<PAGE>
 
                                                                   EXHIBIT 10.21

[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO OMITTED PORTIONS.

                         Authorized Representative:  MYSTIC RIVER SOFTWARE, INC.
                                                     --------------------------

            MICROSOFT LICENSE, DISTRIBUTION AND MARKETING AGREEMENT

     THIS LICENSE, DISTRIBUTION AND MARKETING AGREEMENT (the "Agreement") is
entered into this 23rd day of June, 1998 (the "Effective Date"), by and between
MICROSOFT CORPORATION ("Microsoft"), a Washington corporation having its
principal place of business at One Microsoft Way, Redmond, Washington 98052-
6399, and Business Objects S.A., a French corporation having its principal place
of business at 1, square Chaptal, 92309 Levallois-Perret cedex, France
("Company").

The parties agree as follows:

1. DEFINITIONS.  For the purposes of this Agreement, the following terms shall
   -----------                                                               
have the following meanings:

     1.1 "DOCUMENTATION" shall mean the End User Documentation, VBA 5.0 Host
Integration Guide, VBA 5.0 Host Interface Reference and Repository Help, which
are described in Exhibit A hereto.
                 ---------        

     1.2 "END USER" shall mean an individual or legal entity that acquires
directly or indirectly from Company, one or more Products for its own use and
not for distribution or resale to third parties.

     1.3 "END USER DOCUMENTATION" means the Microsoft documentation for End
Users, which is described in Exhibit A attached hereto.
                             ---------                 

     1.4 "TO INTEGRATE," "INTEGRATION" or "INTEGRATED" shall mean the inclusion
of one or more Redistributable Components as part of a Product copied onto
Company's installation media along with Company's software comprising the
Product.

     1.5 "LICENSED SOFTWARE" means the computer software programs that are
listed and described on Exhibit A attached hereto, including all Upgrades
                        ---------                                        
thereto which are commercially released by Microsoft during the term of this
Agreement.

     1.6 "LOGO" means the Designed for Visual Basic logo which is described in
the logo agreement that is attached hereto as Exhibit D.
                                              --------- 

     1.7 "MASTER COPY" shall mean a diskette(s) or CD-ROM(s) containing the
software portion of the Licensed Software that are delivered by Microsoft to the
Company.

     1.8 "MS PLATFORMS" shall mean Microsoft Windows 95, Microsoft Windows NT,
and all future Microsoft operating system products on which the Licensed
Software is commercially released by Microsoft during the term of this
Agreement.

     1.9 "PRODUCT(S)" shall mean Company's software products which are described
in Exhibit B hereto, regardless of the product name(s) actually used for such
   ---------                                                                
software products, and which: (i) Integrate the Licensed Software; (ii) operate
on the MS Platforms, and (iii) adds significant and primary functionality to the
Licensed Software. The parties may amend the list of Products described in
Exhibit B hereto upon their mutual written consent, provided, however, that in
--------- 
the event that Company assigns this Agreement pursuant to Section 10, at all
times subsequent to the effective date of such assignment 
<PAGE>
 
Microsoft shall have the right, in its sole discretion, to approve or disapprove
any proposed amendments to the list of Products described or Exhibit B

     1.10 "REDISTRIBUTABLE COMPONENTS" means the components of the Licensed
Software that are redistributable by the Company in Products and are identified
as "redistributable" in Exhibit A hereto.
                        ---------        

     1.11 "UPGRADES" shall mean upgrades, maintenance releases and enhancements
of the Licensed Software.

2. INTEGRATION AND DISTRIBUTION OF LICENSED SOFTWARE.
   --------------------------------------------------

     2.1 REPRODUCTION AND INTEGRATION OF THE LICENSED SOFTWARE.  Microsoft
hereby grants the Company a non-exclusive, worldwide, perpetual (subject to the
terms of Section 8) license to reproduce and have reproduced the Licensed
Software and Documentation from the Master Copy as well as any Upgrades for
internal use at the Company solely in connection with the development of
Products and Integration of the Redistributable Components into such Products.

     2.2 DISTRIBUTION RIGHTS TO LICENSED SOFTWARE.  Upon completion of the
Integration of Licensed Software into Products, Microsoft grants Company a non-
exclusive, worldwide, perpetual (subject to the terms of Section 8) license to
reproduce, sublicense and otherwise distribute the Licensed Software as
incorporated in the Products to End Users.  The rights granted in Sections 2.1
and 2.2 may be sublicensed by the Company to the Company's contractors,
distributors and original equipment manufacturers, provided that such parties
adhere to the provisions of this Agreement.

     2.3 LICENSE TO END USER DOCUMENTATION.  Microsoft hereby grants the Company
a non-exclusive, worldwide, perpetual (subject to the terms of Section 8)
license to (a) make, use, modify, adapt, translate and make technically accurate
derivative works of the End User Documentation; and (b) to reproduce, sublicense
and otherwise distribute, and have reproduced, sublicensed and otherwise
distributed by third parties, the End User Documentation and any Company-
authored derivative works thereof (which shall include all relevant Microsoft
copyrights, notices, and marks) via any digital electronic (e.g., the Internet)
or print medium in connection with the distribution of the Products. The Company
also may use a pointer on its Worldwide Web site to the End User Documentation
on the Internet in connection with the distribution of the Products.
Notwithstanding the foregoing, the Company shall not distribute the
Documentation as part of any book or other publication for sale separate from
the Products without the written approval of Microsoft and shall not modify,
adapt, or create derivative works of the compiled "*.HLP" files for use on the
Internet. The Company shall deliver to Microsoft a copy of all Company-authored
derivative works of the End User Documentation (the "Derivative Documents") for
the sole purpose of allowing Microsoft to verify the accuracy of such Derivative
Documents.

     2.4 END USER LICENSE AGREEMENTS.  The Company shall have the right to grant
sublicenses to End Users to use the Licensed Software as incorporated in the
Products in object code form only and to use the Documentation on MS Platforms.
For each copy or unit of a Product, Company shall distribute an End User license
agreement which includes terms that are in accordance with applicable law and
are at least as restrictive as the terms set forth in this Agreement with
respect to the use of the Licensed Software.  In particular, the Company shall
include provisions in its End User license agreements for Products preventing
further redistribution of the Redistributable Components or export of the
Products to any country to which such export or transmission is restricted by
applicable U.S. regulation or statute.

     2.5 RESTRICTIONS.  The rights granted in this Section 2 are subject to the
following restrictions:

          (I) Company shall ship at least one full copy of the End User
     Documentation, whether in the form of printed manuals or online help, as
     modified by the Company pursuant to the terms of Section 2.3, to the End
     User per unit of the Product or include a pointer to the End User
     Documentation on the Internet in the Company's documentation for the
     Product;
<PAGE>
 
          (II)   Company shall employ in its Licensed Software Integration,
     reproduction and installation process state-of the-art tests for virus
     infections to ensure that no Licensed Software will be shipped that has
     been infected with a virus;

          (III)  Company shall not reverse engineer, decompile or disassemble
     the Licensed Software except as otherwise specifically permitted by law;

          (IV)   Company shall not license or distribute the Licensed Software
     as part of any product or bundle of products that compete with Microsoft
     Visual Basic ;

          (V)    Company shall only access documented function calls when
     Integrating the Licensed Software with the Products and shall follow the
     installation procedures required to comply with the  Logo Agreement
     attached hereto as Exhibit D;
                        --------- 

          (VI)   Company's Integration of the Licensed Software included in the
     Products must not adversely affect the full functionality of the Licensed
     Software. For instance, the Company shall not disable any features of the
     Licensed Software included in Products. Company shall insure that quality
     of reproduced Licensed Software included in the Products is equivalent to
     the quality of Licensed Software and meets or exceeds the then current
     applicable ISO, IEC or ANSI standards for media and replication quality for
     Disk or CD-ROM media. Microsoft shall be entitled to periodically, upon
     reasonable notice, inspect the quality of reproduction. Should Microsoft be
     dissatisfied with the quality of the reproduced Licensed Software, it shall
     so notify Company in writing and Company shall have ten (10) days to
     correct such deficiencies.

          (VII)  The Company shall include the following acknowledgment in the
     credit screen of the Products and in the Product Documentation:  "Portions
     Copyright 1996, Microsoft Corporation.  All rights reserved."

3. [*]  AND REPORTS; AUDIT RIGHTS
   ------------------------------

     3.1 [*].  No later than [*], the Company shall pay Microsoft [*] by bank
wire transfer to the account listed in [*].  On [*] the Company shall pay
Microsoft [*] until the latter of (a) the date that the Company ceases licensing
and distributing any Products to third parties (the parties acknowledge and
agree that such date may occur after expiration or termination of this
Agreement), and (b) the date of the expiration or termination of this Agreement.
 
     [*] REPORTING; FINANCE CHARGE.  At the same time that the Company pays
Microsoft pursuant to [*], it shall fax a copy of all remittance information
(i.e., name of company, date of wire transfer, amount of wire transfer, and
number of pages faxed), to Microsoft Special Agreements, Dept. 551 at 425-936-
5401, or to any other fax number which is provided to Company by Microsoft in
writing.  The Company shall remit payment for all amounts due by bank wire
transfer to the following account, unless Microsoft notifies the Company in
writing of a change in such account:

                 Microsoft North American Collections #844505
                              Account #3750771767
                                ABA #11100001-2
                          NationsBank of Texas, N.A.

A finance charge of one percent (1%) per month shall be assessed on all amounts
that are past due.


[*]  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPERATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO OMITTED PORTIONS.
<PAGE>
 
     3.4 PRODUCT BUNDLES.  Subject to prior written approval from Microsoft,
which approval shall not be unreasonably withheld, the Company may license or
distribute Products as part of a package or bundle with other products or
services.  Notwithstanding the foregoing, subsequent to any assignment of this
Agreement pursuant to Section 10, Microsoft shall have the right, in its sole
discretion to approve or disapprove of any package or bundles containing the
Products.

     3.5 FEES FOLLOWING ASSIGNMENT.  The parties acknowledge and agree that the
assignment clause as set forth in Section 10 and the fee provisions of this
Section 3 are personal to the Company.  In the event that Company assigns this
agreement pursuant to Section 10, the parties acknowledge and agree that the fee
schedule contained herein shall be revised to reflect the then current market
rates for VBA license agreements to be paid by the assignee company to Microsoft
under this Agreement, provided, however, that in no event shall such revised fee
schedule be less than the fee schedule contained herein.

     3.6 INTERNAL USE.  No royalty shall be due Microsoft in connection with the
use of the Products, Licensed Software and Documentation by the Company or its
contractors for internal purposes authorized under the terms of this Agreement
or for use of the Products by the Company, its contractors, or prospective End
Users, analysts or developers for developmental use, test, evaluation, market
development, education or other promotional or non-production purposes in the
usual course of the business of the Company.

     3.7 AUDIT RIGHTS.  During the term of this Agreement and for two (2) years
thereafter, Company agrees to keep all usual and proper records and books of
account and all usual and proper entries relating to the Products and the
Licensed Software. Records and books of account include, but are not limited to,
information regarding the number of Product units distributed. Microsoft may, at
its own expense, cause an audit and/or inspection to be made of the applicable
Company records and facilities in order to verify statements issued by Company
and Company's compliance with the terms of this Agreement. Any such audit shall
be conducted upon five (5) days written notice by an independent certified
public accountant selected by Microsoft (other than on a contingent fee basis).
Such independent certified public accountant shall provide a summary of its
findings regarding its verification of the statements issued by the Company and
the Company's compliance with the terms of this Agreement, but shall not provide
Microsoft with any other information produced from the audit and/or inspection
of such Company records. Any audit and/or inspection shall be conducted during
regular business hours at Company's facilities. Company agrees to provide
Microsoft's designated audit or inspection team access to the relevant Company
records and facilities. The Company shall pay Microsoft the full amount of any
underpayment revealed by the audit plus interest from the date such payments
were due under the terms of this Section at the then applicable prime rate, as
announced by Seattle First National Bank of Seattle, Washington (the "Prime
Rate"). Notwithstanding the foregoing, if such audit reveals an underpayment by
the Company of more than five percent (5%) for the period covered by the audit
report, the Company shall pay all of the fees and costs associated with such
audit and the amount underpaid with interest at the rate of five percent (5%)
above the Prime Rate from the date such payment was due pursuant to this
Section.

     3.8 TAXES.  Company will be responsible for the billing, collecting and
remitting of sales, use, value added, and other comparable taxes determined by
Company to be due with respect to the collection of the Net Receipts, or any
portion thereof.  Microsoft is not liable for any taxes, including without
limitation income taxes, withholdings, value added, franchise, gross receipts,
sales, use property or similar taxes, duties, levies, fees, excises or tariffs
incurred in connection with the Net Receipts or related to the sale of Company's
Products.  Company takes full responsibility for all such taxes, including
penalties, interest and other additions thereon.

     3.9 WITHHOLDING TAXES.  If, after a determination by foreign tax
authorities, any taxes are required to be withheld on payments made by Company
to Microsoft, Company may deduct such taxes from the amount owed Microsoft and
pay them to the appropriate taxing authority; provided however, that Company
shall promptly secure and deliver to Microsoft an official receipt for any such
taxes withheld or other documents necessary to enable Microsoft to claim a U.S.
Foreign Tax Credit.  Company will make certain that any taxes withheld are
minimized to the extent possible under applicable law.
<PAGE>
 
4. DELIVERY AND ACCEPTANCE; UPGRADES
   ---------------------------------

     4.1 DELIVERY OF MASTER COPY.  Microsoft or its authorized representative
shall deliver the Company a Master Copy of the Licensed Software within five (5)
days after the Effective Date of this Agreement.  The Master Copy shall be
deemed accepted upon receipt unless the Company notifies Microsoft or its
authorized representative within five (5) days after it receives such Master
Copy that it does not include all of the components described in Exhibit A
                                                                 ---------
hereto.  In such event, the Company shall give Microsoft or its authorized
representative prompt written notice and, no later than five (5) days after
receipt of such notice, Microsoft or its authorized representative shall deliver
the Company another Master Copy which includes all such components.

     4.2 DELIVERY OF UPGRADES; COMPANY RESPONSE.  During the term of this
Agreement, Microsoft or its authorized representative shall deliver all Upgrades
to the Company at the earliest date that Microsoft or its authorized
representative makes such Upgrades available to any third party.  No later than
twenty (20) days after the date that the Company receives an Upgrade, it shall
inform Microsoft or its authorized representative whether the Upgrade contains
any programming errors that severely impair the performance of any major
functions in the Products.

5. PRODUCT MARKETING AND SUPPORT; DEMONSTRATION OF PRODUCTS
   --------------------------------------------------------

     5.1 VISUAL BASIC LOGO.  The Company shall include a copy of the Logo on the
outside of all retail boxes of Products.  In order to be eligible to display
such Logo, the Company must sign a Logo Agreement in substantially the form of
Exhibit D attached hereto.  This Agreement shall not be effective unless and
---------                                                                   
until the Company executes such an agreement and delivers the same to Microsoft.
In the event that Microsoft terminates the Logo Agreement for any reason, the
obligation to include the Logo on all Products shall terminate at the same time.

     5.2 PRODUCT SUPPORT.  Company acknowledges and agrees that Microsoft shall
not provide the Company with any support, other than as described in Section 4,
for Integration of the Licensed Software into the Products, but that the Company
is free to enter into a separate maintenance and support agreement with one of
Microsoft's authorized sales representatives for the Licensed Software on terms
to be negotiated between the Company and such authorized sales representative.
Company further acknowledges that it shall either (i) inform End User that
Company is the support contact for the Product, and that Microsoft will not
support the Product, or (ii) inform the End User that there will be no support
for the Product.  Company shall use best efforts to insert a message to that
effect in the start-up or help screen of the Product.  The parties agree that
Microsoft shall not provide any End User support for Products.

     5.3 MICROSOFT MARKETING TERMS.  Microsoft shall initiate a marketing
program for the Licensed Software to make certain benefits of the program
available to the Company at no cost.  Such benefits may include the following:

         5.3.1  Microsoft "DevWire" announcement of Company launch of a product
     that includes VBA to up to 70,000 email subscribers;

         5.3.2  headline on microsoft.com and/or vba site and/or officedev site
     announcing Company Product launch;

         5.3.3  Company-created case study posted on microsoft.com/vba and/or
     microsoft.com/officedev Web site;

         5.3.4  Company-created demo of Office 97 with product presented at MS
     press events, tradeshows, and/or seminars by Microsoft employees;

         5.3.5  Microsoft supplies quote for Company press release announcing
     availability of Company product that includes VBA;

         5.3.6  public relations help in press releases and press tours;

         5.3.7  Microsoft product giveaways at Company launch events;

         5.3.8  creative assistance and funding in vertical advertising that
     highlights VBA; and
<PAGE>
 
         5.3.9  cooperative channel advertising.

     5.4 COMPANY MARKETING TERMS.  Company shall exercise best efforts to
participate in marketing activities related to the Licensed Software, which
shall include the following:

         5.4.1  include the three (3) core benefits of VBA as articulated by
     Microsoft from time to time, in every relevant press release issued by or
     on behalf of Company related to Products;

         5.4.2  issue a minimum of two (2) press releases:  one issued on or
     near the Effective Date announcing Company's licensing of VBA and detailed
     plans for inclusion in the Products, and one issued at the time of initial
     Product shipment announcing the details of the use of VBA in the Products;

         5.4.3  include VBA materials as provided by Microsoft from time to time
     on Company web site(s);
         5.4.4  include Product object model on Company web site(s); and
         5.4.5  include VBA content as provided by Microsoft from time to time
     in relevant press kits issued by Company.

6. INTELLECTUAL PROPERTY NOTICES.  Company will not remove any copyright,
   ------------------------------                                        
trademark or patent notices that appear on the Licensed Software as delivered to
Company.  Company shall state in all its advertising, marketing materials, and
packaging related to the Products, that Products contain or are provided with
the Licensed Software.  Company agrees to use the appropriate trademark, product
descriptor and trademark symbol (either "" or "" in a superscript), and clearly
indicate Microsoft's ownership of its trademark(s) whenever the Licensed
Software name is first mentioned in any advertisement, brochure or in any other
manner in connection with Licensed Software and/or a Product.  Company shall
undertake no action that will interfere with or diminish Microsoft's right,
title and/or interest in Microsoft Corporation's or licensed third parties'
trademark(s) or trade name(s).  Company shall, upon request, provide Microsoft
with samples of all of Company's promotional, packaging and other written
materials which use Licensed Software name(s).  Company shall not adopt or use a
product name, trademark or service mark in conjunction with the advertising,
packaging, promotion or sale of Product(s) which includes all or part of any
Microsoft trademark or service mark or any term which is confusingly similar to
a Microsoft trademark or service mark.  Company shall not reproduce or imitate
all or part of the packaging or trade dress of any Licensed Software on or in
the packaging of any Product(s) or any related promotional material without
prior written approval of Microsoft.

7. WARRANTY/LIABILITY/INDEMNITY.
   -----------------------------

     7.1 MICROSOFT.

          7.1.1 NO WARRANTIES. The Licensed Software is provided "AS IS" without
     warranty of any kind.  TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY AND ALL
     EXPRESS AND IMPLIED WARRANTIES OF ANY KIND WHATSOEVER, INCLUDING BUT NOT
     LIMITED TO THOSE OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE,
     OF ACCURACY OR COMPLETENESS OF RESPONSES, OF RESULTS, OF REASONABLE CARE OR
     WORKMANLIKE EFFORT, OF LACK OF NEGLIGENCE, AND/OR OF A LACK OF VIRUSES, ALL
     WITH REGARD TO THE LICENSED SOFTWARE, ARE EXPRESSLY EXCLUDED.  MICROSOFT
     MAKES NO WARRANTY THAT THE LICENSED SOFTWARE WILL OPERATE PROPERLY AS
     INTEGRATED IN THE COMPANY'S PRODUCT(S) OR ON ANY CUSTOMER SYSTEM(S). EXCEPT
     AS SET FORTH IN SECTION 7.1.3 BELOW, THERE IS NO WARRANTY OF TITLE OR
     NONINFRINGEMENT IN THE LICENSED SOFTWARE.

          7.1.2 EXCLUSION OF INCIDENTAL AND CONSEQUENTIAL DAMAGES.  COMPANY
     AGREES MICROSOFT SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL,
     INDIRECT, ECONOMIC OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING BUT NOT
     LIMITED TO DAMAGES FOR LOSS OF BUSINESS OR PERSONAL PROFITS, 
<PAGE>
 
     BUSINESS INTERRUPTION, LOSS OF BUSINESS OR PERSONAL OR CONFIDENTIAL
     INFORMATION, OR ANY OTHER PECUNIARY LOSS, DAMAGES FOR LOSS OF PRIVACY, OR
     FOR FAILURE TO MEET ANY DUTY, INCLUDING ANY DUTY OF GOOD FAITH, OR TO
     EXERCISE COMMERCIALLY REASONABLE CARE OR FOR NEGLIGENCE) ARISING OUT OF OR
     IN ANY WAY RELATED TO THE USE OF OR INABILITY TO USE THE LICENSED SOFTWARE,
     EVEN IF MICROSOFT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

          7.1.3 INDEMNITY FOR INFRINGEMENT.  Microsoft hereby agrees to defend,
     indemnify and hold Company harmless from and against any and all claims
     arising as a result of any claim by a third party that the Licensed
     Software infringes any trade secret or copyright of such third party.

     7.2 COMPANY.

          7.2.1 COVENANT.  Company and any of its manufacturer's representatives
     shall not make to any End User any representation with respect to the
     Licensed Software or the use thereof except as is explicitly set forth in
     documentation, if any, provided by Microsoft accompanying the Licensed
     Software.

          7.2.2 INDEMNITY.  Company hereby agrees to defend, indemnify and hold
     Microsoft harmless from and against any and all claims arising as a result
     of:  (i) Company's improper installation of the Licensed Software; (ii) any
     computer software virus introduced by Company; (iii) any claim by an End
     User regarding its use or inability to use a Product if such claim would
     not have occurred solely from use of the Licensed Software; (iv) any claim
     by a third party that the Product infringes any proprietary right of such
     third party if such claim would have been avoided by the exclusive use of
     the Licensed Software; (v) Company's or its agents' breach of any of the
     provisions of Section 2 of this Agreement; or (vi) breach of the covenant
     in Section 7.2.1 of this Agreement.

     7.3 ESSENTIAL ELEMENT.  THE PARTIES ACKNOWLEDGE THAT ALL OTHER PARTS OF
THIS AGREEMENT RELY UPON THE INCLUSION OF THIS SECTION 7.

8. TERM AND TERMINATION.
   ---------------------

     8.1 TERM.  Unless terminated earlier pursuant to this Section, this
Agreement shall be for a period beginning on the Effective Date and ending three
(3) years after the earlier of (a) the date that the Company licenses any
Products to third parties or (b) nine (9) months from the Effective Date.

     8.2 TERMINATION.

          8.2.1 Either party shall have the right to terminate this Agreement in
     the event of a material breach of this Agreement or the logo agreement
     attached hereto as Exhibit D after notice thereof and an opportunity to
                        ---------                                           
     cure within thirty (30) days from the date of such notice.  In addition,
     Microsoft shall have a right to terminate this Agreement immediately in the
     event of an assignment in breach of Section 10.

          8.2.2 In no event shall Microsoft be responsible to Company for any
     costs or damages resulting from the termination of this Agreement.

     8.3 EFFECT OF EXPIRATION OR TERMINATION.

          8.3.1 Sections 1, 2 (with respect to the then current version of the
     Licensed Software), 3, 5.2, 6, 7, 8, 9, 10, and 11 shall survive any
     expiration of this Agreement pursuant to Section 8.1 or termination of this
     Agreement by the Company pursuant to Section 8.2.1.  Without limiting 
<PAGE>
 
     the foregoing, the parties understand and agree that the Company shall be
     obligated to continue paying Microsoft the [*] fees set forth in Section
     [*] of this Agreement for so long as the Company licenses or distributes
     Products after termination or expiration of this Agreement; provided,
     however, that in the event that Company assigns this Agreement pursuant to
     Section 10, Company's assignee shall be obligated to continue paying the
     fees as revised to reflect then-current market rates for VBA licenses, as
     provided for in Section 3.5. In the event that Company has not assigned
     this Agreement and upon expiration of this Agreement at the end of the
     term, the parties agree to negotiate in good faith the terms and conditions
     of a new agreement or the extension of the terms and conditions of this
     Agreement consistent with and subject to the then-current market rates for
     VBA licenses.

          8.3.2 Sections 3, 5, 6, 7, 8, 9, 10, and 11 shall survive any
     termination of this Agreement by Microsoft pursuant to Section 8.2.1.

          8.3.3 Termination of this Agreement shall not affect existing end user
     license agreements for the Products, which shall continue in full force and
     effect in accordance with their terms. Company shall continue to pay the
     [*] fees as specified in Section 3 of this Agreement for so long as the
     Company licenses or distributes Products after termination of this
     Agreement.

9. CONFIDENTIALITY.
   ----------------

     9.1 Each party expressly undertakes to retain in confidence and to require
its distributors, resellers and all other contractors to retain in confidence
all information and know-how transmitted to such party that the disclosing party
has identified as being proprietary and/or confidential or which, by the nature
of the circumstances surrounding the disclosure, ought in good faith to be
treated as proprietary and/or confidential.  Without limiting the foregoing, all
terms and conditions of this Agreement shall be considered confidential and
shall not be disclosed (except to either party's attorneys and accountants on a
need-to-know basis, or as required by the order of a court of competent
jurisdiction) without the prior written consent of the other party.  In
accordance with the provisions of applicable federal or state securities laws
and only to the extent as reasonably required thereunder, Company may disclose
the existence of this Agreement and the terms thereof after prior consultation
with Microsoft and subject to appropriate requests for confidential treatment
for all commercially sensitive information.  The receiving party's obligation
hereunder shall extend for five (5) years following the disclosure of the
Confidential Information.

     9.2. EXCLUSIONS.  Confidential information shall not include any
          ----------                                                 
information that: (i) is at the time of disclosure or subsequently becomes
publicly available without the receiving party's breach of any obligations owed
the disclosing party; (ii) became known to the receiving party prior to the
disclosing party's disclosure of such information to the receiving party; (iii)
became known to the receiving party from a source other than the disclosing
party other than by the breach of an obligation of confidentiality owed to the
disclosing party; or (iv) is independently developed by the receiving party.

10. PROHIBITION AGAINST ASSIGNMENT.  This Agreement, and any rights or
    -------------------------------                                   
obligations in this Agreement, shall not be assigned by Company without the
prior, written consent of Microsoft, which shall not be unreasonably withheld.
For purposes of this Section, the term "assignment" shall include, without
limitation, a merger of Company with another party, whether or not the Company
is the surviving entity, or the acquisition of more than twenty percent (20%) of
any class of the Company's voting stock by another person or entity, or the sale
of more than fifty percent (50%) of the Company's assets.  Notwithstanding the
foregoing, Company may assign this Agreement to any third party that agrees in
writing reasonably satisfactory to Microsoft to be bound to all terms and
conditions of this Agreement (including, without limitation, the revised [*] fee
described in Section 3.5) by providing Microsoft with


[*]  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPERATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO OMITTED PORTIONS.
<PAGE>
 
prior written notice of such intended assignment and a copy of such third
party's written agreement.  Company's failure to comply with the foregoing
requirements shall constitute a material breach of this Agreement.  Subsequent
to any such assignment, such third party assignee shall be bound by the original
assignment provisions as set forth in the first two sentences of this Section
10.

11. GENERAL.
    --------

       11.1 CONTROLLING LAW.  This Agreement shall be construed and controlled
by the laws of the State of Washington, and Company consents to jurisdiction and
venue in the state and federal courts sitting in the State of Washington.
Neither this Agreement, nor any terms and conditions contained herein, shall be
construed as creating a partnership, joint venture, agency, or franchise
relationship.

       11.2 ATTORNEYS' FEES.  If either Microsoft or Company employs attorneys
to enforce any rights arising out of or relating to this Agreement, the
prevailing party shall be entitled to recover its reasonable attorneys' fees,
costs and other expenses.

       11.3 NOTICES AND REQUESTS.  All notices, authorizations, and requests
given by Company or Microsoft in connection with this Agreement shall be deemed
given on the day they are (i) deposited in the mail, postage prepaid, certified
or registered, return receipt requested; or (ii) sent by air express courier,
charges prepaid; to the address listed in this Agreement.

       11.4 COMPANY'S GOVERNMENTAL APPROVAL OBLIGATIONS.  Company shall, at its
own expense, obtain and arrange for the maintenance in full force and effect of
all governmental approvals, consents, licenses, authorizations, declarations,
filings, and registrations as may be necessary or advisable for the performance
of all of the terms and conditions of this Agreement including, but not limited
to, foreign exchange approvals, import and offer agent licenses, fair trade
approvals and all approvals which may be required to realize the purposes of
this Agreement.

       11.5 RESTRICTED RIGHTS.  Any Licensed Software which Company distributes
to or on behalf of the United States of America, its agencies and/or
instrumentalities (the "Government'), are provided to Company with RESTRICTED
RIGHTS.  Use, duplication or disclosure by the Government is subject to
restriction as set forth in subparagraph (c)(1)(ii) of the rights in Technical
Data and Computer Software clause at DFAR 252.227-7013, or as set forth in the
particular department or agency regulations or rules which provide Microsoft
protection equivalent to or greater than the above-cited clause.  Company shall
comply with any requirements of the Government to obtain such RESTRICTED RIGHTS
protection, including without limitation, the placement of any restrictive
legends on the Licensed Software, Licensed Software documentation, and any
license agreement used in connection with the distribution of the Licensed
Software. Manufacturer is Microsoft Corporation, One Microsoft Way, Redmond,
Washington 98052-6399. Under no circumstances shall Microsoft be obligated to
comply with any Governmental requirements regarding the submission of or the
request for exemption from submission of cost or pricing data or cost accounting
requirements. For any distribution of the Licensed Software that would require
compliance by Microsoft with Governmental requirements relating to cost or
pricing data or cost accounting requirements, Company must obtain an appropriate
waiver or exemption from such requirements for the benefit of Microsoft from the
appropriate Governmental authority before the distribution and/or license of the
Licensed Software to the Government.

       11.6 EXPORT CONTROLS.  Company acknowledges that the license and
distribution of the Products are subject to the export control laws and
regulations of the United States of America, and any amendments thereof, which
restrict exports and re-exports of software, technical data, and direct products
of technical data, including services derived from use of the Products (the
"Direct Products").  Company agrees that it will not export or re-export any
Products or Direct Products, or any information and documentation related
thereto, directly or indirectly, without first obtaining permission to do so as
required from the United States of America Department of Commerce's Bureau of
Export Administration, or other appropriate governmental agencies, to any
countries, end-users, or for any end-uses that are 
<PAGE>
 
restricted by U.S. export laws and regulations, and any amendments thereof,
which include, but are not limited to, the following:

   Restricted Countries: Cuba, Iran, Iraq, Libya, North Korea, Sudan, Syria and
   Vietnam.

   Restricted End-Users: Any End-User whom Company knows or has reason to know
   will use Products or Direct Products in the design, development, or
   production of missiles and missile technology, nuclear weapons and weapons
   technology, or chemical and biological weapons.

   Restricted End-Uses: Any use of Products and Direct Products related to the
   design, development, or production of missiles and missile technology,
   nuclear weapons and weapons technology, or chemical and biological weapons.

These restrictions change from time to time.  If Company has any questions
regarding its obligations under United States of America export regulations,
Company should contact the Bureau of Export Administration, United States
Department of Commerce, Exporter Counseling Division, Washington DC., U.S.A.
(202) 482-4811.

     11.7   ENTIRE AGREEMENT.  This Agreement, including Exhibits A-D attached
                                                         ------------         
hereto, shall constitute the entire agreement between the parties with respect
to its subject matter and merges all prior and contemporaneous communications,
both written and oral.  This Agreement shall not be modified except by a written
agreement signed on behalf of Company and Microsoft by their respective duly
authorized representatives.

     11.8   SEVERABILITY.  If any provision of this Agreement shall be held by a
court of competent jurisdiction to be illegal, invalid or unenforceable, the
remaining provisions shall remain in full force and effect.  If this Agreement
as it relates to any Licensed Software shall be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable or if this Agreement is
terminated as to a particular Licensed Software, then it shall  remain in full
force and effect as to the remaining Licensed Software.

     11.9   WAIVER.  No waiver of any breach of any provision of this Agreement
shall constitute a waiver of any prior, concurrent or subsequent breach of the
same or any other provisions hereof, and no waiver shall be effective unless
made in writing and signed by an authorized representative of the waiving party.

     11.10  SECTION HEADINGS.  The Section headings used in this Agreement are
intended for convenience only and shall not be deemed to supersede or modify any
provisions.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.  All signed copies of this Agreement shall be deemed originals.

MICROSOFT CORPORATION                    BUSINESS OBJECTS S.A.


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