27 May 1997: Typos corrected.
21 May 1997
Source: Fax from John Gilmore. Obtained from court filing of
RSA v. PGP.
LICENSE AGREEMENT
Effective as of November 25, 1992 PUBLIC KEY PARTNERS, a
general partnership duly organized under the laws of the State of
California and having its principal office at 310 North Mary
Avenue, Sunnyvale, California, 94086 ("PKP"), and LEMCOM SYSTEMS
INC., a corporation duly organized and existing under and by
virtue of the laws of Delaware having its principal office at 2104
West Peoria Avenue, Phoenix, AZ 85029 ("LICENSEE"), hereby enter
into the following Agreement:
1. BACKGROUND
1.1. PKP holds exclusive sublicensing rights to certain
patents in the filed of public key cryptography.
1.2. LICENSEE desires a sublicense to practice the art of
public key upon the terms and conditions described herein.
2. DEFINITIONS
2.1. "LICENSEE" shall mean Lemcom Systems Inc. and any of its
Subsidiaries.
2.2. "Subsidiaries" shall mean any corporation, company or
other entity in which Lemcom Systems Inc. owns or controls more
than fifty percent (50%) of the voting stock or interests.
2.3 "Patent Rights" shall mean the following patent(s)
registered in the United States, (including all divisions,
EXHIBIT "A"
[ 1 ]
Patent License
Public Key Partners
Lemcom Systems, Inc.
November 25, 1992
continuations and re-issues, and all of their foreign equivalents,
as follows:
Cryptographic Apparatus and Method
("Hellman-Diffie")........................ No. 4,200,770
Public Key Cryptographic Apparatus
and Method ("Hellman-Merkle")............ No. 4,218,582
Cryptographic Communications System and
Method ("RSA") .......................... No. 4,405,829
Exponential Cryptographic Apparatus
and Method ("Hellman-Pohlig")............ No. 4,424,414
Foreign Equivalents: (See Attachment "A")
2.4. "Effective Date" shall mean the date stated in the
preamble to this Agreement.
2.5. "Licensed Product" shall mean devices described in
Attachment "B" which are manufactured by LICENSEE and are covered
by the Patent Rights. This Attachment "B" may be amended by
mutual agreement of the Parties to include new Licensed Products
and their associated royalties.
2.6. "Net Sales price" means the gross selling price of the
Licensed Product in the form in which it is sold by LICENSEE,
whether or not assembled (and without excluding therefrom any
components or subassemblies thereof, whatever their origin and
whether or not all such components and subassemblies are covered
by the Patent Rights), less the following items but only insofar
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Lemcom Systems, Inc.
November 25, 1992
as they actually pertain to the sale of such Licensed Product by
LICENSEE, and are included in the gross selling price, and such
items are separately billed on LICENSEE's invoices:
(a) Custom duties, import, export, excise, and
sales taxes directly imposed with reference to particular sales;
(b) Costs of insurance and transportation from
the place of manufacture to the purchaser's or lessee's place of
use;
(c) Credit for returns, allowances or trades.
No deductions shall be made for commissions paid to individuals
whether they be employed by independent sales agencies or
regularly employed by LICENSEE, or for cost of collections.
2.7 "Licensed Field of use" means encryption, digital
signatures, authentication and key management.
2.8 "Licensed Territory" means the United States and each
country listed on Attachment "A", but each such country shall be
part of the Licensed Territory for each Licensed product only so
long as valid Patent Rights covering that Licensed product are
registered and in full force and effect there in accordance with
all applicable laws.
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Lemcom Systems, Inc.
November 25, 1992
2.9 "End User" means the part who actually utilizes the
Licensed product for its intended purpose without selling,
leasing, or transferring it to any third party.
2.10 "Distributor" means a party who sells Licensed
Products without any modification as packaged by LICENSEE for the
End User.
2.11 "OEM" Customer" means a party who adds significant
functional enhancements to the Licensed Product by bundling it
with other products.
3. GRANT
3.1 PKP hereby grants to LICENSEE a personal, non-
exclusive license to the Patent Right, in the Licensed Field of
Use, for the right to make, use, lease or sell the Licensed
Product in the Licensed Territory to OEM Customers, Distributors
and End Users.
3.2 This license may not be transferred, nor does it convey
any rights whatsoever to sublicense the Licensed Patents.
Specifically, and without limitation on the generality of the
foregoing:
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3.2.1. Except as provided by S3.3 herein, LICENSEE
may not authorize any party to reproduce,
duplicate or copy the Licensed Product.
3.2.2. In the case of software, LICENSEE may not
transfer any rights to the source code for
the Licensed Product.
3.3 Notwithstanding the prohibition in S3.2. and S3.2.1.,
LICENSEE may authorize copying of Licensed Product consisting
solely of object code software in the following instances:
3.2.1. For End Users to make a single copy strictly
for archival purposes;
3.3.2. For OEM Customers when the Licensed product's
sole use of this license to the Patent Rights
is limited to implementation of the Federal
Information Processing Standard known as the
Digital Signature Algorithm, provided (i) the
OEM Customer complies with the accounting
requirements for software stated in
Attachment "C", and (ii) the Licensed product
adds significant functional enhancements to
the art described by the Patent Rights.
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3.4. Provided the royalty has been paid for the Licensed
Product in accordance with Article 5 and Attachment "C", PKP
grants the End User the right to use such Licensed product
without risk of infringement of the Patent Rights.
4. TERM
This Agreement shall be effective for each individual
patent described in the definition of Patent Rights, in each
country where it is registered, until the expiration or
invalidation of each such patent in its country of registry.
5. ROYALTIES
5.1. LICENSEE shall pay the sum of $25,000.00 upon the
execution of this Agreement. This sum shall be deemed earned upon
the execution of this Agreement by PKP and shall be non-
refundable.
5.2. In consideration of the rights granted in Article 3,
LICENSEE agrees to pay PKP, during the term of this Agreement,
the following royalties:
(a) A minimum annual advance royalty of $5,000.00
for 1993, and $10,000 per calendar year for each year thereafter.
This minimum royalty will be paid at the commencement of each
calendar year.
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November 25, 1992
(b) A royalty for each Licensed Product made,
leased, sold or otherwise disposed of in the Licensed Territory at
the rate set forth in the schedule annexed to this Agreement as
Attachment "C". Said royalties are deemed earned when the
Licensed Product is leased, sold or otherwise disposed of.
5.3 In the event any advanced royalty paid in accordance
with §5.2 is not recovered by LICENSEE by offsetting royalties
earned during that year, as provided herein, such advance will be
deemed fully earned by PKP and on-refundable to LICENSEE.
LICENSEE may recoup the minimal annual advance royalty required
by §5.2(a) by offsetting the first $10,000 in royalties that
accrue in each calendar year under §5.2(b) against the advance
royalty paid for that year.
6. REPORTS, PAYMENTS AND ACCOUNTING
6.1 LICENSEE shall submit written royalty reports, in
accordance with the format annexed hereto as Attachment "D",
together with royalty payments to PKP within sixty (60) days
after the end of each calendar quarter. In the event of
LICENSEE's failure to make any required payment on or before the
required date, a supplemental royalty equal to five percent (5%)
of the amount otherwise due, or the maximum amount permitted by
law, whichever is less, shall be paid by LICENSEE for each month
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Lemcom Systems, Inc.
November 25, 1992
or portion thereof that the payment is late by more than five (5)
days.
6.2 The royalty report shall be certified by an authorized
representative of LICENSEE and shall state the number of Licensed
Products, the Net Sales price per Licensed Product, and the
aggregate sales of all Licensed products sold, leased or
otherwise disposed of. In the event a Licensed Product is sold at
varying Nets Sales Prices, then the report shall indicate the
number of Licensed Products sold at each Net Sales price.
Further, LICENSEE shall furnish whatever additional information
PKP may reasonably request from time to time to enable PKP to
verify the calculation of royalties due pursuant to this
Agreement. Concurrent with the submission of each such report,
LICENSEE shall make payment of all royalties due for the calendar
quarter covered by such report.
6.3 For purposes of payment and accounting to PKP for
royalties due pursuant to this Agreement, a "sale" Or "lease" of
a Licensed Product shall be deemed to have occurred as follows:
(a) A "sale" of any Licensed Product shall be
deemed to have occurred as of the date shipment by LICENSEE or the
date of dispatch of a bill or invoice, whichever shall first
occur.
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November 25, 1992
(b) A "lease" of any Licensed Product shall be
deemed to have occurred as of the date of shipment by LICENSEE,
to a lessee thereof, or the date of dispatch of an initial bill
or invoice to any such lessee, whichever first shall occur. In
the event of any lease, royalties will be calculated on the
prevailing Net Sales Price of the Licensed Product.
6.4 In all cases, the Net Sales Price employed in the
computation of royalties shall be a genuine and objective selling
price established in a bona fide arm's length transaction between
unrelated and independent parties which have no affiliation or
other interest which might affect such genuine and objective
selling price. LICENSEE covenants not to engage in manipulative
transfer pricing, distribution of Licensed products which are not
commercially reasonable, or any other means, to avoid the
intended application of this Article. In the vent Licensed
Products are used or otherwise disposed of by LICENSEE to any
other party at a price which is less than a genuine and objective
selling price, as described herein, then the Net Sales Price
employed in the computation of royalties shall be the prevailing
Net Sales price of the identical type of Licensed Products sold or
leased by LICENSEE, as the case may be, to independent and
unrelated third parties. In the event that LICENSEE shall not
have customarily sold or leased the identical type of Licensed
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Lemcom Systems, Inc.
November 25, 1992
Products to independent and unrelated third parties, then the Net
Sales Price employed in the computation of royalties shall be set
at 125% times the full cost of production, including all direct
costs and full overhead established by LICENSEE's standard
practices, for such Licensed products sold.
6.5 The royalty on sales in currencies other than U.S.
Dollars shall be calculated using the appropriate foreign
exchange rate for such currency quoted by the Bank of America
foreign exchange desk located in San Francisco, on the close of
business on the last banking day of each calendar quarter.
Royalty payments to PKP shall be in U.S. Dollars and shall be net
of all non-U.S. taxes.
6.6 It is expressly understood and agreed by the parties
hereto that all computations relating to determination of the
amounts of royalties due and payable pursuant to this Agreement
shall be made in accordance with internationally recognized and
generally accepted accounting principles as reflected in the
practice of certified independent public accountants of
international reputation. LICENSEE agrees to keep records for
period of three (3) years which identify the manufacture, sales,
use, lease and other disposition of Licensed products sold or
otherwise disposed of by LICENSEE under this Agreement in
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November 25, 1992
sufficient detail to enable the royalties payable hereunder to be
determined by PKP's auditors, and LICENSEE further agrees to
permit its books and records to be examined by PKP's auditors as
often as PKP deems reasonably necessary, but not more than once a
quarter, to verify the LICENSEE's compliance with this Agreement.
Any errors discovered during such examination shall be corrected
promptly. Such examination is to be made by PKP, at PKP's
expense, except in the event that any such examination reveals an
increase in PKP's favor of five percent (5%) or more of royalties
owed over that reported by LICENSEE in any one quarter, then the
fees of PKP's auditors shall be paid by the LICENSEE.
7. LIMITATION OF WARRANTIES
7.1 PKP warrants that it is authorized to enter into this
Agreement and to grant the rights stated in Article 3, herein, to
LICENSEE. PKP further warrants that, as of the date of this
Agreement, it has no knowledge of any claims by third parties
which allege infringement for use of the Licensed Patents.
7.2 Nothing in this Agreement is or shall be construed
as:
(a) A warranty or representation by PKP as to the
validity or scope of any Licensed Patents;
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Lemcom Systems, Inc.
November 25, 1992
(b) Except as provided in §7.1, any warranty or
representation that anything made, used, sold or otherwise
disposed of under any license granted in this Agreement is or
will be free from infringement of patents, copyrights, and other
rights of third parties;
(c) An obligation to bring or prosecute actions
or suits against third parties for infringement, except as
provided in Article 10; or
(d) Granting by implication, estoppel or
otherwise any license under patents licensed by PKP other than
the Licensed patents defined in this Agreement, regardless of
whether such patents are dominant or subordinate to any Licensed
Patent.
7.3 Except as expressly set forth in this Agreement, PKP
MAKES NO REPRESENTATION AND EXTENDS NO WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED. THERE ARE NO EXPRESS OR IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT THE USE OF THE LICENSED PRODUCTS WILL NOT
INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHTS. PKP
SHALL NOT BE LIABLE TO LICENSEE, ITS CUSTOMERS, THE USERS OF ANY
LICENSED PRODUCT, OR ANY THIRD PARTIES FOR DIRECT, INDIRECT,
CONSEQUENTIAL DAMAGE, INCLUDING, WITHOUT LIMITATION, ANY DAMAGE
OR INJURY TO BUSINESS EARNINGS, PROFITS OR GOODWILL SUFFERED BY
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Lemcom Systems, Inc.
November 25, 1992
ANY PERSON ARISING FROM ANY USE OF THE LICENSED PATENT(S) OR
LICENSED PRODUCTS, EVEN IF PKP ADVISED OF THE POSSIBILITY OF SUCH
LOSS.
7.4 Except for breach of PKP's warranty in Paragraph 7.1,
herein, PKP shall not be liable to LICENSEE, its customers, users
of the Licensed products or any third parties, under any
circumstances whatsoever, for any amount greater than that paid
by LICENSEE to PKP during the preceding six (6) months prior to
the assertion of any claim against PKP.
7.5 In the event of any damage to LICENSEE caused by
breach of the warranty in Paragraph 7.1, herein, PKP agrees to
reimburse LICENSEE for said damages, up to the amount of all
payments made by LICENSEE to PKP under the terms of Article 5 of
this Agreement.
7.6 Any warranty made by LICENSEE to its customers, users of
the Licensed Product or any third parties are made by LICENSEE
alone and shall not bind PKP or be deemed or treated as having
been made by PKP and service of any such warranty shall be the
sole responsibility of LICENSEE.
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November 25, 1992
8 INDEMNITY
8.1 LICENSEE agrees to indemnify, hold harmless, and
defend PKP, its partners and the assignees of the Licensed
Patents, their trustees, officers, directors, employees, faculty
members, students and agents against any and all claims for
death, illness, personal injury, property damage, improper
business practices, and economic loss of any kind whatsoever
arising out of the exercise of any of the rights granted in
Article 3, herein, by LICENSEE, its distributors, customers or
anyone acting on its behalf, except for liability arising out of
PKP's intentional misconduct.
8.2 LICENSEE's liability under Paragraph 8.1, herein, is
conditioned on prompt notice by PKP of all such claims after PKP
receives notice of their existence and, provided further, PKP
offers LICENSEE an opportunity, to the extent permissible by the
governing law, to assume their defense. In the event LICENSEE
assumes the defense of any such claim, PKP (i) shall, at is
expense, furnish LICENSEE with any information in PKP's
possession or control that LICENSEE reasonably may request for
such defense, and PKP (ii) reserves the right to continue to
participate in the defense of its interests, at its own cost and
expense. LICENSEE shall not be liable for any settlement or
compromise unless, prior to any such agreement, PKP notifies
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Lemcom Systems, Inc.
November 25, 1992
LICENSEE of the proposed settlement or compromise and LICENSEE
fails to assume the defense of said claim.
9. MARKING
9.1 LICENSEE agrees to mark Licensed Products, or in the
event their size or configuration makes such marking impractical,
their containers or labels, as well as all literature describing
the Licensed product, with the following numbers of the Licensed
Patents:
"U.S. Patent Nos. 4,200,770, 4,218,582, 4,405,829 and
4,424,414"
9.2 In addition, all references to public key technology or
any of the Licensed Patents in any literature promoting or
describing the Licensed Products shall be the legend, "Licensed
Exclusively By Public Key Partners". Except for advertising and
marketing materials, said legend shall be in print no less
distinct and in size than the accompanying text.
9.3 LICENSEE agrees not to identify, or use nay trademark,
service mark, trade name, or symbol of PKP's partners, their
affiliates, or the assignees of the Licensed Patents, their
faculty members, students, employees, agents, officers or
directors in any promotional advertising or other promotional
materials to be disseminated to the public.
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November 25, 1992
10. INFRINGEMENT AND PROTECTION OF THE PATENTS
10.1 LICENSEE shall promptly inform PKP of any suspected
infringement of any Licensed Patent(s) by a third party. PKP and
LICENSEE shall each have the right to institute an action for
infringement of the Licensed Patent(s) against such third party
in accordance with the following:
(a) PKP, its partners, their affiliates, and the
assignees of the Licensed Patents may institute suit. PKP may,
at its option, invite LICENSEE by giving written notice to join in
such suit. If LICENSEE fails to notify PKP in writing, within
fifteen (15) days after notice from PKP, that it will join in
enforcing the patent pursuant to the provisions hereof, this
failure shall be deemed conclusively to be LICENSEE's assignment
to PKP of all rights, causes of action and damages resulting from
any such alleged infringement, and PKP shall be entitled to
retain the entire amount of any recovery or settlement. At its
option, PKP may join LICENSEE as a named plaintiff, without cost
to LICENSEE.
(b) If LICENSEE agrees to join in such suit,
the out-of-pocket costs thereof shall be borne, and any recovery
or settlement shall be shared, by all plaintiffs as their
respective interests may appear.
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November 25, 1992
(c) In the absence of agreement by PKP, LICENSEE
may not institute or continue prosecution of any suit concerning
infringement of the Licensed Patent(s) by any third party.
10.2. Should LICENSEE commence a suit under the provisions
of Paragraph 10.1 and thereafter elect to abandon the same, it
shall give timely notice to PKP who may, if it so elects,
continue prosection of such suit. An election to abandon such
an action shall be deemed conclusively to be an assignment by the
abandoning party in favor of PKP of all rights, causes of action
and damages resulting from any such alleged infringement.
10.3. If LICENSEE receives notice of a claim that the
exercise of the rights granted in Article 3, herein, infringes
any patent, copyright or trade secret of any party, it shall
immediately inform PKP in writing. In such event, LICENSEE
agrees to permit PKP, at PKP's option, to appear as a proper
party in interest in the defense of any such claim.
11. TERMINATION
11.1. PKP may terminate this Agreement in the event of any
of the following:
(a) LICENSEE is in default in payment of any
royalty or submission of any royalty report, and fails to cure
such default within thirty (30) days after notice from PKP;
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November 25, 1992
(b) LICENSEE submits a materially false royalty
report;
(c)LICENSEE breaches Paragraph 3.2, Article 8 or
Article 9.
11.2. Surviving and termination are:
(a) LICENSEE's obligation to continuing submitting
report and making payment of royalties as described in Articles
5 and 6.
(b) Any cause of action or claim of PKP or
LICENSEE, accrued or to accrue, because of any breach or default
by the other party herein;
(c) The provisions of Article 5, 6, 8 and
Paragraph 10.3.
12. ASSIGNMENT
12.1. This Agreement may not be assigned by LICENSEE,
without the prior written consent of PKP, which consent may be
withheld for any reason whatsoever.
13. ARBITRATION
13.1 All disputes, controversies or differences between
PKP or LICENSEE arising out of or related in any way whatsoever
to this Agreement shall be submitted to arbitration. Each party
shall be entitled to appoint one arbitrator, who shall not be an
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Lemcom Systems, Inc.
November 25, 1992
affiliate, officer, director, employee, agent, vendor or
contractor of that party. The appointed arbitrators shall then
appoint a neutral arbitrator who shall serve as Chairman, and the
arbitration shall be conducted by the arbitrators so chosen. All
arbitrators so appointed shall be experienced in the business of
licensing intellectual property rights, and the Chairman shall be
an attorney practicing litigation in said field. the arbitration
shall be conducted in Santa Clara County, California. Demand for
arbitration shall be made in writing and shall be served upon the
party or parties to whom the demand is addressed in the manner
provided for the tender of notices in Article 14, hereof. If the
party receiving the demand for arbitration does not appoint its
arbitrator within 30 days after receiving such notice, the
arbitrator appointed to the party serving the demand for
arbitration shall be further empowered to serve as the sole
arbitrator.
13.2. The arbitrators are authorized to award any remedy,
legal or equitable, as well as any interim relief as they deem
appropriate in their discretion. However, notwithstanding the
foregoing, the arbitrators shall have no power to add to,
subtract from, or modify any of the terms or conditions of this
Agreement. Application may be made to any court having
jurisdiction over the proceedings to assist the arbitrators in
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Lemcom Systems, Inc.
November 25, 1992
performing their arbitral duties, to confirm their award and to
enforce any such award as a judgment of said court.
13.3. Claims, disputes or controversies concerning the
validity, construction or effect of any Patent Rights shall be
resolved in any Court having jurisdiction thereof. In the event
that, in any arbitration proceeding, any issue shall arise
concerning the validity, construction or effect of any Patent
Rights, the arbitrators shall assume the validity of all claims
as set forth in such Patent Rights. The arbitrators shall not
delay the arbitration proceeding for the purpose of obtaining or
permitting either party to obtain judicial resolution of such
issue, unless an order staying the arbitration proceeding shall
be entered by a Court of competent jurisdiction. Neither party
shall raise any issue concerning the validity, construction or
effect of any Patent Rights in any proceeding to enforce any
arbitration award hereunder or in any proceeding arising out of
any such arbitration award.
13.4. In the event LICENSEE institutes a proceeding to
contest the validity of, construction or effect of any Patent
Rights before the Court having jurisdiction over such disputes,
all royalties owed by LICENSEE under Article 5 of the Agreement
shall continue to be paid by LICENSEE into an escrow account
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Lemcom Systems, Inc.
November 25, 1992
maintained by PKP's counsel, or their designees, until such
proceeding is resolved, after appeals if any.
13.5. The prevailing party in any action or arbitration to
enforce or interpret this Agreement or for relief of its breach
shall be entitled to recover its costs, including its share of
arbitration fees, and its reasonable attorneys fees incurred in
such proceeding.
14. NOTICES
All notices under this Agreement shall be deemed sent
when:
(a) Deposited in the United States mail, registered or
certified, and addressed as follows:
TO PKP: Public Key Partners
310 North Mary Avenue
Sunnyvale, Ca. 94086
Attention: Director of Licensing
TO LICENSEE: Lemcom Systems Inc.
2104 West Peoria Avenue
Phoenix, AZ 85029
Attention: President
Brown & Bain
2901 North Central Ave.
Phoenix, AZ 85012-2788
Attention: Charles Van Cott
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November 25, 1992
Either party may amend its address by written notice to
the other party, sent as provided herein.
(b) Sent by overnight courier such as Federal Express or
DHL to the address set forth in Subparagraph (a) above.
(c) In the event of a generally-prevailing labor
dispute or other condition which will delay or impede the giving
of notice by any such means, in either the place of origin or the
place of destination, the notice shall be given by such specified
mode as will be most reliable, expeditious and least affected by
such dispute or condition.
15.GENERAL CONDITIONS
15.1 This Agreement, including all attachments (such as
the Non-Disclosure Agreement annexed hereto as Attachment "E"),
all of which the Agreement incorporate by reference, sets forth
the entire agreement and understanding between the Parties and
supersedes and cancels all previous negotiations, agreements,
commitments, whether oral or in writing, with respect to the
subject matter described herein, and neither Party shall be bound
by any term, clause, provision, or condition save as expressly
provided in this Agreement or as duly set forth in writing as a
subsequent Amendment to this Agreement, signed by duly authorized
officers of each Party.
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November 25, 1992
15.2. This Agreement shall be construed in accordance with
the laws of the State of California as they would apply to
contracts executed in and covering transactions solely within
said State, except that questions affecting the construction and
effect of any patent shall be determined by the law of the
country in which the patent was granted.
15.3. Failure by either Party to detect, protest, or remedy
any breach of this Agreement shall not constitute a waiver or
impairment of any such term or condition, or the right of such
Party at any time to avail itself of such remedies as it may have
for any breach or breaches of such term or condition. A waiver
may only occur pursuant to the express written permission of an
authorized officer of the party against whom the waiver is
asserted.
15.4. The provisions of this Agreement are severable, and
in the event that nay provisions of this Agreement are determined
to be invalid or unenforceable under any controllable body of
law, such invalidity or unenforceability shall not in any way
affect the validity or enforceability of the remaining provisions
hereof. In such event, the Parties agree to negotiate in good
faith a substitute enforceable and legal provision which most
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Lemcom Systems, Inc.
November 25, 1992
nearly effects the intent of the Parties in entering into this
Agreement.
15.5. Except as expressly provided herein, the rights and
remedies herein provided shall be cumulative and not exclusive of
any other rights or remedies provided by law or otherwise.
15.6. Time is of the essence for performance under this
Agreement. In determining any time period herein, the day upon
which action is taken to start the period shall not be counted
and the period shall end on the last designated day of the
period.
15.7. LICENSEE is familiar with and agrees comply with
all Export Administration Regulations of the United States
Department of State, and all other United States government
regulations relating to the export of technical data and
equipment and products produced therefrom, which are applicable
to LICENSEE with regard to any distribution of the Licensed
Products.
15.8. The terms of this Agreement shall not be disclosed by
LICENSEE without the written consent of PKP, except to LICENSEE's
attorneys, auditors, investment advisors or when otherwise
required by law.
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Lemcom Systems, Inc.
November 25, 1992
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the Effective Date:
PUBLIC KEY PARTNERS LEMCOM SYSTEMS INC
By: [Signature] By: [Signature]
Title: President Title: President
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Lemcom Systems, Inc.
November 25, 1992
ATTACHMENT A
Foreign Equivalent of Patent Rights
Patent Country Number
Cryptographic Apparatus
and Method ("Hellman-Diffie") Canada 1,121,480
Public Key Cryptographic
Apparatus and Method
("Hellman-Merkle") Australia 40 418/78
Belgium 871039 [?]
Canada 1 128 159
France 78 28474
Germany DE 28 43 583 C2
Italy 1099780
Japan 1,270,888
Spain 474.539
Sweden 78 10478-3
Switzerland 634161
United Kingdom 2 006 580 B
Exponential Cryptographic
Apparatus and Method
("Hellman-Pohlig") Canada 1,152,592
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Lemcom Systems, Inc.
November 25, 1992
ATTACHMENT B
Licensed Product(s):
[Lemcom's product description dated November 10,
1992]
27
ATTACHMENT B
1. Licensed Products consists of a group of products which
will incorporate technology of one or more of the
patents licensed by this agreement. These Licensed
Products may be offered under various individual
designations as part of the ViaCrypt (Trademark applied
for) family of cryptographic products.
2. The ViaCrypt family of products is aimed at a wide
variety of computer and workstation-based applications
that require cryptographic capability. Some examples are
applications that need to employ cryptographic
techniques for such capabilities as data privacy,
message authentication, non-repudiation, key
management, user authentication, access control, and
digital signature.
3. Software implementations of these capabilities will be
common and inexpensive. In many cases software-only
solutions will be adequate. In other cases, the secret
key component will not be considered secure enough in
software and a physical tamper-proof security perimeter
(herein called a "security module") will be required.
It is Lemcom's intention to provide solutions for all
of these requirement for OEMs, Systems Integrators,
VARs, and end-users.
4. The security modules will consist of one or more
microprocessors, ROM, RAM, possibly specialized
hardware such as a DES chip, and control logic. There
will be a reasonably robust program in the ROM. The
security modules will be contained in a tamper-proof
enclosure and be designed to be mounted on PCBs.
5. Lemcom's ViaCrypt product line will therefore consist
of three classes of products:
a. Several software-only products which can be
seamlessly upgraded to include a security
module at some later date. Software-only
products will be offered to OEM's, or sold
through Distributors, Systems Integrators,
VARs, or directly to end-users.
b. A number of security module types that will
be sold on an OEM basis. These security
modules will be integrated into other
products by the OEM and then sold by the OEM
to end-users.
CONFIDENTIAL TO LEMCOM SYSTEMS, INC.
November 10, 1992
[ 27a ]
c. Several products where the security module
may be mounted on a PCB or put into its own
enclosure by Lemcom Systems and then offered
with software to OEM's, through Distributors,
System Integrators, VARs or directly to
end-users.
6. Lemcom Systems' ViaCrypt products will support a very
wide range of standards including, among others, X9.9,
X9.17, X9.23, X12.42, X12.58, FIPS 46, FIPS 106, FIPS
140-1, FIPS DSS, FIPS shs, RFC 1113-1115, and RFC 1186.
7. The number an capabilities of these products will be a
function of:
. Business considerations
. License limitations (RSA, DSA and possibly others)
. Export restrictions (It is likely that both a
domestic and an exportable version of each
product will result)
CONFIDENTIAL TO LEMCOM SYSTEMS, INC.
November 10, 1992
[ 27b ]
Patent License
Public Key Partners
Lemcom Systems, Inc.
November 25, 1992
ATTACHMENT C
A. Hardware Products
In the case of hardware products, the royalty rate shall
be 2.5% of the Net Sales Price per unit of product with a maximum
royalty of $400 per product.
B. Software Products
In the case of Licensed Products consisting entirely of
software, a royalty shall be paid for each End User entitled to
its use at the rate of 5% of the Net Sales Price, with a maximum
royalty of $500 per each such End User.
In the event of sales to OEM Customers, LICENSEE's
agreement with its OEM Customer will require the OEM Customer to
account for the number of End Users entitled to use LICENSEE's
product and that such accounting will be made available PKP's
auditors on the same conditions as LICENSEE's own records set
forth in §6.6 of this Agreement.
C. Minimum Royalties Per Product
The minimum royalties paid for each Licensed Product or,
in the case of software the minimum royalties for each End User,
shall be not less than the following:
28
Patent License
Public Key Partners
Lemcom Systems, Inc.
November 25, 1992
Number of Minimum Accumulated
Units/End Users Royalty Royalties
First 1,000 $15 $ 15,000
Next 2,000 $12 $ 39,000
Next 3,000 $ 9 $ 66,000
Next 5,000 $ 6 $ 96,000
Next 10,000 $ 3 $126,000
Next 15,000 $ 2 $156,000
All Additional Units $ 1
D. Foreign Patents. In the event LICENSEE's payment of a royalty
is due solely to one of PKP's foreign patents listed in
Attachment "A", PKP agrees to adjust the royalty rate for said
payment so as not to exceed the highest royalty rate paid or owed
by any other licensee for similar products under such patent.
E. FIPS. In the event PKP publishes a uniform royalty schedule
for the practice of an FIPS which is less than the royalty rates
set forth herein, PKP agrees to adjust the royalty rates herein by
substituting such uniform royalty schedule; provided, however,
that this adjustment shall apply only to Licensed Products whose
sole use of the Patent Rights is limited to that described by
such FIPS.
29
Patent License
Public Key Partners
Lemcom Systems, Inc.
November 25, 1992
F. Sales to U.S. Government. No royalty will be owed for sales
to the U.S. Government. For purposes of this Agreement, a sale
to the U.S. Government shall mean a transfer of title to the
Licensed Product to a branch, department or agency of the U.S.
Government.
30
[Attachments "D" and "E" not provided.]
[End of License Agreement]
Digitized by NYA/Urban Deadline.