SETTLEMENT AGREEMENT

 

This Settlement Agreement (this “Agreement”) is executed and entered into as of
June 1, 2015 by and among Tauriga Sciences, Inc., a Florida corporation
(“Tauriga”), Typenex Co-Investment, LLC, a Utah limited liability company,
previously an Illinois company known as Typenex Co-Investment, LLC (“Typenex”),
and for purposes of Section 5 only, ClearTrust, LLC, a Florida limited liability
company (“ClearTrust”).

 

RECITALS

 

A. Tauriga previously issued to Typenex a Warrant to Purchase Shares of Common
Stock dated as of June 24, 2013 (the “Warrant”).

 

B. On July 16, 2014, Typenex delivered to Tauriga a Notice of Exercise of
Warrant (the “Previous Exercise Notice”) notifying Tauriga of Typenex’s election
to exercise its right set forth in the Warrant to receive 70,080,714 shares of
Tauriga’s common stock, par value $0.00001 (the “Previous Exercise Shares”).
Typenex subsequently delivered a copy of the Previous Exercise Notice to
Tauriga’s transfer agent, ClearTrust, LLC (“ClearTrust”).

 

C. A dispute subsequently arose regarding the Warrant and Tauriga filed suit
against Typenex and ClearTrust in the Thirteenth Judicial Circuit in and for
Hillsbourgh County, Florida under Case No. 14-CA-009076 (the “Florida
Litigation”). An injunction was subsequently granted in the Florida Litigation
(the “Injunction”).

 

D. Prior to the Injunction in the Florida Litigation, ClearTrust released the
Previous Exercise Shares to Typenex and generated a stock certificate evidencing
the same (the “Certificate”). However, as a result of the Injunction, ClearTrust
placed a stop order on the Previous Exercise Shares.

 

E. After the Injunction was granted in the Florida litigation, Typenex filed a
new action in the United States District Court for the Northern District of
Illinois, Eastern Division, under Case No. 1:14-cv-09072 (the “Chicago
Litigation”).

 

F. On January 16, 2015, the parties entered into a Settlement Agreement (the
“Prior Settlement Agreement”) pursuant to which they settled (the “Settlement”)
the Florida Litigation, the Chicago Litigation, and all claims related thereto,
which Settlement included dismissals with prejudice of both the Florida
Litigation and the Chicago Litigation as well as Typenex’s return of the
Certificate to ClearTrust for cancellation.

 

G. As set forth in the Prior Settlement Agreement, as part of the Settlement
Typenex also agreed to enter into a Securities Purchase Agreement and certain
related documents described in the Prior Settlement Agreement (collectively, the
“Purchase Documents”), pursuant to which Typenex agreed to purchase an aggregate
of $300,000.00 of shares of common stock, par value $0.00001, of Tauriga
(“Common Stock”), in three separate but related $100,000 tranches.

 

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H. In addition, as set forth in the Prior Settlement Agreement, as part of the
Settlement Tauriga agreed to issue to Typenex shares of Common Stock (“Warrant
Shares”) pursuant to the Warrant, until Typenex had received Net Sales Proceeds
(as defined in the Prior Settlement Agreement) of $600,000.00 from selling such
Warrant Shares.

 

I. As of the date hereof, Typenex has purchased an aggregate of $100,000.00 of
shares of Common Stock from Tauriga (evidenced by Certificate No. 6277 for
4,278,990 shares of Common Stock (the “Purchased Shares”) issued to Typenex on
February 13, 2015) and has earned Net Sales Proceeds from the sale of Warrant
Shares equal to approximately $169,000.00 under the Prior Settlement Agreement.

 

J. Instead of requiring Typenex to continue purchasing Common Stock pursuant to
the Purchase Documents and requiring Tauriga to continue issuing Warrant Shares
to Typenex as set forth in the Prior Settlement Agreement, the parties now
desire to settle all outstanding obligations and claims each has under the Prior
Settlement Agreement, the Warrant and the Purchase Documents on the terms and
conditions set forth herein.

 

NOW, THEREFORE, the parties hereby represent, warrant and agree as follows:

 

1) Recitals. The Recitals set forth above are true and correct.

 

2) Settlement Payment. In settlement of all claims and obligations of Tauriga
under the Prior Settlement Agreement, including without limitation its
obligation to deliver Warrant Shares to Typenex pursuant to the terms thereof,
Tauriga agrees to pay to Typenex a payment in the amount of $230,000.00 (the
“Settlement Payment”). The Settlement Payment shall be due and payable in cash
delivered to Typenex in the form of immediately available funds within two (2)
business days of the date of this Agreement.

 

3) Termination of Prior Agreements. Upon and subject to Typenex’s receipt of the
full Settlement Payment, any and all prior agreements between the parties,
including without limitation (a) the Prior Settlement Agreement (including, but
not limited to, the related Irrevocable Letter of Instructions to Transfer
Agent), (b) the Purchase Documents, (c) the Warrant, and (d) all other
certificates, documents, agreements, resolutions and instruments delivered to
any party under or in connection with any of the foregoing (collectively, the
“Terminated Agreements”), will terminate and shall be deemed to have no further
effect, and the parties are hereby released from all obligations, definitions,
representations and commitments therein.

 

4) Return of Warrant. Upon and subject to Typenex’s receipt of the full
Settlement Payment, Typenex covenants and agrees to promptly return the original
Warrant to Tauriga for cancellation, or, if the original Warrant is not
available, Typenex will execute a lost warrant affidavit certifying to Tauriga
that the Warrant has been lost, stolen, or destroyed.

 

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5) Failure to Comply. Tauriga understands that Typenex’s agreements set forth
herein shall terminate immediately upon the earliest occurrence of any material
breach of this Agreement, including without limitation Tauriga’s failure to pay
the Settlement Payment when due, and that in such case, Typenex may seek all
recourse available to it under the terms of the Terminated Agreements and
applicable law. For the avoidance of doubt, in the event of Tauriga’s failure to
pay the Settlement Payment when due, Typenex may not claim that it is due the
Settlement Payment in addition to its rights under this Section 5 set forth
below and the Terminated Agreements. In addition, in the event Tauriga fails to
pay the Settlement Payment when due, it hereby irrevocably authorizes
ClearTrust, as its transfer agent, without any further action, instruction or
authorization from Tauriga, to immediately issue to Typenex 17,543,860 Warrant
Shares pursuant to the Notice of Exercise of Warrant attached hereto as Exhibit
A (the “Notice of Exercise”) upon Typenex’s delivery of such Notice of Exercise
to ClearTrust (together with an opinion of Typenex’s counsel that the issuance
of such Warrant Shares is exempt from registration under the Securities Act of
1933, as amended (the “Opinion Letter”)). In furtherance of the foregoing, by
its signature below, ClearTrust hereby acknowledges the authorization granted by
Tauriga pursuant to the foregoing sentence and covenants and agrees that it is
bound by this Section 5. ClearTrust further agrees to issue the applicable
Warrant Shares immediately to Typenex in the manner described in the Notice of
Exercise upon its receipt of the Notice of Exercise and the Opinion Letter from
Typenex without any further action, instruction or authorization from Tauriga.

 

6) Purchased Shares. Tauriga represents, warrants, affirms, and acknowledges
that each of the Purchased Shares (a) has been duly authorized and validly
issued to Typenex, (b) is fully paid for and non-assessable, and (c) upon
issuance by Tauriga, was free and clear of all liens, claims, charges, and
encumbrances. Tauriga further acknowledges that nothing in this Agreement
modifies, alters, changes, impacts, or limits Typenex’s ownership of the
Purchased Shares and Tauriga covenants not to take any position to the contrary
or that Typenex doesn’t own the Purchased Shares or failed to pay adequate
consideration for the Purchased Shares. Finally, in the event Typenex seeks to
sell any Purchased Shares or have the same reissued to Typenex without a
restricted securities legend (provided it has satisfied any securities laws
applicable to such reissuance), Tauriga covenants and agrees that it will not
seek to enjoin, limit or otherwise prevent Typenex from undertaking such a
transaction.

 

7) Tauriga’s Representations and Release. Tauriga hereby represents and agrees
as follows:

 

A. Representations and Warranties. Tauriga hereby represents and warrants as
follows, in addition to other representations or warranties contained elsewhere
in this Agreement:

 

i. Tauriga has not assigned or otherwise transferred any claim, demand or cause
of action released or referenced by this Agreement.

 

ii. This Agreement has been, or upon execution hereof will be, duly and validly
executed and delivered by and constitutes, or upon execution and delivery hereof
will constitute, a valid and binding obligation of Tauriga, enforceable against
it in accordance with its terms and provisions.

 

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iii. Tauriga has previously caused a motion and order of dismissal with
prejudice to be executed and filed with the court in which the Florida
Litigation has been filed, by which the Florida Litigation has been dismissed
with prejudice and the Injunction has been dissolved.

 

B. Complete and Full Release. For and in consideration of the mutual covenants
in this Agreement, the satisfactions, the waivers, release and other actions by
Typenex in this Agreement, and other good and valuable consideration, received
from or on behalf of Typenex, the receipt and sufficiency of which is hereby
acknowledged, Tauriga, for itself and on behalf of its successors, assigns,
directors, officers, agents and employees (collectively, the “Tauriga Releasing
Parties”), hereby fully remises, releases, acquits, satisfies and forever
discharges Typenex, and each of its successors, assigns, affiliates, directors,
officers, managers, members, agents and employees, of and from all and all
manner of action and actions, cause and causes of action, losses, suits, debts,
dues, sum of money, accounts, reckonings, bonds, bills, contracts,
controversies, agreements, promises, damages, judgments, executions, agreements,
covenants, liabilities, obligations, claims, counterclaims, defenses, right of
set off and demands whatsoever, in law or in equity, whether absolute or
contingent, foreseen or unforeseen, known or unknown, or whether or not
heretofore asserted, which any of the Tauriga Releasing Parties ever had or now
has or may in the future have, that relates to or arises with respect to any of
the Terminated Agreements or the transactions occurring thereunder, any Common
Stock delivered, promised to, contracted for or purchased by Typenex prior to
the date hereof, or any related transactions, events, actions, disputes or
agreements occurring or arising prior to the date hereof; provided that nothing
in this release of claims and liabilities shall be construed to relieve the
parties hereto of their respective representations, warranties or covenants
under this Agreement.

 

8) Typenex’s Representations and Release. Typenex hereby represents and agrees
as follows:

 

A. Representations and Warranties. Typenex hereby represents and warrants as
follows, in addition to other representations or warranties contained elsewhere
in this Agreement:

 

i. Typenex has not assigned or otherwise transferred any claim, demand or cause
of action released or referenced by this Agreement.

 

ii. This Agreement has been, or upon execution hereof will be, duly and validly
executed and delivered by and constitutes, or upon execution and delivery hereof
will constitute, a valid and binding obligation of Typenex, enforceable against
it in accordance with its terms and provisions.

 

iii. Typenex has previously caused a motion and order of dismissal with
prejudice to be executed and filed with the court in which the Chicago
Litigation has been filed, by which the Chicago Litigation has been dismissed
with prejudice.

 

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B. Complete and Full Release. Subject to and conditioned upon Typenex’s receipt
of the full Settlement Payment, for and in consideration of the mutual covenants
in this Agreement, the satisfactions, the waivers, release and other actions by
Tauriga in this Agreement, and other good and valuable consideration, received
from or on behalf of Tauriga, the receipt and sufficiency of which is hereby
acknowledged, Typenex, for itself and on behalf of its successors, assigns,
directors, officers, agents and employees (collectively, the “Typenex Releasing
Parties”), hereby fully remises, releases, acquits, satisfies and forever
discharges Tauriga, and each of its successors, assigns, affiliates, directors,
officers, managers, members, agents and employees, of and from all and all
manner of action and actions, cause and causes of action, losses, suits, debts,
dues, sum of money, accounts, reckonings, bonds, bills, contracts,
controversies, agreements, promises, damages, judgments, executions, agreements,
covenants, liabilities, obligations, claims, counterclaims, defenses, right of
set off and demands whatsoever, in law or in equity, whether absolute or
contingent, foreseen or unforeseen, known or unknown, or whether or not
heretofore asserted, which any of the Typenex Releasing Parties ever had or now
has or may in the future have, that relates to or arises with respect to any of
the Terminated Agreements or the transactions occurring thereunder, any Common
Stock issued, delivered, promised to, contracted for or purchased by Typenex
prior to the date hereof, or any related transactions, events, actions, disputes
or agreements occurring or arising prior to the date hereof; provided that
nothing in this release of claims and liabilities shall be construed to relieve
the parties hereto of their respective representations, warranties or covenants
under this Agreement.

 

9) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of the parties hereto. No person not a party to this Agreement will be a
third-party beneficiary or acquire any rights hereunder; except that all parties
being released hereunder shall be deemed intended third-party beneficiaries of
this Agreement with standing to enforce all provisions that benefit them.

 

10) Assignment. Notwithstanding anything to the contrary herein, the rights,
interests or obligations of Tauriga hereunder may not be assigned, by operation
of law or otherwise, in whole or in part, by Tauriga without the prior written
consent of Typenex, which consent may be withheld at the sole discretion of
Typenex; provided, however, that in the case of a merger, sale of substantially
all of Tauriga’s assets or other corporate reorganization of Tauriga, Typenex
shall not unreasonably withhold, condition or delay such consent. This Agreement
or any of the severable rights and obligations inuring to the benefit of or to
be performed by Typenex hereunder may be assigned by Typenex to a third party,
including its financing sources, in whole or in part.

 

11) Relationship. Nothing contained in this Agreement will be deemed to create a
partnership or joint venture between the parties.

 

12) Cost of Preparation. The parties, as between each other, each shall bear its
own attorney’s fees and costs in connection with the negotiation, preparation
and execution of this Agreement.

 

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13) Arbitration or Litigation Expenses. The prevailing party in any proceeding
brought to enforce the terms and conditions contained in this Agreement shall be
entitled to costs and fees as set forth in Exhibit B attached hereto.

 

14) Mutual Contribution. The parties and their respective counsel have
contributed mutually to the drafting of this Agreement. Consequently, no term or
condition contained in this Agreement shall be construed against any party on
the ground that a party drafted the term or condition or caused the term or
condition to be drafted.

 

15) Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such provision shall be modified to achieve the objective of the
parties to the fullest extent permitted and such invalidity or unenforceability
shall not affect the validity or enforceability of the remainder of this
Agreement or the validity or enforceability of this Agreement in any other
jurisdiction.

 

16) Interpretation, Construction and Recording. The use in this Agreement of the
word “including” does not limit the preceding words or terms and shall mean
“including, without limitation.” The words “herein,” “hereof,” “hereunder,”
“hereby,” “hereto,” “hereinafter,” and other words of similar import refer to
this Agreement as a whole, as the same from time to time may be amended,
modified, supplemented or restated in accordance with the terms hereof or
thereof, and not to any particular article, section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to articles,
sections, subsections, paragraphs, subparagraphs, and clauses shall mean the
articles, sections, subsections, paragraphs, subparagraphs and clauses contained
in this Agreement, except as otherwise expressly provided in this Agreement. The
title of any article, section and paragraph headings in this Agreement are for
convenience of reference only and shall not govern or affect the interpretation
of any of the terms or conditions contained in this Agreement. The use in this
Agreement of the masculine, feminine or neuter forms also shall denote the other
forms, as in each case the context may require. Where specific language is used
to clarify by example a general statement contained in this Agreement, such
specific language shall not be deemed to modify, limit or restrict in any manner
the construction of the general statement to which it relates. The language used
in this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party. This
Agreement shall not be recorded.

 

17) Waiver of Jury Trial. The undersigned hereby knowingly, voluntarily,
intentionally and unconditionally waive any right to a jury trial on any issue
relating to this Agreement and all Terminated Agreements or any claim,
counterclaim, or other action arising in connection therewith.

 

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18) Entire Agreement. This Agreement contains the entire agreement between the
parties concerning the subject matter hereof and supersedes and replaces any and
all prior or contemporaneous agreement, understanding, discussions,
correspondences or documentation, written or oral, with regard to the matters
set forth herein and therein.

 

19) Counterparts and Facsimile Execution. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original signature page to this Agreement. All such counterparts shall be
considered one and the same agreement and shall become effective when
counterparts have been executed by each party and delivered (including by
facsimile, telecopy or other electronic device) to the other parties, it being
understood that all parties need not execute the same counterpart. Any
counterpart or other signature hereupon delivered by facsimile, telecopy or
other electronic device shall be deemed for all purposes as constituting good
and valid execution and delivery of this Agreement by such party.

 

20) Amendment and Waiver. This Agreement may not be amended, modified,
supplemented or restated except pursuant to a written document executed and
delivered by each party against which the amendment, modification, supplement or
restatement is sought to be enforced. No waiver of any term or condition
contained in this Agreement shall be effective unless it is contained in a
written document executed by each party against which the waiver is sought to be
enforced. No waiver by any party of any breach of or default under any
representation, warranty, covenant or agreement under this Agreement, whether
intentional or not, shall be deemed to extend to any prior or subsequent breach
of or default under any representation, warranty, covenant or agreement under
this Agreement, or affect in any way any rights arising by virtue of any such
prior or subsequent occurrence. No oral waiver, amendment, modification,
supplement or restatement shall be valid or enforceable, without exception.

 

21) Compromise. This Agreement constitutes a compromise of disputed claims and
shall not be construed as an admission of liability on the part of any of the
parties. This Agreement shall not be offered into evidence and shall be
inadmissible for any purpose other than in proceedings to enforce or approve its
terms.

 

22) Governing Law; Venue. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Illinois for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each party consents to and expressly agrees that
exclusive venue for Arbitration (as defined in Exhibit B attached hereto) of any
dispute arising out of or relating to this Agreement or the relationship of the
parties or their affiliates shall be in Cook County, Illinois. Without modifying
the parties’ obligations to resolve disputes hereunder pursuant to the
Arbitration Provisions (as defined below), for any litigation arising in
connection with this Agreement, each party hereto hereby (a) consents to and
expressly submits to the exclusive personal jurisdiction of any state or federal
court sitting in Cook County, Illinois, (b) expressly submits to the exclusive
venue of any such court for the purposes hereof, and (c) waives any claim of
improper venue and any claim or objection that such courts are an inconvenient
forum or any other claim or objection to the bringing of any such proceeding in
such jurisdictions or to any claim that such venue of the suit, action or
proceeding is improper.

 

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23) Arbitration of Claims. The parties shall submit all Claims (as defined in
Exhibit B attached hereto) arising under this Agreement or other agreements
between the parties and their affiliates to binding arbitration pursuant to the
arbitration provisions set forth in Exhibit B 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. Any capitalized term not defined in
the Arbitration Provisions shall have the meaning set forth in this Agreement.
The parties agree that all of the Arbitration Provisions shall be strictly
enforced by the arbitrator unless any term or provision thereof is expressly
prohibited by the Illinois Uniform Arbitration Act. By executing this Agreement,
Tauriga represents, warrants and covenants that it 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 Tauriga will not take a position contrary to the foregoing
representations. Tauriga acknowledges and agrees that Typenex may rely upon the
foregoing representations and covenants of Tauriga regarding the Arbitration
Provisions.

 

24) 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:

 

A. 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),

 

B. the fifth Trading Day after deposit, postage prepaid, in the United States
Postal Service (with USPS tracking or by certified mail), or

 

C. the second Trading Day after mailing by domestic or international express
courier (e.g., FedEx), 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)
Trading Days’ advance written notice similarly given to each of the other
parties hereto):

 

If to Tauriga:

 

Tauriga Sciences, Inc.

Attn: Stella M. Sung

39 Old Ridgebury Road

Danbury, Connecticut 06180

 

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

 

Quick Law Group PC

Attn: Jeffrey M. Quick

1035 Pearl Street, Suite 403

Boulder, Colorado 80302

Telephone: (720) 259-3393

Email: jquick@quicklawgroup.com

 

If to Typenex:

 

Typenex Co-Investment, LLC

Attn: John M. Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

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

 

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan K. Hansen

3051 West Maple Loop Drive, Suite 325

Lehi, Utah 84043

Telephone: 801.922.5000

Email: jhansen@HBAAlaw.com

 

25) Survival of Representations and Warranties. All of the representations and
warranties made herein shall survive the execution and delivery of this
Agreement for the maximum time allowable by applicable law.

 

26) Time of the Essence. Time is expressly made of the essence of each and every
provision of this Agreement.

 

27) 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.

 

28) No Reliance. Each party hereto acknowledges and agrees that neither the
other party hereto nor any of its officers, directors, members, managers,
representatives or agents has made any representations or warranties to such
party or any of its officers, directors, stockholders, agents, representatives,
or employees except as expressly set forth herein and, in making its decision to
enter into this Agreement, neither party hereto is relying on any
representation, warranty, covenant or promise of the other party hereto or its
officers, directors, members, managers, agents or representatives other than as
set forth herein.

  

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the undersigned
party has read and understands the provisions herein, and has executed this
Settlement Agreement as of the date set forth above.

 

  Tauriga Sciences, Inc.       By: /s/ Stella M. Sung   Print:     Title:  

 

STATE OF _____________

 

COUNTY OF _____________

 

The foregoing instrument was executed, acknowledged and delivered before me this
1st day of June 2015, by ____________, the __________ of Tauriga Sciences, Inc.
Such person _____ is/are personally known to me or _____ produced a current
____________ driver’s license as identification.

 

  Signature of Notary         Name of Notary (Typed, Printed or Stamped)  
Commission Number (if not legible on seal):   My Commission Expires (if not
legible on seal):

 

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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the undersigned
party has read and understands the provisions herein, and has executed this
Settlement Agreement as of the date set forth above.

  

  Typenex Co-Investment, LLC       By: Red Cliffs Investments, Inc., its Manager
        By: /s/ John M. Fife     John M. Fife, President

 

STATE OF _____________

 

COUNTY OF _____________

 

The foregoing instrument was executed, acknowledged and delivered before me this
1st day of June 2015, by John M. Fife, the President of the Manager of Typenex
Co-Investment, LLC. Such person is personally known to me or produced a current
Illinois driver’s license as identification.

 

  Signature of Notary           Name of Notary (Typed, Printed or Stamped)  
Commission Number (if not legible on seal):   My Commission Expires (if not
legible on seal):

 

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IN WITNESS WHEREOF, the undersigned party has read and understands the
provisions herein, and has executed this Settlement Agreement as of the date set
forth above, and agrees to be legally bound by only Section 5 thereof.

 

  ClearTrust, LLC         By: /s/ Kara Kennedy   Name:   Title:  

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

 

 

 

EXHIBIT b

 

ARBITRATION PROVISIONS

 

1. Dispute Resolution. For purposes of this Exhibit B, the term “Claims” means
any disputes, claims, demands, causes of action, liabilities, damages, losses,
or controversies whatsoever arising from related to or connected with the
transactions contemplated in the Agreement 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. The parties hereby
agree that the arbitration provisions set forth in this Exhibit B (“Arbitration
Provisions”) are binding on the parties hereto and are severable from all other
provisions in the Agreement. As a result, any attempt to rescind the Agreement
or declare the Agreement 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.

 

2. Arbitration. Except as otherwise provided herein, all Claims must be
submitted to arbitration (“Arbitration”) to be conducted in Cook County,
Illinois and pursuant to the terms set forth in these Arbitration Provisions.
The parties agree that the award of the arbitrator shall be final and binding
upon the parties; shall be the sole and exclusive remedy between them regarding
any Claims, counterclaims, issues, or accountings presented or pleaded to the
arbitrator; and shall promptly be payable in United States dollars free of any
tax, deduction or offset (with respect to monetary awards). Any costs or fees,
including without limitation attorneys’ fees, incident to enforcing the
arbitrator’s award shall, to the maximum extent permitted by law, be charged
against the party resisting such enforcement. The award shall include eighteen
percent (18%) annual simple interest (“Default Interest”), both before and after
the award. Judgment upon the award of the arbitrator will be entered and
enforced by a state court sitting in Cook County, Illinois. The parties hereby
incorporate herein the provisions and procedures set forth in the Illinois
Uniform Arbitration Act, 710 ILCS 5 et seq. (as amended or superseded from time
to time, the “Arbitration Act”). Pursuant to Section 1 of the Arbitration Act,
in the event of conflict between the terms of these Arbitration Provisions and
the provisions of the Arbitration Act, the terms of these Arbitration Provisions
shall control.

 

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

 

3.1 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 paragraph 29 of the Agreement; provided, however, that the
Arbitration Notice may not be given by email or fax. Arbitration will be deemed
initiated as of the date that the Arbitration Notice is deemed delivered under
paragraph 29 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 paragraph 29 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 Illinois Rules of Civil
Procedure.

 

Arbitration Provisions, Page 1

 

 

3.2 Within ten (10) calendar days after the Service Date, Typenex shall select
and submit to Tauriga the names of three arbitrators that are designated as
“neutrals” or qualified arbitrators by ADR Systems (http://www.adrsystems.com),
or such other arbitration group or association agreed upon by both parties (such
three 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 ADR Systems. Within ten (10) calendar days after
Typenex has submitted to Tauriga the names of the Proposed Arbitrators, Tauriga
must select, by written notice to Typenex, one (1) of the Proposed Arbitrators
to act as the arbitrator for the parties under these Arbitration Provisions. If
Tauriga fails to select one of the Proposed Arbitrators in writing within such
10-day period, then Typenex may select the arbitrator from the Proposed
Arbitrators by providing written notice of such selection to Tauriga. If Typenex
fails to identify the Proposed Arbitrators within the time period required
above, then Tauriga may at any time prior to Typenex designating the Proposed
Arbitrators, select the names of three arbitrators that are designated as
“neutrals” or qualified arbitrators by ADR Systems by written notice to Typenex.
Typenex may then, within ten (10) calendar days after Tauriga has submitted
notice of its selected arbitrators to Typenex, select, by written notice to
Tauriga, one (1) of the selected arbitrators to act as the arbitrator for the
parties under these Arbitration Provisions. If Typenex fails to select in
writing and within such 10-day period one of the three arbitrators selected by
Tauriga, then Tauriga may select the arbitrator from its three previously
selected arbitrators by providing written notice of such selection to Typenex.
The cost of the arbitrator must be paid solely by Typenex. If ADR Systems ceases
to exist or to provide a list of neutrals, then the arbitrator shall be selected
under the then prevailing rules of the American Arbitration Association. The
date that the selected arbitrator agrees in writing to serve as the arbitrator
hereunder is referred to herein as the “Arbitration Commencement Date”.

 

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

 

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

 

3.5 The parties agree that discovery shall be conducted in accordance with the
Illinois Rules of Civil Procedure; provided, however, that incorporation of such
rules will in no event supersede the Arbitration Provisions set forth herein,
including without limitation the time limitation set forth in Paragraph 3.9
below, and the following:

 

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

 

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

 

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

 

Arbitration Provisions, Page 2

 

 

(c) No party shall be allowed (a) more than fifteen (15) interrogatories
(including discrete subparts), (b) more than fifteen (15) requests for admission
(including discrete subparts), (c) more than ten (10) document requests
(including discrete subparts), or (d) more than three depositions (excluding
expert depositions) for a maximum of seven (7) hours per deposition.

 

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

 

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

 

(b) In order to allow a written discovery request, the arbitrator must find that
the discovery request satisfies the standards set forth in these Arbitration
Provisions and the Illinois 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 Illinois Rules of
Civil Procedure, the arbitrator may modify such discovery request to satisfy the
applicable standards, or strike such discovery request in whole or in part.

 

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

 

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

 

Arbitration Provisions, Page 3

 

 

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

 

3.9 The parties hereby authorize and direct the arbitrator to take such actions
and make such rulings as may be necessary to carry out the parties’ intent for
the arbitration proceedings to be efficient and expeditious. Pursuant to Section
8 of the Arbitration Act, the parties hereby agree that an award of the
arbitrator must be made within 150 days after the Arbitration Commencement Date.
The arbitrator is hereby authorized and directed to hold a scheduling conference
within ten (10) calendar days after the Arbitration Commencement Date in order
to establish a scheduling order with various binding deadlines for discovery,
expert testimony, and the submission of documents by the parties to enable the
arbitrator to render a decision prior to the end of such 150-day period. The
Illinois Rules of Evidence will apply to any final hearing before the
arbitrator.

 

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

 

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

 

3.12 The arbitrator is hereby directed to require the losing party to reimburse
the prevailing party the reasonable attorneys’ fees, deposition costs, and other
discovery costs incurred by the prevailing party. If Tauriga is the losing
party, it will not be required to reimburse Typenex for the arbitrator costs.

 

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Arbitration Provisions, Page 4