Document:

exh10_2.htm

SETTLEMENT AND LICENSE AGREEMENT

           This Settlement and License Agreement (the “Agreement”) is entered into by LML Patent Corp (“LML”), on the one hand, and Capital One National Association and Capital One Services, LLC (collectively “Capital One”) on the other hand. LML and Capital One are individually referred to as “Party” and collectively as the “Parties.”  This Agreement is effective as of September 8, 2011 (“Effective Date”).

RECITALS

           WHEREAS, LML represents that it owns rights in U.S. Patent No. RE40,220 (“the ‘220 Patent”), which LML asserts is related to Electronic Check Conversion systems and services;

           WHEREAS, LML began an action against Capital One and other defendants in the United States District Court for the Eastern District of Texas, Marshall Division, 2-08-CV-448-DF (“Litigation I”), and LML also began a separate action against other defendants in the United States District Court for the Eastern District of Texas, Marshall Division, 2-09-CV-180-TJW (“Litigation II”) (collectively, the “Lawsuits”).  In both Litigations I and II, LML alleges infringement of LML’s ‘220 Patent;

WHEREAS, LML represents that LML’s stated standard royalty rate for use of the LML Patents is $0.01 U.S. dollars for each ARC SEC coded ACH transaction and $0.03 U.S. dollars for each POP, BOC, WEB, or TEL SEC coded ACH transaction;

           WHEREAS, Capital One is a named defendant in Litigation I and Capital One has denied liability;

           WHEREAS, the Parties have agreed to enter into this Agreement to avoid the risk and uncertainty of continued litigation;

           WHEREAS, the Parties wish to settle their dispute, and Capital One desires to obtain certain rights under the LML Patents (as hereinafter defined) and LML is willing to grant such rights;

NOW, THEREFORE, in consideration of the above premises and mutual covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

	
1.  

	
DEFINITIONS.  The following definitions apply to this Agreement:

	
(a)  

	
“ACH” is the acronym for the “Automated Clearing House” Network and means the funds transfer system governed by the National Automated Clearing House Association (“NACHA”).

	
(b)  

	
“ACH Transaction” means an entry complying with the NACHA ACH Record Format Specifications, for NACHA standard entry class codes ARC, WEB, POP, TEL, and BOC.

 

  

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(c)  

	
“Acquires” means to obtain an interest in an entity either by acquisition, purchase, or merger.

	
(d)  

	
“Affiliate” of a Party means any Entity that directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with, such Party, where “control” means: (i) for an Entity incorporated in the U.S. or whose country of domicile is the U.S., direct or indirect ownership of fifty percent (50%) or more of the capital stock, or other direct or indirect ownership interest of the Entity carrying the right to vote for or appoint directors or their equivalent (if not a corporation), or otherwise to direct or cause the direction of the management policies of the Entity; or (ii) for an Entity incorporated outside of the U.S. or whose country of domicile is outside of the U.S., direct or indirect ownership of less than fifty percent (50%) of the capital stock, or other direct or indirect ownership interest of the Entity carrying the right to vote for or appoint directors or their equivalent (if not a corporation), or otherwise to direct or cause the direction of the management policies of the Entity, if the country of incorporation or the country of domicile of the Entity requires that foreign ownership be less than fifty percent (50%), but only to the extent that the maximum allowable amount of securities instruments or other ownership interests of the Entity is owned by the party; and (iii) provided, however, that an Entity shall be considered an Affiliate of a party only for the periods where such ownership or control exists.

	
(e)  

	
“Bank” means any institution that is a member of the Federal Reserve System and that accepts demand deposits to consumer accounts from which a consumer may withdraw funds by check or share draft for payment to others.

	
(f)  

	
“Capital One Entities” (individually referred to as an “Capital One Entity”) means Capital One Financial Corporation and all Affiliates, including Capital One, National Association and Capital One Services, LLC and including all of their predecessors, properly licensed successors (subject to Section 6 (Change in Control/Acquisitions)) and permitted assigns (subject to Section 9.1(Assignment))

	
(g)  

	
“Court” means the United States District Court for the Eastern District of Texas, Marshall Division.

	
(h)  

	
“Covered Products and Services” means any and all Infringing Products and Services (and any of its/their components) that have been, will be, or are being Exploited by or for Capital One (including properly licensed successors (subject to Section 6 (Change in Control / Acquisitions)) and permitted assigns (subject to Section 9.1 (Assignment)) or its Affiliates and only to the extent such Exploitation is done by or for Capital One (including properly licensed successors (subject to Section 6 (Change in Control / Acquisitions)) and permitted assigns (subject to Section 9.1 (Assignment)) or its Affiliates and not done on behalf of an Excluded Party.

 

 

 

  

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(i)  

	
“Covered Third Parties” means any Entity other than an Excluded Party, to the extent that such Entity Exploits any Covered Products and Services.

	
(j)  

	
“Excluded Party” means any Bank.  Notwithstanding the foregoing, Excluded Party does not include, and shall not be interpreted to include: (a) any Capital One Entity; or (b) any Entity that:  (i) is dismissed with prejudice from a lawsuit for Infringement of an LML Patent; (ii) is found not to Infringe all asserted claims of an LML Patent(s) that are also not found to be invalid or unenforceable after all appeals are exhausted; (iii) otherwise enters into a settlement agreement with any LML Entity concerning an LML Patent(s); or (iv) is otherwise licensed to an LML Patent(s).

	
(k)  

	
“Entity” means any individual, trust, corporation, person or company, partnership, joint venture, limited liability company, association, firm, unincorporated organization or other legal or governmental entity.

	
(l)  

	
“Exploit” means to own, design, develop, acquire, make, have made, use, sell, offer to sell, perform, provide, import, export, and/or the exercise of all other activities specified under 35 U.S.C. § 271 and foreign counterparts thereto (as the foregoing 35 U.S.C. § 271 and foreign counterparts thereof may be amended or superseded from time to time).  “Exploited,” “Exploitation,” and other variations of the word “Exploit” shall have correlative meanings.

	
(m)  

	
“Infringement” or “Infringes” means direct infringement, indirect infringement, infringement under the doctrine of equivalents, or any other theory of infringement in any jurisdiction worldwide.

	
(n)  

	
“Infringing Products and Services” means any and all products and services the Exploitation of which, but for the license granted in this Agreement, would Infringe any claim of any LML Patent.

	
(o)  

	
“Non-Covered Affiliate” with respect to an Entity means any affiliate of that Entity that is not covered by a license, release, or covenant-not-to-sue under the LML Patents.

	
(p)  

	
“LML Entities” means LML and its Affiliates and its or their predecessors, successors and permitted assigns (subject to Section 9.1 (Assignment)).

	
(q)  

	
“LML Patents” means (i) U.S. Patent No. RE40,220, (ii) any issued patent and any pending patent application anywhere in the world that LML currently owns or controls (or has the right to own or, control,) as of the Effective Date of this Agreement; (iii) any patent or patent application worldwide to which any of the foregoing patents and/or patent applications claims priority or are otherwise related, including, but not limited to all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, reissues, reexamination certificates, divisionals, foreign counterparts, oppositions, continued examinations, reexaminations, and extensions of any of the foregoing; and (iv) applications of the foregoing patents and/or patent applications described above.  For purposes of this definition, a patent or patent application is deemed to be under LML’s “control” if LML has the right to assert a claim of Infringement or grant a license under such patent or patent application.

 

 

 

  

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2.  

	
SETTLEMENT OF THE LITIGATION

	
2.1.  

	
Stipulated Dismissal.  The Parties agree to direct their counsel to file with the Court a joint motion for dismissal with prejudice of the Parties’ respective claims for relief against the other Party in Litigation I as set forth in Exhibit A within five (5) days after the receipt of payment specified in Section 3.1.  The Parties shall promptly proceed with any and all additional procedures needed to dismiss with prejudice the Parties’ respective claims for relief against the other Party in Litigation I.

	
2.2.  

	
No Award of Fees or Costs.  The Parties agree that they shall bear their own expenses, costs and attorneys' fees relating to Litigation I and negotiating the Agreement, including the transactions contemplated herein.

	
2.3.  

	
No Attempt to Invalidate.  Capital One agrees that, in the absence of a subpoena or court order requiring its participation or support, no Capital One Entity shall participate in or support any suit, claim, action, litigation, administrative proceeding, or proceeding of any nature brought against LML that challenges the validity or enforceability of the LML Patents so long as the Capital One Entities: (a) have a license to the LML Patents, subject to Section 6 (Change in Control / Acquisitions); (b) are fully released for all claims of Infringement of the LML Patents, subject to Section 6 (Change in Control / Acquisitions); or (c) are not accused of Infringement of any LML Patent, subject to Section 6 (Change in Control / Acquisitions).  However, the Capital One Entities may challenge the validity or enforceability of the LML Patents if: (i) any suit, claim, action, litigation or proceeding to enforce one or more of the LML Patents is brought against a Capital One Entity related to one or more of the LML Patents, or places a Capital One Entity in a reasonable apprehension of being sued on one or more of the LML Patents, or (ii) a Capital One Entity receives a request for indemnification related to an LML Patent, but only after the Capital One Entity has provided sixty (60) days written notice to LML of its intent to challenge the validity or enforceability of the asserted LML Patent(s).

	
3.  

	
PAYMENT, TERM AND TERMINATION

	
3.1.  

	
Payment by Capital One.  Capital One agrees to pay to LML the non-refundable sum of Two Million Nine Hundred Thousand U.S. dollars ($2,900,000.00) within five (5) business days following the Effective Date in consideration of the terms set forth in this Agreement.  Such amount will be delivered to LML’s counsel, McKool Smith P.C., via wire or other electronic transfer to the following account:

	
  

	
Address:

	
Citibank, N.A.

	
  

	
666 5th Avenue

	
  

	
New York, New York 10103

	
  

	
SWIFT Code:

	
XXXXXX

	
  

	
ABA Routing:

	
XXXXXX

	
  

	
A/C Name:

	
McKool Smith PC IOLTA Trust Account

	
  

	
A/C Number:

	
XXXXXXX

 

 

 

  

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3.2.  

	
Term.  Unless earlier terminated as specified in this section, the term of this Agreement shall commence upon the Effective Date and shall continue until the expiration of all causes of action and claims arising out of or related to the LML Patents or the Lawsuits.  Otherwise, this Agreement may only be earlier terminated in whole or in part pursuant to Section 3.3 (Termination Due to Non-Payment by Capital One) or upon the mutual written agreement of the Parties.

	
3.3.  

	
Termination Due to Non-Payment by Capital One.  If Capital One fails to make the payment specified in Section 3.1 (Payment by Capital One) above in the time specified, such failure will constitute a material breach of this Agreement.  Upon such breach, LML may then, after five (5) business days following written notice of such breach to Capital One, if Capital One does not deliver the payment specified in Section 3.1 (Payment by Capital One) to LML within five (5) business days after receiving such notice from LML, at its option, either terminate this Agreement (in which event this Agreement shall become null and void) or it may petition the Court for specific enforcement of Capital One’s payment obligations.  Capital One hereby consents to the jurisdiction of the Court for enforcement of the payment obligations in Section 3.1 (Payment by Capital One), and agrees that specific enforcement of the payment obligations of this Agreement is an available remedy if LML does not elect to terminate this Agreement.

	
3.4.  

	
Tax Liability.  Each Party shall bear its own tax liability as a result of the existence of this Agreement or the performance of any obligations hereunder.

	
3.5.  

	
Additional Payments.  Subject to the provisions of Section 6 (Change in Control/Acquisitions), the payment of the amount set forth in Section 3.1 (Payment by Capital One) shall be the total compensation to any LML Entity by any Capital One Entity for all releases, licenses, covenants and all other rights granted in this Agreement, and no additional payment shall be due or made to any LML Entity or any other Entity by any Capital One Entity with respect to the releases, licenses, covenants and all other rights granted in this Agreement.

	
3.6  

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

 

 

  

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4.  

	
RELEASES AND COVENANTS NOT TO SUE

	
4.1.  

	
Agreement Obligations Not Released.  None of the releases or covenants not to sue herein releases any Party or its Affiliates from its respective obligations under this Agreement or under any protective orders entered in Litigation I as of the Effective Date or prevents any Party or any of its Affiliates from enforcing the terms and conditions of this Agreement against the other Party or its Affiliates.

	
4.2.  

	
LML’s Release to Capital One.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Capital One) and Section 6 (Change in Control/Acquisitions), LML Entities forever release Capital One Entities from any and all claims, causes of action, actions, demands, liabilities, losses, damages, attorneys’ fees, court costs, or any other form of claim or compensation, whether known or unknown, whether in law or equity, accruing before or on the Effective Date, related in whole or part to Litigation I, any of the LML Patents, or Exploitation of the Covered Products and Services, including without limitation any act of past or present Infringement, misappropriation or other violation of one or more of the LML Patents, and any claim that is or would have been within the scope of either the covenant not to sue or license granted in Sections 4.4 (Covenant-Not-To-Sue by LML Entities) and 5.1 (License), and any claim that the LML Entities asserted or could have asserted in Litigation I as of the Effective Date.

	
4.3.  

	
Capital One’s Release to LML.  Subject to the obligations of LML under this Agreement, Capital One Entities forever release LML Entities from any claims, causes of action, actions, demands, liabilities, losses, damages, attorneys’ fees, court costs, or any other form of claim or compensation, whether known or unknown, whether in law or equity, accruing before or on the Effective Date, related in whole or part to Litigation I or any of the LML Patents (conserving, subject to Section 2.3, defenses or claims regarding the validity or enforceability of one or more of the LML Patents) that is or would have been within the scope of the covenant not to sue granted in Section 4.5 (Covenant-Not-To-Sue by Capital One Entities) and that the Capital One Entities asserted or could have asserted as of the Effective Date.

	
4.4.  

	
Covenant-Not-to-Sue by LML Entities.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Capital One) and Section 6 (Change in Control/Acquisitions), the LML Entities, on behalf of themselves and their respective successors and permitted assigns, agree that:  (a) they will not assert, pursue, maintain, encourage, support, assist, or join in any action or litigation asserting any claim against any Capital One Entity for Infringement of any claim of the LML Patents with respect to or arising out of the Exploitation of any Covered Products or Services; and (b) they will not assert, pursue, maintain, encourage, support, assist, or join in any action or litigation asserting any claim against any Covered Third Parties for Infringement of any claim of the LML Patents with respect to or arising out of the Exploitation of any Covered Products and Services.

 

 

  

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     4.5

	
Covenant-Not-to-Sue by Capital One Entities.  Subject to the obligations of LML under this Agreement, the Capital One Entities, on behalf of themselves and their respective successors and permitted assigns, agree that they will not assert, pursue, maintain, encourage, support, assist, or join in any action or litigation asserting any claim against any LML Entity in the future for any claims related to or arising out of the LML Patents, unless any claims of Infringement with respect to the LML Patents are asserted against any Capital One Entity or its successors or assigns or any Covered Third Party, or unless otherwise allowed under Section 2.3 (No Attempt to Invalidate).

	
5.  

	
GRANT OF LICENSE

	
5.1.  

	
License.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Capital One) and Section 6 (Change in Control / Acquisitions), LML hereby grants to the Capital One Entities and Covered Third Parties a fully paid-up, irrevocable, non-exclusive, world-wide, royalty free license under the LML Patents to Exploit the Covered Products and Services throughout the world.  This license is retroactive to the earliest priority date of the LML Patents.

	
5.2.  

	
Disclaimer of Infringement and Validity.  Nothing herein shall be construed as an admission by any Capital One Entity: (a) that the LML Patents have been or are being Infringed; or (b) that the LML Patents are valid or enforceable.

 

 

 

  

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6.  

	
CHANGE IN CONTROL / ACQUISITIONS

	
6.1.  

	
Acquisitions by a Capital One Entity.  In the event any Capital One Entity Acquires an Entity or any business line of an Excluded Party or Entity that provides or uses Infringing Products and Services after the Effective Date of this Agreement (hereinafter referred to as “Acquired Entity”), neither the Acquired Entity nor any of its Non-Covered Affiliates will gain the benefit of the license grant, covenant-not-to-sue, or releases in this Agreement. In the event any Capital One Entity Acquires an Entity or any business line of an Excluded Party or Entity that provides or uses Infringing Products and Services after the Effective Date of this Agreement, Capital One agrees to make reasonable efforts to notify LML of the acquisition.   Upon receiving such notification from Capital One, LML agrees to first negotiate in good faith with the Acquired Entity for a period of sixty (60) days to release and/or license and grant a covenant not to sue, under the LML Patents, any ACH Transactions created, processed, or transmitted by the Acquired Entity and/or any of its Non-Covered Affiliates (hereinafter “Section 6.1 Non-Covered ACH Transactions”).  During this sixty (60) day negotiation period, (1) LML agrees that it will not file a lawsuit against any Capital One Entity or the Acquired Entity for the use of Infringing Products and Services after the Effective Date of this Agreement; and (2) the Capital One Entities and the Acquired Entity agree that they will not file a declaratory judgment action against LML in an attempt to seek a declaration of non-infringement as to the Infringing Products and Services after the Effective Date of this Agreement and/or invalidate any LML patent that could be asserted against the Acquired Entity’s Infringing Products and Services or initiate a request for reexamination of any LML patent that could be asserted against the Acquired Entity’s Infringing Products and Services after the Effective Date of this Agreement.  If LML and the Acquired Entity cannot reach agreement on the terms of such release and/or license during the sixty (60) day negotiation period, then LML will have the right to sue the Acquired Entity for patent infringement for a period of thirty (30) days before the Acquired Entity (and including the Capital One Entities), and any Non-Covered Affiliates of the Acquired Entity can exercise their remedies, defenses, and counterclaims available to them under applicable law with respect to any Section 6.1 Non-Covered ACH Transactions.  If Capital One fails to reasonably notify LML of the acquisition, upon learning of the acquisition, LML agrees to notify Capital One and/or the Acquired Entity that it is aware of the acquisition and first negotiate in good faith with the Acquired Entity for a period of sixty (60) days to release and/or license and grant a covenant not to sue, under the LML Patents, any ACH Transactions created, processed, or transmitted by the Acquired Entity and/or any of its Non-Covered Affiliates (hereinafter “Section 6.1 Non-Covered ACH Transactions”).  During this sixty (60) day negotiation period, (1) LML agrees that it will not file a lawsuit against any Capital One Entity or the Acquired Entity for the use of Infringing Products and Services after the Effective Date of this Agreement; and (2) the Capital One Entities and the Acquired Entity agree that they will not file a declaratory judgment action against LML in an attempt to seek a declaration of non-infringement as to the Infringing Products and Services after the Effective Date of this Agreement and/or invalidate any LML patent that could be asserted against the Acquired Entity’s Infringing Products and Services or initiate a request for reexamination of any LML patent that could be asserted against the Acquired Entity’s Infringing Products and Services after the Effective Date of this Agreement.  If LML and the Acquired Entity cannot reach agreement on the terms of such release and/or license during the sixty (60) day negotiation period, then LML will have the right to sue the Acquired Entity for patent infringement for a period of thirty (30) days before the Acquired Entity (and including the Capital One Entities), and any Non-Covered Affiliates of the Acquired Entity can exercise their remedies, defenses, and counterclaims available to them under applicable law with respect to any Section 6.1 Non-Covered ACH Transactions.

 

 

 

  

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6.2.  

	
Acquisitions of a Capital One Entity.  In the event an Excluded Party or any other Entity Acquires any Capital One Entity and maintains the Capital One Entity as a separate legal entity after the acquisition (the resulting legal entity hereinafter referred to as the “Acquiring Entity”), then the license grant, covenant not to sue, and releases in this Agreement may be assigned by the Capital One Entity to the Acquiring Entity, and, under such circumstances, will continue to apply with respect to any Exploitation of the Covered Products and Services that occurred prior to the date of the acquisition and was covered under the license grant, covenant not to sue, and releases in this Agreement.  However, the license grant, covenant not to sue, and releases in this Agreement will not apply to those ACH Transactions created, processed or transmitted by the Acquiring Entity (including the Capital One Entity), and/or by any Non-Covered Affiliates of the Acquiring Entity each month after the date of the acquisition that go beyond 125% of the acquired Capital One Entity’s average monthly transaction volumes for Covered Products and Services based on the 12 months preceding the date of the acquisition (hereinafter, “Acquisition Volume Limit”).  If the collective number of ACH Transactions created, processed or transmitted by the Acquiring Entity (including the Capital One Entity) and/or by any Non-Covered Affiliates of the Acquiring Entity in any given month after the date of the acquisition exceeds the Acquisition Volume Limit, the Acquiring Entity agrees to make reasonable efforts to notify LML of same within sixty (60) days of such occurrence, and the ACH Transactions exceeding the Acquisition Volume Limit shall not be covered under the license grant, covenant not to sue or releases in this Agreement (hereinafter, “Section 6.2 Non-Covered ACH Transactions”).  If the Acquiring Entity provides the notice as specified above within the timeframe specified above, LML agrees to first negotiate in good faith for a period of sixty (60) days with the Acquiring Entity to release and/or license, under the LML Patents, any Section 6.2 Non-Covered ACH Transactions.  During this sixty (60) day negotiation period, (1) LML agrees that it will not file a lawsuit against any Capital One Entity or the Acquiring Entity for the use of Infringing Products and Services after the Effective Date of this Agreement; and (2) the Capital One Entities and the Acquiring Entity agree that they will not file a declaratory judgment action against LML in an attempt to seek a declaration of non-infringement as to the Infringing Products and Services after the Effective Date of this Agreement and/or invalidate any LML patent that could be asserted against the Acquired Entity’s Infringing Products and Services or initiate a request for reexamination of any LML patent that could be asserted against the Acquiring Entity’s Infringing Product and Services after the Effective Date of this Agreement. If the Acquiring Entity fails to reasonably provide the notice as specified above, LML agrees to notify Capital One and/or the Acquiring Entity that it is aware of the acquisition and first negotiate in good faith with the Acquiring Entity for a period of sixty (60) days to release and/or license and grant a covenant not to sue, under the LML Patents, any ACH Transactions created, processed, or transmitted by the Acquiring Entity and/or any of its Non-Covered Affiliates (hereinafter “Section 6.2 Non-Covered ACH Transactions”).  During this sixty (60) day negotiation period, (1) LML agrees that it will not file a lawsuit against any Capital One Entity or the Acquiring Entity for the use of Infringing Products and Services after the Effective Date of this Agreement; and (2) the Capital One Entities and the Acquiring Entity agree that they will not file a declaratory judgment action against LML in an attempt to seek a declaration of non-infringement as to the Infringing Products and Services after the Effective Date of this Agreement and/or invalidate any LML patent that could be asserted against the Acquiring Entity’s Infringing Products and Services or initiate a request for reexamination of any LML patent that could be asserted against the Acquiring Entity’s Infringing Products and Services after the Effective Date of this Agreement.  If LML and the Acquiring Entity cannot reach agreement on the terms of such release and/or license during the sixty (60) day negotiation period, then LML will have the right to sue the Acquired Entity for patent infringement for a period of thirty (30) days before the Acquired Entity (and including the Capital One Entities), and any Non-Covered Affiliates of the Acquired Entity can exercise their remedies, defenses, and counterclaims available to them under applicable law with respect to any Section 6.2 Non-Covered ACH Transactions.

 

 

 

  

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6.3.  

	
Transfer of Covered Assets of a Capital One Entity.  In the event of a sale or other transfer of the assets of any Capital One Entity that includes a business line that provides Covered Products and Services to an Excluded Party or other Entity (hereinafter referred to as the “Covered Transferee Entity”), then the license grant, covenant not to sue, and releases in this Agreement may be assigned by the Capital One Entity to the Covered Transferee Entity, and, under such circumstances, shall continue to apply with respect to any Exploitation of the Covered Products and Services that occurred prior to the date of the sale or transfer and was covered under the license grant, covenant not to sue, and releases in this Agreement.  However, the license grant, covenant not to sue, and releases in this Agreement will not apply to those ACH Transactions created, processed or transmitted by the Covered Transferee Entity (including the Capital One Entities) and/or any Non-Covered Affiliates of the Covered Transferee Entity each month after the date of the purchase that go beyond 125% of the transferring Capital One Entity’s average monthly transaction volumes for Covered Products and Services based on the 12 months preceding the date of the purchase (hereinafter, “Covered Transferee Volume Limit”).  If the collective number of ACH Transactions created, processed or transmitted by the Covered Transferee Entity (including the Capital One Entity) and/or by any Non-Covered Affiliates of the Covered Transferee Entity in any given month after the date of the purchase exceeds the Covered Transferee Volume Limit, the Covered Transferee Entity agrees to make reasonable efforts to notify LML of same within sixty (60) days of such occurrence, and the ACH Transactions exceeding the Covered Transferee Volume Limit shall not be covered under the license grant, covenant not to sue or releases in this Agreement (hereinafter, “Section 6.3 Non-Covered ACH Transactions”).  If the Covered Transferee Entity provides the notice as specified above within the timeframe specified above, LML agrees to first negotiate in good faith for a period of sixty (60) days with the Covered Transferee Entity to release and/or license, under the LML Patents, any Section 6.3 Non-Covered ACH Transactions.  During this sixty (60) day negotiation period, (1) LML agrees that it will not file a lawsuit against any Capital One Entity or the Covered Transferee Entity for the use of Infringing Products and Services after the Effective Date of this Agreement; and (2) the Capital One Entities and the Covered Transferee Entity agree that they will not file a declaratory judgment action against LML in an attempt to seek a declaration of non-infringement as to the Infringing Products and Services after the Effective Date of this Agreement and/or invalidate any LML patent that could be asserted against the Covered Transferee Entity’s Infringing Products and Services or initiate a request for reexamination of any LML patent that could be asserted against the Covered Transferee Entity’s Infringing Product and Services after the Effective Date of this Agreement.  If the Covered Transferee Entity does not provide the notice as specified above, LML agrees to notify Capital One and/or the Covered Transferee Entity that it is aware of the acquisition and first negotiate in good faith with the Covered Transferee Entity for a period of sixty (60) days to release and/or license and grant a covenant not to sue, under the LML Patents, any ACH Transactions created, processed, or transmitted by the Covered Transferee Entity and/or any of its Non-Covered Affiliates (hereinafter “Section 6.3 Non-Covered ACH Transactions”).  During this sixty (60) day negotiation period, (1) LML agrees that it will not file a lawsuit against any Capital One Entity or the Covered Transferee Entity for the use of Infringing Products and Services after the Effective Date of this Agreement; and (2) the Capital One Entities and the Covered Transferee Entity agree that they will not file a declaratory judgment action against LML in an attempt to seek a declaration of non-infringement as to the Infringing Products and Services after the Effective Date of this Agreement and/or invalidate any LML patent that could be asserted against the Covered Transferee Entity’s Infringing Products and Services or initiate a request for reexamination of any LML patent that could be asserted against the Covered Transferee Entity’s Infringing Products and Services after the Effective Date of this Agreement.  If LML and the Covered Transferee Entity cannot reach agreement on the terms of such release and/or license during the sixty (60) day negotiation period, then LML will have the right to sue the Covered Transferee Entity for patent infringement for a period of thirty (30) days before the Covered Transferee Entity (and including the Capital One Entities), and any Non-Covered Affiliates of the Covered Transferee Entity can exercise their remedies, defenses, and counterclaims available to them under applicable law with respect to any Section 6.3 Non-Covered ACH Transactions.

 

 

 

  

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6.4.  

	
Transfer of Non-Covered Assets of a Capital One Entity.  In the event of a sale or other transfer of the assets of any Capital One Entity that does not include any part of a business line that provides the Covered Products and Services to an Excluded Party or any other Entity (hereinafter referred to as the “Non-Covered Transferee Entity”), then neither the Non-Covered Transferee Entity nor any of its Non-Covered Affiliates will gain the benefit of the license grant, covenant-not-to-sue, or releases in this Agreement.  Upon the Non-Covered Transferee Entity’s request, LML agrees to negotiate in good faith with the Non-Covered Transferee Entity to release and/or license, under the LML Patents, any ACH Transactions created, processed, or transmitted by the Non-Covered Transferee Entity and/or any of its Non-Covered Affiliates (hereinafter “Section 6.4 Non-Covered ACH Transactions”).  If LML and the Non-Covered Transferee Entity cannot reach agreement on the terms of such release and/or license, then LML, the Non-Covered Transferee Entity, and any Non-Covered Affiliates of the Non-Covered Transferee Entity shall have all remedies, defenses, and counterclaims available to them under applicable law with respect to any Section 6.4 Non-Covered ACH Transactions.

	
6.5.  

	
Termination of Payments Due Pursuant to Section 6.  With respect to any good faith negotiations undertaken pursuant to Sections 6.1 (Acquisitions by a Capital One Entity) through Section 6.4 (Transfer of Non-Covered Assets By a Capital One Entity) above, LML agrees that no royalty will be due as to an LML Patent for any ACH Transactions created, processed, or transmitted by the Capital One Entity, by any Acquired Entity, Acquiring Entity, Covered Transferee Entity or Non-Covered Transferee Entity (as defined above), or by any Non-Covered Affiliates of any Acquired Entity, Acquiring Entity, Covered Transferee Entity or Non-Covered Transferee Entity after the expiration date of such LML Patent or its final legal adjudication of invalidity or unenforceability after all appeals are exhausted.

 

 

 

  

-11-

  

 

	
7.  

	
CONFIDENTIALITY.  The Parties may disclose the existence of this Agreement, provided, that neither Party may disclose the specific terms and conditions of this Agreement  (including without limitation the payment amount set out in Section 3.1) to any Entity except that each Party may disclose the terms and conditions of this Agreement: (i) in response to a valid subpoena or as otherwise may be required by law, regulation, or order of a court or governmental authority of competent jurisdiction, provided that the Party required to make such a disclosure gives as much notice as is reasonably possible to the other Party to contest such order or requirement and takes all reasonable actions in an effort to minimize the nature and extent of such disclosure; (ii) on a confidential basis to its legal, accounting or financial advisors solely for the purposes of providing such advice and solely to the extent that they have a need for access; (iii) if that Party forms a good faith belief that disclosure is required under applicable securities regulations or listing agency requirements, including for the purpose of disclosure in connection with the Securities and Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, National Instrument NI 51-102 (under Canadian law), as amended, and any other reports filed with the Securities and Exchange Commission, or any other filings, reports or disclosures that may be required under applicable laws or regulations; (iv) in its financial statements as it is required to do under applicable generally accepted accounting principles while acting in reliance on its auditors; (v) to any defendant as part of its disclosure obligations subject to the Court's Protective Order in the applicable litigation brought by LML to enforce an LML Patent, in which event LML will seek to have the production protected under an “Outside Counsel Attorneys Eyes Only” or higher confidentiality designation and LML will take all reasonable actions in an effort to minimize the nature and extent of such disclosure; (vi) upon the express written consent of the other Party; (vii) on a confidential basis to investors and potential investors and acquirers, but subject to any such investor or potential investor or acquirer having first executed an appropriate non-disclosure agreement requiring such investor or potential investor or acquirer to maintain this Agreement and the terms and conditions of this Agreement in confidence; or (viii) as necessary to pursue an indemnification claim from a potential or actual indemnitor, subject to obligations of confidentiality and privilege at least as stringent as those contained herein; and (ix) to a Covered Third Party, subject to obligations of confidentiality and privilege at least as stringent as those contained herein.

	
8.  

	
REPRESENTATIONS AND WARRANTIES

	
8.1.  

	
Capital One Representations and Warranties. Capital One represents and warrants to LML that it has all requisite legal right, power and authority to enter into, execute, deliver and perform this Agreement and grant the releases, covenants not to sue and all other rights provided for under this Agreement.

 

 

  

-12-

  

 

 

	
8.2.  

	
LML Representations and Warranties. As a condition precedent to Capital One entering into this Agreement, LML represents and warrants to Capital One that as of the Effective Date: (a) LML has all requisite legal right, power and authority to enter into, execute, deliver and perform this Agreement and grant the licenses, releases, covenants not to sue and all other rights provided for under this Agreement; (b) LML owns the entire right, title, and interest in and to the LML Patents and the inventions disclosed and claimed therein, including all rights to recover for alleged Infringement of the LML Patents by the Capital One Entities; (c) the LML Entities have not granted and shall not grant any licenses or other rights under the LML Patents or the claims or counterclaims asserted in the Litigation I or otherwise, that would conflict with or prevent the licenses and rights granted to Capital One Entities or Covered Third Parties hereunder; (d) there are no liens, conveyances, mortgages, assignments, encumbrances, or other agreements that would prevent or impair the full and complete exercise of the terms and conditions of this Agreement; (e) the LML Entities have not entered into, and shall not enter into, any other agreement that would interfere with the obligations and immunities set forth in this Agreement during the term of this Agreement; and (f) LML will not transfer, assign, or exclusively license to another any of the LML Patents or claims/demands that LML asserted (or could have asserted) against the Capital One Entities relating to the LML Patents or the Litigation I, unless the transferee, assignee, or exclusive licensee agrees to be bound by all of the terms and conditions of this Agreement.

	
8.3.  

	
Limitations on Representations and Warranties.  Nothing contained in this Agreement shall be construed as: (a) a warranty or representation by either Party that any manufacture, sale, use, or other disposition of products by the other Party has been or will be free from Infringement of any patents other than the LML Patents; (b) an agreement by either Party to bring or prosecute actions or suits against any Entity for Infringement, or conferring any right to the other Party to bring or prosecute actions or suits against third parties for Infringement; (c) conferring any right to either Party to use in advertising, publicity, or otherwise, any trademark, service mark, or trade dress of the other Party, or any simulation thereof, without the prior written consent of the other Party; (d) conferring any right to either Party, except as otherwise provided in Section 7 (Confidentiality), to use any names or trade names of the other Party, or any simulation thereof, without the prior written consent of the other Party; (e) an obligation to furnish any technical information or know-how; or (f) conferring by implication, estoppel or otherwise, upon either party, any right (including a license) under patents other than the LML Patents except for the rights expressly granted hereunder.

	
8.4.  

	
DISCLAIMER OF WARRANTIES.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE NO EXPRESS REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUE OR OTHERWISE.

	
8.5.  

	
No Joint and Several Liability.  Notwithstanding anything herein to the contrary, the Capital One Entities and the Covered Third Parties shall not have any liability to any of the LML Entities for any actions or inactions of another defendant in the Lawsuits, or any other Entity against whom any of the LML Entities has asserted or may assert a claim for Infringement of a LML Patent.

 

 

  

-13-

  

 

 

 

	
9

	
GENERAL PROVISIONS

	
  

	
9.1

	
Assignment.  Except as otherwise provided in Section 6, this Agreement may not be assigned by either Party without the prior written consent of the other Party in its sole discretion.  Notwithstanding the foregoing, if desired and solely for corporate reorganization and/or tax purposes: (1) Capital One shall have the right to assign its rights and obligations under this Agreement to a Capital One Entity without the prior consent of LML; and (2) LML shall have the right to assign its rights and obligations under this Agreement to a LML Entity without the prior consent of Capital One.  Absent such written consent from Capital One, LML shall not assign, or grant any right to enforce any LML Patent, or any right that would conflict with the rights granted hereunder, to any Entity unless such assignment or grant is subject to all of the terms and conditions of this Agreement, and such Entity executes an agreement agreeing to be bound by all of the terms and conditions of this Agreement including a requirement to bind all further successors-in-interest or assigns thereof to the terms and conditions of this Agreement.  All releases, licenses, and covenants contained herein shall run with the LML Patents and shall be binding on any successors-in-interest or assigns thereof.  Any attempted assignment or grant in contravention to this Section shall be null and void.

	
  

	
9.2

	
Entire Agreement.  This Agreement, including all Exhibits attached hereto, constitutes the entire agreement between the Parties and embodies the entire and only understanding of each of them with respect to the subject matter of the Agreement, and merges, cancels and supersedes all prior representations, warranties, assurances, conditions, definitions, understandings and all other statements or agreements, whether express, implied, or arising out of operation of law, whether oral or written, whether by omission or commission, between and among the Parties hereto with respect to the subject matter of the Agreement. There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the Parties other than as expressly set forth in this Agreement.

	
  

	
9.3

	
Notices.  All notices, requests, approvals, consents and other communications required or permitted under this Agreement will be in writing and addressed as follows:

           If to LML:

Mr. Patrick H. Gaines

President

LML Patent Corp

505 East Travis St.

Suite 216

Marshall, Texas  75670

           with a copy to:

LML Patent Corp.

Corporate Secretary

1680- 1140 West Pender Street

Vancouver BC, Canada V6E 4G1

 

 

 

  

-14-

  

 

 

           If to Capital One:

Dennis Browne, Esq.

Capital One Services, LLC

15000 Capital One Drive

Richmond VA 23238

with copy to:

Brian M. Buroker

Hunton & Williams LLC

2200 Pennsylvania Avenue, NW

Washington, DC 20037

and will be deemed delivered: (a) upon receipt if delivered by hand; (b) the next day if sent by prepaid, U.S. recognized, overnight air courier; (c) three (3) business days after being sent by registered or certified mail (return receipt requested, postage prepaid); or if by facsimile, the day that the sender receives an acknowledgement that the facsimile was successfully transmitted.  All notices shall be addressed to the other Party at the address set forth above or to such other person or address as the Parties may from time to time designate in writing delivered pursuant to this notice provision.

	
  

	
9.4

	
Governing Law.  This Agreement and all matters connected with the performance thereof shall be governed by and will be construed, interpreted, and applied in accordance with the laws of the State of Texas and the federal laws of the United States as applicable therein, without regard to the laws of those jurisdictions governing conflicts of laws.

	
  

	
9.5

	
Expenses.  Except as otherwise specifically provided in this Agreement, the Parties agree that they shall bear their own costs and attorneys’ fees incurred in connection with the negotiation and drafting of this Agreement and the transactions contemplated herein.

	
  

	
9.6

	
Headings. The section and sub-section headings contained in this Agreement are for convenience of reference only and shall not serve to limit, expand or interpret the sections or sub-sections to which they apply, and shall not be deemed to be a part of this Agreement.

	
  

	
9.7

	
Interpretation; Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this 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 Agreement.  This Agreement is in the English language only, which language shall be controlling in all respects, and all notices under this Agreement shall be in the English language.  For purposes of construction, the singular includes the plural and vice versa.

	
  

	
9.8

	
Relationship of the Parties.  This Agreement does not constitute and shall not be construed as constituting a partnership, agency, employer-employee, or joint venture between LML and Capital One, and neither Party shall have any right to incur any debt, make any commitment for each other, or 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.  LML and Capital One each expressly disclaim any reliance on any act, word, or deed of the other in entering into this Agreement.

	
  

	
9.9

	
Binding Effect.  Subject to the provisions of Section 6 (Change in Control/Acquisitions), this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties, the licensees and releasees referenced herein, and their predecessors,  successors and permitted assigns.

	
  

	
9.10

	
Enforceability.  The Parties acknowledge and agree that this Agreement is enforceable according to its terms.

	
  

	
9.11

	
Severability.  In the event that any term or provision of this Agreement is deemed illegal, invalid, unenforceable or void by a final, non-appealable judgment of a court or tribunal of competent jurisdiction under any applicable statute or rule of law, such court or tribunal is authorized to modify such provision to the minimum extent possible to effect the overall intention of the Parties as of the Effective Date of this Agreement.  The Parties agree to negotiate in good faith to try and substitute an enforceable provision for any invalid or unenforceable provision that most nearly achieves the intent of such provisions.

	
  

	
9.12

	
Counterparts. This Agreement may be executed in two or more counterparts or duplicate originals, each of which shall be considered one and the same instrument, and which shall be the official and governing version in interpretation of this Agreement.  This Agreement may be executed by facsimile signatures or emailed pdf copies of signatures and such signatures shall be deemed to bind each Party as if they were original signatures.

	
  

	
9.13

	
Waiver.  No waiver of any breach of any provision of this Agreement shall be construed as a waiver of or consent to any previous or subsequent breach of the same or any other provision.

	
  

	
9.14

	
Force Majeure.  The failure of a Party hereunder to perform any obligations, due to governmental action, law or regulation, or due to events, such as war, act of public enemy, strikes or other labor disputes, fire, flood, acts of God, or any similar cause beyond the reasonable control of such Party, is excused for as long as said cause continues to exist.  The Party prevented from performing shall promptly notify the other Party of such non-performance and its expected duration, and shall use all reasonable efforts to overcome the cause thereof as soon as practicable.

	
  

	
9.15

	
Amendment.  This Agreement may not be amended or modified, except by a writing signed by all Parties.

	
  

	
9.16

	
Sophisticated Parties Represented by Counsel.  The Parties each acknowledge, accept, warrant, and represent that: (i) they are sophisticated Entities represented at all relevant times during the negotiation and execution of this Agreement by counsel of their choice, and that they have executed this Agreement with the consent and on the advice of such independent legal counsel; and (ii) they and their counsel have determined through independent investigation and arm’s-length negotiation that the terms of this Agreement shall exclusively embody and govern the subject matter of this Agreement.

 

 

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

	
LML Patent Corp.

	  	
Capital One National Association

	  	  	  
	
By:/s/ Patrick H. Gaines

	  	
By:/s/ Katherine Busser

	  	  	  
	
Name: Patrick H. Gaines

	  	
Name: Katherine Busser

	  	  	  
	
Title: President

	  	
Title: Executive Vice President

	  	  	  
	
Date: September 7, 2011

	  	
Date: September 9, 2011

	 	 	 
	  	  	  
	  	  	
Capital One Services LLC

	  	  	  
	  	  	
By:/s/ Katherine Busser

	  	  	  
	  	  	
Name: Katherine Busser

	  	  	  
	  	  	
Title: Executive Vice President

	  	  	  
	  	  	
Date: September 9, 2011

 

  

-15-

  

EXHIBIT A

STIPULATED DISMISSAL WITH PREJUDICE

and

ORDER OF DISMISSAL WITH PREJUDICE

(see attached)

 

  

  

  

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

	
LML PATENT CORP,

	
§

	  
	  	
§

	  
	
PLAINTIFF

	
§

	  
	  	
§

	  
	
v.

	
§

	
CIVIL ACTION NO. 2:08-CV-448-DF

	  	
§

	  
	  	
§

	
JURY

	
JP MORGAN CHASE & CO., ET AL.,

	
§

	  
	  	
§

	  
	
DEFENDANTS

	
§

	  

STIPULATED DISMISSAL WITH PREJUDICE

Pursuant to Rule 41(a) of the Federal Rules of Civil Procedure and the terms of a separate Settlement and License Agreement, the Plaintiff, LML Patent Corp (“LML”) and Defendants Capital One National Association and Capital One Services, LLC (collectively “Capital One”) have agreed to settle, adjust, and compromise all claims and counterclaims against each other in the above-captioned action.  The parties, therefore, stipulate to dismiss all claims by LML against Capital One and all counterclaims by Capital One against LML made therein with prejudice to the re-filing of same, subject to the terms of the Settlement and License Agreement between the parties.

LML and Capital One further stipulate that all costs and expenses relating to this litigation (including, but not limited to, attorneys’ fees and expert fees and expenses) shall be borne solely by the party incurring the same.

A proposed Order accompanies this motion.

AGREED:

	
Date:  ______________, 2011

	
Respectfully submitted,

 

_/s/ J. Rodney Gilstrap

 

J. Rodney Gilstrap

Texas Bar No. 07964200

Gilstrap1957@yahoo.com

Smith & Gilstrap

P.O. Drawer A

Marshall, Texas 75671

Telephone: (903) 938-8321

Facsimile: (903) 938-8331

 

Brian M. Buroker

bburoker@hunton.com

Daniel G. Vivarelli, Jr. (pro hac vice)

dvivarelli@hunton.com,

Hunton & Williams, LLP

1900 K Street NW

Washington, DC 20006

Telephone: (202) 955-1500

Facsimile: (202) 778-2201

 

ATTORNEYS FOR DEFENDANTS CAPITAL ONE, NATIONAL ASSOCIATION AND CAPITAL ONE SERVICES, LLC

 

 

ATTORNEYS FOR

DEFENDANTS___

 

    /s/ Melissa Smith                                           

Melissa Smith

Texas State Bar No. 00794818

GILLAM & SMITH, LLP

303 South Washington

Marshall, Texas 75670

Telephone:  903-934-8450

Facsimile:  903-934-9257

Melissa@gillamsmithlaw.com

Theodore Stevenson, III

Lead Attorney

Texas Bar No. 19196650

tstevensom@mckoolsmith.com

John Austin Curry

Texas State Bar No. 24059636

acurry@mckoolsmith.com

McKool Smith, P.C.

300 Crescent Court, Suite 1500

Dallas, Texas 75201

Telephone: 214-978-4974

Facsimile: 214-978-4044

 

Sam F. Baxter

Texas Bar No. 01938000

sbaxter@mckoolsmith.com

McKOOL SMITH, P.C.

505 East Travis Street, Suite 105

Marshall, Texas 75670

Telephone: 903-927-2111

Facsimile: 903-927-2622

 

Daniel W. Sharp

Texas Bar No. 24041902

dsharp@mckoolsmith.com

John Garvish

Texas State Bar No. 24043681

jgarvish@mckoolsmith.com

McKool Smith, P.C.

300 W. 6th Street, Suite 1700

Austin, Texas 78701

Telephone: 512-692-8725

Facsimile: 512-692-8744

 

ATTORNEYS FOR PLAINTIFF

LML PATENT CORP

 

  

  

  

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

MARSHALL DIVISION

	
LML PATENT CORP,

	
§

	  
	  	
§

	  
	
PLAINTIFF

	
§

	  
	  	
§

	  
	
v.

	
§

	
CIVIL ACTION NO. 2:08-CV-448-DF

	  	
§

	  
	  	
§

	
JURY

	
JP MORGAN CHASE & CO., ET AL.,

	
§

	  
	  	
§

	  
	
DEFENDANTS

	
§

	  

ORDER OF DISMISSAL WITH PREJUDICE

The Court is of the opinion that the Stipulated Dismissal with Prejudice agreed to by LML Patent Corp(“LML”) and Capital One National Association and Capital One Services, LLC (collectively “Capital One”)  should be GRANTED.

IT IS THEREFORE ORDERED that the above-entitled cause and all claims made by LML against Wels and all counterclaims made by Capital One against LML therein are hereby DISMISSED WITH PREJUDICE to the re-filing of same, subject to the terms of the Settlement and License Agreement between the parties.  All costs and expenses relating to this litigation (including, but not limited to, attorneys’ fees and expert fees and expenses) shall be borne solely by the party incurring the same.

IT IS FURTHER ORDERED that this Court shall retain jurisdiction over this action and the parties for purposes of enforcing the terms of the Settlement and License Agreement entered into by and between the parties.

This is a final judgment as between LML and Capital One.f10q0911ex10i_appsgenius.htm

Exhibit 10.1

 

THE INVESTOR RELATIONS GROUP INC.

LETTER OF AGREEMENT

Date: September 19, 2011

Section 1.  Services to be Rendered. The purpose of this letter is to set forth the terms and conditions on which The Investor Relations Group, Inc. (IRG) agrees to provide Apps Genius Corp (the “Company”) a comprehensive corporate communications program.  These services may include, but are not limited to all items listed in “Addendum A.”  The Company represents and warrants that it will provide on a timely basis any information requested by IRG which is necessary to perform such services and further represents and warrants that such information shall be accurate.

Section 2.   Engagement Period.  Unless sooner terminated as provided herein, the term of this agreement (the “Engagement Period”) shall commence on or before September  19th, 2011 and shall continue for a period of twelve (12) calendar months.  Following expiration of the initial Engagement Period, this agreement shall be automatically renewed for successive Engagement Periods of 12 months each unless either party shall give the other written notice of its intent not to renew this agreement no later than 30 days prior to the expiration of any Engagement Period hereunder.   The Company represents that it is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and is duly qualified as a foreign corporation and in good standing in all jurisdictions in which the nature of its activities requires such qualification.  The Company further represents to IRG: (1) that it has full power and authority to carry on its business as presently or proposed to be conducted and to enter into and perform its obligations under this Agreement; (2) that this Agreement has been duly authorized by all necessary corporate actions; and (3) that this Agreement constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except as such enforcement may be limited by bankruptcy, creditors’ rights laws or general principles of equity).   

Section 3.  Fees.  (a) The Company shall pay to IRG for its services hereunder a maintenance fee (the “Maintenance Fee”) of $12,000 per month beginning December 1st, 2011; provided, that the amount of such Maintenance Fee shall be subject to change by the mutual agreement of the parties at any time after expiration of the initial twelve (12) month Engagement Period hereunder immediately upon written notice to the Company.  Maintenance Fees shall be payable on or before the 1st day of each calendar month which occurs during the Engagement Period.  In the event that a partial month shall occur during the Engagement Period, then the amount of the maintenance Fee for such month shall be prorated based upon the number of days in such month that occur during the Engagement Period. If the Company does not pay its Maintenance Fee and any other recurring charges on or before the 5th day of each month, the Company will immediately be assessed and charged a 10% late fee.

 

(b) In addition to the Maintenance Fees described in paragraph (a) above, immediately upon the execution of this Agreement, the Company issue 400,000 restricted shares of the companies common stock.   375,000 shares shall be issued in the  name of Dian Griesel  and 25,000 shall be issued in the name of J. Kevin Moran. These shares have immediate vesting rights.  

  

1

  

Section 4.  Expenses.  In addition to all other fees payable to IRG hereunder, the Company hereby agrees to reimburse IRG for all reasonable out-of-pocket expenses incurred in connection with the performance of services hereunder.  These out-of-pocket expenses shall include, but are not limited to: telephone, photocopying, postage, messenger service, clipping service, information retrieval service and IRG wire (for emails).  No individual expenses over $500 will be expended without first notifying the Company.  The Company agrees to remit $500 by check or in immediately available funds to be placed on deposit with IRG and credited to the Company against expenses incurred, on a permanent basis, throughout the program.  From time to time, the Company will replenish the expense account as necessary to maintain a balance of $500 whenever the balance drops below $100.  The balance of said deposit is fully refundable should the program terminate.  A running invoice will be maintained of all expenses incurred and will be submitted to the Company each month.  Additionally, the Company shall establish an account with an established wire service for the release of press releases and media releases and an account with a printing service for the production of all of the Company’s printed investor and media relations material.  IRG shall have access to the wire service account for the release of press and media releases and IRG shall have access to the printing service account in order to direct the work necessary to maintain the company’s investor and media information kits.  It will be the responsibility of the Company to pay all associated bills from both the wire service account and the printing service account.  These costs will not be included on IRG’s monthly running invoice and are not the responsibility of IRG.  Finally, in addition to the fees discussed above, the Company is responsible for paying all bills associated with meals arranged around road shows to include business breakfasts, broker lunches and dinners.  Such meals will be arranged in order to minimize the costs associated with each.  When a broker lunch scheduled, IRG will arrange for the lunch at minimum cost to the Company.  We have special prices arranged at several restaurants in order to minimize those costs and there will be no alcohol served at these events. 

Section 5.  Indemnification.  Each of the Company and IRG agrees to defend, indemnify and hold the other and its respective affiliates, stockholders, directors officers, agents, employees, successors and assigns (each an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever (including, without limitation, reasonable attorneys' fees) which arise solely from the Company's or IRG's (as  the case may be) breach of its obligations hereunder or any representation or warranty made by it herein. It is further agreed that the foregoing indemnity shall be in addition to any rights that either party may have at common law or otherwise, including, but not limited to, any right to contribution. 

Section 6.  Termination of Agreement. (a) Subject to paragraph (b) below, either party may terminate this Agreement and IRG’s engagement hereunder, with or without cause, immediately upon written notice given to the other party at any time during the Engagement Period hereunder. In such event, all compensation accrued to IRG prior to such cancellation, whether in the form of Maintenance Fees, reimbursement for expenses or otherwise, will become due and payable immediately upon such termination and IRG shall be relieved of any and all further obligation to provide any services hereunder. 

    

  

2

  

 

(b) Notwithstanding anything to the contrary herein contained, the obligations of the Company under Sections 4, 6 and 7, and the provisions of Sections 9 and 10, and shall survive any termination or breach of this agreement by either party. 

Section 7. Solicitation of Employees. (a) During the term of this agreement, and for a period of two years after the termination of this agreement, neither party shall, directly or indirectly: (1) influence or attempt to influence any employee of the other party to leave such party’s employ; (2) agree to aid any competitor or customer of the other party in any attempt to hire any person who was employed by the other party within the previous two year period; or (3) solicit or induce any person who was employed by the other party within the previous two-year period to become employed by the Company. Each party acknowledges that the restrictions in this Section 7 are reasonable and necessary for the protection of the other party’s business. This clause is not intended to restrict the individual right of employment but rather is intended to preserve the contemplated business arrangement and to prevent the parties from actively recruiting the employees of the opposite party.      

 

(b)  Each party hereby acknowledges and agrees that a breach by it of the restrictions set forth in paragraph (a) above would cause irreparable harm to the other party for which money damages alone would be inadequate.  Accordingly, each party hereby agrees that in such event the other party shall be entitled to seek an injunction or other equitable remedy in addition to any other remedies available to it at law.

 

Section 8.  Severability.  In case any provision of this letter agreement shall be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby.

Section  9. Consent to Jurisdiction.  This agreement shall be governed and construed in accordance with the laws of the State of New York without regard to conflicts of laws principles. The parties further consent to the exclusive jurisdiction of the State and Federal courts located within the City, County and State of New York to resolve any dispute arising under this Agreement, and waive any defense to such jurisdiction based upon inconvenient forum.  

Section 10.  Other Services.  If the Company desires additional services not provided for in this agreement, any such additional services shall be covered by a separate agreement between the parties hereto.

Section 11. Entire Agreement.  This letter agreement contains the entire agreement of the Company and IRG, and supersedes any and all prior discussions and agreements, whether oral or written, with respect to the matters addressed herein.

 

  

3

  

 

Section 12.   Counterparts.  This letter agreement may executed in two or more counterparts, each of which shall be considered an original and all of which, taken together, shall be considered as one and the same instrument. 

Please evidence your acceptance of the provisions of this letter by signing the copy of this letter enclosed herewith and returning it to The Investor Relations Group Inc., 11 Stone Street, 3rd Floor, New York, NY 10004, Attention:  Dian Griesel, President & CEO.

 

	 	Very truly yours,	 
	 	 	 
	 	/s/ 	 
	 	Dian Griesel	 
	 	Founder, President and CEO	 
	 	The Investor Relations Group, Inc.	 

 

 

ACCEPTED AND AGREED 

AS OF THE DATE FIRST ABOVE WRITTEN:

By:_________________________________________

     Name:

     Title:

 

  

4

  

 

ADDENDUM  “A”

In one comprehensive program IRG covers both investor relations and public relations needs from the “corporate communications” perspective.   Our program includes all of the following:

INVESTOR RELATIONS

	
·  

	
Daily Update Reports

	
·  

	
Targeted one-on-one investor meetings and conference calls with the top nano-, micro-, and small-cap decision-making analysts and portfolio managers of corporate, business, and family funds, using our proprietary competitive analysis approach (road shows). We secure a minimum of eight to fifteen-plus pre-qualified meetings per month, for a total of 150 to 200+ unique introductions per year per company.

	
·  

	
Broker lunches in the top 20 cities (excluding lunch costs)

	
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Access to IRG’s MicroCaptivationsTM Wire of professional investors. Effectively IRG’s in-house, proprietary news service, this is a triple opted-in, fully compliant list of registered representatives, registered investment advisors, buy-side fund managers and analysts. (We use an outside vendor that is fully compliant legally for e-mailings to recipients in all fifty states.) Cost per use is $495, with the first wire compliments of IRG.

	
·  

	
All corporate materials (fact sheet, power point, etc) and IRG produced video posted on www.IRGnews.com as well as inclusion in full rotation cycle of “Featured Company”

	
·  

	
A Comprehensive Peer (competitive) Analysis Report that provides detailed information about peer group companies including:  covering analysts and all reporting institutional investor holdings with full names, titles, addresses, and other related contact information once contact is confirmed.

	
·  

	
Webinars and Podcasts

	
·  

	
Development of wire-house analyst research coverage and inclusion in peer reports as a comparable company.

	
·  

	
Corporate message refinement that is flexible, according to ongoing developments.

	
·  

	
A Fact Sheet that is flexible, in terms of ongoing developments.

	
·  

	
Investor presentations in PowerPoint/slide formats.

	
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All written and edited shareholder communications, such as earnings releases, quarterly reports, and other developments.

	
·  

	
 Coaching as necessary for investor meetings and conference calls.

	
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Conference call coordination, including scripting, Q&A preparation, and all details for execution, including Webcasting.

	
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Frank feedback collected from all road show meetings in order to help fine-tune corporate messaging.

	
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Handling and screening investor inquiries.

	
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Nurturing relationships with current and potential investors.

	
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Mail and request fulfillment processing.

	
·  

	
Introductions in the investment banking world.

	
·  

	
Peer group/industry analysis provided on a regular basis.

	
·  

	
Perception audits gathered from the investment community.

  

5

  

 

PUBLIC RELATIONS:

	
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Unique news pieces and media pitches originated and written by our award-winning, well-published editorial staff (approximately twenty+ pieces per year)—above and beyond writing normal “material” news announcements.

	
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Ghost-written/bylined white papers and other high-level trade articles written by our staff PhDs (one minimum per year) then placed in key pharmaceutical trades.

	
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Corporate, product, and technology related stories placed in targeted trade publications to build sales and partnerships.

	
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National and regional trend pieces written and placed in leading magazines and newspapers.

	
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Syndication stories and feature feeds to more than sixteen thousand newspaper and other print editors nationwide.

	
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Original “feature-feed” stories tying your company’s product or service to trends and national/world events.

	
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Comprehensive Social Media Outreach: Leveraging of IRG’s strong presence, understanding and growing following across the major social media networks (Twitter with 48,000+ followers, Facebook with 9,500+ followers, Google Buzz, Flickr, Friendfeed, etc.)

	
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Dissemination of your news through your own specialized webpage on our website, IRGnews.com, and through our: social networks, weekly newsletters, RSS Feeds and proprietary e-mail lists of uniquely targeted audience.

	
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On-camera media training.

	
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Production of your own 2-3 minute CEO interview / corporate video filmed and edited at our studios.

	
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Profiles written of CEOs and other top company officers / management.

	
·  

	
Headshots taken at our studios.

	
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Crisis management plans.

	
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Discounted clipping services — to document media coverage.

 

 

 

6

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