announcement, page-2

Senetas Changes Business Relationship with SafeNet
Senetas Corporation Limited (ASX:SEN) the global leader in high speed
network encryption technology announced today it has moved to change its
business relationship with US partner SafeNet Inc.
SafeNet was recently acquired by US venture capital fund, Vector Capital.
The April 2005 agreement between Senetas and SafeNet provides Senetas with a
right to terminate the agreement in the event of a change of ownership of SafeNet.
Notice must be given within 60 days of the change of ownership and takes effect 90
days after notice is given. Senetas, SafeNet and Vector have discussed the
application of this clause of the agreement since completion of the takeover on April
12, 2007.
Senetas today provided SafeNet with written notice of its decision to terminate the
2005 agreement (including termination of an August 2006 amendment to the
agreement).
Announcing the Senetas Board of Director’s decision to exercise the termination
option within the required 60 days following SafeNet’s takeover, Senetas CEO, John
DuBois said the Agreement would terminate on September 6, 2007 (Melbourne
time), which means that SafeNet would no longer have the right to manufacture
Senetas encryption technology under licence. The termination also removes
SafeNet’s right to sell Senetas technology globally, including into the US market, and
for that reason Mr DuBois said Senetas had immediately offered to enter into a new
non-exclusive global reseller agreement with SafeNet on the same terms provided
other resellers of CypherNet encryption technology.
Mr DuBois said that while the termination decision was influenced by SafeNet’s poor
sales performance with its Senetas licensed Layer 2 encryption technology over the
past year, “Senetas hopes SafeNet will take up the offer to be a Senetas reseller
under revised terms, which will maintain the relationship, but also allows Senetas to
add other resellers to its global sales network.�
“With the advent of our right to terminate the current agreement, Senetas has begun
to explore other options to improve our revenue and profit from US sales. Apart from
appointing additional resellers, we will investigate opportunities to manage our own
manufacturing in the US to existing government and corporate specifications,
including FIPS 140-2 accreditation.
“The heightened level of interest shown in Senetas recently by US equity analysts,
print and broadcast media once it was realised SafeNet was selling our licensed
technology, only confirms that the CypherNet Encryption Security Platform has great
potential in both government and private enterprise if marketed aggressively in
United States,� Mr DuBois said.