          contingencies set forth in Section XXII, (a) SEN shall not after such
          termination, either directly or indirectly, make use of any Technical
          Information furnished or disclosed to it by EATON hereunder, excluding
          the Technical Information already generally known to the public
          through no fault of SEN or its Affiliated or Related Companies during
          the term of this Agreement provided, however,


                                      -12-

<PAGE>   13

          that SEN shall be obliged to establish in reasonable detail to EATON's
          satisfaction that such Technical Information is in fact generally
          known to the public, (b) SEN's rights in the Technical Information
          shall automatically terminate and (c) SEN shall immediately return any
          and all Technical Information to EATON. If SEN shall terminate this
          Agreement as a result of a default of any provision hereof by EATON or
          the other contingencies set forth in Section XXII, SEN shall be
          entitled to continue to utilize the Technical Information in the
          manufacture of the Products; provided, however, that if a dispute
          arises as to said default of EATON and arbitration pursuant to Section
          XXXII hereof results from such dispute, EATON shall have ninety (90)
          days from the date of the arbitration decision, if against EATON, to
          rectify said default consistent with the arbitration decision and
          remove the grounds for termination. Likewise, if a dispute arises as
          to default of SEN and arbitration pursuant to Section XXXII hereof
          results from such dispute, SEN shall also have ninety (90) days from
          the date of the arbitration decision, if against SEN, to rectify said
          default consistent with the arbitration decision and remove the
          grounds for termination.

XXIV.     GOVERNMENT APPROVAL:

          SEN shall, at its sole expense, apply for and obtain any approvals,
authorizations or validations relative to this Agreement that shall be required
by law, either under the Foreign Exchange and Foreign Trade Control Law of Japan
or otherwise, including authorization of all payments to be made hereunder. SEN
shall, at its sole expense, obtain translations of this Agreement and prepare
any documents necessary for such approvals and authorizations of the Japanese
Government.

XXV.      DISCLAIMER OF WARRANTY AND PRODUCT LIABILITY:

          25.01 SEN shall assume all warranty obligations for the Products
          manufactured, used or sold by it hereunder.

          25.02 SEN shall indemnify and save EATON harmless from and against any
          and all loss, cost, claim, liability, obligation and damage arising
          from (a) any negligence, representation, promise, agreement or
          warranty by SEN or its agents, employees, distributors, dealers,
          representatives, subcontractors, or suppliers relating to the Products
          or (b) any Product defect or deficiency in production, manufacture,
          use, design, operation or otherwise of the Products.

XXVI.     ASSIGNMENT:

          Neither of the parties shall be entitled to assign its rights or
delegate its obligations under this Agreement without the prior written approval
of the other party hereto, except that either party hereto may, without the
written consent of the other party, assign its interest in this Agreement or any
portion thereof to a Related Company or a successor of the whole of the


                                      -13-
<PAGE>   14

business relating to the Products which is capable of performing and assuming
the obligations hereunder.

XXVII.    TRANSLATION OF AGREEMENT:

          This Agreement has been written in the English language, but in the
event it is also written in the Japanese or another language and there are
differences from the English text, the English text will govern.

XXVIII.   ENTIRE AGREEMENT:

          The terms and provisions of this Agreement constitute the entire
agreement between the parties as to the granting of license rights by EATON to
SEN under the Patents and Technical Information. This Agreement shall supersede
all previous communications, either oral or written, between the parties with
respect to the subject matter hereof, and no agreement or understanding varying
or extending them shall be binding upon either party unless in writing signed by
a duly authorized officer or representative thereof.

XXIX.     NON-WAIVER OF RIGHTS AND DISCLAIMER OF LIABILITY:

          Failure of either party to enforce any of the provisions of this
Agreement or any rights with respect thereto or failure to exercise any election
provided for herein (except as expressly otherwise provided herein) shall in no
way be considered a waiver of such provisions, rights or elections or in any way
to affect the validity of this Agreement. The failure of either party to enforce
any of said provisions, rights or elections shall not preclude or prejudice such
party from later enforcing or exercising the same or any other provisions,
rights, or elections which it may have under this Agreement.

XXX.      COUNTERPARTS:

          This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, all of which shall constitute one and
the same agreement.

XXXI.     DISCLAIMER OF AGENCY:

          This Agreement shall not constitute SEN the legal agent of EATON, nor
shall SEN have the right or authority to assume, create, or incur any liability
or any obligation of any kind, express or implied, against or on behalf of
EATON.

XXXII.    ARBITRATION:

          Any and all disputes or differences between the parties pertaining to
or arising out of this Agreement, or the breach thereof, shall be settled by
arbitration to be held in Tokyo, Japan, if EATON shall demand the arbitration,
or in Cleveland, Ohio, United States of America, if SEN shall demand the
arbitration, in accordance with the provisions of the Japan-America Trade


                                      -14-
<PAGE>   15

Arbitration Agreement of 1952 under the rules specified in said agreement in
effect upon the date that either party serves notice upon the other party of a
demand for arbitration. The dispute shall be arbitrated by one arbitrator (who
shall not be a national of Japan or the United States of America) selected by
agreement of both parties; provided, however, in the event the parties cannot
agree upon an arbitrator, the arbitrator shall be appointed by the chairman of
the Japan Commercial Arbitration Association, if arbitration is to be in Japan,
or of the American Arbitration Association, if arbitration is to be in the
United States of America. The award rendered by the arbitrator shall be final,
binding upon the parties, and enforceable by any court of competent
jurisdiction.

XXXIII.   LIABILITIES TO SURVIVE TERMINATION:

          Termination of this Agreement or any rights conveyed hereunder for any
cause shall not relieve either party from its obligation to pay to the other all
compensation which shall have accrued prior to such termination pursuant to the
provisions of this Agreement or release either party from any obligations which
may have been incurred prior to such termination as a result of operations
conducted under this Agreement. This clause shall not be construed to prevent or
limit any award for damages consequent upon a breach of this Agreement.

XXXIV.    NOTICES:

          All notices for all purposes under this Agreement shall be deemed to
have been sufficiently addressed when, if given to EATON, addressed to:

                        Office of The Secretary
                        Eaton Corporation
                        1111 Superior Avenue
                        Cleveland, Ohio 44114 U.S.A.

or when, if given to SEN, addressed to:

                        President
                        Sumitomo Eaton Nova Kabushiki Kaisha
                        13-16, Mita 3 Chome,
                        Minato-ku, Tokyo 108, Japan

and if sent by registered airmail with return receipt requested. The date of
posting shall be deemed to be the date on which such notice or request has been
given or served. The parties may give written notice of change of address by
mail or by facsimile and, after notice of such change has been received, any
notice or request shall thereafter be given to such party as above provided at
such changed address.


                                      -15-
<PAGE>   16

          IN WITNESS THEREOF, each of the parties has duly executed this
Agreement as of the Effective Date.


                                      EATON CORPORATION

                                      By: /s/ [signature illegible]
                                         ----------------------------------
ATTEST:                                  Vice President

/s/ [signature illegible]
--------------------------------
Director of Business Development

                                      SUMITOMO EATON NOVA
                                      KABUSHIKI KAISHA

                                      By: /s/ [signature illegible]
                                         ----------------------------------
ATTEST:                                  President

/s/ N. Takahashi
--------------------------------
     Managing Director



          SUMITOMO HEAVY INDUSTRIES, LTD., hereby approves the terms and
conditions of this Agreement, by the below execution of its Representative
Director:


                                      SUMITOMO HEAVY INDUSTRIES, LTD.

                                      By: /s/ Mitoshi Ozawa
                                         ----------------------------------
ATTEST:                                  President

/s/ H. Taniguchi
--------------------------------
     Managing, Director



                                      -16-
<PAGE>   17
                                   APPENDIX A

                                    PRODUCTS

HIGH CURRENT PRODUCTS
---------------------

NV-10                    GSDIII
NV-20                    GSD100
NV-20A                   GSD200
NV-10SD                  GSD200E
GSD                      GSDULE
GSDA

MEDIUM CURRENT PRODUCTS
-----------------------

6200
6200A
6200AV
8200GD
8200P

HIGH ENERGY PRODUCTS
--------------------

NV1002
GSD-HE
GSD-VHE
GSD-UHE