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SETTLEMENT AND LICENSE AGREEMENT
 
THIS SETTLEMENT AND PATENT CROSS-LICENSE AGREEMENT (the “Settlement and License
Agreement”) is entered on April 3, 2006 (the “Effective Date”) by and among LML
Patent Corp., a Delaware corporation having its principal place of business at
Corporation Trust Centre, 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware, 19801, LML Payment Systems, Inc., a Canadian entity with its
principal place of business at 1140 West Pender Street, Suite 1680, Vancouver,
British Columbia, Canada V6E4G1 and LML Payment Systems Corp., a Delaware
corporation with its principal place of business at 1330 RiverBend Drive, Suite
600, Dallas, Texas 75247 (collectively “LML”), and TeleCheck Services, Inc. and
TeleCheck International, Inc., both Delaware corporations having their principal
place of business at 5251 Westheimer Road, Houston, Texas 77056 (collectively
“TeleCheck”) and First Data Corp., a Delaware corporation with its principal
place of business at 6200 South Quebec Street, Greenwood Village, CO 80111.
 
RECITALS
 
WHEREAS, LML Patent Corp. owns rights in certain U.S. Patents related to making,
using, offering for sale and selling electronic check conversion systems and
services;
 
WHEREAS, TeleCheck International, Inc. owns rights in certain U.S. Patents
related to making, using, offering for sale and selling checking systems and
services;
 
WHEREAS, LML Patent Corp. filed suit against TeleCheck Services, Inc. in the
United States District Court for the District of Delaware, Case No. CA-04-858,
alleging infringement of certain LML Patent Corp. patents by certain of
TeleCheck’s products, systems and/or services;
 
WHEREAS, TeleCheck International, Inc. filed suit against LML Payment Systems,
Inc. and LML Payment Systems Corp. in the United States District Court for the
Eastern District of Texas, Case No. 2:05CV270, alleging infringement of certain
TeleCheck patents by certain of LML’s products, systems and/or services, and
where LML asserted certain antitrust and other counterclaims.
 
WHEREAS, LML, First Data Corp., and TeleCheck desire to cross-license the
asserted patents and the parties desire to settle all litigation between them.
 
NOW, THEREFORE, in consideration of the covenants contained in this Settlement
and License Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:
 

 
1.
DEFINITIONS.

 
The following terms, when used in this License Agreement with initial capital
letters, shall have the respective meanings set forth in this Section 1.
 

 
1.1.
“Confidential Information” has the meaning set forth in Section 6.

 
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1.2.
“Current LML Products” means products or services commercially offered by LML as
of the Effective Date, as well as minor or insubstantial variations in such
products or services.

 

 
1.3.
 
“Effective Date” has the meaning set forth in the preamble.

 

 
1.4.
 “First Data Corp.” means First Data Corporation and any entity controlled by
First Data Corp. and/or controlled by any such controlled companies, as of the
Effective Date or thereafter. For purposes of this Agreement, an entity will be
deemed to “control” or be “controlled” by another entity if (a) the controlling
entity owns or controls, directly or indirectly, 30% or more of the voting power
of the shares or other interests entitled to vote for the directors or other
governing authority of the controlled entity; (b) if the controlling entity has
a legal or beneficial interest in the controlled entity of 30% or more of the
controlled entity’s revenue or capital accounts; or (c) if the controlling
entity possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the controlled entity.

 

 
1.5.
“FDC Customer” means any person or entity that purchases, licenses or otherwise
receives services from First Data Corp. or TeleCheck for its own use or for
sale, license, or transfer to any party.

 

 
1.6.
“LML Licensed Patents” means U.S. Patent Nos. 6,354,491; 6,283,366; 6,164,528;
and 5,484,988, including any continuations, continuations-in-part, divisionals,
extensions, reexaminations, reissues or renewals thereof, and specifically
including any reissues of what was U.S. Patent No. 6,547,129.

 

 
1.7.
“Licensed Patents License Term” means the time period beginning on the Effective
Date and ending on the date of expiration of the last to expire of the TeleCheck
and LML Licensed Patents.

 

 
1.8.
“LML” means LML Patent Corp., LML Payment Systems, Inc. and/or LML Payment
Systems Corp., and any entity controlled by LML and/or controlled by any such
controlled companies as of the Effective Date or thereafter. For purposes of
this Agreement, an entity will be deemed to “control” or be “controlled” by
another entity if (a) the controlling entity owns or controls, directly or
indirectly, 30% or more of the voting power of the shares or other interests
entitled to vote for the directors or other governing authority of the
controlled entity; (b) if the controlling entity has a legal or beneficial
interest in the controlled entity of 30% or more of the controlled entity’s
revenue or capital accounts; or (c) if the controlling entity possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the controlled entity.

 

 
1.9.
“Other FDC Patents” means any U.S. Patents owned by First Data Corp. or
TeleCheck as of the Effective Date, other than the TeleCheck Licensed Patents,
as well as any patents obtained or acquired by First Data Corp. or TeleCheck
after the Effective Date and before January 16, 2013.

 
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1.10.
“Other LML Patents” means any U.S. Patents owned by LML as of the Effective
Date, other than the LML Licensed Patents, as well as any patents obtained or
acquired by LML after the Effective Date and before January 16, 2013.

 

 
1.11.
“Other Patents License Term” means the time period beginning on the Effective
Date and ending on January 16, 2013.

 

 
1.12.
“Parties” means LML, First Data Corp. and TeleCheck, collectively.

 

 
1.13.
“Party” means each of LML, First Data Corp. and TeleCheck, individually.

 

 
1.14.
“Person” means an individual, corporation, partnership, joint venture, trust,
unincorporated organization or similar organization or any other legal entity.

 

 
1.15.
“TeleCheck” means TeleCheck International, Inc. and/or TeleCheck Systems, Inc.
and any entity controlled by TeleCheck and/or controlled by any such controlled
companies, as of the Effective date or thereafter. For purposes of this
Agreement, an entity will be deemed to “control” or be “controlled” by another
entity if (a) the controlling entity owns or controls, directly or indirectly,
30% or more of the voting power of the shares or other interests entitled to
vote for the directors or other governing authority of the controlled entity;
(b) if the controlling entity has a legal or beneficial interest in the
controlled entity of 30% or more of the controlled entity’s revenue or capital
accounts; or (c) if the controlling entity possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of the
controlled entity.

 

 
1.16.
“TeleCheck Licensed Patents” means U.S. Patent Nos. 5,679,938 and 5,679,940,
including any continuations, continuations-in-part, divisionals, extensions,
reexaminations, reissues or renewals thereof.

 
 

 
2.
 SETTLEMENT OF THE LITIGATION.

 

 
2.1.
Stipulated Dismissal: Within three (3) business days of the Effective Date, the
parties shall file with the respective Courts Stipulated Dismissals with
prejudice substantially in the form attached hereto as Exhibits 1 and 2.

 

 
2.2.
No Award of Fees or Costs. Each party shall bear responsibility for its own
costs and fees associated with the litigation and no request, motion, petition
or otherwise for such fees and/or costs shall be made to either Court.

 

 
2.3.
No Attempt To Invalidate. LML, First Data Corp. and TeleCheck agree that, in
absence of a subpoena or court order requiring their participation or support,
no party shall take any action, participate in or support any suit, claim,
action, litigation, administrative proceedings, or proceeding of any nature
brought by or against the other that concerns or challenges the validity or
enforceability of any of the LML Licensed Patents, the Other LML Patents, the
TeleCheck Licensed Patents, or the Other FDC Patents. This Section 2.3 shall not
apply to litigation between the Parties properly brought notwithstanding the
provisions of this Settlement and License Agreement.

 
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2.4.
Retention of Jurisdiction to Enforce This Agreement. The United States District
Court for the District of Delaware shall retain jurisdiction for purposes of
enforcing the terms of this Settlement and License Agreement.

 

 
3.
LICENSE OF RIGHTS.

 

 
3.1.
LML License Grant - LML Licensed Patents. LML Patent Corp. hereby grants to
First Data Corp. and TeleCheck, and First Data Corp. and TeleCheck hereby accept
from LML Patent Corp., a non-exclusive, fully-paid, license under the LML
Licensed Patents during the Licensed Patents License Term. LML further grants to
FDC Customers, for products and services purchased from First Data Corp. or
TeleCheck, a non-exclusive, fully-paid, license under the LML Licensed Patents
during the Licensed Patents License Term.

 

 
3.2.
LML License Grant - LML Other Patents. LML Patent Corp. hereby grants to First
Data Corp. and TeleCheck, and First Data Corp. and TeleCheck hereby accept from
LML Patent Corp., a non-exclusive, fully-paid, license under the Other LML
Patents during the Other Patents License Term. LML further grants to FDC
Customers, for products and services purchased from First Data Corp. or
TeleCheck, a non-exclusive, fully-paid, license under the Other LML Patents
during the Other Patents License Term. Following the Other Patents License Term,
in any suit brought by LML that alleges infringement of any Other LML Patent by
First Data Corp. or TeleCheck, LML shall not seek, and will not be entitled to
recover, damages for any alleged infringement by First Data Corp. or TeleCheck
during the period of the Other Patents License Term.

 

 
3.3.
TeleCheck License Grant - TeleCheck Licensed Patents. TeleCheck International,
Inc. hereby grants to LML, and LML hereby accepts from TeleCheck International,
Inc., a non-exclusive, fully-paid, license under the TeleCheck Licensed Patents
during the Licensed Patents License Term.

 

 
3.4.
First Data Corp. and TeleCheck License Grant - Other FDC Patents. First Data
Corp. and TeleCheck hereby grant to LML, and LML hereby accepts from First Data
Corp. and TeleCheck, a non-exclusive, fully-paid, license under the Other FDC
Patents for all Current LML Products during the Other Patents License Term. The
licenses granted under this Section 3.4 shall not apply to any LML products
other than Current LML Products. Notwithstanding the other provisions of this
Agreement, the licenses granted under this Section 3.4 shall be personal to LML
and not assignable and not otherwise transferable, including in the event all or
substantially all the asserts of LML or any unit thereof are acquired by another
entity. Following the Other Patents License Term, in any suit brought by First
Data Corp. or TeleCheck that alleges infringement of any Other FDC Patent by LML
due to its making, using, selling or offering to sell any Current LML Product,
neither First Data Corp. nor TeleCheck shall seek, and neither will be entitled
to recover, damages for any alleged infringement by LML during the period of the
Other Patents License Term.

 
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3.5.
No Transfer of License Grant. Except as expressly provided for in Section 10.2
and 3.8, the licenses granted under Sections 3.1, 3.2 and 3.3 of this Settlement
and License Agreement are not assignable or transferable.

 

 
3.6.
No Right to Sublicense. The licenses granted hereunder do not include the right
to grant sublicenses.

 

 
3.7.
No Implied License. Except as expressly provided herein, nothing in this
Settlement and License Agreement is intended to grant any rights or license,
express or implied, to either Party in or to any intellectual property owned,
licensed or controlled by the other Party.

 

 
3.8.
Controlled Entities. The licenses granted under Sections 3.1, 3.2 and 3.3 of
this Agreement shall remain with any controlled entity, as defined in Sections
1.4, 1.8 and 1.15, in the event such controlled entity ceases to be a controlled
entity after the Effective Date. First Data Corp. and TeleCheck warrant that
neither party has an intention of utilizing the provisions of this Agreement for
the mere purpose of shielding companies from the LML Licensed Patents and Other
LML Patents by passing entities through the control of First Data Corp. or
TeleCheck. LML warrants that it does not have an intention of utilizing the
provisions of this Agreement for the mere purpose of shielding companies from
the TeleCheck Licensed Patents by passing entities through the control of LML.

 

 
3.9.
Within thirty (30) days after the Effective Date, LML shall make reasonable
efforts to compile documentation sufficient to show the features and functioning
of Current LML Products. LML will provide notice to First Data Corp. and
TeleCheck that such documentation has been collected pursuant to this Section
3.4 and placed in secured, off-site storage. LML shall maintain such
documentation for a period of six years following the end of the Other Patents
License Term.

 

 
4.
MUTUAL RELEASE.

 

 
4.1.
 
LML, for itself and its successors, assigns, affiliates, and licensees, hereby
releases and forever discharges First Data Corp., TeleCheck and any parents,
subsidiaries, affiliates, directors, officers, employees and agents from any and
all causes of action in law or at equity related to the LML Licensed Patents,
whether known or unknown, which may have arisen prior to the Effective Date.

 

 
4.2.
 
First Data Corp. and TeleCheck, for themselves and their successors, assigns,
affiliates, and licensees, hereby releases and forever discharges LML and any
parents, subsidiaries, affiliates, directors, officers, employees and agents
from any and all causes of action in law or at equity related to the TeleCheck
Licensed Patents, whether known or unknown, which may have arisen prior to the
Effective Date.

 
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5.
PAYMENTS.

 

 
5.1.
 
Release Fee And Other Payment. As part of the consideration for this Settlement
and License Agreement First Data Corp. or TeleCheck agrees to pay LML Patent
Corp. Fifteen Million ($15,000,000.00) U.S. Dollars by wire transfer to the
following account within fourteen calendar days of the Effective Date:

 
Beneficiary:
LML Patent Corp.
Beneficiary Address:
1330 Riverbend Drive, Suite 600
Dallas, Texas 75247
Bank Name:
Bank of America
Bank Address:
Tampa, Florida
Bank Account #:
 
Bank Routing #:
 

 
The Release Fee And Other Payment is not refundable.
 

 
6.
CONFIDENTIALITY.

 

 
6.1.
 
The terms and conditions of this Settlement and License Agreement shall
constitute confidential information of each Party (“Confidential Information”).
No Party shall disclose any Confidential Information to any third Person without
the prior written consent of the other Party, except that a Party may disclose
Confidential Information as required by SEC rules and regulations and any other
required regulatory filings and may also disclose Confidential Information in
response to a discovery request, subpoena or court order to produce such
Confidential Information, or as otherwise required by law.

 

 
6.2.
 
Notwithstanding the provisions of Section 6 of this Agreement, LML may release
publicly the statement substantially in the form attached hereto as Exhibit 3.
First Data Corp. or TeleCheck may release publicly a statement consistent with
the provisions of Section 6 of this Agreement, following approval of such
statement by LML. Such approval shall not be unreasonably withheld by LML.

 

 
6.3.
 
All parties acknowledge and agree that it is an essential term of this Agreement
that the Parties agree not to, and the Parties hereby do agree not to, disclose
the contents or terms of this Agreement or any matters pertaining to this
settlement, including its negotiation, whether in writing or orally to any
person whatsoever, directly or indirectly, whether individually, or by or
through an agent, representative, attorney or other person, unless such
disclosure is (i) lawfully required by any governmental agency, including
without limitation the Securities and Exchange Commission; (ii) otherwise
required to be disclosed by law; (iii) necessary in any legal proceeding in
order to enforce any provision of this Agreement; or (iv) permitted pursuant to
this Agreement.

 
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6.4.
 
The Parties agree that each may disclose the terms of this Agreement to their
auditors, accountants, tax advisors and/or legal counsel only to the extent
required for professional advice from those sources and only after securing a
commitment from such professionals to maintain the confidentiality of the terms
of this Agreement to the extent possible.

 

 
6.5.
 
The Parties agree that TeleCheck and First Data Corp. may disclose the terms of
Sections 1.5, 1.6, 1.10, 1.11, 3.1 and 3.2 to any FDC Customer who seeks
indemnification or raises any inquiry regarding any of the LML Licensed Patents
or the Other LML Patents.

 

 
6.6.
  The Parties agree to seek a protective order or other protective arrangement,
if necessary, regarding confidential information relating to this Agreement. The
Parties shall take reasonable precautions to ensure that their representatives
and agents also treat such information in a confidential manner.

 
 

 
7.
REPRESENTATIONS AND WARRANTIES. The express representations and warranties
contained in this Section 7 of this Settlement and License Agreement are the
only representations and warranties made by either Party. No other
representations or warranties shall be implied in law or in fact.

 

 
7.1.
LML Patent Corp. LML Patent Corp. represents and warrants as follows.

 

 
(a)
LML Patent Corp. is a corporation organized and validly existing under the laws
of the state of its incorporation and has all requisite corporate power and
authority to enter into and legally perform its obligations under this
Settlement and License Agreement. When executed and delivered, this Settlement
and License Agreement shall constitute a valid and binding obligation of LML
Patent Corp., legally enforceable against it in accordance with its terms.

 

 
(b)
LML Patent Corp. represents that it has the right, authority and capacity to
enter into this Settlement and License Agreement and to grant and accept the
rights set forth in Section 3.

 

 
(c)
LML Patent Corp. represents that it has not entered into any agreement in
conflict with this Settlement and License Agreement or which would interfere
with or diminish the rights granted hereunder.

 

 
7.2.
LML Payment Systems, Inc. LML Payment Systems, Inc. represents and warrants as
follows.

 
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(a)
LML Payment Systems, Inc. is a corporation organized and validly existing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to enter into and legally perform its obligations
under this Settlement and License Agreement. When executed and delivered, this
Settlement and License Agreement shall constitute a valid and binding obligation
of LML Payment Systems, Inc., legally enforceable against it in accordance with
its terms.

 

 
(b)
LML Payment Systems, Inc. represents that it has the right, authority and
capacity to enter into this Settlement and License Agreement and to accept the
rights set forth in Section 3.

 

 
(c)
LML Payment Systems, Inc. represents that it has not entered into any agreement
in conflict with this Settlement and License Agreement or which would interfere
with or diminish the rights granted hereunder.

 

 
7.3.
LML Payment Systems Corp. LML Payment Systems Corp. represents and warrants as
follows.

 

 
(a)
LML Payment Systems Corp. is a corporation organized and validly existing under
the laws of the state of its incorporation and has all requisite corporate power
and authority to enter into and legally perform its obligations under this
Settlement and License Agreement. When executed and delivered, this Settlement
and License Agreement shall constitute a valid and binding obligation of LML
Payment Systems Corp., legally enforceable against it in accordance with its
terms.

 

 
(b)
LML Payment Systems Corp. represents that it has the right, authority and
capacity to enter into this Settlement and License Agreement and to accept the
rights set forth in Section 3.

 

 
(c)
LML Payment Systems Corp. represents that it has not entered into any agreement
in conflict with this Settlement and License Agreement or which would interfere
with or diminish the rights granted hereunder.

 

 
7.4.
First Data Corp. First Data Corp. represents and warrants as follows.

 

 
(a)
First Data Corp. is a corporation organized and validly existing under the laws
of the state of its incorporation and has all requisite corporate power and
authority to enter into and legally perform its obligations under this
Settlement and License Agreement. When executed and delivered, this Settlement
and License Agreement shall constitute a valid and binding obligation of First
Data Corp., legally enforceable against it in accordance with its terms.

 

 
(b)
First Data Corp. represents that it has the right, authority and capacity to
enter into this Settlement and License Agreement, to accept the rights set forth
in Section 3, and undertake the payment obligations set forth in Section 5.

 
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(c)
First Data Corp. represents that it has not entered into any agreement in
conflict with this Settlement and License Agreement or which would interfere
with or diminish the rights granted hereunder.

 

 
7.5.
TeleCheck International, Inc. TeleCheck International, Inc. represents and
warrants as follows.

 

 
(a)
TeleCheck International, Inc. is a corporation organized and validly existing
under the laws of the state of its incorporation and has all requisite corporate
power and authority to enter into and legally perform its obligations under this
Settlement and License Agreement. When executed and delivered, this Settlement
and License Agreement shall constitute a valid and binding obligation of
TeleCheck International, Inc., legally enforceable against it in accordance with
its terms.

 

 
(b)
TeleCheck International, Inc. represents that it has the right, authority and
capacity to enter into this Settlement and License Agreement, to grant and
accept the rights set forth in Section 3, and undertake the payment obligations
set forth in Section 5.

 

 
(c)
TeleCheck International, Inc. represents that it has not entered into any
agreement in conflict with this Settlement and License Agreement or which would
interfere with or diminish the rights granted hereunder.

 

 
7.6.
TeleCheck Services, Inc. TeleCheck Services, Inc. represents and warrants as
follows.

 

 
(a)
TeleCheck Services, Inc. is a corporation organized and validly existing under
the laws of the state of its incorporation and has all requisite corporate power
and authority to enter into and legally perform its obligations under this
Settlement and License Agreement. When executed and delivered, this Settlement
and License Agreement shall constitute a valid and binding obligation of
TeleCheck Services, Inc., legally enforceable against it in accordance with its
terms.

 

 
(b)
TeleCheck Services, Inc. represents that it has the right, authority and
capacity to enter into this Settlement and License Agreement, to accept the
rights set forth in Section 3, and undertake the payment obligations set forth
in Section 5.

 

 
(c)
TeleCheck Services, Inc. represents that it has not entered into any agreement
in conflict with this Settlement and License Agreement or which would interfere
with or diminish the rights granted hereunder.

 
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8.
COMPROMISE. The Parties acknowledge that this Agreement is the result of a
compromise and shall never be construed as an admission by LML, First Data Corp.
or TeleCheck of any liability, wrongdoing, or responsibility on the part of any
of the Parties and their respective predecessors, successors, subsidiaries,
assigns, agents, officers, directors, or employees. This Agreement is entered by
way of compromise and settlement to avoid the expense and risk of resolving any
dispute through the continuation of litigation.

 

 
9.
INVESTIGATION AND ENFORCEMENT.   

 

 
9.1
Enforcement by LML. In the event that LML brings a claim under the LML Licensed
Patents or Other LML Patents against First Data Corp., TeleCheck, or any FDC
Customer, and LML does not dismiss such action within thirty (30) days of
written notice from First Data Corp. or TeleCheck that the defendant is a First
Data Corp. or TeleCheck controlled entity or FDC Customer, and that the conduct
forming the basis of such claim is licensed or permitted by this Agreement, and
LML does not prevail on such claim because of the applicability of this
Agreement to the alleged infringing conduct, LML shall be required to pay the
attorneys’ fees and litigation costs of defending against such claim in that
litigation.

 

 
9.2
Enforcement by First Data Corp. or TeleCheck. In the event that First Data Corp.
or TeleCheck brings a claim under the TeleCheck Licensed Patents or Other FDC
Patents against LML, and First Data Corp. or TeleCheck does not dismiss such
action within thirty (30) days of written notice from LML that the defendant is
an LML controlled entity, and that the conduct forming the basis of such claim
is licensed or permitted by this Agreement, and First Data Corp. or TeleCheck
does not prevail on such claim because of the applicability of this Agreement to
the alleged infringing conduct, First Data Corp. or TeleCheck shall be required
to pay the attorneys’ fees and litigation costs of defending against such claim
in that litigation.

 

 
10.
MISCELLANEOUS PROVISIONS.

 

 
10.1.
Amendment/Waiver. No modification, amendment, supplement to or waiver of any
provision of this Settlement and License Agreement will be binding upon the
Parties unless made in a writing signed by the Parties. A failure of any Party
to exercise any right provided for herein shall not be deemed to be a waiver of
any right hereunder.

 

 
10.2.
Assignment. This Settlement and License Agreement may not be assigned or
transferred by a Party without the prior written consent of the other Party,
which consent shall not be unreasonably withheld. Divesture or sale of all or
substantially all of a business unit or the assets thereof shall constitute a
reasonable basis for assignment of this Agreement. However, this Section 10.2 is
subject to and limited by the provisions regarding transfer set forth in Section
3.4 of this Agreement.

 
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10.3.
Entire Settlement and License Agreement. This Settlement and License Agreement
sets forth the entire agreement between the Parties as it relates to the subject
matter of this Settlement and License Agreement, and such documents replace and
supersede any and all prior agreements, promises, proposals, representations,
understandings and negotiations, written or not, between the Parties relating to
the same.

 

 
10.4.
Expenses. Except as otherwise specifically provided in this Settlement and
License Agreement, all costs and expenses incurred in connection with this
Settlement and License Agreement and the transactions contemplated hereby shall
be paid by the Party incurring such costs or expenses.

 

 
10.5.
Governing Law and Choice of Forum. This Settlement and License Agreement shall
be construed and interpreted in accordance with the laws of Delaware, without
regard to conflict of law provisions. Pursuant to Section 2.4, any disputes
arising hereunder shall be resolved in the United States District Court for the
District of Delaware.

 

 
10.6.
Headings. The Section headings contained in this Settlement and License
Agreement are for convenience of reference only and shall not serve to limit,
expand or interpret the Sections to which they apply, and shall not be deemed to
be a part of this Settlement and License Agreement.

 

 
10.7.
Interpretation; Construction. The Parties have participated jointly in the
negotiation and drafting of this Settlement and License Agreement. In the event
an ambiguity or question of intent or interpretation arises, this Settlement and
License Agreement shall be construed as if jointly drafted by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring either Party
by virtue of the authorship of any provision of this Settlement and License
Agreement. The word “including” shall mean “including without limitation.”

 

 
10.8.
TeleCheck’s Retained Rights. The Parties acknowledge and agree that the LML
Licensed Patents are “intellectual property” as defined in Section 101(35A) of
the United States Bankruptcy Code, as the same may be amended from time to time
(the “Code”), which have been licensed hereunder in a contemporaneous exchange
for value. The Parties further acknowledge and agree that if LML: (i) becomes
insolvent or generally fails to pay, or admits in writing its inability to pay,
its debts as they become due; (ii) applies for or consents to the appointment of
a trustee, receiver or other custodian for it, or makes a general assignment for
the benefit of its creditors; (iii) commences, or has commenced against it, any
bankruptcy, reorganization, debt arrangement, or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution or liquidation proceedings;
or (iv) elects to reject, or a trustee on behalf of it elects to reject, this
Settlement and License Agreement or any agreement supplementary hereto, pursuant
to Section 365 of the Code (“365”), or if this Settlement and License Agreement
or any agreement supplementary hereto is deemed to be rejected pursuant to 365
for any reason, this Settlement and License Agreement, and any agreement
supplementary hereto, shall be governed by Section 365(n) of the Code (“365(n)”)
and First Data Corp. and TeleCheck will retain and may elect to fully exercise
its rights under this Settlement and License Agreement in accordance with
365(n).

 
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10.9.
LML’s Retained Rights. The Parties acknowledge and agree that the TeleCheck
Licensed Patents are “intellectual property” as defined in Section 101(35A) of
the United States Bankruptcy Code, as the same may be amended from time to time
(the “Code”), which have been licensed hereunder in a contemporaneous exchange
for value. The Parties further acknowledge and agree that if TeleCheck: (i)
becomes insolvent or generally fails to pay, or admits in writing its inability
to pay, its debts as they become due; (ii) applies for or consents to the
appointment of a trustee, receiver or other custodian for it, or makes a general
assignment for the benefit of its creditors; (iii) commences, or has commenced
against it, any bankruptcy, reorganization, debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution or
liquidation proceedings; or (iv) elects to reject, or a trustee on behalf of it
elects to reject, this Settlement and License Agreement or any agreement
supplementary hereto, pursuant to Section 365 of the Code (“365”), or if this
Settlement and License Agreement or any agreement supplementary hereto is deemed
to be rejected pursuant to 365 for any reason, this Settlement and License
Agreement, and any agreement supplementary hereto, shall be governed by Section
365(n) of the Code (“365(n)”) and LML will retain and may elect to fully
exercise its rights under this Settlement and License Agreement in accordance
with 365(n).

 

 
10.10.
Notices. If a Party is required or permitted to give notice to the other Party
under this Settlement and License Agreement, such notice shall be deemed given
either (a) one business day if by overnight courier, delivery of which is
acknowledged by signature of recipient, (b) five business days after depositing
the notice in the U.S. mail, first-class postage prepaid, at the address
specified below, or at such other address as the Party may specify in writing in
accordance with this Section. 

 

 
To LML
To First Data and TeleCheck

     

 
Mr. Patrick H. Gaines
Henry C. Duques

 
CEO and President
Chairman and CEO

 
LML Patent Corp.
First Data Corp.

 
Suite 1680
6200 South Quebec Street

 
1140 West Pender St.
Greenwood Village, CO 80111

 
Vancouver, BC V6E 4GI
 

   
With copies to:

     

  with copy to:  

     

   
Michael Whaley

 
Russell E. Levine, P.C.
General Counsel

 
Kirkland & Ellis LLP
First Data Corp.

 
200 East Randolph Drive
6200 South Quebec Street

 
Chicago, Illinois 60601
Greenwood Village, CO 80111

- 12 -

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Brian Mooney

   
President

   
TeleCheck Services, Inc.

   
5251 Westheimer Road

   
Houston, Texas 77056

   
William J. Marsden, Jr.

   
Fish & Richardson P.C.

   
919 N. Market Street

   
Suite 1100

   
Wilmington, DE 19801

 

 
10.11.
Relationship of the Parties. This Settlement and License Agreement does not
constitute and shall not be construed as constituting a partnership or joint
venture between LML, First Data Corp. and TeleCheck, and no Party shall have any
right to obligate or bind any other Party in any manner whatsoever, and nothing
herein contained shall give or is intended to give any rights of any kind to any
third persons, except as expressly provided herein.

 

 
10.12.
Severability.  If any provision of this Settlement and License Agreement is
found or held to be invalid or unenforceable, the meaning of said provision will
be construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation shall save such provision, it will be severed
from the remainder of this Settlement and License Agreement, as appropriate. The
remainder of this Settlement and License Agreement shall remain in full force
and effect unless the severed provision is essential and material to the rights
or benefits received by either Party.

 

 
10.13.
Counterparts. This Settlement and License Agreement, which with exhibits
included consists of 25 pages, may be executed in two or more counterparts, each
of which shall be considered one and the same document.

 
* * * * *

- 13 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused this Settlement and License
Agreement to be executed by their duly authorized officers as of the Effective
Date.

LML PATENT CORP.
 
By:
/s/ Patrick H. Gaines
       
Name:
Patrick H. Gaines
   
Title:
CEO and President
   
Dated:
April 1, 2006
   
LML PAYMENT SYSTEMS CORP.
 
By:
/s/ Patrick H. Gaines
       
Name:
Patrick H. Gaines
   
Title:
CEO and President
   
Dated:
April 1, 2006
   
LML PAYMENT SYSTEMS, INC.
 
By:
/s/ Patrick H. Gaines
       
Name:
Patrick H. Gaines
   
Title:
CEO and President
   
Dated:
April 1, 2006
     
FIRST DATA CORPORATION
     
By:
/s/ Brian Mooney
     
Name:
Brian Mooney
   
Title:
Senior Vice President
   
Dated:
April 1 , 2006

 
- 14 -

--------------------------------------------------------------------------------

 
TELECHECK INTERNATIONAL, INC.
     
By:
/s/ Brian Mooney
       
Name:
Brian Mooney
   
Title:
President
   
Dated:
April 1, 2006
     
TELECHECK SERVICES, INC.
     
By:
/s/ Brian Mooney
       
Name:
Brian Mooney
   
Title:
President
   
Dated:
April 1, 2006

 
- 15 -

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EXHIBIT 1
 

--------------------------------------------------------------------------------

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
 
 
LML PATENT CORP.,
)
   
)
 
Plaintiff,
)
   
)
   
)
 
v.
)
Civil Action No. 04-858 SLR
 
)
 
TELECHECK SERVICES, INC.,
)
Jury Trial Demanded
ELECTRONIC CLEARING HOUSE, INC.,
)
 
XPRESSCHEX, INC., and
)
 
NOVA INFORMATION SYSTEMS, INC.
)
   
)
 
Defendants.
)
 

STIPULATED DISMISSAL PERTAINING
TO SOME BUT NOT ALL DEFENDANTS
 
WHEREAS, plaintiff, LML Patent Corp., and defendant TeleCheck Services, Inc., as
indicated by the signature of counsel appearing below, have agreed to the
dismissal of TeleCheck Services, Inc. from this action pursuant to Federal Rule
of Civil Procedure 41 and subject to the terms of this Order and a confidential
settlement agreement, dated March __, 2006,
 
NOW, THEREFORE, it is ordered as follows:
 
1.     The claims by LML Patent Corp. against TeleCheck Services, Inc. are
hereby dismissed with prejudice.
 
2.     Each party shall bear its own costs and attorneys fees attributable to
the prosecution and defense of the claims as between LML Patent Corp. and
TeleCheck Services, Inc.
 
3.     As a result of this stipulated dismissal, the following motions are
rendered moot:
 

 
·
LML’S MOTION FOR SUMMARY JUDGMENT NO. 1: FOR A RULING THAT TELECHECK
INFRINGES CLAIMS 1, 2, 4, 5, 6, 9, 10, 11 AND 16 OF THE ‘988 PATENT (Dkt. No.
312)

 

--------------------------------------------------------------------------------

 
·
DEFENDANT TELECHECK SERVICES, INC.’S MOTION FOR SUMMARY JUDGMENT OF
NON-INFRINGEMENT (Dkt. No. 341)

 
STIPULATED AND AGREED

  
/s/ Richard K. Herrmann
  
/s/ William J. Marsden, Jr.
Richard K. Herrmann #405
 
William J. Marsden, Jr. (I.D. No. 2247)
MORRIS JAMES HITCHENS & WILLIAMS
 
Sean Hayes (I.D. No. 4413)
222 Delaware Avenue, 10th Floor
 
FISH & RICHARDSON
Wilmington, Delaware 19801
 
919 North Market Street, Suite 1000
(302) 888-6800
 
Wilmington, Delaware 19801
rherrmann@morrisjames.com
 
302.652.5070
   
marsden@fr.com
Russell E. Levine, P.C.
 
hayes@fr.com
Jamie H. McDole
 
 
KIRKLAND & ELLIS LLP
 
Counsel for Defendant
200 East Randolph Drive
 
TeleCheck Services, Inc.
Chicago, Illinois 60601
   
312.861.2000
         
Counsel for Plaintiff
   
LML Patent Corp.
   

 
SO ORDERED this ______ day of ______________________, 2006.
 

 
   
 
Judge Sue L. Robinson

 
- 2 -

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CERTIFICATE OF SERVICE

I hereby certify that on the __ day of _______, 2006, I electronically filed the
foregoing document, STIPULATED DISMISSAL, with the Clerk of the Court using
CM/ECF which will send notification of such filing to the following:
 
Francis DiGiovanni, Esq. (I.D. No. 3189)
Mark Scarsi, Esq.
CONNOLLY BOVE LODGE & HUTZ
Vision Winter, Esq.
The Nemours Building
O'Melveny & Myers LLP
1007 N. Orange Street
400 South Hope Street
Wilmington, Delaware 19801
Los Angeles, CA 90071
   
Mark B. Mizrahi, Esq.
William Marsden, Esq.
BELASCO JACOBS & TOWNSLEY
Timothy Devlin, Esq.
Howard Hughes Center
Fish & Richardson
6100 Center Drive, Suite 630
919 N. Market Street, Suite 1100
Los Angeles, CA 90045
Wilmington, DE 19801
   
Richard D. Kirk, Esq. (I.D. No. 922)
 
THE BAYARD FIRM
 
222 Delaware Avenue, Suite 900
 
Wilmington, DE 19801
 

 

 
     
/s/ Richard K. Herrmann
   
Richard K. Herrmann (I.D. No. 405)
   
Mary B. Matterer (I.D. No. 2696)
   
MORRIS, JAMES, HITCHENS & WILLIAMS
   
222 Delaware Avenue, 10th Floor
   
Wilmington, Delaware 19801
   
302.888.6800
   
rherrmann@morrisjames.com
   
mmatterer@morrisjames.com
         
Counsel for Plaintiff LML Patent Corp.
 

 

--------------------------------------------------------------------------------

 
EXHIBIT 2

--------------------------------------------------------------------------------

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
 
 

  
 
 
TELECHECK INTERNATIONAL, INC., a
)
 
Delaware Corporation,
)
   
)
 
Plaintiff and Counterclaim Defendant,
)
   
)
Civil Action No. 2:05-CV-270
v.
)
   
)
Hon. Caroline M. Craven
LML PAYMENT SYSTEMS, INC., a Yukon
)
 
Territory, Canada corporation; and LML
)
 
PAYMENT SYSTEMS CORP., a Delaware
)
 
corporation,
)
   
)
 
Defendants and Counterclaim
)
 
Plaintiffs,
)
   
)
 
v.
)
   
)
 
TELECHECK SERVICES, INC., a Delaware
)
 
corporation,
)
   
)
   
)
   
)
 
Counterclaim Defendant.
)
    
)
 

STIPULATED DISMISSAL

WHEREAS, TeleCheck International, Inc., TeleCheck Services, Inc., LML Payment
Systems, Inc. and LML Payment Systems Corp., as indicated by the signature of
counsel appearing below, have agreed to the dismiss their respective causes of
actions and claims with prejudice pursuant to Federal Rule of Civil Procedure 41
and subject to the terms of this Order and a confidential settlement agreement,
dated March __, 2006,
 
NOW, THEREFORE, it is ordered as follows:
 
The above captioned case, and all claims asserted therein, are hereby dismissed
with prejudice. Each party shall bear its own costs and attorneys fees
attributable to the prosecution and defense of such claims.

--------------------------------------------------------------------------------

 
SO ORDERED this ______ day of ______________________, 2006.
 

 
     
   

--------------------------------------------------------------------------------

Dated this __ day of March 2006
               
By:
 
By:
Otis W. Carroll
 
Melissa R. Smith
Ireland Carroll & Kelley, P.C.
 
Gillam & Smith, LLP
6101 South Broadway, Suite 500
 
110 South Bolivar Street, Suite 204
Tyler, TX 75703
 
Marshall, Texas 75670
   
Phone: (903) 934-8450
   
Fax: (930) 934-9257
   
Email: Melissa@gillamsmithlaw.com
     
William Marsden
 
Russell E. Levine, P.C.
Thomas L. Halkowski, Esq.
 
Jamie H. McDole
Fish & Richardson P.C.
 
Kirkland & Ellis LLP
919 N. Market St. Suite 1100
 
200 East Randolph Drive
P.O. Box 1114
 
Chicago, Illinois 60601
Wilmington, DE 19899-1114
 
Phone: (312) 861-2000
   
Fax: (312) 861-2200
     
Attorneys for TeleCheck International, Inc. and TeleCheck Services, Inc.
 
Attorneys for LML Payment Systems, Inc. and LML Payment Systems Corp.

 

--------------------------------------------------------------------------------

EXHIBIT 3
 

--------------------------------------------------------------------------------

 
EXHIBIT 3
 
Statement for Public Release Pursuant to Section 6.2
 
LML and TeleCheck Enter Into Patent License
 
VANCOUVER, BC, April 3, 2006 - LML Patent Corp. (“LML”), a wholly-owned
subsidiary of LML Payment Systems Inc. (the “Corporation”) (Nasdaq: LMLP)
announced today that LML and TeleCheck Services, Inc. (“TeleCheck”) have settled
litigations and entered into a cross patent license agreement. The Settlement
and License Agreement provides TeleCheck and First Data Corporation with a
license to LML’s patents for electronic check conversion, including LML’s U.S.
Patent Nos. 5,484,988; 6,164,528 and 6,283,366, and provides LML with a license
to First Data Corporation’s U.S. Patent Nos. 5,679,938 and 5,679,940. Terms of
the Settlement and License Agreement are confidential. 
 
About LML Payment Systems Inc. (www.lmlpayment.com)
 
The Corporation, through its subsidiary LML Payment Systems Corp., is a
financial payment processor providing check processing solutions including
electronic check authorization, electronic check conversion (ECC) and primary
and secondary check collection including electronic check re-presentment (RCK)
to national, regional and local retailers. The Corporation also provides
selective routing of debit, credit and EBT transactions to third party
processors and banks for authorization and settlement. The Corporation’s
intellectual property estate, owned by subsidiary LML Patent Corp., includes
U.S. Patent No. 6,354,491, No. 6,283,366, No. 6,164,528, and No. 5,484,988 all
of which relate to electronic check processing methods and systems.
 
Statements contained in this news release which are not historical facts are
forward-looking statements, subject to uncertainties and risks. For a discussion
of the risks associated with the Corporation’s business, please see the
documents filed by the Corporation with the SEC.
 
LML Payment Systems, Inc.
 
Patrick H. Gaines
 
President and CEO
 
(604) 689-4440
     
Investor Relations
 
(800) 888-2260
 

 
 

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