If we look at the BAE Agreement it may offer some clues. I believe that India will have exclusive rights to the “Military Field of Use” without any royalty payments required to be paid to POET. In return I believe POET receives upfront and milestone payments for granting exclusive rights in lieu of royalties and POET retains all rights to commercial applications worldwide. Beyond the ISRO/DRDO applications I would think that there could be synergistic benefits to POET expanding the business in India for commercial applications

BAE > This Agreement (“Agreement”) is effective as of the 21st day of May, 2008 (“Effective Date”)

1.17                        “Military Field of Use” shall mean the National Aeronautics and Space Administration, the U.S. Department of Defense, the branches of the U.S. Armed Forces, U.S. agencies and instrumentalities engaged in activities related to defense, security, space exploration and/or intelligence, as well as comparable organizations of other nations or multinational treaty organizations.

2.12                        Post Process Manufacturing and Follow-on Services. BAE Systems shall be the exclusive foundry supplier for POET products for Military Field of Use

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applications for 6 years from Phase III (“Foundry Term”). After the expiration of the Foundry Term, BAE Systems shall have the right of first refusal to extend foundry supply exclusivity for POET products for Military Field of Use applications for a successive 3 year period. In the event BAE Systems fails to provide wafers at competitive pricing available from equivalent products in the open market, ODIS may terminate the exclusivity condition mentioned above and provide licenses to alternative sources.  BAE Systems will facilitate ODIS interaction with BAE Systems packaging and reliability test groups on customary terms.  ODIS shall discuss with BAE Systems the terms of a foundry supply relationship for POET products for other than Military Field of Use, but shall be under no obligation hereunder to establish or maintain such a relationship.

ARTICLE III. LICENSES; NON-ASSERTIONS.

3.1           Non-Exclusive Licensed Production Grant to BAE SYSTEMS.

a.                                      ODIS hereby grants to BAE SYSTEMS and its affiliates a royalty—bearing, paid up, non-exclusive, worldwide license under ODIS Background Technology and ODIS 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, limited to the Military Field of Use.  ODIS also grants to BAE SYSTEMS the right to grant sublicenses, of the same scope (and for no longer than the term of) as the license for Licensed Products and Licensed Processes granted herein to BAE SYSTEMS, to third parties, with the

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prior written consent of ODIS, which consent shall not be unreasonably withheld or delayed.  BAE Systems shall promptly furnish ODIS with a fully executed photocopy of any such sublicense agreement.

b.                                      ODIS agrees that it shall not grant to any third party rights equivalent to those granted to BAE Systems under section 3.1 specifically covering the Military Field of Use.  ODIS shall include a clause in all third party license agreements relating to ODIS Background Technology or ODIS Development Technology which states that no rights are granted thereunder to make, use or sell products for sale in the Military Field of Use.

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

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Licensed Products or Licensed Processes sold, transferred or Otherwise Disposed of by ODIS, 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 BAE SYSTEMS Background Technology or BAE Systems 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 ODIS or its Affiliates to BAE Systems or its Affiliates, or for any subsequent resales by BAE Systems or its Affiliates of Licensed Products or Licensed Processes sold or transferred to them by ODIS 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 the licensed products will be on a royalty-free basis for both parties.

4.3                   Sublicense Fees.  BAE Systems shall pay ODIS an aggregate of fifty percent (50%) of all payments received (“Sublicense Income”) by BAE Systems or any Affiliate receives from any Sublicensee in consideration of the Sublicense of rights granted BAE Systems and its Affiliates pursuant to Section 3.1, including without limitation license fees, milestone payments, license maintenance fees and other payments, but excluding running royalties on sales or other transfers.  ODIS shall pay BAE Systems an aggregate of fifty percent (50%) of Sublicense Income received by ODIS or any Affiliate in consideration of the sublicense of rights granted to ODIS and its Affiliates pursuant to Section 3.2.  All payments to be made by one party to

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

4.4                   No Multiple Royalties.  If the manufacture, use, lease or sale of any Licensed Product or the performance of any Licensed Process is covered by more than one of the Patent Rights, multiple royalties shall not be due.