Document:

exh10_1.htm

AMENDING AGREEMENT

 

 

THIS AGREEMENT dated as of the 9th day of June, 2011

 

BETWEEN:

 

LML PAYMENT SYSTEMS INC., a corporation continued under the laws of the Yukon Territory of 1680 – 1140 West Pender Street, Vancouver, B.C., V6E 4G1

 

(the “Corporation”)

 

AND:

 

CAROLYN GAINES, businesswoman of 21018, 11-200 Burrard Street, Vancouver, B.C., V6C 3L0

 

(the “Executive”)

 

 

WHEREAS:

 

	
A.  

	
The Corporation and the Executive are parties to an employment agreement dated March 31, 2008 (the “Original Agreement”) whereby the Corporation has retained the services of the Executive in acting as the Corporate Secretary of the Corporation;

 

	
B.  

	
The Board has determined that it is in the best interests of the Corporation to make the bonus structure for the Executive the same as that of other senior executives of the Corporation;

 

	
C.  

	
It is appropriate to amend the Original Agreement in order to reflect such change to the Executive’s bonus entitlement; and

 

	
D.  

	
The parties now wish to make certain amendments to the Original Agreement upon the terms and conditions set out in this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto covenant and agree as follows:

 

	
1.  

	
Section 4.2 of the Original Agreement is deleted in its entirety.

 

	
2.  

	
The following provision is added to the Original Agreement as a new section 4.2:

 

“4.2           For each full fiscal year of the Corporation that begins and ends during the Term, commencing at the commencement of the 2012 fiscal year  of the Corporation, the Executive shall be eligible to earn an annual cash bonus (the “Annual Bonus”) of up to thirty-five percent (35%) of the Base Salary based on the achievement by the Corporation of reasonable performance goals established by the Compensation Committee for each such fiscal year (or portion) which may include targets related to the earnings before interest, taxes, depreciation and amortization (“EBITDA”) of the Corporation.”

 

 

  

  

  

 

	
3.  

	
Section 11.7(a)(i)(B) of the Original Agreement is deleted in its entirety.

 

	
4.  

	
The following provision is added to the Original Agreement as a new section 11.7(a)(i)(B):

 

	
  

	
“(B)

	
Two (2) years’ current Base Salary plus two (2) times the Executive’s last Annual Bonus”

 

	
5.  

	
All provisions of the Original Agreement which are not amended by this Agreement remain unchanged and the amendments contemplated in sections 1 through 4 hereof taken together with all other unamended provisions of the Original Agreement form the employment agreement between the Company and the Executive as if such amendments formed part of the Original Agreement.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the day and year first above written.

 

 

LML PAYMENT SYSTEMS INC.

 

 

Per:         /s/ Greg A. MacRae                                                        

       Authorized Signatory

 

 

	
CAROLYN GAINES

	  	  
	  	  	  
	
/s/ Carolyn Gaines                                                                

Signature

	  	
/s/ Richard Schulz                                                                   

Witness Signature

	  	  	  
	  	  	
Richard Schulz                                                                   

Print Witness Nameexh10_2.htm

SETTLEMENT AND LICENSE AGREEMENT

           This Settlement and License Agreement (the “Agreement”) is entered into by LML Patent Corp., a Delaware corporation having its principal place of business in Marshall, Texas   (“LML”), on the one hand, and The Northern Trust Company, an Illinois State Bank, and Northern Trust Corporation, a Delaware Corporation, both having a principal place of business at 50 S. LaSalle Street, Chicago, Illinois 60603 (collectively “Northern Trust”), on the other hand.  LML and Northern Trust are individually referred to as “Party” and collectively as the “Parties.”  This Agreement is effective as of June 30, 2011 (“Effective Date”).

RECITALS

           WHEREAS, LML owns all right, title and interest in U.S. Patent No. RE40,220 entitled “Check Writing Point of Sale System” (“the ‘220 Patent”);

           WHEREAS, LML filed an action against Northern Trust 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 published 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, Northern Trust is a named defendant in Litigation I and Northern Trust has denied liability;

 

    WHEREAS, the Parties have agreed to enter into this Agreement to avoid the costs and risks of further litigation;

 

    WHEREAS, the Parties wish to settle their disputes, and Northern Trust 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”).

 

 

 

  

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(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.

	
(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 Licensed Products and Services (and any of its/their components) that have been, will be, or are being Exploited by or for Northern Trust (including properly licensed successors (subject to Section 6 (Change in Control / Acquisitions)) and permitted assigns (subject to Section 9.1 (Assignment)) or their Affiliates and only to the extent such Exploitation is done by or for Northern Trust (including properly licensed successors (subject to Section 6 (Change in Control / Acquisitions)) and permitted assigns (subject to Section 9.1 (Assignment)) or their 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 Northern Trust Entity; or (b) any Entity that:  (i) is dismissed with prejudice from a lawsuit alleging 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, test, 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, including inducement to infringe and contributory infringement, infringement under the doctrine of equivalents, or any other theory of infringement in any jurisdiction worldwide.

	
(m)  

	
“Licensed 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)  

	
“Northern Trust Entities” means Northern Trust and its Affiliates and their direct and indirect parents, subsidiaries, 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.  LML warrants and represents that, as the Effective Date, the LML Patents include the LML Patents listed in the attached Schedule A.

	
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 their respective claims for relief against the other 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 this Agreement, including the transactions contemplated herein.

	
2.3.  

	
No Attempt to Invalidate.  Northern Trust agrees that, in the absence of a subpoena or court order requiring its participation or support, no Northern Trust Entity shall participate in or support any suit, claim, action, litigation, administrative proceeding, or proceeding of any nature brought against LML that challenges the validity or enforceability of the LML Patents so long as  Northern Trust 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, any Northern Trust Entity may challenge the validity and/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 any Northern Trust Entity related to one or more of the LML Patents, or places any Northern Trust Entity in a reasonable apprehension of being sued on one or more of the LML Patents, or (ii) any Northern Trust Entity receives a request for indemnification related to an LML Patent, but only after the Northern Trust Entity has provided thirty (30) days written notice to LML 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 Northern Trust.  Northern Trust agrees to pay, or will cause to be paid on its behalf, a non-refundable lump sum of One Million Two Hundred Fifty Thousand U.S. dollars ($1,250,000.00) within five (5) business days following the Effective Date in consideration of the rights, licenses and terms granted to Northern Trust and Northern Trust Entities as set forth in this Agreement and the dismissal of Northern Trust with prejudice in Litigation I.  In the event Northern Trust causes such amount to be paid on its behalf, the paying third party shall not receive any rights, licenses, releases, covenants, or other benefits or obligations under this Agreement solely by virtue of its having made the payment on Northern Trust’s behalf, provided nothing herein shall be construed to affect any rights of Covered Third Parties otherwise granted in this Agreement.  Such amount will be delivered to LML’s counsel, McKool Smith P.C., via wire transfer to the following account:

	
  

	
Address:

	
Citibank, N.A.

666 5th Avenue

	
  

	
New York, NY 10103

	
  

	
SWIFT Code:

	
  

	
ABA Routing:

	
  

	
A/C Name:

	
McKool Smith PC IOLTA Trust Account

	
  

	
A/C Number:

Nothing in this paragraph 3.1, however, shall diminish Northern Trust’s right to seek damages independently for an alleged breach of this Agreement.

	
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 later of the expiration of the last-to-expire patent included in the LML Patents or the expiration of all causes of action and claims arising out of or related to the LML Patents.  Otherwise, this Agreement may only be earlier terminated in whole or in part pursuant to Section 3.3 (Termination Due to Non-Payment by Northern Trust) or upon the mutual written agreement of the Parties.

	
3.3.  

	
Termination Due to Non-Payment by Northern Trust.  If Northern Trust fails to make the payment as specified in Section 3.1 to LML (Payment by Northern Trust) above in the time specified, such failure will constitute a material breach of this Agreement.  Upon such breach, LML may then, after ten (10) business days following written notice of such breach to Northern Trust, if Northern Trust does not deliver the payment specified in Section 3.1 (Payment by Northern Trust) to LML within ten (10) 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 Northern Trust’s payment obligations.  Northern Trust hereby consents to the jurisdiction of the Court for enforcement of the payment obligations in Section 3.1 (Payment by Northern Trust), 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 Northern Trust) shall be the total compensation to any LML Entity by any Northern Trust 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 Northern Trust Entity with respect to the releases, licenses, covenants and all other rights granted in this Agreement.

	
3.6  

	
Northern Trust’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 Northern Trust 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.

	
4.2.  

	
LML’s Release to Northern Trust.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Northern Trust) and Section 6 (Change in Control/Acquisitions), LML Entities forever release (a) the Northern Trust 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 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.

 

 

  

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4.3.  

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

	
4.4.  

	
Covenant-Not-To-Sue by LML Entities.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Northern Trust) 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 Northern Trust 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 or any patents which LML has the right to assert against Northern Trust as of the Effective Date; 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 or any patents which LML has the right to assert against Northern Trust as of the Effective Date.

 

	
4.5.  

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

 

 

 

  

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5.  

	
GRANT OF LICENSE

	
5.1.  

	
License.  Subject to the provisions of Section 3.3 (Termination Due to Non-Payment by Northern Trust) and Section 6 (Change in Control / Acquisitions), LML hereby grants to the Northern Trust Entities and Covered Third Parties a fully paid-up, irrevocable, non-exclusive, worldwide, 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 possible for any of the LML Patents.

	
5.2.  

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

	
6.  

	
CHANGE IN CONTROL / ACQUISITIONS

	
6.1.  

	
Acquisitions by a Northern Trust Entity.  In the event any Northern Trust Entity Acquires an Excluded Party or any business line of an Excluded Party 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 Northern Trust 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 Northern Trust 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.

	
6.2.  

	
Acquisitions of a Northern Trust Entity.  In the event an Excluded Party Acquires any Northern Trust Entity and maintains the Northern Trust 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 Northern Trust 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 any Exploitation of the Covered Products and Services created, processed or transmitted by the Acquiring Entity (including the Northern Trust 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 Northern Trust 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 Covered Products and Services created, processed or transmitted by the Acquiring Entity (including the Northern Trust 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 Covered Products and Services 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 Northern Trust 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 Northern Trust Entity.  In the event of a sale or other transfer of the assets of any Northern Trust 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 Northern Trust 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 Covered Products and Services created, processed or transmitted by the Covered Transferee Entity (including the Northern Trust 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 Northern Trust 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 Covered Products and Services created, processed or transmitted by the Covered Transferee Entity (including the Northern Trust 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 Covered Products and Services 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 Northern Trust 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 Northern Trust Entity. In the event of a sale or other transfer of the assets of any Northern Trust 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 Northern Trust Entity) through Section 6.4 (Transfer of Non-Covered Assets By a Northern Trust 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 Northern Trust 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 the LML Entities or the Northern Trust Entities may disclose the specific terms and conditions of this Agreement, including but not limited to payment terms, 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, provided that any copy of this Agreement that is provided under such laws or regulations is marked as “Confidential”; (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.  

	
Northern Trust Representations and Warranties. Northern Trust 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 Northern Trust entering into this Agreement, LML represents and warrants to Northern Trust 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 enforce and recover for alleged Infringement of the LML Patents; (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 Northern Trust 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 Northern Trust 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 STATUTE OR OTHERWISE.

	
8.5.  

	
No Joint and Several Liability.  Notwithstanding anything herein to the contrary, the Northern Trust 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 an LML Patent.

 

 

 

  

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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 Northern Trust, 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.  The Parties agree to abide by all of the terms of this Section 9.1 (Assignment), even if a court or other tribunal later finds that any portion of this section is contrary to law or equity.

	
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

           with a copy to:

LML Patent Corp.

Corporate Secretary

1680- 1140 West Pender Street

Vancouver BC, Canada V6E 4G1

 

 

 

  

-13-

  

 

 

If to Northern Trust:

Northern Trust Corporation

50 S. LaSalle Street

Chicago, IL 60603

Attention:  Executive Vice President and General Counsel

and

The Northern Trust Company

50 S. LaSalle Street

Chicago, IL 60603

Attention:  Executive Vice President and General Counsel

with a copy to:

Pamela L. Peters

Senior Attorney

Legal Department

The Northern Trust Company

50 S. LaSalle Street

Chicago, IL 60603

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

	
9.4.  

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

	
9.5.  

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

	
9.6.  

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

 

 

 

  

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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 Northern Trust, 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 Northern Trust 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.

 

 

 

  

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9.12.  

	
Releases; Waiver of Section 1542 of the California Civil Code. To the extent that the releases in Section 4.2 (LML’s Release of Northern Trust) and Section 4.3 (Northern Trust’s Release of LML) are releases to which Section 1542 of the California Civil Code (or similar provisions of other applicable law) applies, it is the intention of the Parties that the releases in Section 4.2 (LML’s Release of Northern Trust) and Section 4.3 (Northern Trust’s Release of LML) shall be effective as a bar to any and all actions, fees, damages, losses, claims, liabilities and demands of whatsoever character, nature and kind, known or unknown, suspected or unsuspected specified therein.  In furtherance of this intention, the Parties expressly waive any and all rights and benefits conferred upon them by the provisions of Section 1542 of the California Civil Code (or similar provisions of applicable law), which provides that:  “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 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.

	
9.14.  

	
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.

	
9.15.  

	
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.

	
9.16.  

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

	
9.17.  

	
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.

  

-16-

  

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.

	  	
Northern Trust Corporation

	  	  	  
	
By:/s/ Patrick H. Gaines

	  	
By:/s/ Peter A. Magrini

	  	  	  
	
Name: Patrick H. Gaines

	  	
Name: Peter A. Magrini

	  	  	  
	
Title: President

	  	
Title: Executive Vice President

	  	  	  
	
Date: June 24, 2011

	  	
Date: June 23, 2011

	  	  	  
	  	  	  
	  	  	
The Northern Trust Company

	  	  	  
	  	  	
By:  /s/ Maureen A. Mosh

	  	  	  
	  	  	
Name: Maureen A. Mosh

	  	  	  
	  	  	
Title: Assistant General Counsel

	  	  	  
	  	  	
Date: June 30, 2011

 

 

 

 

  

-17-

  

SCHEDULE A

LML PATENTS

 

 

 

	
Patent Number

	
Patent Application Number

 

	
Filing Date

	
Issue Date

	
Country

	
Title

	
RE40,220

	
10/889,639

	
07/12/04

	
04/08/08

	
US

	
“Check Writing Point of Sale System”

	
6,354,451

	
09/851,609

	
05/09/01

	
03/12/02

	
US

	
“Check Writing Point of Sale System”

	
6,283,366

	
09/562,303

	
05/01/00

	
09/04/01

	
US

	
“Check Writing Point of Sale System”

	
6,164,528

	
08/775,400

	
12/31/96

	
12/26/00

	
US

	
“Check Writing Point of Sale System”

	
5,484,988

	
08/257,390

	
06/09/94

	
01/16/96

	
US

	
“Checkwriting Point of Sale System”

 

 

 

  

  

  

EXHIBIT A

 

JOINT STIPULATED MOTION FOR DISMISSAL WITH PREJUDICE

           Plaintiff LML Patent Corp. (“LML”) and Defendant The Northern Trust Company (“Northern Trust”), pursuant to Fed. R. Civ. P. 41(a)(2) and (c), hereby move for an order dismissing all of LML’s claims in this action against Northern Trust WITH PREJUDICE and all of Northern Trust’s counterclaims in this action against LML WITH PREJUDICE , with each party bearing its own attorneys’ fees, costs and expenses.

ORDER OF DISMISSAL WITH PREJUDICE

           On this day the Court heard Plaintiff LML Patent Corp.’s (“LML”) and Defendant The Northern Trust Company’s (“Northern Trust”) Stipulated Motion for Dismissal With Prejudice (“Motion for Dismissal”).  After considering the Motion for Dismissal and other matters of record, the Court is of the opinion that the Motion for Dismissal is meritorious and should be GRANTED.  It is therefore ORDERED that:

           Each and every claim and/or cause of action asserted by LML against Northern Trust in the above-captioned lawsuit is hereby DISMISSED WITH PREJUDICE, and each and every counterclaim and/or cause of action asserted by Northern Trust against LML in the above-captioned lawsuit is hereby DISMISSED WITH PREJUDICE.  Each party is to bear its own attorneys’ fees, costs and expenses.

So ORDERED and SIGNED this           day of           ,2011.

DAVID FOLSOM

UNITED STATES DISTRICT JUDGE

DM_US 28853515-1.042044.0062

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