NON-EXCLUSIVE SOURCE CODE AGREEMENT
Between

CATUITY INC., a Delaware Corporation
and

ORIGINAL INK LLC, a Virginia limited liability company

This Unlimited, Non-Exclusive Source Code License Agreement (“the Agreement”) is
made and entered into as of 31 October 2007 by and between Catuity Inc, a
Delaware Corporation (“Catuity”), and Original Ink LLC, a Virginia Limited
Liability company (“Original Ink”).

RECITALS

Original Ink is owned and controlled by Alfred H. (John) Racine, a resident of
the Commonwealth of Virginia and an executive and director of Catuity Inc.

Catuity desires to grant a license in its software and source code commonly
known as the Catuity Advanced Loyalty System and Original Ink desires the right
to use, modify and license, sell or otherwise transfer the software and source
code for his own business purposes under the terms and conditions set forth in
this Agreement.

The Board of Directors of ratified, confirmed, and approved the grant of license
to Original Ink pursuant to the terms of this Agreement.

NOW, THEREFORE, for an in consideration of the foregoing Recitals, the mutual
covenants and agreements set forth below and other good and valuable
consideration, the receipt and adequacy of which are acknowledged, the parties
agree to as follows:

 
I.
NON-EXCLUSIVE LICENSE TO THE SOFTWARE

1.1 Non-Exclusive License of Software. Catuity hereby acknowledges and agrees
that Original Ink has and is hereby granted a world-wide, paid-up, perpetual,
royalty-free, non-exclusive, transferable license to use, modify, alter,
enhance, sublicense, and distribute, and create derivative works of the
Software. This license is and shall be unlimited in scope and use, and includes,
but is not limited to, (i) the right of Original Ink to use the Software in its
own internal data processing operations, wherever located and without respect to
the type or machine class of hardware used, (ii) to make an unlimited number of
copies of the Software, and (iii) the unlimited and unrestricted right to
license and sublicense and distribute any and all present and future versions of
the Software. Original Ink shall own all right, title and interest in and to all
modifications, alterations, enhancements and derivative works of the Software
and no license to any such modification, alterations, enhancements and
derivative works are granted to Catuity.
 
a. The license acknowledged and granted hereunder includes the right to allow
third party maintenance vendors of Original Ink, as well as third party
maintenance vendors of any party granted a sublicense of the Software, to use
the Software in connection with performing maintenance or technical support or
services of any sort or description.
 

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b. All sublicenses of the Software granted by Original Ink may be on such terms
and conditions as Original Ink shall in its sole discretion determine necessary
or proper. Original Ink will be under no duty to report to or notify Catuity of
any such grant of a sublicense nor to disclose the terms of any such sublicense.

c. The license hereby acknowledged and granted is a license to use, modify,
alter, enhance, and create derivative works of the source code of the Software.
Original Ink has and shall have the right to contract with any third party to
assist it in the modification, alteration, and enhancement of the Software and
in the creation of derivative works of the Software. Original Ink has and shall
have all right title and interest in and ownership of any such modifications,
alterations, enhancements, and derivative works and all copyrights therein
without the payment of any amount, fee, additional payment, or royalty.

d. In addition to using the Software for Original Ink’s own internal data
processing operations, the license acknowledged and granted hereunder is a
license for use of the Software for commercial time-sharing arrangements and for
providing service bureau, data processing, rental, and other services to third
parties.

e. The license acknowledged and granted hereunder shall include the right to
sublicense and package the Software to third parties in conjunction with any
Original Ink product. Original Ink may also appoint third parties to sell or
license the Software on its behalf.

1.2 Exclusions. Catuity retains the right to license, sell or otherwise transfer
its Software to other third parties.

LICENSE FEE

 
2.1
License Fee. Catuity hereby acknowledges receipt of the one-time license fee of
$10,000 for the grant of license hereunder.

 
2.2
Royalties. For a period of three years, Catuity will be entitled to 1% of
licensing revenue generated by the licensee or successor licensee. Payment shall
be made on a quarterly basis and Catuity shall have access to the books and
records of the licensee in order to determine compliance with this royalty.

REPRESENTATIONS AND WARRANTIES

Both parties to this Agreement provide the following mutual representations and
warranties as of the date of this Agreement:

 
3.1
Power and Authority. Both parties have all requisite power and authority to
enter into this Agreement and to consummate this Agreement, and to carry out and
perform all terms and conditions of this Agreement. Catuity warrants that it
knows of no claims or encumbrances against all or part of the software included
under this agreement.

 

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3.2
Consents. No consent, approval, or authorization of, designation, declaration or
filing with any governmental agency or any lender, lessor, creditor, landlord or
other person is required in connection with the execution, delivery, performance
of or compliance with this Agreement and the transaction contemplated in this
Agreement.

 
3.3
Non-Contravention. Neither the execution, delivery, performance of or compliance
with this Agreement, no any other action contemplated by this Agreement or such
other agreements, will (i) violate, conflict with, or constitute a default or
breach under the governing documents of either party; (ii) constitute a
violation by Catuity of any requirement of law; or (iii) result, or with the
passage of time will result, in any breach or violation of, or be in conflict
with, or constitute a default, or give to any person any rights of termination
or cancellation of, or accelerate the performance required by or maturity of,
any contract or any other document or instrument binding on or affecting either
party.

 
3.4
Costs of the Agreement. Each party is responsible for its own costs in
connection with the preparation and execution of this Agreement.

 
3.5
No Time Bombs, Etc. Catuity warrants that the Software will be free of item such
as “time bombs,” “logic bombs”, “computer viruses”, “worms”, or any
intentionally implanted devices of a like or similar nature which might
detrimentally affect the functionality or operation of the Software.

 
3.6
Post-Effective Date Covenants. Neither party will take any actions after the
Effective Date that will materially alter the benefit received by the other.

 
3.7
Title to Software. Catuity warrants that it owns all right, title, and interest
in an to the Software free of all liens, claims, encumbrances, and licenses.

 
DELIVERIES

4.1 Catuity Deliveries. Promptly following execution of this Agreement, Catuity
shall deliver or cause to be executed or delivered a complete copy of Version
4.5 of all components of the Software, the Source of which shall be in
electronic format.

INDEMNIFICATION

5.1 Indemnification. Both parties agree to indemnify, defend and hold harmless
the other party from and against any and all claims, damages, liabilities,
losses and expenses (“Losses”) caused by, arising out of or relating to:

 
(a)
any misrepresentation or breach of any representation, warranty, covenant or
agreement contained in this Agreement or in any agreement or instrument executed
and delivered or provided or caused to be provided by or on behalf of either
party or in connection with the transactions and transfers contemplated by this
Agreement; and

 

 
(b)
any and all actions, suits, proceedings, demands, assessments, judgments, cost
and expenses, including actual attorneys’ fees, incidental to any of the
foregoing.

 

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5.2 Notice. Within sixty (60) days after learning of the assertion of any claim
against which either party claims indemnification (“Indemnitee”) pursuant to
this Article 5, Indemnitee will notify the other party (“Indemnitor”) and afford
Indemnitor the opportunity to assume the defense or settlement of such claim at
Indemnitor’s own expense with counsel of Indemnitor’s choosing. If Indemnitee
fails to notify Indemnitor within the prescribed period, then the Indemnitor
will be relieved of its indemnity obligations.

5.3 Remedial Action. The parties shall each use reasonable efforts to minimize
the obligation of the other to indemnify by, among other reasonable things and
without limiting the generality of the foregoing, taking such reasonable
remedial action as it believes may minimize such obligation and seeking to the
maximum extent possible reimbursement from insurance carriers under applicable
insurance policies covering any such liability.

5.4 Assignment of Claims. The Parties agree that upon satisfaction of the
obligation to indemnify, they will assign to the Indemnitor any and all claims,
cause of action and demands of whatever kind and nature which Indemnitee may
have against any person, firm or other entity giving rise to the indemnified
loss, and to reasonably cooperate in any efforts to recover from such person or
entity.

TERMINATION

6.1 Termination. This agreement may not be terminated.

MISCELLANEOUS

7.1 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the Commonwealth of Virginia. Both parties consent
to the jurisdiction and venue of the state or federal courts in Albemarle
County, Virginia or the City of Charlottesville, Virginia.

7.2 Payment of Expenses. Each party will pay all fees and expenses, including
legal and accounting fees, incurred by it in connection with the transaction
contemplated in this Agreement.

7.3 Entire Agreement. This Agreement and all other documents and instruments
delivered pursuant to this Agreement constitute the full and entire
understanding and agreement between the parties with respect to the contemplated
transaction and supersede all related prior understandings, agreements or
letters of intent.

7.4 Benefit. This Agreement will be binding upon and inure to the benefit of
Catuity and Original Ink, or his designee, and their permitted successors and
assigns.
 

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7.5 Amendments. Any modification or amendment to this Agreement will be
effective only if in writing and executed by both parties to this Agreement.

7.6 Waiver. Waiver by any party of any breach of any provision of this Agreement
will not operate or be construed as a waiver of any subsequent or similar
breach.

7.7 Notices. Any and all notices, requests, demands and other communications
permitted under or required pursuant to this Agreement shall be in writing and
shall be deemed given if delivered, either physically or electronically,
including fax or email, to the parties at the addresses set forth below, or at
such other addresses as they may indicate by written notice given as provided in
this Section:

If to Catuity:
 
If to Original Ink
Catuity Inc.
 
Original Ink LLC
2340 Commonwealth Drive
 
622 Wilder Drive
Charlottesville, VA 22901
 
Charlottesville, VA 22902

7.8 Severability. If any provision of this Agreement or any agreement or
instrument executed in connection with this Agreement is determined to be
invalid, illegal or unenforceable, such provision shall be enforced to the
fullest extent permitted by applicable law, and the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired.

7.9 Construction. Catuity and Original Ink, or his designee, acknowledge and
agree that each of them has equally participated in the final wording of this
Agreement and this Agreement will be construed equally against each party.

7.10 Counterparts. This Agreement may be executed in counterparts, each of which
will be deemed an original and all of which together will be considered one and
the same agreement. This Agreement may be signed by facsimile or PDF signature
and any facsimile or PDF signature shall be deemed an original.

7.11 No Third Party Beneficiary Rights. This Agreement is not intended to and
will not benefit any Persons other than Catuity and Original Ink, or his
designee, and will not create any third party beneficiary rights in any Person.

7.12 Confidentiality. The parties agree to keep in strict confidence the fact of
and the content of this Agreement.

DEFINITIONS

8.1 Agreement means this non-exclusive source code license agreement, including
all schedules.

8.2 7 Software means all right, title and interest in and to the Catuity loyalty
and stored value software product version 4.5 in Source Code format, including
terminal applications and APIs as described in the attached product descriptions
circulated in the U.S. by Catuity, a documentation, including data security
practices, policies and procedures and support materials, and any proprietary
compliers used with respect to such software product
 

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8.3 Effective Date has the meaning set forth in the first paragraph of this
Agreement.

8.4 Excluded Software has the meaning set forth in Section 1

8.5 Indemnitee has the meaning set forth in Section 5.

8.6 Indemnitor has the meaning set forth in Section 5.

8.7 Source Code means a copy of the source code (the computer instructions in
human readable computer language form on magnetic media) to the Software,
including all upgrades and enhancements, plus any pertinent commentary or
explanation that may be used by Catuity’s programmers, including, but not
limited to those incorporated into the Software. The Source Code shall include
system documentation, statements of principles of operation, and schematics, all
as necessary or useful for the effective understanding, maintenance and use of
the Source Code. To the extent that the development environment employed by
Catuity for the development, maintenance, compilation, and implementation of the
Source Code includes any device, programming, or documentation not commercially
available to Original Ink on reasonable terms through readily known sources
other than Catuity, the Source Code shall include all such devices, programming,
or documentation. The foregoing reference to such development environment is
intended to apply to any programs, including compilers, workbenches, tools, and
higher-level (or proprietary) languages, used by Catuity for the development,
maintenance, and implementation of the Source Code.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written

        Catuity Inc.     Original Ink LLC         By:     By:

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Clifford W. Chapman Jr.
   

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John Racine
Director and Authorized Person
   
Member

 

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