Exhibit 10.2


    
      

    

    EXHIBIT
      10.2

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2
 

    

    
SETTLEMENT
      AND LICENSE AGREEMENT

    


    THIS
      SETTLEMENT AND PATENT 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 (“LICENSOR”), and
      Electronic Clearing House, Inc., a Nevada corporation having its principal
      place
      of business at 730 Paseo Camarillo, Camarillo, California 93010 and its
      wholly-owned subsidiary Xpresschex, Inc., a New Mexico corporation having its
      principal place of business at 215 Central NW, Suite 3A, Albuquerque, New Mexico
      87102 (collectively “ECHO” and/or the
      “LICENSEE”).

    


    RECITALS

    


    WHEREAS,
      LICENSOR owns rights in certain U.S. Patents related to making, using, offering
      for sale and selling Electronic Check Conversion systems and services in the
      Direct Consumer Field; and

    WHEREAS,
      LICENSOR filed suit against LICENSEE in the United States District Court for
      the
      District of Delaware, Case No. CA-04-858, alleging infringement of certain
      LICENSOR patents by certain of LICENSEE’s products, systems and/or services
      (“Delaware Litigation”).

    WHEREAS,
      LICENSOR desires to grant to LICENSEE, and LICENSEE desires to obtain from
      LICENSOR, a license for the right to use the invention of LICENSOR’s patents for
      use in connection with all the transactions in which LICENSEE is involved in
      the
      Direct Consumer Field; and the parties desire to settle the 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 Settlement
      and License Agreement with initial capital letters, shall have the respective
      meanings set forth in this Section 1.

     

    
      	 	
              1.1.

            	
              “Affiliate”
                means, with respect to any party to this Settlement and License Agreement,
                any Person that, directly or indirectly, controls, is controlled
                by, or is
                under common control with, such Party, such as parents, subsidiaries
                and
                sister corporations.

            


    

     

    
      	 	
              1.2.

            	
              “Acquirer
                Processor”
                means the role of accepting transactions from a merchant prior to
                submission to Visa and then submitting them to Visa for qualification
                under the Visa POS Check program.

            


    

     

    
      	 	
              1.3.

            	
              “ACH”
                means the Automated Clearing House.


            


    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              1.4.

            	
              “ACH
                Processor”
                means a party which processes ACH files and/or items on behalf of
                one of
                the participants in the ACH system provided that the party did not
                perform
                the ECC function.

            


    

     

    
      	 	
              1.5.

            	
              “Capture
                Service Provider”
                means the service of capturing and storing the check data upon electronic
                submission to a data center and the transfer of files of captured
                data on
                a routine basis for ACH submission by another
                party.

            


    

     

    
      	 	
              1.6.

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

            


    

     

    
      	 	
              1.7.

            	
              “Consumer”
                means any entity which either:

            


    

     

    
      	 	
              (a)

            	
              purchases
                or offers to purchase goods or services from a Merchant;
                or

            


    

     

    
      	 	
              (b)

            	
              settles
                all or part of a payment obligation other than the purchase of goods
                and
                services, including, without limitation, the payment of taxes, duties,
                fees and fines.

            


    

     

    
      	 	
              1.8.

            	
              “Direct
                Consumer Field”
                means the field of use in which a Consumer effects a transaction
                through
                the action of a natural person at the physical business premises
                of a
                Merchant and the use of ECC, also called point-of-purchase transaction.
                The NACHA standard entry class code for a Direct Consumer Field
                transaction is “POP.”

            


    

     

    
      	 	
              1.9.

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

            


    

     

    
      	 	
              1.10.

            	
              “ECC”
                is the acronym for “Electronic Check Conversion” and means the process or
                system by which a paper check is converted to an electronic
                transaction.

            


    

     

    
      	 	
              1.11.

            	
              “Final
                Judgment”
                is the decision of the District Court for the District of Delaware
                in Case
                No. CA-04-858. 

            


    

     

    
      	 	
              1.12.

            	
              “Funds
                Transfer”
                means, with respect to any transaction, the transfer of funds from
                the
                banking account of the Consumer that is a party to such transaction
                to the
                banking account of the Merchant that is a party to such transaction
                and
                vice
                versa.

            


    

     

    
      	 	
              1.13.

            	
              “Gross
                Revenue”
                means the total revenue received by LICENSEE for serving as an Acquirer
                Processor and/or a Third Party Processor for any Visa ECC
                Transaction.

            


    

     

    
      	 	
              1.14.

            	
              “ISO”
                means Independent Sales
                Organization.

            


    

     

    
      	 	
              1.15.

            	
              “Licensed
                Activity”
                means making, using, offering for sale or selling one or more steps
                of ECC
                in the Direct Consumer Field.

            


    

     

    
      	 	
              1.16.

            	
              “Licensed
                Patents”
                means any and all LICENSOR patents, including but not limited to
                U.S.
                Patent Nos. 6,354,491; 6,283,366; 6,164,528; and 5,484,988, to the
                extent
                necessary to perform ECC in the Direct Consumer Field. Such patents
                include any such patents currently owned or controlled by
                LICENSOR
                and any such patents later acquired by, granted to or controlled
                by
                LICENSOR. 

            


    

     

    
      	 	
              1.17.

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

            


    

     

    
      	 	
              1.18.

            	
              “LICENSOR”
                means LML Patent Corp. and any entity controlled by LICENSOR. For
                purposes
                of this Settlement and License Agreement, “control” of an entity means the
                ability, directly or indirectly, to direct and manage the activities
                of
                such entity. 

            


    

     

    
      	 	
              1.19.

            	
               “Merchant”
                means any entity which offers ECC services to Consumers in connection
                with
                the purchase of goods or services or uses ECC to effectuate a Funds
                Transfer.

            


    

     

    
      	 	
              1.20.

            	
              “Merchant
                Account Information”
                means the electronic form of information relating to the bank and
                banking
                account of a Merchant.

            


    

     

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              1.21.

            	
              “Non-Visa
                ECC Transaction”
                means any ECC transaction in the Direct Consumer Field that is not
                a Visa
                ECC Transaction.

            


    

     

    
      	 	
              1.22.

            	
              “Participating
                Transaction”
                means those check transactions that are processed in the Visa POS
                Check
                program that go directly from Visa to the bank where the check writer’s
                checking account resides and, where upon verification of funds, clearance
                of the check occurs from the check writer’s bank through the Visa network
                rather than through the ACH, independent of
                LICENSEE.

            


    

     

    
      	 	
              1.23.

            	
              “Parties”
                means LICENSOR and LICENSEE,
                collectively.

            


    

     

    
      	 	
              1.24.

            	
              “Party”
                means each of LICENSOR and LICENSEE,
                individually.

            


    

     

    
      	 	
              1.25.

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

            


    

     

    
      	 	
              1.26.

            	
              “Territory”
                means the United States of America, its territories and possessions,
                including, without limitation, the District of Columbia and the
                Commonwealth of Puerto Rico;

            


    

     

    
      	 	
              1.27.

            	
              “Third
                Party Processor”
                means the entity that clears ECC transactions under the VISA POS
                Check
                service through the ACH in those cases where the check transactions
                first
                went to Visa for clearance through the Visa Network but could not
                be
                cleared by through the Visa
                network.

            


    

     

    
      	 	
              1.28.

            	
              “Visa
                ECC Transaction”
                means any ECC transaction processed through the Visa network (a.k.a.
                the
                Visa Net).

            


    

     

    
      	 	
              1.29.

            	
              “Visa
                POS Check Guarantee”
                means a transaction that has been processed through the Visa POS
                Check
                program and the merchant or bank have requested that LICENSEE guarantee
                the transaction in addition to performing the ECC
                function.

            


    

     

    
      	
              2.

            	
              SETTLEMENT
                OF THE LITIGATION.

            


    

     

    
      	 	
              2.1.

            	
              Stipulated
                Dismissal.
                Within three (3) business days of the receipt of the release fee
                payment
                specified in Section 5.1, the parties shall file with the Court a
                Stipulated Dismissal with prejudice substantially in the form attached
                hereto as Exhibit 1 and LICENSOR shall send a letter to the Special
                Discovery Master substantially in the form attached hereto as Exhibit
                2.
                In addition. LICENSEE need not produce the documents that are the
                subject
                of Special Discovery Master Order No. 5 and LICENSEE’s objections thereto
                (DI 362).

            


    

     

    
      	 	
              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 the
                Court.

            


    

     

    
      	 	
              2.3.

            	
              No
                Admissions of Liability.
                By entering into this Settlement and License Agreement, LICENSEE
                is not
                making any admissions of liability.

            


    

     

    
      	 	
              2.4.

            	
              No
                Attempt To Invalidate.
                LICENSEE agrees that, in absence of a subpoena or court order requiring
                its participation or support, it shall not take any action, participate
                in
                or support any suit, claim, action, litigation, administrative
                proceedings, or proceeding of any nature brought by or against LICENSOR
                that concerns or challenges the validity or enforceability of the
                Licensed
                Patents, unless such suit, claim, action, litigation or proceedings
                to
                enforce one or more of the Licensed Patents is brought by LICENSOR
                or its
                successors, assigns, Affiliates, or licensees against LICENSEE, or
                places
                LICENSEE in a reasonable apprehension of being sued on one or more
                of the
                Licensed Patents.

            


    

     

    
      	 	
              2.5.

            	
              Retention
                of Jurisdiction to Enforce This Agreement.
                Except as provided under Section 9.2, 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

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	
              3.

            	
              LICENSE
                OF RIGHTS.

            


    

     

    
      	 	
              3.1.

            	
              License
                Grant.
                LICENSOR hereby grants to LICENSEE, and LICENSEE hereby accepts from
                LICENSOR, a personal, non-exclusive, license under the Licensed Patents
                to
                perform the Licensed Activity in the Territory during the License
                Term.

            


    

     

    
      	 	
              3.2.

            	
              No
                Transfer Of License Grant.
                Except as expressly provided for in Section 10.2, the license granted
                hereunder is not assignable or
                transferable.

            


    

     

    
      	 	
              3.3.

            	
              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.

            


    

     

    
      	 	
              3.4.

            	
              No
                License To Other Fields Of Use.
                Nothing in this Settlement and License Agreement is intended to grant,
                nor
                should anything in this Settlement and License Agreement be construed
                to
                grant, any rights or license, express or implied, to perform ECC
                in any
                field of use other than the Direct Consumer
                Field.

            


    

     

    
      	 	
              3.5.

            	
              Covenant
                Not to Sue.
                Subject to and except as set forth in Section 5.3, LICENSOR covenants
                not
                to sue Persons, including VISA, banks, ISO’s, processors or merchants,
                using LICENSEE’S ECC Direct Consumer Field products, services or systems
                based on an allegation that the use of LICENSEE’S ECC Direct Consumer
                Field products, services or systems infringes whether by inducing
                infringement, contributorily infringing or directly, one or more
                of the
                Licensed Patents. All Visa ECC Direct Consumer Field transactions
                processed by
                merchants, banks, processors or ISO’s, provided that such merchants,
                banks, processors or ISO’s had designated LICENSEE as their third-party
                processor, as defined in Exhibit 4, including without limitation
                Participating Transactions, as identified in Exhibit 4 as transaction
                9,
                are covered by this covenant. Within thirty (30) days of the Effective
                Date, LICENSEE shall provide to LICENSOR a list containing the names
                and
                addresses of all such banks, ISO’s processors and merchants, and shall
                update this list once per quarter at the time the report of Section
                5.4 is
                sent to LICENSOR. Nothing herein, however, shall preclude or is intended
                to preclude LICENSOR from asserting, in litigation or otherwise,
                the
                Licensed Patents against such Persons based on the use by such Persons
                of
                ECC products, services or systems that are not connected to or reliant
                upon the LICENSEE as an Acquirer Processor and/or Third Party Processor
                for a portion of their transaction activity.
                Moreover, nothing herein shall preclude or is intended to preclude
                LICENSOR from asserting, in litigation or otherwise, the Licensed
                Patents
                against such Persons if LICENSEE is not abiding by the defined
                royalty
                arrangements as set forth
                in Section 5.3 for ECC transactions performed in whole or in part
                by such
                Persons.

            


    

     

    
      	
              4.

            	
              RELEASE.

            


    

     

    
      	 	
              4.1.

            	
              LICENSOR,
                for itself and its successors, assigns, Affiliates, and licensees,
                hereby
                releases and forever discharges LICENSEE and any parents, subsidiaries,
                Affiliates, directors, officers, employees, agents, shareholders
                and
                customers from any and all causes of action (including all demands,
                damages of any type or kind, debts, liabilities, accounts, costs,
                expenses, liens, obligations, injunctive relief, fees, actions, causes
                of
                action (at law, in equity, under federal or state law, in any kind
                of
                forum), suits, promises, rights, rights to subrogation, rights to
                contribution, and remedies of any nature whatsoever) in law or at
                equity
                related to the Licensed Patents, whether known or unknown, which
                may have
                arisen prior to the Effective Date.

            


    

     

    
      	 	
              4.2.

            	
              LICENSEE,
                for itself and its successors, assigns, Affiliates, and licensees,
                hereby
                releases and forever discharges LICENSOR and any parents, subsidiaries,
                Affiliates, directors, officers, employees, agents and shareholders
                from
                any and all causes of action (including
                all demands, damages of any type or kind, debts, liabilities, accounts,
                costs, expenses, liens, obligations, injunctive relief, fees, actions,
                causes of action (at law, in equity, under federal or state law,
                in any
                kind of forum), suits, promises, rights, rights to subrogation, rights
                to
                contribution, and remedies of any nature whatsoever)
                in
                law or at equity related to the Licensed Patents, whether known or
                unknown, which may have arisen prior to the Effective
                Date.

            


    

     

    
      	
              5.

            	
              PAYMENTS. 

            


    

     

    
      	 	
              5.1.

            	
              Release
                Fee Payment.

            


    

     

    As
      consideration for LICENSOR entering into the release set forth in Section 4.1,
      LICENSEE agrees to pay LICENSOR Four Hundred
      Thousand
      ($400,000.00) U.S. Dollars by wire transfer to the following account on the
      Effective Date:

    


    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	
              Beneficiary:

            	
              LML
                Patent Corp.

            
	
              Beneficiary
                Address:

            	
              1330
                Riverbend Drive, Suite 600

              Dallas,
                Texas 75247

            
	
              Bank
                Name:

            	
              *

            
	
              Bank
                Address:

            	
              *

            
	
              Bank
                Account #:

            	
              *

            
	
              Bank
                Routing #:

            	
              *

            


    

    


    The
      Release Fee Payment is not refundable. Said
      payment recognizes part of the ECC transaction volume of the LICENSEE has been
      generated from other parties and the payment by LICENSEE will therefore inure
      to
      the benefit of those same parties whose transactions LICENSEE has processed
      as
      ECC transactions over the years such that those parties will not be required
      to
      also make any royalty payment, except as set forth in Section 5.3, on such
      past
      transactions.

    


    
      	 	
              5.2.

            	
              Standstill
                Fee Payment.

            


    

     

    As
      consideration for LICENSOR entering in the Standstill agreement set forth in
      Section 10.15 herein, LICENSEE agrees to pay LICENSOR Two Hundred Thousand
      ($200,000.00) U.S. Dollars by wire transfer to the above account on the
      Effective Date.
      This
      paragraph shall not supercede any provision set forth in Section 10.15
      herein.

    


    
      	 	
              5.3.

            	
              Direct
                Consumer Field Running Royalties.

            


    

     

    
      	 	
              (a)

            	
              * performed
                by LICENSEE.
                As further consideration for entering into this Settlement and License
                Agreement, on transactions processed on or after April 1, 2006, LICENSEE
                agrees to pay running royalties to LICENSOR *.

            


    

     

    
      	 	
              (b)

            	
              * Coordinated
                by Third Party.
                For * coordinated by a third party wherein LICENSEE performs a portion
                of
                the ECC activity, * LICENSEE will be required to do the
                following:

            


    

     

    
      	 	
              (1)

            	
              LICENSEE
                will advise the party coordinating the ECC activity, in writing with
                a
                copy to LICENSOR, that they can qualify the transactions under this
                Settlement and License Agreement
                for a payment of *. Should either the party or LICENSEE pay the *
                to
                LICENSOR, LICENSOR shall have no further rights against LICENSEE
                or the
                third party with regard to the transactions in question.
                

            


    

     

    
      	 	
              (2)

            	
              Should
                LICENSEE advise the party of the opportunity to qualify the transaction
                by
                making such royalty payment and they refuse to do so, for any reason,
                and
                should LICENSEE decide not to pay the royalty itself, LICENSOR will
                leave
                LICENSEE alone and pursue only the third party coordinating the ECC
                transaction. LICENSEE’s activities and revenues for services provided as
                solely a Capture Service Provider or an ACH Processor, whatever they
                may
                be, will not qualify LICENSEE to make * to LICENSOR under any
                circumstance and LICENSOR agrees to leave LICENSEE alone if written
                notice
                to the party, with a copy to LICENSOR, was given by LICENSEE of the
                opportunity to qualify the
                transactions.

            


    

     

    
      	 	
              (c)

            	
               Non-Qualified
                Transactions for Royalty Payment under this Agreement.
                LICENSOR agrees that LICENSEE’s * , do not qualify as transactions for
                which a royalty should be paid to LICENSOR unless an ECC transaction
                is
                performed or conducted by LICENSEE in connection with LICENSEE’s *.
                LICENSEE will have no obligation or liability to LICENSOR for a third
                party that may use LICENSEE’s *, even if used as a first step in
                performing an ECC transaction (by someone other than LICENSEE) and
                LICENSOR specifically agrees to leave LICENSEE alone in such situations.
                LICENSEE will have no obligation or liability to LICENSOR for a third
                party that performs an ECC transaction and subsequently asks LICENSEE
                to *  the transaction other than to provide to LICENSOR in
                writing the name of the third party performing ECC transactions.
                Should
                LICENSEE have performed the ECC function on a transaction *, then
                LICENSEE’s only obligation to LICENSOR will be the single payment as set
                forth in 5.3.(a) for a *. Should LICENSEE * a Visa POS Check
                transaction, its only obligation to LICENSOR will be the payment
                of *
                LICENSEE receives for being the Acquiring Processor and/or Third
                Party
                Processor, depending on whatever role LICENSEE plays with the specific
                Visa POS Check * transaction.
                

            


    

     

    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              (d)

            	
              Rate
                for *.
                As further consideration for entering into this Settlement and License
                Agreement, on transactions processed on or after April 1, 2006, LICENSEE
                agrees to pay running royalties to LICENSOR*.

            


    

     

    
      	 	
              (e)

            	
              No
                Royalty Payment for *.
                No royalty will be due LICENSOR on * from LICENSEE or any other party,
                including Visa, banks, merchants, ISO’s, processors or such other parties
                that may assist in processing such transactions, that are processed
                by
                Visa for those merchants and/or banks who use LICENSEE as either
                their
                Acquirer Processor and/or Third Party Processor provided that LICENSEE
                has
                not received any fees or revenue from VISA for such transactions.
                Should
                LICENSEE receive any Acquirer Processor and/or Third Party Processor
                fees
                in association with processing a *, such fee will be counted toward
                the
                royalty obligation LICENSEE has to LICENSOR as defined in Section
                5.3.(d).
                

            


    

     

    
      	 	
              (f)

            	
              Particular
                Merchant Rate.
                Once a running royalty rate has been established for a particular
                merchant
                (i.e. 5.3(d)), the running royalty rate for that merchant will be
                calculated, during the License Term, in that manner even if the use
                of the
                Visa network is discontinued, provided however, that if the Visa
                network
                is discontinued, LICENSEE’S pricing to such Merchant shall not increase
                by * above the rate that the Visa bank or Visa charged
                to that Merchant prior to the discontinuation of the Visa network.
                If
                LICENSEE’S pricing to such Merchant does increase by *, the transactions
                for that merchant will be considered Non-Visa ECC Transactions and
                the
                running royalty rate set forth in Section 5.3(a) will
                apply.

            


    

     

    
      	 	
              5.4.

            	
              Running
                Royalty Payments, Timing and Reports.

            


    

     

    
      	 	
              (a)

            	
              Payments.
                Running royalty payments are to be deposited via the ACH to the same
                LICENSOR bank account identified in Section 5.1. Running royalty
                payments
                are not refundable.

            


    

     

    
      	 	
              (b)

            	
              Timing.
                All running royalties payable pursuant to Sections 5 are to be paid
                to
                LICENSOR by LICENSEE within
                fifteen (15)
                days of the end of each calendar quarter during the License Term.
                LICENSEE
                shall keep full and true books of account and other records in sufficient
                detail so that the royalties due and payable to LICENSOR hereunder
                may be
                properly ascertained. When any royalty payment is due, LICENSEE shall
                report to LICENSOR the number of non-Visa ECC transactions and Gross
                Revenue from Visa ECC
                Transactions originated in the Direct Consumer Field for the period
                for
                which the royalty payment is due. LICENSOR shall have the right,
                at its
                expense, to have an independent professional accountant audit LICENSEE’s
                books and records solely for the purpose of determining the accuracy
                of
                any royalty payments due and payable hereunder; provided that LICENSOR
                provides LICENSEE with reasonable prior notice, and such audit is
                conducted during normal business hours. Such audits may be conducted
                no
                more than once per calendar year. Any information obtained as a result
                of
                such audits shall be maintained by the independent professional accountant
                in confidence, and only disclosed to LICENSOR to the extent necessary
                to
                collect any underpayment by LICENSEE under this Settlement and License
                Agreement.
                If
                the audit shows an underpayment of more than seven percent (7%),
                LICENSEE
                shall reimburse for the full cost of the
                audit.

            


    

     

    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              (c)

            	
              Interest
                on Overdue Royalties.
                LICENSEE covenants and agrees to pay to LICENSOR interest upon any
                of the
                royalties payable under Sections 5 that are in arrears at the lower
                of the
                rate of 9 percent (9%)
                per annum and the maximum rate allowed by applicable law which interest
                shall be payable by LICENSEE at the same time as payment of any part
                of
                the principal amount in respect of which it is
                owed.

            


    

     

    
      	 	
              5.5.

            	
              Direct
                Consumer Field Most Favored Running Royalty Rates.
                If, at any time during the term of this Settlement and License Agreement,
                LICENSOR grants
                a license to the Licensed Patents in the Direct Consumer Field to
                any
                third party, other than an Affiliate of LICENSOR,
                *
                running royalty rate lower than that specified in Section 5.3(a),
                or at a
                percentage of Gross Revenue from * royalty rate lower than that specified
                in Section 5.3(d), regardless of any transaction volume levels that
                might
                be involved in the third party agreement to qualify for said running
                royalty rate, LICENSEE shall be immediately advised and shall be
                entitled
                to receive such reduced running royalty rate with respect to the
                Licensed
                Activity, effective as of the date that the reduced running royalty
                rate
                is provided to such third party and shall not be subject to any
                transaction volume qualifying level in order to receive the lower
                running
                royalty rate. Upon good cause shown, and provided that LICENSOR does
                not
                acknowledge that it has granted a reduced running royalty rate with
                respect to the Licensed Activity, LICENSEE shall have the right,
                at its
                expense, to have an independent professional accountant audit, no
                more
                than once per year, LICENSOR’s running royalty rates and, if it is found
                that a lower running royalty rate has been offered to others and
                not
                immediately offered to LICENSEE according to this section, LICENSOR
                agrees
                to pay all audit expenses and to return all running royalties paid
                over
                those that would have been paid at the lower running royalty rate
                plus an
                interest rate of
                9% per annum on such funds.
                Any information obtained as a result of such audits shall be maintained
                by
                the independent professional accountant in confidence, and only disclosed
                to LICENSEE to the extent necessary to inform LICENSEE of any overpayment
                by LICENSEE under this Settlement and License
                Agreement.

            


    

     

    
      	
              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/or regulations 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 6.1, LICENSOR may release publicly the
                statement
                in substantially the same form as attached hereto as Exhibit 3 and
                LICENSEE may release publicly the statement in substantially the
                same form
                as attached hereto as Exhibit 5.

            


    

     

    
      	 	
              6.3.

            	
              In
                reference to the identity of ISO’s, processors, merchants, banks and such
                other information that is shared by LICENSEE under Section 3.5 of
                this
                Settlement and License Agreement with LICENSOR, LICENSOR agrees such
                data
                will be considered Confidential Information and LICENSOR agrees to
                limit
                access thereto to only those with a need to know. LICENSOR specifically
                agrees that such information will never be used by LICENSOR in any
                manner
                other than to honor the spirit and terms as set forth in Section
                3.5 of
                this Settlement and License Agreement and, under no circumstances
                shall
                the information be used for marketing, promotional or any similar
                activity
                by LICENSOR or its Affiliates.

            


    

     

    
      	
              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.

            	
              LICENSOR.
                LICENSOR represents and warrants as
                follows.

            


    

     

    
      	 	
              (a)

            	
              LICENSOR
                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 LICENSOR, legally enforceable against it in accordance
                with
                its terms.

            


    

     

    
      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              (b)

            	
              LICENSOR
                represents that it has the right, authority and capacity to enter
                into
                this Settlement and License Agreement and grant the rights set forth
                in
                Section 3. LICENSOR further represents
                that no person other than LICENSOR has the right to enforce any of
                the
                rights in the Licensed Patents that are the subject of this Settlement
                and
                License Agreement.

            


    

     

    
      	 	
              (c)

            	
              LICENSOR
                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.

            	
              LICENSEE.
                LICENSEE represents and warrants as
                follows.

            


    

     

    
      	 	
              (a)

            	
              LICENSEE
                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 LICENSEE, legally enforceable against it in accordance
                with
                its terms.

            


    

     

    
      	 	
              (b)

            	
              LICENSEE
                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, and undertake the payment and royalty obligations set
                forth
                in Section 5.

            


    

     

    
      	 	
              (c)

            	
              LICENSEE
                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.

            


    

     

    
      	
              8.

            	
              INVESTIGATION
                AND ENFORCEMENT. LICENSOR
                covenants and agrees that if LICENSEE notifies it in writing of any
                third
                party who appears to be conducting the Licensed Activity without
                a license
                from LICENSOR (such notice shall include a detailed explanation supported
                by documents if available) as to why LICENSEE believes that the third
                party appears to be conducting the Licensed Activity, LICENSOR will
                investigate the same in good faith and will take reasonable efforts
                to
                initiate license discussions with or enforce its patent rights against
                such third party.

            


    

     

    
      	
              9.

            	
              TERMINATION
                AND SURVIVAL.

            


    

     

    
      	 	
              9.1.

            	
              Termination.
                Except as specifically set forth in Sections 9.2 through 9.5 herein,
                the
                license grants and covenants in Section 3 and the royalty provisions
                in
                Section 5 are non-terminable.

            


    

     

    
      	 	
              9.2.

            	
              Failure
                to Pay Royalties.
                In the event that LICENSEE fails to meet its obligations under Section
                5,
                LICENSOR may not file a patent infringement suit and is limited to
                only
                filing a breach of contract action seeking to collect the unpaid
                royalties. However, prior to filing any such action, LICENSOR must
                provide
                written notice to LICENSEE, followed by a thirty (30) day period
                during
                which LICENSEE may cure any breaches, and if such breaches are not
                cured
                during that thirty (30) day period, there shall be another thirty
                (30) day
                period during which the parties shall negotiate in good faith to
                resolve
                their dispute. Any action for breach of this Settlement and License
                Agreement will be submitted to the American
                Arbitration Association and the decision of a
                single arbitrator shall be deemed binding on both Parties. In
                any such action, the parties agree that time is of the essence and
                agree
                that the discovery period shall not be longer than 60 days. The parties
                also agree to jointly ask the arbitrator to issue his/her decision
                within
                150 days from initiation of the action. If the arbitrator decides
                to hold
                a hearing/trial in any such action, such hearing/trial shall be held
                in
                Dallas, Texas or Phoenix, Arizona. The arbitrator shall have experience
                with patent license disputes.

            


    

     

    
      	 	
              9.3.

            	
              Finding
                of Invalidity or Unenforceability.
                If the claims of the ‘988 Patent that are asserted in the Delaware
                Litigation are declared invalid or unenforceable in a final judgment
                rendered by any U.S. District Court or binding decision of an
                administrative body, the obligation of LICENSEE to pay a running
                royalty
                with respect to ECC transactions conducted in the Direct Consumer
                Field,
                on or after the date of said final judgment shall terminate. However,
                if
                the finding of invalidity or unenforceability is overturned on appeal
                for
                any of the asserted claims of the ‘988 Patent, the running royalty
                provisions of Section 5.3 will be reinstated and LICENSEE will pay
                LICENSOR on the next subsequent Royalty Payment Date the royalties
                due for
                ECC transactions conducted after the date of the final
                judgment.

            


    

     

    
      	 	
              9.4.

            	
              Finding
                of Non-Infringement.
                If Telecheck
                or
                Nova are found in a Final Judgment not to infringe the claims of
                the ‘988
                Patent that are asserted in the Delaware Litigation, the obligation
                of
                LICENSEE to pay a running royalty with respect to ECC transactions
                conducted in the Direct Consumer Field, on or after the date of the
                Final
                Judgment shall terminate. However, if the finding of non-infringement
                is
                overturned on appeal, and a Final Judgment is then entered against
                Telecheck or Nova in favor of LICENSOR, for any of the asserted claims
                of
                the ‘988 Patent the running royalty provisions of Section 5 will be
                reinstated and LICENSEE will pay LICENSOR on the next subsequent
                Royalty
                Payment Date the royalties due for ECC transactions in the Direct
                Consumer
                Field conducted after the date of the Final Judgment. If
                the Delaware Litigation is decided in LML’s favor and either TeleCheck or
                Nova file an appeal, LICENSEE will continue all royalty payments
                hereunder
                to LICENSOR pending such appeal. If such appeal results in a finding
                that
                TeleCheck or Nova do not to infringe the claims of the ‘988 patent,
                the
                obligation of LICENSEE to pay a running royalty with respect to ECC
                transactions conducted in the Direct Consumer Field shall
                terminate.

            


    

     

    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              9.5.

            	
              Survival.
                The provisions of this Settlement and License Agreement shall survive
                except to the extent a provision is terminated in accordance with
                specific
                provisions contained herein.

            


    

     

    
      	
              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 (not
                unreasonably withheld); provided,
                however,
                that either Party may assign its rights and obligations under this
                Settlement and License Agreement, in whole or in part to, any subsequent
                purchaser of such Party or any material portion of its assets (whether
                such sale is structured as a sale of stock, a sale of assets, a merger
                or
                otherwise), provided,
                further
                that (in the event that such subsequent purchaser conducted ECC
                transactions prior to the date of purchase) any such subsequent purchaser
                of LICENSEE is already a licensee under the Licensed Patents. If
                such
                subsequent purchaser of LICENSEE is not a licensee under the Licensed
                Patents but has conducted ECC transactions prior to the date of purchase
                for which royalties would be due to LICENSOR, this Settlement and
                License
                Agreement may still be assigned if, and only after, such subsequent
                purchaser enters into a release agreement with LICENSOR for any and
                all
                such transactions it conducted prior to the date of the release and
                pays
                LICENSOR a fee equal to what LICENSOR would have received if the
                transactions had been processed under LICENSEE’S running royalty fee
                structure as set forth in Section 5.3. If such subsequent purchaser
                of
                LICENSEE or any material portion of its assets is not a licensee
                under the
                Licensed Patents but has not conducted ECC transactions prior to
                the date
                of purchase for which royalties would be due to LICENSOR, this Settlement
                and License Agreement may be assigned to said subsequent purchaser
                by
                LICENSEE without further qualification. This Settlement and License
                Agreement shall be binding upon and inure to the benefit of the permitted
                assigns and successors of the
                Parties.

            


    

     

    
      	 	
              10.3.

            	
              Inclusion
                of Acquired Companies.
                In the event that LICENSEE acquires another company or business,
                or
                acquires products, services, technology, assets or business operations,
                the license and rights granted to LICENSEE under this Settlement
                and
                License Agreement may be extended to, and shall cover, such acquired
                company or business, if and only after, LICENSEE enters into a release
                agreement with LICENSOR for any and all ECC Direct Consumer Field
                transactions such company or business conducted prior to the date
                of the
                release and pays LICENSOR a fee equal to what LICENSOR would have
                received
                if the transactions had been processed under LICENSEE’S running royalty
                fee structure as set forth in Section
                5.3.

            


    

     

    
      	 	
              10.4.

            	
              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. 

            


    

     

    
      	 	
              10.5.

            	
              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.

            


    

     

    
      	 	
              10.6.

            	
              Governing
                Law and Choice of Forum.
                Except
                as provided under Section 9.2, this
                Settlement and License Agreement shall be construed and interpreted
                in
                accordance with the laws of Delaware, without regard to conflict
                of law
                provisions. Except
                as provided under Section 9.2, any
                disputes arising hereunder shall be resolved in a Court of competent
                jurisdiction in Wilmington,
                Delaware.

            


    

     

    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              10.7.

            	
              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.
                

            


    

     

    
      	 	
              10.8.

            	
              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.”

            


    

     

    
      	 	
              10.9.

            	
              Licensee’s
                Retained Rights.
                The
                Parties acknowledge and agree that the 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 LICENSOR (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 LICENSEE 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) when transmitted by facsimile or (b) two 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 or facsimile
                number as the Party may specify in writing in accordance with this
                Section. 

            


    

     

    
      	 	
              10.11.

            	
              Scope
                of Agreement.
                Unless expressly provided to the contrary in this Settlement and
                License
                Agreement, this Settlement and License Agreement shall be binding
                upon and
                inure to the benefit of the parties, their successors in interest,
                their
                assigns and licensees, successors, assigns, and heirs.
                

            


    

     

    
      	
              To
                LICENSOR

               

              Mr.
                Patrick H. Gaines

              CEO
                and President

              LML
                Patent Corp.

              Suite
                1680

              1140
                West Pender St.

              Vancouver,
                BC V6E 4GI

               

              with
                copy to:

               

              Russell
                E. Levine, P.C.

              Kirkland
                & Ellis LLP

              200
                East Randolph Drive

              Chicago,
                Illinois 60601

            	
              To
                ECHO

               

              Mr.
                Joel M. Barry

              Chairman
                of the Board and CEO

              Electronic
                Clearing House, Inc.

              730
                Paseo Camarillo

              Camarillo,
                California 93010

               

               

              with
                copy to:

               

              V.
                Joseph Stubbs

              Stubbs
                Alderton & Markiles, LLP

              15260
                Ventura Boulevard

              20th
                Floor

              Sherman
                Oaks, California 91403

               

               

            


    

    
      	 	
              10.12.

            	
              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
                LICENSOR
                and LICENSEE, and neither Party shall have any right to obligate
                or bind
                the 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

          
            

          

        

        
          
          

        

      

    

     

    
      *TEXT
        OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
        CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
        240.24b-2

    

     

    
      	 	
              10.13.

            	
              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. If either Party deems the severed provisions to be
                material,
                then that Party may terminate this Settlement and License Agreement
                upon
                giving thirty (30) days prior written
                notice.

            


    

     

    
      	 	
              10.14.

            	
              Counterparts.
                This Settlement and License Agreement, which with exhibits included
                consists of
                30
                pages, may be executed in two or more counterparts, each of which
                shall be
                considered one and the same document.


            


    

     

    
      	 	
              10.15.

            	
              Standstill.
                The parties agree that neither party shall initiate any patent
                infringement suit, action, or administrative proceeding against the
                other
                in the United States or Canada prior to April 1, 2009, except
                for breach of this Settlement and License Agreement,
                and the parties further agree that any and all statute of limitations,
                claims for monetary damages and other defenses are tolled during
                this
                standstill period. Any such suit filed after April 1, 2009 shall
                be
                preceeded by a sixty (60) day notice to the other party prior to
                initiation of any suit, during which time the parties shall negotiate
                in
                good faith to informally resolve any disputes that may exist between
                them.

            


    

     

    *
      * * *
      *

    


    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:

            	
               

            	
            	 
	
              Name:

            	
              Patrick
                H. Gaines

            	 
	
              Title:

            	
              CEO
                and President

            	 
	
              Dated:

            	
              March
                __, 2006

            	 


    

    


    
      	
              ELECTRONIC
                CLEARING HOUSE, INC.

            	
              XPRESSCHEX,
                INC.

            
	 	 	 	 
	
              By:

            	 	
            	
              By:

            	 
	
              Name:

            	
              Joel
                M. Barry

            	
              Name:

            	 
	
              Title:

            	
              Chairman
                of the Board and CEO

            	
              Title:

            	 
	
              Dated:

            	
              March
                __, 2006

            	
              Dated:

            	
              March
                __, 2006

            


    

    


    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      1

    


    IN
      THE UNITED STATES DISTRICT COURT

    FOR
      THE DISTRICT OF DELAWARE

    


    
      	
              LML
                PATENT CORP.,

               

              Plaintiff,

               

              v.

               

              TELECHECK
                SERVICES, INC.,

              ELECTRONIC
                CLEARING HOUSE, INC.,

              XPRESSCHEX,
                INC., and

              NOVA
                INFORMATION SYSTEMS, INC.

               

              Defendants.

            	
              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

              )

            	
               

               

               

               

               

              Civil
                Action No. 04-858 SLR

               

              Jury
                Trial Demanded

            


    

    


    STIPULATED
      DISMISSAL PERTAINING

    TO
      SOME BUT NOT ALL DEFENDANTS

     

    WHEREAS,
      plaintiff, LML Patent Corp., and defendants Electronic Clearing House, Inc.
      and
      XpressChex, Inc., as indicated by the signature of counsel appearing below,
      have
      agreed to the dismissal of Electronic Clearing House, Inc. and XpressChex,
      Inc.
      from this action pursuant to Federal Rule of Civil Procedure 41 and subject
      to
      the terms of this Order and a confidential Settlement
      and License Agreement,
      dated
      March __, 2006,

     

    NOW,
      THEREFORE, it is ordered as follows:

     

    1.    
The
      claims by LML Patent Corp. against Electronic Clearing House, Inc. and
      XpressChex, Inc. are hereby dismissed with prejudice with respect to Electronic
      Clearing House, Inc. and XpressChex, Inc.

     

    2.    
Each
      party shall bear its own costs and attorneys fees attributable to the
      prosecution and defense of the claims against Electronic Clearing House, Inc.
      and XpressChex, Inc.

     

    3.    
As
      a
      result of this stipulated dismissal, the following motions are rendered
      moot:

     

    
      	 	
              ·

            	
              LML’S
                MOTION FOR SUMMARY JUDGMENT NO. 2: FOR A RULING THAT ECHO
                INFRINGES CLAIMS
                1, 2, 4, 5, 6, 9, 10, 11 AND 16 OF THE ‘988 PATENT (Dkt. No.
                315)

            


    

     

    
      	 	
              ·

            	
              ECHO
                AND XPRESSCHEX’S MOTION
                FOR SUMMARY JUDGMENT OF NON-INFRINGEMENT (Dkt. No.
                347)

            


    

     

    STIPULATED
      AND AGREED

    


    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    


    
      	
              /s/
                Richard K. Herrmann

            	 	
              /s/
                Francis DiGiovanni

            
	
              Richard
                K. Herrmann #405

              MORRIS
                JAMES HITCHENS & WILLIAMS

              222
                Delaware Avenue, 10th
                Floor

              Wilmington,
                Delaware 19801

              (302)
                888-6800

              rherrmann@morrisjames.com

               

              Russell
                E. Levine, P.C.

              Jamie
                H. McDole

              KIRKLAND
                & ELLIS LLP

              200
                East Randolph Drive

              Chicago,
                Illinois 60601

              312.861.2000

               

              Counsel
                for Plaintiff

              LML
                Patent Corp.

            	 	
              Francis
                DiGiovanni (I.D. No. 3189)

              CONNOLLY
                BOVE LODGE & HUTZ LLP

              The
                Nemours Building

              1007
                N. Orange Street

              Wilmington,
                Delaware 19801

              302.658.9141

              fdigiovanni@cblh.com

               

              Mark
                B. Mizrahi

              BELASCO
                JACOBS & TOWNSLEY, LLP

              Howard
                Hughes Center

              6100
                Center Drive, Suite 630

              Los
                Angeles, CA 90045

              310.743.1188

               

              Counsel
                for Defendants

              Electronic
                Clearing House, Inc. 

              and
                Xpresschex, Inc. 

            


    

    


    


    SO
      ORDERED this ______ day of ______________________, 2006.

     

    
      
        	 	 
	 	
                Judge
                  Sue L. Robinson

              


      

    

    


    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

    


    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)

              CONNOLLY
                BOVE LODGE & HUTZ 

              The
                Nemours Building

              1007
                N. Orange Street

              Wilmington,
                Delaware 19801

               

              Mark
                B. Mizrahi, Esq.

              BELASCO
                JACOBS & TOWNSLEY

              Howard
                Hughes Center

              6100
                Center Drive, Suite 630

              Los
                Angeles, CA 90045

               

              Richard
                D. Kirk, Esq. (I.D. No. 922)

              THE
                BAYARD FIRM

              222
                Delaware Avenue, Suite 900

              Wilmington,
                DE 19801

            	
              Mark
                Scarsi, Esq.

              Vision
                Winter, Esq.

              O'Melveny
                & Myers LLP

              400
                South Hope Street

              Los
                Angeles, CA 90071

               

               

              William
                Marsden, Esq.

              Timothy
                Devlin, Esq.

              Fish
                & Richardson

              919
                N. Market Street, Suite 1100

              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.


    


    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      2

     

     

    ___________,
      2006

     

    
      	
              VIA
                FACSIMILE

            	 


    

    


    
      	
              The
                Honorable Louis C. Bechtle

              Conrad,
                O'Brien, Gellman & Rohn PC

              1515
                Market Street, 16th Floor

              Philadelphia,
                PA 19102-1916

               

            	 


    

    
      	 	
              Re:

            	
              LML
                Patent Corp. v. TeleCheck, et al,

            


    

    D.
      Del., Civil Action No. 04-858 SLR

     

    Dear
      Judge Bechtle:

     

    This
      letter is to inform your Honor of a significant development in the above
      captioned case. On March __, 2006, plaintiff LML Patent Corp. and defendants
      Electronic Clearing House, Inc. and XpressChex, Inc. (collectively “ECHO”)
      settled LML’s claims against ECHO. As a result of this settlement, LML and ECHO
      signed and filed a stipulated dismissal of ECHO pursuant to Federal Rule of
      Civil Procedure 41, attached hereto.

    The
      dismissal of ECHO from this case renders moot LML’s November 10, 2005
      application for fees relating to its motion to compel the production of
      documents from ECHO. If
      you
      have any questions, please feel free to call me.

    


    
      	 	
              Very
                truly yours,

               

               

            
	 	
              Richard
                K. Herrmann

            


    

     

    RKH/djp

     

    
      	
              cc:

            	
              All
                counsel via email

            


    

     

    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      3

    


    Statement
      for Public Release Pursuant to Section 6.2

    


    Electronic
      Clearing House, Inc. and its wholly-owned subsidiary

    Xpresschex,
      Inc. Enter
      Into Patent License With LML

    


    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 Electronic
      Clearing House, Inc. and its wholly-owned subsidiary Xpresschex, Inc.
      (collectively “ECHO”)
      have
      settled litigation, and entered into a patent license agreement, with LML.
      The
      Settlement and License Agreement provides ECHO with a license to LML’s patents
      for electronic check conversion in the Direct Consumer Field (NACHA standard
      entry class code “POP”), including LML’s U.S. Patent Nos. 5,484,988; 6,164,528
      and 6,283,366. Terms of the
      Settlement and License Agreement are confidential. 

     

    “We
      are
      extremely pleased to have settled our litigation with ECHO and we welcome them
      as another of our valued licensees,” said Patrick H. Gaines, chief executive
      officer and president of LML Patent Corp. and LML Payment Systems Inc. “Revenue
      attributed to the settlement is expected to be recorded this quarter and revenue
      from running royalties is expected to be recorded in the period in which they
      are earned,” he added. Mr. Gaines also said “Our litigation against Telecheck
      and Nova will continue until they too acknowledge the value of our patented
      technology.” 

     

    LML
      was
      represented in the license negotiations and in the litigation by Russell E.
      Levine of the law firm Kirkland & Ellis LLP.“As
      a
      result of the settlement of the litigation against ECHO, LML’s pending motion
      asking the court to rule as a matter of law that ECHO infringes LML’s ‘988
      patent will be dismissed as moot,” said Mr. Levine. “Oral argument on that and
      other motions was held on December 19, 2005 and a decision from the court was
      expected prior to the scheduled trial date in April 2006,” Mr. Levine added.
“LML’s similar motions related to the other defendants, Telecheck Services, Inc.
      and Nova Information Systems, Inc. will remain pending as will other motions
      addressing issues not unique to ECHO,” he added. 

     

    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.

     

    About
      Kirkland & Ellis LLP (www.kirkland.com)

     

    Kirkland
      & Ellis LLP is a 1,000-attorney law firm representing global clients in
      complex corporate and tax, workout, insolvency and bankruptcy, litigation,
      dispute resolution and arbitration, and intellectual property and technology
      matters. The Firm has offices in Chicago, London, Los Angeles, New York, Munich,
      San Francisco and Washington.

     

    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

            	
              Kirkland
                & Ellis LLP

              Brian
                Pitts

              (312)
                861-3115

            


    

     

    
      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      4

    


    Non-Visa
      transaction types: 

    
      	
              #1)
                

            	
              An
                ECC transaction in the Direct Consumer Field where LICENSEE serves
                as the
                party that captures the check data and clears the transaction through
                the
                ACH.

            


    

    
      	
              #2)
                

            	
              An
                ECC transaction in the Direct Consumer Field where another party
                has
                captured the check data and is having LICENSEE settle the transaction
                through the ACH.

            


    

    
      	
              #3)

            	
              An
                ECC transaction in the Direct Consumer Field where LICENSEE captures
                the
                check data and transfers the capture file off to the third party
                (or
                designee) for ACH processing. 

            


    

    
      	
              #4)
                

            	
              A
                point of purchase check transaction that is processed through LICENSEE’s
                verification database, whether as a prelude to being converted by
                another
                party or not.

            


    

    
      	
              #5)
                

            	
              A
                point of purchase guarantee transaction wherein LICENSEE provides
                a check
                guarantee service and in so doing, uses or accepts an electronic
                file from
                itself or any party, whether the check data was captured through
                ECC or
                not. 

            


    

    


    Visa
      transaction types:

    
      	
              #6)
                

            	
              LICENSEE
                operates as the Third Party
                Processor.

            


    

    
      	
              #7)
                

            	
              LICENSEE
                operates as an Acquirer Processor.

            


    

    
      	
              #8)
                

            	
              LICENSEE
                sells the Visa ECC Transaction service
                directly to a merchant and thereby processes Direct Consumer Field
                transactions both as the Acquirer Processor and the Third Party
                Processor.

            


    

    
      	
              #9)
                

            	
              Participating
                Transactions are Direct Consumer Field transactions that do not get
                directed to LICENSEE as the Third Party Processor but are
                settled directly
                between the merchant, Visa and the check writer banks.
                

            


    

    


    
      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

    


    EXHIBIT
      5

     

    FOR
      IMMEDIATE RELEASE

     

    Electronic
      Clearing House (ECHO)
      Settles Patent Litigation

     

    Camarillo,
      Calif., April 3, 2006
      -
      Electronic Clearing House, Inc. (NASDAQ: ECHO),
      a
      leading provider of electronic payment and transaction processing services,
      announced today that it and its wholly owned subsidiary, XpressCheX, Inc.,
      have
      reached an agreement with LML
      Patent Corp. (“LML”), a wholly-owned subsidiary of LML Payment Systems
      Inc.,
      to
      settle a litigation matter alleging infringement of certain LML
      patents.

     

    Under
      the
      terms of the settlement, ECHO
      and
      XpressCheX entered into an agreement to license LML’s patents
      for electronic check conversion in the Direct Consumer Field (NACHA standard
      entry class code “POP”), including LML’s U.S. Patent Nos. 6,354,491; 5,484,988;
      6,164,528 and 6,283,366.

    


    Each
      of
ECHO,
      XpressCheX and LML also agreed, for a period continuing through April 1, 2009,
      not to initiate any other patent infringement claims in the United States or
      Canada against each other.

    


    Specific
      financial and other terms of the agreement were not disclosed.

    


    “We
      are
      pleased to put the LML patent issue behind us.  Whenever possible, we
      believe it is preferable to resolve business uncertainties so, in
      this case, while we were confident in our own legal position, we felt
      reaching a settlement prior to a long and costly trial was the best
      option.  With this settled, we can now dedicate our time and
      resources toward an effective execution of our strategic sales and
      operational initiatives,” stated Joel Barry, Chairman and Chief Executive
      Officer of ECHO.

    


    About
      Electronic Clearing House, Inc. (ECHO)

    ECHO
      (www.echo-inc.com)
      provides a complete solution to the payment processing needs of merchants,
      banks
      and collection agencies. ECHO's
      services include debit and credit card processing, check guarantee, check
      verification, check conversion, check re-presentment, and check collection.
      

    


    Contact:

    Donna
      Rehman, Corporate Secretary

    (800)
      262-3246, ext. 8533

    Electronic
      Clearing House, Inc.

    Camarillo,
      CA

    URL:http://www.echo-inc.com

    E-MAIL:corp@echo-inc.com

    


    #   
      #    #

     

    
       

      18