ENGINEERING CONSULTANT SERVICES AGREEMENT

EXHIBIT 10.26



Confidential materials omitted and filed separately

with the Securities and Exchange Commission.

Asterisks denote such omissions.





ENGINEERING CONSULTANT SERVICES AGREEMENT





STRATUS COMPUTER, INC.





PERITUS SOFTWARE SERVICES, INC.



This Agreement is made this 30 day of November, 1993, between Stratus Computer, Inc., 55 Fairbanks Boulevard, Marlboro, Massachusetts 01752 ("Stratus") and Peritus Software Services, Inc., 164 Middlesex Turnpike, Burlington, MA 01803 ("Peritus").



1. Stratus hereby engages Peritus and Peritus hereby agrees to perform the

software engineering services for Stratus as set forth in Appendix A

hereto (the "Work") for the price set forth in Appendix A. The dates

and/or events causing payments to become due and payable and the

conditions which define the starting date of Peritus' performance are

also set forth in Appendix A.



2. TERM OF AGREEMENT



This Agreement shall continue in force for a three (3) year period from

the date set forth above unless earlier terminated in accordance with

Section 8.



3. TRADE SECRETS



A. During the term of this Agreement, Stratus may disclose to Peritus,

or Peritus may obtain access to, develop or create proprietary and

confidential information or material concerning or related to

Stratus' manufacturing processes, services, products or general

business operations. Such Information or material may include, but

is not limited to, computer programs, design documentation,

development, test and maintenance tools, programs and procedures,

test data, or Stratus' sales, costs, profits, pricing methods,

organization, employee lists, service, software diagnostic

techniques, customer lists, processes, user access passwords, etc.

Peritus acknowledges the confidential and secret character of the

Information, and agrees that the Information is the sole, exclusive

and extremely valuable property of Stratus. Accordingly, without

Stratus' prior written consent, Peritus agrees not to use the

Information for any purpose except in the performance of this





Agreement as expressly permitted herein, and not to divulge all or

any part of the Information to any third party, either during or

after the term of this Agreement without Stratus' prior written

consent in each instance.



B. Except as expressly provided in this Agreement or authorized by

Stratus in writing, all Information shall remain in the possession

and control of Peritus at its offices as first noted above.



4. INVENTIONS, DISCOVERIES AND DEVELOPMENTS



A. Rights in the Work: Stratus shall have all right, title and

interest, including all copyright, trade secret and patent rights

in the Work and in all inventions, discoveries, developments and

improvements, made or conceived by Peritus under or arising out of

this Agreement, including all physical copies and all ideas,

techniques, concepts and expressions thereof contained in the Work.

Notwithstanding the foregoing, nothing in this Agreement shall

preclude Peritus from using its general knowledge, experience and

skill in connection with any other work, products or services for

itself or for any other person or entity.



B. Assignment and Assistance: Peritus hereby transfers and assigns all

of his/her rights in and to the Work to Stratus. During and after

the term of this Agreement Peritus shall, at Stratus' request and

expense, make application of letters Patent in the United States

and/or other countries, will assign such applications to Stratus

and will assist and cooperate with Stratus in the prosecution of

such applications. Peritus hereby assigns to Stratus all copyrights

in and to the Work.



5. RETURN OF PROPERTY



Upon expiration or earlier termination of this Agreement, Peritus

agrees to stop using and to immediately return to Stratus all

Information, material, documents, equipment, tools or facilities

furnished by Stratus pursuant to the provisions or requirements of this

Agreement. Peritus shall be fully responsible for the care and

protection of the same until such delivery.



6. WARRANTY



Peritus warrants that it has or will have good and marketable title to

all of the Work provided herewith. Peritus shall indemnify, defend and

hold harmless Stratus and its customers from any liability, damage or

expense (including





reasonable attorney's fee) resulting from or arising in any way out of

any claims by any third parties, which are based upon or are the result

of any breach of the warrants contained in this Section. Peritus has

the right to be notified promptly of any claim, demand or suit brought

against Stratus and Peritus has the right to defend such suit with

counsel of its choice.



7. HARMLESS/WAIVER



Peritus and Stratus shall indemnify and hold harmless the other party

("Indemnified Party") against all claims, losses and expenses

(including reasonable attorney's fees) and injuries to person or

property (including the Indemnified Party's property) resulting from

any act on the part of (indemnifying party), its agents, employees or

subcontractors pursuant to (indemnifying party's) performance under

this Agreement, except to the extent any such loss is due directly to

the negligence of the Indemnified Party.



8. TERMINATION:



A. For Cause: Stratus may terminate this Agreement without further

payment to Peritus if:



1. Peritus fails to perform any material provisions of this

Agreement, and fails to cure within thirty (30) days after

receipt of notice.



2. Peritus declares bankruptcy or makes an assignment for the

benefit of creditors, or a receiver of similar officer is

appointed to take charge of all or part Peritus' assets.



3. Peritus assigns this Agreement, or any obligation or right

under it (the word "assign" to include without limitation, a

transfer of major interest in Peritus), or merges with a third

party, not a parent or subsidiary company, without Stratus'

prior written consent which Stratus shall not unreasonably



B. For Convenience: Stratus may terminate this Agreement for

convenience at any time after the first year upon giving Peritus

not less than one hundred eighty (180) days' prior written notice.

Upon the effective date of termination Peritus will:



1. Immediately stop work unless otherwise directed by Stratus in



2. Notify Stratus of costs incurred up to the date of termination.





Stratus shall pay those costs within thirty (30) days of

receipt of a proper invoice. Such costs shall not exceed, and

Stratus will not be obligated to pay more than the unpaid

balance due for Work performed prior to the termination date

based upon the fees and payments described in Appendix A.

Payment upon termination will be accepted by Peritus in full

satisfaction of all claims and demands against Stratus based

upon or arising out of or in connection with the Agreement.



3. Notwithstanding any termination, the obligations of Peritus

under paragraphs 3, 4 and 5 above shall survive expiration.



9. NOTICE



Any notice given under this Agreement shall be written or telegraphic.

Written notice shall be sent by registered or certified mail, postage

prepaid, return receipt requested. Any telegraphic notice must be

followed within three (3) days by written notice. All notices shall be

effective when first received at the following addresses:



STRATUS COMPUTER, INC.

55 Fairbanks Blvd.

Marlboro, MA 01752

Attn: James Filreis



PERITUS SOFTWARE SERVICES INC.

164 Middlesex Turnpike

Burlington, MA 01803

Attn: Peter McElroy



10. COMPLIANCE WITH APPLICABLE LAWS



Peritus warrants that the Work performed under this Agreement complies

with or will comply with all applicable United States laws and

regulation Peritus' failure to comply with the above may result in a

material breach of this Agreement.



11. INDEPENDENT CONTRACTOR



In furnishing services pursuant to the Agreement, Peritus will be acting

as an Independent Contractor. Peritus is not an agent or employee of

Stratus and is not authorized to act on behalf of Stratus. As such,

neither Peritus nor his/her employees, agents or contractors will be an

employee of Stratus and will not by reason of the Agreement or his/her

services hereunder be entitled to





participate in, or to receive any benefit or right under, any of

Stratus' employee benefit or welfare plans.



12. GENERAL



A. This Agreement constitutes and fully expresses the entire and only

Agreement between the parties with respect to the subject matter

hereof. This Agreement supersedes all prior agreements and

understandings between the parties and may not be modified, waived

or extended unless mutually agreed upon in writing by both



B. In the event any provision of this Agreement is found to be

legally unenforceable, such unenforceability shall not prevent

enforcement of any other provision of the Agreement.



C. This Agreement shall be construed, interpreted and applied in

accordance with the Laws of the Commonwealth of Massachusetts.



IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 30th day of November, 1993.





STRATUS COMPUTER, INC. PERITUS SOFTWARE SERVICES, INC.



BY: /s/James Filres BY: /s/Peter McElroy

------------------------------ ------------------------------------ NAME: James Filres NAME: Peter McElroy

---------------------------- ---------------------------------- TITLE: TITLE:

--------------------------- ---------------------------------







Confidential materials omitted and filed separately

with the Securities and Exchange Commission.

Asterisks denote such omissions.



APPENDIX A

ENGINEERING CONSULTANT SERVICES AGREEMENT





1. STATEMENT OF WORK



1.1 Out Source Products



A. Peritus will use all technically feasible means to

diagnose and repair or resolve software defects which

occur in the following Stratus VOS-based software

programs ("Out Sourced Products") and which are

reported to Peritus during the term of the Agreement



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*****

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Stratus shall have the right to add or delete

products from the above list subject to **********

days' advance written notice. The parties shall

adjust (increase or decrease) the annual fee, on a

pro rata basis, to reflect the change in the list of

Out Source Products, based on the product's defect

history and using the rate of

*********************************************.





Confidential materials omitted and filed separately

with the Securities and Exchange Commission.

Asterisks denote such omissions.



B. For each ********************************************

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C. For each *****************************************

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D. Peritus will ***************************************

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E. Peritus will ***************************************

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F. Peritus will ***************************************

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Priority Definition Response Time

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******** ********** ***************

******** ********** ***************

******** ********** ***************

******** ********** ***************

******** ********** ***************

7

Confidential materials omitted and filed separately

with the Securities and Exchange Commission.

Asterisks denote such omissions.







1.2 Unresolved Defects List:



Peritus will ************************************************

************************** currently included in the Stratus

UNR (Unresolved Defect) list or which are added to the UNR

list during the term of this agreement or other difficult

software defects which Stratus assigns to Peritus. Such

maintenance shall be for the affected Stratus releases of each

applicable Software program. Assignment of UNR defects to

Peritus shall be through mutual agreement.



1.3 Field Support/Enhancements



A. If requested and approved by an authorized

representative of Stratus, Peritus will dispatch

software engineers to a customer location for

diagnosis and/or resolution of a defect or to provide

specialized software support. For such support,

Peritus will charge Stratus a consulting fee (as set

forth in Appendix B hereof) as well as usual and

customary administrative, communication, travel, and

living expenses.



B. At the request of Stratus, Peritus will be available

to make enhancements to the Out Sourced Products.

Peritus will respond to such requests with a proposal

which will provide a description of the enhancement,

schedules, costs, additional expenses (if

applicable), and other requirements. Peritus will

perform the work after written approval has been

received from an authorized representative of



2. STRATUS REQUIREMENTS



2.1 Stratus will make available, at no cost to Peritus, (1) one

complete library of current source code, requirements and

design documentation, user documentation, operations

documentation, and all other relevant documentation and

material which is required for the performance of this

agreement. The source code fo ...