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*************************************************************************
*************************** Gradated licenses ***************************
*************************************************************************

Because  LISTSERV  originated  in   the  mainframe  world,  where  large,
centralized  servers  cater  for  the   needs  of  an  entire  branch  or
organization,  LISTSERV licenses  have  traditionally been  issued on  an
"unlimited  use" basis.  The customers  purchased  a single  copy of  the
software, which  served tens of thousands  of users and had  to be priced
accordingly.

With the advent  of the workstation versions of LISTSERV,  it may be more
practical for  some of our  customers to decentralize list  management. A
single  mainframe  license  would  thus  be replaced  with  a  number  of
departmental licenses, each of which would only support a fraction of the
total number of  users. Obviously, the customer expects to  pay about the
same for  this decentralized model, as  the service his users  receive is
the same. Gradated charges make this possible.

With gradated charging, you decide in  advance how much capacity you want
each  of your  departmental  list  servers to  handle.  This capacity  is
measured in "points", which are described below. You then purchase one or
more "gradated licenses" (which include support) for the amount of points
you need, and we bill you accordingly. If you later need to increase your
capacity, you simply order additional license points from us. Because you
are only  renting the  capacity, you  do not need  to be  concerned about
selecting  the  right  hardware  or operating  system  from  the  outset.
Switching  from one  brand to  another is  as simple  as turning  in your
gradated license for a credit on the  new license - at no charge. You can
also downgrade your license (decrease the number of points) and receive a
prorated credit  on the  points you  are no  longer using.  This charging
method gives  you the  flexibility you need  to meet  the ever-increasing
group communication needs of your  users, without any capital investment.
You can  start with a  $2,000 personal  computer and a  gradated LISTSERV
license on  the order of $500/year,  and increase your capacity,  at your
own rate,  all the way up  to a high-end workstation  running hundreds of
lists. Our offerings  adjust to your needs  when and if you  need it, not
the other way around.

We will, of course, continue to offer unlimited licenses for those of our
customers who prefer this charging model.

****************************
* What do the points mean? *
****************************

We have evaluated all sorts of  charging schedules, and it quickly became
clear that we were faced with a trade-off between complexity and accuracy
(ie the  "fairness" of the resulting  price, as compared to  the intended
usage). We could  build a system that would produce  a "fair" price 99.5%
of the time  but would be unintelligible without the  manual, or a simple
charging schedule  that would work  90% of the  time and would  allow our
customers to develop an intuitive  understanding of what a "point" really
means. We  finally decided to  go for the simplest  of all the  models we
considered:

  Each point gives you the right  to run one "typical" list. Larger lists
  require several points. There is a  simple table that lets you find out
  how many points you need, based on the number of subscribers.

That's all. Most of the time, one  point equals one list. If you know you
have a couple of large lists, add  in a few points to compensate, and you
should be within 10% of the exact amount of points you will need. Here is
the table that maps subscribers to points:

  Subscribers        Points
  -----------        ------
      0-150             1
    151-300             2
    301-500             3
    501-1000            4
   1001-                5

We conducted a  survey over some 5000 lists to  determine how this scheme
would work  out in  practice. Over 2/3  of all lists  fell into  the "one
point"  category, another  15%  required two  points,  8% required  three
points, and so on.

The only serious problem with this  method is that it may be unreasonably
expensive  for large,  inactive lists  (such as  lists used  to send  out
monthly newsletters). To  compensate for this, we stopped the  scale at 5
points. We did  not want to include traffic in  the calculations, because
this would require implementing  some form of cryptographically protected
"memory"  in the  program.  Concretely, this  would  mean some  encrypted
information in  a disk file,  which malicious users could  easily restore
from a  backup to  a previous,  known "no  traffic today"  level, without
having to break the encryption itself,  and without having to tamper with
the software or  otherwise violate their licensing  agreement. To prevent
this,  we would  have had  to impose  a "restore  all or  nothing" backup
policy, which we felt would be  unacceptable. We want our customers to be
able  to restore  just one  list from  a backup  if it  was inadvertently
erased.

****************************************************
* What happens when the server runs out of points? *
****************************************************

You can only run out of points when  you attempt to create a new list, or
when you add subscribers to an existing list. In the first case, the list
is not created  and the server continues to  operate normally. Otherwise,
the ADD  or SUBSCRIBE command  is rejected,  the list owner  and LISTSERV
administrator are  notified, and the  server continues to  work normally.
LISTSERV will also issue warnings  to the LISTSERV administrator when the
number  of available  points  runs below  a  configurable threshold.  The
server will not stop unless you attempt to bypass the built-in protection
by editing the  files manually to add subscribers. Even  in that case, it
will not take your system hostage  by encrypting your data with a special
key, or anything like  that. It will just refuse to  start until you have
removed the "illegitimate" subscribers or lists; you do not need to worry
about making  mistakes when  moving files  around, or  about bugs  in the
software destroying  your precious data.  This does not, of  course, mean
that we will  not prosecute people who intentionally  modify the software
to use more  points than they paid  for. The nature of  the software, and
the charging  method we  selected, make  it particularly  easy for  us to
check that everything is in order: if  a server runs 30 lists but is only
licensed for 10 points, we know for  a fact that something is wrong, even
if the server was modified to report that only 9 points are being used.

****************************
* How is the usage billed? *
****************************

When you first  order a gradated license,  you just tell us  what kind of
system you will be using, and how  many points you will need (the minimum
is five points). We then send  you the code, a cryptographic license key,
and a bill for the first year. Gradated licenses are invoiced on a yearly
basis, just like maintenance.

Purchasing additional points  is as easy as sending us  a purchase order,
with the amount of extra points you need (at least five), and the date of
effect. We will  FAX you a new  license key one week before  the date you
specified, and charge you for the prorated difference between new and old
rates,  for the  remainder  of your  licensing term.  There  is no  fixed
charge; the only requirement is that you must order at least another five
points, to keep processing overhead to a reasonable level.

Downgrading a  license (reducing the  number of points),  or transferring
points between a license  and another, is just as easy.  Simply send us a
FAX explaining what  you want to do,  and at what date  the change should
take effect. We  will send you updated license keys  one week in advance,
and,  for  a downgrade,  you  will  receive  a  credit for  the  prorated
difference. There is no fixed charge; again, the only requirement is that
you remove  or transfer  at least  five points. We  reserve the  right to
require a written  statement from a duly  authorized official, certifying
that the  new license keys have  indeed been installed, and  that the old
ones were removed  from online storage and will not  be used knowingly in
the future without our written permission.

********************
* Gradated support *
********************

Gradated  support  is  available   to  complement  indefinite,  unlimited
licenses acquired separately (usually via a promotional package offer, or
then to fulfill a corporate  requirement on license procurement). Because
ordinary gradated licenses include both right to use and support, you can
get a  better price if  you have already purchased  the right to  use the
program in perpetuity. But, of course,  if you apply for gradated support
you will only be  able to use the amount of points you  pay for, in spite
of the fact that your original  license was for unlimited use. You retain
the right to  use the version you originally  purchased, indefinitely and
without limitation, but you can only use the new versions we send you for
the amount of points you are paying for.

*************************************************************************
****************** General conditions and disclaimers *******************
*************************************************************************

All prices are in US dollars and  exclusive of sales or other tax. Unless
indicated otherwise, all  prices are guaranteed for a period  of one year
from the date hereof (6 June  1994). Package prices and other promotional
prices are guaranteed until their expiration date ("Order before:" in the
package   templates).   Academic   customers   include   all   non-profit
degree-granting  organizations  of  higher  education.  Other  non-profit
organizations may also be eligible; contact L-Soft for more information.

L-Soft International, Inc.  ("L-Soft" in this document)  does not endorse
or approve the use of any of the product names or trademarks appearing in
this document.

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