SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 29, 2015,
is entered into by and between AVALANCHE INTERNATIONAL, CORP., a Nevada
corporation (“Company”), and TYPENEX CO-INVESTMENT, LLC, a Utah limited
liability company, its successors and/or assigns (“Investor”).

 

A.                 Company and Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the rules and regulations promulgated by the United States Securities and
Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended
(the “1933 Act”).

 

B.                 Investor desires to purchase and Company desires to issue and
sell, upon the terms and conditions set forth in this Agreement (i) a Secured
Convertible Promissory Note, in the form attached hereto as Exhibit A, in the
original principal amount of $252,500.00 (the “Note”), convertible into shares
of common stock, $0.001 par value per share, of Company (the “Common Stock”),
upon the terms and subject to the limitations and conditions set forth in such
Note, and (ii) 15,000 shares of Common Stock (the “Origination Shares”).

 

C.                 This Agreement, the Note, the Security Agreement (as defined
below), the Investor Notes (as defined below), and all other certificates,
documents, agreements, resolutions and instruments delivered to any party under
or in connection with this Agreement, as the same may be amended from time to
time, are collectively referred to herein as the “Transaction Documents”.

 

D.                 For purposes of this Agreement: “Conversion Shares” means all
shares of Common Stock issuable upon conversion of all or any portion of the
Note; and “Securities” means the Note, the Origination Shares and the Conversion
Shares.

 

NOW, THEREFORE, in consideration of the above recitals and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Company and Investor hereby agree as follows:

 

1.                  Purchase and Sale of Securities.

 

1.1.            Purchase of Securities. Company shall issue and sell to Investor
and Investor agrees to purchase from Company the Note and the Origination
Shares. In consideration thereof, Investor shall pay (i) the amount designated
as the initial cash purchase price on Investor’s signature page to this
Agreement (the “Initial Cash Purchase Price”), and (ii) issue to Company the
Investor Notes (the sum of the initial principal amount of the Investor Notes,
together with the Initial Cash Purchase Price, the “Purchase Price”). The
Purchase Price, the OID (as defined below), and the Transaction Expense Amount
(as defined below) are allocated to the Tranches (as defined in the Note) of the
Note and to the Origination Shares as set forth in the table attached hereto as
Exhibit B. For the avoidance of doubt, the Initial Cash Purchase Price
constitutes payment in full for the Initial Tranche (as defined in the Note) and
the Origination Shares.

 

1.2.            Form of Payment. On the Closing Date, (i) Investor shall pay the
Purchase Price to Company by delivering the following at the Closing: (A) the
Initial Cash Purchase Price, which shall be delivered by wire transfer of
immediately available funds to Company, in accordance with Company’s written
wiring instructions; (B) Investor Note #1 in the principal amount of $50,000.00
duly executed and substantially in the form attached hereto as Exhibit C
(“Investor Note #1”); (C) Investor Note #2 in the principal amount of $50,000.00
duly executed and substantially in the form attached hereto as Exhibit C
(“Investor Note #2”); and (D) Investor Note #3 in the principal amount of
$50,000.00 duly executed and substantially in the form attached hereto as
Exhibit C (“Investor Note #3”, and together with Investor

1

 

 

Note #2, the “Investor Notes”); and (ii) Company shall deliver the duly executed
Note on behalf of Company and deliver a certificate representing the Origination
Shares, to Investor, against delivery of such Purchase Price.

 

1.3.            Closing Date. Subject to the satisfaction (or written waiver) of
the conditions set forth in Section 5 and Section 6 below, the date and time of
the issuance and sale of the Securities pursuant to this Agreement (the “Closing
Date”) shall be 5:00 p.m., Eastern Time on or about May 29, 2015, or such other
mutually agreed upon time. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall occur on the Closing Date by means of the
exchange by express courier and email of .pdf documents, but shall be deemed to
have occurred at the offices of Hansen Black Anderson Ashcraft PLLC in Lehi,
Utah.

 

1.4.            Collateral for the Note. The Note shall be secured by the
collateral set forth in that certain Security Agreement attached hereto as
Exhibit D listing the Investor Notes as security for Company’s obligations under
the Transaction Documents (the “Security Agreement”).

 

1.5.            Collateral for Investor Notes. Initially, none of the Investor
Notes will be secured, but all or any of the Investor Notes may become secured
subsequent to the Closing by such collateral and at such time as determined by
Investor in its sole discretion. In the event Investor desires to secure any of
the Investor Notes, Company shall timely execute any and all amendments and
documents and take such other measures requested by Investor that are necessary
or advisable in order to properly secure the applicable Investor Notes.

 

1.6.            Original Issue Discount; Transaction Expenses. The Note carries
an original issue discount of $22,500.00 (the “OID”). In addition, Company
agrees to pay $5,000.00 to Investor to cover Investor’s legal fees, accounting
costs, due diligence, monitoring and other transaction costs incurred in
connection with the purchase and sale of the Securities (the “Transaction
Expense Amount”), all of which amount is included in the initial principal
balance of the Note. The Purchase Price, therefore, shall be $225,000.00,
computed as follows: $252,500.00 original principal balance, less the OID, less
the Transaction Expense Amount. The Initial Cash Purchase Price shall be the
Purchase Price less the sum of the initial principal amounts of the Investor
Notes. The portion of the OID and the Transaction Expense Amount allocated to
the Initial Cash Purchase Price are set forth on Exhibit B.

 

2.                  Investor’s Representations and Warranties. Investor
represents and warrants to Company that: (i) this Agreement has been duly and
validly authorized; (ii) this Agreement constitutes a valid and binding
agreement of Investor enforceable in accordance with its terms; (iii) Investor
is an “accredited investor” as that term is defined in Rule 501(a) of Regulation
D of the 1933 Act; and (iv) this Agreement and the Investor Notes have been duly
executed and delivered on behalf of Investor.

 

3.                  Representations and Warranties of Company. Company
represents and warrants to Investor that: (i) Company is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has the requisite corporate power to own its properties and to
carry on its business as now being conducted; (ii) Company is duly qualified as
a foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property owned by it
makes such qualification necessary; (iii) Company has registered its Common
Stock under Section 15(d) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), and is obligated to file reports pursuant to Section 13 or
Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and the
transactions contemplated hereby and thereby, have been duly and validly
authorized by Company; (v) this Agreement, the Note, the Security Agreement and
the other Transaction Documents have been duly executed and delivered by Company
and constitute the valid and binding obligations of Company enforceable in
accordance with their terms, subject as to enforceability only to general
principles of equity and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors’ rights generally; (vi) the
execution and delivery of the Transaction

2

 

 

Documents by Company, the issuance of Securities in accordance with the terms
hereof, and the consummation by Company of the other transactions contemplated
by the Transaction Documents do not and will not conflict with or result in a
breach by Company of any of the terms or provisions of, or constitute a default
under (a) Company’s formation documents or bylaws, each as currently in effect,
(b) any indenture, mortgage, deed of trust, or other material agreement or
instrument to which Company is a party or by which it or any of its properties
or assets are bound, including any listing agreement for the Common Stock, or
(c) any existing applicable law, rule, or regulation or any applicable decree,
judgment, or order of any court, United States federal or state regulatory body,
administrative agency, or other governmental body having jurisdiction over
Company or any of Company’s properties or assets; (vii) no further
authorization, approval or consent of any court, governmental body, regulatory
agency, self- regulatory organization, or stock exchange or market or the
stockholders or any lender of Company is required to be obtained by Company for
the issuance of the Securities to Investor; (viii) none of Company’s filings
with the SEC contained, at the time they were filed, any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; (ix) Company has filed
all reports, schedules, forms, statements and other documents required to be
filed by Company with the SEC under the 1934 Act on a timely basis or has
received a valid extension of such time of filing and has filed any such report,
schedule, form, statement or other document prior to the expiration of any such
extension; (x) Company has not consummated any financing transaction that has
not been disclosed in a periodic filing with the SEC under the 1934 Act; (xi)
Company is not currently, nor has it been since July 21, 2014, a “Shell
Company,” as such type of “issuer” is described in Rule 144(i)(1) under the 1933
Act; (xii) with respect to any commissions, placement agent or finder’s fees or
similar payments that will or would become due and owing by Company to any
person or entity as a result of this Agreement or the transactions contemplated
hereby (“Broker Fees”), any such Broker Fees will be made in full compliance
with all applicable laws and regulations and only to a person or entity that is
a registered investment adviser or registered broker-dealer; (xiii) Investor
shall have no obligation with respect to any Broker Fees or with respect to any
claims made by or on behalf of other persons for fees of a type contemplated in
this subsection that may be due in connection with the transactions contemplated
hereby and Company shall indemnify and hold harmless each of Investor,
Investor’s employees, officers, directors, stockholders, managers, agents, and
partners, and their respective affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorneys’ fees) and
expenses suffered in respect of any such claimed or existing Broker Fees; (xiv)
when issued, the Origination Shares and the Conversion Shares will be duly
authorized, validly issued, fully paid for and non-assessable, free and clear of
all liens, claims, charges and encumbrances; (xv) neither Investor nor any of
its officers, directors, members, managers, employees, agents or representatives
has made any representations or warranties to Company or any of its officers,
directors, employees, agents or representatives except as expressly set forth in
the Transaction Documents and, in making its decision to enter into the
transactions contemplated by the Transaction Documents, Company is not relying
on any representation, warranty, covenant or promise of Investor or its
officers, directors, members, managers, employees, agents or representatives
other than as set forth in the Transaction Documents; and (xvi) Company has
performed due diligence and background research on Investor and its affiliates
including, without limitation, John M. Fife, and, to its satisfaction, has made
inquiries with respect to all matters Company may consider relevant to the
undertakings and relationships contemplated by the Transaction Documents
including, among other things, the following:
http://investing.businessweek.com/research/stocks/people/person.asp?personId=7505107&ticker=UAHC;
SEC Civil Case No. 07-C-0347 (N.D. Ill.); SEC Civil Action No. 07-CV-347 (N.D.
Ill.); and FINRA Case #2011029203701. Company, being aware of the matters
described in subsection (xvi) above, acknowledges and agrees that such matters,
or any similar matters, have no bearing on the transactions contemplated by the
Transaction Documents and covenants and agrees it will not use any such
information as a defense to performance of its obligations under the Transaction
Documents or in any attempt to avoid, modify or reduce such obligations and
shall not pay such proceeds to any other party pursuant to any financing
transaction effected prior to the date hereof.

3

 

 

4.                  Company Covenants. Until all of Company’s obligations under
all of the Transaction Documents are paid and performed in full, or within the
timeframes otherwise specifically set forth below, Company shall comply with the
following covenants: (i) so long as Investor beneficially owns any of the
Securities and for at least twenty (20) Trading Days thereafter, Company shall
file all reports required to be filed with the SEC pursuant to Sections 13 or
15(d) of the 1934 Act, and shall take all reasonable action under its control to
ensure that adequate current public information with respect to Company, as
required in accordance with Rule 144 of the 1933 Act, is publicly available, and
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
permit such termination; (ii) the Common Stock shall be listed or quoted for
trading on any of (a) NYSE, (b) NASDAQ, (c) OTCQX, (d) OTCQB, or (e) OTC Pink
Current Information; (iii) when issued, the Origination Shares and the
Conversion Shares will be duly authorized, validly issued, fully paid for and
non-assessable, free and clear of all liens, claims, charges and encumbrances;
(iv) Company shall use the net proceeds received hereunder for working capital
and general corporate purposes only and shall not pay such proceeds to any other
party pursuant to any financing transaction effected prior to the date hereof;
(v) trading in Company’s Common Stock shall not be suspended, halted, chilled,
frozen, reach zero bid or otherwise cease on the Company’s principal trading
market; (vi) from and after the date hereof and until all of Company’s
obligations hereunder and the Note are paid and performed in full, Company shall
not transfer, assign, sell, pledge, hypothecate or otherwise alienate or
encumber the Investor Notes in any way without the prior written consent of
Investor; and (vii) at all times during which the Note remains outstanding,
Company shall not have at any given time more than five (5) Variable Security
Holders (as defined below), excluding Investor, without Investor’s prior written
consent. For purposes hereof, the term “Variable Security Holder” means any
holder of any Company securities that are convertible into Common Stock
(including without limitation convertible debt, warrants or convertible
preferred stock) with a conversion price that varies with the market price of
the Common Stock.

 

5.                  Conditions to Company’s Obligation to Sell. The obligation
of Company hereunder to issue and sell the Securities to Investor at the Closing
is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions:

 

5.1.            Investor shall have executed this Agreement and the Investor
Notes and delivered the same to Company.

 

5.2.            Investor shall have delivered the Initial Cash Purchase Price to
Company in accordance with Section 1.2 above.

 

6.                  Conditions to Investor’s Obligation to Purchase. The
obligation of Investor hereunder to purchase the Securities at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for Investor’s sole
benefit and may be waived by Investor at any time in its sole discretion:

 

6.1.            Company shall have executed this Agreement and delivered the
same to Investor.

 

6.2.            Company shall have delivered to Investor the duly executed Note
in accordance with Section 1.2 above.

 

6.3.            Company shall have delivered to Investor a certificate
representing the Origination Shares.

 

6.4.            Company shall have delivered to Investor a fully executed
Irrevocable Letter of Instructions to Transfer Agent substantially in the form
attached hereto as Exhibit E acknowledged in writing by Company’s transfer agent
(the “Transfer Agent”).

4

 

 

6.5.            Company shall have delivered to Investor a fully executed
Secretary’s Certificate substantially in the form attached hereto as Exhibit F
evidencing Company’s approval of the Transaction Documents.

 

6.6.            Company shall have delivered to Investor a fully executed Share
Issuance Resolution substantially in the form attached hereto as Exhibit G to be
delivered to the Transfer Agent.

 

6.7.            Company shall have delivered to Investor fully executed copies
of the Security Agreement and all other Transaction Documents required to be
executed by Company herein or therein.

 

7.                  Reservation of Shares. At all times during which the Note is
convertible, Company will reserve from its authorized and unissued Common Stock
to provide for the issuance of Common Stock upon the full conversion of the Note
at least three (3) times the quotient obtained by dividing the Outstanding
Balance (as defined in the Note) by the Installment Conversion Price (as defined
in the Note) (the “Share Reserve”), but in any event not less than 400,000
shares of Common Stock shall be reserved at all times for such purpose (the
“Transfer Agent Reserve”). Company further agrees that it will cause the
Transfer Agent to immediately add shares of Common Stock to the Transfer Agent
Reserve in increments of 100,000 shares as and when requested by Investor in
writing from time to time, provided that such incremental increases do not cause
the Transfer Agent Reserve to exceed the Share Reserve. In furtherance thereof,
from and after the date hereof and until such time that the Note has been paid
in full, Company shall require the Transfer Agent to reserve for the purpose of
issuance of Conversion Shares under the Note, a number of shares of Common Stock
equal to the Transfer Agent Reserve. Company shall further require the Transfer
Agent to hold such shares of Common Stock exclusively for the benefit of
Investor and to issue such shares to Investor promptly upon Investor’s delivery
of a conversion notice under the Note. Finally, Company shall require the
Transfer Agent to issue shares of Common Stock pursuant to the Note to Investor
out of its authorized and unissued shares, and not the Transfer Agent Reserve,
to the extent shares of Common Stock have been authorized, but not issued, and
are not included in the Transfer Agent Reserve. The Transfer Agent shall only
issue shares out of the Transfer Agent Reserve to the extent there are no other
authorized shares available for issuance and then only with Investor’s written
consent.

 

8.                  Miscellaneous. The provisions set forth in this Section 8
shall apply to this Agreement, as well as all other Transaction Documents as if
these terms were fully set forth therein.

 

8.1.            Original Signature Pages. Each party agrees to deliver its
original signature pages to the Transaction Documents to the other party within
five (5) Trading Days of the date hereof. Notwithstanding the foregoing, the
Transaction Documents shall be fully effective upon exchange of electronic
signature pages by the parties and payment of the Initial Cash Purchase Price by
Investor. For the avoidance of doubt, the failure by either party to deliver its
original signature pages to the other party shall not affect in any way the
validity or effectiveness of any of the Transaction Documents, provided that
such failure to deliver original signatures shall be a breach of the party’s
obligations hereunder.

 

8.2.Arbitration of Claims. The parties shall submit all Claims (as defined in
Exhibit

H) arising under this Agreement or any other Transaction Document or other
agreements between the parties and their affiliates to binding arbitration
pursuant to the arbitration provisions set forth in Exhibit H attached hereto
(the “Arbitration Provisions”). The parties hereby acknowledge and agree that
the Arbitration Provisions are unconditionally binding on the parties hereto and
are severable from all other provisions of this Agreement. By executing this
Agreement, Company represents, warrants and covenants that Company has reviewed
the Arbitration Provisions carefully, consulted with legal counsel about such
provisions (or waived its right to do so), understands that the Arbitration
Provisions are intended to allow for the expeditious and efficient resolution of
any dispute hereunder, agrees to the terms and limitations set forth in the
Arbitration Provisions, and that Company will not take a position contrary to
the foregoing

5

 

 

representations. Company acknowledges and agrees that Investor may rely upon the
foregoing representations and covenants of Company regarding the Arbitration
Provisions.

 

8.3.            Governing Law; Venue. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Utah for contracts to be
wholly performed in such state and without giving effect to the principles
thereof regarding the conflict of laws. Each party consents to and expressly
agrees that exclusive venue for arbitration of any dispute arising out of or
relating to any Transaction Document or the relationship of the parties or their
affiliates shall be in Salt Lake County, Utah or Utah County, Utah, Utah;
provided, however, that notwithstanding anything herein to the contrary,
enforcement of Investor’s rights under the Security Agreement will occur in
accordance with the Uniform Commercial Code of the applicable state(s) under the
Security Agreement and enforcement of Company’s rights over the Collateral will
occur in accordance with the laws of the state in which the Collateral is
located. Without modifying the parties obligations to resolve disputes hereunder
pursuant to the Arbitration Provisions, for any litigation arising in connection
with any of the Transaction Documents, each party hereto hereby (i) consents to
and expressly submits to the exclusive personal jurisdiction of any state or
federal court sitting in Salt Lake County, Utah, (ii) expressly submits to the
exclusive venue of any such court for the purposes hereof, and (iii) waives any
claim of improper venue and any claim or objection that such courts are an
inconvenient forum or any other claim or objection to the bringing of any such
proceeding in such jurisdictions or to any claim that such venue of the suit,
action or proceeding is improper.

 

8.4.            Calculation Disputes. Notwithstanding the Arbitration
Provisions, in the case of a dispute as to any determination or arithmetic
calculation under the Transaction Documents, including without limitation,
calculating the Outstanding Balance, Lender Conversion Price (as defined in the
Note), Lender Conversion Shares (as defined in the Note), Installment Conversion
Price, Installment Conversion Shares (as defined in the Note), Conversion Factor
(as defined in the Note), Market Price (as defined in the Note), or VWAP (as
defined in the Note) (each, a “Calculation”), Company or Investor (as the case
may be) shall submit any disputed Calculation via email or facsimile with
confirmation of receipt

(i) within two (2) Trading Days after receipt of the applicable notice giving
rise to such dispute to Company or Investor (as the case may be) or (ii) if no
notice gave rise to such dispute, at any time after Investor learned of the
circumstances giving rise to such dispute. If Investor and Company are unable to
agree upon such Calculation within two (2) Trading Days of such disputed
Calculation being submitted to Company or Investor (as the case may be), then
Investor shall, within two (2) Trading Days, submit via email or facsimile the
disputed Calculation to Unkar Systems Inc. (“Unkar Systems”). Company shall
cause Unkar Systems to perform the Calculation and notify Company and Investor
of the results no later than ten (10) Trading Days from the time it receives
such disputed Calculation. Unkar Systems’ determination of the disputed
Calculation shall be binding upon all parties absent demonstrable error. Unkar
Systems’ fee for performing such Calculation shall be paid by the incorrect
party, or if both parties are incorrect, by the party whose Calculation is
furthest from the correct Calculation as determined by Unkar Systems. In the
event Company is the losing party, no extension of the Delivery Date (as defined
in the Note) shall be granted and Company shall incur all effects for failing to
deliver the applicable shares in a timely manner as set forth in the Transaction
Documents. Notwithstanding the foregoing, Investor may, in its sole discretion,
designate an independent, reputable investment bank or accounting firm other
than Unkar Systems to resolve any such dispute and in such event, all references
to “Unkar Systems” herein will be replaced with references to such independent,
reputable investment bank or accounting firm so designated by Investor.

 

8.5.            Counterparts. Each Transaction Document may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument. The parties hereto confirm that
any electronic copy of another party’s executed counterpart of a Transaction
Document (or such party’s signature page thereof) will be deemed to be an
executed original thereof.

6

 

 

8.6.            Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.

 

8.7.            Severability. In the event that any provision of this Agreement
is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.

 

8.8.            Entire Agreement. This Agreement, together with the other
Transaction Documents, contains the entire understanding of the parties with
respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither Company nor Investor makes any
representation, warranty, covenant or undertaking with respect to such matters.

 

8.9.            No Reliance. Company acknowledges and agrees that neither
Investor nor any of its officers, directors, stockholders, members, managers,
representatives or agents has made any representations or warranties to Company
or any of its officers, directors, representatives, agents or employees except
as expressly set forth in the Transaction Documents and, in making its decision
to enter into the transactions contemplated by the Transaction Documents,
Company is not relying on any representation, warranty, covenant or promise of
Investor or its officers, directors, members, managers, agents or
representatives other than as set forth in the Transaction Documents.

 

8.10.        Amendments. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the parties hereto.

 

8.11.        Notices. Any notice required or permitted hereunder shall be given
in writing (unless otherwise specified herein) and shall be deemed effectively
given on the earliest of: (i) the date delivered, if delivered by personal
delivery as against written receipt therefor or by email to an executive
officer, or by facsimile (with successful transmission confirmation), (ii) the
earlier of the date delivered or the third Trading Day after deposit, postage
prepaid, in the United States Postal Service by certified mail, or (iii) the
earlier of the date delivered or the third Trading Day after mailing by express
courier, with delivery costs and fees prepaid, in each case, addressed to each
of the other parties thereunto entitled at the following addresses (or at such
other addresses as such party may designate by five (5) calendar days’ advance
written notice similarly given to each of the other parties hereto):

 

If to Company:

 

Avalanche International, Corp. Attn: Philip E. Mansour

5940 South Rainbow Blvd. Las Vegas, Nevada 89118

 

If to Investor:

 

Typenex Co-Investment, LLC Attn: John Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

7

 

 

With a copy to (which copy shall not constitute notice):

 

Hansen Black Anderson Ashcraft PLLC Attn: Jonathan K. Hansen

3051 West Maple Loop Drive, Suite 325 Lehi, Utah 84043

 

8.12.        Successors and Assigns. This Agreement or any of the severable
rights and obligations inuring to the benefit of or to be performed by Investor
hereunder may be assigned by Investor to a third party, including its financing
sources, in whole or in part, without the need to obtain Company’s consent
thereto. Company may not assign its rights or obligations under this Agreement
or delegate its duties hereunder without the prior written consent of Investor.

 

8.13.        Survival. The representations and warranties of Company and the
agreements and covenants set forth in this Agreement shall survive the Closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of Investor. Company agrees to indemnify and hold harmless Investor and
all its officers, directors, employees, attorneys, and agents for loss or damage
arising as a result of or related to any breach or alleged breach by Company of
any of its representations, warranties and covenants set forth in this Agreement
or any of its covenants and obligations under this Agreement, including
advancement of expenses as they are incurred.

 

8.14.        Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

8.15.        Investor’s Rights and Remedies Cumulative; Liquidated Damages. All
rights, remedies, and powers conferred in this Agreement and the Transaction
Documents are cumulative and not exclusive of any other rights or remedies, and
shall be in addition to every other right, power, and remedy that Investor may
have, whether specifically granted in this Agreement or any other Transaction
Document, or existing at law, in equity, or by statute, and any and all such
rights and remedies may be exercised from time to time and as often and in such
order as Investor may deem expedient. The parties acknowledge and agree that
upon Company’s failure to comply with the provisions of the Transaction
Documents, Investor’s damages would be uncertain and difficult (if not
impossible) to accurately estimate because of the parties’ inability to predict
future interest rates and future share prices, Investor’s increased risk, and
the uncertainty of the availability of a suitable substitute investment
opportunity for Investor, among other reasons. Accordingly, any fees, charges,
and default interest due under the Note and the other Transaction Documents are
intended by the parties to be, and shall be deemed, liquidated damages (under
Company’s and Investor’s expectations that any such liquidated damages will tack
back to the Closing Date for purposes of determining the holding period under
Rule 144 under the 1933 Act). The parties agree that such liquidated damages are
a reasonable estimate of Investor’s actual damages and not a penalty, and shall
not be deemed in any way to limit any other right or remedy Investor may have
hereunder, at law or in equity. The parties acknowledge and agree that under the
circumstances existing at the time this Agreement is entered into, such
liquidated damages are fair and reasonable and are not penalties. All fees,
charges, and default interest provided for in the Transaction Documents are
agreed to by the parties to be based upon the obligations and the risks assumed
by the parties as of the Closing Date and are consistent with investments of
this type. The liquidated damages provisions of the Transaction Documents shall
not limit or preclude a party from pursuing any other remedy available at law or
in equity; provided, however, that the liquidated damages provided for in the
Transaction Documents are intended to be in lieu of actual damages.

8

 

 

8.16.        Ownership Limitation. Notwithstanding anything to the contrary
contained in this Agreement or the other Transaction Documents, if at any time
Investor shall or would be issued shares of Common Stock under any of the
Transaction Documents, but such issuance would cause Investor (together with its
affiliates) to beneficially own a number of shares exceeding the Maximum
Percentage (as defined in the Note), then Company must not issue to Investor the
shares that would cause Investor to exceed the Maximum Percentage. The shares of
Common Stock issuable to Investor that would cause the Maximum Percentage to be
exceeded are referred to herein as the “Ownership Limitation Shares”. Company
will reserve the Ownership Limitation Shares for the exclusive benefit of
Investor. From time to time, Investor may notify Company in writing of the
number of the Ownership Limitation Shares that may be issued to Investor without
causing Investor to exceed the Maximum Percentage. Upon receipt of such notice,
Company shall be unconditionally obligated to immediately issue such designated
shares to Investor, with a corresponding reduction in the number of the
Ownership Limitation Shares. For purposes of this Section, beneficial ownership
of Common Stock will be determined under Section 13(d) of the 1934 Act.

 

8.17.        Attorneys’ Fees and Cost of Collection. In the event of any
arbitration or action at law or in equity to enforce or interpret the terms of
this Agreement or any of the other Transaction Documents, the parties agree that
the party who is awarded the most money shall be deemed the prevailing party for
all purposes and shall therefore be entitled to an additional award of the full
amount of the attorneys’ fees, deposition costs, and expenses paid by such
prevailing party in connection with arbitration or litigation without reduction
or apportionment based upon the individual claims or defenses giving rise to the
fees and expenses. Nothing herein shall restrict or impair an arbitrator’s or a
court’s power to award fees and expenses for frivolous or bad faith pleading. If
(i) the Note is placed in the hands of an attorney for collection or enforcement
prior to commencing arbitration or legal proceedings, or is collected or
enforced through any arbitration or legal proceeding, or Investor otherwise
takes action to collect amounts due under the Note or to enforce the provisions
of the Note; or (ii) there occurs any bankruptcy, reorganization, receivership
of Company or other proceedings affecting Company’s creditors’ rights and
involving a claim under the Note; then Company shall pay the costs incurred by
Investor for such collection, enforcement or action or in connection with such
bankruptcy, reorganization, receivership or other proceeding, including, without
limitation, attorneys’ fees, expenses, deposition costs, and disbursements.

 

8.18.        Waiver. No waiver of any provision of this Agreement shall be
effective unless it is in the form of a writing signed by the party granting the
waiver. No waiver of any provision or consent to any prohibited action shall
constitute a waiver of any other provision or consent to any other prohibited
action, whether or not similar. No waiver or consent shall constitute a
continuing waiver or consent or commit a party to provide a waiver or consent in
the future except to the extent specifically set forth in writing.

 

8.19.        Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY
WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS
WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER
COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH
PARTY HERETO ACKNOWLEDGES THAT SUCH PARTY IS KNOWINGLY AND VOLUNTARILY WAIVING
SUCH PARTY’S RIGHT TO DEMAND TRIAL BY JURY.

 

8.20.        Time of the Essence. Time is expressly made of the essence with
respect to each and every provision of this Agreement and the other Transaction
Documents.

 

 

[Remainder of page intentionally left blank; signature page follows]

9

 

 

IN WITNESS WHEREOF, the undersigned Investor and Company have caused this
Agreement to be duly executed as of the date first above written.

 

SUBSCRIPTION AMOUNT:

 

Principal Amount of Note: $252,500.00

 

Initial Cash Purchase Price: $75,000.00

 

 

INVESTOR:

 

TYPENEX CO-INVESTMENT, LLC

 

By: Red Cliffs Investments, Inc., its Manager

 

/s/ John M. Fife

John M. Fife, President

 

COMPANY:

 

AVALANCHE INTERNATIONAL, CORP.

 

 

By: /s/ Philip Mansour

Printed Name: Phil Mansour

Title: Ceo

 

ATTACHED EXHIBITS:

 

Exhibit A Note

Exhibit B Allocation of Purchase Price

Exhibit C Form of Investor Note

Exhibit D Security Agreement

Exhibit E Irrevocable Transfer Agent Instructions

Exhibit F Secretary’s Certificate

Exhibit G Share Issuance Resolution Exhibit H Arbitration Provisions

10

 

 

EXHIBIT H

 

ARBITRATION PROVISIONS

 

1.        Dispute Resolution. For purposes of this Exhibit H, the term “Claims”
means any disputes, claims, demands, causes of action, liabilities, damages,
losses, or controversies whatsoever arising from related to or connected with
the transactions contemplated in the Transaction Documents and any
communications between the parties related thereto, including without limitation
any claims of mutual mistake, mistake, fraud, misrepresentation, failure of
formation, failure of consideration, promissory estoppel, unconscionability,
failure of condition precedent, rescission, and any statutory claims, tort
claims, contract claims, or claims to void, invalidate or terminate the
Agreement or any of the other Transaction Documents. The term “Claims”
specifically excludes a dispute over Calculations and enforcement of Investor’s
rights and remedies against the personal property described in the Security
Agreement under the applicable provisions of the Uniform Commercial Code. The
parties hereby agree that the arbitration provisions set forth in this Exhibit H
(“Arbitration Provisions”) are binding on the parties hereto and are severable
from all other provisions in the Transaction Documents. As a result, any attempt
to rescind the Agreement or declare the Agreement or any other Transaction
Document invalid or unenforceable for any reason is subject to these Arbitration
Provisions. These Arbitration Provisions shall also survive any termination or
expiration of the Agreement. Any capitalized term not defined in these
Arbitration Provisions shall have the meaning set forth in the Agreement.

2.        Arbitration. Except as otherwise provided herein, all Claims must be
submitted to arbitration (“Arbitration”) to be conducted exclusively in Salt
Lake County, Utah or Utah County, Utah and pursuant to the terms set forth in
these Arbitration Provisions. The parties agree that the award of the arbitrator
(the “Arbitration Award”) shall be final and binding upon the parties (subject
to the appear right set forth in Section 4 below); shall be the sole and
exclusive remedy between them regarding any Claims, counterclaims, issues, or
accountings presented or pleaded to the arbitrator; and shall promptly be
payable in United States dollars free of any tax, deduction or offset (with
respect to monetary awards). Any costs or fees, including without limitation
attorneys’ fees, incident to enforcing the arbitrator’s award shall, to the
maximum extent permitted by law, be charged against the party resisting such
enforcement. The award shall include Default Interest (as defined in the Note)
both before and after the award. Judgment upon the award of the arbitrator will
be entered and enforced by a state court sitting in Salt Lake County, Utah. The
parties hereby incorporate herein the provisions and procedures set forth in the
Utah Uniform Arbitration Act, U.C.A. § 78B-11-101 et seq. (as amended or
superseded from time to time, the “Arbitration Act”). Pursuant to Section 105 of
the Arbitration Act, in the event of conflict between the terms of these
Arbitration Provisions and the provisions of the Arbitration Act, the terms of
these Arbitration Provisions shall control.

3.Arbitration Proceedings. Arbitration between the parties will be subject to
the following procedures:

3.1           Pursuant to Section 110 of the Arbitration Act, the parties agree
that a party may initiate Arbitration by giving written notice to the other
party (“Arbitration Notice”) in the same manner that notice is permitted under
Section 8.11 of the Agreement; provided, however, that the Arbitration Notice
may not be given by email or fax. Arbitration will be deemed initiated as of the
date that the Arbitration Notice is deemed delivered under Section 8.11 of the
Agreement (the “Service Date”). After the Service Date, information may be
delivered, and notices may be given, by email or fax pursuant to Section 8.11 of
the Agreement or any other method permitted thereunder. The Arbitration Notice
must describe the nature of the controversy, the remedies sought, and the
election to commence Arbitration proceedings. All Claims in the Arbitration
Notice must be pleaded consistent with the Utah Rules of Civil Procedure.

3.2           Within ten (10) calendar days after the Service Date, Investor
shall select and submit to Company the names of three (3) arbitrators that are
designated as “neutrals” or qualified arbitrators by Utah ADR Services
(http://www.utahadrservices.com) (such three (3) designated persons hereunder
are referred to herein as the “Proposed Arbitrators”). For the avoidance of
doubt, each Proposed Arbitrator must be qualified as a “neutral” with Utah ADR
Services. Within ten (10) calendar days after Investor has submitted to Company
the names of the Proposed Arbitrators, Company must select, by written notice to
Investor, one (1) of the Proposed Arbitrators to act as the arbitrator for the
parties under these Arbitration Provisions. If Company fails to select one of
the Proposed Arbitrators in writing within such 10-day period, then Investor may
select the arbitrator from the Proposed Arbitrators by providing written notice
of such selection to

11

 

 

Company. If Investor fails to identify the Proposed Arbitrators within the time
period required above, then Company may at any time prior to Investor
designating the Proposed Arbitrators, select the names of three

(3) arbitrators that are designated as “neutrals” or qualified arbitrators by
Utah ADR Service by written notice to Investor. Investor may then, within ten
(10) calendar days after Company has submitted notice of its selected
arbitrators to Investor, select, by written notice to Company, one (1) of the
selected arbitrators to act as the arbitrator for the parties under these
Arbitration Provisions. If Investor fails to select in writing and within such
10-day period one of the three (3) arbitrators selected by Company, then Company
may select the arbitrator from its three (3) previously selected arbitrators by
providing written notice of such selection to Investor. Subject to Paragraph
3.12 below, the cost of the arbitrator must be paid equally by both parties;
provided, however, that if one party refuses or fails to pay its portion of the
arbitrator fee, then the other party can advance such unpaid amount (subject to
the accrual of Default Interest thereupon), with such amount added to or
subtracted from, as applicable, the award granted by the arbitrator. If Utah ADR
Services ceases to exist or to provide a list of neutrals, then the arbitrator
shall be selected under the then prevailing rules of the American Arbitration
Association. The date that the selected arbitrator agrees in writing to serve as
the arbitrator hereunder is referred to herein as the “Arbitration Commencement
Date”.

3.3           An answer and any counterclaims to the Arbitration Notice, which
must be pleaded consistent with the Utah Rules of Civil Procedure, shall be
required to be delivered to the other party within twenty (20) calendar days
after the Service Date. Upon request, the arbitrator is hereby instructed to
render a default award, consistent with the relief requested in the Arbitration
Notice, against a party that fails to submit an answer within such time period.

3.4           The party that delivers the Arbitration Notice to the other party
shall have the option to also commence concurrent legal proceedings with any
state court sitting in Salt Lake County, Utah (“Litigation Proceedings”),
subject to the following: (i) the complaint in the Litigation Proceedings is to
be substantially similar to the claims set forth in the Arbitration Notice,
provided that an additional cause of action to compel arbitration will also be
included therein, (ii) so long as the other party files an answer to the
complaint in the Litigation Proceedings and an answer to the Arbitration Notice,
the Litigation Proceedings will be stayed pending an Arbitration Award
hereunder, (iii) if the other party fails to file an answer in the Litigation
Proceedings or an answer in the Arbitration Proceedings, then the party
initiating Arbitration shall be entitled to a default judgment consistent with
the relief requested, to be entered in the Litigation Proceedings, and (iv) any
legal or procedural issue arising under the Arbitration Act that requires a
decision of a court of competent jurisdiction may be determined in the
Litigation Proceedings. Any award of the arbitrator may be entered in such
Litigation Proceedings pursuant to the Arbitration Act.

3.5           Pursuant to Section 118(8) of the Arbitration Act, the parties
agree that discovery shall be conducted in accordance with the Utah Rules of
Civil Procedure; provided, however, that incorporation of such rules will in no
event supersede the Arbitration Provisions set forth herein, including without
limitation the time limitation set forth in Paragraph 3.9 below, and the
following:

a.              Discovery will only be allowed if the likely benefits of the
proposed discovery outweigh the burden or expense, and the discovery sought is
likely to reveal information that will satisfy a specific element of a claim or
defense already pleaded in the Arbitration. The party seeking discovery shall
always have the burden of showing that all of the standards and limitations set
forth in these Arbitration Provisions are satisfied. The scope of discovery in
the Arbitration proceedings shall also be limited as follows:

(i)             To facts directly connected with the transactions contemplated
by the Agreement.

(ii)           To facts and information that cannot be obtained from another
source that is more convenient, less burdensome or less expensive.

b.              No party shall be allowed (i) more than fifteen (15)
interrogatories (including discrete subparts), (ii) more than fifteen (15)
requests for admission (including discrete subparts), (iii) more than ten

(10) document requests (including discrete subparts), or (iv) more than three
depositions (excluding expert depositions) for a maximum of seven (7) hours per
deposition.

3.6           Any party submitting any written discovery requests, including
interrogatories, requests for production, subpoenas to a party or a third party,
or requests for admissions, must prepay the estimated attorneys’ fees and costs,
as determined by the arbitrator, before the responding party has any obligation
to produce or respond.

12

 

 

(a)            All discovery requests must be submitted in writing to the
arbitrator and the other party before issuing or serving such discovery
requests. The party issuing the written discovery requests must include with
such discovery requests a detailed explanation of how the proposed discovery
requests satisfy the requirements of these Arbitration Provisions and the Utah
Rules of Civil Procedure. Any party will then be allowed, within ten (10)
calendar days of receiving the proposed discovery requests, to submit to the
arbitrator an estimate of the attorneys’ fees and costs associated with
responding to such written discovery requests and a written challenge to each
applicable discovery request. After receipt of an estimate of attorneys’ fees
and costs and/or challenge(s) to one or more discovery requests, the arbitrator
will make a finding as to the likely attorneys’ fees and costs associated with
responding to the discovery requests and issue an order that (A) requires the
requesting party to prepay the attorneys’ fees and costs associated with
responding to the discovery requests, and (B) requires the responding party to
respond to the discovery requests as limited by the arbitrator within a certain
period of time after receiving payment from the requesting party. If a party
entitled to submit an estimate of attorneys’ fees and costs and/or a challenge
to discovery requests fails to do so within such 10-day period, the arbitrator
will make a finding that (A) there are no attorneys’ fees or costs associated
with responding to such discovery requests, and (B) the responding party must
respond to such discovery requests (as may be limited by the arbitrator) within
a certain period of time as determined by the arbitrator.

(b)          In order to allow a written discovery request, the arbitrator must
find that the discovery request satisfies the standards set forth in these
Arbitration Provisions and the Utah Rules of Civil Procedure. The arbitrator
must strictly enforce these standards. If a discovery request does not satisfy
any of the standards set forth in these Arbitration Provisions or the Utah Rules
of Civil Procedure, the arbitrator may modify such discovery request to satisfy
the applicable standards, or strike such discovery request in whole or in part.

(c)            Discovery deadlines will be set forth in a scheduling order
issued by the arbitrator. The parties hereby authorize and direct the arbitrator
to take such actions and make such rulings as may be necessary to carry out the
parties’ intent for the arbitration proceedings to be efficient and expeditious.

3.7           Each party may submit expert reports (and rebuttals thereto),
provided that such reports must be submitted by the deadlines established by the
arbitrator. Expert reports must contain the following: (a) a complete statement
of all opinions the expert will offer at trial and the basis and reasons for
them; (b) the expert’s name and qualifications, including a list of all
publications within the preceding 10 years, and a list of any other cases in
which the expert has testified at trial or in a deposition or prepared a report
within the preceding 10 years; and (c) the compensation to be paid for the
expert’s report and testimony. The parties are entitled to depose any other
party’s expert witness one time for no more than 4 hours. An expert may not
testify in a party’s case-in-chief concerning any matter not fairly disclosed in
the expert report.

3.8           All information disclosed by either party during the Arbitration
process (including without limitation information disclosed during the discovery
process) shall be considered confidential in nature. Each party agrees not to
disclose any confidential information received from the other party during the
discovery process unless (i) prior to or after the time of disclosure such
information becomes public knowledge or part of the public domain, not as a
result of any inaction or action of the receiving party, (ii) such information
is required by a court order, subpoena or similar legal duress to be disclosed
if such receiving party has notified the other party thereof in writing and
given it a reasonable opportunity to obtain a protective order from a court of
competent jurisdiction prior to disclosure; or (iii) disclosed to the receiving
party’s agents, representatives and legal counsel on a need to know basis who
each agree in writing not to disclose such information to any third party.
Pursuant to Section 118(5) of the Arbitration Act, the arbitrator is hereby
authorized and directed to issue a protective order to prevent the disclosure of
privileged information and confidential information upon the written request of
either party.

3.9           The parties hereby authorize and direct the arbitrator to take
such actions and make such rulings as may be necessary to carry out the parties’
intent for the arbitration proceedings to be efficient and expeditious. Pursuant
to Section 120 of the Arbitration Act, the parties hereby agree that an
Arbitration Award must be made within 150 days after the Arbitration
Commencement Date. The arbitrator is hereby authorized and directed to hold a
scheduling conference within ten (10) calendar days after the Arbitration
Commencement Date in order to establish a scheduling order with various binding
deadlines for discovery, expert testimony, and the submission of documents by
the parties to enable the arbitrator to render a

13

 

 

decision prior to the end of such 150-day period. The Utah Rules of Evidence
will apply to any final hearing before the arbitrator.

3.10        The arbitrator shall have the right to award or include in the
Arbitration Award any relief which the arbitrator deems proper under the
circumstances, including, without limitation, specific performance and
injunctive relief, provided that the arbitrator may not award exemplary or
punitive damages.

3.11        If any part of these Arbitration Provisions is found to violate
applicable law or to be illegal, then such provision shall be modified to the
minimum extent necessary to make such provision enforceable under applicable
law.

3.12        The arbitrator is hereby directed to require the losing party to (i)
pay the full amount of any unpaid costs and fees of the arbitrator, and (ii)
reimburse the prevailing party the reasonable attorneys’ fees, arbitrator costs,
deposition costs, and other discovery costs incurred by the prevailing party.

4.Appeals.

4.1           Following the entry of the Arbitration Award, either party (the
“Appellant”) shall have a period of thirty (30) days in which to notify the
other party (the “Appellee”), in writing, that it elects to appeal (the
“Appeal”) the Arbitration Award (such notice, an “Appeal Notice”). The date the
Appellant delivers an Appeal Notice to the Appellee is referred to herein as the
“Appeal Date”. The Appeal Notice must be delivered to the Appellee in accordance
with the provisions of Paragraph 3.1 above with respect to delivery of an
Arbitration Notice and must describe the nature of the appeal and the remedies
sought. In addition, together with its delivery of an Appeal Notice to the
Appellee, the Appellant must also pay for (and provide proof of such payment to
the Appellee together with its delivery of the Appeal Notice) a bond in the
amount of 110% of the sum it owes to the Appellee as a result of the final
decision made by the arbitrators that it is appealing. In the event neither
party delivers an Appeal Notice to the other within the deadline prescribed in
this Paragraph 4.1, each party shall lose its right to appeal and the decision
of the arbitrator shall be final.

4.2           In the event an Appellant delivers an Appeal Notice to the
Appellee in compliance with the provisions of Paragraph 4.1 above, the following
provisions shall apply with respect to the Appeal:

(a)            The Appeal will be heard by a three (3) person arbitration panel
(the “Appeal Panel”). Within ten (10) calendar days after the Appeal Date, the
Appellee shall select and submit to the Appellant the names of five (5)
arbitrators that are designated as “neutrals” or qualified arbitrators by Utah
ADR Services (http://www.utahadrservices.com) (such five designated persons
hereunder are referred to herein as the “Proposed Appeal Arbitrators”). For the
avoidance of doubt, each Proposed Appeal Arbitrator must be qualified as a
“neutral” with Utah ADR Services. Within ten (10) calendar days after the
Appellee has submitted to the Appellant the names of the Proposed Appeal
Arbitrators, the Appellant must select, by written notice to the Appellee, three
(3) of the Proposed Appeal Arbitrators to act as the members of the Appeal
Panel. If the Appellant fails to select three (3) of the Proposed Appeal
Arbitrators in writing within such 10-day period, then the Appellee may select
such three (3) arbitrators from the Proposed Appeal Arbitrators by providing
written notice of such selection to the Appellant. If the Appellee fails to
identify the Proposed Appeal Arbitrators within the time period required above,
then the Appellant may at any time prior to the Appellee designating the
Proposed Appeal Arbitrators, select the names of the five (5) Proposed Appeal
Arbitrators. The Appellee may then, within ten (10) calendar days after the
Appellant has submitted notice of its Proposed Appeal Arbitrators to the
Appellee, select, by written notice to the Appellant, three (3) of the Proposed
Appeal Arbitrators to serve on the Appeal Panel. If the Appellee fails to select
in writing and within such 10-day period the three (3) members of the Appeal
Panel, then the Appellant may select such three (3) members of the Appeal Panel
by providing written notice of such selection to the Appellee. After the three
(3) members of the Appeal Panel are selected, the Appellee shall designate in
writing to the Appellant the name of one of such three (3) arbitrators to serve
as the lead arbitrator. Subject to Paragraph 4.2(d) below, the cost of the
Appeal Panel must be paid entirely by the Appellant. If Utah ADR Services ceases
to exist or to provide a list of neutrals, then the arbitrators shall be
selected under the then prevailing rules of the American Arbitration
Association. The date that all three (3) selected arbitrators agree in writing
to serve as the arbitrators hereunder is referred to herein as the “Appeal
Commencement Date”.

(b)          Within seven (7) days of the Appeal Commencement Date, Appellant
shall deliver to the Appeal Panel and to Appellee a memorandum in support of
appeal describing in detail its basis and arguments for appealing the
Arbitration Award (the “Memorandum in Support”). Within seven (7) days of
Appellant’s delivery of the Memorandum in Support, Appellee shall deliver to the
Appeal Panel and to Appellant a

14

 

 

memorandum in opposition to the Memorandum in Support (the “Memorandum in
Opposition”). Within seven (7) days of Appellee’s delivery of the Memorandum in
Opposition, Appellant shall deliver to the Appeal Panel and to Appellee a reply
memorandum to the Memorandum in Opposition.

(c)            The parties hereby agree that the Appeal must be heard by the
Appeal Panel within thirty (30) calendar days of the Appeal Commencement Date
and that the Appeal Panel’s Arbitration Award must be made within thirty (30)
days after the Appeal is heard, and in any event within sixty (60) days of the
Appeal Commencement Date. The Utah Rules of Evidence will apply to any final
hearing before the Appeal Panel.

(d)           The Appeal Panel is hereby directed to require the losing party to
(i) pay the full amount of any unpaid costs and fees of the Appeal Panel, and
(ii) reimburse the prevailing party the reasonable attorneys’ fees, arbitrator
costs, deposition costs, and other discovery costs incurred by the prevailing
party.

 

[Remainder of page intentionally left blank]

15