SETTLEMENT AND LICENSE AGREEMENT
EXHIBIT
10.2
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
THIS
SETTLEMENT AND PATENT LICENSE AGREEMENT (the
“Settlement and License Agreement”) is entered on April
3,
2006 (the
“Effective Date”) by and among LML Patent Corp., a Delaware corporation having
its principal place of business at Corporation Trust Centre, 0000 Xxxxxx Xxxxxx,
Xxxx xx Xxxxxxxxxx, Xxxxxx of Xxx Xxxxxx, Xxxxxxxx, 00000 (“LICENSOR”), and
Electronic Clearing House, Inc., a Nevada corporation having its principal
place
of business at 000 Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 and its
wholly-owned subsidiary Xpresschex, Inc., a New Mexico corporation having its
principal place of business at 000 Xxxxxxx XX, Xxxxx 0X, Xxxxxxxxxxx, Xxx Xxxxxx
00000 (collectively “ECHO” and/or the
“LICENSEE”).
RECITALS
WHEREAS,
LICENSOR owns rights in certain U.S. Patents related to making, using, offering
for sale and selling Electronic Check Conversion systems and services in the
Direct Consumer Field; and
WHEREAS,
LICENSOR filed suit against LICENSEE in the United States District Court for
the
District of Delaware, Case No. CA-04-858, alleging infringement of certain
LICENSOR patents by certain of LICENSEE’s products, systems and/or services
(“Delaware Litigation”).
WHEREAS,
LICENSOR desires to grant to LICENSEE, and LICENSEE desires to obtain from
LICENSOR, a license for the right to use the invention of LICENSOR’s patents for
use in connection with all the transactions in which LICENSEE is involved in
the
Direct Consumer Field; and the parties desire to settle the litigation between
them.
NOW,
THEREFORE,
in
consideration of the covenants contained in this Settlement and License
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
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1.
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DEFINITIONS.
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The
following terms, when used in this Settlement
and License Agreement with initial capital letters, shall have the respective
meanings set forth in this Section 1.
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1.1.
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“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.
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1.2.
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“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.
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1.3.
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“ACH”
means the Automated Clearing House.
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*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
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1.4.
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“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.
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1.5.
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“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.
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1.6.
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“Confidential
Information”
has the meaning set forth in Section
6.
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1.7.
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“Consumer”
means any entity which either:
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(a)
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purchases
or offers to purchase goods or services from a Merchant;
or
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(b)
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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.
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1.8.
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“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.”
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1.9.
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“Effective
Date”
has the meaning set forth in the
preamble.
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1.10.
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“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.
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1.11.
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“Final
Judgment”
is the decision of the District Court for the District of Delaware
in Case
No. CA-04-858.
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1.12.
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“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.
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1.13.
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“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.
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1.14.
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“ISO”
means Independent Sales
Organization.
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1.15.
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“Licensed
Activity”
means making, using, offering for sale or selling one or more steps
of ECC
in the Direct Consumer Field.
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1.16.
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“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.
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1.17.
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“License
Term”
means the time period beginning on the Effective Date and ending
on
January 16, 2013.
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1.18.
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“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.
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1.19.
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“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.
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1.20.
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“Merchant
Account Information”
means the electronic form of information relating to the bank and
banking
account of a Merchant.
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2
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
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1.21.
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“Non-Visa
ECC Transaction”
means any ECC transaction in the Direct Consumer Field that is not
a Visa
ECC Transaction.
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1.22.
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“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.
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1.23.
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“Parties”
means LICENSOR and LICENSEE,
collectively.
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1.24.
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“Party”
means each of LICENSOR and LICENSEE,
individually.
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1.25.
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“Person”
means an individual, corporation, partnership, joint venture, trust,
unincorporated organization or similar organization or any other
legal
entity.
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1.26.
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“Territory”
means the United States of America, its territories and possessions,
including, without limitation, the District of Columbia and the
Commonwealth of Puerto Rico;
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1.27.
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“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.
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1.28.
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“Visa
ECC Transaction”
means any ECC transaction processed through the Visa network (a.k.a.
the
Visa Net).
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1.29.
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“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.
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2.
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SETTLEMENT
OF THE LITIGATION.
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2.1.
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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).
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2.2.
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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.
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2.3.
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No
Admissions of Liability.
By entering into this Settlement and License Agreement, LICENSEE
is not
making any admissions of liability.
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2.4.
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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.
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2.5.
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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.
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3
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
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3.
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LICENSE
OF RIGHTS.
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3.1.
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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.
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3.2.
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No
Transfer Of License Grant.
Except as expressly provided for in Section 10.2, the license granted
hereunder is not assignable or
transferable.
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3.3.
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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.
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3.4.
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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.
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3.5.
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Covenant
Not to Xxx.
Subject to and except as set forth in Section 5.3, LICENSOR covenants
not
to xxx 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.
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4.
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RELEASE.
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4.1.
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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.
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4.2.
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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.
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5.
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PAYMENTS.
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5.1.
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Release
Fee Payment.
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As
consideration for LICENSOR entering into the release set forth in Section 4.1,
LICENSEE agrees to pay LICENSOR Four Hundred
Thousand
($400,000.00) U.S. Dollars by wire transfer to the following account on the
Effective Date:
4
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
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Beneficiary:
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LML
Patent Corp.
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Beneficiary
Address:
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0000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx,
Xxxxx 00000
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Bank
Name:
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*
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Bank
Address:
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*
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Bank
Account #:
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*
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Bank
Routing #:
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*
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The
Release Fee Payment is not refundable. Said
payment recognizes part of the ECC transaction volume of the LICENSEE has been
generated from other parties and the payment by LICENSEE will therefore inure
to
the benefit of those same parties whose transactions LICENSEE has processed
as
ECC transactions over the years such that those parties will not be required
to
also make any royalty payment, except as set forth in Section 5.3, on such
past
transactions.
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5.2.
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Standstill
Fee Payment.
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As
consideration for LICENSOR entering in the Standstill agreement set forth in
Section 10.15 herein, LICENSEE agrees to pay LICENSOR Two Hundred Thousand
($200,000.00) U.S. Dollars by wire transfer to the above account on the
Effective Date.
This
paragraph shall not supercede any provision set forth in Section 10.15
herein.
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5.3.
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Direct
Consumer Field Running Royalties.
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(a)
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* 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 *.
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(b)
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* 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:
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(1)
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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
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(2)
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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.
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(c)
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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.
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5
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
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(d)
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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*.
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(e)
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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).
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(f)
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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.
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5.4.
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Running
Royalty Payments, Timing and Reports.
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(a)
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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.
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(b)
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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.
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6
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
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(c)
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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.
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5.5.
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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.
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6.
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CONFIDENTIALITY.
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6.1.
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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.
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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.
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6.3.
|
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.
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7.
|
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.
|
7
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
|
(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.
|
|
8.
|
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.
|
|
9.
|
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.
|
8
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
|
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.
|
MISCELLANEOUS
PROVISIONS.
|
|
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.
|
9
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
|
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.
|
|
To
LICENSOR
Xx.
Xxxxxxx X. Xxxxxx
CEO
and President
LML
Patent Corp.
Xxxxx
0000
0000
Xxxx Xxxxxx Xx.
Xxxxxxxxx,
XX X0X 0XX
with
copy to:
Xxxxxxx
X. Xxxxxx, P.C.
Xxxxxxxx
& Xxxxx LLP
000
Xxxx Xxxxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxx 00000
|
To
ECHO
Xx.
Xxxx X. Xxxxx
Chairman
of the Board and CEO
Electronic
Clearing House, Inc.
000
Xxxxx Xxxxxxxxx
Xxxxxxxxx,
Xxxxxxxxxx 00000
with
copy to:
V.
Xxxxxx Xxxxxx
Xxxxxx
Xxxxxxxx & Markiles, LLP
00000
Xxxxxxx Xxxxxxxxx
00xx
Xxxxx
Xxxxxxx
Xxxx, Xxxxxxxxxx 00000
|
|
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
*TEXT
OMITTED AND FILED SEPARATELY. CONFIDENTIAL TREATMENT REQUESTED BY ELECTRONIC
CLEARING HOUSE, INC. UNDER 17 C.F.R. SECTIONS 200.80(b)(4) 200.83 AND
240.24b-2
|
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.
|
*
* * *
*
IN
WITNESS WHEREOF, the Parties have caused this Settlement and License Agreement
to be executed by their duly authorized officers as of the Effective
Date.
LML
PATENT CORP.
|
By:
|
|
||
|
Name:
|
Xxxxxxx
X. Xxxxxx
|
||
|
Title:
|
CEO
and President
|
||
|
Dated:
|
March
__, 2006
|
||
|
ELECTRONIC
CLEARING HOUSE, INC.
|
XPRESSCHEX,
INC.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Xxxx
X. Xxxxx
|
Name:
|
||
|
Title:
|
Chairman
of the Board and CEO
|
Title:
|
||
|
Dated:
|
March
__, 2006
|
Dated:
|
March
__, 2006
|
|
11
EXHIBIT
1
IN
THE UNITED STATES DISTRICT COURT
FOR
THE DISTRICT OF DELAWARE
|
LML
PATENT CORP.,
Plaintiff,
v.
TELECHECK
SERVICES, INC.,
ELECTRONIC
CLEARING HOUSE, INC.,
XPRESSCHEX,
INC., and
NOVA
INFORMATION SYSTEMS, INC.
Defendants.
|
)
)
)
)
)
)
)
)
)
)
)
)
)
|
Civil
Action No. 04-858 SLR
Jury
Trial Demanded
|
STIPULATED
DISMISSAL PERTAINING
TO
SOME BUT NOT ALL DEFENDANTS
WHEREAS,
plaintiff, LML Patent Corp., and defendants Electronic Clearing House, Inc.
and
XpressChex, Inc., as indicated by the signature of counsel appearing below,
have
agreed to the dismissal of Electronic Clearing House, Inc. and XpressChex,
Inc.
from this action pursuant to Federal Rule of Civil Procedure 41 and subject
to
the terms of this Order and a confidential Settlement
and License Agreement,
dated
March __, 2006,
NOW,
THEREFORE, it is ordered as follows:
1.
The
claims by LML Patent Corp. against Electronic Clearing House, Inc. and
XpressChex, Inc. are hereby dismissed with prejudice with respect to Electronic
Clearing House, Inc. and XpressChex, Inc.
2.
Each
party shall bear its own costs and attorneys fees attributable to the
prosecution and defense of the claims against Electronic Clearing House, Inc.
and XpressChex, Inc.
3.
As
a
result of this stipulated dismissal, the following motions are rendered
moot:
|
·
|
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)
|
STIPULATED
AND AGREED
12
|
/s/
Xxxxxxx X. Xxxxxxxx
|
/s/
Xxxxxxx XxXxxxxxxx
|
|
|
Xxxxxxx
X. Xxxxxxxx #405
XXXXXX
XXXXX XXXXXXXX & XXXXXXXX
000
Xxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
(302)
888-6800
xxxxxxxxx@xxxxxxxxxxx.xxx
Xxxxxxx
X. Xxxxxx, P.C.
Xxxxx
X. XxXxxx
XXXXXXXX
& XXXXX LLP
000
Xxxx Xxxxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxx 00000
312.861.2000
Counsel
for Plaintiff
LML
Patent Corp.
|
Xxxxxxx
XxXxxxxxxx (I.D. No. 3189)
XXXXXXXX
XXXX LODGE & HUTZ LLP
The
Nemours Building
0000
X. Xxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
302.658.9141
xxxxxxxxxxx@xxxx.xxx
Xxxx
X. Xxxxxxx
XXXXXXX
XXXXXX & XXXXXXXX, LLP
Xxxxxx
Xxxxxx Center
0000
Xxxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxxxx, XX 00000
310.743.1188
Counsel
for Defendants
Electronic
Clearing House, Inc.
and
Xpresschex, Inc.
|
SO
ORDERED this ______ day of ______________________, 2006.
|
Judge
Xxx X. Xxxxxxxx
|
13
CERTIFICATE
OF SERVICE
I
hereby
certify that on the __ day of _______, 2006, I electronically filed the
foregoing document, STIPULATED
DISMISSAL,
with
the Clerk of the Court using CM/ECF which will send notification of such filing
to the following:
|
Xxxxxxx
XxXxxxxxxx, Esq. (I.D. No. 3189)
XXXXXXXX
XXXX LODGE & HUTZ
The
Nemours Building
0000
X. Xxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
Xxxx
X. Xxxxxxx, Esq.
XXXXXXX
XXXXXX & XXXXXXXX
Xxxxxx
Xxxxxx Center
0000
Xxxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxxxx, XX 00000
Xxxxxxx
X. Xxxx, Esq. (I.D. No. 922)
THE
BAYARD FIRM
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
|
Xxxx
Xxxxxx, Esq.
Vision
Winter, Esq.
O'Melveny
& Xxxxx LLP
000
Xxxxx Xxxx Xxxxxx
Xxx
Xxxxxxx, XX 00000
Xxxxxxx
Xxxxxxx, Esq.
Xxxxxxx
Xxxxxx, Esq.
Fish
& Xxxxxxxxxx
000
X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
|
|
/s/
Xxxxxxx X. Xxxxxxxx
|
|
Xxxxxxx
X. Xxxxxxxx
(I.D. No.
405)
|
|
Xxxx
X. Xxxxxxxx (I.D. No. 2696)
|
|
MORRIS,
JAMES, HITCHENS & XXXXXXXX
|
|
000
Xxxxxxxx Xxxxxx, 00xx
Xxxxx
|
|
Xxxxxxxxxx,
Xxxxxxxx 00000
|
|
302.888.6800
|
|
xxxxxxxxx@xxxxxxxxxxx.xxx
|
|
xxxxxxxxx@xxxxxxxxxxx.xxx
|
Counsel
for Plaintiff LML Patent Corp.
14
EXHIBIT
2
___________,
2006
|
VIA
FACSIMILE
|
|
The
Xxxxxxxxx Xxxxx X. Xxxxxxx
Xxxxxx,
X'Xxxxx, Xxxxxxx & Xxxx PC
0000
Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx,
XX 00000-0000
|
|
Re:
|
LML
Patent Corp. v. TeleCheck, et al,
|
D.
Del., Civil Action No. 04-858 SLR
Dear
Judge Bechtle:
This
letter is to inform your Honor of a significant development in the above
captioned case. On March __, 2006, plaintiff LML Patent Corp. and defendants
Electronic Clearing House, Inc. and XpressChex, Inc. (collectively “ECHO”)
settled LML’s claims against ECHO. As a result of this settlement, LML and ECHO
signed and filed a stipulated dismissal of ECHO pursuant to Federal Rule of
Civil Procedure 41, attached hereto.
The
dismissal of ECHO from this case renders moot LML’s November 10, 2005
application for fees relating to its motion to compel the production of
documents from ECHO. If
you
have any questions, please feel free to call me.
|
Very
truly yours,
|
|
|
Xxxxxxx
X. Xxxxxxxx
|
RKH/djp
|
cc:
|
All
counsel via email
|
15
EXHIBIT
3
Statement
for Public Release Pursuant to Section 6.2
Electronic
Clearing House, Inc. and its wholly-owned subsidiary
Xpresschex,
Inc. Enter
Into Patent License With LML
VANCOUVER,
BC, April
3,
2006 -
LML Patent Corp. (“LML”), a wholly-owned subsidiary of LML Payment Systems Inc.
(the “Corporation”) (Nasdaq: LMLP) announced today that Electronic
Clearing House, Inc. and its wholly-owned subsidiary Xpresschex, Inc.
(collectively “ECHO”)
have
settled litigation, and entered into a patent license agreement, with LML.
The
Settlement and License Agreement provides ECHO with a license to LML’s patents
for electronic check conversion in the Direct Consumer Field (NACHA standard
entry class code “POP”), including LML’s U.S. Patent Nos. 5,484,988; 6,164,528
and 6,283,366. Terms of the
Settlement and License Agreement are confidential.
“We
are
extremely pleased to have settled our litigation with ECHO and we welcome them
as another of our valued licensees,” said Xxxxxxx X. Xxxxxx, chief executive
officer and president of LML Patent Corp. and LML Payment Systems Inc. “Revenue
attributed to the settlement is expected to be recorded this quarter and revenue
from running royalties is expected to be recorded in the period in which they
are earned,” he added. Xx. Xxxxxx also said “Our litigation against Telecheck
and Nova will continue until they too acknowledge the value of our patented
technology.”
LML
was
represented in the license negotiations and in the litigation by Xxxxxxx X.
Xxxxxx of the law firm Xxxxxxxx & Xxxxx LLP.“As
a
result of the settlement of the litigation against ECHO, LML’s pending motion
asking the court to rule as a matter of law that ECHO infringes LML’s ‘988
patent will be dismissed as moot,” said Xx. Xxxxxx. “Oral argument on that and
other motions was held on December 19, 2005 and a decision from the court was
expected prior to the scheduled trial date in April 2006,” Xx. Xxxxxx added.
“LML’s similar motions related to the other defendants, Telecheck Services, Inc.
and Nova Information Systems, Inc. will remain pending as will other motions
addressing issues not unique to ECHO,” he added.
About
LML Payment Systems Inc. (xxx.xxxxxxxxxx.xxx)
The
Corporation, through its subsidiary LML Payment Systems Corp., is a financial
payment processor providing check processing solutions including electronic
check authorization, electronic check conversion (ECC) and primary and secondary
check collection including electronic check re-presentment (RCK) to national,
regional and local retailers. The Corporation also provides selective routing
of
debit, credit and EBT transactions to third party processors and banks for
authorization and settlement. The Corporation’s intellectual property estate,
owned by subsidiary LML Patent Corp., includes U.S. Patent No. 6,354,491, No.
6,283,366, No. 6,164,528, and No. 5,484,988 all of which relate to electronic
check processing methods and systems.
About
Xxxxxxxx & Xxxxx LLP (xxx.xxxxxxxx.xxx)
Xxxxxxxx
& Xxxxx LLP is a 1,000-attorney law firm representing global clients in
complex corporate and tax, workout, insolvency and bankruptcy, litigation,
dispute resolution and arbitration, and intellectual property and technology
matters. The Firm has offices in Chicago, London, Los Angeles, New York, Munich,
San Francisco and Washington.
Statements
contained in this news release which are not historical facts are
forward-looking statements, subject to uncertainties and risks. For a discussion
of the risks associated with the Corporation’s business, please see the
documents filed by the Corporation with the SEC.
|
LML
Payment Systems, Inc.
Xxxxxxx
X. Xxxxxx
President
and CEO
(000)
000-0000
Investor
Relations
(000)
000-0000
|
Xxxxxxxx
& Xxxxx LLP
Xxxxx
Xxxxx
(000)
000-0000
|
16
EXHIBIT
4
Non-Visa
transaction types:
|
#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.
|
Visa
transaction types:
|
#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.
|
17
EXHIBIT
5
FOR
IMMEDIATE RELEASE
Electronic
Clearing House (ECHO)
Settles Patent Litigation
Camarillo,
Calif., April 3, 2006
-
Electronic Clearing House, Inc. (NASDAQ: ECHO),
a
leading provider of electronic payment and transaction processing services,
announced today that it and its wholly owned subsidiary, XpressCheX, Inc.,
have
reached an agreement with LML
Patent Corp. (“LML”), a wholly-owned subsidiary of LML Payment Systems
Inc.,
to
settle a litigation matter alleging infringement of certain LML
patents.
Under
the
terms of the settlement, ECHO
and
XpressCheX entered into an agreement to license LML’s patents
for electronic check conversion in the Direct Consumer Field (NACHA standard
entry class code “POP”), including LML’s U.S. Patent Nos. 6,354,491; 5,484,988;
6,164,528 and 6,283,366.
Each
of
ECHO,
XpressCheX and LML also agreed, for a period continuing through April 1, 2009,
not to initiate any other patent infringement claims in the United States or
Canada against each other.
Specific
financial and other terms of the agreement were not disclosed.
“We
are
pleased to put the LML patent issue behind us. Whenever possible, we
believe it is preferable to resolve business uncertainties so, in
this case, while we were confident in our own legal position, we felt
reaching a settlement prior to a long and costly trial was the best
option. With this settled, we can now dedicate our time and
resources toward an effective execution of our strategic sales and
operational initiatives,” stated Xxxx Xxxxx, Chairman and Chief Executive
Officer of ECHO.
About
Electronic Clearing House, Inc. (ECHO)
ECHO
(xxx.xxxx-xxx.xxx)
provides a complete solution to the payment processing needs of merchants,
banks
and collection agencies. ECHO's
services include debit and credit card processing, check guarantee, check
verification, check conversion, check re-presentment, and check collection.
Contact:
Xxxxx
Xxxxxx, Corporate Secretary
(000)
000-0000, ext. 8533
Electronic
Clearing House, Inc.
Camarillo,
CA
URL:xxxx://xxx.xxxx-xxx.xxx
X-XXXX:xxxx@xxxx-xxx.xxx
#
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