Document:

exh10_3.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 Fifth Third Bank (“Fifth Third Bank”), on the other hand.  LML and Fifth Third Bank are individually referred to as “Party” and collectively as the “Parties.”  This Agreement is effective as of November 10, 2010 (“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 Fifth Third Bank 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‘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, Fifth Third Bank is a named defendant in Litigation I and Fifth Third Bank has denied liability;

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

WHEREAS, the Parties wish to settle their dispute, and Fifth Third Bank 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., ownership of fifty percent (50%) or more of the capital stock or other 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., ownership of less than fifty percent (50%) of the capital stock or other 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)  

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

	
(g)  

	
“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 Fifth Third Bank (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 Fifth Third Bank (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.

	
(h)  

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

  

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(i)  

	
“Excluded Party” means any Bank.  Notwithstanding the foregoing, Excluded Party does not include, and shall not be interpreted to include: (a) any Fifth Third Bank 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).

	
(j)  

	
“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.

	
(k)  

	
“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.

	
(l)  

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

	
(m)  

	
“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.

	
(n)  

	
“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.

	
(o)  

	
“Fifth Third Bank Entities” means Fifth Third Bank and its Affiliates and its or their predecessors, properly licensed successors (subject to Section 6 (Change in Control / Acquisitions)) and permitted assigns (subject to Section 9.1 (Assignment)).

	
(p)  

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

  

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(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.

	
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.  Fifth Third Bank agrees that, in the absence of a subpoena or court order requiring its participation or support, no Fifth Third Bank Entity shall participate in or support any suit, claim, action, litigation, administrative proceeding, or proceeding of any nature brought by or against LML that challenges the validity or enforceability of the LML Patents so long as the Fifth Third Bank 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 Fifth Third Bank 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 Fifth Third Bank Entity related to one or more of the LML Patents, or places a Fifth Third Bank Entity in a reasonable apprehension of being sued on one or more of the LML Patents, or (ii) a Fifth Third Bank Entity receives a request for indemnification related to an LML Patent, but only after the Fifth Third Bank Entity has provided sixty (60) days written notice to LML Entities of its intent to challenge the validity or enforceability of the asserted LML Patent(s).

  

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3.  

	
PAYMENT, TERM AND TERMINATION

	
3.1.  

	
Payment by Fifth Third Bank.  Fifth Third Bank agrees to pay to LML the non-refundable sum of Five Hundred Thousand U.S. dollars ($500,000.00) 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 transfer to the following account:

Bank: Citibank, N.A.

Address: 666 5th Avenue

                New York, NY 10103

SWIFT Code:

Acct#

ABA#

Account Name:  McKool Smith PC IOLTA Trust Account

	
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 Fifth Third Bank) or upon the mutual written agreement of the Parties.

	
3.3.  

	
Termination Due to Non-Payment by Fifth Third Bank.  If Fifth Third Bank fails to make the payment specified in Section 3.1 (Payment by Fifth Third Bank) 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 Fifth Third Bank, if Fifth Third Bank does not deliver the payment specified in Section 3.1 (Payment by Fifth Third Bank) to LML within five (5) business days after receiving such notice from LML, at its option, either terminate the Agreement or it may petition the Court for specific enforcement of Fifth Third Bank’s payment obligations.  Fifth Third Bank hereby consents to the jurisdiction of the Court for enforcement of the payment obligations in Section 3.1 (Payment by Fifth Third Bank), and agrees that specific enforcement of the payment obligations of this Agreement is an available remedy.

	
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.

  

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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 Fifth Third Bank) shall be the total compensation to any LML Entity by any Fifth Third Bank 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 Fifth Third Bank Entity with respect to the releases, licenses, covenants and all other rights granted in this Agreement.

	
3.6  

	
Fifth Third Bank’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 Fifth Third Bank Entities will retain and may elect to fully exercise its or their rights under this Agreement in accordance with 365(n).

	
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.

  

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4.2.  

	
LML’s Release to Fifth Third Bank.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Fifth Third Bank) and Section 6 (Change in Control/Acquisitions), LML Entities forever release (a) the Fifth Third Bank 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; and (b) the Covered Third Parties 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 the 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 license or covenant not to sue 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.  

	
Fifth Third Bank’s Release to LML.  Subject to the obligations of LML under this Agreement, Fifth Third Bank 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 Fifth Third Bank Entities) and that the Fifth Third Bank Entities asserted or could have asserted as of the Effective Date.

  

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4.4.  

	
Covenant-Not-To-Sue by LML Entities.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Fifth Third Bank) 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 Fifth Third Bank 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.

	
4.5.  

	
Covenant-Not-To-Sue by Fifth Third Bank Entities.  Subject to the obligations of LML under this Agreement, the Fifth Third Bank 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 Fifth Third Bank Entity or its successors or assigns or any Covered Third Party.

	
5.  

	
GRANT OF LICENSE

	
5.1.  

	
License.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Fifth Third Bank) and Section 6 (Change in Control / Acquisitions), LML hereby grants to the Fifth Third Bank 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 attaches to and is transferred with each Covered Product and Service and passes to each and every Covered Third Party with regard to such Covered Product and Service.  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 Fifth Third Bank 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 Fifth Third Bank Entity.  In the event any Fifth Third Bank Entity Acquires an Excluded Party or any business line of an Excluded Party that provides 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.  Upon the Fifth Third Bank Entity’s request, LML agrees to negotiate in good faith with the Acquired Entity to release and/or license, 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”).  If LML and the Acquired Entity cannot reach agreement on the terms of such release and/or license, then LML, the Acquired Entity (including the Fifth Third Bank Entities), and any Non-Covered Affiliates of the Acquired Entity shall have all 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 Fifth Third Bank Entity.  In the event an Excluded Party Acquires any Fifth Third Bank Entity and maintains the Fifth Third Bank 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 Fifth Third Bank 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 Fifth Third Bank Entities), 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 Fifth Third Bank Entities’ 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 Fifth Third Bank 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 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 negotiate in good faith with the Acquiring Entity to release and/or license, under the LML Patents, any Section 6.2 Non-Covered ACH Transactions.  If the Acquiring Entity does not provide the notice as specified above and/or if LML and the Acquiring Entity cannot reach agreement on the terms of such release and/or license, then LML, the Acquiring Entity (including the Fifth Third Bank Entities), and any Non-Covered Affiliates of the Acquiring Entity shall have all 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 Fifth Third Bank Entity.  In the event of a sale or other transfer of the assets of any Fifth Third Bank Entity that includes a business line that provides Covered Products and Services to an Excluded Party (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 Fifth Third Bank 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 Fifth Third Bank 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 Fifth Third Bank Entities’ 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 Fifth Third Bank 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 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 negotiate in good faith with the Covered Transferee Entity to release and/or license, under the LML Patents, any Section 6.3 Non-Covered ACH Transactions.  If the Covered Transferee Entity does not provide the notice as specified above and/or if LML and the Covered Transferee Entity cannot reach agreement on the terms of such release and/or license, then LML, the Covered Transferee Entity (including the Fifth Third Bank Entities), and any Non-Covered Affiliates of the Covered Transferee Entity shall have all 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 Fifth Third Bank Entity. In the event of a sale or other transfer of the assets of any Fifth Third Bank Entity that does not include any part of a business line that provides the Covered Products and Services to an Excluded Party (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 Fifth Third Bank Entity) through Section 6.4 (Transfer of Non-Covered Assets By a Fifth Third Bank 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 Fifth Third Bank 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.

  

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7.  

	
CONFIDENTIALITY.  The Parties may disclose the existence of this Agreement.  Neither Party may disclose the specific terms and conditions of this Agreement 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.  

	
Fifth Third Bank Representations and Warranties. Fifth Third Bank 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.

  

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8.2.  

	
LML Representations and Warranties. As a condition precedent to Fifth Third Bank entering into this Agreement, LML represents and warrants to Fifth Third Bank 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 Fifth Third Bank 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 Fifth Third Bank 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 Fifth Third Bank 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.

  

-15-

  

	
8.5.  

	
No Joint and Several Liability.  Notwithstanding anything herein to the contrary, the Fifth Third Bank 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.

	
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.  Absent such written consent from Fifth Third Bank, 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, TX  75670

  

-16-

  

           with a copy to:

LML Patent Corp.

Corporate Secretary

1680- 1140 West Pender Street

Vancouver BC, Canada V6E 4G1

           If to Fifth Third Bank:

Fifth Third Bank

38 Fountain Square Plaza

MD 10AT76

Cincinnati, OH 45263

Attention: Molly K. Lampe

With a copy thereof to each of the following (which shall not constitute notice hereunder):

Fifth Third Bank

38 Fountain Square Plaza

MD10AT76

Cincinnati, OH 45263

Attention: James R. Hubbard

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.

  

-17-

  

	
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 Fifth Third Bank, 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 Fifth Third Bank 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, their predecessors, and 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 and such signatures shall be deemed to bind each Party as if they were original signatures.

  

-18-

  

	
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.

	  	
Fifth Third Bank

	  	  	  
	
By:/s/ Patrick H. Gaines

	  	
By:/s/ Molly K. Lampe

	  	  	  
	
Name: Patrick H. Gaines

	  	
Name: Molly K. Lampe

	  	  	  
	
Title: President

	  	
Title: Vice President and Counsel

	  	  	  
	
Date: November 10, 2010

	  	
Date: November 10, 2010

 

 

  

-19-

  

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 and Defendant Fifth Third Bank, 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 Patent Corp against Fifth Third Bank and all counterclaims by Fifth Third Bank against LML Patent Corp made therein with prejudice to the re-filing of same, subject to the terms of the Settlement and License Agreement between the parties.

LML Patent Corp. and Fifth Third Bank 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: ______________, 2010

	  	
Respectfully submitted,

	  	  	  
	  	  	
By: /s/                                                      

	  	  	
[INSERT INFO]

	  	  	  
	  	  	
ATTORNEYS FOR DEFENDANT

FIFTH THIRD BANK

	  	  	  
	  	  	
and

  

-1-

  

	  	  	  
	  	  	
/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, TX 75670

	  	  	
Telephone: 903-927-2111

	  	  	
Facsimile: 903-927-2622

	  	  	  
	  	  	
Michael S. Perez

	  	  	
Texas Bar No. 24002752

	  	  	
mperez@mckoolsmith.com

	  	  	
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.

  

-2-

  

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 and Fifth Third Bank should be GRANTED.

IT IS THEREFORE ORDERED that the above-entitled cause and all claims made by LML Patent Corp against Fifth Third Bank and all counterclaims made by Fifth Third Bank against LML Patent Corp 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.

	
3672327.1f10q1210ex4i_techprec.htm

Exhibit 4.1

 

	Registered No. R-A-l	  $4,250,000

 

UNITED STATES OF AMERICA

COMMONWEALTH OF MASSACHUSETTS

MASSACHUSETTS DEVELOPMENT FINANCE AGENCY

Revenue Bonds

Ranor Issue, Series 2010a

 

	
INITIAL LIBOR RATE:

	
One and 9606/10000 Percent (1.9606%) Per Annum

 

	
MATURITY DATE:

	
January 1, 2021

 

	
DATE OF THIS BOND:

	
December 30, 2010 (Date as of which the Bonds were initially issued.)

 

	
INITIAL RATE PERIOD:

	
From the date of this Bond to and including January 31, 2011.

 

	
PAYMENT DATES:

	
February 1, 2011 and the first (1 st) day of each month thereafter to the MATURITY DATE or earlier redemption in full.

 

	
DATE OF REGISTRATION:

	
December 30, 2010 REGISTERED OWNER: Sovereign Bank

 

	
PRINCIPAL AMOUNT:

	
FOUR MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS

 

THIS BOND DOES NOT CONSTITUTE A GENERAL OBLIGATION OF THE MASSACHUSETTS DEVELOPMENT FINANCE AGENCY OR A DEBT OR PLEDGE OF THE FAITH AND CREDIT OF THE COMMONWEALTH OF MASSACHUSETTS; THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THIS BOND ARE PAYABLE SOLELY FROM THE REVENUES AND FUNDS PLEDGED FOR THEIR PAYMENT IN ACCORDANCE WITH THE MORTGAGE, LOAN AND SECURITY AGREEMENT REFERRED TO HEREIN. THE AGENCY HAS NO TAXING POWER UNDER THE ACT.

 

The Massachusetts Development Finance Agency (the “Agency”), for value received promises to pay to the REGISTERED OWNER of this bond, or registered assigns, but solely from the moneys to be provided under the Agreement mentioned below, in lawful money of the United States of America, in immediately available funds, the PRINCIPAL AMOUNT, in installments in the amounts as set forth on Schedule 1, commencing on February 1, 2011, and on each PAYMENT DATE thereafter, with the remaining principal balance due on the MATURITY DATE, unless paid earlier as provided below, with interest (computed on the basis of a 360-day year based on the actual number of days elapsed) on the PRINCIPAL AMOUNT outstanding from the most recent PAYMENT DATE to which interest has been paid or duly provided for or, if no interest has been paid, from the DATE OF THIS BOND, at the INITIAL LIBOR RATE per annum during the INITIAL RATE PERIOD, and thereafter at the LIBOR Rate (as defined below) per annum, as determined below for each Rate Period (as defined below), payable on each PAYMENT DATE, until the date on which this bond becomes due, whether at maturity or by acceleration or redemption. Notwithstanding the foregoing, if at any time an Event of Taxability occurs, the interest rate in effect on the Series A Bonds from and after the Date of Taxability shall be the Taxable Rate and following an Event of Default, the interest rate in effect on the Series A Bonds shall be the Default Rate. The Agency also shall pay to the Bondowner, but only from amounts available under the Agreement, a late charge for any payment of principal or interest not paid within fifteen (15) days following the date such payment is due equal to five percent (5.0%) of the amount of any such payment.

 

  

1

  

 

Unless otherwise defined herein, capitalized terms used in this bond shall have the same meanings assigned to them in the Mortgage, Loan and Security Agreement (the “Agreement”), dated as of December 1, 2010, by and among the Agency, Ranor, Inc. (the “Borrower”), and Sovereign Bank, as Bondowner and Disbursing Agent (the “Disbursing Agent”). As used in this bond, the following terms shall have the following meanings:

 

“Effective Date” means the date on which a new Rate Period takes effect. The first Effective Date shall be February 1, 2011 and thereafter shall be the first (1st) day of each month thereafter.

 

“LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest 1/32 of one percent) for deposits in U.S. Dollars for a one-month period, which appears on the day that is two London Banking Days preceding the next Effective Date as of 11:00 a.m. London time (x) on the Telerate Page 3750 or (y) if such rate does not appear on the Telerate Page 3750, then as determined by the Bank from another recognized source or interbank quotation. In the event that the Board of Governors of the Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR deposits of the REGISTERED OWNER of this bond, then for any period during which such Reserve Percentage shall apply, LIBOR shall be equal to the amount determined above divided by an amount equal to 1 minus the Reserve Percentage.

 

“LIBOR Rate” means 65% times the sum of (i) the Spread plus (ii) LIBOR.

 

“Rate Period” means, when used with respect to any particular LIBOR Rate, the period during which such rate of interest determined for the Bonds will remain in effect as described herein, which shall be the period commencing on each Effective Date and ending on the last day of the calendar month. A new interest rate shall take effect on each Effective Date.

 

“Reserve Percentage” means the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves), which is imposed on member banks of the Federal Reserve System against “Euro-currency Liabilities” as defined in Regulation D.

 

“Spread” means 275 basis points.

 

The record date for payment of interest is the Business Day preceding the date on which the interest is to be paid; provided that, with respect to overdue interest or interest payable on redemption of this bond other than on a PAYMENT DATE or interest on any overdue amount, the Disbursing Agent may establish a special record date. The special record date may not be more than five (5) days before the date set for payment. The Disbursing Agent will mail notice of a special record date to the Bondowner at least seven (7) days before the special record date. The Disbursing Agent will promptly certify to the Agency that it has mailed such notice to the Bondowner, and such certificate will be conclusive evidence that such notice was given in the manner required hereby.

 

  

2

  

 

This bond is one of a series of bonds (the “Series A Bonds”), in the aggregate principal amount of $4,250,000, being issued by the Agency under and in accordance with the laws of The Commonwealth of Massachusetts, including Massachusetts General Laws Chapter 23 G, as amended, and resolutions duly adopted by the board of directors of the Agency, which resolutions also authorize the execution and delivery of the Agreement. The Series A Bonds are being issued pursuant to the Agreement. Simultaneously with the issuance of the Series A Bonds, the Agency is issuing its $1,950,000 Massachusetts Development Finance Agency Revenue Bonds, Ranor Issue, Series 2010B (the “Series B Bonds,” and together with the Series A Bonds, the “Bonds”). Pursuant to the Agreement, the Agency is loaning the proceeds of the Bonds to the Borrower for the purpose of financing and refinancing the Project (as defined in the Agreement). The Borrower has agreed to repay the borrowing in the amounts and at the times necessary to enable the Agency to pay the principal, premium, if any, and interest on the Bonds, and the Agency has assigned its rights to receive such funds to the Bondowner, subject to the provisions of the Agreement. Reference is made to the Agreement for a description of the funds pledged and the rights, limitations of rights, duties, obligations and immunities of the Borrower, the Agency and the Bondowner, including the order of payments in the event of insufficient funds. The Agreement may be amended to the extent and in the manner provided therein.

 

In case any Event of Default (as defined in the Agreement) occurs, the principal amount of this bond together with accrued interest may be declared due and payable in the manner and with the effect provided in the Agreement.

 

The Series A Bonds are redeemable pursuant to the Agreement prior to maturity, as a whole or in part on any PAYMENT DATE, in inverse order of principal installments due, at their principal amounts, without premium, plus accrued interest to the redemption date, (i) at the direction of the Borrower, (ii) from excess proceeds on deposit in the Project Fund created under the Agreement upon completion or termination of the Project, and (iii) in the event of a substantial loss to the Mortgaged Property, as defined in the Agreement, from insurance or condemnation award proceeds allocable to the Series A Bonds.

 

If less than all of the Outstanding Series A Bonds are to be called for redemption, the Series A Bonds to be redeemed will be selected by the Disbursing Agent by lot.

 

In the event this bond is selected for redemption, notice will be mailed not less than twenty (20) days prior to the redemption date to the REGISTERED OWNER at its address shown on the registration books maintained by the Disbursing Agent. Failure to mail notice to the owner of any other Series A Bond or any defect in the notice to such an owner shall not affect the redemption of this bond.

 

If this bond is of a denomination in excess of One Hundred Thousand Dollars ($100,000), portions of the principal amount in excess of One Hundred Thousand Dollars ($100,000) may be redeemed. If less than all of the principal amount is to be redeemed, upon surrender of this bond to the Disbursing Agent, there will be issued to the REGISTERED OWNER, without charge, a new bond or bonds, at the option of the REGISTERED OWNER, for the unredeemed principal amount.

 

  

3

  

 

Notice of redemption having been duly mailed, this bond, or the portion called for redemption, will become due and payable on the redemption date at the applicable redemption price and, the redemption price having been paid or moneys for the redemption having been deposited with the Disbursing Agent, from and after the date fixed for redemption interest on this bond (or such portion) will no longer accrue.

 

This bond is transferable by the REGISTERED OWNER, subject to the provisions of the Agreement, in person or by its attorney duly authorized in writing, at the office of the Disbursing Agent set forth above, upon surrender of this bond to the Disbursing Agent for cancellation. Upon the transfer, a new bond or bonds of the same aggregate principal amount will be issued to the transferee at the same office. No transfer will be effective unless represented by such surrender and reissue. This bond may also be exchanged at the office of the Disbursing Agent for a new bond or bonds of the same aggregate principal amount without transfer to a new registered owner. Exchanges and transfers will be without expense to the holder except for applicable taxes or other governmental charges, if any. The Disbursing Agent will not be required to make an exchange or transfer of this bond during the thirty (30) days preceding (i) any date fixed for redemption if this bond (or any part thereof) is eligible to be selected or has been selected for the redemption and (ii) the MATURITY DATE.

 

The Bonds are issuable only in fully registered form in the minimum denomination of One Hundred Thousand Dollars ($100,000).

 

The Agency, the Disbursing Agent and the Borrower may treat the REGISTERED OWNER as the absolute owner of this bond for all purposes, notwithstanding any notice to the contrary.

 

Neither the members of the Agency nor any Person executing this bond are liable personally hereon or subject to any personal liability or accountability by reason of the issuance hereof.

 

  

4

  

 

Upon the terms and conditions set forth in the Agreement, this bond is subject to mandatory tender by the REGISTERED OWNER on the Purchase Date at a price (the “Purchase Price”) equal to one hundred percent (100%) of the principal amount Outstanding, plus accrued interest, if any, to the Purchase Date, unless the REGISTERED OWNER shall give the Agency, the Disbursing Agent and the Borrower notice of its election to retain this bond by delivery to the Borrower, with a copy to the Agency and the Disbursing Agent, of a written notice substantially in the form of the Bondowner’s Non-Tender Election Notice set forth herein, not less than thirty (30) days prior to the Purchase Date. Upon receipt of the copy of the Bondowner’s Non-Tender Election Notice, the Disbursing Agent shall give notice to any other Bondowner of the receipt of such Bondowner’s Non-Tender Election Notice not less than fifteen (15) days prior to the Purchase Date. In the event there is more than one Bondowner and the registered owners of Bonds representing more than fifty percent (50%) of the principal amount of Bonds then Outstanding elect not to tender their Bonds for purchase, each Bondowner shall be deemed to have agreed irrevocably to retain their Bonds and that the Bonds shall not be subject to mandatory tender on the applicable Purchase Date. If the Borrower does not receive at least thirty (30) days prior to a Purchase Date Bondowner’s Non-Tender Election Notices from Bondowners representing more than fifty percent (50%) of the principal amount of Bonds then Outstanding, then the Bonds will be subject to mandatory tender and purchased on the applicable Purchase Date. THE OWNER OF THIS BOND, BY ACCEPTANCE HEREOF, AGREES TO SELL AND SURRENDER THIS BOND AT THE PURCHASE PRICE TO ANY PURCHASER DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT IN THE EVENT OF A MANDATORY TENDER AND, ON THE PURCHASE DATE, TO SURRENDER THIS BOND TO THE AGENCY FOR PAYMENT OF THE PURCHASE PRICE. The Purchase Price of this bond shall be paid to the REGISTERED OWNER by the Borrower on the Delivery Date, which shall be the Purchase Date or any subsequent Business Day on which this bond is delivered to the Agency for cancellation, with a copy to the Borrower. The Purchase Price of this bond shall be paid only upon surrender of this bond to the Agency as provided herein. From and after the Purchase Date, no further interest on this bond shall be payable to the REGISTERED OWNER, provided that there are sufficient funds available on the Purchase Date to pay the Purchase Price. Payment of the Purchase Price of this bond to the REGISTERED OWNER shall be made by the Borrower on the Purchase Date, if presentation and surrender of this bond to the Agency, with a copy to the Borrower, is made prior to 10:00 a.m. Boston, Massachusetts time on the Purchase Date, or on such later Business Day upon which presentation and surrender of this bond to the Agency, with a copy to the Borrower, is made prior to 10:00 a.m. Boston, Massachusetts time.

 

This bond will not be valid until the Certificate of Disbursing Agent has been signed by the Disbursing Agent.

 

	 	MASSACHUSETTS DEVELOPMENT FINANCE AGENCY (SEAL)	 
	 	 	 	 
	
 

	
By: 

	/s/ Steven Chilton

 

CERTIFICATE OF DISBURSING AGENT

 

This bond is one of the Bonds described in the Agreement.

 

	 	SOVEREIGN BANK, as Disbursing Agent	 
	 	 	 	 
	
 

	
By: 

	/s/ Edward S. Borden
	 	 	Authorized Signature	 

 

  

5

  

 

ASSIGNMENT

 

For value received the undersigned sells, assigns and transfers this bond to

 

	 
	
(Name and Address of Assignee)

	  
	  
	  
	
Social Security or Other Identifying Number of Assignee

 

and irrevocably appoints _________________ attorney-in-fact to transfer it on the books kept for registration of the bond, with full power of substitution.

 

	 	 	 	 
	
 

	
 

	 	NOTE: The signature to this assignment must correspond with the name as written on the face of the bond without alteration or enlargement or other change.
	  	 	 	 
	Dated:	 	 
	 	 	 	 
	Signature Guaranteed:	 	 
	 	 	 	 
	 	 	 	 
	
Participant in a Recognized

Signature Guarantee Medallion

Program

	 	 
	 	 	 	 
	By:	 	 	 
	 	Authorized Signature	 	 

 

  

6

  

 

SCHEDULE 1

 

Schedule of Principal Payments

 

	
Payment Date

	
Principal Payment

	
l-Feb-2011

	
$17,708.33

	
l-Mar-2011

	
17,708.33

	
l-Apr-2011

	
17,708.33

	
l-May-2011

	
17,708.33

	
l-Jun-2011

	
17,708.33

	
l-Jul-2011

	
17,708.33

	
l-Aug-2011

	
17,708.33

	
l-Sep-2011

	
17,708.33

	
l-Oct-2011

	
17,708.33

	
l-Nov-2011

	
17,708.33

	
l-Dec-2011

	
17,708.33

	
l-Jan-2012

	
17,708.33

	
l-Feb-2012

	
17,708.33

	
l-Mar-2012

	
17,708.33

	
l-Apr-2012

	
17,708.33

	
l-May-2012

	
17,708.33

	
l-Jun-2012

	
17,708.33

	
l-Jul-2012

	
17,708.33

	
l-Aug-2012

	
17,708.33

	
l-Sep-2012

	
17,708.33

	
l-Oct-2012

	
17,708.33

	
l-Nov-2012

	
17,708.33

	
l-Dec-2012

	
17,708.33

	
l-Jan-2013

	
17,708.33

	
l-Feb-2013

	
17,708.33

	
l-Mar-2013

	
17,708.33

	
l-Apr-2013

	
17,708.33

	
l-May-2013

	
17,708.33

	
l-Jun-2013

	
17,708.33

	
l-Jul-2013

	
17,708.33

	
l-Aug-2013

	
17,708.33

	
l-Sep-2013

	
17,708.33

	
l-Oct-2013

	
17,708.33

	
l-Nov-2013

	
17,708.33

	
l-Dec-2013

	
17,708.33

	
l-Jan-2014

	
17,708.33

	
l-Feb-2014

	
17,708.33

	
l-Mar-2014

	
17,708.33

	
l-Apr-2014

	
17,708.33

	
l-May-2014

	
17,708.33

	
l-Jun-2014

	
17,708.33

	
l-Jul-2014

	
17,708.33

 

  

7

  

 

	
l-Aug-2014

	
17,708.33

	
l-Sep-2014

	
17,708.33

	
l-Oct-2014

	
17,708.33

	
l-Nov-2014

	
17,708.33

	
l-Dec-2014

	
17,708.33

	
l-Jan-2015

	
17,708.33

	
l-Feb-2015

	
17,708.33

	
l-Mar-2015

	
17,708.33

	
l-Apr-2015

	
17,708.33

	
l-May-2015

	
17,708.33

	
l-Jun-2015

	
17,708.33

	
l-Jul-2015

	
17,708.33

	
l-Aug-2015

	
17,708.33

	
l-Sep-2015

	
17,708.33

	
l-Oct-2015

	
17,708.33

	
l-Nov-2015

	
17,708.33

	
l-Dec-2015

	
17,708.33

	
l-Jan-2016

	
17,708.33

	
l-Feb-2016

	
17,708.33

	
l-Mar-2016

	
17,708.33

	
l-Apr-2016

	
17,708.33

	
l-May-2016

	
17,708.33

	
l-Jun-2016

	
17,708.33

	
l-Jul-2016

	
17,708.33

	
l-Aug-2016

	
17,708.33

	
l-Sep-2016

	
17,708.33

	
l-Oct-2016

	
17,708.33

	
l-Nov-2016

	
17,708.33

	
l-Dec-2016

	
17,708.33

	
l-Jan-2017

	
17,708.33

	
l-Feb-2017

	
17,708.33

	
l-Mar-2017

	
17,708.33

	
l-Apr-2017

	
17,708.33

	
l-May-2017

	
17,708.33

	
l-Jun-2017

	
17,708.33

	
l-Jul-2017

	
17,708.33

	
l-Aug-2017

	
17,708.33

	
l-Sep-2017

	
17,708.33

	
l-Oct-2017

	
17,708.33

	
l-Nov-2017

	
17,708.33

	
l-Dec-2017

	
17,708.33

	
l-Jan-2018

	
17,708.33

	
l-Feb-2018

	
17,708.33

	
l-Mar-2018

	
17,708.33

	
l-Apr-2018

	
17,708.33

	
l-May-2018

	
17,708.33

 

  

8

  

 

	
l-Jun-2018

	
17,708.33

	
l-M-2018

	
17,708.33

	
l-Aug-2018

	
17,708.33

	
l-Sep-2018

	
17,708.33

	
l-Oct-2018

	
17,708.33

	
l-Nov-2018

	
17,708.33

	
l-Dec-2018

	
17,708.33

	
l-Jan-2019

	
17,708.33

	
l-Feb-2019

	
17,708.33

	
l-Mar-2019

	
17,708.33

	
l-Apr-2019

	
17,708.33

	
l-May-2019

	
17,708.33

	
l-Jun-2019

	
17,708.33

	
l-Jul-2019

	
17,708.33

	
l-Aug-2019

	
17,708.33

	
l-Sep-2019

	
17,708.33

	
l-Oct-2019

	
17,708.33

	
l-Nov-2019

	
17,708.33

	
l-Dec-2019

	
17,708.33

	
l-Jan-2020

	
17,708.33

	
l-Feb-2020

	
17,708.33

	
l-Mar-2020

	
17,708.33

	
l-Apr-2020

	
17,708.33

	
l-May-2020

	
17,708.33

	
l-Jun-2020

	
17,708.33

	
l-Jul-2020

	
17,708.33

	
l-Aug-2020

	
17,708.33

	
l-Sep-2020

	
17,708.33

	
l-Oct-2020

	
17,708.33

	
l-Nov-2020

	
17,708.33

	
l-Dec-2020

	
17,708.33

	
l-Jan-2021

	
17,708.33

	  	
$2,142,708.73

  

9

  

NON-TENDER ELECTION NOTICE

 

Massachusetts Development Finance Agency

Revenue Bonds

Ranor Issue, Series 2010A

 

Principal Amount                                Bond Numbers                                Purchase Date

 

The undersigned hereby certifies that it is the registered owner of the Bonds described above (the “Non-Tendered Bonds”), and hereby agrees that the delivery of this instrument to the Agency, the Disbursing Agent and the Borrower constitutes an irrevocable election to retain the Non-Tendered Bonds and not to sell the Non-Tendered Bonds to the Borrower or its designee on the Purchase Date; provided, however, that the undersigned acknowledges and agrees that if there is more than one Bondowner, then the Non-Tendered Bonds nonetheless shall be subject to purchase by the Borrower or its designee on the Purchase Date unless the Owners of more than fifty percent (50%) of the principal amount of the Outstanding Bonds elect not to tender their Bonds for purchase on the next Purchase Date. The undersigned further acknowledges and agrees that, subject to the foregoing provision and subject to all other rights of the undersigned contained in the Bonds, this election notice is irrevocable.

 

Except as otherwise indicated herein and unless the context otherwise requires, the terms used herein shall have the meanings set forth in the Mortgage, Loan and Security Agreement, dated as of December 1, 2010, providing for the issuance of the Bonds.

	 	 	 	 
	
Date:

	
 

	Signature(s)	 
	  	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	Street           City           State           Zip	 

IMPORTANT: The above signature(s) must correspond with the name(s) as set forth on the face of the Non-Tendered Bond(s) with respect to which this Bondowner’s Non-Tender Election Notice is being delivered without any change whatsoever. If this notice is signed by a person other than the registered owner of any Non-Tendered Bond(s), the Non-Tendered Bond(s) must be either endorsed on the Assignment appearing on each Bond or accompanied by appropriate bond powers, in each case signed exactly as the name or names of the registered owner or owners appear on the bond register. The method of presenting this notice to the Agency, the Disbursing Agent and the Borrower is the choice of the person making such presentation. If it is made by mail, it should be by registered mail with return receipt requested.

 

  

10

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