License Agreement

LICENSE AGREEMENT


THIS LICENSE AGREEMENT is made and entered into this 8th day of May, 1996, by and between ACT NETWORKS, INC., a Delaware corporation with its headquarters located at 188 Camino Ruiz, Camarillo, California (hereinafter referred to as "ACT") and SKYDATA, INC., a Florida corporation with its headquarters located at 7780 Technology Drive, West Melbourne, Florida 32904 (hereinafter referred to as "SKYDATA"). SKYDATA and ACT are collectively referred to as the "Parties."


WHEREAS, SKYDATA owns all rights, titles and interest to that certain United States Patent Number 5,434,850; Frame Relay Protocol based Multiplex Switching Scheme for satellites (the "Patent"); and


WHEREAS, SKYDATA is in the business of developing, supplying, installing, and servicing products for the satellite communications industry; and


WHEREAS, SKYDATA, by and through its employees, has developed new and useful technology and devices for use in earth station as part of a satellite communications network; and


WHEREAS, the Patent is an important and valuable asset of SKYDATA; and


WHEREAS, SKYDATA is currently engaged in litigation for patent infringement against ORION Network Systems, Inc., International Private Satellite Partners, L.P., and Orion Satellite Corporation (collectively referred to as "ORION") for alleged infringement of the Patent; and


WHEREAS, SKYDATA is willing to license ACT for compensation that SKYDATA believes is substantially lower than what would be a reasonable compensation if SKYDATA were not experiencing pressing financial conditions resulting from the infringement litigation and the failure of ORION to purchase its patented equipment from SKYDATA; and


WHEREAS, ACT is willing to become licensed at the royalty rate set forth herein; therefore


NOW, THEREFORE, in consideration of mutual covenants contained herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties, intending to be bound, hereby agree as follows: 2
1. DEFINITIONS. For purposes of this Agreement, the following terms shall have the meanings hereinafter set forth:


(a) "Net Revenue" shall mean revenue of ACT or entities owned by ACT (a "Subsidiary") from the sale of Products by ACT or an entity owned by ACT, but not including any freight, delivery, insurance, handling, customs duties or other duties, taxes (including value added taxes), imposts, transfer prices between entities owned by ACT or similar fees.


(b) "Patent" shall mean U.S. Patent 5,434,850, as well as any and all continuations, continuations-in-part, divisionals, reexaminations, reissues, and any and all extensions or improvements thereof, and any and all other patents incorporating in whole or in part the disclosure thereof, and any and all patents, utility models, inventor's certificates, or similar documents, applied for or issued in any jurisdiction anywhere in the world relating to the foregoing.


(c) A "Product" shall mean one or more chassis incorporating a frame relay protocol switch which, at the time sold by ACT, includes one or more modulator cards and demodulator cards, and which is sold for incorporation in an earth station of a satellite based communications system (e.g., the Skyframe SF-800 and SF-400); provided, however, a product shall not be a Product unless the sale of the product at the location of its sale would, except for this license, infringe at least one claim of the Patent according to the law of the jurisdiction where the product is sold. For purposes of calculating Net Revenues, the term Products shall also include other products sold by ACT which are not manufactured by or on behalf of ACT which ACT knows will be used in an earth station in conjunction with the Products.


2. GRANT OF LICENSE.


(a) SKYDATA grants to ACT a nonexclusive license under all claims of the Patent to make, have made, use, sell, offer to sell, import and have imported, the claimed invention, and to do, authorize, or cause any and all other acts or omissions which would, except for this license, be regarded as infringing the Patent under the law of any jurisdiction anywhere in the world. SKYDATA acknowledges that this license includes, without limitation, the right to fully commercialize a system that will incorporate products other than the Products, and that ACT has the right to sublicense the Patent to distributors and users of the Products to the extent appropriate to enable them, without liability to SKYDATA, to build, integrate, commercialize and use systems which incorporate one or more Products. It is understood that the right to sublicense only applies to distributors and users of the Products, and does not give ACT the right to sublicense a third party to commercialize a system unless Products are incorporated in the system. The license granted hereunder shall inure to the benefit of ACT and its Subsidiaries.


(b) Subject to ACT performing its obligations hereunder, SKYDATA covenants not to sue ACT, and waives all damages for, any and all acts or omissions up to the


2 3 date of execution of this License, for which ACT would otherwise have liability by reason of the existence of the Patent.


3. MARKING.


Each chassis constituting a Product will be labeled prior to shipment by ACT with a label , the size, placement and contents of which shall be reasonably acceptable to both ACT and SKYDATA. ACT will be liable for any damages to SKYDATA resulting from its failure to affix the label prior to shipment.


4. COMPENSATION. In consideration of the license granted by SKYDATA to ACT, ACT shall pay as compensation to SKYDATA upon such terms and in such amounts as follows:


(a) ACT shall pay on or before May 13, 1996, the nonrefundable sum of Seven Hundred and Fifty Thousand Dollars ($750,000.00); and


(b) Within 45 days of the end of each calendar quarter, ACT shall pay SKYDATA five percent (5%) of Net Revenue for that calendar quarter, less credits due to Products returned to ACT. At that time, ACT shall provide SKYDATA with a written statement specifying the total number of Products sold during that calendar quarter and the total amount of Net Revenues therefor.


(c) ACT shall keep such records and books of account of all Products sold by ACT and its Subsidiaries, as may be necessary for SKYDATA to determine whether royalties are due for such Products, and to determine the amount of such royalties due. Such records and books of account shall be open to inspection, not more often than once per twelve (12) months, during ACT's normal business hours by an independent accountant or accountants of national reputation selected by SKYDATA and not objected to by ACT (which objection shall not be unreasonably made), to the extent necessary to verify the correctness of the reports and the royalty payments provided for herein. Such accountants shall, as a precondition to such inspection, agree in writing to hold such information in confidence except as necessary to carry out the provisions of this License Agreement. In any event, no customer names or other customer identification shall be provided to SKYDATA except for serial numbers of Products and the Net Revenues associated therewith. Any such audit shall be at SKYDATA's expense; provided, however, that if such audit reveals an underpayment of royalties for any particular quarter of five percent (5%) or more of the amount actually due for that quarter, ACT shall bear all reasonable expenses of the audit. ACT and SKYDATA agree to resolve in good faith and on a timely basis any dispute or discrepancy in such accounting. Any such underpayment shall not be a material breach if paid to SKYDATA within fifteen (15) days of ACT's receipt of the independent accountant or accountants' written report or if contested in good faith.


(d) All compensation due hereunder shall be paid and computed in U.S. Dollars.


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5. WARRANTIES AND REPRESENTATIONS.


(a) ACT represents and warrants as follows:


(1) The execution and delivery by ACT of this Agreement and the performance by ACT of its obligations hereunder have been duly authorized by all requisite corporate action and will not violate any prov ...