Document:

NON-EXCLUSIVE
      SOURCE CODE AGREEMENT

    Between

    

    CATUITY
      INC., a Delaware Corporation

    and
      

    

    ORIGINAL
      INK LLC, a Virginia limited liability company

    

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

    

    RECITALS

    

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

    

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

    

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

    

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

    

    
      	 	
              I.

            	
              NON-EXCLUSIVE
                LICENSE TO THE SOFTWARE

            

    

    

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

     

    a. The
      license acknowledged and granted hereunder includes the right to allow third
      party maintenance vendors of Original Ink, as well as third party maintenance
      vendors of any party granted a sublicense of the Software, to use the Software
      in connection with performing maintenance or technical support or services
      of
      any sort or description.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

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

    

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

    

    LICENSE
      FEE

    

    
      	 	
              2.1

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

            

    

    

    
      	 	
              2.2

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

            

    

    

    REPRESENTATIONS
      AND WARRANTIES

    

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

    

    
      	 	
              3.1

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              3.2

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

            

    

    

    
      	 	
              3.3

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

            

    

    

    
      	 	
              3.4

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

            

    

    

    
      	 	
              3.5

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

            

    

    

    
      	 	
              3.6

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

            

    

    

    
      	 	
              3.7

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

            

    

     

    DELIVERIES

    

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

    

    INDEMNIFICATION

    

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

    

    
      	 	
              (a)

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

            

    

     

    
      	 	
              (b)

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

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

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

    

    TERMINATION

    

    6.1
      Termination.
      This
      agreement may not be terminated.

    

    MISCELLANEOUS

    

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

    

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

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

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

    

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

    

      
        	
                If
                  to Catuity:

              	 	
                If
                  to Original Ink

              
	
                Catuity
                  Inc.

              	 	
                Original
                  Ink LLC

              
	
                2340
                  Commonwealth Drive

              	 	
                622
                  Wilder Drive

              
	
                Charlottesville,
                  VA 22901

              	 	
                Charlottesville,
                  VA 22902

              

      

    

    

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

    

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

    

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

    

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

    

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

    

    DEFINITIONS

    

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

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

    8.4
      Excluded
      Software
      has the
      meaning set forth in Section 1

    

    8.5
      Indemnitee
      has the
      meaning set forth in Section 5.

    

    8.6
      Indemnitor
      has the
      meaning set forth in Section 5.

    

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

    

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

    
      	 	 	 	 
	Catuity Inc.	 	 	Original Ink
              LLC
	 	 	 	 
	By:	 	 	By:
	
              
                

              

              Clifford
                W. Chapman Jr.

            	 	 	
              
                

              

              John
                Racine

            
	
              
                Director
                  and Authorized Person

              

            	 	 	
              MemberConvertible
      Promissory Note

     

    For
      good
      value, CATUITY,
      INC.,
      a
      Delaware corporation, (“Borrower”) promises to pay to the order of GOTTBETTER
      CAPITAL MASTER, LTD. (“Holder”) an amount equal to the Principal Balance (as
      defined below), paid in the following manner:

    

    
      	 	
              1.

            	
              Principal
                Amount and Offsets.
                This promissory note (the “Note”) is for an amount equal to $60,000.
                (the “Initial Principal Amount”). 

            

    

    

    
      	 	
              2.

            	
              Purchase
                Price. The
                Holder shall purchase the Promissory Note for $50,000
                (the “Purchase Price”).

            

    

    

    
      	 	
              3.

            	
              Term
                and Payments.
                The term of this Note is for six months from the date hereof, after
                which
                this Note shall become due and payable in full. This Note may be
                prepaid
                at any time, in whole or in part, without penalty.
                

            

    

    

    
      	 	
              4.

            	
              Conversion.
                This
                Note is convertible at any time into shares of the Borrower’s common stock
                at a conversion price equal to 80% of the price of the Borrower’s common
                stock at the time of conversion. The Borrower agrees to make reasonable
                efforts to have an adequate number of shares available at all times
                to
                satisfy the conversion of this Note.

            

    

    

    
      	 	
              5.

            	
              Acceleration.
                This Note shall, at the option of the Holder hereof upon written
                notice to
                the Borrower, become immediately due and payable in full upon
                the:

            

    

     

    (a)
      Failure to make any payment within fifteen (15) days of its due
      date.

     

    (b)
      Filing
      by
      the Borrower of an assignment for the benefit of creditors, bankruptcy or other
      form of insolvency, or by suffering an involuntary petition in bankruptcy or
      receivership not vacated within thirty (30) days.

     

    (c)
      Any
      breach of the provisions of the provisions of Sections 6 or 7 of this
      Note.

     

    
      	 	
              6.

            	
              Default.
                If
                this Note shall be in default and placed for collection, the Borrower
                shall pay all reasonable attorney fees and costs of collection. Payments
                shall be made to such address as may from time to time be designated
                by
                the Holder. 

            

    

     

    
      	 	
              7.

            	
              Security.
                This Note is unsecured.

            

    

     

    
      	 	
              8.

            	
              Waiver
                of Demand and Presentment.
                The Borrower, and all other parties to this note, whether as endorsers,
                guarantors or sureties, shall remain fully bound until this note
                is paid
                and waive demand, presentment and protest and all notices thereto
                and
                further agree to remain bound, notwithstanding any extension,
                modification, waiver, or other indulgence or discharge or release
                of any
                obligor hereunder or exchange, substitution, or release of any collateral
                granted as security for this note. No modification or indulgence
                by the
                Holder hereof shall be binding unless in writing; and any indulgence
                on
                any one occasion shall not be an indulgence for any other or future
                occasion. The rights of the Holder hereof shall be cumulative and
                not
                necessarily successive. 

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              9.

            	
               Governing
                Law; Jurisdiction; Jury Trial.
                This note shall take effect as a sealed instrument under the law
                of the
                State of New York. All questions concerning the construction, validity,
                enforcement and interpretation of this Note shall be governed by
                the
                internal laws of the State of New York, without giving effect to
                any
                choice of law or conflict of law provision or rule (whether of the
                State
                of New York or any other jurisdictions) that would cause the application
                of the laws of any jurisdictions other than the State of New York.
                Each
                party hereby irrevocably submits to the exclusive jurisdiction of
                the
                state and federal courts sitting in The City of New York, Borough
                of
                Manhattan, for the adjudication of any dispute hereunder or in connection
                herewith or with any transaction contemplated hereby or discussed
                herein,
                and hereby irrevocably waives, and agrees not to assert in any suit,
                action or proceeding, any claim that it is not personally subject
                to the
                jurisdiction of any such court, that such suit, action or proceeding
                is
                brought in an inconvenient forum or that the venue of such suit,
                action or
                proceeding is improper. Each party hereby irrevocably waives personal
                service of process and consents to process being served in any such
                suit,
                action or proceeding by mailing a copy thereof to such party at the
                address for such notices to it under this Agreement and agrees that
                such
                service shall constitute good and sufficient service of process and
                notice
                thereof. Nothing contained herein shall be deemed to limit in any
                way any
                right to serve process in any manner permitted by law. EACH
                PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
                NOT TO
                REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
                OR IN
                CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
                CONTEMPLATED HEREBY.

            

    

     

    Dated:
      November
      1, 2007

    

     

    
      	
              BORROWER:

              CATUITY
                INC.,
                

              a
                Delaware Corporation

               

               

              By: 

              
                

              

              Alfred
                H. (John) Racine

              President
                & CEO

              2340
                Commonwealth Drive, Suite C

              Charlottesville,
                VA 22901

            	 	
              HOLDER: 

              GOTTBETTER
                CAPITAL MASTER, LTD., 

              a
                Cayman Islands Exempted Company

               

               

              By:
                

              
                

              

              Adam
                S. Gottbetter, Director

              488
                Madison Avenue, 12th
                Floor

              New
                York, NY 10022

              Telephone:
                212.400.6990

              Fax:
                212.400.6999

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