Indemnification Agreement re: G-Q Patent Dispute - RSA Security Inc. and Novell Inc.
[RSA SECURITY LOGO]
RSA SECURITY INC. Tel 781 515 5000
174 Middlesex Turnpike Fax 781 515 5450
Bedford, MA 01730 www.rsasecurity.com
August 5, 2002
VIA FACSIMILE AND OVERNIGHT MAIL
--------------------------------
Michael A. Jacobs
Morrison & Foerster LLP
425 Market Street
San Francisco, CA 04105-2482
Re: G-Q Patent Dispute
Dear Michael:
This letter confirms the agreements RSA and Novell reached concerning
Novell's tender of the defense of and the litigation strategy relating to France
Telecom's claim for infringement of U.S. Patent No. 5,140,634 (the "G-Q
patent"), currently pending in U.S. District Court in Delaware, and the defense
strategy relating to the arbitration entitled, France Telecom and Telefusion de
France v. RSA Security, Inc., presently pending before the International Chamber
of Commerce Court of Arbitration (the "Arbitration"), and related matters. Both
RSA and Novell believe that France Telecom's claims are without merit, and that
the likelihood that damages for infringement or other remedies will be awarded
to France Telecom is low. The parties also agree, however, that it is sensible
to address certain issues at this point, while deferring others for another
time. The parties further agree that they have common interests in these
actions, and it is helpful to reduce to writing certain agreements intended to
aid in the pursuit of these common interests. The parties therefore agree that:
1. The indemnification provisions of the RSA/Novell software license,
dated June 1, 1990 ("Software License"), remain in effect except as specifically
modified by this agreement, and any limitations period (or other time-sensitive
defense, such as waiver or estoppel) applicable to Novell's tender or a request
for indemnification is tolled as of the date of this letter agreement. This
letter agreement shall be treated as an addendum to the Software License. In
addition, RSA agrees to toll any limitations period or other time sensitive
defense, such as waiver or estoppel, applicable to any other Novell claim
related to its claim for indemnification, such as any tort claim, any breach of
warranty claim, or any claim for costs and attorneys fees under the software
license, as of the date of this letter agreement.
2. (a) In the unlikely event that, after exhaustion of appeals, damages
(including interest and the plaintiff's attorneys' fees) are paid on behalf of
Novell of up to $5,000,000 as a result of the above-referenced litigation, RSA
will pay Novell 50% of the amount of such damages, that is, up to $2,500,000,
and Novell will bear the remaining 50%. By way of example, if damages are paid
on behalf of Novell in the amount of $3,000,000, RSA will pay Novell $1,500,000.
<PAGE>
Michael A. Jacobs
August 5, 2002
Page Two
(b) RSA's potential liability to Novell for indemnification of
any damages awarded over $5,000,000 will be governed, insofar as a claim under
the Software License's indemnification provisions is concerned, by the indemnity
provisions of the Software License as originally executed as will RSA's
potential liability for indemnification in circumstances other than the awarding
of damages, e.g., a payment made in settlement. Notwithstanding this paragraph,
Novell agrees that it will not seek reimbursement of its litigation expenses
(including attorneys' fees) from RSA.
3. The parties have entered into a separate agreement concerning litigation
strategy. The parties have also agreed that in the event Novell alleges in the
course of a claim for indemnification that RSA has breached certain terms of the
litigation strategy agreement, the parties may introduce this letter agreement
and lawyer arguments in support or defense of a claim for indemnification.
Please indicate RSA's agreement to the above terms by countersigning
below.
Sincerely,
/s/ Margaret Seif
----------------------------------
Margaret Seif
Agreed
For Novell, Inc.
By /s/ Joseph A. Lasala
-----------------------------