LICENSE AGREEMENT

Exhibit 99.1

LICENSE AGREEMENT

     This License Agreement (the “ Agreement ”), dated as of December 29, 2006 (the “ Effective Date ”), is by and between Paradyne Networks, Inc., a Delaware corporation (“ Licensor ”), and Verso Technologies, Inc., a Minnesota corporation (“ Licensee ”).

BACKGROUND

     WHEREAS, Licensor and Licensee have entered into that certain Asset Purchase Agreement dated as of December 29, 2006 (the “ Purchase Agreement ”); and

     WHEREAS, pursuant to the Purchase Agreement, Licensor has agreed to license to Licensee the Retained IP (as defined below) on a non-exclusive basis and the Transferred IP on an exclusive basis.

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1.
Definitions

     Any capitalized terms used herein which are not defined below shall have the meanings given to them in the Purchase Agreement:

     “ Bankruptcy Code ” means as set forth in Section 7.02 .

     “ Extended License Date ” means as set forth in Section 2.05 .

     “ Disclosing Party ” means as set forth in Section 4.01 .

     “ Improvements ” means any improvements, modifications or enhancements which are a derivative of or related to the Retained IP and/or Transferred IP.

     “ Infringing Activities ” means as set forth in Section 3.01(b) .

     “ Intellectual Property Rights ” means any or all of the following and all rights in, arising out of, or associated with: (a) all United States and foreign patents and utility models and applications therefor, including provisional applications and all reissues, divisions, re-examinations, renewals, extensions, continuations and continuations-in-part thereof; (b) all rights in inventions (whether patentable or not), invention disclosures, improvements, trade secrets, proprietary information, know-how, technology and technical data; and (c) all copyrightable material, copyright registrations and applications therefor and all other rights corresponding thereto throughout the world including moral rights.

     “ Licensed Products ” means the iMARC product line and the 7123 TI CSU/DSU product.

     “ Proprietary Information ” means as set forth in Section 4.01 .

     “ Receiving Party ” means as set forth in Section 4.01 .

Signature Page to License Agreement

     “ Retained IP ” means any Intellectual Property Rights owned by Licensor or licensed to Licensor, in each case, which do not constitute Transferred IP but which were used by Licensor in the conduct of the Business prior to the Effective Date, but in the case of Intellectual Property Rights licensed to Licensor, only such Intellectual Property Rights that Licensor has the right to license to Licensee on a royalty-free basis without restriction.

     “ Subsidiary ” of a party means any entity which is controlled by that party. An entity shall be regarded as in control of another entity if it owns or controls, directly or indirectly, more than fifty percent (50%) of the shares of the subject entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority).

     “ Term ” means as set forth in Section 6.01 .

ARTICLE 2.
Technology Licenses

      Section 2.01 . License Grant to Retained IP. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a perpetual (except as set forth below), worldwide, royalty-free, non-transferable (except as set forth in Section 7.07 ), non-exclusive license, under the Retained IP, to make, have made, use, offer for sale, and sell Licensed Products and to practice any methods, processes and procedures covered by the Retained IP, in each case solely within the conduct of the Business and solely during the Term. Notwithstanding the foregoing, the license granted to Licensee under this Section 2.01 shall terminate on the IP Payment Date, if, and only if, Licensee fails to provide to Licensor the IP Payment on the IP Payment Date. Otherwise, the license granted to Licensee under this Section 2.01 shall continue in perpetuity.

      Section 2.02 License Grant to Transferred IP. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a limited term, worldwide, royalty-free, non-transferable (except as set forth in Section 7.07 ), exclusive (except as set forth in Section 2.05 ) license, under the Transferred IP, to make, have made, use, offer for sale, and sell Licensed Products and to practice any methods, processes and procedures covered by the Transferred IP, in each case solely within the conduct of the Business and solely until the IP Payment Date. Upon the IP Payment Date, the license granted under this Section 2.02 shall terminate.

      Section 2.03 Sublicenses. The license granted to Licensee in Sections 2.01 and 2.02 shall include the right to grant and authorize sublicenses to one or more Subsidiaries of Licensee or third parties who may assist in the development of Licensed Products for use in the conduct of the Business for Licensee; provided that: (a) any such sublicenses shall terminate contemporaneously with the termination of any licenses granted to Licensee hereunder; and (b) Licensee provides a copy of each such sublicense to Licensor upon the expiration or termination of this Agreement. Licensee shall have no other right to grant or authorize sublicenses except that the license hereunder shall pass to the extent required to: (i) permit a reseller or distributor who has agreed in writing to be bound by the confidentiality restrictions set forth in this Agreement to resell Licensed Products; and (ii) permit a consumer of the Licensed

Products to use indefinitely whether or not this Agreement is in effect such Licensed Product, without the prior written consent of Licensor.

      Section 2.04 . Retention of Rights. Licensor hereby reserves all rights in the Retained IP and Transferred IP not expressly granted under this Agreement.

      Section 2.05 License Back. Licensee hereby grants to Licensor and Zhone Technologies, Inc. and its Subsidiaries a perpetual (except as set forth below), irrevocable, worldwide, royalty-free, non-transferable (except as set forth in Section 7.07 ), non-exclusive license, under the Transferred IP: (i) prior to the Extended License Date (as hereafter defined), to make, have made, use, offer for sale, sell and have sold Licensed Products and to practice any methods, processes and procedures covered by the Transferred IP solely on behalf of Licensee ( e.g. pursuant to a reseller or manufacturing agreement between the parties); and (ii) after the Extended License Date, to make, have made, use, offer for sale, sell and have sold Licensed Products and any other products manufactured, marketed, distributed and/or sold by Licensor and/or Zhone Technologies, Inc. and/or its Subsidiaries and to practice any methods, processes and procedures covered by the Transferred IP. Notwithstanding the foregoing, the license granted to Licensor under this Section 2.05(ii) shall automatically terminate thirty (30) days after the Inventory Payment Date if Licensee pays to Licensor the Inventory Payment (less any amount remaining under dispute in good faith under Section 2.5 of the Purchase Agreement) prior to the end of such 30-day period (the end of such 30-day period is referred to herein as the “ Extended License Date ”). Otherwise, the licenses granted to Licensor under this Section 2.05 shall continue in perpetuity, including after the transfer, if at all, of the Transferred IP to Licensee pursuant to the Purchase Agreement.

ARTICLE 3.
Patent Prosecution And Infringement

      Section 3.01 . Prosecution and Infringement.

     (a)  Prosecution by Licensee. Licensor shall have the sole right, but not the obligation, to prepare, file, prosecute and maintain any applications and registrations for the Retained IP and Transferred IP. Licensee shall cooperate with and assist Licensor in all reasonable respects in connection with such activities.

     (b)  Enforcement of Intellectual Property Rights. In the event that Licensee becomes aware of any infringement by a third party of any of the Retained IP or Transferred IP (“ Infringing Activities ”), it shall promptly notify Licensor. Licensor shall have the sole right, but not the obligation, to institute, prosecute and control any action or proceeding with respect to any such Infringing Activities, using counsel of its choice, including any declaratory judgment action arising from such infringement. Licensee shall cooperate with Lic