TAVAD X.X.
Xxx 00, 0000
Xxxxxxx Inc.
Re: Technology Purchase and Royalty Agreement
Dated as of March 12, 2003
-----------------------------------------
Dear Sirs:
This is to confirm our mutual agreement that the term "cocaine" as used in
the Technology Purchase Agreement dated as of March 12, 2003, by and between
Hythiam Inc. ("Hythiam") and Tratamientos Avanzados de la Adiccion S.L. ("TAVAD"
formerly known as CITA S.L.") shall be deemed to include "crack cocaine" in all
places that such term is used in the Agreement, except for Section 12.4. Tavad
does not warrant that the Intellectual Property constitutes all technology and
know-how necessary for crack cocaine detoxification procedures. Without limiting
the generality of the foregoing, it is the sole responsibility of Hythiam to
determine the procedures and know-how for use of the Intellectual Property in
crack cocaine detoxification procedures, including the safety and efficacy of
such procedures.
The Technology Purchase Agreement, as amended by this Letter Agreement
remains in full force and effect.
Kindly acknowledge your agreement to the foregoing by signing a copy of
this letter where indicated.
Very truly yours,
TAVAD S.L.
By: /s/ Xxxx Xxxx Xxxxxxx
-----------------------
AGREED TO:
Hythiam Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
SECOND AMENDMENT TO
TECHNOLOGY PURCHASE AND ROYALTY AGREEMENT
THIS AGREEMENT made as of the 25th day of September, 2003 by and
between HYTHIAM, INC., a New York corporation ("Buyer"), having its principal
place of business at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, and CITA S.L., a Spanish corporation ("Seller"), having its
principal place of business at Xxxx Xxxxxxxxxxxxxx 0, Xxxxxx 00000 Xxxxx.
W I T N E S S E T H :
WHEREAS, Buyer and Seller have entered into the Purchase Agreement
(defined below), which is incorporated herein by reference; and
WHEREAS, the parties wish to amend certain provisions of the
Purchase Agreement upon the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Terms defined in this Paragraph or parenthetically
defined elsewhere in this Amendment shall have the meanings here or there
provided. Capitalized terms used in this Amendment which are not defined herein
have the meanings ascribed to them in the Purchase Agreement. Defined terms may
be used in the singular or plural, as the context requires.
a. "Amendment" means this Second Amendment to the Purchase
Agreement.
b. "Market Value" means the average, over the preceding 30
consecutive calendar days, of the closing prices of sales of Shares on any
domestic exchange on which they are listed, or, if there have been no sales on
any day, the average of the highest bid and lowest asked prices at the end of
the day, or, if the Shares are not listed on a domestic exchange, the average of
the highest bid and lowest asked prices in the domestic over-the-counter market
as reported by the OTC Bulletin Board.
c. "Merger" means the merger between Buyer and the
wholly-owned subsidiary of a public shell company, as described in Buyer's
Private Placement Memorandum dated August 8, 2003, as amended, which is
incorporated herein by reference.
d. "Purchase Agreement" means the Technology Purchase and
Royalty Agreement, dated as of March 12, 2003, by and between Buyer and Seller,
as the same may be amended from time to time.
e. "Shares" means shares of common stock of Buyer, or a
corporation for whose shares they are exchanged.
f. "Triggering Event" means that both of the following shall
have occurred:
i. The aggregate Market Value of all Shares granted to
Seller pursuant to the Purchase Agreement and this Amendment and any
shares and options issued to Xx. Xxxx Xxxx Xxxxxxx Ibanez individually
(the total of which shall be at least 1,400,000 million shares; and
assuming, for purposes of the calculation, the full conversion of all
options, including the options granted pursuant to this Amendment) is not
at least US $10 million at some time within 18 months following the
Merger; and
ii. Buyer has not developed a European expansion plan
and does not have at least the first facility in Europe performing
Processes in the Field (as defined in Section 2.5 of the Purchase
Agreement) within 18 months following the Merger.
2. Amendment of Territory. Effective as of the date hereof, the
definition of "Territory" in Section 1.1 of the Purchase Agreement is amended to
read in its entirety as follows:
"1.11 TERRITORY. The term `Territory' means worldwide, except
for the country of Spain which shall be excluded from the Territory."
3. Additional Options. In addition to the Shares and options to
purchase Shares which will be granted to Seller pursuant to the Purchase
Agreement, Seller will be granted options to purchase an additional 160,000
Shares at US $2.50 per Share, exercisable at any time within five years from the
date of the Merger, subject to the same conditions described in Section 2.1.2(b)
of the Purchase Agreement.
4. Contingent Payment. If there is a Triggering Event, upon written
notice by Seller within 30 days thereafter, Buyer shall, at its option, either
(a) pay to Seller an additional US $3 million or (b) issue to Seller the higher
of 750,000 additional Shares or that number of additional Shares that have a
total Market Value of US $3 million as of the date of the Triggering Event.
5. Amendment of Royalty. Effective as of the date hereof, Section
2.1.3(a) of the Purchase Agreement is amended to read in its entirety as
follows:
"(a) BUYER shall pay SELLER Continuing Royalties of Six Percent (6%)
of the first US $10 million gross sales of alcohol and cocaine detoxification
Process (defined below) BUYER (or any licensee) performs using the Intellectual
Property in Europe, and Three Percent (3%) thereafter for so long as BUYER (or
any licensee) uses the Intellectual Property. BUYER shall pay SELLER Continuing
Royalties of Three Percent (3%) of gross sales of alcohol and cocaine
detoxification Process BUYER (or any licensee) performs using the Intellectual
Property elsewhere in the Territory for so long as BUYER (or any licensee) uses
the Intellectual Property."
6. European Operations. Xx. Xxxxxxx will, at his option, oversee
Buyer's European operations on terms and conditions mutually agreed between Xx.
Xxxxxxx and Buyer's Board of Directors.
2
7. Miscellaneous Provisions.
a. All article headings and subheadings in this Amendment are
for convenience of reference only and are not intended to qualify the meaning of
any paragraph or subparagraph hereof.
b. Except as specifically amended or supplemented in this
Amendment, the provisions of the Purchase Agreement remain in full force and
effect and are in all respects ratified and confirmed. In the event of an
ambiguity or conflict between the terms of the Purchase Agreement and this
Amendment, this Amendment shall control.
c. This Amendment may be executed in counterparts, which
together shall constitute one and the same instrument. Facsimile signatures
shall be binding as originals.
d. This Amendment and the other agreements to which it refers
constitute the complete agreement between the parties with respect to the
subject matter and may not be changed, modified, amended or terminated orally,
but only by a writing signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their officers thereunto duly authorized.
CITA S.L.
By: /s/ Xxxx Xxxx Xxxxxxx
-------------------------------------
Xx. Xxxx Xxxx Xxxxxxx Ibanez
Title:
HYTHIAM, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Title:
3
FIRST AMENDMENT TO
TECHNOLOGY PURCHASE AND ROYALTY AGREEMENT
THIS AGREEMENT made as of the 16th day of September, 2003 by and between
HYTHIAM, INC., a New York corporation ("Buyer"), having its principal place of
business at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, and CITA S.L., a Spanish corporation ("Seller"), having its principal
place of business at Xxxx Xxxxxxxxxxxxxx 0, Xxxxxx 00000 Xxxxx.
W I T N E S S E T H :
WHEREAS, Buyer and Seller have entered into the Purchase Agreement
(defined below); and
WHEREAS, the parties wish to amend certain provisions of the Purchase
Agreement upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Terms defined in this Paragraph or parenthetically defined
elsewhere in this Amendment shall have the meanings here or there provided.
Capitalized terms used in this Amendment which are not defined herein have the
meanings ascribed to them in the Purchase Agreement. Defined terms may be used
in the singular or plural, as the context requires.
a. "Amendment" means this Amendment to the Purchase Agreement.
b. "Market Value" means the average, over the preceding 5
consecutive trading days, of the closing prices of sales of Shares on any
domestic exchange on which they are listed, or, if there have been no sales on
any day, the average of the highest bid and lowest asked prices at the end of
the day, or, if the Shares are not listed on a domestic exchange, the average of
the highest bid and lowest asked prices in the domestic over-the-counter market
as reported by the OTC Bulletin Board.
c. "Merger" means the closing and effectiveness of a reverse
triangular merger between Buyer and the wholly-owned subsidiary of a public
shell company whose shares are traded on the OTC Bulletin Board.
d. "Purchase Agreement" means the Technology Purchase and Royalty
Agreement, dated as of March 12, 2003, by and between Buyer and Seller, as the
same may be amended from time to time.
e. "Shares" means shares of common stock of Buyer, or a public
corporation for whose shares they are exchanged.
f. "Triggering Event" means that both of the following shall have
occurred:
i. On the first anniversary of the Merger, the aggregate
Market Value of all Shares granted to Seller pursuant to the Purchase Agreement
and this Amendment and any shares and options issued to Xx. Xxxx Xxxx Xxxxxxx
Ibanez individually (the total of which shall be at least 1,400,000 million
shares; and assuming, for purposes of the calculation, the full conversion of
all options, including the options granted pursuant to this Amendment) is not at
least $10 million; and
ii. On the date which is 27 months from the date of the
Merger, Buyer does not have at least one facility in Europe performing the
Processes in the Field (as defined in Section 2.5 of the Purchase Agreement).
2. Amendment of Territory. Effective as of the date hereof, the
definition of "Territory" in Section 1.1 of the Purchase Agreement is amended to
read in its entirety as follows:
"1.11 TERRITORY. The term `Territory' means worldwide, except
for the country of Spain which shall be excluded from the Territory."
3. Additional Options. In addition to the Shares and options to
purchase Shares which will be granted to Seller pursuant to the Purchase
Agreement, Seller will be granted options to purchase an additional 160,000
Shares at $2.50 per Share, exercisable at any time after 27 months and within 5
years from the date of the Merger, subject to the same conditions described in
Section 2.1.2(b) of the Purchase Agreement. The options will become exercisable
immediately if Seller waives its right to the contingent payment provided for in
Section 4 below.
4. Contingent Payment. In the event of a Triggering Event, upon
written notice by Seller within 30 days thereafter, (a) the options granted
pursuant to Section 3 above shall be cancelled and of no further force or
effect, and (b) Buyer shall, at its option, either (i) pay to Seller an
additional $3 million or (ii) issue to Seller the higher of 750,000 additional
Shares or that number of additional Shares that have a total Market Value of $3
million as of the date of the Triggering Event. To the extent, if any, that
Seller is unable to sell any such Shares due to the volume restrictions of Rule
144 promulgated under the Securities Act of 1933, as amended, and the Market
Value of the Shares he is so unable to sell declines within 6 months of
issuance, the Company will issue that number of additional Shares with a total
Market Value equal to the difference between the Market Value of such Shares on
the issue date and the Market Value 6 months thereafter.
5. Miscellaneous Provisions.
a. All article headings and subheadings in this Amendment are
for convenience of reference only and are not intended to qualify the meaning of
any paragraph or subparagraph hereof.
b. Except as specifically amended or supplemented in this
Amendment, the provisions of the Purchase Agreement remain in full force and
effect and are in all respects ratified and confirmed. In the event of an
ambiguity or conflict between the terms of the Purchase Agreement and this
Amendment, this Amendment shall control.
c. This Amendment may be executed in counterparts, which
together shall constitute one and the same instrument. Facsimile signatures
shall be binding as originals.
d. This Amendment and the other agreements to which it refers
constitute the complete agreement between the parties with respect to the
subject matter and may not be changed, modified, amended or terminated orally,
but only by a writing signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their officers thereunto duly authorized.
CITA S.L.
By: /s/ Xxxx Xxxx Xxxxxxx
-------------------------------------
Xx. Xxxx Xxxx
Xxxxxxx Ibanez
Title:
HYTHIAM, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Title:
EXECUTION COPY
--------------
TECHNOLOGY PURCHASE AND ROYALTY AGREEMENT
This Technology Purchase and Royalty Agreement (the "Agreement") is
entered into as of the 12th day of March, 2003, by and between HYTHIAM, INC., a
Delaware corporation ("BUYER"), having its principal place of business at 00000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, and CITA S.L.,
a Spanish corporation ("SELLER"), having its principal place of business at
Xxxxxxxxxxxx 0, Xxxxxx 00000 Xxxxx.
RECITALS
WHEREAS, SELLER is the rightful owner of certain technology, patents
pending, know-how and related intellectual property with respect to an alcohol
and cocaine detoxification and neuron adaptation process which is more
specifically described on Schedule A and attached hereto (the "Intellectual
Property");
WHEREAS, BUYER desires to acquire, on an exclusive basis, all of SELLER's
right, title and interest to use, sell the products and services embodied in,
and license (collectively, "Exploit") the Intellectual Property in the Field
within the Territory on the terms and conditions set forth in this Agreement;
WHEREAS, SELLER is willing to sell, exclusively to BUYER, SELLER's right,
title and interest to Exploit the Intellectual Property in the Field within the
Territory on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
agreements below, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
SECTION 1: DEFINITIONS
1.1 BUYER'S AGENTS. The term "BUYER's Agents" means all of BUYER's
officers, directors, shareholders, partners, employees, independent contractors
and other agents.
1.2 FIELD. The term "Field" has the meaning stated in Section 2.5.
1.3 HEALTH CARE PROVIDER. The term "Health Care Provider" means each
psychiatrist, psychologist, physician, nurse, or other health care professional
that is engaged by BUYER to utilize the Intellectual Property, including
pre-treatment testing, detoxification, and post-treatment follow-up.
1.4 HEALTH CARE PROVIDER OFFICE. The term "Health Care Provider Office"
means the Office of a Health Care Provider.
-1-
1.5 INTELLECTUAL PROPERTY. The term "Intellectual Property" has the
meaning stated in the first paragraph of the Recitals.
1.6 MARKETING MATERIAL. The term "Marketing Material" has the meaning
stated in Section 7.2.1.
1.7 MEDICAL CENTER. The term "Medical Center" has the meaning stated in
Section 2.6.
1.8 PAYMENT DATE. The term "Payment Date" means the date that is ten (10)
days after the close of each Payment Period (e.g., February 10, with regard to
the month of January).
1.9 PAYMENT PERIOD. The term "Payment Period" means each calendar month.
1.10 SELLER'S AGENTS. The term "SELLER's Agents" means all of SELLER's
officers, directors, shareholders, partners, employees, independent contractors
and other agents.
1.11 TERRITORY. The term "Territory" means the United States of America,
Canada and Mexico.
SECTION 2: ACQUISITION OF THE INTELLECTUAL PROPERTY
2.1 TRANSFER OF PROPERTY
2.1.1 ACQUISITION.
(a) Subject to the terms and conditions hereof, on the Closing
Date, SELLER shall sell, transfer, assign and convey (the "Transfer")
exclusively to BUYER, and BUYER shall purchase from SELLER, free and clear of
all liens, claims and encumbrances (except as set forth on Schedule B), all of
SELLER's right, title and interest to Exploit the Intellectual Property in the
Field within the Territory in consideration for the performance by BUYER of its
obligations under this Agreement.
(b) SELLER expressly reserves all rights in and to the
Intellectual Property for all uses (the "Retained Uses") outside of the Field in
the Territory and for uses in the Field in all jurisdictions (the "Retained
Territory") outside of the Territory, including, without limitation, the right
to utilize the Intellectual Property in the Retained Territory for any purpose
and to license or Transfer the Intellectual Property to third parties for use in
the Retained Territory for any purpose (subject to Section 14.24) and for use in
the Retained Uses in the Territory.
2.1.2 EQUITY CONSIDERATION.
(a) As partial consideration for the sale of the Intellectual
Property, BUYER will issue to SELLER shares of its common stock (the "Shares")
following consummation of the first equity financing (the "First Equity
Financing") of BUYER which raises gross proceeds of at least $5,000,000. The
number of shares that will be issued will represent five percent (5%) of BUYER's
-2-
outstanding capital stock after the consummation of the First Equity Financing,
assuming that (i) any shares of convertible preferred stock or warrants have
been converted into or exercised for, as applicable, common stock at the
then-applicable conversion or exercise rate and (ii) only $5,000,000 of shares
were issued at the sale price in the First Equity Financing (regardless of the
number of shares actually issued). Notwithstanding the foregoing, SELLER's
percentage ownership interest in the shares of common stock of BUYER shall not
be reduced to less than 4.5% (on a fully diluted basis after giving effect to
the exercise of all Convertible Securities) upon the completion of the first
$10,000,000 in equity financing that is raised by BUYER
(b) As a condition to receiving the shares described in
Section 2.1.2(a), BUYER will have to (x) deliver to SELLER an appropriate
investor representation letter to establish that BUYER may issue the shares to
SELLER in compliance with applicable federal and state securities laws and a
properly completed Form W-8BEN and (y) at BUYER's option, either (i) become a
party to any stockholder, investor rights or similar agreement ("Investor
Agreement(s)") entered into in connection with the First Equity Financing;
provided that such Investor Agreement(s) is in a form reasonably satisfactory to
SELLER and pursuant to which SELLER shall be subject to the same rights (except
as to board representation and as set forth in the last sentence hereof) and
obligations as BUYER's founding stockholder or (ii) sign an investor agreement
in form reasonably satisfactory to BUYER and SELLER (which may be part of the
investor representation letter) which will, among other things, limit transfer
of the shares, grant BUYER a right of first refusal (subject to customary
exceptions), and provide for a lock-up of up to 180 days in connection with a
public offering by BUYER; provided, that SELLER shall not be under any greater
restriction under the lock-up than BUYER's founding stockholders. The Investor
Agreement(s) or investor representation letter will grant SELLER unlimited
piggyback registration rights with respect to the shares of common stock
(including the shares issuable upon exercise of any options) of BUYER owned by
SELLER, subject to customary terms, conditions and restrictions. The Investor
Agreement shall also grant SELLER the right to put its shares of common stock
(including the shares issuable upon exercise of the options) to BUYER at a
purchase price equal to their fair market value if BUYER shall not have
completed an initial public offering or a Reverse Merger within three years
following the Closing Date
(c) For the gross proceeds, if any, between $5,000,000 and
$10,000,000 raised in the First Equity Financing, BUYER will also issue to
SELLER stock options up to an additional two percent (2%) of BUYER's common
stock, assuming that any shares of convertible preferred stock or warrants have
been converted into or exercised for, as applicable, common stock at the
then-applicable conversion or exercise rate Such stock options will be granted
on a pro rata basis depending on the exact amount of such proceeds raised (e.g.,
if $7,500,000 of gross proceeds are raised in the First Equity Financing, BUYER
will issue to SELLER stock options to purchase one percent (1%) of BUYER's
common stock). The stock option grant will be made subject to the same
conditions described above for the stock grant and will be made pursuant to
BUYER's standard form of stock option agreement satisfactory to BUYER, will have
an exercise price equal to the per share price in the First Equity Financing,
and will have such vesting and other provisions that are no less favorable than
the options granted to BUYER's senior officers.
-3-
(d) SELLER understands that BUYER may raise some or all of the
First Equity Financing through a reverse merger (a "Reverse Merger") with an
existing public company ("Merger Partner"). In the event BUYER consummates a
Reverse Merger, (i) the net working capital (determined in accordance with
generally accepted accounting principles) of the Merger Partner as of the
closing of the Reverse Merger, net of long-term debt in excess of $1,000,000 and
(ii) cash obtained upon the sale of any marketable securities held by a Merger
Partner shall be treated as proceeds of an equity financing (such that if Merger
Partner had $4,000,000 of net working capital and no long-term liabilities and
Buyer raised $3,000,000 in a separate equity financing, then, as of the
consummation of the Reverse Merger, BUYER shall be deemed to have engaged in a
First Equity Financing which raised $7,000,000) and (ii) SELLER will receive
common stock of the Merger Partner and options to purchase common stock of the
Merger Partner on a basis otherwise consistent with the terms set forth in the
other clauses of this Section 2.1.2.
2.1.3 CONTINUING ROYALTIES.
(a) BUYER shall pay SELLER Continuing Royalties of Three
Percent (3%) of gross sales of alcohol or cocaine detoxification Process
(defined below) BUYER (or any licensee) performs using the Intellectual Property
for so long as BUYER (or any licensee) uses the Intellectual Property.
(b) Continuing Royalties shall be paid by BUYER to SELLER on
all collected funds for each Payment Period no later than the Payment Date.
(c) BUYER shall tender payments of the Continuing Royalties
due on each Payment Date by wire transfer to such account or accounts as SELLER
may designate in advance.
(d) BUYER shall pay the Continuing Royalties in US Dollars.
(e) BUYER's obligation to pay Continuing Royalties to SELLER
shall terminate after the public disclosure (other than as a result of a breach
by BUYER of Section 8.1) of all Intellectual Property knowhow and the expiration
of the last to expire of all Intellectual Property patents that are enforceable
within the Territory.
(f) In the event that Buyer shall make any improvements to the
Intellectual Property, BUYER shall continue to be obligated to pay Continuing
Royalties of Three Percent (3%) to SELLER of gross sales of alcohol or cocaine
detoxification Processes BUYER (or any licensee) performs using the Intellectual
Property and any improvements thereto.
2.2 CLOSING.
(a) The closing (the "Closing") of the transactions
contemplated by this Agreement will take place at the offices of Irell & Xxxxxxx
LLP, 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, XX 00000, on the date
(the "Closing Date") on which this Agreement is executed by the parties hereto
or at such later date and/or other place as the parties shall mutually agree
upon.
-4-
(b) At the Closing, SELLER shall deliver to BUYER a duly
executed general xxxx of sale and assignment of the Intellectual Property and
any other documents of transfer requested by BUYER necessary to convey all of
SELLER's right, title and interest in and to the Intellectual Property to BUYER,
in recordable form, if required.
(c) At the Closing, BUYER shall deliver to SELLER a duly
executed security agreement, substantially in the form of Exhibit 1 hereto,
granting SELLER a first priority security interest in the Intellectual Property
to secure SELLER's reversion rights pursuant to Section 2.6 and Section 2.7.
2.3 FURTHER ASSURANCES. At any time and from time to time after the
Closing Date and after the delivery of all of the initial documents and
necessary information that comprise the Intellectual Property at BUYER's request
and approved expense, and subject to the terms of this Agreement, SELLER
promptly shall execute and deliver, and shall cause its affiliates and employees
to execute and deliver, such instruments of sale, transfer, conveyance,
assignment and confirmation, and take such other action, as BUYER may reasonably
request to more effectively transfer, convey and assign to BUYER, and to confirm
BUYER's title to, all of the Intellectual Property, including providing to BUYER
an executed assignment to BUYER, recordable in the appropriate regional or
national patent office, for each patent and patent application within the
Intellectual Property and specifically claiming the Field, to assist BUYER in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
2.4 RESTRICTION ON TRANSFER OF THE INTELLECTUAL PROPERTY.
2.4.1 BUYER may not Transfer the Intellectual Property or any right
or obligation under this Agreement, except as permitted by this Section 2.4. Any
attempted Transfer, except as permitted by this Section 2.4 is void.
2.4.2 BUYER may not Transfer the Intellectual Property separate from
all of its rights and obligations under this Agreement. In addition, BUYER may
not Transfer any of its rights or obligations under this Agreement separate from
the Intellectual Property.
2.4.3 BUYER may Transfer the Intellectual Property, together with
all of its rights and obligations under this Agreement, to another person or
entity reasonably satisfactory to SELLER; provided that SELLER's consent shall
not be required in connection with such a Transfer (i) in whole or in part to a
direct or indirect subsidiary of BUYER or (ii) in connection with a merger
(including a Reverse Merger), consolidation, sale of substantially all assets or
other similar corporate transaction by or involving BUYER. In connection with
any proposed Transfer,
(a) The proposed transferee must assume in writing all of
BUYER's obligations under this Agreement, including any of BUYER's obligations
which arose prior to the effective date of Transfer.
(b) The proposed transferee's assumption of BUYER's
obligations under this Agreement will NOT relieve BUYER of any liability which
BUYER has to SELLER under this Agreement for the failure of BUYER or the
proposed transferee to perform all of BUYER's obligations under this Agreement,
unless, at BUYER's request, SELLER approves of transferee, which approval shall
-5-
not be unreasonably withheld, and all of BUYER's obligations and liabilities are
then transferred to transferee.
2.4.4 BUYER will use its commercially reasonable efforts to provide
in any license that BUYER may grant to any third party for use of the
Intellectual Property that (i) licensee shall pay directly to SELLER directly
the Continuing Royalties (the "Equivalent Royalties") that BUYER would be
obligated to pay to SELLER pursuant to Section 2.1.3 on account of any Processes
performed by licensee using the Intellectual Property and (ii) SELLER shall have
the right to enforce such obligation directly against licensee as a third party
beneficiary. Any such Continuing Royalties paid to SELLER by any such licensee
shall be credited against BUYER's royalty payment obligations to SELLER. The
failure to include a "direct payment" obligation in any license granted by BUYER
to any third party shall not release BUYER from its obligation to pay to SELLER
the Equivalent Royalties.
2.4.5 Nothing in this Section 2.4 is meant, or shall be construed,
to limit BUYER's right to Exploit the Intellectual Property as described in
Section 2.1.1 hereof.
2.5 REQUIREMENTS FOR USE OF INTELLECTUAL PROPERTY. The Intellectual
Property may only be used to perform detoxification processes (the "Processes")
on persons for alcohol and/or cocaine addiction (the "Field"). Without limiting
the generality of the foregoing sentence, BUYER shall not directly or indirectly
use the Intellectual Property to treat any physical or psychological condition
other than alcohol addiction and/or cocaine addiction. BUYER must have
reasonable grounds to believe that any person on whom a Process is performed is
a resident of the Territory. Subject to the last sentence of this paragraph, the
Processes may only be performed in a licensed medical facility (the "Medical
Center") within the Territory, by one or more Healthcare Providers. A Healthcare
Provider may perform evaluation and diagnosis and follow-up care using the
Intellectual Property in a Healthcare Provider Officer, provided that the
Process is performed in a Hospital.
2.6 DILIGENCE.
2.6.1 Until the earlier of (i) the fifth anniversary of the date of
this Agreement or (ii) the date when BUYER has paid to SELLER royalties and, if
applicable Additional Payments (as defined below) pursuant to this Agreement of
at least $1,000,000 (the "Reversion Term"), BUYER agrees that, unless otherwise
agreed to by SELLER, BUYER will allocate during each fiscal year at least fifty
percent (50%) (the "Requisite Percentage") of the funds it expends on sales,
marketing, research and development (the "Exploitation Activities") on
Exploitation Activities relating to use of the Intellectual Property, including
any changes or improvements to the Intellectual Property (the "Technology
Package"), in the Field.
2.6.2 Within sixty (60) days after the beginning of each fiscal year
of BUYER, BUYER shall deliver to SELLER a copy of the budget that has been
approved by the Board of Directors of BUYER for such fiscal year, which shall
describe in general terms BUYER's proposed allocation of funds for Exploitation
Activities for such fiscal year for (i) the Technology Package, and (ii) any
other products or technology.
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2.6.3 Within sixty (60) days after the end of each fiscal year,
BUYER shall deliver to SELLER a statement that will indicate (i) BUYER's total
expenditures in such fiscal year on (a) Exploitation Activities relating to the
Technology Package and (b) all of its Exploitation Activities, and (ii) the
actual percentage (the "Actual Percentage") of BUYER's expenditures on
Exploitation Activities that were spent on Exploitation Activities relating to
the Technology Package.
2.6.4 If such statement does not indicate that SELLER has expended
at least the Requisite Percentage on Exploitation Activities relating to the
Technology Package, then SELLER may, by written notice (the "Reversion Notice")
to BUYER given within fifteen (15) days of its receipt of such statement, elect
to have the rights to the Intellectual Property revert from BUYER to SELLER.
Such reversion, if so elected by SELLER, shall take effect (30) days after the
date of the Reversion Notice, unless, prior to the end of such 30-day period,
BUYER either (i) agrees by written notice to SELLER to increase the Requisite
Percentage for the current fiscal year and the remainder of the Reversion Term
(provided that BUYER may agree to increase the Requisite Percentage not more
than twice) or (ii) pays to SELLER an amount in cash (an "Additional Payment")
equal to the product of (x) $20,000 multiplied by (y) the difference between the
Requisite Percentage and the Actual Percentage (e.g., if the Actual Percentage
was 45%, then the payment due from BUYER to SELLER to prevent reversion would be
$100,000 ($20,000 times (50-45)); provided, however, that if the sum of the
royalties and Additional Payments (including a prospective Additional Payment)
made pursuant to this Agreement would exceed $1,000,000, then the amount of the
last prospective Additional Payment shall be reduced so that such sum will not
exceed $1,000,000.
2.6.5 BUYER may also terminate SELLER's reversion rights pursuant to
this Section 2.6 at any time by making a payment to SELLER which, when added to
the royalties and Additional Payments, if any, previously paid pursuant to this
Agreement, would aggregate $1,000,000.
2.7 FUND RAISING ACTIVITIES. If BUYER does not raise at least $5,000,000
by the first anniversary of the Closing Date (the "Funding Condition"), whether
in the form of equity, debt or revenue from operations, or any combination
thereof (including (i) net working capital (determined in accordance with
generally accepted accounting principles) of a Merger Partner as of the closing
of the Reverse Merger, net of long-term debt in excess of $1,000,000 and (ii)
cash obtained upon the sale of any marketable securities held by a Merger
Partner), then SELLER may terminate this Agreement and the rights to the
Intellectual Property shall revert to SELLER upon written notice delivered by
SELLER to BUYER within thirty days after BUYER notifies SELLER in writing that
the Funding Condition has not been satisfied; provided, however, that any such
termination will not affect the rights of any licensee or transferee of BUYER
pursuant to any license or transfer entered into by Buyer prior to such
termination; and provided further that all of BUYER's rights pursuant to any
such license shall be assigned to SELLER.
2.8 OBLIGATIONS IN CONNECTION WITH REVERSION. In connection with the
reversion of the Intellectual Property to SELLER pursuant to Section 2.6, BUYER
promptly shall execute and deliver, and shall cause its affiliates and employees
to execute and deliver, such instruments of sale, transfer, conveyance,
assignment and confirmation, and take such other action, at SELLER's expense, as
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SELLER may reasonably request to more effectively transfer, convey and assign to
SELLER, and to confirm SELLER's title to, all of the Intellectual Property,
including providing to SELLER an executed assignment to SELLER, recordable in
the appropriate regional or national patent office, for each patent and patent
application within the Intellectual Property and specifically claiming the
Field.
SECTION 3: QUALITY STANDARDS AND CONTROLS
3.1 QUALITY STANDARDS TO BE ESTABLISHED BY BUYER. BUYER shall establish
and maintain standards for the quality of BUYER's treatment of patients seeking
medical care using the Intellectual Property. BUYER's standards at a minimum
shall satisfy the standards imposed by law and the standards in BUYER's
community for this type of medical care.
3.2 LABORATORY STANDARD. BUYER shall require all patients to undergo a
battery of clinical laboratory tests appropriate for the type of treatment that
the Intellectual Property involves. SELLER may from time to time, provide
protocols for such clinical tests.
SECTION 4: MALPRACTICE INSURANCE
4.1 REQUIREMENT OF MALPRACTICE INSURANCE.
(a) At BUYER's sole cost and expense, BUYER shall obtain and
maintain malpractice insurance, covering all medical care provided by BUYER and
the Health Care Providers pursuant to this Agreement. The malpractice insurance
must be issued by a company and on terms acceptable to BUYER and SELLER. The
insurance required under this Section may be procured by the Health Care
Provider, and name SELLER as an additional insured.
(b) SELLER shall be a named insured on all policies. BUYER
shall use its best efforts to obtain policies that require a 30-day notification
to SELLER prior to termination, and a subrogation waiver regarding SELLER. If
reasonably possible, BUYER shall give SELLER thirty (30) days' prior written
notice if coverage is canceled, modified or terminated. If not reasonably
possible, BUYER shall give SELLER the maximum number of days less than thirty
(30), prior written notice possible.
4.2 COVERAGE LIMITS. The malpractice insurance will have coverage limits
of at least One Million Dollars (US $ 1,000,000) per occurrence and at least
Three Million Dollars (US $3,000,000) per annual aggregate for each Medical
Center.
4.3 TYPE OF INSURANCE. The insurance may be "occurrence" type or "claims
made" type. If BUYER obtains claims made insurance, BUYER will obtain an
extended reporting endorsement (a "tail") when required under the policy, to
continue insurance coverage for services provided under this Agreement for a
period no less than five (5) years following the termination of this Agreement.
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SECTION 5: FINANCIAL CONTROLS
5.1 AUDIT RIGHTS.
(a) SELLER may (either directly or through SELLER's Agents)
inspect BUYER's books and records on such occasions as SELLER may determine, for
purposes of determining whether BUYER has complied with its general financial
obligations under this Agreement, and with its specific duty to pay the
Continuing Royalties. SELLER will give BUYER at least five (5) business days
notice prior to any inspection. SELLER (either directly or through SELLER's
Agents) will conduct its inspection during normal business hours. Unless an
underpayment of five percent (5%) or more has occurred in any twelve (12) month
period, BUYER will be limited to four (4) inspections per that twelve (12) month
period. If an underpayment of five percent (5%) or more has occurred, SELLER may
inspect once per Payment Period.
(b) SELLER may copy part or all of the said books and records
as it may determine appropriate for purposes of this Agreement, and SELLER may
retain these copies. SELLER may not use these copies or their contents for any
other purpose. SELLER and SELLER's Agents shall not divulge any financial
information or materials gathered from BUYER or BUYER's Agents without the
consent of BUYER, except required by law, including to SELLER's Agents.
5.2 TAX RETURNS. SELLER shall have the right to receive from BUYER, within
two weeks after requested from BUYER, a full copy of BUYER's, income tax returns
filed with the applicable federal, state and local governmental authorities, for
the year preceding the Closing.
SECTION 6: RECORD KEEPING. OBLIGATIONS
6.1 FINANCIAL RECORDS.
(a) BUYER at BUYER's expense shall maintain such financial
records as may be necessary or appropriate to evidence the amounts due SELLER
under this Agreement. To this end, BUYER shall establish and/or maintain an
appropriate financial system for its books and records, to ensure that the
relevant data is gathered and maintained completely and accurately.
(b) BUYER shall preserve and safeguard its financial records
for no less that five (5) years following the period which the records concern.
6.2 RECORDS TO ACCOMPANY CONTINUING ROYALTIES. At the time BUYER pays the
Continuing Royalties, it shall provide SELLER with a list of the patients
treated identified by patient number only during the preceding month, a list of
fees collected, and a detailed calculation as to the amount being paid. SELLER
shall use this information solely for the purpose of determining royalties owed
by BUYER to SELLER and shall treat the information, other than that concerning
the amount being paid to SELLER, as BUYER's trade secrets.
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6.3 MEDICAL RECORDS. BUYER at BUYER's expense shall develop a system of
medical records and shall maintain medical records for each patient seen in
connection with providing treatment using the Intellectual Property. The system
of medical records and the maintenance shall accomplish all of the following
purposes:
6.3.1 Comply with all legal requirements for medical records in
Territory
6.3.2 Satisfy at least the minimum standard in the medical community
for medical records; and
6.3.3 Allow thorough evaluation of the quality of medical care
provided patients who seek treatment from BUYER using the Intellectual Property;
and
6.3.4 BUYER, shall preserve and safeguard its medical records for no
less than five (5) years following the treatment of the applicable patient.
Treatment includes any counseling or psychological assistance, and any
"follow-up" conducted by SELLER.
6.3.5 With the exception of patient records, SELLER shall have the
right to review, inspect and copy any record referred to in this Agreement.
BUYER shall procure appropriate patient releases.
SECTION 7: PROMOTIONAL MATERIAL.
7.1 MARKETING OF THE INTELLECTUAL PROPERTY. BUYER's rights to the
Intellectual Property are limited to the Territory. BUYER may use means of
marketing which in the normal course can be expected to reach persons when they
are physically in the Territory, but it may not use means of marketing which in
the normal course can be expected to reach or does reach more than a de minimis
number of persons outside of the Territory.
7.2 PROMOTIONAL MATERIALS.
7.2.1 BUYER will develop such promotional and other marketing
material (collectively, "Marketing Material") as it deems necessary or
appropriate, but in no event less than is necessary for BUYER to fulfill its
obligations under this Agreement.
7.2.2 The Marketing Materials shall accurately characterize the
Intellectual Property, its scope or the expected results.
SECTION 8: CONFIDENTIAL INFORMATION
8.1 CONFIDENTIAL INFORMATION.
(a) The parties acknowledge and agree that following the
Closing each party will have an ownership interest in the Intellectual Property
with such rights thereto as are set forth in this Agreement.
(b) For so long as this Agreement remains in effect and for a
period of five (5) years following the termination hereof, each party shall
maintain in confidence the Intellectual Property and such other confidential
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information of the other party that is disclosed to it (collectively, the
"Confidential Information"), and shall not disclose, use or grant the use of the
Confidential Information, except on a need-to-know basis to such party's
directors, officers, employees, consultants and collaborators, and to other
parties, to the extent such disclosure is reasonably necessary or required in
connection with such party's activities as expressly authorized by this
Agreement. To the extent that disclosure by a party to any person is authorized
by this Agreement, prior to disclosure, a party shall obtain written agreement
of such Person to hold in confidence and not disclose, use or grant the use of
the Confidential Information of the other party except as expressly permitted
under this Agreement. Each party shall notify the other promptly upon discovery
of any unauthorized use or disclosure of Confidential Information. Upon the
expiration or earlier termination of this Agreement, each party shall return to
the other party all tangible items regarding the Confidential Information of the
other party and all copies thereof.
(c) Confidential Information shall not include information
that
(i) can be shown by the receiving party to have been in
its possession prior to receipt thereof from the disclosing party;
(ii) is now or hereafter becomes information in the
public domain through no act or failure to act by the receiving party;
(iii) can be shown by the receiving party to have been
subsequently lawfully received by the receiving party on a nonconfidential basis
from a third party having the right to disclose it; or
(iv) can be shown by the receiving party to have been
independently developed by the receiving party before the receiving party had
access to the Confidential Information received from the disclosing party.
SECTION 9: GOVERNMENTAL APPROVALS
9.1 PROCUREMENT. BUYER shall obtain and procure all governmental, state
and professional permits/licenses, and other approvals required under the laws
or regulations of the Territory (and any subdivisions thereof, if any) to
perform, deploy, or carry out their medical responsibilities in the performance
of the Intellectual Property and all related medical services (collectively
"Permits").
9.2 RESPONSIBILITY. BUYER shall bear sole responsibility (as between the
parties) for knowing at all times which permits, licenses, and other approvals,
if any, must be obtained or procured and for obtaining and procuring the Permits
at BUYER's sole expense.
9.3 PREREQUISITE. BUYER shall not perform, deploy, or use the Intellectual
Property or commence any treatment of any patients before BUYER has obtained the
Permits, if any are required.
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9.4 MAINTENANCE. BUYER shall maintain all of the Permits, if any are
required, in full force and effect from a time after the Closing Date that is
reasonable to allow procurement of such Permits until the termination of this
Agreement, without lapse.
9.5 TERMINATION. If BUYER fails, for any reason, to obtain the Permits, if
any are required, within a reasonable time after the Closing Date and maintain
all of the Permits, if any are required, in full force and effect during the
entire Term of this Agreement, SELLER may terminate this Agreement immediately
upon written notice to BUYER.
SECTION 10: INDEMNIFICATION
10.1 INDEMNIFICATION OF SELLER. BUYER shall indemnify, hold harmless and
defend SELLER and SELLER's Agents and affiliates from and against any and all
liability, loss, damages, claims, causes of action and expenses associated with
them (including reasonable attorneys' fees) caused or asserted to have been
caused, directly or indirectly by or as a result of any acts or omissions of
BUYER and BUYER's Agents and affiliates in connection with this Agreement, and
with regard to any and all claims relating or arising from this Agreement or the
Intellectual Property.
10.2 INDEMNIFICATION OF BUYER. SELLER shall indemnify, hold harmless and
defend BUYER and BUYER's Agents and affiliates from and against any and all
liability, loss, damages, claims, causes of action and expenses associated with
them (including reasonable attorney's fees) caused or asserted to have been
caused, directly or indirectly by or as a result of any acts or omissions of
SELLER and SELLER's Agents and affiliates in connection with this Agreement, and
with regard to any and all claims relating or arising from this agreement or the
Intellectual Property; except for any and all obligations and liabilities with
respect to claims for infringement which shall be the sole responsibility of
BUYER.
10.3 LIMITATION OF LIABILITY. It is understood and agreed that neither
party to this Agreement shall be liable for any negligent or wrongful acts,
either of commission or omission, chargeable to the other, unless such liability
is imposed by law and that this Agreement shall not be construed as seeking to
either enlarge or diminish any obligation or duty owed by one party against the
other or against a third party.
SECTION 11: PATENTS; INFRINGEMENT
11.1 FILING OF PATENT APPLICATIONS; MAINTENANCE OF PATENTS.
(a) BUYER shall identify to SELLER all inventions relating to
the Intellectual Property that arise under the Agreement and of which BUYER is
aware. Except for those falling within Section 11.1(c) below, BUYER shall be
responsible for diligently preparing, filing, prosecuting and maintaining in the
Territory all patent applications and patents having at least one claim that
covers the Intellectual Property within the Field. All expenses relating to the
preparation, filing , prosecution and maintenance of such patent applications
and patents will be paid by BUYER.
(b) BUYER shall not be responsible for preparing, filing,
prosecuting or maintaining any patent application or patent that is enforceable
only outside the Territory, or that has no claim that covers the Intellectual
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Property within the Field, unless the BUYER and SELLER otherwise agree in
writing to this obligation for any particular, identified patent application or
patent.
(c) In the event that BUYER is not interested in obtaining
patent protection for a particular invention it has identified to the SELLER and
the SELLER is interested in having patent protection obtained for that
invention, SELLER will be responsible for preparing, filing, prosecuting and
maintaining in the Territory any such patent application and patent, including
paying for such activity, and such patent application and patent shall be
excluded from the Intellectual Property and shall belong solely to the SELLER.
11.2 INFORMATION TO SELLER. BUYER shall inform SELLER of all activities
with respect to prosecution and maintenance of patents in the Territory and
shall provide to SELLER copies of all office actions and other communications
concerning patents within two weeks after receipt thereof. BUYER shall provide
copies of proposed amendments, responses and instructions at least three (3)
weeks before contemplated submissions to a patent office, if reasonably
possible, in order to provide SELLER with an opportunity to comment and provide
suggestions with regard thereto if SELLER desires. BUYER shall instruct its
attorneys to give consideration to such comments or suggestions as may be
provided to them by SELLER.
11.3 THIRD PARTY INFRINGEMENT. If, at any time during the term hereof,
either party shall become aware of any infringement or threatened infringement
of the Intellectual Property in the Territory, the party having the knowledge
thereof shall forthwith give notice to the other party. BUYER or its designee
shall determine within 120 days of notice whether or not to prosecute such
alleged infringement and to assert the Intellectual Property against such
infringer, in which event BUYER or its designee shall bear all costs and
expenses of any actions and enjoy all benefits of damages, proceeds or awards
rendered in any such action. In such event, SELLER shall give BUYER or its
designee all reasonable assistance in consideration for reimbursement of all out
of pocket expenses thereby incurred. SELLER agrees that SELLER will be joined in
such suit if SELLER is determined to be a necessary party. Should BUYER not
determine or determine not to initiate any action against the alleged infringer
within the above 120 days, SELLER shall have the right to assert, at its own
expense, the Intellectual Property and shall be entitled to any and all
recoveries therein. In the event that an action for infringement may only be
asserted in a particular jurisdiction in BUYER's name, then BUYER agrees that it
will bring such an action at SELLER's or its designee's request. SELLER or its
designee shall pay all of the costs and expenses of such action and enjoy all
benefits of damages, proceeds or awards rendered in any such action: SELLER or
its designee shall have the right to control such litigation with counsel
reasonably acceptable to BUYER selected by SELLER or its designee.
11.4 PATENT FEES. BUYER shall insure that all fees relating to the
Intellectual Property are paid (at BUYER's expense) in due time and that all
such administrative steps are taken as may be necessary to keep any patent
issuing from the Intellectual Property in force until the termination of this
Agreement.
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SECTION 12: REPRESENTATIONS AND WARRANTIES
12.1 OWNERSHIP. SELLER represents and warrants that (i) it is the sole,
exclusive, true and lawful owner of the Intellectual Property; (ii) it has the
right to Transfer to BUYER good, clear, record and marketable title to the
Intellectual Property as contemplated herein; (iii) except as set forth on
Schedule B hereto, none of the Intellectual Property has been assigned,
transferred or licensed to or from any third party; and (iv) the validity or
enforceability of the Intellectual Property has not been challenged by others in
any proceeding or dispute about which SELLER has received notice, nor is there
any pending or, to the best of SELLER's knowledge, threatened litigation or
proceeding challenging SELLER's right to use any of such Intellectual Property.
12.2 FILES. SELLER has used its diligent and reasonable efforts to provide
to BUYER all existing files and records pertaining to the Intellectual Property,
including, but not limited to, all office actions, drafts, receipts, drawings,
correspondence, disclosures, models, copies, prototypes, diagnostic reports,
test results, opinions, prior art (including search results, publications and
copies of patents, if any) and analyses (collectively, the "Files"). To the
extent that any Files have not been provided to BUYER as of the Closing Date,
SELLER shall, upon the first to occur of the request of BUYER or discovery that
such Files have not been provided, provide such Files to BUYER, at no charge to
BUYER.
12.3 AUTHORITY. SELLER and BUYER each represent and warrant that each has
the authority to execute this Agreement and to perform all the functions
necessary to effect the transactions contemplated herein and that this Agreement
has been duly authorized and is a valid and binding obligation of such party.
12.4 USE OF INTELLECTUAL PROPERTY. SELLER warrants that the Intellectual
Property constitutes all technology and know-how necessary for alcohol and/or
cocaine detoxification processes and that the Intellectual Property will enable
BUYER to provide such processes in accordance with the specifications set forth
on Schedule C.
12.5 EXCEPT AS EXPRESSLY STATED HEREIN, SELLER MAKES NO WARRANTIES,
EXPRESSED OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE, WITH RESPECT TO THE
INTELLECTUAL PROPERTY FURNISHED HEREUNDER OR IN CONNECTION HEREWITH. SELLER
DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR PARTICULAR
PURPOSE. NO REPRESENTATION OR OTHER AFFIRMATION OF FACT, INCLUDING BUT NOT
LIMITED TO STATEMENTS REGARDING SUITABILITY FOR USE OR PERFORMANCE OF
INTELLECTUAL PROPERTY WHICH IS NOT CONTAINED IN THIS AGREEMENT SHALL BE DEEMED
TO BE A WARRANTY OF SELLER FOR ANY PURPOSE, OR GIVE RISE TO ANY LIABILITY OF
SELLER FOR ANY PURPOSE.
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SECTION 13: TERMINATION OF RIGHT TO USE THE INTELLECTUAL PROPERTY
13.1 TERMINATION BY SELLER. Notwithstanding anything to the contrary
contained herein, BUYER shall cease to have the right to use the Intellectual
Property to perform Processes during such periods as any of the following events
shall occur:
13.1.1 BUYER's failure to comply with the requirements of Section
10.1.
13.1.2 BUYER shall have committed a breach of a material term of
this Agreement, which shall not be cured within thirty (30) days of written
notice of such breach. Without limiting the generality of the foregoing, the
following provisions shall be deemed to be material provisions of this Agreement
for the purposes of Section 13.1.2: Sections 2.1.2, 2.1.3, 2.4, 2.5, 2.6, 3, 4,
5, 6, 7, 8, 9, 10, 11, 12 and 14.
13.1.3 If BUYER loses its legal capacity to perform Processes in the
Territory.
13.1.4 If BUYER becomes bankrupt or insolvent, or has made an
assignment for the benefit of its creditors or has a petition filed against it
under any bankruptcy or similar laws (which petition is not dismissed within 30
days of such filing), or a receiver or liquidator is appointed for all of a
majority of its assets or if it is unable to pay its debts as they become due.
13.2 INJUNCTIVE RELIEF.
13.2.1 BUYER acknowledges that if it should commit a material breach
of a material provision of this Agreement, SELLER may suffer irreparable damages
and that SELLER's remedy at law may be inadequate. Therefore, in addition to any
remedy of law otherwise available to SELLER, BUYER agrees that SELLER may be
entitled to a temporary or permanent injunction restraining BUYER from any such
violations and BUYER may be specifically compelled to perform its material
obligations under this Agreement. BUYER hereby consents to the personal
jurisdiction of any state or federal court located in the state of New York for
the purpose of providing such injunctive relief.
13.2.2 SELLER acknowledges that if it should commit a material
breach of a material provision of this Agreement, BUYER may suffer irreparable
damages and that BUYER's remedy at law may be inadequate. Therefore, in addition
to any remedy of law otherwise available to BUYER, SELLER agrees that BUYER may
be entitled to a temporary or permanent injunction restraining SELLER from any
such violations and SELLER may be specifically compelled to perform its material
obligations under this Agreement. SELLER hereby consents to the personal
jurisdiction of any state or federal court located in the state of New York for
the purpose of providing such injunctive relief.
13.3 PRIOR OBLIGATIONS. Unless otherwise expressly provided for herein,
termination of BUYER's right to use the Intellectual Property shall be without
prejudice to the right of any party who is not in default hereunder to receive
all payments accrued and unpaid at the effective date of such termination or
expiration, to the remedy of either party in respect to any previous breach of
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any of the covenants herein contained and to any other provisions herein which
expressly or necessarily call for performance after such termination or
expiration.
SECTION 14: GENERAL PROVISIONS
14.1 AMENDMENT. This Agreement may be amended by the parties. No amendment
will be effective unless in writing, and signed by both parties.
14.2 ARBITRATION.
14.2.1 The parties will attempt through good faith negotiation to
resolve their disputes. The term "disputes" includes, without limitation, any
disagreements between the parties concerning the existence, formation,
interpretation and implementation of this Agreement.
14.2.2 If the parties are unable to resolve their disputes by
negotiation, either party may commence arbitration by sending a written notice
of arbitration to the other party. The notice will state the dispute with
particularity.
14.2.3 The arbitration will be by the American Arbitration
Association, which will apply its rules except as stated in this Section 14.2.
14.2.4 The fee payable to the arbitrator will be based upon the their current
fee schedule of the American Arbitration Association and will be advanced one
half by each party, upon the written request of the arbitrator(s) or the
American Arbitration Association.
14.2.5 Except as set forth in this Section 14.2, the arbitrator(s)
will conduct the arbitration according to the rules of the American Arbitration
Association. Arbitration will take place in New York City, unless the parties
hereto otherwise agree. The arbitrator(s) will base the decision on the express
language of this Agreement. Each party may make written submissions to the
arbitrator, and each party will have a reasonable opportunity for rebuttal, but
no longer than ten (10) days. As soon after the appointment of the arbitrator(s)
as is reasonably practicable, the arbitrator(s) will conduct a hearing on the
dispute. As soon as reasonably practicable, but not later than ten (10) days
after the hearing is completed, the arbitrator(s) will arrive at a final
decision, which will be reduced to writing, signed by the arbitrators, and
mailed to each party and its legal counsel.
14.2.6 All decisions of the arbitrator(s) will be final, and binding
on both parties, and (except as otherwise provided herein) will constitute the
only method of resolving disputes. Judgment may be entered upon the decision in
accordance with applicable law in any court having jurisdiction. Each party
waives the right to challenge the use of arbitration to resolve disputes as
provided for in this Agreement.
14.2.7 This arbitration section and all decisions of the
arbitrator(s) will be specifically enforceable in a court of law, or in the
arbitral tribunal.
14.2.8 The parties reserve the right to seek a judicial temporary
restraining order, preliminary injunction, or other similar short term equitable
relief prior to the appointment of the arbitrator. The arbitral tribunal will
have the right to make a final determination of the parties' rights, including
whether to make permanent, modify or dissolve any judicial order.
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14.2.9 Nothing contained in this Section 14.2 shall preclude the
SELLER or BUYER from enforcing its rights under this Agreement in accordance
with its terms.
14.3 ATTORNEYS' FEES. If either party institutes litigation or arbitration
to interpret or enforce this Agreement, or to recover damages for breach of this
Agreement, the prevailing party will be entitled to recover costs of suit or
arbitration, and to recover actual attorney fees.
14.4 CAPTIONS. The titles and captions are included only as a matter of
convenience. They will not affect the interpretation of any provision.
14.5 CONSENTS AND APPROVALS. A party will not unreasonably withhold a
consent provided for in this Agreement, unless the Agreement specially permits
otherwise. Consents will be effected only by notice.
14.6 CONSTRUCTION OF AGREEMENT. Both parties and their counsels have
participated fully in the review and revision of this Agreement. Any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party will not apply to the interpretation of this Agreement.
14.7 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which will be deemed an original, but taken together will constitute one
instrument.
14.8 BUSINESS DAYS. If the day for performance of any obligation under
this Agreement is a Saturday, Sunday or legal holiday, then the time for
performance of any obligation under this Agreement will be extended to 5:00 p.m.
on the first day following which is not a Saturday, Sunday or legal holiday.
14.9 CUMULATION OF REMEDIES. The various rights, options, elections,
powers, and remedies under this Agreement, or granted by law (collectively,
"Remedies"), will be construed as cumulative. No single Remedy is exclusive of
any of the other Remedies.
14.10 DOLLARS. All the amounts referred to herein are in United States
Dollars.
14.11 ELECTRONIC FACSIMILE. If a party signs this Agreement and then
transmits an electronic facsimile of the signature page to the other party, the
party who receives the transmission may rely upon the electronic facsimile as a
signed original of this Agreement.
14.12 EXPENSES. Except as may be specifically provided for in this
Agreement, both parties will bear their own expenses incurred in connection with
this Agreement and the transactions contemplated in it including, but not
limited to, legal and accounting fees.
14.13 FURTHER ASSURANCES. Each party will do such further acts, including
executing and delivering additional agreements or instruments as the other may
reasonably require, to consummate, evidence or confirm the agreements contained
in this Agreement or otherwise carry out the intent and purposes of this
Agreement.
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14.14 GOVERNING, LAW. This Agreement will be construed and enforced
according to the laws of the State of New York without regard to conflicts of
law principles.
14.15 INCORPORATION OF RECITALS AND THE EXHIBIT. All Recitals and the
schedules and exhibit referred to in this Agreement are an integral part of this
Agreement. They are incorporated in this Agreement by this reference as though
at this point set forth in full.
14.16 INTEGRATION. The making, execution and delivery of this Agreement by
the parties has not been induced by any representations, statements, warranties
or agreements other than those expressed in this Agreement. This Agreement
embodies the entire understanding of the parties. There are no other agreements
or understandings, written or oral, in effect between the parties relating to
the subject matter of this Agreement, unless expressly referenced in this
Agreement.
14.17 NO JOINT VENTURE. Neither party is an agent, partner, or joint
venture with or of the other party.
14.18 NOTICES.
14.18.1 WRITTEN NOTICES. All notices, demands or requests
("Notices") which are required or permitted to be given pursuant to this
Agreement will be in writing. Notices will be delivered personally, by
commercial carrier, by fax with a machine generated confirmation sheet or by
registered or certified mail, postage prepaid, addressed to a party as stated
below.
SELLER's address for notices.
XXXX, X.X.
Xxxxxxxxxxxx 0
Xxxxxx 00000 Xxxxx
Tel: 00-00-0000000
Fax: 00-00-0000000
Attn: Xx. Xxxx Xxxx Xxxxxxx Ibanez
With a copy to:
Xxxxxxxx Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxx Xxxxxxxx, Esq.
BUYER's address for notices.
Hythiam, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
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With a copy to:
Irell & Xxxxxxx LLP 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000 Xxx
Xxxxxxx, XX 00000 Tel: 000-000-0000
Fax: 000-000-0000
Attn: Xxxxx X. Xxxxxxxxx, Ph.D., X.X.
14.18.2 EFFECTIVE DATE. Notice given personally or by commercial
carrier is effective upon delivery. Notice given by fax with a machine generated
confirmation sheet is effective upon sending. Notice given by mail of a national
government is effective seven days after the date of mailing.
14.18.3 CHANGE OF ADDRESS. Either party may change his/its address
for Notices by notice given pursuant to this section.
14.19 PARTIAL INVALIDITY. If any provision of this Agreement is found to
be invalid or unenforceable by any court or arbitral tribunal, only that
provision will be ineffective, unless its invalidity or non enforceability will
defeat an essential business purpose of this Agreement.
14.20 SOLE DISCRETION. If any party may make a decision or take action or
refuse to take action under this Agreement in that party's sole discretion, the
party may act based on any reason or no reason, so long as the basis for action
is not an illegal reason.
14.21 TIME OF THE ESSENCE. Time is of the essence throughout the term of
this Agreement for every provision in which time is an element. No extension of
time for performance of any act will be deemed an extension of time for the
performance of any other acts.
14.22 WAIVER OF RIGHTS. No waiver of or failure by either party to enforce
a provision, covenant, condition or right under this Agreement (collectively,
"Right") will be construed as a subsequent waiver of the same Right, or a waiver
of any other Right. No extension of time for performance of any obligations or
acts will be deemed an extension of the time for performance of any other
obligations or acts.
14.23 SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES. This Agreement
shall inure to the benefit of the parties to this Agreement and their respective
permitted successors and assigns and shall be binding upon the parties to this
Agreement and their respective successors and assigns. SELLER may not assign any
of its rights under this Agreement without the prior written consent of BUYER.
There are no third party beneficiaries under this Agreement and the sole and
intended beneficiaries of this Agreement are BUYER and SELLER.
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14.24 RIGHT OF FIRST NEGOTIATION. SELLER agrees to grant to BUYER first
negotiation rights for any intent of expansion of use of the Intellectual
Property outside of the designated Territory by (i) any third party other than
SELLER or (ii) SELLER, if Xx. Xxxx Xxxxxxx beneficially owns, or following such
transaction will beneficially own, less than eighty percent (80%) of all of the
equity interests of SELLER. BUYER upon notification of such rights shall have 30
days from the date of notice to negotiate an agreement for such expanded
territory in a form and on terms which are acceptable to SELLER. Notice shall be
in written form to BUYER and BUYER must notify SELLER within 5 days after
receipt of its intent. Both BUYER and SELLER agree to negotiate in good faith.
14.25 "EXPLOIT" AND "TRANSFER". BUYER's right to "Exploit" (as defined in
the Recitals hereto) the Intellectual Property in the Field within the Territory
pursuant to this Agreement does not include the right to Transfer such
Intellectual Property. BUYER's right to Transfer such Intellectual Property
shall be governed by the provisions of this Agreement which specifically discuss
the Transfer thereof.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CITA S.L.
By: /s/ Xxxx Xxxx Xxxxxxx
------------------------------------
Xx. Xxxx Xxxx Xxxxxxx Ibanez
Title:
HYTHIAM, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Title:
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EXHIBIT 1
---------
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") is made the 12th day of
March, 2003, between Hythiam, Inc., a Delaware corporation ("Debtor") and
CITA S.L., a Spanish corporation ("Secured Party").
This Security Agreement is entered into to secure certain obligations of
Debtor to Secured Party pursuant to that certain Technology Purchase and
Royalty Agreement dated as of the date hereof (the "Technology
Agreement").
SECTION 15: DEFINITIONS.
15.1 "Collateral." The Collateral shall consist of the Intellectual
Property (as such term is defined in the Technology Agreement), wherever
located, including:
15.1.1 General intangibles included in the Intellectual Property;
and
15.1.2 proceeds and products of the foregoing.
15.2 "Obligations." This Security Agreement secures the following:
15.2.1 Debtor's obligations to Secured Party under Sections 2.6 and
2.7 of the Technology Agreement;
15.2.2 the repayment of (a) any amounts that Secured Party may
advance or spend for the maintenance or preservation of the Collateral and (b)
any other expenditures that Secured Party may make under the provisions of this
Security Agreement or for the benefit of Debtor; and
15.2.3 any of the foregoing that arise after the filing of a
petition by or against Debtor under the Bankruptcy Code, even if the obligations
do not accrue because of the automatic stay under Bankruptcy Code ss. 362 or
otherwise.
15.3 UCC. Any term used in the Uniform Commercial Code as in effect in New
York ("UCC") and not defined in this Security Agreement has the meaning given to
the term in the UCC.
SECTION 16: GRANT OF SECURITY INTEREST.
Debtor grants a security interest in the Collateral to Secured Party to
secure the payment or performance of the Obligations.
SECTION 17: PERFECTION OF SECURITY INTERESTS.
17.1 Filing of financing statement and patent assignments.
17.1.1 Debtor authorizes Secured Party to file one or more financing
statements (the "Financing Statements") describing the Collateral.
17.1.2 At Secured Party's request, Debtor shall provide Secured
Party an official report from the Secretary of State of each Collateral State,
the Chief Executive Office State, and the Debtor State (each as defined below)
(the "SOS Reports") indicating that Secured Party's security interest in the
Collateral as described in the applicable Financing Statement and which may be
perfected by the filing of such Financing Statement is prior to all other
security interests or other interests reflected in the report. Secured Party
acknowledges and understands that such SOS Reports may not be available until a
period of time following filing of any Financing Statement and the
unavailability of such a report shall not be deemed a breach of this Agreement.
17.1.3 Secured Party, at Debtor's expense, may prepare, file and
record such assignments, statements, notices and agreements, take such action
and obtain such certificates and documents, in accordance with all applicable
laws, statutes, and regulations (whether state, federal, or local), as necessary
to perfect, evidence and continue Secured Party's security interest in the
Collateral, including, without limitation, assignments of security in the U.S.
Patent and Trademark Office and corresponding foreign patent offices. Debtor
agrees to cooperate with Secured Party in making such filings, including by
executing such filings, as necessary. Secured Party shall be responsible for the
timely filing of any such documents.
17.2 Possession.
17.2.1 Debtor shall have possession of the Collateral, except where
expressly otherwise provided in this Security Agreement; and
17.2.2 Where Collateral is in the possession of a third party,
Debtor will join with Secured Party in notifying the third party of Secured
Party's security interest and obtaining an acknowledgement from the third party
that it is holding the Collateral for the benefit of Secured Party.
SECTION 18: POST-CLOSING COVENANTS AND RIGHTS CONCERNING THE COLLATERAL.
18.1 Inspection. The parties to this Security Agreement may inspect any
Collateral in the other party's possession, at any time during normal business
hours and upon reasonable advance notice.
18.2 Limitations on Obligations Concerning Maintenance of Collateral.
18.2.1 Risk of Loss. Debtor has the risk of loss of the Collateral.
18.2.2 No Collection Obligation. Secured Party have no duty to
collect any income accruing on the Collateral or to preserve any rights relating
to the Collateral.
18.3 No Disposition of Collateral. Secured Party does not authorize, and
Debtor agrees not to:
18.3.1 make any sales or leases of any of the Collateral, except in
the ordinary course of business or as otherwise permitted pursuant to the
Technology Agreement;
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18.3.2 license any of the Collateral except in the ordinary course
of business or as otherwise permitted under the Technology Agreement; or
18.3.3 grant any other security interest in any of the Collateral.
SECTION 19: DEBTOR'S REPRESENTATIONS AND WARRANTIES.
Debtor warrants and represents that:
19.1 Title to and transfer of Collateral. It has rights in or the power to
transfer the Collateral and, based on the representations and warranties of
Secured Party in the Technology Agreement, its title to the Collateral is free
of all adverse claims, liens, security interests and restrictions on transfer or
pledge except as created by this Security Agreement or created by or otherwise
described in the Technology Agreement.
19.2 Location of Collateral. All collateral is located solely in the State
(the "Collateral State") listed in Exhibit A.
19.3 Location, State of Incorporation and, Name of Debtor. Debtor's:
19.3.1 chief executive office is located in the State (the "Chief
Executive Office State") identified in Exhibit A;
19.3.2 state of incorporation is the State (the "Debtor's State")
identified in Exhibit A; and
19.3.3 exact legal name is as set forth in the first paragraph of
this Security Agreement.
SECTION 20: DEBTOR'S COVENANT.
Until the Obligations are performed in full, Debtor agrees that it will:
20.1 preserve its corporate existence and not, in one transaction or a
series of related transactions, merge into or consolidate with any other entity,
or sell all or substantially all of its assets, except in any case if the merger
or consolidation partner or acquiror expressly assumes in writing all of the
obligations of Debtor hereunder or as otherwise may be permitted or contemplated
pursuant to the Technology Agreement;
20.2 not change the state of its incorporation without providing Secured
Party with 30 days' prior written notice; and
20.3 not change its corporate name without providing Secured Party with 30
days' prior written notice.
SECTION 21: EVENTS OF DEFAULT.
The occurrence of any of the following shall, at the option of Secured
Party, be an Event of Default:
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21.1 Any default under any of the Obligations, following 30-days advance
written notice, during which time Debtor may cure the default;
21.2 Debtor's failure to comply with any of the material covenants, or the
incorrectness in any material respect of any representation or warranty of
Debtor contained in, this Security Agreement, in either case, following 30-days
advance written notice, during which time Debtor may cure the default;
21.3 Transfer or disposition of any of the Collateral, except as expressly
permitted by this Security Agreement;
21.4 Attachment, execution or levy on any of the Collateral not discharged
within 60 days; or
21.5 Debtor voluntarily or involuntarily becoming subject to any
proceeding under (a) the Bankruptcy Code or (b) any similar remedy under state
statutory or common law and the continuance of (if involuntary) such proceeding
for 60 consecutive days unless dismissed, bonded or discharged to the
satisfaction of a court of competent jurisdiction.
SECTION 22: DEFAULT COSTS.
22.1 Should an Event of Default occur, Debtor will pay to Secured Party
all costs reasonably incurred by the Secured Party for the purpose of enforcing
its rights hereunder, including:
22.1.1 costs of foreclosure;
22.1.2 costs of obtaining money damages; and
22.1.3 a reasonable fee for the services of attorneys employed by
Secured Party for any purpose related to this Security Agreement or the
Obligations, including consultation, drafting documents, sending notices or
instituting, prosecuting or defending litigation or arbitration.
SECTION 23: REMEDIES UPON DEFAULT.
23.1 General. Upon any Event of Default, Secured Party may pursue any
remedy available at law (including those available under the provisions of the
UCC), or in equity to collect, enforce or satisfy any Obligations then owing,
whether by acceleration or otherwise. 23.2 Remedies. Upon any Event of Default,
Secured Party shall have the right to pursue any of the following remedies
separately, successively or simultaneously:
23.2.1 File suit and obtain judgment and, in conjunction with any
action, Secured Party may seek any ancillary remedies provided by law, including
levy of attachment and garnishment.
23.2.2 Without taking possession, sell, lease or otherwise dispose
of the Collateral at public or private sale in accordance with the UCC. Upon
Secured Party's written demand, Debtor will assemble and make the Collateral
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available to Secured Party as it directs. Debtor grants to Secured Party the
right, for this purpose, upon written demand, to enter into or on any premises
where Collateral may be located during normal business hours.
SECTION 24: FORECLOSURE PROCEDURES.
24.1 No Waiver. No delay or omission by Secured Party to exercise any
right or remedy accruing upon any Event of Default shall: (a) impair any right
or remedy, (b) waive any default or operate as an acquiescence to the Event of
Default, or (c) affect any subsequent default of the same or of a different
nature.
24.2 Notices. Secured Party shall give Debtor such notice of any private
or public sale as may be required by the UCC.
24.3 Condition of Collateral. Secured Party has no obligation to clean-up
or otherwise prepare the Collateral for sale.
24.4 No Obligation to Pursue Others. Secured Party has no obligation to
attempt to satisfy the Obligations by collecting them from any other person
liable for them and Secured Party may release, modify or waive any collateral
provided by any other person to secure any of the Obligations, all without
affecting Secured Party's rights against Debtor. Debtor waives any right it may
have to require Secured Party to pursue any third person for any of the
Obligations.
24.5 Compliance with Other Laws. Secured Party shall comply with any
applicable state or federal law requirements in connection with a disposition of
the Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral.
24.6 Warranties. Secured Party may sell the Collateral without giving any
warranties as to the Collateral. Secured Party may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.
24.7 Purchases by Secured Party. In the event Secured Party purchases any
of the Collateral being sold, Secured Party may pay for the Collateral by
crediting some or all of the Obligations of the Debtor.
24.8 No Marshalling. Secured Party will have no obligation to marshal any
assets in favor of Debtor, or against or in payment of:
24.8.1 any of the other Obligations, or
24.8.2 any other obligation owed to Secured Party by Debtor or any
other person.
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SECTION 25: MISCELLANEOUS
25.1 Assignment.
25.1.1 Binds Assignees. This Security Agreement shall bind and shall
inure to the benefit of the heirs, legatees, executors, administrators,
successors and assigns of Secured Party and shall bind all persons who become
bound as a debtor to this Security Agreement.
25.1.2 No Assignments by Debtor. Secured Party does not consent to
any assignment by Debtor except as expressly provided in this Security Agreement
and the Technology Agreement.
25.1.3 Secured Party Assignments. Secured Party may assign its
rights and interests under this Security Agreement to the same extent permitted
under the Technology Agreement; provided, however, that Secured Party may only
assign such rights and interests in connection with an assignment of the benefit
of the Obligations under the Technology Agreement. If an assignment is made and
Secured Party provides Debtor with written notice thereof, Debtor shall render
performance under this Security Agreement to the assignee; provided, however,
that Debtor may assert against any assignee any claims, defenses or set-offs
which Debtor could assert against Secured Party.
25.2 Severability. Should any provision of this Security Agreement be
found to be void, invalid or unenforceable by a court or panel of arbitrators of
competent jurisdiction, that finding shall only affect the provisions found to
be void, invalid or unenforceable and shall not affect the remaining provisions
of this Security Agreement.
25.3 Notices. Any notices required by this Security Agreement shall be
deemed to be delivered (a) three (3) business days after such notice has been
deposited in any United States postal box if postage is prepaid, and the notice
properly addressed to the intended recipient, (b) one (1) business day after
such notice has been delivered to a nationally-recognized overnight delivery
service if the delivery fee is prepaid and the notice properly addressed to the
intended recipient, (c) on the date received by telecopy, as evidenced by a
confirmed delivery receipt, (d) on the date received through the Internet, as
evidenced by an electronic confirmation of delivery, or (e) when personally
delivered.
25.4 Headings. Section headings used in this Security Agreement are for
convenience only. They are not a part of this Security Agreement and shall not
be used in construing it.
25.5 Governing Law. This Security Agreement is being executed and
delivered and is intended to be performed in the State of New York and shall be
construed and enforced in accordance with the laws of the State of New York,
except to the extent that the UCC provides for the application of the law of the
Debtor State.
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25.6 Rules of Construction.
25.6.1 No reference to "proceeds" in this Security Agreement
authorizes any sale, transfer, or other dispositions of the Collateral by the
Debtor other than as permitted by this Agreement or the Technology Agreement.
25.6.2 "Includes" and "including" are not limiting.
25.6.3 "Or" is not exclusive.
25.6.4 "All" includes "any" and "any" includes "all."
25.7 Integration and Modifications.
25.7.1 This Security Agreement is the entire agreement of the Debtor
and Secured Party concerning its subject matter.
25.7.2 Any modification to this Security Agreement must be made in
writing and signed by the party adversely affected.
25.8 Waiver. Any party to this Security Agreement may waive the
enforcement of any provision to the extent the provision is for its benefit.
25.9 Further Assurance.
25.9.1 Debtor agrees to execute any further documents, and to take
any further actions, reasonably requested by Secured Party to evidence or
perfect the security interest granted herein, to maintain the first priority of
the security interests, or to effectuate the rights granted to Secured Party
herein.
25.9.2 Secured Party agrees to promptly execute, upon satisfaction
of Debtor's obligations under Section 2.6 and Section 2.7 of the Technology
Agreement, all UCC releases and other documents and instruments reasonably
requested by Debtor, at Debtor's expense, to release the lien of the Secured
Party in the Collateral.
[SIGNATURE PAGE FOLLOWS]
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The parties have signed this Security Agreement as of the day and
year first above written.
"DEBTOR"
HYTHIAM, INC.
A California corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name:
Title:
SECURED PARTY:
Accepted by:
CITA S.L.
By: Xxxx Xxxx Xxxxxxx
------------------------------
Name:
Title:
-8-
Exhibit A to
Security Agreement
I. Collateral State
California
II. Chief Executive Office State
California
III. State of Incorporation
Delaware
-1-
