Document:

exh10_1.htm

    

      
        
           

        

        
           

          
            

          

        

        
           

          
            CONFIDENTIAL
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      Exhibit
10.1

      

      SETTLEMENT AND LICENSE
AGREEMENT

       

      This Settlement and License Agreement
(the “Agreement”) is entered into by LML Patent Corp., (“LML”) and The Royal
Bank of Scotland plc. (“RBS”).  LML and RBS are individually referred
to as “Party” and collectively as the “Parties.”  This Agreement is
effective as of the 29th day
of December, 2009 (“Effective Date”).

      

      RECITALS

      

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

      

      WHEREAS, LML began an action
against RBS 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 2-09-CV-180-TJW (“Litigation II”) (collectively, the “Lawsuits”), alleging
infringement of LML’s U.S. Patent No. RE40,220; and

      

      WHEREAS, the Parties have
reached a settlement of their dispute, and RBS desires to license LML’s
patents;

      

      NOW, THEREFORE, in
consideration of the 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
electronic payment network regulated by the National Automated Clearing House
Association (“NACHA”).

      

      (b)           “ACH
File” means the electronic transaction that results from ECC and includes NACHA
standard entry class codes ARC, WEB, POP, TEL, and BOC.

      

      (c)           
“Affiliate” means any person or 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 ownership of fifty percent (50%) or more
of the capital stock or other ownership interest of the person or entity
carrying the right to vote for or appoint directors or their equivalent (if not
a corporation).

      

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

      
        
          
            

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      (e)           “Customer”
means any person or entity that purchases or receives Licensed Products and
Services directly from Licensee.  Specifically excluded from this
definition are (1) Defendants, (2) banks, banking institutions and payment
processing companies, and (3) any person or entity that purchases or receives
Licensed Products and Services directly from Licensee on behalf of a bank,
banking institution, or payment processing company.

      

      (f)           “Defendant”
means any defendant named in the Lawsuits and any Affiliate of such
defendant.

      

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

      

      (h)           “Licensed
Products and Services” means products or services of RBS that create, process,
or transmit ACH Files that RBS originates, receives from Third Party Converters
and/or receives or generates on behalf of Customers, and that practice one or
more claims of the LML Patents.

      

      (i)           “Licensee”
means RBS and its Affiliates as of the Effective Date.

      

      (j)           “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 application to which any of the foregoing patents
and/or patent applications claims priority, and (iv) any continuations,
continuations in part, reissues, reexamination certificates, and/or divisional
applications of the foregoing patents and/or patent applications described
above.

      

       (k)           “Third
Party Converter” means any person or entity that creates or processes ACH Files
on behalf of RBS and transmits those ACH Files to RBS for the purpose of further
transmission to the ACH Network (as part of an ACH pass-through transaction)
using the Licensed Products and Services.  Specifically excluded from
this definition are (1) Defendants, (2) banks and banking institutions, and (3)
any person or entity that creates or processes ACH Files on behalf of any bank
or banking institution other than RBS, and that transmits those ACH Files to RBS
for the purpose of further transmission to the ACH Network (as part of an ACH
pass-through transaction) using the Licensed Products and Services.

      

      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 in Litigation I within five (5) days after the
receipt of payment specified in Section 3.1.

      

      2.2             No Award of Fees or
Costs.  The Parties agree that they shall bear their own costs
and attorneys' fees relating to Litigation I.

      
        
          
            

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

      

      3.           PAYMENT
AND TERMINATION

      

      3.1           Payment by
Licensee.  Licensee agrees to pay to LML the sum of one million
one hundred fifty thousand U.S. dollars ($1,150,000.00) within ten (10) business
days following the Effective Date.  The amount will be delivered to
LML’s counsel, McKool Smith P.C., via wire transfer to the following
account:

      

      Bank:
Inwood National Bank

      Address:
7621 Inwood Road, Dallas, TX 75209

      Acct#
[******]

      ABA#
[******]

      Account
Name:  McKool Smith IOLTA Trust Account

      

      3.2           Termination Due to Non-Payment by
Licensee.  If Licensee fails to make the payment specified in
Section 3.1 above in the time specified, that failure will constitute a material
breach of this Agreement.  LML may then, after five business (5) days
following written notice of such breach to Licensee, at its option, either
terminate the Agreement or it may petition the Court for specific enforcement of
Licensee’s payment obligations.  Licensee hereby consents to the
jurisdiction of the Court for enforcement of the payment obligations in Section
3.1, and agrees that specific enforcement of the payment obligations of this
Agreement is an available remedy.

      

      3.3           Tax Liability. Each Party
shall bear its own tax liability hereunder.

      

      3.4           Additional
Payments.  The payment of the amount set forth in Section 3.1
shall be the total compensation to LML and any other LML Affiliates by Licensee
for all releases, licenses, covenants and all other rights granted in this
Agreement, and no additional payment shall be due or made to LML or any other
person by Licensee with respect to the releases, licenses, covenants and all
other rights granted in this Agreement.

      

      3.5           Payment Transaction Forms. LML
agrees that, as a condition to receiving payment as set forth herein, it shall
complete RBS’ standard W-9 form and ACH transmittal form.

      

      ***This
confidential portion has been omitted and filed separately with the Securities
and Exchange Commission 

      
        
          
            

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      4.           RELEASES
AND COVENANT NOT TO SUE

      

      4.1           LML’s
Release.  Except for the obligations of Licensee under this
Agreement and conditioned upon LML’s receipt of payment from Licensee as
specified under this Agreement, LML forever releases Licensee from any claims or
causes of action for patent infringement, whether known or unknown, that as of
the Effective Date, LML asserted or could have asserted.

      4.2.           Licensee’s Release.  Except for
the obligations of LML under this Agreement, Licensee forever releases LML and
its Affiliates from any claims or causes of action for patent infringement,
whether known or unknown, that as of the Effective Date, Licensee asserted or
could have asserted.

      

      4.3           Covenant-Not-To-Sue.  The
Parties and their Affiliates covenant not to file suit against each other for
infringement of any patents they own that are currently issued or that may
hereafter issue on applications currently owned, or patents that they
subsequently acquire that are not otherwise licensed under this
Agreement.  This covenant-not-to-sue will expire seven (7) years
following the Effective Date of this Agreement.

      

      5.           GRANT OF LICENSE. LML hereby
grants to Licensee a fully paid-up, irrevocable, non-exclusive,
non-sublicensable, non-transferable license under the LML Patents to make, use,
sell, offer for sale, import, and export the Licensed Products and
Services.  In addition, this grant of license applies to: (i)
Customers, but only to the extent that such Customers purchase or receive
Licensed Products and Services directly from the Licensee, and (ii) Third Party
Converters, but only to the extent that such Third Party Converters create or
process ACH Files directly for the Licensee and transmit those ACH Files to the
Licensee for the purpose of further transmission to the ACH Network (as part of
an ACH pass-through transaction) using the Licensed Products and
Services.  For the avoidance of doubt, this grant of license does not
apply to (i) any ACH Files purchased or received by a Customer from any person
or entity other than Licensee, or (ii) any ACH Files created or processed by a
Third Party Converter for any person or entity other than
Licensee.   Except as expressly provided herein, nothing in the
Agreement is intended to grant any rights or license, express or implied, to
Licensee or exhaust any patent rights of LML with respect to the LML
Patents.

      

      6.           CHANGE
IN CONTROL/ACQUISITIONS

      

      6.1           Acquisitions by
Licensee.  In the event Licensee acquires an entity after the
Effective Date of this Agreement, such entity will not gain the benefit of the
license grant, covenant-not-to-sue, or releases in the Agreement.  LML
agrees to negotiate in good faith with the acquired entity to license, under the
LML Patents, any ACH Files created, processed, or transmitted by the acquired
entity based on a presumptive royalty rate of $[***] U.S. dollars per ARC
SEC-coded ECC transaction and $[***] U.S. dollars per POP, BOC, WEB, or TEL
SEC-coded ECC transaction.

      

      ***This
confidential portion has been omitted and filed separately with the Securities
and Exchange Commission 

      
        
          
            

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      6.2           Mergers Between Licensee and Another
Entity.

      

      (i)           In
the event Licensee merges with another entity that is not otherwise licensed
under the LML Patents and the number of ACH Files created, processed, or
transmitted by the merged entity each month after the date of the merger does
not exceed [***]% of Licensee’s average monthly transaction volumes for Licensed
Products and Services (based on the 12 months preceding the date of the merger
(hereinafter, “Conditional Merger Volume Limit”), then the license grant,
covenant not to sue, and releases in this Agreement will continue to apply but
only with respect to: (a) the Licensed Products and Services that existed prior
to the date of the merger, and (b) the ACH Files created, processed or
transmitted by the merged entity each month after the date of the merger up to
the Conditional Merger Volume Limit.

      

      (ii)           In
the event Licensee merges with another entity that is not otherwise licensed
under the LML Patents and the number of ACH Files created, processed, or
transmitted by the merged entity in any given month after the date of the merger
exceeds the Conditional Merger Volume Limit (as defined above), then the
provisions of Section 6.2(i) shall immediately terminate, and the license grant,
covenant not to sue, and releases in this Agreement will continue to apply but
only with respect to: (a) the Licensed Products and Services that existed prior
to the date of the merger, and (b) the ACH Files created, processed or
transmitted by the merged entity each month after the date of the merger up to
[***]% of the Licensee’s average monthly transaction volumes for Licensed
Products and Services (based on the 12 months preceding the date of the merger)
(hereinafter, “Adjusted Merger Volume Limit”).  LML agrees to
negotiate in good faith with the merged entity to license, under the LML
Patents, any ACH Files created, processed, or transmitted by the merged entity
in excess of the Adjusted Merger Volume Limit based on a presumptive royalty
rate of $[***] U.S. dollars per ARC SEC-coded ECC transaction and $[***] U.S.
dollars per POP, BOC, WEB, or TEL SEC-coded ECC transaction.

      

      6.3           Acquisitions of
Licensee.

      

      (i)           In
the event of an acquisition of Licensee by an entity that is not otherwise
licensed under the LML Patents and in which Licensee continues to exist as a
legal entity and the number of ACH Files created, processed, or transmitted by
the acquiring entity each month after the date of the acquisition does not
exceed [***]% of Licensee’s average monthly transaction volumes for Licensed
Products and Services (based on the 12 months preceding the date of the
acquisition (hereinafter, “Conditional Acquisition Volume Limit”), then the
license grant, covenant not to sue, and releases in this Agreement will continue
to apply but only with respect to: (a) the Licensed Products and Services that
existed prior to the date of the acquisition, and (b) the ACH Files created,
processed or transmitted by the acquiring entity each month after the date of
the acquisition up to the Conditional Acquisition Volume Limit.

      

      ***This
confidential portion has been omitted and filed separately with the Securities
and Exchange Commission 

      
        
          
            

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      (ii)           In
the event of an acquisition of Licensee by an entity that is not otherwise
licensed under the LML Patents and in which Licensee continues to exist as a
legal entity and the number of ACH Files created, processed, or transmitted by
the acquiring entity each month after the date of the acquisition exceeds the
Conditional Acquisition Volume Limit (as defined above), then the provisions of
Section 6.3(i) shall immediately terminate, and the license grant, covenant not
to sue, and releases in this Agreement will continue to apply but only with
respect to: (a) the Licensed Products and Services that existed prior to the
date of the acquisition, and (b) the ACH Files created, processed or transmitted
by the acquiring entity each month after the date of the acquisition up to
[***]% of the Licensee’s average monthly transaction volumes for Licensed
Products and Services (based on the 12 months preceding the date of the
acquisition) (hereinafter, “Adjusted Acquisition Volume Limit”).  LML
agrees to negotiate in good faith with the acquiring entity to license, under
the LML Patents, any ACH Files created, processed, or transmitted by the
acquiring entity in excess of the Adjusted Acquisition Volume Limit based on a
presumptive royalty rate of $[***] U.S. dollars per ARC SEC-coded ECC
transaction and $[***] U.S. dollars per POP, BOC, WEB, or TEL SEC-coded ECC
transaction.

      

          6.4           Purchase of Assets of
Licensee.

      

      (i)           In
the event of a sale of the assets of Licensee that includes the business line
that provides the Licensed Products and Services to an entity that is not
otherwise licensed under the LML Patents and in which the number of ACH Files
created, processed, or transmitted by the purchasing entity each month after the
date of the purchase does not exceed [***]% of Licensee’s average monthly
transaction volumes for Licensed Products and Services (based on the 12 months
preceding the date of the purchase (hereinafter, “Conditional Purchase Volume
Limit”), then the license grant, covenant not to sue, and releases in this
Agreement will continue to apply but only with respect to: (a) the Licensed
Products and Services that existed prior to the date of the purchase, and (b)
the ACH Files created, processed or transmitted by the purchasing entity each
month after the date of the purchase up to the Conditional Purchase Volume
Limit.

      

      (ii)           In
the event of a sale of the assets of Licensee that includes the business line
that provides the Licensed Products and Services to an entity that is not
otherwise licensed under the LML Patents and in which the number of ACH Files
created, processed, or transmitted by the purchasing entity each month after the
date of the purchase exceeds the Conditional Purchase Volume Limit (as defined
above), then the provisions of Section 6.4(i) shall immediately terminate, and
the license grant, covenant not to sue, and releases in this Agreement will
continue to apply but only with respect to: (a) the Licensed Products and
Services that existed prior to the date of the purchase, and (b) the ACH Files
created, processed or transmitted by the purchasing entity each month after the
date of the purchase up to [***]% of the Licensee’s average monthly transaction
volumes for Licensed Products and Services (based on the 12 months preceding the
date of the purchase) (hereinafter, “Adjusted Purchase Volume
Limit”).

      

      ***This
confidential portion has been omitted and filed separately with the Securities
and Exchange Commission 

      
        
          
            

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      LML
agrees to negotiate in good faith with the purchasing entity to license, under
the LML Patents, any ACH Files created, processed, or transmitted by the
purchasing entity in excess of the Adjusted Purchase Volume Limit based on a
presumptive royalty rate of $[***] U.S. dollars per ARC SEC-coded ECC
transaction and $[***] U.S. dollars per POP, BOC, WEB, or TEL SEC-coded ECC
transaction.

      

          6.5           Termination of Payments Due Pursuant
to Section 6.  With respect to any good faith negotiations
undertaken pursuant to Sections 6.1 - 6.4 above, LML agrees that no royalty will
be due under the LML Patents for any ACH Files created, processed, or
transmitted by the Licensee or by any acquired entity, merged entity, acquiring
entity, or purchasing entity (as described above) after the expiration date of
the last to expire of the LML Patents.

      

      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) to third parties with a need for access pursuant to the order or requirement
of a court, administrative or regulatory agency, or other governmental body,
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; (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; (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 parties in the Lawsuits as part of disclosure
obligations under the Court's Protective Order, (vi) upon the express written
consent of the other Party; or (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.

      

      8.           REPRESENTATIONS
AND WARRANTIES

      

      8.1           Licensee Representations and
Warranties. Licensee represents and warrants to LML that (a) it has all
requisite legal right, power and authority to execute, deliver and perform this
Agreement; and (b) it has the right to enter into this settlement and grant the
releases, covenants not to sue and all other rights provided for under this
Agreement without any payment to any other person or third Party.

      

       

      ***This
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      8.2           Licensor Representations and
Warranties. As a condition precedent to Licensee entering into this
Agreement, LML represents and warrants to Licensee that as of the Effective Date
(a) it has all requisite legal right, power and authority to execute, deliver
and perform this Agreement; (b) it has the right to enter into this Agreement
and grant the licenses and covenants not to sue and all other rights provided
for under this Agreement without any payment to any other person or third party;
(c) it owns the LML Patents, and that no other person or third party owns any
right to recover any amounts in connection with the LML Patents; (d) it has not
granted and shall not grant any licenses or other rights, under the LML Patents
or otherwise, that would conflict with or prevent the licenses and rights
granted to Licensee hereunder; and (e) 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.

      

      9.    GENERAL
PROVISIONS

      

      9.1           Assignment.  This
Agreement may not be assigned by either Party without the prior written consent
of the other Party in its sole discretion.  This Agreement shall inure
to the benefit of, and shall bind, the respective heirs, executors,
administrators, other legal representatives, successors and permitted assigns of
the Parties hereto.

      

      9.2           Entire
Agreement.  This Agreement and the License Agreement constitute
the entire agreement between the Parties hereto with respect to the subject
matter hereof and thereof and cancels and supersedes any prior understandings
and agreements between the Parties hereto with respect thereto. 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.

      Suite
1680

      1140 West
Pender St.

      Vancouver,
BC  V6E 4GI

      

      If to
Licensee:

      

      RBS
Citizens, N.A.

      One
Citizens Plaza

      Providence,
Rhode Island 02903

      Mail Code
RDC 360

      Attention:
Hollie Lussier

      

      
        
          
          

        

        
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      and will
be deemed sufficiently given if delivered by hand or sent by certified mail
(return receipt requested), courier, or facsimile (provided that the receiver
acknowledges receipt of the facsimile) 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. Any such notices, requests, demands or other communications will be
deemed to be delivered when received by the Party to whom they were
addressed.

      

      9.4           Governing Law.  This
Agreement is governed by and will be construed in accordance with the laws of
the State of New York 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           Arbitration.  All
claims, disputes, or other differences between the Parties relating to or
arising under this Agreement shall be exclusively resolved by binding
arbitration pursuant to the Federal Arbitration Act and the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”), with
arbitration to occur at a location to be determined by the three (3)
arbitrators.  The arbitration shall be before three (3)
arbitrators.  Each Party shall be entitled to select one (1)
arbitrator, each of whom shall be an attorney with subject matter expertise in
patent law and technology related to methods of electronically transferring
funds, and the selected arbitrators shall together choose the third arbitrator,
who shall also have the same required subject matter expertise.  The
arbitration proceedings and the documents, materials and testimony provided
thereunder shall be kept confidential and the Parties and the arbitrators shall
be required to execute a confidentiality agreement as necessary to protect the
confidentiality of such documents, materials and testimony.  Each
Party shall bear its own attorneys’ fees and costs in connection with the
arbitration, including the costs of the AAA and the arbitrators, which shall be
equally divided.  The majority award of the arbitrators shall be final
and binding on the Parties, and their successors and assigns.  Each
Party and its successors and assigns agrees to abide by any such award rendered
in the arbitration, hereby consents to the jurisdiction of the Court for
enforcement of any such award, and agrees that specific enforcement of any
payment obligations pursuant to such an award is an available
remedy.

      

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

      

      9.7           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.

      

      9.8           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.

       

       

      
        
          
          

        

        
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      CONFIDENTIAL TREATMENT

      
 

      9.9           Relationship of the
Parties.  This Agreement does not constitute and shall not be
construed as constituting a partnership or joint venture between LML and
Licensee, and neither Party shall have any right to obligate or bind the other
Party in any manner whatsoever, and nothing herein contained shall give or is
intended to give any rights of any kind to any third persons, except as
expressly provided herein.

      

      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 invalid,
unenforceable or void by a final, non-appealable judgment of a court of
competent jurisdiction, the remainder of the Agreement shall be interpreted to
the extent possible to effect the overall intention of the Parties as of the
Effective Date of this Agreement.

      

      9.12           Waiver of Section 1542 of the
California Civil Code.  The Parties to this Agreement hereby
expressly waive the provisions of Section 1542 of the California Civil Code,
which states as follows:  “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.”

      

      9.13           Counterparts. This Agreement
may be executed in two or more counterparts, each of which shall be considered
one and the same document.

       

       

      
        
          
          

        

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

      

      LML
PATENT CORPORATION

      

      By:  /s/ Patrick H.
Gaines                                                                

      

      Print
Name:  Patrick H. Gaines

      

      Title:  President

      

      Dated:  December
29, 2009

      

      

      THE
ROYAL BANK OF SCOTLAND PLC.

      

      By:  /s/ Denise M.
Menelly                                                                           

      

      Print
Name:  Denise M. Menelly

      

      Title:  Executive
Vice-President, COO Americas

      

      Dated:  December
29, 2009

      

      

      

      
        
          
            

            MHDocs 2501314_2
980074.1

          

           

        

        
          -11-f8k020810ex10i_cinnebar.htm

    Exhibit 10.1

     

    
       

      AGREEMENT
FOR CHAIRMAN OF BOARD OF DIRECTORS

      
        
          

        

      

       

      This
Agreement for Chairman of Board of Directors (the "Agreement") is effective
[DATE],

       

      
        	
                BETWEEN:

              	
                Cinnabar
      Ventures, Inc. (the
      "Company"), a company organized and existing under the laws
      of Nevada, with its head office located
  at:

              
	 	 
	 
      	
                17595
      S Tamiami Trail, Suite 300

                Fort
      Myers, FL 33908

              
	 	 
	
                AND:

              	
                Linda
      Starr (the
      "Director"), an individual located at:

              
	 	 
	 
      	
                4415
      Lago Viento

                Austin,
      TX 78734

              

      

       

      THIS
AGREEMENT is made and entered into effective as of February 7, 2010 (the
"Effective Date"), by and between Cinnabar Ventures, Inc. a Nevada corporation,
("Company") and Linda Starr, an individual ("Director").

       

      1.
`    TERM

       

      
        	
                a)  

              	
                This
      Agreement shall continue for a period of three years from the Effective
      Date and shall continue thereafter for as long as Director is elected as
      Chairman of the Board of Directors ("Chairman") of
  Company.

              

      

       

      
        	
                b)  

              	
                Notwithstanding
      the foregoing and provided that Director has neither voluntarily resigned
      nor been terminated for "cause", Company agrees to use its best efforts to
      reelect Director to the Board for a period of two years at the 2013 Annual
      Meeting of the Shareholders.

              

      

       

      2.     POSITION AND
RESPONSIBILITIES

       

      
        	
                a)  

              	
                Position.
      Company hereby retains Director to serve as Chairman of the Board of
      Directors. Director shall perform such duties and responsibilities as are
      normally related to such position in accordance with Company's bylaws and
      applicable law, including those services described on Exhibit A, (the
      "Services"), and Director hereby agrees to use his best efforts to provide
      the Services. Director shall comply with the statutes, rules, regulations
      and orders of any governmental or quasi-governmental authority, which are
      applicable to the performance of the Services, and Company's rules,
      regulations, and practices as they may from time-to-time be adopted or
      modified.

              

      

       

      
        	
                b)  

              	
                Other
      Activities. Director may be employed by another company, may serve on
      other Boards of Directors or Advisory Boards, and may engage in any other
      business activity (whether or not pursued for pecuniary advantage), as
      long as such outside activities do not violate Director's obligations
      under this Agreement or Director's fiduciary obligations to the
      shareholders, except as set forth in Exhibit B. The ownership of less than
      a 6 % interest in an entity, by itself, shall not constitute a violation
      of this duty.

              

      

       

      
        	
                c)  

              	
                Except
      as set forth in Exhibit B, Director represents that, to the best of his
      knowledge, Director has no outstanding agreement or obligation that is in
      conflict with any of the provisions of this Agreement, and Director agrees
      to use his best efforts to avoid or minimize any such conflict and agrees
      not to enter into any agreement or obligation that could create such a
      conflict, without the approval of the Chief Executive Officer or a
      majority of the Board of Directors.

              

      

       

       

      
      

       

        
          

        

      

      
        	Agreement For
      Chairman Of Board Of Directors 	 Page 1 of
      8

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
         

        
          	
                  d)  

                	
                  If,
      at any time, Director is required to make any disclosure or take any
      action that may conflict with any of the provisions of this Agreement,
      Director will promptly notify the Chief Executive Officer or the Board of
      such obligation, prior to making such disclosure or taking such
      action.

                

        

         

      

      3.     COMPENSATION
AND BENEFITS

       

      
        	
                a)  

              	
                Director's
      Fee. In consideration of the services to be rendered under this Agreement,
      Company shall pay Director a fee at the rate of $120,000 per year, which
      shall be paid monthly, in advance, at a rate of $10,000 per
      month.

              

      

       

      
        	
                b)  

              	
                Stock
      and Stock Options. Company acknowledges that Director is an owner of both
      Common and Preferred Stock and holds an option to purchase stock in
      Company, and that the rights attributable to these securities (the
      "Securities") shall not be affected by the execution of this Agreement. In
      addition, in consideration of the services to be rendered under this
      Agreement, Company agrees to grant Director the following 500,000 stock
      options subject to the approval of the Board of Directors (the "Options"):
      (1) an option to purchase 500,000 shares of Company's Stock at an exercise
      price of $0.01 per share, which shall be fully vested on the Effective
      Date.

              

      

       

      
        	
                c)  

              	
                In
      the event (i) of a merger, change in control or sale of Company or (ii)
      Director either is terminated as a board member or is not reelected, where
      the Director has not engaged in conduct during his tenure on the board
      which would constitute "cause" for such termination, as determined by a
      majority vote of the disinterested board members, any additional shares
      granted which are unvested shall immediately become fully
      vested.

              

      

       

      
        	
                d)  

              	
                Termination
      for Cause. Company shall have the right to terminate this Agreement and
      Executive's employment hereunder for cause upon written notice to
      Executive. The term "cause" shall mean Executive must have (i) been
      willful, gross or persistent in Executive's inattention to Executive's
      duties or Executive committed acts which constitute willful or gross
      misconduct and, after written notice of the same has been given to
      Executive and he has been given an opportunity to cure the same within
      thirty (30) days after such notice; or (ii) committed fraud against the
      Company. If Executive's employment is terminated for cause, as defined
      above, and Executive does not consent to such termination, the existence
      of such cause shall be determined by an independent arbitrator appointed
      by the American Arbitration Association. In connection with the
      appointment of an arbitrator, both parties agree to submit the question to
      final and binding arbitration by an appointee of the American Arbitration
      Association and to cooperate with the arbitrator, with all costs of
      arbitration paid by the Company.

              

      

       

      
        	
                e)  

              	
                The
      removal of Director as Chairman, by itself, shall not affect the vesting
      schedule. The Options shall be subject to the terms and conditions of
      Company's standard Stock Option Agreement, as modified by this Agreement.
      During the term of this Agreement, Director may be granted additional
      stock options or other equity rights, as determined by Company's
      Compensation Committee, in its sole
discretion.

              

      

       

      
        	
                f)  

              	
                Benefits.
      Company will provide Director and their household with medical, dental,
      eye-care, disability and life insurance benefits in accordance with the
      benefit plans established by Company for its senior executives (as may be
      amended from time to time in Company's sole discretion) to the extent
      allowed under the terms of such plans and will pay all premiums for
      coverage of Director and his family, including his domestic partner.
      Director shall also be eligible to participate in any additional benefits
      made generally available by Company to its senior executives, to the
      extent allowed by the benefit plans established by Company, which may be
      amended or terminated at any time in Company's sole discretion; except
      that Director shall not be entitled to any paid vacation
      leave.

              

      

       

      
        	
                g)  

              	
                Expenses.
      The Company shall reimburse Director for all reasonable business expenses
      incurred in the performance of his duties hereunder in accordance with
      Company's expense reimbursement
guidelines

              

      

       

       

      
        
          

        

        
          	Agreement For
      Chairman Of Board Of Directors 	 Page 2 of
      8

        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

       

       

      
        	
                h)  

              	
                Indemnification.
      Company shall defend and indemnify Director at Company's sole expense to
      the full extent of applicable state, federal, and international law with
      respect to all claims, causes of action and adversarial proceedings of
      every nature to which Executive is or may become subjected in her role as
      an Officer or Director of Company and Executive shall have the right to
      select his own counsel. Company's indemnification duty shall survive the
      termination or expiration of this Agreement. In the event that Company
      elects to change coverage or carriers for its Directors and Officers
      insurance ("D & 0 Insurance"), Company shall notify Executive of such
      change and arrange to purchase, at a minimum, a five-year tail policy for
      such former insurance policy at the sole expense of Company and deliver
      evidence of such tail policy to Executive within five (5) days after
      termination of Company's existing D & 0
  Insurance.

              

      

       

      
        	
                i)  

              	
                Records.
      Director shall have reasonable access to books and records of Company, as necessary to
      enable Director to fulfill his obligations as a Director of
      Company.

              

      

       

      4.     TERMINATION

       

      
        	
                a)  

              	
                Right
      to Terminate. At any time, Director may be removed as Chairman as provided
      in Company's Certificate of Incorporation, as amended, bylaws, as amended,
      and applicable law. Director may resign as Chairman or Director as
      provided in Company's Certificate of Incorporation, as amended, bylaws, as
      amended, and applicable law. Notwithstanding anything to the contrary
      contained in or arising from this Agreement or any statements, policies,
      or practices of Company, neither Director nor Company shall be required to
      provide any advance notice or any reason or cause for termination of
      Director's status as Chairman, except as provided in Company's Certificate
      of Incorporation, as amended, Company's bylaws, as amended, and applicable
      law.

              

      

       

      
        	
                b)  

              	
                Effect
      of Termination as Chairman Upon a termination of Director's status as
      Chairman, in which Director remains a Director, this Agreement will
      terminate, and the Company and Director will sign the Company's standard
      Director's Agreement, in effect at the time of the termination, subject to
      any modifications to which both parties mutually agree; provided, however,
      following such termination and for as long as Director continues to serve
      as a Director of the Company, the Company will continue to provide
      Director

              

      

       

      
        	
                c)  

              	
                and
      his household with medical, dental and eye-care benefits provided by
      Section 3(g) and will pay all premiums for coverage of Director and his
      family, including his household members under such benefit plans as
      provided in Section 3(g) to the extent allowed under applicable law.
      Except as provided herein, the Company shall pay to Director all
      compensation and benefits to which Director is entitled up through the
      date of termination, and thereafter, all of the Company's obligations
      under this Agreement shall cease.

              

      

       

      
        	
                d)  

              	
                Effect
      of Termination as Director. Upon a termination of Director's status as a
      Director, this Agreement will terminate; Company shall pay to Director all
      compensation and benefits to which Director is entitled up through the
      date of termination; and Director shall be entitled to his rights under
      Florida and any other applicable law. Thereafter, all of Company's
      obligations under this Agreement shall cease, except as provided in
      Sections Section 5.

              

      

       

      5.     TERMINATION
OBLIGATIONS

       

      
        	
                 
      

              	
                a)
      Director agrees that all property, including, without limitation, all
      equipment, tangible proprietary information, documents, records, notes,
      contracts, and computer-generated materials provided to or prepared by
      Director incident to his services belong to Company and shall be promptly
      returned at the request of Company.

              

      

       

      
         

        
          
            

          

          
            	Agreement For
      Chairman Of Board Of Directors 	 Page 3 of
      8

          

           

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	
                b)  

              	
                Upon
      termination of this Agreement, Director shall be deemed to have resigned
      from all offices then held with Company by virtue of his position as
      Chairman, except that Director shall continue to serve as a director if
      elected as a director by the shareholders of Company as provided in
      Company's Certificate of Incorporation, as amended, Company's bylaws, as
      amended, and applicable law.

              

      

       

      
        	
                c)  

              	
                Director
      agrees that following any termination of this Agreement, he shall
      cooperate with Company in the winding up or transferring to other
      directors of any pending work and shall also cooperate with Company (to
      the extent allowed by law, and at Company's expense) in the defense of any
      action brought by any third party against Company that relates to the
      Services.

              

      

       

      
        	
                d)  

              	
                The
      Company and Director agree that their obligations under this Section, as
      well as Section 6, shall survive the termination of this
      Agreement.

              

      

       

      6.     NONDISCLOSURE
OBLIGATIONS

       

      Director
shall maintain in confidence and shall not, directly or indirectly, disclose or
use, either during or after the term of this Agreement, any Proprietary
Information (as defined below), confidential information, or trade secrets
belonging to Company, whether or not it is in written or permanent form, except
to the extent necessary to perform the Services, as required by a lawful
government order or subpoena, or as authorized in writing by Company. These
nondisclosure obligations also apply to Proprietary Information belonging to
customers and suppliers of Company, and other third parties, learned by Director
as a result of performing the Services.

       

      "Proprietary
Information" means all information pertaining in any manner to the business of
Company, unless

      
        	
                i)  

              	
                the
      information is or becomes publicly known through lawful
    means;

              

      

       

      
        	
                ii)  

              	
                the
      information was part of Director's general knowledge prior to his
      relationship with Company; or

              

      

       

      
        	
                iii)  

              	
                the
      information is disclosed to Director without restriction by a third party
      who rightfully possesses the information and did not learn of it from
      Company.

              

      

       

      7.    DISPUTE
RESOLUTION

       

      
        	
                a)  

              	
                Jurisdiction
      and Venue. The parties agree that any suit, action, or proceeding between
      Director (and his attorneys, successors, and assigns) and Company (and its
      affiliates, shareholders, directors, officers, employees, members, agents,
      successors, attorneys, and assigns) relating to the Services or the
      termination of those Services shall be determined by an independent
      arbitrator appointed by the American Arbitration Association. In
      connection with the appointment of an arbitrator, both parties agree to
      submit the question to final and binding arbitration by an appointee of
      the American Arbitration Association and to cooperate with the arbitrator,
      with all costs of arbitration paid by the
  Company.

              

      

       

      
        	
                b)  

              	
                The
      parties irrevocably waive, to the fullest extent permitted by Florida law,
      any objection the party may have to the laying of venue for any such suit,
      action or proceeding brought in such court. If any one or more provisions
      of this Section shall for any reason be held invalid or unenforceable, it
      is the specific intent of the parties that such provisions shall be
      modified to the minimum extent necessary to make it or its application
      valid and enforceable.

              

      

       

      
        	
                c)  

              	
                Attorneys'
      Fees. Should any litigation, arbitration or other proceeding be commenced
      between the parties concerning the rights or obligations of the parties
      under this Agreement, the party prevailing in such proceeding shall be
      entitled, in addition to such other relief as may be granted, to a
      reasonable sum as and for its attorneys' fees in such proceeding. This
      amount shall be determined by the court in such proceeding or in a
      separate action brought for that
purpose.

              

      

       

      
         

        
          
            

          

          
            	Agreement For
      Chairman Of Board Of Directors 	 Page 4 of
      8

          

           

        

      

       

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                d)
      In addition to any amount received as attorneys' fees, the prevailing
      party also shall be entitled to receive from the party held to be liable,
      an amount equal to the attorneys' fees and costs incurred in enforcing any
      judgment against such party. This Section is severable from the other
      provisions of this Agreement and survives any judgment and is not deemed
      merged into any judgment.

              

      

       

      8.   ENTIRE
AGREEMENT

       

      This
Agreement is intended to be the final, complete, and exclusive statement of the
terms of Director's relationship solely with respect to his position as Chairman
with Company. This Agreement entirely supersedes and may not be contradicted by
evidence of any prior or contemporaneous statements or agreements pertaining to
Director's relationship as Chairman or Director. Agreements related to
Director's ownership of the Securities are not affected by this
Agreement.

       

      9.   AMENDMENTS;
WAIVERS

       

      This
Agreement may not be amended except by a writing signed by Director and by a
duly authorized representative of the
Company other than Director. Failure to exercise any right under this Agreement
shall not constitute a waiver of such right.

       

      10.   ASSIGNMENT

       

      Director
agrees that Director will not assign any rights or obligations under this
Agreement, with the exception of Director's ability to assign rights with
respect to the Securities. Nothing in this Agreement shall prevent the
consolidation, merger or sale of Company or a sale of all or substantially all
of its assets.

       

      11.   SEVERABILITY

       

      If any
provision of this Agreement shall be held by a court or arbitrator to be
invalid, unenforceable, or void, such provision
shall be enforced to fullest extent permitted by law, and the remainder of this
Agreement shall remain in full force and effect. In the event that the time
period or scope of any provision is declared by a court or arbitrator of
competent jurisdiction to exceed the maximum time period or scope that such
court or arbitrator deems enforceable, then such court or arbitrator shall
reduce the time period or scope to the maximum time period or scope permitted by
law.

       

      12.   GOVERNING
LAW

       

      This
Agreement shall be governed by and construed in accordance with the laws of the
State of Florida without regards to principles of conflicts of law.

       

      13.   INTERPRETATION

       

      This
Agreement shall be construed as a whole, according to its fair meaning, and not
in favor of or against any party. Captions are used for reference purposes only
and should be ignored in the interpretation of the Agreement.

       

      14.   BINDING
AGREEMENT

       

      Each
party represents and warrants to the other that the person(s) signing this
Agreement below has authority to bind the party to this Agreement and that this
Agreement will legally bind both Company and Director. This Agreement will be
binding upon and benefit the parties and their heirs, administrators, executors,
successors and permitted assigns. To the extent that the practices, policies, or
procedures of Company, now or in the future, are inconsistent with the terms of
this Agreement, the provisions of this Agreement shall control. Any subsequent
change in Director's

       

       

      
        
           

          
            
              

            

            
              	Agreement For
      Chairman Of Board Of Directors 	 Page 5 of
      8

            

             

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      duties or
compensation as Chairman will not affect the validity or scope of the remainder
of this Agreement.

       

      15.   DIRECTOR
ACKNOWLEDGMENT

       

      Director
acknowledges Director has had the opportunity to consult legal counsel
concerning this Agreement, that Director has read and understands the
Agreement,  that Director is fully aware of its legal effect, and that
Director has entered into it freely based on his own judgment and not on any
representations or promises other than those contained in this
Agreement.

       

      16.   COUNTERPARTS

       

      This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Facsimile or PDF copies shall be considered originals for all
purposes.

       

      17.   DATE
OF AGREEMENT

       

      The
parties have duly executed this Agreement as of the date first written
above.

       

       

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

       

       

      
        	
                COMPANY

              	 	
                DIRECTOR

              
	 
      	 	 
      
	 	 	/s/ 
      Linda Starr 
	Authorized
      Signature	 	Authorized
      Signature
	 	 	 
	 	 	LINDA
      STARR, DIRECTOR 
	Print
      Name and Title	 	Print
      Name and Title
	 	 	 

      

      

       

       

      
         

        
          
            

          

          
            	Agreement For
      Chairman Of Board Of Directors 	 Page 6 of
      8

          

           

        

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      EXHIBIT
A

      DESCRIPTION OF
SERVICES

       

      Responsibilities
as Director. Director shall have all responsibilities of a Director of the
Company imposed by Nevada or applicable law, the Certificate of Incorporation,
as amended, and Bylaws, as amended, of Company. These responsibilities shall
include, but shall not be limited to, the following:

       

      1. Attendance.
Use best efforts to attend scheduled meetings of Company's Board of
Directors;

       

      2. Act as a
Fiduciary. Represent the shareholders and the interests of Company as a
fiduciary; and

       

      3. Participation.
Participate as a full voting member of Company's Board of Directors in setting
overall objectives, approving plans and programs of operation, formulating
general policies, offering advice and counsel, serving on Board Committees, and
reviewing management performance.

       

       

       

       

      
        
           

          
            
              

            

            
              	Agreement For
      Chairman Of Board Of Directors 	 Page 7 of
      8

            

             

          

        

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      EXHIBIT
B

      AUTHORIZED
ACTIVITIES

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

          
            
              

            

            
              	Agreement For
      Chairman Of Board Of Directors 	 Page 8 of
      8

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