Yes, and in the next paragraph, BAE does the same to ODIS.

I didn't suggest that ODIS has any obligation to BAE on the commercial side other than those outlined in Article IV Running Royalties and Other Considerations (outlined again below)

I'm no lawyer but it seems that BAE gets the military and ODIS gets the commercial side of the product. I only question what, exactly, "the Field" means. I see the definition:

“Field” shall mean information, processes, methods, devices and apparatus involved in the technology of making, designing or using integrated electronics and optoelectronic semiconductor devices on Gallium Arsenide substrates.

The point is what's the value of the military side? If they decided to do this together, would BAE take less than half (the military side) and let ODIS walk away with the lions share of the profit? I doubt it.

So that means that the military side is worth as much as the commercial side.

Additionally, it seems like we would be paying BAE a royalty for commercial production, just as they are paying ODIS for military production.

Non-Exclusive Licensed Production Grant to ODIS Under BAE SYSTEMS Background Technology and BAE SYSTEMS Development Technology. BAE SYSTEMS hereby grants to ODIS and its affiliates a royalty—bearing, paid up, non-exclusive, perpetual worldwide license under BAE SYSTEMS Background Technology and BAE SYSTEMS Development Technology to make, have made, use, sell, lease, offer for sale, offer for lease, import, and Otherwise Dispose of Licensed Products and Licensed Processes in the Field. BAE SYSTEMS also grants to ODIS the right to grant sublicenses, of the same scope as the licenses for Licensed Products and Licensed Processes granted herein to ODIS to third parties, with the prior written consent of BAE SYSTEMS, which will not be unreasonably withheld or delayed. ODIS will promptly furnish BAE Systems with a fully executed photocopy of any such license agreement.

ARTICLE IV. RUNNING ROYALTIES AND OTHER CONSIDERATION.

4.1. Running Royalty Rates to ODIS. In consideration of the rights granted to BAE SYSTEMS hereinabove in Section 3.1, BAE SYSTEMS, its Affiliates and its sublicensees, if any, shall pay to ODIS running royalties on the Net Selling Price of Licensed Products or Licensed Processes sold, transferred, or Otherwise Disposed of by BAE SYSTEMS, its affiliates, agents or sublicensees in any country of the world that Licensed Products or Licensed Processes embody, employ or are manufactured by use of any invention that forms part of ODIS Background Technology or ODIS Development Technology during the period commencing on the date of first sale, transfer or Other Disposition and ending 15 years thereafter at the royalty rate of 5.0% commencing on the Effective Date of this Agreement. No royalties shall be required to be paid hereunder with respect to sales or transfers by BAE Systems or its Affiliates to ODIS or its Affiliates, or for any subsequent resales by ODIS or its Affiliates of Licensed Products or Licensed Processes sold or transferred to any of them by BAE Systems or its Affiliates. It is understood and agreed by the parties that after such 15-year period from the effective date has expired, all further sales or other transfers of Licensed Products and Licensed Processes will be on a royalty-free basis.

4.2 Running Royalty Rates to BAE SYSTEMS. In consideration of the rights granted to ODIS hereinabove in Section 3.2, ODIS, its Affiliates or its sublicensees, if any, shall pay to BAE SYSTEMS running royalties on the Net Selling Price of

21

the other in respect of Sublicense Income received by either party shall be made within thirty (30) days of receipt of such Sublicense Income.