Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 8, 2018,
is entered into by and between CONTRAVIR PHARMACEUTICALS, INC., a Delaware
corporation (“Company”), and ILIAD RESEARCH AND TRADING, L.P., a Utah limited
partnership, 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 Securities Act of 1933, as amended (the “1933
Act”), and the rules and regulations promulgated thereunder by the United States
Securities and Exchange Commission (the “SEC”).

 

B.                                    Investor desires to purchase and Company
desires to issue and sell, upon the terms and conditions set forth in this
Agreement, Secured Convertible Promissory Note #1, in the form attached hereto
as Exhibit A, in the original principal amount of $3,325,000.00 (the “First
Note”) and at the option of the Company and upon satisfaction of the Funding
Conditions (as defined below) (the “Subsequent Closing Event”) Secured
Convertible Promissory Note #2, in a form substantially similar to the First
Note, in the original principal amount of $2,200,000.00 (the “Second Note”, and
together with the First Note, the “Notes”), each of which is convertible into
shares of common stock, $0.0001 par value per share, of Company (the “Common
Stock”), upon the terms and subject to the limitations and conditions set forth
in such Notes.

 

C.                                    This Agreement, the Notes, 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 Notes; and “Securities” means the Notes and the
Conversion Shares.

 

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

 

1.                                      Purchase and Sale of Securities.

 

1.1.                            Purchase of Securities. On the date of this
Agreement, Company shall issue and sell to Investor and Investor shall purchase
from Company the First Note. In consideration thereof, Investor shall pay
(i) the amount designated as the initial cash purchase price on the signature
page to this Agreement (the “Initial Cash Purchase Price”), and (ii) issue to
Company the Investor Notes (the sum of the initial principal amounts of the
Investor Notes, together with the Initial Cash Purchase Price, the “First
Closing Purchase Price”). The First Closing 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 First Note as set forth in the
table attached hereto as Exhibit B. On the date that is sixty (60) days from the
date of this Agreement (the “Conditional Purchase Date”), Company shall have the
option to cause Investor to purchase the Second Note if each of the following
conditions is met as of the Conditional Purchase Date: (a) the average and
median daily dollar volumes of the Common Stock on Company’s principal market
for the forty (40) Trading Days (as defined below) immediately preceding the
Conditional Purchase Date are greater than $150,000.00; (b) Company shall have
timely filed on or before the applicable deadline all reports required to be
filed with the SEC pursuant to Sections 13 or

 

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15(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and
adequate current public information with respect to Company, as required under
Rule 144 of the 1933 Act shall be publicly available; (c) Company’s Common Stock
shall be listed or quoted for trading on NASDAQ; (d) the market capitalization
of the Common Stock on the Conditional Purchase Date is greater than
$15,000,000.00; and (e) no Event of Default (as defined in the First Note) under
the First Note shall have occurred as of the Conditional Purchase Date.
Following the Subsequent Closing Event, if any, upon the terms and subject to
the conditions set forth herein, Company shall issue and sell to Investor and
Investor shall purchase from Company the Second Note. In consideration
thereof, Investor shall pay the amount designated as the second cash purchase
price on the signature page to this Agreement (the “Second Closing Purchase
Price” and together with the First Closing Purchase Price, the “Purchase
Price”).

 

1.2.                            Form of Payment. On the First Closing Date (as
defined below), (i) Investor shall pay the First Closing Purchase Price to
Company by delivering the following at the Closing (as defined below): (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 $250,000.00
duly executed and substantially in the form attached hereto as Exhibit C
(“Investor Note #1”); (C) Investor Note #2 in the principal amount of
$250,000.00 duly executed and substantially in the form attached hereto as
Exhibit C (“Investor Note #2”); (D) Investor Note #3 in the principal amount of
$250,000.00 duly executed and substantially in the form attached hereto as
Exhibit C (“Investor Note #3”); and (E) Investor Note #4 in the principal amount
of $250,000.00 duly executed and substantially in the form attached hereto as
Exhibit C (“Investor Note #4”, and together with Investor Note #1, Investor Note
#2, and Investor Note #3, the “Investor Notes”); and (ii) Company shall deliver
the duly executed First Note on behalf of Company, to Investor, against delivery
of such First Closing Purchase Price.  On the Second Closing Date (as defined
below), if applicable, (i) Investor shall pay the Second Closing Purchase Price
by wire transfer of immediately available funds to Company, in accordance with
Company’s written wiring instructions and (ii) Company shall deliver the duly
executed Second Note on behalf of Company, to Investor, against delivery of such
Second Closing 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 of the issuance and sale of the First Note pursuant to this Agreement
(the “First Closing Date”) shall be May 8, 2018, or such other mutually agreed
upon date. Subject to the satisfaction (or written waiver) of the conditions set
forth in Section 5 and Section 6 below, the date of the issuance and sale of the
Second Note pursuant to this Agreement (the “Second Closing Date”) shall occur
within three (3) Trading Days of the Conditional Purchase Date unless otherwise
agreed to by the parties.  The closing of the transactions contemplated by this
Agreement (each, a “Closing”) shall occur on the applicable Closing Date by
means of the exchange by email of signed .pdf documents, but shall be deemed for
all purposes to have occurred at the offices of Hansen Black Anderson Ashcraft
PLLC in Lehi, Utah.

 

1.4.                            Collateral for the Note. The Notes shall be
secured by the collateral set forth in that certain Security Agreement attached
hereto as Exhibit D listing certain of Company’s assets (including all of  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 First 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.

 

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1.6.                            Original Issue Discount; Transaction Expense
Amount. The First Note carries an original issue discount of $300,000.00 (the
“First Note OID”). The Second Note carries an original issue discount of
$200,000.00 (the “Second Note OID” and together with the First Note OID, the
“OID”).In addition, Company agrees to pay $25,000.00 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 First Note. The Purchase Price,
therefore, shall be $5,000,000.00, computed as follows: $5,525,000.00 initial
principal balances of the Notes, less the OID, less the Transaction Expense
Amount. The Initial Cash Purchase Price shall be the First Note Purchase Price
less the sum of the initial principal amounts of the Investor Notes. The
portions 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 as of the Closing
Date: (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; (iv) this
Agreement and the Investor Notes have been duly executed and delivered on behalf
of Investor; and (v) the Notes will be acquired for Investor’s own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of the 1933 Act, and Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same in
violation of the Securities Act without prejudice, however, to such Investor’s
right at all times to sell or otherwise dispose of all or any part of the Note
in compliance with applicable federal and state securities laws.

 

3.                                      Company’s Representations and
Warranties. Company represents and warrants to Investor that, other than as
disclosed in the Company’s public filings with the SEC, as of the Closing Date:
(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 12(g) of the1934
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 and all necessary actions have been taken; (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, except:
(a) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (b) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (c) insofar as indemnification and contribution
provisions may be limited by applicable law; (vi) the execution and delivery of
the Transaction Documents by Company, the issuance of the 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, without limitation,
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, state or foreign regulatory body, administrative agency,
or other governmental body having jurisdiction over Company or any of Company’s
properties or assets except in the case of each of clauses (b) and (c), such as
could not have or

 

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reasonably be expected to result in a (1) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (2) a material
adverse effect on the results of operations, assets, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or (3) a material adverse effect on the Company’s ability to perform in
any material respect on a timely basis its obligations under any Transaction
Document (any of (1), (2) or (3), a “Material Adverse Effect”); (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 or the entering into of the
Transaction Documents other than the filing of Form D with the SEC and such
filings as are required to be made under applicable state securities laws;
(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
for the two years preceding the date hereof 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) there is no action, suit, proceeding, inquiry or investigation before or by
any court, public board or body pending or, to the knowledge of Company,
threatened against or affecting Company before or by any governmental authority
or non-governmental department, commission, board, bureau, agency or
instrumentality or any other person, wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect; (xi) Company has not consummated
any financing transaction that has not been disclosed in a periodic filing or
current report with the SEC under the 1934 Act; (xii) Company is not, nor has it
been at any time in the previous twelve (12) months, a “Shell Company,” as such
type of “issuer” is described in Rule 144(i)(1) under the 1933 Act; (xiii) 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; (xiv) 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, members, 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 Broker Fees; (xv) when issued
in accordance with the Notes, 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; (xvi) neither Investor nor any of its
officers, directors, stockholders, 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;
(xvii) Company acknowledges that the State of Utah has a reasonable relationship
and sufficient contacts to the transactions contemplated by the Transaction
Documents and any dispute that may arise related thereto such that the laws and
venue of the State of Utah, as set forth more specifically in Section  10.3
below, shall be applicable to the Transaction Documents and the transactions
contemplated therein; and (xviii) 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:

 

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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 (xviii) 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.

 

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 will at all times 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 will timely file on the applicable
deadline all reports required to be filed with the SEC pursuant to Sections 13
or 15(d) of the 1934 Act, and will 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
will 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, or (d) OTCQB; provided,
however, that in the event that the Common Stock is not listed or quoted for
trading on any of (a)-(d) for any reason, the Company shall have a period of
fifteen (15) days to re-establish such listing for the first occurrence of such
event; (iii) when issued, 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) trading in Company’s Common Stock will not be
suspended, halted, chilled, frozen, reach zero bid or otherwise cease on
Company’s principal trading market; (v) Company will not transfer, assign, sell,
pledge, hypothecate or otherwise alienate or encumber the Investor Notes in any
way without the prior written consent of Investor, which consent may be given or
withheld in Investor’s sole and absolute discretion; (vi) Company will not have
at any given time any Variable Security Holders (as defined below), excluding
Investor, without Investor’s prior written consent, which consent may be granted
or withheld in Investor’s sole and absolute discretion; (vii) at Closing and on
the first day of each calendar quarter for so long as the Notes remain
outstanding or on any other date during which the Note is outstanding, as may be
requested by Investor, Company shall cause its Chief Executive Officer to
provide to Investor a certificate in substantially the form attached hereto as
Exhibit E (the “Officer’s Certificate”) certifying in his personal capacity and
in his capacity as Chief Executive Officer of Company the number of Variable
Security Holders of Company as of the date the applicable Officer’s Certificate
is executed; and (viii) if at any time the Common Stock trades below $0.0005,
Company shall, as soon as practicable but in no event longer than sixty (60)
days thereafter, reduce the par value of its Common Stock to $0.00001 or below;
and (ix) so long as the Note remains outstanding, Company will not pledge any of
its intellectual property (or related assets) or rights thereto or to any
substitutions for, additions and accessions to, or proceeds of such intellectual
property (or related assets). For purposes hereof, the term “Variable Security
Holder” means any holder of any Company securities that (A) have or may have
conversion rights of any kind, contingent, conditional or otherwise, in which
the number of shares that may be issued pursuant to such conversion right varies
with the market price of the Common Stock, or (B) are or may become 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, even if such security only becomes convertible
following an event of default, the passage of time, or another trigger event or
condition (each a “Variable Security Issuance”). For avoidance of doubt, the
issuance of shares of Common Stock under, pursuant to, in exchange for or in
connection with any contract or instrument, whether convertible or not, is
deemed a Variable Security Issuance for purposes hereof if the number of shares
of Common Stock to be issued is based upon or related in any way to the market
price of the Common Stock, including, but not limited to, Common Stock issued in
connection with a Section 3(a)(9) exchange, a

 

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Section 3(a)(10) settlement, or any other similar settlement or exchange.  For
the avoidance of doubt, the term “Variable Security Issuance” is not intended to
include the issuance of securities by the Company pursuant to any of the
Company’s convertible securities previously disclosed in the Company’s filings
with the SEC, including, without limitation, securities issuable pursuant to the
Company’s 2013 Equity Incentive Plan, any series of pre-existing preferred stock
or any pre-existing note or debenture.

 

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, on 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 a
Closing is subject to the satisfaction, on or before a 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
the Note and delivered the same to Investor.

 

6.2.                            Company’s Chief Executive Officer shall have
executed the Officer’s Certificate and delivered the same to Investor.

 

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

 

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

 

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

 

6.6.                            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. On the date
hereof, Company will reserve 10,000,000 shares of Common Stock from its
authorized and unissued Common Stock to provide for all issuances of Common
Stock under the Notes (the “Share Reserve”). Company further agrees to add
(a) 67,000,000 shares of Common Stock to the Share Reserve within five
(5) Trading Days of Company’s completion of its reverse stock split (the
“Reverse Split Completion Date”); and (b) additional shares of Common Stock to
the Share Reserve at any time following the Reverse Split Completion Date in
increments of 2,500,000 shares as and when requested by Investor if as of the
date of any such request the number of shares being held in the Share Reserve is
less than three (3) times the number of shares of Common Stock obtained by
dividing the Outstanding Balance (as defined in the Note) as of the date of the
request by the Conversion Price (as defined in the Note). Company shall further
require the Transfer Agent to hold the shares of

 

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Common Stock reserved pursuant to the Share Reserve 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 Share Reserve,
to the extent shares of Common Stock have been authorized, but not issued, and
are not included in the Share Reserve. The Transfer Agent shall only issue
shares out of the Share Reserve to the extent there are no other authorized
shares available for issuance and then only with Investor’s written consent.

 

8.                                      Terms of Future Financings. So long as
the Note is outstanding, upon any issuance by Company of any security with any
conversion-related term more favorable to the holder of such security or with a
conversion-related term in favor of the holder of such security that was not
similarly provided to Investor in the Transaction Documents, then Company shall
notify Investor of such additional or more favorable term and such term, at
Investor’s option, shall become a part of the Transaction Documents for the
benefit of Investor. Additionally, if Company fails to notify Investor of any
such additional or more favorable conversion-related term, but Investor becomes
aware that Company has granted such a term to any third party, Investor may
notify Company of such additional or more favorable term and such term shall
become a part of the Transaction Documents retroactive to the date on which such
term was granted to the applicable third party. The types of conversion-related
terms contained in another security that may be more favorable to the holder of
such security include, but are not limited to, terms addressing conversion
discounts and conversion lookback periods.

 

9.                                      No Shorting. During the period beginning
on the Closing Date and ending on the date the Note has been repaid in full or
sold by Investor to a third party that is not an affiliate of Investor, Investor
will not directly or through an affiliate engage in any open market Short Sales
(as defined below) of the Common Stock; provided; however, that unless and until
Company has affirmatively demonstrated by the use of specific evidence that
Investor is engaging in open market Short Sales, Investor shall be assumed to be
in compliance with the provisions of this Section 9 and Company shall remain
fully obligated to fulfill all of its obligations under the Transaction
Documents; and provided, further, that (i) Company shall under no circumstances
be entitled to request or demand that Investor either (A) provide trading or
other records of Investor or of any party or (B) affirmatively demonstrate that
Investor or any other party has not engaged in any such Short Sales in breach of
these provisions as a condition to Company’s fulfillment of its obligations
under any of the Transaction Documents, (ii) Company shall not assert Investor’s
or any other party’s failure to demonstrate such absence of such Short Sales or
provide any trading or other records of Investor or any other party as all or
part of a defense to any breach of Company’s obligations under any of the
Transaction Documents, and (iii) Company shall have no setoff right with respect
to any such Short Sales.  As used herein, “Short Sale” has the meaning provided
in Rule 3b-3 under the 1934 Act.

 

10.                               Miscellaneous. The provisions set forth in
this Section 10 shall apply to this Agreement, as well as all other Transaction
Documents as if these terms were fully set forth therein; provided, however,
that in the event there is a conflict between any provision set forth in this
Section 10 and any provision in any other Transaction Document, the provision in
such other Transaction Document shall govern.

 

10.1.                     Certain Capitalized Terms. To the extent any
capitalized term used in any Transaction Document is defined in any other
Transaction Document (as noted therein), such capitalized term shall remain
applicable in the Transaction Document in which it is so used even if the other
Transaction Document (wherein such term is defined) has been released,
satisfied, or is otherwise cancelled or terminated.

 

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10.2.                     Arbitration of Claims. The parties shall submit all
Claims (as defined in Exhibit I) arising under this Agreement or any other
Transaction Document or any other agreement between the parties and their
affiliates or any Claim relating to the relationship of the parties to binding
arbitration pursuant to the arbitration provisions set forth in Exhibit I
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 representations. Company acknowledges
and agrees that Investor may rely upon the foregoing representations and
covenants of Company regarding the Arbitration Provisions.

 

10.3.                     Governing Law; Venue. This Agreement shall be
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Agreement shall
be governed by, the internal laws of the State of Utah, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Utah or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Utah. Each party consents to and
expressly agrees that the 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. 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 (and notwithstanding the terms (specifically including any
governing law and venue terms) of any transfer agent services agreement or other
agreement between the Transfer Agent and Company, such litigation specifically
includes, without limitation any action between or involving Company and the
Transfer Agent under the TA Letter or otherwise related to Investor in any way
(specifically including, without limitation, any action where Company seeks to
obtain an injunction, temporary restraining order, or otherwise prohibit the
Transfer Agent from issuing shares of Common Stock to Investor for any reason)),
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, (iii) agrees to not bring any such action (specifically
including, without limitation, any action where Company seeks to obtain an
injunction, temporary restraining order, or otherwise prohibit the Transfer
Agent from issuing shares of Common Stock to Investor for any reason) outside of
any state or federal court sitting in Salt Lake County, Utah, and (iv) waives
any claim of improper venue and any claim or objection that such courts are an
inconvenient forum or any other claim, defense or objection to the bringing of
any such proceeding in such jurisdiction or to any claim that such venue of the
suit, action or proceeding is improper. Finally, Company covenants and agrees to
name Investor as a party in interest in, and provide written notice to Investor
in accordance with Section 10.13 below prior to bringing or filing, any action
(including without limitation any filing or action against any person or entity
that is not a party to this Agreement, including without limitation the Transfer
Agent) that is related in any way to the Transaction Documents or any
transaction contemplated herein or therein, including without limitation any
action brought by Company to enjoin or prevent the issuance of any shares of
Common Stock to Investor by the Transfer Agent, and further agrees to timely
name Investor as a party to any such action. Company acknowledges that the
governing law and venue provisions set forth in this Section 10.3 are material
terms to induce Investor to enter into the Transaction Documents and that but
for Company’s agreements set forth in this Section 10.3 Investor would not have
entered into the Transaction Documents.

 

10.4.                     Specific Performance. Company acknowledges and agrees
that irreparable damage may occur to Investor in the event that Company fails to
perform any material provision of this

 

8

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Agreement or any of the other Transaction Documents in accordance with its
specific terms. It is accordingly agreed that Investor shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement or such other Transaction Document and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which the Investor may be entitled under the Transaction Documents, at
law or in equity. For the avoidance of doubt, in the event Investor seeks to
obtain an injunction against Company or specific performance of any provision of
any Transaction Document, such action shall not be a waiver of any right of
Investor under any Transaction Document, at law, or in equity, including without
limitation its rights to arbitrate any Claim pursuant to the terms of the
Transaction Documents.

 

10.5.                     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, Conversion Price, Conversion, Conversion
Factor (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 will promptly submit via email or facsimile the disputed Calculation to
Unkar Systems Inc. (“Unkar Systems”). Investor 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.

 

10.6.                     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.

 

10.7.                     Document Imaging. Investor shall be entitled, in its
sole discretion, to image or make copies of all or any selection of the
agreements, instruments, documents, and items and records governing, arising
from or relating to any of Company’s loans, including, without limitation, this
Agreement and the other Transaction Documents, and Investor may destroy or
archive the paper originals. The parties hereto (i) waive any right to insist or
require that Investor produce paper originals, (ii) agree that such images shall
be accorded the same force and effect as the paper originals, (iii) agree that
Investor is entitled to use such images in lieu of destroyed or archived
originals for any purpose, including as admissible evidence in any demand,
presentment or other proceedings, and (iv) further agree that any executed
facsimile (faxed), scanned, emailed, or other imaged copy of this Agreement or
any other Transaction Document shall be deemed to be of the same force and
effect as the original manually executed document.

 

9

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10.8.                     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.

 

10.9.                     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.

 

10.10.              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.
For the avoidance of doubt, all prior term sheets or other documents between
Company and Investor, or any affiliate thereof, related to the transactions
contemplated by the Transaction Documents (collectively, “Prior Agreements”),
that may have been entered into between Company and Investor, or any affiliate
thereof, are hereby null and void and deemed to be replaced in their entirety by
the Transaction Documents. To the extent there is a conflict between any term
set forth in any Prior Agreement and the term(s) of the Transaction Documents,
the Transaction Documents shall govern.

 

10.11.              No Reliance. Company acknowledges and agrees that neither
Investor nor any of its officers, directors, 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.

 

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

 

10.13.              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:

 

ContraVir Pharmaceuticals, Inc.

Attn: James Sapirstein

399 Thornall Street, First Floor

Edison, New Jersey 08837

 

10

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If to Investor:

 

Iliad Research and Trading, L.P.

Attn: John Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

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

 

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan Hansen

3051 West Maple Loop Drive, Suite 325

Lehi, Utah 84043

 

10.14.              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
affiliates, 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.

 

10.15.              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.

 

10.16.              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.

 

10.17.              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

 

11

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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.

 

10.18.              Ownership Limitation. Notwithstanding anything to the
contrary contained in this Agreement or the other Transaction Documents, if at
any time Investor 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
shall 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.

 

10.19.              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 (which, for the avoidance of doubt,
shall be determined without regard to any statutory fines, penalties, fees, or
other charges awarded to any party) 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.

 

10.20.              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.

 

10.21.              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

 

12

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OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, 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.

 

10.22.              Time is 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.

 

10.23.              No Changes; Signature Pages. Company, as well as the person
signing each Transaction Document on behalf of Company, represents and warrants
to Investor that it has not made any changes to this Agreement or any other
Transaction Document except those that have been conspicuously disclosed to
Investor in a “redline” or similar draft of the applicable Transaction Document,
which clearly marks all changes Company has made to the applicable Transaction
Document. Moreover, the versions of the Transaction Documents signed by Company
are the same versions Investor delivered to Company as being the “final”
versions of the Transaction Documents and Company represents and warrants that
it has not made any changes to such “final” versions of the Transaction
Documents and that the versions Company signed are the same versions Investor
delivered to it. In the event Company has made any changes to any Transaction
Document that are not conspicuously disclosed to Investor in a “redline” or
similar draft of the applicable Transaction Document and that have not been
explicitly accepted and agreed upon by Investor, Company acknowledges and agrees
that any such changes shall not be considered part of the final document set.
Finally, and in furtherance of the foregoing, Company agrees and authorizes
Investor to compile the “final” versions of the Transaction Documents, which
shall consist of Company’s executed signature pages for all Transaction
Documents being applied to the last set of the Transaction Documents that
Investor delivered to Company, and Company agrees that such versions of the
Transaction Documents that have been collated by Investor shall be deemed to be
the final versions of the Transaction Documents for all purposes.

 

10.24.              Voluntary Agreement. Company has carefully read this
Agreement and each of the other Transaction Documents and has asked any
questions needed for Company to understand the terms, consequences and binding
effect of this Agreement and each of the other Transaction Documents and fully
understand them. Company has had the opportunity to seek the advice of an
attorney of Company’s choosing, or has waived the right to do so, and is
executing this Agreement and each of the other Transaction Documents voluntarily
and without any duress or undue influence by Investor or anyone else.

 

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

 

13

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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 First Note:

 

$

2,325,000.00

 

 

 

 

 

Principal Amount of Second Note:

 

$

2,200,000.00

 

 

 

 

 

Initial Cash Purchase Price:

 

$

2,000,000.00

 

 

 

 

 

Second Closing Purchase Price:

 

$

2,000,000.00

 

 

 

INVESTOR:

 

 

 

ILIAD RESEARCH AND TRADING, L.P.

 

 

 

By:

Iliad Management, LLC, its General Partner

 

 

 

 

 

By:

Fife Trading, Inc., its Manager

 

 

 

 

 

By:

 

 

 

John M. Fife, President

 

 

 

 

 

COMPANY:

 

 

 

CONTRAVIR PHARMACEUTICALS, INC.

 

 

 

By:

 

 

Printed Name:

 

 

Title:

 

 

[Signature Page to Securities Purchase Agreement]

 

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ATTACHED EXHIBITS:

 

Exhibit A                                             First Note

Exhibit B                                             Allocation of Purchase
Price

Exhibit C                                             Form of Investor Note

Exhibit D                                             Security Agreement

Exhibit E                                              Officer’s Certificate

Exhibit F                                               Irrevocable Transfer
Agent Instructions

Exhibit G                                             Secretary’s Certificate

Exhibit H                                            Share Issuance Resolution

Exhibit I                                                 Arbitration Provisions

 

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EXHIBIT I

 

ARBITRATION PROVISIONS

 

1.              Dispute Resolution. For purposes of this Exhibit I, the term
“Claims” means any disputes, claims, demands, causes of action, requests for
injunctive relief, requests for specific performance, 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 these Arbitration Provisions (defined below)) 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 to the Agreement (the
“parties”) hereby agree that the arbitration provisions set forth in this
Exhibit I (“Arbitration Provisions”) are binding on each of them. As a result,
any attempt to rescind the Agreement (or these Arbitration Provisions) or
declare the Agreement (or these Arbitration Provisions) 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 and pursuant to the terms set forth in these Arbitration
Provisions. Subject to the arbitration appeal right provided for in Paragraph 5
below (the “Appeal Right”), the parties agree that the award of the arbitrator
rendered pursuant to Paragraph 4 below (the “Arbitration Award”) shall be
(a) final and binding upon the parties, (b) the sole and exclusive remedy
between them regarding any Claims, counterclaims, issues, or accountings
presented or pleaded to the arbitrator, and (c) promptly payable in United
States dollars free of any tax, deduction or offset (with respect to monetary
awards). Subject to the Appeal Right, any costs or fees, including without
limitation attorneys’ fees, incurred in connection with or incident to enforcing
the Arbitration Award shall, to the maximum extent permitted by law, be charged
against the party resisting such enforcement. The Arbitration Award shall
include default interest (as defined or otherwise provided for in the Note,
“Default Interest”) (with respect to monetary awards) at the rate specified in
the Note for Default Interest both before and after the Arbitration Award.
Judgment upon the Arbitration Award will be entered and enforced by any state or
federal court sitting in Salt Lake County, Utah.

 

3.              The Arbitration Act. 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”). Notwithstanding the foregoing, pursuant to, and to the
maximum extent permitted by, Section 105 of the Arbitration Act, in the event of
conflict or variation between the terms of these Arbitration Provisions and the
provisions of the Arbitration Act, the terms of these Arbitration Provisions
shall control and the parties hereby waive or otherwise agree to vary the effect
of all requirements of the Arbitration Act that may conflict with or vary from
these Arbitration Provisions.

 

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

 

4.1                   Initiation of Arbitration. 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 10.13 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 to such other party under Section 10.13 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 10.13 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.

 

1

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4.2                   Selection and Payment of Arbitrator.

 

(a) 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 five (5) 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 5-day period, then Investor may
select the arbitrator from the Proposed Arbitrators by providing written notice
of such selection to Company.

 

(b) If Investor fails to submit to Company the Proposed Arbitrators within ten
(10) calendar days after the Service Date pursuant to subparagraph (a) above,
then Company may at any time prior to Investor so designating the Proposed
Arbitrators, identify 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 five (5) calendar days after Company has
submitted notice of its Proposed Arbitrators to Investor, select, by written
notice to Company, one (1) of the Proposed Arbitrators to act as the arbitrator
for the parties under these Arbitration Provisions. If Investor fails to select
in writing and within such 5-day period one (1) of the three (3) Proposed
Arbitrators selected by Company, then Company may select the arbitrator from its
three (3) previously selected Proposed Arbitrators by providing written notice
of such selection to Investor.

 

(c) If a Proposed Arbitrator chosen to serve as arbitrator declines or is
otherwise unable to serve as arbitrator, then the party that selected such
Proposed Arbitrator may select one (1) of the other three (3) Proposed
Arbitrators within three (3) calendar days of the date the chosen Proposed
Arbitrator declines or notifies the parties he or she is unable to serve as
arbitrator. If all three (3) Proposed Arbitrators decline or are otherwise
unable to serve as arbitrator, then the arbitrator selection process shall begin
again in accordance with this Paragraph 4.2.

 

(d) The date that the Proposed Arbitrator selected pursuant to this Paragraph
4.2 agrees in writing (including via email) delivered to both parties to serve
as the arbitrator hereunder is referred to herein as the “Arbitration
Commencement Date”.  If an arbitrator resigns or is unable to act during the
Arbitration, a replacement arbitrator shall be chosen in accordance with this
Paragraph 4.2 to continue the Arbitration.  If Utah ADR Services ceases to exist
or to provide a list of neutrals and there is no successor thereto, then the
arbitrator shall be selected under the then prevailing rules of the American
Arbitration Association.

 

(e) Subject to Paragraph 4.10 below, the cost of the arbitrator must be paid
equally by both parties. Subject to Paragraph 4.10 below, 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 being added to or subtracted from, as applicable,
the Arbitration Award.

 

4.3                   Applicability of Certain Utah Rules. The parties agree
that the Arbitration shall be conducted generally in accordance with the Utah
Rules of Civil Procedure and the Utah Rules of Evidence. More specifically, the
Utah Rules of Civil Procedure shall apply, without limitation, to the filing of
any pleadings, motions or memoranda, the conducting of discovery, and the taking
of any depositions. The Utah Rules of Evidence shall apply to any hearings,
whether telephonic or in person, held by the arbitrator. Notwithstanding the
foregoing, it is the parties’ intent that the incorporation of such rules will
in no event supersede these Arbitration Provisions. In the event of any conflict
between the Utah Rules of Civil Procedure or the Utah Rules of Evidence and
these Arbitration Provisions, these Arbitration Provisions shall control.

 

4.4                   Answer and Default. An answer and any counterclaims to the
Arbitration Notice shall be required to be delivered to the party initiating the
Arbitration within twenty (20) calendar days after the Arbitration Commencement
Date. If an answer is not delivered by the required deadline, the arbitrator
must provide written notice to the defaulting party stating that the arbitrator
will enter a default award against such party if such party does not file an
answer within five (5) calendar days of receipt of such notice. If an answer is
not filed within the five (5) day extension period, the arbitrator must 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.

 

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4.5                   Related Litigation. The party that delivers the
Arbitration Notice to the other party shall have the option to also commence
concurrent legal proceedings with any state or federal court sitting in Salt
Lake County, Utah (“Litigation Proceedings”), subject to the following: (a) 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, (b) 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 (or Appeal Panel Award (defined below), as
applicable) hereunder, (c) 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
(d) 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 (or of the Appeal Panel
(defined below)) may be entered in such Litigation Proceedings pursuant to the
Arbitration Act.

 

4.6                   Discovery. Pursuant to Section 118(8) of the Arbitration
Act, the parties agree that discovery shall be conducted as follows:

 

(a) Written discovery will only be allowed if the likely benefits of the
proposed written discovery outweigh the burden or expense thereof, and the
written 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 written 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 or in another manner that is more convenient, less burdensome or
less expensive than in the manner requested.

 

(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 (3) depositions
(excluding expert depositions) for a maximum of seven (7) hours per deposition.
The costs associated with depositions will be borne by the party taking the
deposition. The party defending the deposition will submit a notice to the party
taking the deposition of the estimated attorneys’ fees that such party expects
to incur in connection with defending the deposition. If the party defending the
deposition fails to submit an estimate of attorneys’ fees within five
(5) calendar days of its receipt of a deposition notice, then such party shall
be deemed to have waived its right to the estimated attorneys’ fees.  The party
taking the deposition must pay the party defending the deposition the estimated
attorneys’ fees prior to taking the deposition, unless such obligation is deemed
to be waived as set forth in the immediately preceding sentence. If the party
taking the deposition believes that the estimated attorneys’ fees are
unreasonable, such party may submit the issue to the arbitrator for a decision. 
All depositions will be taken in Utah.

 

(c) All discovery requests (including document production requests included in
deposition notices) must be submitted in writing to the arbitrator and the other
party. The party submitting 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. The receiving party will then be allowed, within five
(5) 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, consistent with
subparagraph (c) above, the arbitrator will within three (3) calendar days make
a finding as to the likely attorneys’ fees and costs associated with responding
to the discovery requests and issue an order that (i) requires the requesting
party to prepay the attorneys’ fees and costs associated with responding to the
discovery requests, and (ii) requires the responding party to respond to the
discovery requests as limited by the arbitrator within twenty-five (25) calendar
days of the arbitrator’s finding with respect to such discovery requests. 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 5-day period, the
arbitrator will make a finding that (A) there are no attorneys’ fees or costs
associated with responding to such discovery requests,

 

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and (B) the responding party must respond to such discovery requests (as may be
limited by the arbitrator) within twenty-five (25) calendar days of the
arbitrator’s finding with respect to such discovery requests. Any party
submitting any written discovery requests, including without limitation
interrogatories, requests for production subpoenas to a party or a third party,
or requests for admissions, must prepay the estimated attorneys’ fees and costs,
before the responding party has any obligation to produce or respond to the
same, unless such obligation is deemed waived as set forth above.

 

(d) 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.

 

(e) Each party may submit expert reports (and rebuttals thereto), provided that
such reports must be submitted within sixty (60) days of the Arbitration
Commencement Date. Each party will be allowed a maximum of two (2) experts.
Expert reports must contain the following: (i) a complete statement of all
opinions the expert will offer at trial and the basis and reasons for them;
(ii) the expert’s name and qualifications, including a list of all the expert’s
publications within the preceding ten (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 ten (10) years; and (iii) 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 (1) time for no more than four (4) hours.
An expert may not testify in a party’s case-in-chief concerning any matter not
fairly disclosed in the expert report.

 

4.6                   Dispositive Motions.  Each party shall have the right to
submit dispositive motions pursuant Rule 12 or Rule 56 of the Utah Rules of
Civil Procedure (a “Dispositive Motion”). The party submitting the Dispositive
Motion may, but is not required to, deliver to the arbitrator and to the other
party a memorandum in support (the “Memorandum in Support”) of the Dispositive
Motion. Within seven (7) calendar days of delivery of the Memorandum in Support,
the other party shall deliver to the arbitrator and to the other party a
memorandum in opposition to the Memorandum in Support (the “Memorandum in
Opposition”). Within seven (7) calendar days of delivery of the Memorandum in
Opposition, as applicable, the party that submitted the Memorandum in Support
shall deliver to the arbitrator and to the other party a reply memorandum to the
Memorandum in Opposition (“Reply Memorandum”). If the applicable party shall
fail to deliver the Memorandum in Opposition as required above, or if the other
party fails to deliver the Reply Memorandum as required above, then the
applicable party shall lose its right to so deliver the same, and the
Dispositive Motion shall proceed regardless.

 

4.7                   Confidentiality. All information disclosed by either party
(or such party’s agents) during the Arbitration process (including without
limitation information disclosed during the discovery process or any Appeal
(defined below)) shall be considered confidential in nature. Each party agrees
not to disclose any confidential information received from the other party (or
its agents) during the Arbitration process (including without limitation during
the discovery process or any Appeal) unless (a) 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 or its
agents, (b) 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
(c) such information is 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.

 

4.8                   Authorization; Timing; Scheduling Order. Subject to all
other portions of these Arbitration Provisions, 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 one hundred
twenty (120) calendar days after the Arbitration Commencement Date. The
arbitrator is hereby authorized and directed to hold a scheduling conference
within ten (10)

 

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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 decision prior to the end of such 120-day period.

 

4.9                   Relief. The arbitrator shall have the right to award or
include in the Arbitration Award (or in a preliminary ruling) 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.

 

4.10            Fees and Costs. As part of the Arbitration Award, the arbitrator
is hereby directed to require the losing party (the party being awarded the
least amount of money by the arbitrator, which, for the avoidance of doubt,
shall be determined without regard to any statutory fines, penalties, fees, or
other charges awarded to any party) to (a) pay the full amount of any unpaid
costs and fees of the Arbitration, and (b) reimburse the prevailing party for
all reasonable attorneys’ fees, arbitrator costs and fees, deposition costs,
other discovery costs, and other expenses, costs or fees paid or otherwise
incurred by the prevailing party in connection with the Arbitration.

 

5.              Arbitration Appeal.

 

5.1                   Initiation of Appeal.  Following the entry of the
Arbitration Award, either party (the “Appellant”) shall have a period of thirty
(30) calendar days in which to notify the other party (the “Appellee”), in
writing, that the Appellant elects to appeal (the “Appeal”) the Arbitration
Award (such notice, an “Appeal Notice”) to a panel of arbitrators as provided in
Paragraph 5.2 below.  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 4.1
above with respect to delivery of an Arbitration Notice.  In addition, together
with delivery of the Appeal Notice to the Appellee, the Appellant must also pay
for (and provide proof of such payment to the Appellee together with delivery of
the Appeal Notice) a bond in the amount of 110% of the sum the Appellant owes to
the Appellee as a result of the Arbitration Award the Appellant is appealing. 
In the event an Appellant delivers an Appeal Notice to the Appellee (together
with proof of payment of the applicable bond) in compliance with the provisions
of this Paragraph 5.1, the Appeal will occur as a matter of right and, except as
specifically set forth herein, will not be further conditioned.  In the event a
party does not deliver an Appeal Notice (along with proof of payment of the
applicable bond) to the other party within the deadline prescribed in this
Paragraph 5.1, such party shall lose its right to appeal the Arbitration Award. 
If no party delivers an Appeal Notice (along with proof of payment of the
applicable bond) to the other party within the deadline described in this
Paragraph 5.1, the Arbitration Award shall be final.  The parties acknowledge
and agree that any Appeal shall be deemed part of the parties’ agreement to
arbitrate for purposes of these Arbitration Provisions and the Arbitration Act.

 

5.2                   Selection and Payment of Appeal Panel.  In the event an
Appellant delivers an Appeal Notice to the Appellee (together with proof of
payment of the applicable bond) in compliance with the provisions of Paragraph
5.1 above, the Appeal will be heard by a three (3) person arbitration panel (the
“Appeal Panel”).

 

(a)                     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 (5) 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, and shall not be the arbitrator who rendered
the Arbitration Award being appealed (the “Original Arbitrator”). Within five
(5) 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 5-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.

 

(b)                     If the Appellee fails to submit to the Appellant the
names of the Proposed Appeal Arbitrators within ten (10) calendar days after the
Appeal Date pursuant to subparagraph (a) above, then the Appellant may at any
time prior to the Appellee so designating the Proposed Appeal Arbitrators,
identify the names of five (5) arbitrators that are designated as “neutrals” or
qualified arbitrators by Utah ADR Service (none of whom may be the Original
Arbitrator) by written notice to the Appellee.  The Appellee may then, within
five (5) calendar days after the Appellant has submitted notice of its selected
arbitrators to the Appellee, select, by

 

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written notice to the Appellant, three (3) of such selected arbitrators to serve
on the Appeal Panel. If the Appellee fails to select in writing within such
5-day period three (3) of the arbitrators selected by the Appellant to serve as
the members of the Appeal Panel, then the Appellant may select the three
(3) members of the Appeal Panel from the Appellant’s list of five
(5) arbitrators by providing written notice of such selection to the Appellee.

 

(c)                      If a selected Proposed Appeal Arbitrator declines or is
otherwise unable to serve, then the party that selected such Proposed Appeal
Arbitrator may select one (1) of the other five (5) designated Proposed Appeal
Arbitrators within three (3) calendar days of the date a chosen Proposed Appeal
Arbitrator declines or notifies the parties he or she is unable to serve as an
arbitrator. If at least three (3) of the five (5) designated Proposed Appeal
Arbitrators decline or are otherwise unable to serve, then the Proposed Appeal
Arbitrator selection process shall begin again in accordance with this Paragraph
5.2; provided, however, that any Proposed Appeal Arbitrators who have already
agreed to serve shall remain on the Appeal Panel.

 

(d)                     The date that all three (3) Proposed Appeal Arbitrators
selected pursuant to this Paragraph 5.2 agree in writing (including via email)
delivered to both the Appellant and the Appellee to serve as members of the
Appeal Panel hereunder is referred to herein as the “Appeal Commencement Date”. 
No later than five (5) calendar days after the Appeal Commencement Date, the
Appellee shall designate in writing (including via email) to the Appellant and
the Appeal Panel the name of one (1) of the three (3) members of the Appeal
Panel to serve as the lead arbitrator in the Appeal proceedings. Each member of
the Appeal Panel shall be deemed an arbitrator for purposes of these Arbitration
Provisions and the Arbitration Act, provided that, in conducting the Appeal, the
Appeal Panel may only act or make determinations upon the approval or vote of no
less than the majority vote of its members, as announced or communicated by the
lead arbitrator on the Appeal Panel.  If an arbitrator on the Appeal Panel
ceases or is unable to act during the Appeal proceedings, a replacement
arbitrator shall be chosen in accordance with Paragraph 5.2 above to continue
the Appeal as a member of the Appeal Panel.  If Utah ADR Services ceases to
exist or to provide a list of neutrals, then the arbitrators for the Appeal
Panel shall be selected under the then prevailing rules of the American
Arbitration Association.

 

(e)                      Subject to Paragraph 5.7 below, the cost of the Appeal
Panel must be paid entirely by the Appellant.

 

5.3                   Appeal Procedure.  The Appeal will be deemed an appeal of
the entire Arbitration Award. In conducting the Appeal, the Appeal Panel shall
conduct a de novo review of all Claims described or otherwise set forth in the
Arbitration Notice.  Subject to the foregoing and all other provisions of this
Paragraph 5, the Appeal Panel shall conduct the Appeal in a manner the Appeal
Panel considers appropriate for a fair and expeditious disposition of the
Appeal, may hold one or more hearings and permit oral argument, and may review
all previous evidence and discovery, together with all briefs, pleadings and
other documents filed with the Original Arbitrator (as well as any documents
filed with the Appeal Panel pursuant to Paragraph 5.4(a) below). 
Notwithstanding the foregoing, in connection with the Appeal, the Appeal Panel
shall not permit the parties to conduct any additional discovery or raise any
new Claims to be arbitrated, shall not permit new witnesses or affidavits, and
shall not base any of its findings or determinations on the Original
Arbitrator’s findings or the Arbitration Award.

 

5.4                   Timing.

 

(a)                  Within seven (7) calendar days of the Appeal Commencement
Date, the Appellant (i) shall deliver or cause to be delivered to the Appeal
Panel copies of the Appeal Notice, all discovery conducted in connection with
the Arbitration, and all briefs, pleadings and other documents filed with the
Original Arbitrator (which material Appellee shall have the right to review and
supplement if necessary), and (ii) may, but is not required to, deliver to the
Appeal Panel and to the Appellee a Memorandum in Support of the Appellant’s
arguments concerning or position with respect to all Claims, counterclaims,
issues, or accountings presented or pleaded in the Arbitration. Within seven
(7) calendar days of the Appellant’s delivery of the Memorandum in Support, as
applicable, the Appellee shall deliver to the Appeal Panel and to the Appellant
a Memorandum in Opposition to the Memorandum in Support. Within seven
(7) calendar days of the Appellee’s delivery of the Memorandum in Opposition, as
applicable, the Appellant shall deliver to the Appeal Panel and to the Appellee
a Reply Memorandum to the Memorandum in Opposition. If the Appellant shall fail
to substantially comply with the requirements of clause (i) of this subparagraph
(a), the Appellant shall lose its right to appeal the Arbitration Award, and the
Arbitration Award shall be final.  If the Appellee shall fail to deliver the
Memorandum in Opposition as required above, or if the Appellant shall fail to
deliver the Reply

 

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Memorandum as required above, then the Appellee or the Appellant, as the case
may be, shall lose its right to so deliver the same, and the Appeal shall
proceed regardless.

 

(b)                     Subject to subparagraph (a) above, 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 must
render its decision within thirty (30) calendar days after the Appeal is heard
(and in no event later than sixty (60) calendar days after the Appeal
Commencement Date).

 

5.5                   Appeal Panel Award.  The Appeal Panel shall issue its
decision (the “Appeal Panel Award”) through the lead arbitrator on the Appeal
Panel.  Notwithstanding any other provision contained herein, the Appeal Panel
Award shall (a) supersede in its entirety and make of no further force or effect
the Arbitration Award (provided that any protective orders issued by the
Original Arbitrator shall remain in full force and effect), (b) be final and
binding upon the parties, with no further rights of appeal, (c) be the sole and
exclusive remedy between the parties regarding any Claims, counterclaims,
issues, or accountings presented or pleaded in the Arbitration, and (d) be
promptly 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, incurred in connection with or incident to enforcing
the Appeal Panel Award shall, to the maximum extent permitted by law, be charged
against the party resisting such enforcement. The Appeal Panel Award shall
include Default Interest (with respect to monetary awards) at the rate specified
in the Note for Default Interest both before and after the Arbitration Award.
Judgment upon the Appeal Panel Award will be entered and enforced by a state or
federal court sitting in Salt Lake County, Utah.

 

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

 

5.7                   Fees and Costs.  As part of the Appeal Panel Award, the
Appeal Panel is hereby directed to require the losing party (the party being
awarded the least amount of money by the arbitrator, which, for the avoidance of
doubt, shall be determined without regard to any statutory fines, penalties,
fees, or other charges awarded to any party) to (a) pay the full amount of any
unpaid costs and fees of the Arbitration and the Appeal Panel, and (b) reimburse
the prevailing party (the party being awarded the most amount of money by the
Appeal Panel,  which, for the avoidance of doubt, shall be determined without
regard to any statutory fines, penalties, fees, or other charges awarded to any
part) the reasonable attorneys’ fees, arbitrator and Appeal Panel costs and
fees, deposition costs, other discovery costs, and other expenses, costs or fees
paid or otherwise incurred by the prevailing party in connection with the
Arbitration (including without limitation in connection with the Appeal).

 

6.              Miscellaneous.

 

6.1                   Severability. If any part of these Arbitration Provisions
is found to violate or be illegal under applicable law, then such provision
shall be modified to the minimum extent necessary to make such provision
enforceable under applicable law, and the remainder of the Arbitration
Provisions shall remain unaffected and in full force and effect.

 

6.2                   Governing Law.  These Arbitration Provisions shall be
governed by the laws of the State of Utah without regard to the conflict of laws
principles therein.

 

6.3                   Interpretation.  The headings of these Arbitration
Provisions are for convenience of reference only and shall not form part of, or
affect the interpretation of, these Arbitration Provisions.

 

6.4                   Waiver. No waiver of any provision of these Arbitration
Provisions shall be effective unless it is in the form of a writing signed by
the party granting the waiver.

 

6.5                   Time is of the Essence. Time is expressly made of the
essence with respect to each and every provision of these Arbitration
Provisions.

 

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