Document:

<PAGE>

                                                                    EXHIBIT 10.8

                        SEPARATION AGREEMENT AND RELEASE

         This Separation Agreement and Release (this "Agreement") is made and
entered into this 31st day of March, 2000, by Sola International, Inc., a
Delaware corporation (the "Company"), and John Heine (the "Executive").

                                  WITNESSETH:

         WHEREAS, the Executive and the Company are parties to a Confidential
Severance Agreement dated as of November 20, 1996 (the "Severance Agreement");
and

         WHEREAS, the Executive desires to resign his employment with the
Company and the Company is willing to accept the Executive's resignation,
subject to the terms and conditions of this Agreement set forth below;

         NOW THEREFORE, the Company and Executive, in consideration of the
covenants and agreements herein expressed, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
agree as follows:

         1.    Resignation.  The Executive hereby resigns from all of his
               -----------
positions as a director and officer of the Company and all of its subsidiaries
and affiliates effective as of the date hereof (the "Resignation Date").

         2.  Severance Payments.  Subject to Section 2(f) below, for and in
             ------------------
consideration of all of the Executive's acknowledgments, releases and covenants
set forth in this Agreement, the Executive shall be entitled to the following
compensation and benefits:

                    (a) Salary Continuation. In accordance with and in full
                        -------------------
satisfaction of the Company's obligations under Section 3.A. of the Severance
Agreement in respect of salary, the Company shall pay the Executive 1/12 of his
annual base salary at the rate in effect on the Termination Date for each month
from the Termination Date until the expiration of the Severance Period (as
defined below). Such payments shall be made in accordance with the normal
payroll procedures of the Company and be pro-rated for any partial payroll
period. "Severance Period" shall mean the period ending on the earlier of (A)
the second anniversary of the Resignation Date, or (B) the date the Executive
breaches any of his obligations under Section 5, 6, 7 or 8 of the Severance
Agreement.

                    (b) Bonus Severance. In accordance with and in full
                        ---------------
satisfaction of the Company's obligations under Section 3.A. of the Severance
Agreement in respect of the Management Incentive Plan, the Company shall pay to
the Executive $23,861.17 for each month during the Severance Period. Such
payment shall be made in accordance with the normal payroll procedures of the
Company and be pro-rated for any partial payroll period.

                    (c) Options. All options (the "Options") to acquire common
                        -------
stock of the Company which are held by the Executive shall remain outstanding
and exercisable until the expiration of the Severance Period, immediately after
which they shall terminate.

                    (d) Benefits Continuation. In accordance with and in full
                        ---------------------
satisfaction of the Company's obligations under Sections 3.B. and C. of the
Severance Agreement, the Company shall
<PAGE>

make the payments and reimbursements and provide the benefits set forth on Parts
1 and 2 of Schedule A attached hereto; it being understood that the amount of
all payments and reimbursements shall be based on actual costs incurred by the
Company or by the Executive.

                    (e) No 2000 Bonus. The Executive shall not be entitled to
                        -------------
receive an annual cash bonus in respect of the Company's 2000 fiscal year under
the Company's Management Incentive Plan.

                    (f) Forfeiture of the Severance Payments. If the Severance
                        ------------------------------------
Period expires prior to the Second Anniversary of the Resignation Date, the
Company shall be entitled to terminate the payments and benefits under this
Section 2.

                    (g) No Mitigation. The Executive shall not be required to
                        -------------
mitigate the amount of any payment or benefit contemplated by this Section 2.

         3.  Withholding.  The Company shall have the right to deduct from any
             -----------
amounts payable under this Agreement or otherwise any taxes or other amounts
required by law to be withheld.

         4.    Executive Release. In consideration of this Agreement, the
               -----------------
Executive agrees to release and forever discharge the Company, its stockholders,
subsidiaries, directors, officers and employees, and any affiliates, agents,
representatives, successors, and assigns of any of the foregoing (collectively
referred to as the "Releasees"), from and against any and all obligations,
liabilities, damages, costs, claims, complaints, charges, or causes of actions
in law or equity (collectively "Claims") that the Executive or his heirs,
administrators, successors, or assigns may now have or may ever have against any
Releasee, whether accrued, absolute, contingent, unliquidated or otherwise, and
whether known or unknown on the date hereof, and which have or may have arisen
out of any act or omission occurring, or state of facts existing, prior to the
date of execution of this Agreement, in any way related to the Executive's
employment with, and services as a director of, the Company and its affiliates
and the termination thereof, or in connection with the Executive's ownership of
any securities of the Company or any of its affiliates, including, without
limitation, (i) Claims arising under the Severance Agreement and, except as
explicitly provided in this Agreement, any arrangement, plan, program, or policy
for executive benefits, with the exception of any tax qualified plans under
which the Executive has a vested accrued interest, (ii) any other Claims related
to the Executive's employment with the Company or the termination of that
employment and (iii) Claims based on federal, state, or local law or regulation
or the common law, including but not limited to, Claims in any way related to
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act, the Equal Pay Act, the Fair Labor Standards Act, the Americans with
Disabilities Act, the Employee Retirement Income Security Act of 1974, as
amended, and all other applicable state and local labor and employment laws
(including all laws concerning unlawful and unfair labor and employment
practices), breach of contract, wrongful discharge, defamation or intentional
infliction of emotional distress.  If and to the extent a court of competent
jurisdiction shall determine any part or portion of the foregoing release to be
invalid or unenforceable, the same shall not affect the remainder of the release
which shall be given full effect without regard to the invalid part or portion
of the release.  The Executive acknowledges that by signing below he knowingly,
voluntarily, and expressly waives and relinquishes any and all rights that he
may have under Section 1542 of the California Civil Code, or any similar
provision or law of any jurisdiction or any similar or analogous principle of
common law.  California Civil Code Section 1542 provides:

               "A general release does not extend to claims which the creditor
               does not know or suspect to exist in his favor at the time of
               executing the release, which if known by him must have materially
               affected his settlement with the debtor."

         5.    Executive Acknowledgment.  The Executive acknowledges that he:
               ------------------------
(i)  has been given the opportunity to consider the terms of this Agreement for
more than twenty-one (21) days and has
<PAGE>

determined that it is in his best interest to execute this Agreement on the date
hereof; (ii) is waiving claims under the Age Discrimination in Employment Act;
(iii) has been advised to consult with legal counsel of his own choosing prior
to the execution of this Agreement; (iv) fully understands the terms and
conditions contained herein; (v) has entered into this Agreement of his own free
will and was not under any undue pressure or duress; (vi) is not waiving rights
or claims that may arise after the date this Agreement is executed; (vii) has
received as consideration for the waivers contained herein money and other
benefits in addition to that which he is already entitled; (viii) understands
that for a period of seven (7) days following the execution of this Agreement
that he may revoke his waiver and release of any claims under the Age
Discrimination in Employment Act. In the event the Executive so revokes his
waiver and release of claims under the Age Discrimination in Employment Act, the
Executive shall not be entitled to any of the payments or benefits provided in
Section 2(b) hereof and in all other respects this Agreement shall remain in
full force and effect. The Executive represents that with respect to any act or
omission occurring, or state of facts existing, on or prior to the date of
execution of this Agreement, he has not filed any complaints, charges or
lawsuits against any Releasee with any government agency or any court or other
tribunal.

         6.    Continuing Provisions.  Sections 5, 6, 7 ,8, 9, and 19 of the
               ---------------------
Severance Agreement shall remain in full force and effect and are incorporated
into this Agreement, and the Executive shall continue to be bound thereby.

         7.  No Admissions.  Nothing in this Agreement shall be construed as an
             -------------
admission by any Releasee of any liability on its part under any federal, state,
or local law or regulation or the common law.  The Executive also acknowledges
that he has had the opportunity to consult with an attorney prior to signing
this Agreement, and that he has read and understood all of the provisions of
this Agreement.

         8.    Entire Agreement.  This Agreement and the portions of the
               ----------------
Severance Agreement which remain in full force and effect pursuant to Section 6
hereof constitute the entire agreement between the parties with respect of the
subject matter hereof and supersedes any and all other agreements either oral or
in writing between the parties hereto with respect to the subject matter hereof,
including, but not limited to, the Severance Agreement (except as set forth
above), and contain all of the covenants and agreements between the parties with
respect to said matters.  Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, orally or otherwise, have
been made by any Releasee, or anyone acting on behalf of any Releasee, which are
not embodied herein, and that no other agreement, statement or promise not
contained in this Agreement shall be valid or binding.

         9.  Binding Effect.  This Agreement shall be binding upon any and all
             --------------
successors and assigns of the Executive and the Company.

         10.  Governing Law.  Except for issues or matters as to which federal
              -------------
law is applicable, this Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California without giving
effect to the conflicts of law principles thereof.

         11.  Severability.  If and to the extent that any court of competent
              ------------
jurisdiction holds any provision or part of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity of the remainder
of this Agreement.

         12.  Headings.  The headings contained herein are solely for the
              --------
purpose of reference, are not part of this Agreement and shall not in any way
affect the meaning or interpretation of this Agreement.

         13.  Counterparts.  This Agreement may be executed in two counterparts.
              ------------

         14.  Press Release; Confidentiality.  Subject to applicable law, the
              ------------------------------
parties shall mutually agree on the form of any press release relating to the
Executive's resignation from the Company.  Other
<PAGE>

than with respect to information provided in any such press release or required
to be disclosed by court order, the Executive agrees not to disclose the terms
of this Agreement to any person or entity, other than the Executive's immediate
family and financial or legal advisors who agree to be bound by this
confidentiality provision.

         15.  Arbitration.  Except as otherwise provided in Section 9, with
              -----------
respect to any controversy arising out of or relating to this Agreement, or the
subject matter thereof, such controversy shall be settled by final and binding
arbitration in Palo Alto, California in accordance with the then existing rules
("the Rules") of the American Arbitration Association ("AAA") and judgment upon
the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof; provided, however, that the law applicable to any
controversy shall be the law of California, regardless of its or any
jurisdiction's choice of law principle.  Arbitration shall be the sole and
exclusive remedy for the resolution of the disputes described above.  In any
such arbitration, the award or decision shall be rendered by a majority of the
members of a board of arbitration consisting of three (3) members, one of whom
shall be appointed by each party and the third of whom shall be the chairman of
the panel and be appointed by mutual agreement of said two party appointed
arbitrators.  In the event of the failure of said two arbitrators to agree,
within five (5) working days after the commencement of the arbitration, upon
appointment of the third arbitrator, the third arbitrator shall be appointed by
the AAA in accordance with the Rules.  In the event that either party shall fail
to appoint an arbitrator within five (5) days after the commencement of the
arbitration proceeding, such arbitrator and the third arbitrator shall be
appointed  by the AAA in accordance with the Rules.  The arbitrators are
empowered but, not limited, in making an award in favor of the Executive to
require any act or acts which they believe necessary to effectuate the intent of
this Agreement.  The Company agrees that any costs of any arbitration brought
whether by the Executive or the Company including the Executive's reasonable
attorneys' fees and expenses and the costs, fees and expenses of the Executive's
appointed arbitrator, shall be borne in their entirety by the Company.
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and date indicated below.

                              JOHN HEINE

                              _________________________________

                              Dated:___________________________

                              SOLA INTERNATIONAL, INC.

                              By:______________________________

                              Title:___________________________

                              Dated:___________________________

327137
<PAGE>

                                   Schedule A
                                   ----------

1. Continuing Cash Payments:
                                                       Actual Cost for Two Years
                                                       -------------------------
Two Years Housing allowance            $38,461 X 2               $76,922
Two Years Medical supplement           $ 6,750 X 2               $13,500
                                                                 -------
Total over 2 years:                                              $90,422
                                                                 -------
Monthly payment via payroll:           $ 3,767.58

2.  Benefits/Reimbursements:

<TABLE>
 <CAPTION>
                                                                                    Estimated Cost
                                                                                    --------------
                                                                                     for Two Years
                                                                                     -------------
<S>                                                                               <C>
Two years continued participation in medical, dental, vision care,
and insurance  plans                                                                    $ 14,424

Two years continued tax advice and preparation in accordance with
existing  Company policy and past practice                                              $ 10,000

Two years continuation of use of Company car in accordance with
existing Company policy and past practice, including insurance,
maintenance, fuel                                                                       $ 35,521

Two years continued accrual of benefits in accordance with existing
Company  policy and past practice under Australian Superannuation
Fund/individual  retirement contract mirroring the fund                                 $220,926

Two years continued telephone use in accordance with existing Company
policy and  past practice                                                               $  2,500

Two years of annual family leave in accordance with existing Company                    $ 12,000
policy and past practice X 2 years

Reimbursement of repatriation costs in accordance with existing
Company policy  and past practice

     Real estate agents commissions on sale of US property                              $250,000
</TABLE>
<PAGE>

  Closing costs on sale of US property                              $ 10,000

  Tax protection of closing costs                                   $227,505

  Shipping of household goods to Australian home                    $ 30,000

  Air fares and expenses of Heine and spouse travel                 $  8,000

Outplacement in accordance with confidential Severance Agreement
                                                                    $ 25,000

Purchase by you of Company car at end of 2 years at net book value

Transfer of ownership to you by the Company of 2 personal computers<PAGE>

                                                                   EXHIBIT 10.15

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.

                           BEAR STEARNS & CO. INC.
                         ENTERPRISE LICENSE AGREEMENT

This Enterprise License Agreement ("Agreement") is dated this 27th day of May,
1999, by and between Bear Stearns & Co. Inc. ("Bear Stearns"), a Delaware
corporation, having offices at 245 Park Avenue New York, NY 10167, and  Tioga
Systems, Inc., ("Tioga"), having offices at 1816 Embarcadero Road, Palo Alto, CA
94303.

Section 1:  GRANT OF LICENSE

1.1  Tioga hereby grants to Bear Stearns, and Bear Stearns hereby accepts, a
     nonexclusive, nontransferable, perpetual license to install and use the
     Licensed Materials described on the Exhibit A. Bear Stearns may however
     assign this agreement to a successor in interest through merger or
     acquisition, to a parent or subsidiary, or to a purchaser of all or
     substantially all of the assets of the division that is to use the Licensed
     Material(s).  Any assignment of Bear Stearns's interest, other than as
     described herein is prohibited without prior written consent of Tioga.

1.2  Bear Stearns is authorized to use the Licensed Materials on the number of
     network computers, workstations and servers specified on Exhibit A for Bear
     Stearns's own internal business purposes.  Bear Stearns will not otherwise
     copy or reproduce the Licensed Materials; except for disaster recovery,
     back-up, archival or test purposes.  Bear Stearns may use the Licensed
     Materials at other than the specified site at no charge and without penalty
     in the following circumstances:  (i) if the specified site cannot be used
     because equipment or software is inoperable; however, Bear Stearns shall
     notify Tioga within five (5) business days after such relocation or, (ii)
     if use of the Licensed Materials is only for testing purposes.

1.3  Bear Stearns shall not, directly or indirectly, nor shall Bear Stearns
     permit others to: copy, duplicate or furnish to others any physical,
     magnetic or optical version of the Licensed Materials provided by Tioga;
     remove any copyright or other notice contained or included in the Licensed
     Materials or any material provided by Tioga; or change, modify, reverse
     engineer, decompile, disassemble or create derivative works from the
     Licensed Materials or any other material provided by Tioga: provide, lease,
     lend, use for timesharing, service bureau or hosting purposes or otherwise
     use or allow others to use the Licensed Materials to or for the benefit of
     third parties, modify, or, except to the extent expressly authorized
     herein, incorporate into or with other software or create a derivative work
     of any part of the License Materials, disseminate information or analysis
     (including, without limitation, benchmarks) regarding the quality or
     performance of the Licensed Materials from any source, and: use the output
     or other information generated by the Licensed Materials (including,
     without limitation, output describing the structure of a software program)
     for any purpose other than use by the Licensed Materials in accordance with
     its specifications.  Notwithstanding anything else, Tioga retains all title
     to, and, except as expressly licensed herein, all rights to the Licensed
     Materials, all copies thereof and all related documentation and materials.
     Bear Stearns must reproduce and include the copyright notice and other
     proprietary notices that appear on the original Licensed Materials on any
     copies and any media thereof made in accordance with the terms of this
     Agreement.

1.4  More than one Exhibit A may be incorporated into this Agreement and each
     Exhibit A together with the terms and conditions of this Agreement shall
     constitute a separate Agreement which is independent from other Exhibit A
     as incorporated into this Agreement. Subsidiaries and affiliates of Bear
     Stearns shall have the right to incorporate Exhibit A under this Agreement
     provided the terms and conditions of the Agreement are strictly adhered to.

Section 2:  CHARGES, FEES, PAYMENT AND INVOICING

2.1  License fees and service fees under this Agreement are specified on the
     Exhibit B. The prices and charges hereunder do not include any amount
     for taxes or duties.  If any duty, sales, use, excise, or other tax,
     penalties or interest, except for taxes based upon Tioga's net income,
     is, or should ultimately be, assessed against or is required to be
     collected by Tioga or by any taxing authority in connection with their
     performance required hereunder, Bear Stearns agrees to pay an amount
     equal to any and all such charges, except where Bear Stearns is exempt
     by law and Bear Stearns provides a bonafide exemption certificate to
     Tioga.
<PAGE>

2.2  Bear Stearns shall make all payments hereunder to Tioga, in accordance with
     instructions on the invoice which includes a due date of 30 days from the
     receipt of a proper and correct invoice. Any late payments under this
     Agreement shall be subject to a service charge amount equal to 1.5% of the
     amount due (calculated on a monthly basis) or the maximum amount allowed by
     law, whichever is less.

Section 3:  DELIVERY AND INSTALLATION

3.1  Tioga shall deliver to Bear Stearns, the Licensed Materials within ten (10)
     business days from the execution of this Agreement or at a different date
     if agreed to by both parties. Accompanying the Licensed Materials will be
     one (1) copy of the related Documentation regularly furnished by Tioga.

3.2  Tioga shall provide the amount of training, instruction and consultation
     prepaid as set forth in Exhibit B at Tioga's the current rates for such
     services, when requested by Bear Stearns. Such services are to be used at a
     time to be mutually agreed upon by the parties and Bear Stearns shall, in
     addition to the amount set forth in Exhibit B, reimburse Tioga for all
     reasonable out-of-pocket expenses, including all transportation, lodging,
     meals and other expenditures related to providing such services.

Section 4:  SUPPORT AND MAINTENANCE

4.1  Support. During the one year period extending from the Effective Date (the
     -------
     "Support Period"), and provided Bear Stearns has paid the applicable annual
     support and maintenance fee set forth in Exhibit B, Tioga shall provide
     support and maintenance described in Exhibit C. Any patches, updates, etc.
     provided as part of Maintenance shall be included within the definition of
     the Licenses Materials for the purpose of this Agreement.

4.2  Renewals. Tioga's obligation to provide the above-described support and
     --------
     maintenance and Bear Stearns' obligation to pay the then-current applicable
     annual support and maintenance fee shall renew automatically upon each
     anniversary of the Effective Date (or such other consolidated Licensed
     Materials purchase date agreed to by the parties in writing), unless either
     Bear Stearns or Tioga has given the other party prior written notice of
     cancellation at least thirty (30) days prior to the expiration of the then
     current term. If Bear Stearns elects not to renew support and maintenance
     for successive terms, Bear Stearns may reenroll only upon payment of the
     applicable annual fee which would have been paid had Bear Stearns not
     terminated support and maintenance.

4.3  Training. Upon Bear Stearns' request, Tioga will provide training to Bear
     --------
     Stearns in accordance with Tioga's then current training offerings and at
     Tioga's then current prices at mutually agreed upon times and locations.
     Tioga's current training offerings and their associated prices are set
     forth in Exhibit D. In the event training services are provided at
     locations other than at Tioga's premises, Bear Stearns shall be responsible
     for all reasonable travel, meals, hotel and other associated expenses
     related to providing such training services. If training services are
     listed in Exhibit B, Bear Stearns agrees to pay Tioga for such training
     services in accordance with the terms of this Agreement.

4.4  Deployment and Implementation Services.  Bear Stearns shall be responsible
     --------------------------------------
     for deployment and implementation of the Licenses Materials. Bear Stearns,
     at its option, may elect to have Tioga provide deployment and
     implementation services at Tioga's then current rates for such services.
     In the event provision of deployment and implementation services requires
     Tioga's employees to travel to Bear Stearns's location or other locations,
     Bear Stearns shall be responsible for all reasonable travel, meals, hotel
     and other associated expenses related to providing such deployment and
     implementation services.  In the event any work product or code is created
     in the provision of Deployment and Implementation services, such work
     product or code shall be included within Licensed Materials and licensed to
     Bear Stearns under the terms and conditions of this Agreement, and Tioga
     shall retain all right, title and interest in and to such work product or
     code and any derivatives, enhancements or modifications to the Licensed
     Materials created by Tioga.   If deployment and implementation services are
     listed in Exhibit B, Bear Stearns agrees to pay Tioga for such deployment
     and implementation services in accordance with the terms of this Agreement.
<PAGE>

Section 5:  WARRANTIES

5.1  Tioga warrants to Bear Stearns that for a period of sixty (60) days from
     the Effective Date, the Licensed Materials will achieve the functionality
     described in the Documentation. Tioga does not warrant, however that Bear
     Stearns use of the Licensed Materials will be uninterrupted or that the
     operation of the Licenses Materials will be error-free. Tioga also warrants
     that the media containing the Licensed Materials, if any, is free from
     defects in material and workmanship and will so remain for ninety (90) days
     from the date Bear Stearns acquired the Licensed Materials. Tioga's sole
     liability (and Bear Stearns exclusive remedy) for any breach of this
     warranty shall be, in Tioga's sole discretion, the use of commercially
     reasonable efforts: (i) to replace Bear Stearns' media or Licensed
     Materials; or (ii) to advise Bear Stearns how to achieve the same
     functionality with the Licensed Materials as described in the Documentation
     through a procedure different from that set forth in the Documentation; or
     (iii) if the above remedies are impracticable, to refund the license fee
     paid for the Licensed Materials and terminate this Agreement. Tioga shall
     have no obligation with respect to a warranty claim unless notified of such
     claim and provided evidence of the license purchase within the applicable
     warranty period. Tioga will use reasonable commercial efforts to repair,
     replace, advise or refund pursuant to the foregoing warranty within thirty
     (30) days of being so notified.

5.2  Tioga warrants the Licensed Materials are free from computer viruses
     introduced as a result of the gross negligence or intentional acts of
     Tioga, its agents or employees and that Tioga, its agents or employees will
     not embed any device in the Licensed Materials or take any action to
     disrupt or terminate its operation of such Licensed Materials.

5.3  Tioga further warrants that it is the sole owner of, or that it has the
     right to license the use of, the Licensed Materials being used for Bear
     Stearns's purposes, and that it has the right to provide Bear Stearns with
     a nonexclusive license for the use of those Licensed Materials.

5.4  The Licensed Materials (i) is designed to be used prior to, during, and
     after the calendar year 2000 A.D.; (ii) will operate during each such time
     period without any error or interruption relating to, or the product of,
     data or input which includes an indication of or reference to a date ("Date
     Data") which represents or references different centuries or more than one
     century; (iii) will, under normal use and service, record, store, process
     and present calendar dates falling on or after September 9, 1999, January
     1, 2000 and February 29, 2000, in the same manner, and with the same
     functionality, data integrity and performance, as the Licensed Materials
     records, stores, processes and presents calendar dates on or before
     September 8, 1999, December 1, 1999 and February 29, 1996; and (iv)
     recognizes the year 2000 as a leap year.

5.5  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR EXPRESSLY
     DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE LICENSED MATERIALS OR THE
     SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED, INCLUDING
     (WITHOUT LIMITATION) ANY WARRANTY OF NON INFRINGEMENT, MERCHANTABILITY OR
     FITNESS FOR A PARTICULAR PURPOSE.

Section 6:  LIMITATIONS OF LIABILITY

EXCEPT AS STATED HEREIN, NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, INDIRECT AND/OR CONSEQUENTIAL DAMAGES OF ANY KIND, RESULTING FROM
EITHER PARTY'S PERFORMANCE OR FAILURE TO PERFORM PURSUANT TO THE TERMS OF THIS
AGREEMENT OR ANY OF THE SCHEDULES OR ATTACHMENTS HERETO, OR RESULTING FROM THE
FURNISHING, PERFORMANCE OR USE OR LOSS OF ANY LICENSED PRODUCTS OR OTHER
MATERIALS DELIVERED TO BEAR STEARNS THEREUNDER, INCLUDING WITHOUT LIMITATION ANY
INTERRUPTION OF BUSINESS, WHETHER RESULTING FROM BREACH OF CONTRACT OR BREACH OF
WARRANTY, EVEN IF THE PARTIES HERETO HAVE BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.

Tioga's liability to Bear Stearns under any provision of this Agreement shall be
limited to the amounts actually paid by Bear Stearns to Tioga pursuant to the
Exhibit A and/or subsequent Exhibit A hereto.  The existence of more than one
claim shall not enlarge or extend the limit.  Bear Stearns releases Tioga from
all obligations, liability, claims or demands related to the Licensed Materials
supplied by Tioga to Bear Stearns under this agreement in excess of the
limitation provided for in this section.
<PAGE>

The parties acknowledge that the limitations set forth in this section are
integral to the amount of fees charged for the license granted under this
Agreement and services provided in connection with the same, and recognize that
were Tioga to assume any further liability beyond that set forth in this
section, such fees would be substantially higher.

Section 7:  DISCLOSURE

7.1  The Licensed Materials and Documentation received by Bear Stearns from
     Tioga under this Agreement are and shall be treated as proprietary and
     confidential information of Tioga.  Any material or information relating to
     the business policies, procedures, customs and forms of Bear Stearns
     including information previously divulged or delivered to Tioga by Bear
     Stearns regarding the aforementioned subject matter and all information and
     data which are proprietary to a third party and which the Bear Stearns is
     obligated to treat as confidential obtained by Tioga or its officers,
     employees or agents, or disclosed to them in connection with the
     performance by Tioga of its obligations under this Agreement, is hereby
     designated as confidential and proprietary information of Bear Stearns.
     The obligations of confidentiality contained in this Section 7 shall not
     apply to information which: (i) is known to a party at the time of
     disclosure as proven by written records of the receiving party; (ii) is
     independently received by a party without obligations of confidentiality
     from a third party which has the legal right to give such information; or
     (iii) is generally known to third parties through no fault or action of the
     receiving party.

7.2  The parties agree not to use or copy the other's confidential information
     unless such use or copying is approved by, and for the benefit of, the
     other party.

7.3  Using the Licensed Material and Documentation or any part of the data
     therein in original or remanipulated form for the purpose of creating any
     form of list, directory, reporting service whether for internal use or
     release to persons outside the Bear Stearns organization, is expressly
     prohibited.

7.4  Each party hereto will take all reasonable steps to assure that the
     confidential information of the other party shall not be disclosed by them
     to others, in whole or in part, without the prior written permission of the
     other party.  Such prohibition on disclosures shall not apply to
     disclosures by Bear Stearns to its employees and agents, provided such
     disclosures are reasonably necessary to Bear Stearns's use of the Licensed
     Materials and provided further that Bear Stearns shall take all reasonable
     steps to insure that the Licensed Materials are not disclosed by such
     employees in contravention of this Agreement.

Section 8:  TITLE

     Tioga shall retain title to the Licensed Material and Documentation
     including all versions and embodiments thereof and all additions and
     modifications thereto.  Tioga does not by this Agreement convey any
     proprietary interest therein to  Bear Stearns.   Bear Stearns agrees that
     the Licensed Materials' Documentation and any derivative works thereof,
     including all changes made thereto by anyone and any materials related
     thereto that are supplied by or developed by Tioga, are the valuable
     property of Tioga. Bear Stearns further agrees to treat the Licensed
     Materials and related materials accordingly and agrees diligently to
     preclude all access to the Licensed Materials except as provided herein, to
     keep the same confidential, by using the same care and discretion that
     Bear Stearns uses with respect to its own confidential property.  Bear
     Stearns agrees to keep all property of Tioga free and clear of all claims,
     liens and encumbrances.

Section 9:  INDEMNIFICATION

     9.1  Tioga agrees to defend Bear Stearns and at Tioga's option, settle any
action or proceeding of any kind or description based upon a third party's claim
of copyright or trademark infringement asserted against Bear Stearns by such
third party based upon the use of the Licensed Materials by Bear Stearns,
provided: (i) the Licensed Materials are used as provided by Tioga; (ii) Tioga
shall have received from Bear Stearns notice of said claim within ten (10) days
of assertion thereof and, (iii) Tioga is given sole control to direct the
investigation, defense and settlement of each such claim. The foregoing
obligation of Tioga does not apply with respect to those portions of the
Licensed Materials (i) which are modified after shipment by any party other than
Tioga, if the alleged infringement relates to such modification, (ii) combined
with any non-Tioga products, processes or materials where the alleged
infringement relates to such combination, (iii) where the allegedly infringing
activity continues after Tioga has notified Licensee thereof or after Tioga has
informed Bear Stearns of modifications that would have avoided the alleged
infringement, (iv) where Bear Stearns' use of the Licensed Materials is incident
to an infringement not resulting primarily from the Licensed Materials, or (v)
infringement based on use of version other
<PAGE>

than the then current version of the Licensed Materials if such infringement
could have been avoided by use of the then current version.  Bear Stearns shall
cooperate fully with Tioga in connection with the foregoing.  If notified of
said claim within ten (10) days of assertion thereof brought against Bear
Stearns based on an allegation that Bear Stearns' use of the Licensed Materials
constitutes infringement, Tioga will pay  reasonable attorney fees, associated
with resolving such claim and any amounts finally awarded in settlement, if any,
provided that Tioga shall have sole control of the resolution of any such claim
and all negotiations for its settlement.  Any settlement made by Tioga under
this Section 9 shall not adversely affect Bear Stearns' ability to exercise the
license rights granted hereunder without Bear Stearns's prior written consent.

9.2  Should the Licensed Materials, become, or in Tioga's opinion are likely to
     become, the subject of a claim of infringement, Tioga shall have the right,
     at Tioga's option and expense, either: (i) to procure for the Bear Stearns
     the right to continue using the Licensed Materials; (ii) to replace or
     modify the same so that they become non-infringing; or, if after Tioga uses
     its commercially reasonable efforts  to accomplish (i) and (ii) and is
     unable to do so, then; (iii) to grant the Bear Stearns a refund of the
     unused portion of the license fees.

9.3  Both parties agree to indemnify, defend and hold harmless the other party,
     its employees, agents and/or authorized representatives for any actual
     damages, liabilities, costs and expenses, including reasonable attorneys
     fees, due to claims alleging damage to the other parties  property or
     injury or death to any persons, arising directly out of the other parties
     ', or the other parties employee's, agent's or subcontractor's negligence
     in performing the services contemplated under this Agreement.

Section 10:  TERMINATION

10.1 In the event a party hereto materially defaults in the performance of any
     of its duties or obligations hereunder, which default shall not be
     substantially cured within thirty (30) days after notice is given to the
     defaulting party specifying the default, then the party not in default may,
     by giving notice thereof to the defaulting party specifying the default,
     terminate this Agreement for cause.  Notwithstanding the foregoing, with
     respect to any such material default that cannot be reasonably cured within
     thirty (30) days, if the defaulting party in good faith promptly proceeds
     to commence curing said default and thereafter proceeds with all diligence
     substantially to cure the same, the defaulting party shall have up to
     another thirty (30) days (for a total of sixty (60) days) substantially to
     cure such default.  If such material default is not substantially cured
     prior to the end of the second thirty (30) days, the party not in default
     may, by giving notice thereof, terminate this Agreement for cause as of a
     date specified in such notice of termination.

10.2 This agreement shall expire in the event Bear Stearns does not have any
     active support services pursuant to Section 4 above.  Additionally, Either
     party hereto may have the right to terminate this Agreement and/or the
     license granted hereunder, in the event that the other party: (i)
     terminates or suspends its business, (ii) becomes subject to any bankruptcy
     or insolvency proceeding under Federal or state statute, (iii) becomes
     insolvent or becomes subject to direct control by a trustee, receiver or
     similar authority, (iv) has liquidated, voluntarily or otherwise, or (v)
     transfers, assigns or otherwise conveys control of itself, without the
     prior written consent of the other party hereto.

Section 11:  PUBLICITY

     Tioga agrees to submit to Bear Stearns all advertising, sales promotion and
     other publicity matter relating to this Agreement wherein Bear Stearns's
     name is mentioned or language is used from which the connection of Bear
     Stearns's name therewith may be inferred or implied; and Tioga further
     agrees not to publish or use such advertising, sales promotion, or
     publicity matter without the prior written consent of Bear Stearns.

Section 12:  MONITORING

     Tioga acknowledges that, as is the custom and practice in Bear Stearns's
     industry, from time to time Bear Stearns monitors and/or records certain
     telephone lines and other communications devices going into or out of Bear
     Stearns's premises, and to the extent that any such monitoring and/or
     recording occurs relating to any telephone call and other communication
     going into or out of Bear Stearns's premises involving Tioga or any of its
     employees, agents and sub-contractors, then Tioga, on behalf of its self
     and its employees, agents and sub-contractors, consents thereto or will
     ensure such other party consents thereto.
<PAGE>

Section 13:  EXPORT RESTRICTIONS

     Bear Stearns understands and acknowledges that certain technology licensed
     hereunder may be subject to regulation by agencies of the U.S. government,
     including the U.S. Department of Commerce, which prohibit export or
     diversion of certain products and technology to certain countries. Bear
     Stearns warrants that it will comply in all respects with the export
     restrictions applicable to any materials or technology provided hereunder
     and will otherwise comply with the Export Administration Regulations or
     other United States laws and regulations in effect from time to time.

Section 14:  MISCELLANEOUS

14.1 Any waiver, amendment or modification of any provisions of this Agreement
     and/or any Exhibits and Attachments (if any) hereto shall not be effective
     unless made in writing and signed by both parties. No failure or delay by
     either party with respect to exercising any of its rights hereunder shall
     operate as a waiver thereof.

14.2 If any provision of this Agreement is declared or found to be invalid,
     illegal, unenforceable or void, then both parties shall be relieved of all
     obligations arising under such provision, but only to the extent that such
     provision is invalid, illegal, unenforceable or void, it being the intent
     and agreement of the parties that this Agreement shall be deemed amended by
     modifying such provision to the extent necessary to make it valid, legal
     and enforceable while preserving its intent or, if that is not possible, by
     substituting therefor another provision that is valid, legal and
     enforceable and achieves the same objective.  Each party agrees that it
     will perform its obligations hereunder in accordance with all applicable
     laws, rules and regulations now or hereafter in effect.

14.3 Headings are for reference purposes only.

14.4 Neither party shall be liable, or have recourse, in respect to any delay in
     delivery or failure to deliver the Licensed Materials or any other
     materials used in connection therewith provided by Tioga, or of the non-
     performance or delay in performance of any term or condition of this
     Agreement directly or indirectly resulting from any cause beyond the
     control of Tioga.  Such causes shall include, but not be limited to, acts
     of God, strikes, lockouts, riots, acts of war, epidemics, governmental
     regulations superimposed after the fact, fire, communication failures,
     power failures, earthquakes or other disasters.

14.5 Tioga may, upon advance notice of at least ten (10) business days, conduct
     and audit during regular business hours to verify compliance with the terms
     of this Agreement, which shall be conducted at Tioga's expense unless the
     results establish that inaccuracies from the audit have resulted in
     underpayment to Tioga of more than 10% of the amount actually due, in which
     case Bear Stearns shall pay all amount due and bear the expense of the
     audit.

14.6 Any notices required or permitted to be sent hereunder shall be served
     personally or by registered or certified mail, return receipt requested or
     by facsimile with confirmation of receipt; to the addresses stated below:

     Bear, Stearns & Co. Inc.                Tioga Systems, Inc.
     115 South Jefferson Road                1816 Embarcadero Road
     Whippany, NJ  07981                     Palo Alto, CA  94303
     Attn:  IS-Contracts & Acquisitions      Attn: Mark Vranesh

14.7 The laws of the State of New York shall govern and the parties consent and
     submit to the jurisdiction and venue of the State or Federal Courts located
     in New York.

14.8 Both parties acknowledges that it has read this Agreement, its Exhibits and
     Attachments (if any), understands it and agrees to be bound by its terms,
     and further agrees that it is the complete and exclusive statement of the
     Agreement, which supersedes and merges all prior proposals, understandings
     and all other agreements, oral and/or written, between the parties relating
     to this Agreement.  This Agreement may not be modified or altered except by
     a written instrument duly executed by both parties.
<PAGE>

IN WITNESS WHEREOF, the parties, by their duly authorized representatives, have
caused this Agreement to be duly executed and delivered as of the day and year
first above written.

Bear, Stearns & Co. Inc.                 Tioga Systems, Inc.
---------------------------------        -------------------------------------

       /s/ Geryl W. Darington                     /s/ Robert Amaral Jr.
---------------------------------        -------------------------------------
Signature                                Signature

       Geryl W. Darington                         Robert Amaral Jr.
---------------------------------        -------------------------------------
Print or Type Name                       Print or Type Name

       Senior Managing Director                   Vice-President of Sale
---------------------------------        -------------------------------------
Title  5/27/99                           Title  5-27-99
<PAGE>

                                   EXHIBIT A
                              LICENSED MATERIALS
                              ------------------

I.  Description and Specifications of Software:
-----------------------------------------------

Tioga Self-Healing System(TM) Version 1.2 in object code format.

II.  Number of Network Computers and Workstations Licensed
----------------------------------------------------------

Catalogue Number and Program Name        Number of Authorized Copies
---------------------------------        ---------------------------

11-00001  Tioga/Desktop Agent            See Scope Below
11-00002  Tioga/Mobile Agent             See Scope Below
11-00006  Server Agent                   See Scope Below
11-00011  Tioga/Administration and       One (1)
          Healing Console - Enterprise
          License

Scope: This is an Enterprise License deal with a term of three (3) years. Bear
Stearns may deploy any mixture of Desktop, Mobil, and/or Server agents as long
as the total number of authorized copies does not exceed [***] during the term
of the agreement. At the end of the three years, Bear Stearns will have a
perpetual right to use the number of licenses deployed during the term of this
agreement.

Bear, Stearns & Co. Inc.                 Tioga Systems, Inc.
---------------------------------        -------------------------------------

       /s/ Geryl W. Darington                     /s/ Robert Amaral Jr.
---------------------------------        -------------------------------------
Signature                                Signature

       Geryl W. Darington                         Robert Amaral Jr.
---------------------------------        -------------------------------------
Print or Type Name                       Print or Type Name

       Senior Managing Director                   Vice-President of Sale
---------------------------------        -------------------------------------
Title  5/27/99                           Title  5-27-99

[***]  CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>

                                   EXHIBIT B
                        PAYMENT TERMS AND FEE SCHEDULE
                        ------------------------------

I.  Payment Terms:
------------------

The Fees described in VI. below will become due and payable upon the earlier to
occur of; (i) [***] by Bear Stearns of the initial rollout of the Company's
software on approximately [***] desktops at Bear Stearns whereby Tioga will
notify Bear Stearns in writing of the completion of the initial rollout and Bear
Stearns will have 10 business days to notify Tioga in writing of [***] of
the initial rollout or (ii) after [***] days from the Effective date. By mutual
agreement, both Companies may extend the [***] day [***] described in (ii)
above.

II. Software License Fees
---------------------------

Item                                         Fees
----                                         ----
License Fees                                 $[***].
Licenses beyond the [***] limit may be purchased in blocks of [***] for a price
of $[***]/License.

III. Technical Support Fee Schedule
-----------------------------------

Item                                         Fees
----                                         ----
Standard Technical Support (Year 1)          $ [***]
Standard Technical Support (Year 2)          $ [***]
Standard Technical Support (Year 3 - [***]%) $ [***]

IV. Deployment and Implementation Fee Schedule
----------------------------------------------

V.  Training
------------

VI.  Payment of Fees
--------------------

All fees are due and payable net 30 days from receipt of invoice. Payments are
due according to the following schedule:
 .    $[***] due June 30, 1999.Includes- First installment payment on software
     license fees and payment of six months of product maintenance for 1999.
 .    $[***] due September 30, 1999. Second installment payment on software
     license fees and payment of second six-months product maintenance for the
     remainder of 1999 through May 2000.
 .    $[***] Maintenance  Fee due May 31, 2000
 .    $[***] Maintenance Fee due May 31, 2001
 .    Beginning May 31, 2002, Maintenance fee due annually in advance at a rate
     of [***]% of license fees billed to date (increased annually based on the
     percentage increase reflected in the CPI).

Bear, Stearns & Co. Inc.                 Tioga Systems, Inc.
---------------------------------        -------------------------------------

       /s/ Geryl W. Darington                     /s/ Robert Amaral Jr.
---------------------------------        -------------------------------------
Signature                                Signature

       Geryl W. Darington                         Robert Amaral Jr.
---------------------------------        -------------------------------------
Print or Type Name                       Print or Type Name

       Senior Managing Director                   Vice-President of Sale
---------------------------------        -------------------------------------
Title  5/27/99                           Title  5-27-99

[***]  CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION.
<PAGE>

                                   EXHIBIT C
                                    SUPPORT
                                    -------

Standard Technical Support
--------------------------

Support Hours
     Tioga will provide support from 8AM to 6PM Pacific time, Monday through
     Friday
Response Time
     Tioga will respond to customer inquiries within 24 hours
Contact Methods
     Tioga will provide a 1-800 number support line
     Tioga will provide e-mail support
Contacts
     Customer is allowed one named contact per TAC (Tioga Administration
     Console) User License purchased
     Customer receives a reasonable amount of phone and e-mail support for those
     contacts

Software Maintenance for product purchased
     Customer will receive software patches and maintenance releases
     Customer will receive major releases that are generally made available by
     Tioga without charge

Product Information
     Customer will receive quarterly product information updates
<PAGE>

                                   EXHIBIT D
                                   TRAINING
                                   --------

Tioga Administrator Training
----------------------------

One day training course that includes the following:

Systems Administration Training
- Installation and configuration of Tioga Self-Healing System
- Configuration and administration of Tioga Servers
- Installation and configuration of Tioga Agents

HelpDesk Administration Training
- Tioga Self-Healing System Overview
- User issues and education
- Remote Diagnosis and Repair

Training to be provided at Bear Stearns facilities.

Fee Schedule
------------

See exhibit B.

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