TOMLINSON ZISKO MOROSOLI & MASER, LLP
200 Page Mill Road, Second Floor
Palo Alto, California 94306
Telephone (415) 325-8666
Facsimile (415) 324-1808

April 16, 1997

_VIA FAX AND CERTIFIED MAIL_
_RETURN RECEIPT REQUESTED_

Mr. Leonard E. Mikus
Lemcom Systems, Inc.
9033 N. 24th Avenue, Ste. 7
Phoenix, Arizona 85021

Re:	_Notice of Termination of License_

Dear Mr. Mikus:

This law firm represents RSA Data Security, Inc. ("RSA"). RSA has
been granted the exclusive right by Public Key Partners ("PKP") to
monitor and enforce the terms of patent licenses granted by PKP which
deal with Patent No. 4,405,829 - Cryptographic Communications
Systems and Method (The "MIT Patent"). On November 25, 1992, PKP
and Lemcom Systems, Inc. ("Lemcom") entered into a license agreement
(the "License Agreement") by which Lemcom Systems was granted
certain limited rights to utilize the methods described in the MIT Patent. 

The purpose of this letter is to notify you that effective immediately, the
License Agreement is terminated because of Lemcom's violations of the
terms of the License Agreement. The most obvious breach arises out of
the recent Lemcom merger.

As a result of this merger, PGP is now claiming that it has the right to
practice the inventions described in the MIT Patent under the Licence
Agreement. We are aware of PGP's claim that somehow no consent to
assignment was required because Lemcom was the surviving entity in a
reverse triangular merger. This is simply not the case. Under a long line
of well established case law, a merger (specifically including a reverse
triangular merger) which involves a change of control over the licensee is
an assignment, which under the License Agreement, required PKP/RSA's
consent. No such consent was ever sought or given. Thus, Lemcom is
in clear violation of Article 12 of the License Agreement. 

In addition, RSA has reason to believe that Lemcom has violated other
terms of the License Agreement. For example, Paragraph 3.2.1 of the
License Agreement provides as follows:

	Except as provided by 3.3 herein, LICENSEE
	may not authorize any party to reproduce,
	duplicate, or copy the Licensed Product.

With regard to OEM customers, the applicable provision of Paragaph 3.3
is Paragraph 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...

In at least two instances (FTB Software and Network TeleSystems) RSA
understands that PGP has purported to grant rights to copy to these
OEMs which violate the provisions of Paragraph 3.2.1 and do not fall
within the exception created in Paragraph 3.3.2. RSA's understanding
with regard to copying rights purportedly granted by PGP is based not
only on press information but also on the refusal of PGP to respond to
specific questions from RSA. Mr. Jim Bidzos, the President of RSA, sent
an e-mail to Dr. Steding requesting specific information on whether PGP
was licensing OEM's and, if so, whether PGP was granting rights to
copy the software. Dr. Steding's failure to reply to this e-mail indicates
that in fact, PGP is purporting to grant such rights. This is a specific
and independent ground for termination as set forth in Article 11 of the
License Agreement.

An additional apparent material violation of the License Agreement
relates to Paragraph 3.2.2 of the License Agreement which provides as
follows:

	In the case of software, LICENSEE may not
	transfer any rights to the source code for the
	Licensed Product.

We are informed that in conjunction with the merger between Lemcom
and PGP, Lemcom purported to transfer its source code rights to PGP.
We are further informed that PGP, in conjunction with its dealings with
various OEM's has purportedly transferred additional source code rights.
Each of these acts is a material violation of Paragraph 3.2.2 of the
License Agreement and grounds for immediate termination of the License
Agreement under the provisions of Article 11.

Finally, based on press releases issued by Lemcom and PGP, it appears
that Lemcom may well be delinquent in meeting the royalty obligations
set forth in Article 6 of the License Agreement. PKP's records show
that no royalty payments have been made by Lemcom since the third
quarter of 1996. Thus in addition to notice of termination, this letter is
also a demand pursuant to Paragraph 6.6 that Lemcom make its books
and records regarding sales or licenses of Licensed Products available for
inspection and audit by RSA. We will contact you to arrange for a
mutually convenient time for such an audit.

As noted above, the License Agreement is terminated effective
immediately. We fully expect that PGP will cease all commercial
licensing activities of products utilizing the MIT Patented technology.

Finally, in accordance with Article 14 of the License Agreement, this
letter is the required notice that all further communications directed to
PKP or RSA shall be sent to the undersigned with a copy to:

	Thomas R. Hogan, Esq.
	Law Offices of Thomas R. Hogan
	60 S. Market St., Suite 1125
	San Jose, CA 95113

Very truly yours,

/s/
James R. Busselle

JRB:sb

cc:	Charles Van Cott, Esq.	(via facsimile)
	Dr. Thomas Steding	(via facsimile)
	Thomas R. Hogan, Esq.	(via facsimile)
	Mr. D. James Bidzos

bcc:	Paul O. Livesay, Esq.	(via facsimile)
	Thomas E. Moore, Esq.
	Michael W. Stebbins, Esq.