System Enhancement Associates vs. PKware, Inc CONFIDENTIAL CROSS-LICENSE AGREEMENT Document dated July 31, 1988. Agreement between SEA and PKware to allow PKware to distribute its file compression programs. The following pages have been re-keyed by me for purposes of full disclosure to the public. They have been run through spelling checker, but have not been proofread by anyone. See the file --> SEA-PK-S.arc <-- for re-keyed version of the latest contempt proceeding being brought against PKware by SEA in which SEA says PKware violated the Confidential Cross-License Agreement. Initial arguments to be heard September 9th in Judge Gordon's Federal Court -- Milwaukee County. Both documents were photocopied at the Clerk of Court's Office in the Milwaukee County Federal Courthouse by myself at 1:00 PM on August 31, 1988. Before reading this, the public should know that PKware did not and HAS not violated any copyright law or any other law involving SEA's file compression programs. The confidential cross-license agreement was settled for $62,500 BECAUSE it would have cost Phil Katz of PKware a minimum of $100,000 to defend himself against any allegation brought by SEA. The actual case on Phil's behalf was estimated to actually run between 1/2 and ONE MILLION DOLLARS. By the way, as *I* am the person who wrote PKware's documentation for their file compression programs, the information contained herein came as a COMPLETE surprise to me. I first became aware of the Confidential Information in a Milwaukee The Business Journal article. Neither Phil Katz or his attorney, Nick Kees, discussed any aspect of the case or upcoming legal proceedings with me prior to the revaluations which I received at the courthouse. Karen Little, President Office Technology Academy, Inc. 230 W Wells, Suite 310 Milwaukee, WI 53203 414 / 273-7310 September 1, 1988 + + + + CONFIDENTIAL CROSS-LICENSE AGREEMENT This Agreement is made effective this 1st day of August, 1988, by and between PKware, Inc., a Wisconsin Corporation having offices in Glendale, Wisconsin, and Phillip W. Katz, a citizen of the State of Wisconsin, hereinafter collectively referred to as "PK", and System Enhancement Associates, Inc., a New Jersey Corporation having offices in Wayne, New Jersey, hereinafter referred to as "SEA." 2 WHEREAS, SEA filed a lawsuit against PK on or about April 25, 1988, in the Federal District Court for the Eastern District of Wisconsin, Case No. 88-C-447, claiming copyright infringement, violations of the Lenham Act, trademark infringement and unfair competition; and WHEREAS, both parties desire to resolve the above identified lawsuit, without admitting any fault, wrongdoing or liability; IT IS THEREFORE AGREED THAT: 1. Judgment on Consent: A Judgment for Plaintiff on Consent, in the form to which this Agreement is attached, shall be entered in the above identified lawsuit referencing the following terms of this Agreement. 2. Magazine Advertising: PK shall forthwith withdraw all magazine advertising of ARC compatible programs in any publication where they may currently appear to the extent possible. 3. Cross License: SEA hereby grants to PK, nunc pro tunc, a license to use its source code for a period beginning with the first release of an ARC compatible program by PK, and ending on January 31, 1989. PK hereby grants to SEA a personal, non- transferable (except with the assets of SEA's business in ARC compatible programs), perpetual, world-wide, non-exclusive (including the right to grant sub-licenses of no greater scope) royalty-free license to use PK's source code for ARC compatible programs, provided that, in using any code provided by PK to SEA, SEA agrees not to alter materially the existing "look and feel" of SEA's ARC program, that is, SEA agrees not to use any code provided to SEA by PK for the purpose of splitting its ARC program into separate compression and extraction modules. PK agrees to provide, as expeditiously as possible after the date of this Agreement, fully commented source code of its ARC compatible programs to SEA. SEA agrees never to sell or license, without substantial changes, the entire source code provided to it by PK. 4. Termination of PK's License: After January 31, 1989, PK agrees not to distribute or offer for license any program that: 1. creates ARC compatible archive files; 2. by default adds a filename extension of ".ARC"; or 3. processes ARC format files. 5. No Trademark License: After the effective date of this Agreement, PK agrees not to distribute or offer for license any program that carries a trademark, tradename or filename including the letter combination "ARC" or any other trademark, tradename or filename the use of which may be confusingly similar to any of SEA's trademarks, or the use of which may be likely to cause confusion or mistake or to deceive with respect to SEA's programs. PK agrees to forthwith abandon any applications it has pending to register in the United States Patent & Trademark Office any of its trademarks containing the letter combination "ARC". 3 6. New Versions: PK agrees not to release any new versions of ARC compatible programs. SEA does, however, hereby grant to PK a license to distribute, prior to January 31, 1989, bug fixes, and minor modifications not affecting the substantive functionality of the programs, for only those versions of ARC compatible programs released by PK prior to the date of this Agreement. 7. Royalties: PK agrees to account monthly and pay to SEA a royalty fee of 6.5% (six and one half percent) of all revenue received for ARC compatible programs on all orders received after the effective date of this Agreement, such revenue including any license fees or shareware registrations received after January 31, 1989, for ARC compatible programs. During the period from the effective date of this Agreement to January 31, 1989, the parties hereto agree to discuss and, on an ad hoc basis, mutually determine which party is to respond to any inquiries PK receives for commercial licenses to use ARC compatible programs. After January 31, 1989, PK agrees to refer all inquiries for ARC compatible programs to SEA. SEa agrees to pay to PK a commission in the amount of 6.5% of any license fees received by SEA from any licensee referred to SEA by PK, whether before or after January 31, 1989. 8. Customer List: PK agrees to promptly provide to SEA's designated attorney a listing (in hard copy and machine readable forms) of the names and addresses of PK's existing licensees as of the effective date of this Agreement. SEA agrees that it will not access the listing directly, and that the sole purpose for such listing is to allow SEA's designated attorney to determine whether any legal entity is licensed by PK. 9. Non-Infringing Programs: SEA acknowledges that PK continues to have the right to distribute non-infringing compression programs. This Paragraph 9 is not intended to grant any license to PK to use any of SEA's intellectual property. 10. Payments: PK agrees to pay to SEA the sum of $22,500 for past royalty payments, and the sum of $40,000 as litigation expense reimbursements, for a total payment of $62,500. [payment schedule follows] 11. Press Release: The parties agree to issue a mutually acceptable publicity release describing disposition of the above identified lawsuit and this Agreement, a copy of which is attached hereto and incorporated herein by reference as Exhibit A. [Press release is not being rekeyed at this time as my hands are breaking off -- Karen] 12. Merger and Governing Law: This Agreement and the attachments hereto embody the entire agreement between the parties hereto. 13. Jurisdiction. The parties agree that any dispute arising under this Agreement shall be resolved under the Judgment to which it 4 is attached, in the US District Court for the EAstern District of Wisconsin. 14. Waver: The waiver of either party hereto of any right hereunder or failure to perform or breach by the other party shall not be deemed as a waver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. 15. Notice: Any notice required to be given pursuant to the provisions of this Agreement shall be in writing and by certified mail, and mailed to the parties at the following addresses . . . [PKware, Glendale, WI and SEA, Wayne, NJ) The agreement was signed by Phillip W. Katz, PKware, Inc. and