Monaker Group, Inc. 8-K [mkgi-8k_040320.htm]

Exhibit 10.1

 

NOTE PURCHASE AGREEMENT  

 

THIS NOTE PURCHASE AGREEMENT (this “Agreement”), dated as of April 3, 2020, is
entered into by and between MONAKER GROUP, INC., a Nevada 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 an 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, a Secured
Promissory Note, in the form attached hereto as Exhibit A, in the original
principal amount of $895,000.00 (the “Note”).

 

C.               This Agreement, the Note, the Security Agreement (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”.

 

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 Note.

 

1.1.           Purchase of Note. Company hereby agrees to issue and sell to
Investor and Investor hereby agrees to purchase from Company the Note. In
consideration thereof, Investor agrees to pay the Purchase Price (as defined
below) to Company.

 

1.2.           Form of Payment. On the Closing Date (as defined below), Investor
shall pay the Purchase Price to Company via wire transfer of immediately
available funds against delivery of the Note.

 

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 Note pursuant to this Agreement (the “Closing Date”)
shall be April 3, 2020, or another mutually agreed upon date. The closing of the
transactions contemplated by this Agreement (the “Closing”) shall occur on the
Closing Date by means of the exchange by email of .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 Note shall be secured by the
collateral set forth in that certain Security Agreement attached hereto as
Exhibit B listing all of Company’s assets as security for Company’s obligations
under the Transaction Documents (the “Security Agreement”).

 

1.5.           Original Issue Discount; Transaction Expense Amount. The Note
carries an original issue discount of $80,000.00 (the “OID”). In addition,
Company agrees to pay $15,000.00 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 Note (the “Transaction Expense
Amount”), all of which amount is included in the initial principal balance of
the Note. The “Purchase Price”, therefore, shall be $800,000.00, computed as
follows: $895,000.00 initial principal balance, less the OID, less the
Transaction Expense Amount.

 

 

 

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) Investor is acquiring the Note for its own account and
not with a view towards, or for resale in connection with, the public sale or
distribution thereof in violation of applicable securities laws, except pursuant
to sales registered or exempted under the 1933 Act; provided, however, by making
the representations herein, Investor does not agree, or make any representation
or warranty, to hold the Note for any minimum or other specific term and
reserves the right to dispose of the Note at any time in accordance with or
pursuant to a registration statement or an exemption from registration under the
1933 Act; (v) Investor does not presently have any agreement or understanding,
directly or indirectly, with any Person (as defined below) to distribute the
Note in violation of applicable securities laws; (vi) Investor and its advisors,
if any, have been furnished with all materials relating to the business,
finances and operations of Company and materials relating to the offer and sale
of the Note that have been requested by Investor; (vii) Investor and its
advisors, if any, have been afforded the opportunity to ask questions of
Company; (viii) neither such inquiries nor any other due diligence
investigations conducted by Investor or its advisors, if any, or its
representatives shall modify, amend or affect Investor's right to rely on
Company's representations and warranties contained herein; (ix) Investor
understands that its investment in the Note involves a high degree of risk; (x)
Investor has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Note; (xi) Investor understands that the Note has not been
and is not being registered under the 1933 Act or any state securities laws and
that Company will not be obligated in the future to register the Note under the
1933 Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”), or
under any state securities laws and that Company has not made or is making any
representation, warranty or covenant, express or implied, as to the availability
of any exemption from registration under the 1933 Act or any applicable state
securities laws for the resale, pledge or other transfer of the Note. For
purposes of this Agreement, “Person” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and any governmental entity or any
department or agency thereof. Investor acknowledges that the security interest
set forth in the Security Agreement will be secondary to, and subordinated to,
the security interest of the First Lien Holder (as defined in the Security
Agreement).

 

3.                Company’s Representations and Warranties. Company represents
and warrants to Investor that 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
shares of common stock, $0.00001 per share (the “Common Stock”), under Section
12(b) of the 1934 Act, and is obligated to file reports pursuant to Section 13
or Section 15(d) of the 1934 Act; (iv) each of the Transaction Documents and the
transactions contemplated hereby and thereby, have been duly and validly
authorized by Company 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; (vi)
the execution and delivery of the Transaction Documents by Company 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 certificate of incorporation 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, except for those agreements evidencing amounts owed to the
First Lien Holder, 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

 

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governmental body having jurisdiction over Company or any of Company’s
properties or assets, except for, with respect to clauses (b) and (c) above, for
any breach or default that would not reasonably be expected to result in a
material adverse effect on Company’s the condition (financial or otherwise),
results of operations, business or assets (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 Note to Investor or the entering into of the Transaction
Documents; (viii) none of Company’s filings with the SEC contained, at the time
they were filed, any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; (ix) Company has filed all reports, schedules, forms, statements and
other documents required to be filed by Company with the SEC under the 1934 Act
on a timely basis or has received a valid extension of such time of filing and
has filed any such report, schedule, form, statement or other document prior to
the expiration of any such extension; (x) 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 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 reasonably be expected to have a Material
Adverse Effect or which would adversely affect the validity or enforceability
of, or the authority or ability of Company to perform its obligations under, any
of the Transaction Documents; (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) Investor
shall have no obligation with respect to any commissions, placement agent or
finder’s fees or similar payments (“Broker Fees”) or with respect to any claims
made by or on behalf of other persons for fees of a type contemplated in this
subsection that may be due in connection with the transactions contemplated
hereby and Company shall indemnify and hold harmless each of Investor,
Investor’s employees, officers, directors, stockholders, managers, agents, and
partners, and their respective affiliates, from and against all claims, losses,
damages, costs (including the costs of preparation and attorneys’ fees) and
expenses suffered in respect of any such claimed or existing Broker Fees; (xiv)
neither Investor nor any of its officers, directors, members, managers,
employees, agents or representatives has made any representations or warranties
to Company or any of its officers, directors, employees, agents or
representatives except as expressly set forth in the Transaction Documents and,
in making its decision to enter into the transactions contemplated by the
Transaction Documents, Company is not relying on any representation, warranty,
covenant or promise of Investor or its officers, directors, members, managers,
employees, agents or representatives other than as set forth in the Transaction
Documents; (xv) 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 7.2 below, shall be applicable to the Transaction Documents and the
transactions contemplated therein; and (xvi) Company has performed due diligence
and background research on Investor and its affiliates including, without
limitation, John M. Fife, and, to its satisfaction, has made inquiries with
respect to all matters Company may consider relevant to the undertakings and
relationships contemplated by the Transaction Documents including, among other
things, the following:
http://investing.businessweek.com/research/stocks/people/person.asp?personId=7505107&ticker=UAHC;
SEC Civil Case No. 07-C-0347 (N.D. Ill.); SEC Civil Action No. 07-CV-347 (N.D.
Ill.); and FINRA Case #2011029203701. Company, being aware of the matters
described in subsection (xvi) above, acknowledges and agrees that such matters,
or any similar matters, have no bearing on the transactions contemplated by the
Transaction Documents and covenants and agrees it will not use any such
information as a defense to performance of its obligations under the Transaction
Documents or in any attempt to avoid, modify, offset or reduce such obligations.

 

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4.                Company Covenants. Until all of Company’s obligations under
the Note 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 the Note and for
at least twenty (20) Trading Days (as defined in the Note) 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; (iii) trading in Company’s Common Stock will not be
suspended, halted, chilled, frozen, reach zero bid or otherwise cease trading on
Company’s principal trading market; (iv) Company will make a payment on the Note
equal to twenty percent (20%) of the gross proceeds Company receives from the
sale of any of its Common Stock or preferred stock, within ten (10) days of
receiving such an amount; (v) Company will not enter into any financing
transaction with John Kirkland or any entity owned by or affiliated with John
Kirkland; and (vi) within ten (10) days of the Closing Date, Company will obtain
First Lien Holder’s consent to Company’s entering into the Transaction Documents
and the transactions contemplated thereby.

 

5.                Conditions to Company’s Obligation to Sell. The obligation of
Company hereunder to issue and sell the Note 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 delivered the
same to Company.

 

5.2.           Investor shall have delivered the 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 Note at the Closing is subject
to the satisfaction, on or before the Closing Date, of each of the following
conditions, provided that these conditions are for Investor’s sole benefit and
may be waived by Investor at any time in its sole discretion:

 

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

 

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

 

6.3.           Company shall have delivered to Investor fully executed copies of
all other Transaction Documents required to be executed by Company herein or
therein.

 

7.                Miscellaneous. The provisions set forth in this Section 7
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 7 and any
provision in any other Transaction Document, the provision in such other
Transaction Document shall govern.

 

7.1.            Arbitration of Claims. The parties shall submit all Claims (as
defined in Exhibit D) 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 D attached hereto
(the “Arbitration Provisions”). For the avoidance of doubt, the parties agree
that the injunction described in Section 7.3 below may be pursued in an
arbitration that is separate and apart from any other arbitration regarding all
other Claims arising under the Transaction Documents. 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.

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7.2.           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, each party hereto hereby (i) consents to and expressly submits to the
exclusive personal jurisdiction of any state or federal court sitting in Salt
Lake County, Utah, (ii) expressly submits to the exclusive venue of any such
court for the purposes hereof, and (iii) waives any claim of improper venue and
any claim or objection that such courts are an inconvenient forum or any other
claim, 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 7.12 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) that is related in any way to the Transaction Documents or
any transaction contemplated herein or therein, 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 7.2 are material
terms to induce Investor to enter into the Transaction Documents and that but
for Company’s agreements set forth in this Section 7.2 Investor would not have
entered into the Transaction Documents.

 

7.3.           Specific Performance. Company acknowledges and agrees that
Investor may suffer irreparable harm in the event that Company fails to perform
any material provision of this Agreement or any of the other Transaction
Documents in accordance with its specific terms. It is accordingly agreed that
Investor shall be entitled to one or more 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. Company specifically
agrees that following an Event of Default (as defined in the Note) under the
Note and during the period such Event of Default remains in place, the Company
shall pay Investor, as a payment on the Note, thirty percent (30%) of the gross
proceeds the Company receives from the sale of any of its Common Stock or
preferred stock, within ten (10) days of receiving such an amount. Company also
agrees that in the event it fails to timely pay over proceeds as required
pursuant to the previous sentence, Investor shall have the right to seek and
receive injunctive relief from a court or an arbitrator prohibiting Company from
issuing any of its Common Stock or preferred stock to any party unless the Note
is being paid in full simultaneously with such issuance. Company specifically
acknowledges that Investor’s right to obtain specific performance constitutes
bargained for leverage and that the loss of such leverage would result in
irreparable harm to Investor. For the avoidance of doubt, in the event Investor
seeks to obtain an injunction from a court or an arbitrator 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, nor shall Investor’s
pursuit of an injunction prevent Investor, under the doctrines of claim
preclusion, issues preclusion, res judicata or other similar legal doctrines,
from pursuing other Claims in the future in a separate arbitration.

 

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7.4.           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 7.4 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 200 promulgated under Regulation SHO under the 1934 Act.

 

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

 

7.6.           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.

 

7.7.           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.

 

7.8.           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.

 

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7.9.           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.

 

7.10.        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.

 

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

 

7.12.        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 business 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 business 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:

 

Monaker Group, Inc.

Attn: William Kerby

2893 Executive Park Drive, Suite 201

Weston, Florida 33331

 

With a copy to (which copy shall not constitute notice): The Loev Law Firm, PC

 

Attn: David M. Loev

6300 West Loop South, Suite 280

Bellaire, Texas 77401 If to Investor:

Iliad Research and Trading, L.P.

Attn: John Fife

303 East Wacker Drive, Suite 1040

Chicago, Illinois 60601

 

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

 

Hansen Black Anderson Ashcraft PLLC

Attn: Jonathan K. Hansen

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

7.13.        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 its affiliates, in whole or in part,
without the need to obtain Company’s consent thereto. Except as set forth above,
neither Investor nor Company may assign its rights or obligations under this
Agreement or delegate its duties hereunder without the prior written consent of
the other party.

 

7.14.        Survival. The representations and warranties of the parties 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 each party. Each party agrees to indemnify and hold harmless the other
and all its respective officers, directors, employees, attorneys, and agents for
loss or damage arising as a result of or related to any breach or alleged breach
by the other party 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.

 

7.15.        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.

 

7.16.        Rights and Remedies Cumulative. 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 any party 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 such party may
deem expedient.

 

7.17.        Attorneys’ Fees and Cost of Collection. In the event any suit,
action or arbitration is filed by either party against the other to interpret or
enforce any of the Transaction Documents, the unsuccessful party to such action
agrees to pay to the prevailing party all costs and expenses, including
attorneys’ fees incurred therein, including the same with respect to an appeal.
The “prevailing party” shall be the party in whose favor a judgment is entered,
regardless of whether judgment is entered on all claims asserted by such party
and regardless of the amount of the judgment; or where, due to the assertion of
counterclaims, judgments are entered in favor of and against both parties, then
the arbitrator shall determine the “prevailing party” by taking into account the
relative dollar amounts of the judgments or, if the judgments involve
nonmonetary relief, the relative importance and value of such relief. 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 reasonable 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.

 

7 

 

 

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

 

7.19.        Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY
WAIVES ANY AND ALL RIGHTS SUCH PARTY MAY HAVE TO DEMAND THAT ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT, 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.

 

7.20.        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.

 

7.21.        Voluntary Agreement. Each party has carefully read this Agreement
and each of the other Transaction Documents and has asked any questions needed
for such party to understand the terms, consequences and binding effect of this
Agreement and each of the other Transaction Documents and fully understand them.
Each party has had the opportunity to seek the advice of an attorney of such
party’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 the other party or anyone else.

 

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

 

8 

 

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

 

SUBSCRIPTION AMOUNT:

 

Principal Amount of Note: $895,000.00     Purchase Price: $800,000.00

  

  INVESTOR:       ILIAD RESEARCH AND TRADING, L.P.       By: Iliad Management,
LLC, its General Partner         By: Fife Trading, Inc., its Manager          
By: [ex10-1_img001.gif]         John M. Fife, President                   John
M. Fife, President       COMPANY:       MONAKER GROUP, INC.           By:
[ex10-1_img002.gif]       Name: Bill Kerby       Title: CEO

 

ATTACHED EXHIBITS:

 

Exhibit A Note

Exhibit B Security Agreement

Exhibit C Secretary’s Certificate

Exhibit D Arbitration Provisions

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Note Purchase Agreement]

 

9 

 

EXHIBIT D

 

ARBITRATION PROVISIONS

 

1.      Dispute Resolution. For purposes of this Exhibit D, 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
parties to this Agreement (the “parties”) hereby agree that the Claims may be
arbitrated in one or more Arbitrations pursuant to these Arbitration Provisions
(one for an injunction or injunctions and a separate one for all other Claims).
The parties hereby agree that the arbitration provisions set forth in this
Exhibit D (“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 7.12 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 7.12 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 7.12 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.

 

Arbitration Provisions, Page 1 

 

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.

Arbitration Provisions, Page 2 

 

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, 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.

 

Arbitration Provisions, Page 3 

 

(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) 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.

Arbitration Provisions, Page 4 

 

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 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.

Arbitration Provisions, Page 5 

 

(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.

(d) 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 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).

 

Arbitration Provisions, Page 6 

 

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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Arbitration Provisions, Page 7