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EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of August 12, 1998,
is made and entered into by and between Micro Therapeutics Inc. , a
corporation organized and existing under the laws of the State of
Delaware, having its principal place of business at 0000-X Xxxxx
Xxxxxxx, Xxx Xxxxxxxx, Xxxxxxxxxx 00000, (the "Debtor"), and Xxxxxx
Laboratories, an Illinois corporation, having its principal place of
business at 000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx 00000-0000 (the
"Secured Party"), with reference to the following:
RECITALS
A. Debtor is executing and delivering to Secured Party a promissory
note of even date herewith in the principal amount of Five Million U.S.
Dollars ($5,000,000) payable to the order of Secured Party (the "Note")
in connection with that certain Convertible Subordinated Note Agreement
by and between Debtor and Secured Party, dated as of August 12, 1998
(the "Note Agreement").
B. Debtor is executing with the Secured Party a Credit Agreement on the
date hereof (the "Credit Agreement") providing Debtor with the right to
borrow from Secured Party up to Five Million U.S. Dollars ($5,000,000)
on or before July 31, 1999 by delivery of a promissory note thereunder
(the "Credit Facility Note").
C. In order to secure the payment and performance of the obligations of
Debtor to the Secured Party under the Note and the Credit Facility
Note, Secured Party requires that Debtor grant to Secured Party a
security interest in the Collateral as provided for herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the
following mutual agreements and promises, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. SECURITY INTEREST.
(a) Creation of Security Interest. Debtor hereby grants to
Secured Party a security interest in all of Debtor's right,
title and interest in and to the Collateral, as defined in
Subsection 1(b) below, in order to secure the payment and
performance of the obligations of Debtor to Secured Party
described in Subsection 1(d) below.
(b) COLLATERAL. As used herein, the term "Collateral"
shall mean:
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(i) all Debtor's right, title and interest in and to
the current and future trademarks owned by Debtor in
connection with Debtor's peripheral blood clot
infusion products in the Territory (as defined in the
Distribution Agreement) (the "Trademarks"), which are
set forth on Exhibit A hereto; and
(ii) all Debtor's right, title and interest in and to
the current and future patents owned by Debtor in
connection with Debtor's peripheral blood clot
infusion products in the Territory (the "Patents"),
which are set forth on Exhibit B hereto; and
(iii) all Debtor's right, title and interest in and
to the other current and future intellectual property
rights owned by Debtor in connection with Debtor's
peripheral blood clot infusion products in the
Territory (the "Other Assets"), which are set forth
on Exhibit C hereto.
(c) ASSIGNMENT. Debtor shall execute a Notice of Recordation
of Assignment Document with the United States Patent and
Trademark Office for each Trademark and Patent registered with
the United States Patent and Trademark Office, thereby
assigning all right, title and interest in such Patents and
Trademarks to the Secured Party for the purpose of obtaining
for the Secured Party the complete and timely satisfaction of
a security interest in the Patents and the Trademarks. Debtor
shall perfect the filing of a UCC-1 document for each of the
Collateral for the purpose of obtaining for the Secured Party
the complete and timely satisfaction of a security interest in
the Collateral.
(d) OBLIGATIONS SECURED. The security interest granted to
Secured Party by Debtor pursuant to this Section 1 shall
secure payment and performance of Debtor's obligations under
(i)the Note, (ii) the Note Agreement, (iii) the Credit
Facility Note, (iv) the Credit Agreement and (iv) any
amendment, modification, renewal or extension of the Note or
the Note Agreement (the "Secured Obligations").
2. REPRESENTATIONS AND WARRANTIES OF DEBTOR. Debtor hereby represents
and warrants to Secured Party that:
(a) Debtor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry
on its business as now conducted. Debtor is duly qualified to
transact business and is in good standing in each jurisdiction
in which the failure so to qualify would have a material
adverse effect on its business, financial condition or
properties.
(b) All corporate action on the part of Debtor necessary for
the execution and delivery of this Agreement has been duly
authorized by Debtor's Board
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of Directors. This Agreement constitutes valid and legally
binding obligations of Debtor, enforceable in accordance with
its terms, except as enforcement thereof may be limited by
bankruptcy laws, laws affecting creditors' rights and court
decisions limiting the availability of specific performance
and other equitable remedies. Debtor has full corporate power
and corporate authority to execute and deliver this Agreement
and to carry out the transactions contemplated hereby.
(c) Debtor has not changed its name, address or organization
within the last four (4) months.
(d) The Collateral is subject to no other lien or security
interest.
3. COVENANTS.
(a) Until payment of all obligations due under the Note,
Debtor agrees that, unless the Secured Party shall have
otherwise consented in writing:
(i) Debtor shall execute and take such action as may
reasonably be requested from time to time by Secured
Party, including the execution and delivery of
financing statements and certificates of title, and
the filing of financing statements, as may be
necessary to perfect and maintain the first priority
security interest granted to Secured Party hereby.
(ii) Debtor shall keep appropriate records and, upon
written request of the Secured Party, will give
Secured Party any information it may reasonably
require with respect to the condition and status of
the Collateral.
(iii) Debtor shall update Exhibits (A) (B) and (C) on
a quarterly basis and shall notify Secured Party in
writing of additions to the Collateral during the
period as there remains outstanding principal or
interest on the Note or the Credit Facility Note.
(iv) Debtor shall notify Secured Party within ten
(10) days of any change in (A)Debtor's corporate
name, (B)Debtor's business or legal structure, or
(C)Debtor's place of business or chief executive
office if the Debtor has more than one place of
business, or (D)location of Collateral.
(b) Until payment of all obligations due under the Note or
conversion of the Note, the Secured Party covenants to
subordinate this Security Agreement to Senior Indebtedness (so
long as the Senior Indebtedness is secured by a perfected
security interest in the Collateral) as defined in the Note
Agreement at the request of the Company.
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4. EVENTS OF DEFAULT. The occurrence of the following shall constitute
an "Event of Default":
(a) PAYMENTS. Default in the payment of the principal and
unpaid accrued interest of the Note when due and payable if
such default is not cured by the Company within ten (10) days
after the Holder has given the Company written notice of such
default.
(b) BANKRUPTCY. The institution by the Company of proceedings
to be adjudicated as bankrupt or insolvent, or the consent by
it to institution of bankruptcy or insolvency proceedings
against it or the filing by it of a petition or answer or
consent seeking reorganization or release under the federal
Bankruptcy Code, or any other applicable federal or state law,
or the consent by it to the filing of any such petition or the
appointment of a receiver, liquidator, assignee, trustee or
other similar official of the Company, or of any substantial
part of its property, or the making by it of an assignment for
the benefit of creditors, or the taking of corporate action by
the Company in furtherance of any such action.
(c) COMMENCEMENT OF AN ACTION. If, within sixty (60) days
after the commencement of an action against the Company (and
service of process in connection therewith on the Company)
seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present
or future statute, law or regulation, such action shall not
have been resolved in favor of the Company or all orders or
proceedings thereunder affecting the operations or the
business of the Company stayed, or if the stay of any such
order or proceeding shall thereafter be set aside, or if,
within sixty (60) days after the appointment without the
consent or acquiescence of the Company of any trustee,
receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such
appointment shall not have been vacated.
(d) DEFAULT OF SENIOR INDEBTEDNESS. Any declared default of
the Company under any Senior Indebtedness (as defined in the
Note Agreement) that gives the holder thereof the right to
accelerate such Senior Indebtedness, and such Senior
Indebtedness is in fact accelerated by the holder.
(e) COVENANTS AND AGREEMENTS. The Company shall default in the
performance of any of its material covenants and agreements
set forth in any provision of the Note Agreement and the
continuance of such default for thirty (30) days after the
Holder (as defined in the Note Agreement) has given the
Company written notice of such default.
(f) DEFAULT UNDER OTHER AGREEMENTS. The Company breaches or
defaults on any material covenant, condition or other
provision of the
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Distribution Agreements and such breach or default continues
after the applicable grace period, if any, specified therein
but in no event more than thirty (30) days after the Holder
has given the Company written notice of such breach or
default.
(g) CHANGE OF CONTROL OF THE COMPANY. Any change in control of
the Company which includes any consolidation of the Company
with, or merger of the Company into, any other Person, any
merger of another Person into the Company (other than a merger
which does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common
Stock), any acquisition of at least a majority of the Voting
Stock (as defined in the Note Agreement) of the Company or any
sale or transfer of all or substantially all of the business
or assets of the Company (a "Change of Control"), or Xxxxxx'x
receipt of written notice from the Company that a Change of
Control will occur.
5. SECURED PARTY'S RIGHTS AND REMEDIES.
(a) Upon the occurrence of an Event of Default as hereinabove
set forth, the Secured Party may exercise all rights or
remedies that the Secured Party may have as a secured party
under the Uniform Commercial Code as adopted in the State of
California.
(b) Upon the occurrence of an Event of Default as hereinabove
set forth, the Secured Party may, at its option, (i) retain
for its own commercial use all or any portion of the
Collateral upon terms that are commercially reasonable;
provided that upon such retention the Note and the Credit
Facility Note shall be credited as fully paid, and/or (ii)
sell, lease or otherwise dispose of all or any part of the
Collateral upon any terms which are commercially reasonable.
Secured Party shall give fifteen (15) days prior written
notice to Debtor of the time and place of any public sale of
the Collateral, or of the time after which a private sale or
other disposition of the Collateral is to be made.
(c) All proceeds from the sale or other disposition of the
Collateral, and all other amounts received by Secured Party
pursuant to the terms of this Agreement, unless otherwise
expressly required by law or regulation, shall be applied as
follows:
(1) First, to the payment of all expenses reasonably
incurred by Secured Party in connection with any sale
or disposition of the Collateral, including, but not
limited to, the expenses of taking, advertising,
processing, preparing and storing the Collateral to
be sold, and all court costs and all reasonable legal
fees of Secured Party in connection therewith;
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(2) Second, to the payment of all obligations of
Debtor to Secured Party arising under the Note which
have come due and are unpaid; and
(3) Third, the balance, if any, to Debtor.
(d) No delay or omission by Secured Party in exercising any
right or remedy hereunder or with respect to any obligation of
Debtor to Secured Party secured hereunder shall operate as a
waiver thereof or of any other right or remedy available to
Secured Party, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise
of any other right or remedy. Secured Party, in its sole
discretion, on at least three (3) days prior written notice to
Debtor, may (but shall have no obligation to) remedy any Event
of Default by Debtor hereunder or with respect to any
obligation of Debtor to the Secured Party or any other person,
firm, corporation or other entity in any reasonable manner
without waiving the Event of Default remedied and without
waiving any other prior or subsequent Event of Default by
Debtor, and shall be reimbursed for its necessary and
reasonable out-of-pocket expenses in so remedying any of such
Event of Default. All rights and remedies of Secured Party
hereunder are cumulative.
6. MISCELLANEOUS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Company and its
successors and assigns and shall be binding upon and inure to
the benefit of Abbott and its successors and assigns;
provided, however, that neither the Company nor Abbott shall
assign this Agreement or any of its rights, duties or
obligations hereunder without the prior written consent of the
other party which consent shall not be unreasonably withheld,
and provided further, Abbott may assign its rights hereunder
after July31, 1999 without the Company's prior written
consent.
(b) GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California.
(c) TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are for convenience of reference only and are
not to be considered in construing or interpreting this
Agreement.
(d) NOTICE. Except as otherwise expressly provided herein, any
notice, consent or document required or permitted hereunder
shall be given in writing and it or any certificates or other
documents delivered hereunder shall be deemed effectively
given or delivered (as the case may be) upon personal delivery
(professional courier permissible) or when mailed by receipted
United States certified mail delivery, or five (5) business
days after deposit in the United States mail. Such
certificates, documents or notice may be
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personally delivered to an authorized representative of the
Company or Abbott (as the case may be) at any address where
such authorized representative is present and otherwise shall
be sent to the following address:
If to the Company: Micro Therapeutics, Inc.
0000 Xxxxx Xxxxxxx #X
Xxx Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
If to Xxxxxx: Xxxxxx Laboratories
D-960, AP30
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, XX 00000-0000
Attention: President, Hospital Products Division
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxx Laboratories
Legal Division
D-322, AP6D
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, XX 00000-0000
Attn: Divisional Vice President,
Domestic Legal Operations
Telecopy No.: (000) 000-0000
Any party hereto may from time to time, by ten (10) days' advance written notice
to the other parties, designate a different address, which shall be substituted
for the one specified above for such party. If any notice or other document is
sent by certified or registered mail, return receipt requested, postage prepaid,
properly addressed as aforementioned, the same shall be deemed served or
delivered seventy-two (72) hours after mailing thereof. If any notice is sent by
facsimile machine ("fax") to a party, he will be deemed to have been delivered
on the date the fax thereof is actually received, provided the original thereof
is sent by mail in the manner set forth above, within twenty-four (24) hours
after the fax is sent.
(e) AMENDMENTS, WAIVERS AND CONSENTS. Any term of this
Agreement to the contrary notwithstanding, changes in or
additions to this Agreement may be made, and compliance with
any covenant or provision or breach of any representation or
warranty herein or therein set forth may be omitted or waived,
if the Debtor shall obtain consent thereto in writing from the
Secured
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Party. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which given.
(f) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and any number of counterparts signed in
the aggregate by Debtor and the Secured Party shall constitute
a single original instrument.
(g) ENTIRE AGREEMENT. This Agreement, the Note, the Note
Agreement, the Credit Agreement, the Credit Facility Note and
the Distribution Agreement constitute the entire understanding
between the parties with respect to the subject matter hereof,
superseding all negotiations, prior discussions and
preliminary agreements with respect thereto.
(h) WAIVER. No waiver of any term, provision or condition of
this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or be construed as a
further or continuing waiver of any such term, provision or
condition or as a waiver of any other term, provision or
condition of this Agreement.
(i) FURTHER ASSURANCES. Each party hereto agrees to execute
and deliver such other documents and instruments as the other
party may reasonably request to better evidence or effectuate
the rights and obligations of the parties hereto and the
transactions contemplated hereunder, provided that no party
shall, as a result thereof, be required to assume any further
obligation or relinquish any of its rights hereunder.
(j) SEVERABILITY. The invalidity or unenforceability of any
provision hereto shall in no way affect the validity or
enforceability of any other provision.
(k) NUMBER AND GENDER. Whenever the singular or plural number
is used herein, and when the context so requires, the same
shall include the plural or singular, as the case may be; and,
the masculine, feminine and neuter gender shall each include
the other.
(l) DISPUTES RESOLUTION. Disputes shall be resolved as
provided in Exhibit D attached hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Debtor"
MICRO THERAPEUTICS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Its: Executive Vice President
----------------------------------
"Secured Party"
XXXXXX LABORATORIES,
an Illinois corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Its: President HPD
----------------------------------
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EXHIBIT A
INTELLECTUAL PROPERTY
TRADEMARKS
REGISTERED TRADEMARKS
NAME TRADEMARK(TM) REGISTERED(R)
1. ProStream TM Reg. No. 2,035,778
2. MicroMewi TM Reg. No. 2,137,320
TRADEMARKS - NOT YET REGISTERED
NAME TRADEMARK(TM) REGISTERED(R)
1. Xxxxx Thrombolytic Brush
2. Mewi-5 Appl. No. 75/431312
3. Xxxxxxxxx Over-The-Wire Brush
4. Focused Infusion Catheters
EXHIBIT B
INTELLECTUAL PROPERTY
PATENTS
1. Valved-Tip Angiographic Catheter 5,085,535
2. Infusion Device with Preformed Shape (Coiled Wire) 5,554,114
3. Longitudinally Extendable Infusion Device 5,624,396
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4. U.S. patent application number 08/541,147, filed 10/11/95, response to 1st
Office Action filed 7/10/97 Infusion Guidewire Having Fixed Cord and Flexible
Radiopague Marker (Straight Wire)
5. U.S. patent application number 08/900,024, filed 7/24/97, awaiting office
action; PCT filed CIP to Infusion Guidewire Having Fixed Core and Flexible
Radiopague Marker
6. U.S. patent application number 08/746,302, filed 11/8/96, issue fee paid
4/15/98 Infusion Device for Distributing Infusate Along an Elongated Infusion
Segment
7. U.S. patent application number 09/079,487, filed 5/15/97, awaiting 1st office
action; Canada and EPO filed and in process Power Lysis of Thrombus in Blood
Vessels
8. Thrombectomy Method and Apparatus 5,370,653
9. Miniaturized Brush with Hollow Lumen Brush Body 5,681,335
EXHIBIT C
OTHER ASSETS
NO OTHER CURRENT ASSETS
EXHIBIT D
DISPUTE RESOLUTION
The parties recognize that a bona fide dispute as to certain matters may arise
from time to time during the term of this Agreement which relates to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between their respective presidents (or their
equivalents) of the affected subsidiaries, divisions, or business units within
twenty-eight (28) days after such notice is received (all references to "days"
in this ADR provision are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written
notice to the party initiating the ADR, add additional issues to be
resolved within the same ADR.
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2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral within
such period, either party may request the President of the CPR
Institute for Dispute Resolution ("CPR"), 000 Xxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to select a neutral pursuant to the
following procedures:
(a) The CPR shall submit to the parties a
list of not less than five (5) candidates within
fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No
candidate shall be an employee, director, or
shareholder of either party or any of their
subsidiaries or affiliates.
(b) Such list shall include a statement of
disclosure by each candidate of any circumstances
likely to affect his or her impartiality.
(c) Each party shall number the candidates
in order of preference (with the number one (1)
signifying the greatest preference) and shall deliver
the list to the CPR within seven (7) days following
receipt of the list of candidates. If a party
believes a conflict of interest exists regarding any
of the candidates, that party shall provide a written
explanation of the conflict to the CPR along with its
list showing its order of preference for the
candidates. Any party failing to return a list of
preferences on time shall be deemed to have no order
of preference.
(d) If the parties collectively have
identified fewer than three (3) candidates deemed to
have conflicts, the CPR immediately shall designate
as the neutral the candidate for whom the parties
collectively have indicated the greatest preference.
If a tie should result between two candidates, the
CPR may designate either candidate. If the parties
collectively have identified three (3) or more
candidates deemed to have conflicts, the CPR shall
review the explanations regarding conflicts and, in
its sole discretion, may either (i) immediately
designate as the neutral the candidate for whom the
parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than
five (5) candidates, in which case the procedures set
forth in subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each
of the issues identified by the parties. The ADR proceeding shall take
place at a location in the State of California agreed upon by the
parties. If the parties cannot agree, the neutral shall designate a
location
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in the State of California other than the principal place of business
of either party or any of their subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such
party intends to rely in any oral or written
presentation to the neutral;
(b) a list of any witnesses such party
intends to call at the hearing, and a short summary
of the anticipated testimony of each witness;
(c) a proposed ruling on each issue to be
resolved, together with a request for a specific
damage award or other remedy for each issue. The
proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and
shall not exceed one (1) page per issue.
(d) a brief in support of such party's
proposed rulings and remedies, provided that the
brief shall not exceed twenty (20) pages. This page
limitation shall apply regardless of the number of
issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no
discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production of
documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5)
hours of hearing time to present its case. The
neutral shall determine whether each party has had
the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not
required, to make an opening statement, to present
regular and rebuttal testimony, documents or other
evidence, to cross-examine witnesses, and to make a
closing argument. Cross-examination of witnesses
shall occur immediately after their direct testimony,
and cross-examination time shall be charged against
the party conducting the cross-examination.
(c) The party initiating the ADR shall begin
the hearing and, if it chooses to make an opening
statement, shall address not only issues it raised
but also any issues raised by the responding
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party. The responding party, if it chooses to make an
opening statement, also shall address all issues
raised in the ADR. Thereafter, the presentation of
regular and rebuttal testimony and documents, other
evidence, and closing arguments shall proceed in the
same sequence.
(d) Except when testifying, witnesses shall
be excluded from the hearing until closing arguments.
(e) Settlement negotiations, including any
statements made therein, shall not be admissible
under any circumstances. Affidavits prepared for
purposes of the ADR hearing also shall not be
admissible. As to all other matters, the neutral
shall have sole discretion regarding the
admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any new evidence and shall not exceed ten
(10) pages. This page limitation shall apply regardless of the number
of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies
on some issues and the other party's proposed rulings and remedies on
other issues. The neutral shall not issue any written opinion or
otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the
fees and expenses of a court reporter, and any expenses for a hearing
room, shall be paid as follows:
(a) If the neutral rules in favor of one
party on all disputed issues in the ADR, the losing
party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one
party on some issues and the other party on other
issues, the neutral shall issue with the rulings a
written determination as to how such fees and
expenses shall be allocated between the parties. The
neutral shall allocate fees and expenses in a way
that bears a reasonable relationship to the outcome
of the ADR, with the party prevailing on more issues,
or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and
expenses.
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9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The
neutral shall have the authority to impose sanctions for unauthorized
disclosure of Confidential Information.
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