Settlement and License Agreement dated March 31, 2006, among Electronic Clearing House, Inc., XpressCheX, Inc. and LML Patent Corporation. (Confidential treatment requested for portions of this exhibit. These portions have been omitted form this Quarterly Report and submitted separately to the Securities and Exchange Commission.)

1.1.

“Affiliate” means, with respect to any party to this Settlement and License Agreement, any Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Party, such as parents, subsidiaries and sister corporations.

1.2.

“Acquirer Processor” means the role of accepting transactions from a merchant prior to submission to Visa and then submitting them to Visa for qualification under the Visa POS Check program.

1.3.

“ACH” means the Automated Clearing House.

1.4.

“ACH Processor” means a party which processes ACH files and/or items on behalf of one of the participants in the ACH system provided that the party did not perform the ECC function.

1.5.

“Capture Service Provider” means the service of capturing and storing the check data upon electronic submission to a data center and the transfer of files of captured data on a routine basis for ACH submission by another party.

1.6.

“Confidential Information” has the meaning set forth in Section 6.

1.7.

“Consumer” means any entity which either:

(a)

purchases or offers to purchase goods or services from a Merchant; or

(b)

settles all or part of a payment obligation other than the purchase of goods and services, including, without limitation, the payment of taxes, duties, fees and fines.

1.8.

“Direct Consumer Field” means the field of use in which a Consumer effects a transaction through the action of a natural person at the physical business premises of a Merchant and the use of ECC, also called point-of-purchase transaction. The NACHA standard entry class code for a Direct Consumer Field transaction is “POP.”

1.9.

“Effective Date” has the meaning set forth in the preamble.

1.10.

“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.

1.11.

“Final Judgment” is the decision of the District Court for the District of Delaware in Case No. CA-04-858.

1.12.

“Funds Transfer” means, with respect to any transaction, the transfer of funds from the banking account of the Consumer that is a party to such transaction to the banking account of the Merchant that is a party to such transaction and vice versa.

1.13.

“Gross Revenue” means the total revenue received by LICENSEE for serving as an Acquirer Processor and/or a Third Party Processor for any Visa ECC Transaction.

1.14.

“ISO” means Independent Sales Organization.

1.15.

“Licensed Activity” means making, using, offering for sale or selling one or more steps of ECC in the Direct Consumer Field.

1.16.

“Licensed Patents” means any and all LICENSOR patents, including but not limited to U.S. Patent Nos. 6,354,491; 6,283,366; 6,164,528; and 5,484,988, to the extent necessary to perform ECC in the Direct Consumer Field. Such patents include any such patents currently owned or controlled by LICENSOR and any such patents later acquired by, granted to or controlled by LICENSOR.

1.17.

“License Term” means the time period beginning on the Effective Date and ending on January 16, 2013.

1.18.

“LICENSOR” means LML Patent Corp. and any entity controlled by LICENSOR. For purposes of this Settlement and License Agreement, “control” of an entity means the ability, directly or indirectly, to direct and manage the activities of such entity.

1.19.

 “Merchant” means any entity which offers ECC services to Consumers in connection with the purchase of goods or services or uses ECC to effectuate a Funds Transfer.

1.20.

“Merchant Account Information” means the electronic form of information relating to the bank and banking account of a Merchant.

1.21.

“Non-Visa ECC Transaction” means any ECC transaction in the Direct Consumer Field that is not a Visa ECC Transaction.

1.22.

“Participating Transaction” means those check transactions that are processed in the Visa POS Check program that go directly from Visa to the bank where the check writer’s checking account resides and, where upon verification of funds, clearance of the check occurs from the check writer’s bank through the Visa network rather than through the ACH, independent of LICENSEE.

1.23.

“Parties” means LICENSOR and LICENSEE, collectively.

1.24.

“Party” means each of LICENSOR and LICENSEE, individually.

1.25.

“Person” means an individual, corporation, partnership, joint venture, trust, unincorporated organization or similar organization or any other legal entity.

1.26.

“Territory” means the United States of America, its territories and possessions, including, without limitation, the District of Columbia and the Commonwealth of Puerto Rico;

1.27.

“Third Party Processor” means the entity that clears ECC transactions under the VISA POS Check service through the ACH in those cases where the check transactions first went to Visa for clearance through the Visa Network but could not be cleared by through the Visa network.

1.28.

“Visa ECC Transaction” means any ECC transaction processed through the Visa network (a.k.a. the Visa Net).

1.29.

“Visa POS Check Guarantee” means a transaction that has been processed through the Visa POS Check program and the merchant or bank have requested that LICENSEE guarantee the transaction in addition to performing the ECC function.

2.1.

Stipulated Dismissal. Within three (3) business days of the receipt of the release fee payment specified in Section 5.1, the parties shall file with the Court a Stipulated Dismissal with prejudice substantially in the form attached hereto as Exhibit 1 and LICENSOR shall send a letter to the Special Discovery Master substantially in the form attached hereto as Exhibit 2. In addition. LICENSEE need not produce the documents that are the subject of Special Discovery Master Order No. 5 and LICENSEE’s objections thereto (DI 362).

2.2.

No Award of Fees or Costs. Each party shall bear responsibility for its own costs and fees associated with the litigation and no request, motion, petition or otherwise for such fees and/or costs shall be made to the Court.

2.3.

No Admissions of Liability. By entering into this Settlement and License Agreement, LICENSEE is not making any admissions of liability.

2.4.

No Attempt To Invalidate. LICENSEE agrees that, in 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 proceedings, or proceeding of any nature brought by or against LICENSOR that concerns or challenges the validity or enforceability of the Licensed Patents, unless such suit, claim, action, litigation or proceedings to enforce one or more of the Licensed Patents is brought by LICENSOR 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 Licensed Patents.

2.5.

Retention of Jurisdiction to Enforce This Agreement. Except as provided under Section 9.2, the United States District Court for the District of Delaware shall retain jurisdiction for purposes of enforcing the terms of this Settlement and License Agreement.

3.1.

License Grant. LICENSOR hereby grants to LICENSEE, and LICENSEE hereby accepts from LICENSOR, a personal, non-exclusive, license under the Licensed Patents to perform the Licensed Activity in the Territory during the License Term.

3.2.

No Transfer Of License Grant. Except as expressly provided for in Section 10.2, the license granted hereunder is not assignable or transferable.

3.3.

No Implied License. Except as expressly provided herein, nothing in this Settlement and License Agreement is intended to grant any rights or license, express or implied, to either Party in or to any intellectual property owned, licensed or controlled by the other Party.

3.4.

No License To Other Fields Of Use. Nothing in this Settlement and License Agreement is intended to grant, nor should anything in this Settlement and License Agreement be construed to grant, any rights or license, express or implied, to perform ECC in any field of use other than the Direct Consumer Field.

3.5.

Covenant Not to Sue. Subject to and except as set forth in Section 5.3, LICENSOR covenants not to sue Persons, including VISA, banks, ISO’s, processors or merchants, using LICENSEE’S ECC Direct Consumer Field products, services or systems based on an allegation that the use of LICENSEE’S ECC Direct Consumer Field products, services or systems infringes whether by inducing infringement, contributorily infringing or directly, one or more of the Licensed Patents. All Visa ECC Direct Consumer Field transactions processed by merchants, banks, processors or ISO’s, provided that such merchants, banks, processors or ISO’s had designated LICENSEE as their third-party processor, as defined in Exhibit 4, including without limitation Participating Transactions, as identified in Exhibit 4 as transaction 9, are covered by this covenant. Within thirty (30) days of the Effective Date, LICENSEE shall provide to LICENSOR a list containing the names and addresses of all such banks, ISO’s processors and merchants, and shall update this list once per quarter at the time the report of Section 5.4 is sent to LICENSOR. Nothing herein, however, shall preclude or is intended to preclude LICENSOR from asserting, in litigation or otherwise, the Licensed Patents against such Persons based on the use by such Persons of ECC products, services or systems that are not connected to or reliant upon the LICENSEE as an Acquirer Processor and/or Third Party Processor for a portion of their transaction activity. Moreover, nothing herein shall preclude or is intended to preclude LICENSOR from asserting, in litigation or otherwise, the Licensed Patents against such Persons if LICENSEE is not abiding by the defined royalty arrangements as set forth in Section 5.3 for ECC transactions performed in whole or in part by such Persons.

4.1.

LICENSOR, for itself and its successors, assigns, Affiliates, and licensees, hereby releases and forever discharges LICENSEE and any parents, subsidiaries, Affiliates, directors, officers, employees, agents, shareholders and customers from any and all causes of action (including all demands, damages of any type or kind, debts, liabilities, accounts, costs, expenses, liens, obligations, injunctive relief, fees, actions, causes of action (at law, in equity, under federal or state law, in any kind of forum), suits, promises, rights, rights to subrogation, rights to contribution, and remedies of any nature whatsoever) in law or at equity related to the Licensed Patents, whether known or unknown, which may have arisen prior to the Effective Date.

4.2.

LICENSEE, for itself and its successors, assigns, Affiliates, and licensees, hereby releases and forever discharges LICENSOR and any parents, subsidiaries, Affiliates, directors, officers, employees, agents and shareholders from any and all causes of action (including all demands, damages of any type or kind, debts, liabilities, accounts, costs, expenses, liens, obligations, injunctive relief, fees, actions, causes of action (at law, in equity, under federal or state law, in any kind of forum), suits, promises, rights, rights to subrogation, rights to contribution, and remedies of any nature whatsoever) in law or at equity related to the Licensed Patents, whether known or unknown, which may have arisen prior to the Effective Date.

Beneficiary:

LML Patent Corp.

Beneficiary Address:

1330 Riverbend Drive, Suite 600

Dallas, Texas 75247

Bank Name:

*

Bank Address:

*

Bank Account #:

*

Bank Routing #:

*

5.2.

5.3.

Direct Consumer Field Running Royalties.

(a)

* performed by LICENSEE. As further consideration for entering into this Settlement and License Agreement, on transactions processed on or after April 1, 2006, LICENSEE agrees to pay running royalties to LICENSOR *.

(b)

* Coordinated by Third Party. For * coordinated by a third party wherein LICENSEE performs a portion of the ECC activity, * LICENSEE will be required to do the following:

(1)

LICENSEE will advise the party coordinating the ECC activity, in writing with a copy to LICENSOR, that they can qualify the transactions under this Settlement and License Agreement for a payment of *. Should either the party or LICENSEE pay the * to LICENSOR, LICENSOR shall have no further rights against LICENSEE or the third party with regard to the transactions in question.

(2)

Should LICENSEE advise the party of the opportunity to qualify the transaction by making such royalty payment and they refuse to do so, for any reason, and should LICENSEE decide not to pay the royalty itself, LICENSOR will leave LICENSEE alone and pursue only the third party coordinating the ECC transaction. LICENSEE’s activities and revenues for services provided as solely a Capture Service Provider or an ACH Processor, whatever they may be, will not qualify LICENSEE to make * to LICENSOR under any circumstance and LICENSOR agrees to leave LICENSEE alone if written notice to the party, with a copy to LICENSOR, was given by LICENSEE of the opportunity to qualify the transactions.

(c)

 Non-Qualified Transactions for Royalty Payment under this Agreement. LICENSOR agrees that LICENSEE’s * , do not qualify as transactions for which a royalty should be paid to LICENSOR unless an ECC transaction is performed or conducted by LICENSEE in connection with LICENSEE’s *. LICENSEE will have no obligation or liability to LICENSOR for a third party that may use LICENSEE’s *, even if used as a first step in performing an ECC transaction (by someone other than LICENSEE) and LICENSOR specifically agrees to leave LICENSEE alone in such situations. LICENSEE will have no obligation or liability to LICENSOR for a third party that performs an ECC transaction and subsequently asks LICENSEE to *  the transaction other than to provide to LICENSOR in writing the name of the third party performing ECC transactions. Should LICENSEE have performed the ECC function on a transaction *, then LICENSEE’s only obligation to LICENSOR will be the single payment as set forth in 5.3.(a) for a *. Should LICENSEE * a Visa POS Check transaction, its only obligation to LICENSOR will be the payment of * LICENSEE receives for being the Acquiring Processor and/or Third Party Processor, depending on whatever role LICENSEE plays with the specific Visa POS Check * transaction.

(d)

Rate for *. As further consideration for entering into this Settlement and License Agreement, on transactions processed on or after April 1, 2006, LICENSEE agrees to pay running royalties to LICENSOR*.

(e)

No Royalty Payment for *. No royalty will be due LICENSOR on * from LICENSEE or any other party, including Visa, banks, merchants, ISO’s, processors or such other parties that may assist in processing such transactions, that are processed by Visa for those merchants and/or banks who use LICENSEE as either their Acquirer Processor and/or Third Party Processor provided that LICENSEE has not received any fees or revenue from VISA for such transactions. Should LICENSEE receive any Acquirer Processor and/or Third Party Processor fees in association with processing a *, such fee will be counted toward the royalty obligation LICENSEE has to LICENSOR as defined in Section 5.3.(d).

(f)

Particular Merchant Rate. Once a running royalty rate has been established for a particular merchant (i.e. 5.3(d)), the running royalty rate for that merchant will be calculated, during the License Term, in that manner even if the use of the Visa network is discontinued, provided however, that if the Visa network is discontinued, LICENSEE’S pricing to such Merchant shall not increase by * above the rate that the Visa bank or Visa charged to that Merchant prior to the discontinuation of the Visa network. If LICENSEE’S pricing to such Merchant does increase by *, the transactions for that merchant will be considered Non-Visa ECC Transactions and the running royalty rate set forth in Section 5.3(a) will apply.

5.4.

Running Royalty Payments, Timing and Reports.

(a)

Payments. Running royalty payments are to be deposited via the ACH to the same LICENSOR bank account identified in Section 5.1. Running royalty payments are not refundable.

(b)

Timing. All running royalties payable pursuant to Sections 5 are to be paid to LICENSOR by LICENSEE within fifteen (15) days of the end of each calendar quarter during the License Term. LICENSEE shall keep full and true books of account and other records in sufficient detail so that the royalties due and payable to LICENSOR hereunder may be properly ascertained. When any royalty payment is due, LICENSEE shall report to LICENSOR the number of non-Visa ECC transactions and Gross Revenue from Visa ECC Transactions originated in the Direct Consumer Field for the period for which the royalty payment is due. LICENSOR shall have the right, at its expense, to have an independent professional accountant audit LICENSEE’s books and records solely for the purpose of determining the accuracy of any royalty payments due and payable hereunder; provided that LICENSOR provides LICENSEE with reasonable prior notice, and such audit is conducted during normal business hours. Such audits may be conducted no more than once per calendar year. Any information obtained as a result of such audits shall be maintained by the independent professional accountant in confidence, and only disclosed to LICENSOR to the extent necessary to collect any underpayment by LICENSEE under this Settlement and License Agreement. If the audit shows an underpayment of more than seven percent (7%), LICENSEE shall reimburse for the full cost of the audit.

(c)

Interest on Overdue Royalties. LICENSEE covenants and agrees to pay to LICENSOR interest upon any of the royalties payable under Sections 5 that are in arrears at the lower of the rate of 9 percent (9%) per annum and the maximum rate allowed by applicable law which interest shall be payable by LICENSEE at the same time as payment of any part of the principal amount in respect of which it is owed.

5.5.

Direct Consumer Field Most Favored Running Royalty Rates. If, at any time during the term of this Settlement and License Agreement, LICENSOR grants a license to the Licensed Patents in the Direct Consumer Field to any third party, other than an Affiliate of LICENSOR, * running royalty rate lower than that specified in Section 5.3(a), or at a percentage of Gross Revenue from * royalty rate lower than that specified in Section 5.3(d), regardless of any transaction volume levels that might be involved in the third party agreement to qualify for said running royalty rate, LICENSEE shall be immediately advised and shall be entitled to receive such reduced running royalty rate with respect to the Licensed Activity, effective as of the date that the reduced running royalty rate is provided to such third party and shall not be subject to any transaction volume qualifying level in order to receive the lower running royalty rate. Upon good cause shown, and provided that LICENSOR does not acknowledge that it has granted a reduced running royalty rate with respect to the Licensed Activity, LICENSEE shall have the right, at its expense, to have an independent professional accountant audit, no more than once per year, LICENSOR’s running royalty rates and, if it is found that a lower running royalty rate has been offered to others and not immediately offered to LICENSEE according to this section, LICENSOR agrees to pay all audit expenses and to return all running royalties paid over those that would have been paid at the lower running royalty rate plus an interest rate of 9% per annum on such funds. Any information obtained as a result of such audits shall be maintained by the independent professional accountant in confidence, and only disclosed to LICENSEE to the extent necessary to inform LICENSEE of any overpayment by LICENSEE under this Settlement and License Agreement.

6.1.

The terms and conditions of this Settlement and License Agreement shall constitute confidential information of each Party (“Confidential Information”). No Party shall disclose any Confidential Information to any third Person without the prior written consent of the other Party, except that a Party may disclose Confidential Information as required by SEC rules and/or regulations and may also disclose Confidential Information in response to a discovery request, subpoena or court order to produce such Confidential Information, or as otherwise required by law.

6.2.

Notwithstanding the provisions of Section 6.1, LICENSOR may release publicly the statement in substantially the same form as attached hereto as Exhibit 3 and LICENSEE may release publicly the statement in substantially the same form as attached hereto as Exhibit 5.

In reference to the identity of ISO’s, processors, merchants, banks and such other information that is shared by LICENSEE under Section 3.5 of this Settlement and License Agreement with LICENSOR, LICENSOR agrees such data will be considered Confidential Information and LICENSOR agrees to limit access thereto to only those with a need to know. LICENSOR specifically agrees that such information will never be used by LICENSOR in any manner other than to honor the spirit and terms as set forth in Section 3.5 of this Settlement and License Agreement and, under no circumstances shall the information be used for marketing, promotional or any similar activity by LICENSOR or its Affiliates.

REPRESENTATIONS AND WARRANTIES. The express representations and warranties contained in this Section 7 of this Settlement and License Agreement are the only representations and warranties made by either Party. No other representations or warranties shall be implied in law or in fact.

7.1.

LICENSOR. LICENSOR represents and warrants as follows.

(a)

LICENSOR is a corporation organized and validly existing under the laws of the state of its incorporation and has all requisite corporate power and authority to enter into and legally perform its obligations under this Settlement and License Agreement. When executed and delivered, this Settlement and License Agreement shall constitute a valid and binding obligation of LICENSOR, legally enforceable against it in accordance with its terms.

(b)

LICENSOR represents that it has the right, authority and capacity to enter into this Settlement and License Agreement and grant the rights set forth in Section 3. LICENSOR further represents that no person other than LICENSOR has the right to enforce any of the rights in the Licensed Patents that are the subject of this Settlement and License Agreement.

(c)

LICENSOR represents that it has not entered into any agreement in conflict with this Settlement and License Agreement or which would interfere with or diminish the rights granted hereunder.

7.2.

LICENSEE. LICENSEE represents and warrants as follows.

(a)

LICENSEE is a corporation organized and validly existing under the laws of the state of its incorporation and has all requisite corporate power and authority to enter into and legally perform its obligations under this Settlement and License Agreement. When executed and delivered, this Settlement and License Agreement shall constitute a valid and binding obligation of LICENSEE, legally enforceable against it in accordance with its terms.

(b)

LICENSEE represents that it has the right, authority and capacity to enter into this Settlement and License Agreement and to accept the rights set forth in Section 3, and undertake the payment and royalty obligations set forth in Section 5.

(c)

LICENSEE represents that it has not entered into any agreement in conflict with this Settlement and License Agreement or which would interfere with or diminish the rights granted hereunder.

INVESTIGATION AND ENFORCEMENT. LICENSOR covenants and agrees that if LICENSEE notifies it in writing of any third party who appears to be conducting the Licensed Activity without a license from LICENSOR (such notice shall include a detailed explanation supported by documents if available) as to why LICENSEE believes that the third party appears to be conducting the Licensed Activity, LICENSOR will investigate the same in good faith and will take reasonable efforts to initiate license discussions with or enforce its patent rights against such third party.

TERMINATION AND SURVIVAL.

9.1.

Termination. Except as specifically set forth in Sections 9.2 through 9.5 herein, the license grants and covenants in Section 3 and the royalty provisions in Section 5 are non-terminable.

9.2.

Failure to Pay Royalties. In the event that LICENSEE fails to meet its obligations under Section 5, LICENSOR may not file a patent infringement suit and is limited to only filing a breach of contract action seeking to collect the unpaid royalties. However, prior to filing any such action, LICENSOR must provide written notice to LICENSEE, followed by a thirty (30) day period during which LICENSEE may cure any breaches, and if such breaches are not cured during that thirty (30) day period, there shall be another thirty (30) day period during which the parties shall negotiate in good faith to resolve their dispute. Any action for breach of this Settlement and License Agreement will be submitted to the American Arbitration Association and the decision of a single arbitrator shall be deemed binding on both Parties. In any such action, the parties agree that time is of the essence and agree that the discovery period shall not be longer than 60 days. The parties also agree to jointly ask the arbitrator to issue his/her decision within 150 days from initiation of the action. If the arbitrator decides to hold a hearing/trial in any such action, such hearing/trial shall be held in Dallas, Texas or Phoenix, Arizona. The arbitrator shall have experience with patent license disputes.

9.3.

Finding of Invalidity or Unenforceability. If the claims of the ‘988 Patent that are asserted in the Delaware Litigation are declared invalid or unenforceable in a final judgment rendered by any U.S. District Court or binding decision of an administrative body, the obligation of LICENSEE to pay a running royalty with respect to ECC transactions conducted in the Direct Consumer Field, on or after the date of said final judgment shall terminate. However, if the finding of invalidity or unenforceability is overturned on appeal for any of the asserted claims of the ‘988 Patent, the running royalty provisions of Section 5.3 will be reinstated and LICENSEE will pay LICENSOR on the next subsequent Royalty Payment Date the royalties due for ECC transactions conducted after the date of the final judgment.

9.4.

Finding of Non-Infringement. If Telecheck or Nova are found in a Final Judgment not to infringe the claims of the ‘988 Patent that are asserted in the Delaware Litigation, the obligation of LICENSEE to pay a running royalty with respect to ECC transactions conducted in the Direct Consumer Field, on or after the date of the Final Judgment shall terminate. However, if the finding of non-infringement is overturned on appeal, and a Final Judgment is then entered against Telecheck or Nova in favor of LICENSOR, for any of the asserted claims of the ‘988 Patent the running royalty provisions of Section 5 will be reinstated and LICENSEE will pay LICENSOR on the next subsequent Royalty Payment Date the royalties due for ECC transactions in the Direct Consumer Field conducted after the date of the Final Judgment. If the Delaware Litigation is decided in LML’s favor and either TeleCheck or Nova file an appeal, LICENSEE will continue all royalty payments hereunder to LICENSOR pending such appeal. If such appeal results in a finding that TeleCheck or Nova do not to infringe the claims of the ‘988 patent, the obligation of LICENSEE to pay a running royalty with respect to ECC transactions conducted in the Direct Consumer Field shall terminate.

9.5.

Survival. The provisions of this Settlement and License Agreement shall survive except to the extent a provision is terminated in accordance with specific provisions contained herein.

10.1.

Amendment/Waiver. No modification, amendment, supplement to or waiver of any provision of this Settlement and License Agreement will be binding upon the Parties unless made in a writing signed by the Parties. A failure of any Party to exercise any right provided for herein shall not be deemed to be a waiver of any right hereunder.

10.2.

Assignment. This Settlement and License Agreement may not be assigned or transferred by a Party without the prior written consent of the other Party (not unreasonably withheld); provided, however, that either Party may assign its rights and obligations under this Settlement and License Agreement, in whole or in part to, any subsequent purchaser of such Party or any material portion of its assets (whether such sale is structured as a sale of stock, a sale of assets, a merger or otherwise), provided, further that (in the event that such subsequent purchaser conducted ECC transactions prior to the date of purchase) any such subsequent purchaser of LICENSEE is already a licensee under the Licensed Patents. If such subsequent purchaser of LICENSEE is not a licensee under the Licensed Patents but has conducted ECC transactions prior to the date of purchase for which royalties would be due to LICENSOR, this Settlement and License Agreement may still be assigned if, and only after, such subsequent purchaser enters into a release agreement with LICENSOR for any and all such transactions it conducted prior to the date of the release and pays LICENSOR a fee equal to what LICENSOR would have received if the transactions had been processed under LICENSEE’S running royalty fee structure as set forth in Section 5.3. If such subsequent purchaser of LICENSEE or any material portion of its assets is not a licensee under the Licensed Patents but has not conducted ECC transactions prior to the date of purchase for which royalties would be due to LICENSOR, this Settlement and License Agreement may be assigned to said subsequent purchaser by LICENSEE without further qualification. This Settlement and License Agreement shall be binding upon and inure to the benefit of the permitted assigns and successors of the Parties.

10.3.

Inclusion of Acquired Companies. In the event that LICENSEE acquires another company or business, or acquires products, services, technology, assets or business operations, the license and rights granted to LICENSEE under this Settlement and License Agreement may be extended to, and shall cover, such acquired company or business, if and only after, LICENSEE enters into a release agreement with LICENSOR for any and all ECC Direct Consumer Field transactions such company or business conducted prior to the date of the release and pays LICENSOR a fee equal to what LICENSOR would have received if the transactions had been processed under LICENSEE’S running royalty fee structure as set forth in Section 5.3.

10.4.

Entire Settlement and License Agreement. This Settlement and License Agreement sets forth the entire agreement between the Parties as it relates to the subject matter of this Settlement and License Agreement, and such documents replace and supersede any and all prior agreements, promises, proposals, representations, understandings and negotiations, written or not, between the Parties relating to the same.

10.5.

Expenses. Except as otherwise specifically provided in this Settlement and License Agreement, all costs and expenses incurred in connection with this Settlement and License Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs or expenses.

10.6.

Governing Law and Choice of Forum. Except as provided under Section 9.2, this Settlement and License Agreement shall be construed and interpreted in accordance with the laws of Delaware, without regard to conflict of law provisions. Except as provided under Section 9.2, any disputes arising hereunder shall be resolved in a Court of competent jurisdiction in Wilmington, Delaware.

10.7.

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

10.8.

Interpretation; Construction. The Parties have participated jointly in the negotiation and drafting of this Settlement and License Agreement. In the event an ambiguity or question of intent or interpretation arises, this Settlement and License 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 Settlement and License Agreement. The word “including” shall mean “including without limitation.”

10.9.

Licensee’s Retained Rights. The Parties acknowledge and agree that the Licensed 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 LICENSOR (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 Settlement and License Agreement or any agreement supplementary hereto, pursuant to Section 365 of the Code (“365”), or if this Settlement and License Agreement or any agreement supplementary hereto is deemed to be rejected pursuant to 365 for any reason, this Settlement and License Agreement, and any agreement supplementary hereto, shall be governed by Section 365(n) of the Code (“365(n)”) and LICENSEE will retain and may elect to fully exercise its rights under this Settlement and License Agreement in accordance with 365(n).

10.10.

Notices. If a Party is required or permitted to give notice to the other Party under this Settlement and License Agreement, such notice shall be deemed given either (a) when transmitted by facsimile or (b) two business days after depositing the notice in the U.S. mail, first-class postage prepaid, at the address specified below, or at such other address or facsimile number as the Party may specify in writing in accordance with this Section. 

10.11.

Scope of Agreement. Unless expressly provided to the contrary in this Settlement and License Agreement, this Settlement and License Agreement shall be binding upon and inure to the benefit of the parties, their successors in interest, their assigns and licensees, successors, assigns, and heirs.

 

Mr. Patrick H. Gaines

CEO and President

LML Patent Corp.

Suite 1680

1140 West Pender St.

Vancouver, BC V6E 4GI

 

with copy to:

 

Russell E. Levine, P.C.

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, Illinois 60601

 

Mr. Joel M. Barry

Chairman of the Board and CEO

Electronic Clearing House, Inc.

730 Paseo Camarillo

Camarillo, California 93010

 

 

with copy to:

 

V. Joseph Stubbs

Stubbs Alderton & Markiles, LLP

15260 Ventura Boulevard

20^th Floor

Sherman Oaks, California 91403

 

 

10.12.

Relationship of the Parties. This Settlement and License Agreement does not constitute and shall not be construed as constituting a partnership or joint venture between LICENSOR 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.

10.13.

Severability. If any provision of this Settlement and License Agreement is found or held to be invalid or unenforceable, the meaning of said provision will be construed, to the extent feasible, so as to render the provision enforceable, and if no feasible interpretation shall save such provision, it will be severed from the remainder of this Settlement and License Agreement, as appropriate. The remainder of this Settlement and License Agreement shall remain in full force and effect unless the severed provision is essential and material to the rights or benefits received by either Party. If either Party deems the severed provisions to be material, then that Party may terminate this Settlement and License Agreement upon giving thirty (30) days prior written notice.

10.14.

Counterparts. This Settlement and License Agreement, which with exhibits included consists of 30 pages, may be executed in two or more counterparts, each of which shall be considered one and the same document.

10.15.

Standstill. The parties agree that neither party shall initiate any patent infringement suit, action, or administrative proceeding against the other in the United States or Canada prior to April 1, 2009, except for breach of this Settlement and License Agreement, and the parties further agree that any and all statute of limitations, claims for monetary damages and other defenses are tolled during this standstill period. Any such suit filed after April 1, 2009 shall be preceeded by a sixty (60) day notice to the other party prior to initiation of any suit, during which time the parties shall negotiate in good faith to informally resolve any disputes that may exist between them.

By:

 

Name:

Patrick H. Gaines

Title:

CEO and President

Dated:

March __, 2006

ELECTRONIC CLEARING HOUSE, INC.

XPRESSCHEX, INC.

By:

By:

Name:

Joel M. Barry

Name:

Title:

Chairman of the Board and CEO

Title:

Dated:

March __, 2006

Dated:

March __, 2006

LML PATENT CORP.,

 

Plaintiff,

 

v.

 

TELECHECK SERVICES, INC.,

ELECTRONIC CLEARING HOUSE, INC.,

XPRESSCHEX, INC., and

NOVA INFORMATION SYSTEMS, INC.

 

Defendants.

)

)

)

)

)

)

)

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)

)

)

)

)

 

 

 

 

 

Civil Action No. 04-858 SLR

 

Jury Trial Demanded

·

LML’S MOTION FOR SUMMARY JUDGMENT NO. 2: FOR A RULING THAT ECHO INFRINGES CLAIMS 1, 2, 4, 5, 6, 9, 10, 11 AND 16 OF THE ‘988 PATENT (Dkt. No. 315)

·

ECHO AND XPRESSCHEX’S MOTION FOR SUMMARY JUDGMENT OF NON-INFRINGEMENT (Dkt. No. 347)

Richard K. Herrmann #405

MORRIS JAMES HITCHENS & WILLIAMS

222 Delaware Avenue, 10^th Floor

Wilmington, Delaware 19801

(302) 888-6800

 

Russell E. Levine, P.C.

Jamie H. McDole

KIRKLAND & ELLIS LLP

200 East Randolph Drive

Chicago, Illinois 60601

312 ###-###-####

 

Francis DiGiovanni (I.D. No. 3189)

CONNOLLY BOVE LODGE & HUTZ LLP

The Nemours Building

1007 N. Orange Street

Wilmington, Delaware 19801

302 ###-###-####

 

Mark B. Mizrahi

BELASCO JACOBS & TOWNSLEY, LLP

Howard Hughes Center

6100 Center Drive, Suite 630

Los Angeles, CA 90045

310 ###-###-####

 

and Xpresschex, Inc. 

Francis DiGiovanni, Esq. (I.D. No. 3189)

CONNOLLY BOVE LODGE & HUTZ

The Nemours Building

1007 N. Orange Street

Wilmington, Delaware 19801

 

Mark B. Mizrahi, Esq.

BELASCO JACOBS & TOWNSLEY

Howard Hughes Center

6100 Center Drive, Suite 630

Los Angeles, CA 90045

 

Richard D. Kirk, Esq. (I.D. No. 922)

THE BAYARD FIRM

222 Delaware Avenue, Suite 900

Wilmington, DE 19801

Mark Scarsi, Esq.

Vision Winter, Esq.

O'Melveny & Myers LLP

400 South Hope Street

Los Angeles, CA 90071

 

 

William Marsden, Esq.

Timothy Devlin, Esq.

Fish & Richardson

919 N. Market Street, Suite 1100

Wilmington, DE 19801

Richard K. Herrmann (I.D. No. 405)

MORRIS, JAMES, HITCHENS & WILLIAMS

222 Delaware Avenue, 10^th Floor

Wilmington, Delaware 19801

302 ###-###-####

The Honorable Louis C. Bechtle

Conrad, O'Brien, Gellman & Rohn PC

1515 Market Street, 16th Floor

Philadelphia, PA 19102-1916

 

Very truly yours,

 

 

Richard K. Herrmann

cc:

All counsel via email

Patrick H. Gaines

President and CEO

(604) 689-4440

 

Investor Relations

(800) 888-2260

Brian Pitts

(312) 861-3115

#1)

An ECC transaction in the Direct Consumer Field where LICENSEE serves as the party that captures the check data and clears the transaction through the ACH.

#2)

An ECC transaction in the Direct Consumer Field where another party has captured the check data and is having LICENSEE settle the transaction through the ACH.

#3)

An ECC transaction in the Direct Consumer Field where LICENSEE captures the check data and transfers the capture file off to the third party (or designee) for ACH processing.

#4)

A point of purchase check transaction that is processed through LICENSEE’s verification database, whether as a prelude to being converted by another party or not.

#5)

A point of purchase guarantee transaction wherein LICENSEE provides a check guarantee service and in so doing, uses or accepts an electronic file from itself or any party, whether the check data was captured through ECC or not.

#6)

LICENSEE operates as the Third Party Processor.

#7)

LICENSEE operates as an Acquirer Processor.

#8)

LICENSEE sells the Visa ECC Transaction service directly to a merchant and thereby processes Direct Consumer Field transactions both as the Acquirer Processor and the Third Party Processor.

#9)

Participating Transactions are Direct Consumer Field transactions that do not get directed to LICENSEE as the Third Party Processor but are settled directly between the merchant, Visa and the check writer banks.