EXHIBIT 4
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED (DESIGNATED BY AN
ASTERISK (*) ) AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT DATED AUGUST 28, 1998
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement"), is entered into as of August 12,
1998, by and between XXXXXX LABORATORIES, an Illinois corporation
("Xxxxxx"), as lender, and MICRO THERAPEUTICS, INC., a Delaware corporation
(the "Company"), as borrower.
W I T N E S S E T H:
WHEREAS, Xxxxxx has purchased from the Company, and the Company has sold to
Xxxxxx, a certain 5% Convertible Subordinated Note, due August 19, 2003, in
the principal aggregate amount of Five Million Dollars ($5,000,000) (the
"Note") pursuant to the terms and conditions of that certain Convertible
Subordinated Note Agreement, dated as of August12, 1998, by and between
Xxxxxx and the Company (the "Note Agreement"); and
WHEREAS, pursuant to Section6 of the Note Agreement, the Company and Xxxxxx
agreed to enter into this Credit Agreement, which provides that Xxxxxx, as
lender, shall loan to the Company, as borrower at the Company's request, an
amount not to exceed an aggregate of Five Million Dollars ($5,000,000).
NOW, THEREFORE, in consideration of the premises and of the mutual provisions,
agreements and covenants contained herein, the Company and Xxxxxx hereby
agree as follows:
1. DEFINITIONS. In addition to any terms defined elsewhere in this Agreement,
the following terms have the meanings indicated for purposes of this
Agreement (such definitions being equally applicable to the singular and
plural forms of the defined term):
"Acceleration" means that the Loan (i)shall not have been paid at the Maturity
Date, or (ii)shall have become due and payable prior to its stated maturity
pursuant to Section7.2 hereof.
"Disbursement Date" means any date on or prior to July31, 1999 on which a
disbursement of the Loan is made. Each Disbursement Date shall be on the
date designated in a written notice from the Company to Xxxxxx; provided,
however, that
(a)Xxxxxx shall not be required to make any disbursement if the conditions
hereto and the Note Agreement are not satisfied, and (b)Xxxxxx shall in no
event be required to make any disbursement after July 31, 1999.
"Maturity" means any date on which the Loan or any portion thereof becomes due
and payable, whether as stated or by virtue of mandatory prepayment, by
acceleration or otherwise.
"Maturity Date" means the fifth year anniversary of the first Disbursement Date.
"Obligations" means all loans, advances, debts, liabilities, obligations,
covenants and duties owing to Xxxxxx by the Company, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, arising under this Agreement.
Each accounting term not defined herein and each accounting term partly defined
herein to the extent not defined shall have the meaning given to it under
generally accepted accounting principles.
2. LOAN.
2.1 PROCEDURE FOR LOAN. Subject to all of the terms and conditions of
this Agreement and the Note Agreement, Xxxxxx agrees to make periodic
loans (the "Loan") prior to July31, 1999 to the Company in the amount
of up to Five Million Dollars ($5,000,000) to be governed by the terms
and conditions of, and repaid in accordance with, this Agreement and
the Note Agreement. The Company shall provide Xxxxxx with fifteen
(15) business days (as defined in the Note Agreement) written notice
of a requested disbursement. Disbursement amounts shall be in
multiples of One Million Dollars ($1,000,000). Subject to the
satisfaction of the terms and conditions set forth in this Agreement
and the Note Agreement, Xxxxxx shall disburse up to Five Million
Dollars ($5,000,000) to the Company at the Company's request. Amounts
repaid may not be reborrowed.
2.2 INTEREST.
(a) INTEREST. The Loan shall bear interest from the date of
disbursement on the unpaid principal amount thereof until the
earlier of an Event of Default or the date upon which such amount
shall become due and payable (whether upon Maturity, by
Acceleration or otherwise) at a rate per annum equal to five
percent (5%).
(b) ACCRUAL AND COMPUTATION OF INTEREST. Interest shall accrue daily
and shall be computed on the basis of a year of 360 days for the
actual number of days elapsed.
2.3 MAXIMUM INTEREST RATE. Nothing in this Agreement shall require the
Company to pay interest at a rate exceeding the maximum amount
permitted by applicable law to be charged by Xxxxxx.
2.4 REPAYMENT.
(a) INTEREST PAYMENTS. On the last day of each quarter payable in
arrears on January 31, April 30, July 31 and October 31,
commencing with the quarter of the first Disbursement Date until
the Maturity Date, and on the Maturity Date, the Company shall
pay Xxxxxx all interest then accrued.
(b) LOAN PAYMENT. The Company shall repay the entire outstanding
principal amount of the Loan in full on the Maturity Date.
(c) OPTIONAL PREPAYMENT. The Company may at any time prepay the
entire outstanding principal amount of the Loan or any portion
thereof without penalty.
2.5 POST-MATURITY INTEREST. After the earlier of an Event of Default or
Maturity (whether by Acceleration or otherwise) of the Loan, the Loan
shall bear interest, payable on demand, at a rate per annum equal to
ten percent (10%), subject to Section2.3 hereof.
2.6 CREDIT FACILITY NOTE. The Loan made by Xxxxxx pursuant hereto shall
be evidenced by a credit facility note (the "Credit Facility Note") of
the Company in the form of AnnexA hereto, payable to the order of
Xxxxxx on the Maturity Date in the principal amount of up to Five
Million Dollars ($5,000,000) in accordance with Section2.1 hereof.
The Company hereby authorizes Xxxxxx to indicate upon a schedule
attached to the Credit Facility Note all disbursements made by Xxxxxx
pursuant to this Agreement and all payments of principal and interest
thereon. Absent manifest error, such notations shall be presumptive
as to the aggregate unpaid principal amount of the Loan, and interest
due thereon, but the failure by Xxxxxx to make such notations or the
inaccuracy or incompleteness of any such notations shall not affect
the obligations of the Company hereunder or under the Credit Facility
Note.
2.7 PAYMENTS BY THE COMPANY. All payments (including prepayments) to be
made by the Company shall be made without set-off or counterclaim and
shall be made to Xxxxxx by wire transfer in United States dollars and
in immediately available funds to the following Xxxxxx account: *
for credit to Xxxxxx Laboratories Account * (or to such other
account as may be designated by written notice to the Company), no
later than 12:00noon, Pacific time, of the business day on which
payment is due. Any payment which is received in Xxxxxx'x account
later than 12:00noon, Pacific time, shall be deemed to have been
received on the immediately succeeding
business day. Whenever any payment hereunder shall be stated to be
due on a day other than a business day, such payment shall be made
on the next succeeding business day, and such extension of time shall
in such case be included in the computation of interest.
3. CONVERSION OF CREDIT FACILITY NOTE.
3.1 CONVERSION PRIVILEGE AND CONVERSION PRICE.
(a) Subject to and upon compliance with the provisions of this
Section 3, at the option of the Company at any time and at the
Company's sole discretion without regard to the price of the
Common Stock (except as set forth in Section3.1(b)) and the
Conversion Price (as defined herein), the Credit Facility Note or
any portion of the principal amount thereof which is One Million
Dollars ($1,000,000) or an integral multiple of One Million
Dollars ($1,000,000) (a "$1,000,000 Integral Multiple") may be
converted at the principal amount thereof, or of such portion
thereof, into fully paid and nonassessable shares of Common Stock
at the Conversion Price, in effect at the time of conversion.
Such conversion right shall expire at the close of business on
the Maturity Date. The price at which shares of Common Stock
shall be delivered upon conversion (the "Conversion Price") shall
be initially * of Common Stock, unless the Conversion Price
shall be adjusted in certain instances as provided in this
Section 3.
(b) The Company shall not have the option to convert the Credit
Facility Note into shares of Common Stock (i) to the extent that
such shares of Common Stock, together with the shares of Common
Stock then beneficially owned by Xxxxxx, would exceed 19% of the
then outstanding shares of Common Stock of the Company (giving
effect to such issuance upon conversion to Xxxxxx) or (ii) if the
Fair Market Value of the Common Stock as of the date that written
notice of conversion is provided to Xxxxxx shall be less than * .
"Fair Market Value" of the Common Stock as of any date of determination
means the arithmetic mean of the reported last sale price of the Common
Stock regular way on each of the 20 trading days preceding such date of
determination or, if no such sale takes place on any of such days, the
average of the reported closing bid and asked prices regular way, in each
case on the principal national securities exchange on which the security is
listed or admitted to trading, or, if the security is not listed or
admitted to trading on any national securities exchange, the closing sales
prices, or, if there are no closing sales prices on any such days, the
average of the closing bid and asked prices, in the Nasdaq Stock Market or
other over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System, or, if not so reported, the
fair market value of the security as estimated by a nationally recognized
investment banking firm selected by Xxxxxx and acceptable to
the Company in the exercise of its reasonable discretion, which estimate
shall be prepared at the expense of the Company.
3.2 EXERCISE OF CONVERSION PRIVILEGE. Upon receipt of written notice of
conversion (pursuant to Section 8.1 hereof) in the form provided on
the Credit Facility Note, Xxxxxx shall immediately surrender the
Credit Facility Note or any $1,000,000 Integral Multiple thereof duly
endorsed or assigned to the Company or in blank, at any office or
agency of the Company maintained for that purpose. No payment or
adjustment shall be made upon any conversion on account of any
interest accrued on the Credit Facility Note surrendered for
conversion or on account of any dividends on the Common Stock issued
upon conversion.
The Credit Facility Note shall be deemed to have been converted immediately
prior to the close of business on the day of mailing of the written notice
of conversion (pursuant to Section8.1 hereof) by the Company, and at such
time the rights of Xxxxxx shall cease, and the Person or Persons entitled
to receive the Common Stock issuable upon conversion shall be treated for
all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office or agency a
certificate or certificates for the number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in Section 3.3 hereof.
In the case of any Credit Facility Note which is converted in part only, upon
such conversion, the Company shall execute and deliver to Xxxxxx, at the
expense of the Company, a new Credit Facility Note or Credit Facility
Notes of authorized denominations in the aggregate principal amount equal
to the unconverted portion of the principal amount of the Credit Facility
Note.
3.3 FRACTIONS OF SHARES. No fractional shares of Common Stock shall be
issued upon conversion of the Credit Facility Note or $1,000,000
Integral Multiple thereof. Instead of any fractional share of Common
Stock which would otherwise be issuable upon the conversion of the
Credit Facility Note or the $1,000,000 Integral Multiple thereof, the
Company shall pay a cash adjustment in respect of such fraction of a
share of Common Stock in an amount equal to the remaining amount which
is not converted by reason of this Section 3.3.
3.4 ADJUSTMENT OF CONVERSION PRICE.
(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in
Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend
or other distribution shall be reduced
by multiplying such Conversion Price by a fraction the numerator
of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number
of shares and the total number of shares constituting such
dividend or other distribution, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the
purposes of this Section 3.4(a), the number of shares of Common
Stock at any time outstanding shall not include shares held in
the treasury of the Company but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company will not pay any dividend
or make any distribution on shares of Common Stock held in the
treasury of the Company.
(b) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock (not being available on an
equivalent basis to Xxxxxx upon conversion) entitling them to
subscribe for or purchase shares of Common Stock at a price per
share less than the current market price per share of the Common
Stock (determined as provided in Section 3.4(h) hereof) on the
date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than pursuant to
a dividend reinvestment plan), the Conversion Price in effect at
the opening of business on the day following the date fixed for
such determination shall be reduced to a price (calculated to the
nearest cent) determined by multiplying such Conversion Price by
a fraction the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common
Stock which the aggregate consideration received by the Company
for the total number of additional shares of Common Stock so
offered for subscription or purchase would purchase at such
Conversion Price in effect immediately prior to the date fixed
for such determination and the denominator of which shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription or
purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for
such determination. For purposes of calculating the Conversion
Price in this Section 3.4(b), the number of shares of Common
Stock outstanding immediately prior to the date fixed for such
determination of rights, options or warrants shall be calculated
as if all shares had been fully converted into shares of Common
Stock. Also, for the purposes of this Section 3.4(b), the number
of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common
Stock. The Company will not issue any rights, options or
warrants in respect of shares of Common Stock held in the
treasury of the Company.
(c) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following
the day upon which such subdivision becomes effective shall be
proportionately reduced, and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon
which such combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the
day following the day upon which such subdivision or combination
becomes effective.
(d) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock evidences of its indebtedness
or assets (including securities, but excluding any rights,
options or warrants referred to in Section 3.4(b) hereof, any
dividend or distribution paid exclusively in cash and any
dividend or distribution referred to in Section 3.4), the
Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive
such distribution by a fraction the numerator of which shall be
the current market price per share (determined as provided in
Section 3.4(h)) of the Common Stock on the date fixed for such
determination less the then fair market value (as determined by
an independent majority of the Board of Directors, whose
determination shall be conclusive and described in a board
resolution) of the portion of the assets or evidences of
indebtedness so distributed applicable to one share of Common
Stock and the denominator shall be such current market price per
share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following
the date fixed for the determination of stockholders entitled to
receive such distribution. In any case in which this
Section3.4(d) is applicable, Section 3.4(b) hereof shall not be
applicable.
(e) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that
is distributed upon a merger or consolidation to which Section
3.10 hereof applies or as part of a distribution referred to in
paragraph (d) of this Section 3.4) in an aggregate amount that,
combined together
with (i) the aggregate amount of any other distributions to all
holders of its Common Stock made exclusively in cash within the
twelve (12) months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to
this paragraph (e) has been made and (ii) the aggregate of any
cash plus the fair market value (as determined by an
independent majority of the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender
offer by the Company or any of its Subsidiaries for all or any
portion of the Common Stock concluded within the twelve (12)
months preceding the date of payment of such distribution and in
respect of which no adjustment pursuant to paragraph (f) of this
Section 3.4 has been made, exceeds ten percent (10%) of the
product of the current market price per share of the Common Stock
on the date for the determination of holders of shares of Common
Stock entitled to receive such distribution multiplied by the
number of shares of Common Stock outstanding on such date, then,
and in each such case, immediately after the close of business on
such date for determination, the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the close of business on the date fixed for determination of the
stockholders entitled to receive such distribution by a fraction
(A) the numerator of which shall be equal to the current market
price per share of the Common Stock (determined as provided in
paragraph (h) of this Section 3.4) on the date fixed for such
determination less an amount xxxx to the quotient of (x) the
excess of such combined amount over such ten percent (10%) and
(y) the number of shares of Common Stock outstanding on such date
for determination and (B) the denominator of which shall be equal
to the current market price per share of the Common Stock
(determined as provided in paragraph (h) of this Section 3.4) on
such date for determination.
(f) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such
tender offer (as amended upon the expiration thereof) shall
require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender offer) of
Purchased Shares (as defined herein)) of an aggregate
consideration having a fair market value (as determined by an
independent majority of the Board of Directors, whose
determination shall be conclusive and described in a board
resolution) that combined together with (i) the aggregate of the
cash plus the fair market value (as determined by an independent
majority of the Board of Directors, whose determination shall be
conclusive and described in a board resolution), as of the
expiration of such tender offer, of consideration payable in
respect of
any other tender offer, by the Company or any Subsidiary for
all or any portion of the Common Stock expiring within the
twelve (12) months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to this
paragraph (f) has been made and (ii) the aggregate amount of
any distributions to all holders of the Common Stock made
exclusively in cash within twelve (12) months preceding the
expiration of such tender offer and in respect of which no
adjustment pursuant to paragraph (e) of this Section 3.4 has
been made, exceeds ten percent (10%) of the product of the
current market price per share of the Common Stock (determined
as provided in paragraph (h) of this Section 3.4) as of the
last time (the "Expiration Time") tenders could have been made
pursuant to such tender offer (as it may be amended)
multiplied by the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then,
and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the
Conversion Price shall be adjusted so that the same shall
equal the price determined by multiplyng the Conversion Price
in effect immediately prior to the close of business on the
date of the Expiration Time by a fraction (A) the numerator of
which shall be equal to (1) the product of (a) the current
market price per share of the Common Stock (determined as
provided in paragraph (h) of this Section 3.4) on the date of
the Expiration Time and (b) the number of shares of Common
Stock outstanding (including any tendered shares) on the
Expiration Time, less (2) the amount of cash plus the fair
market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance
(up to any maximum specified in the terms of the tender offer)
of Purchased Shares, and (B) the denominator of which shall be
equal to the product of (1) the current market price per share
of the Common Stock (determined as provided in paragraph (h)
of this Section 3.4) as of the Expiration Time and (2) the
number of shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time less the number of
all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted up to any such
maximum, being referred to as the "Purchased Shares").
(g) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section
3.10 hereof applies) shall be deemed to involve (i) a
distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such
distribution" and the "date fixed for such determination" within
the meaning of paragraph (d) of this Section 3.4), and (ii) a
subdivision
or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon
which such subdivision becomes effective" or "the day upon
which such combination becomes effective," as the case may be,
and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (c) of this
Section 3.4).
(h) For the purpose of any computation under paragraphs (d), (e) and
(f) of this Section 3.4, the current market price per share of
Common Stock on any date shall be deemed to be the average of the
daily Closing Prices for the five (5) consecutive trading days
selected by the Company commencing not more than twenty (20)
trading days before, and ending not later than, the earlier of
the day in question and the day before the "ex" date with respect
to the issuance or distribution requiring such computation. The
"Closing Price" for each trading day shall be the reported last
sale price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on the National Association
of Securities Dealers Automated Quotations system ("Nasdaq")
National Market System ("Nasdaq National Market") or, if not
listed or admitted to trading on Nasdaq National Market, on
Nasdaq, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange or Nasdaq National
Market or quoted on Nasdaq, the average of the closing bid and
asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected from time to time by
the Company for that purpose, or, if the Common Stock does not
have any closing bid and asked prices in the over-the-counter
market during the relevant period of time, the fair market value
per share as determined by an independent majority of the Board
of Directors as of the most recent available month-end determined
pursuant to GAAP. For purposes of this paragraph, the term "'ex'
date," when used with respect to any issuance or distribution,
shall mean the first date on which the Common Stock trades
regular way on such exchange or in such market without the right
to receive such issuance or distribution.
(i) No adjustment in the Conversion Price shall be required unless
such adjustment (plus any adjustments not previously made by
reason of this paragraph (i)) would require an increase or
decrease of at least one percent (1%) in such price; provided,
however, that any
adjustments which by reason of this paragraph (i) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
this paragraph (i) shall be made to the nearest cent.
(j) The Company may make such reductions in the Conversion Price, in
addition to those required by paragraphs (a), (b), (c), (d), (e)
and (f) of this Section 3.4, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of
shares of Common Stock resulting from any dividend or
distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such
for federal income tax purposes or for any other reasons. An
independent majority of the Board of Directors shall have the
power to resolve any ambiguity or correct any error in this
Section 3.4 and its actions in so doing shall be final and
conclusive.
3.5 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the Conversion
Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price in
accordance with Section 3.4 hereof and shall prepare a
certificate signed by the Chief Financial Officer of the Company
setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed at the offices of
the Company.
(b) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall forthwith be
required, and as soon as practicable after it is required, such
notice shall be mailed by the Company to the Holder in accordance
with the terms of Section 8.1 herein.
3.6 NOTICE OF CERTAIN CORPORATE ACTION. In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than in cash out of its
earned surplus; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights;
or
(c) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding shares of
Common Stock), or of any consolidation, merger or share exchange
to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; then the Company shall cause to be
filed at the offices of the Company, and shall cause to be mailed
to the Holder at its last addresses as it shall appear in the
Note Register, at least twenty (20) days (or ten (10) days in any
case specified in clause (a) or (b) of this Section 3.6) prior to
the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined,
or (y) the date on which such reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall
be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up. Neither the
failure to give such notice nor any defect therein shall affect
the legality or validity of the proceedings described in clauses
(a) through (d) of this Section 3.6.
3.7 COMPANY TO RESERVE COMMON STOCK. The Company shall at all times
reserve and keep available out of its authorized but unissued Common
Stock, for the purpose of effecting the conversion of the Credit
Facility Note, the full number of shares of Common Stock issuable upon
the conversion of the entire Credit Facility Note.
3.8 TAXES ON CONVERSIONS. The Company will pay any and all taxes that may
be payable in respect of the issuance or delivery of shares of Common
Stock on conversion of the Credit Facility Note pursuant hereto. The
Company shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock in a name other than that of Xxxxxx
and no such issuance or delivery shall be made unless and until the
Person requesting such issuance has paid to the Company the amount of
any such tax, or has established to the satisfaction of the Company
that such tax has been paid.
3.9 COVENANT AS TO COMMON STOCK. The Company covenants that all shares of
Common Stock which may be issued upon conversion of the Credit
Facility Note will upon issuance be fully paid and nonassessable and,
except as provided in Section 3.8 hereof, the Company will pay all
taxes, liens and charges with respect to the issue thereof.
3.10 PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS. In
case of any Change of Control of the Company, the Company will notify
Xxxxxx at least thirty (30) days prior to the closing of the
transaction that will effect the Change of Control, and the Company
shall notify Xxxxxx whether the Company elects to convert the Credit
Facility Note in accordance with Section 3 hereof prior to the
transaction or pay the Credit Facility Note and terminate this
Agreement in accordance with Section 2 hereof.
3.11 TRANSFER AND EXCHANGE OF CREDIT FACILITY NOTE. The Credit Facility
Note may be freely transferred or assigned by Xxxxxx without the
consent of the Company. Such transfer and assignment shall be made in
accordance with applicable federal and state securities laws. At any
time and from time to time, upon not less than ten (10) days notice to
that effect given by Xxxxxx and, upon surrender of the Credit Facility
Note at the Company's office by Xxxxxx, the Company will deliver in
exchange therefor, without expense to Xxxxxx, except as set forth
below, one Credit Facility Note for the same aggregate principal
amount as the then unpaid principal amount of the Credit Facility Note
so surrendered, provided such Credit Facility Note shall be in the
amount of the full principal amount of the Credit Facility Note and
there shall be no right to divide the Credit Facility Note, dated as
of the date to which interest has been paid on the Credit Facility
Note so surrendered or, if such surrender is prior to the payment of
any interest thereon, then dated as of the date of issue, registered
in the name of such Person as may be designated by Xxxxxx, and
otherwise of the same form and tenor as the Credit Facility Note so
surrendered for exchange. The Company may require the payment of a
sum sufficient to cover any stamp tax or governmental charge imposed
upon such exchange or transfer.
3.12 LOSS, THEFT, MUTILATION OR DESTRUCTION OF CREDIT FACILITY NOTE. Upon
receipt of evidence satisfactory to the Company of the loss, theft,
mutilation or destruction of the Credit Facility Note, the Company
will make and deliver without expense to Xxxxxx thereof, a new Credit
Facility Note, of like tenor, in lieu of such lost, stolen, mutilated
or destroyed Credit Facility Note.
3.13 EXPENSES, STAMP TAX INDEMNITY. The Company agrees to pay duplicating
and printing costs and charges for shipping the Credit Facility Note,
adequately insured to Xxxxxx'x home office or at such other place as
Xxxxxx may designate, and all reasonable expenses of Xxxxxx
(including, without limitation, the reasonable fees and expenses of
any financial advisor to Xxxxxx) relating to any proposed or actual
amendment, waivers or consents pursuant to the provisions hereof,
including, without limitation, any proposed or actual amendments,
waivers, or consents resulting from any work-out, re-negotiations or
restructuring relating to the performance by the Company of its
obligations under this Agreement and the Credit Facility Note. The
Company also agrees that it will pay and hold Xxxxxx harmless against
any
and all liabilities with respect to stamp and other taxes, if any,
which may be payable or which may be determined to be payable in
connection with the execution and delivery of this Agreement or the
Credit Facility Note, whether or not the Credit Facility Note is then
outstanding. The Company agrees to protect and indemnify Xxxxxx
against any liability for any and all brokerage fees and commissions
payable or claimed to be payable to any Person (other than any Person
engaged by a Purchaser) in connection with the transactions
contemplated by this Agreement.
3.14 CANCELLATION OF CONVERTED CREDIT FACILITY NOTE. The Credit Facility
Note or $1,000,000 Integral Multiple portions thereof delivered for
conversion shall be canceled by or at the direction of the Company.
4. CONDITIONS PRECEDENT.
4.1 DISBURSEMENTS. The obligation of Xxxxxx to make any disbursement of
the Loan shall be subject to the prior or contemporaneous satisfaction
of each of the following conditions:
(a) AUTHORIZATIONS. Xxxxxx shall have received such instruments or
documents as Xxxxxx may reasonably request relating to the
existence and good standing of the Company or the authority for
execution, delivery and performance of this Agreement, dated and
in full force and effect on the Disbursement Date.
(b) NO EXISTING DEFAULT. No Event of Default (as defined in Section
7.1) or event which, upon the lapse of time or the giving of
notice or both, would constitute an Event of Default by the
Company (an "Incipient Default") shall exist on the Disbursement
Date.
(c) REPRESENTATIONS AND WARRANTIES CORRECT. Each of the
representations and warranties made by the Company in the Note
Agreement and as incorporated by reference herein shall be true
and correct in all material respects on the Disbursement Date
with the same effect as though made on and as of such date; and
the Company shall have performed and complied with all
agreements, covenants and conditions required by this Agreement
and the Note Agreement to be performed and complied with by the
Company on or prior to the Disbursement Date.
(d) OTHER AGREEMENTS. The Distribution Agreement and the Note
Agreement shall be in full force and effect, and the Company
shall not be in breach or default of any material covenant,
condition or other provision thereof beyond the applicable grace
period, if any, specified therein.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company and its
subsidiaries represent and warrant to Xxxxxx as of the date hereof that the
representations and warranties as made by the Company in Section3 of the
Note Agreement are true and correct in all material respects with the same
effect as though made on and as of the Disbursement Date, subject to
delivery of an updated Disclosure Schedule. The representations and
warranties as made by the Company in Section3 of the Note Agreement are
incorporated by reference in their entirety herein.
6. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company has performed and
complied with all of the covenants and agreements of the Company in
Section5 and Section8 of the Note Agreement and further covenants and
agrees to perform and comply with such provisions. The covenants and
agreements of the Company in Section5 and Section8 of the Note Agreement
are incorporated by reference in their entirety herein.
7. EVENTS OF DEFAULT.
7.1 EVENTS OF DEFAULT. The following shall constitute "Events of
Default": (a)an Event of Default as defined in Section9 of the Note
Agreement (which is hereby incorporated by reference in its entirety
herein); (b)an Event of Default as defined under the Security
Agreement dated as of August 12, 1998 between Xxxxxx and the Company
(which is hereby incorporated by reference in its entirety herein);
(c)default by the Company in the payment of any amount under this
Agreement or the Note; or (d)any representation or warranties by the
Company set forth in this Agreement, the Note Agreement or the
Security Agreement shall not be true and correct in all material
respects as and when made.
7.2 TERMINATION OF COMMITMENT AND ACCELERATION. If any Event of Default
described in Section7.1 hereof shall occur, Xxxxxx shall have no
obligation to make disbursements hereunder and may declare all
Obligations to be due and payable, whereupon all Obligations shall
immediately become due and payable, all as so declared by Xxxxxx and
without presentment, demand, protest or other notice of any kind. Any
such declaration made pursuant to this Section7.2 may be rescinded by
Xxxxxx.
7.3 OTHER REMEDIES. If any Event of Default shall occur and be
continuing, Xxxxxx shall have, in addition to the remedies set forth
in Section7.2 hereof, all other remedies otherwise available at law.
8. MISCELLANEOUS.
8.1 NOTICES. 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 personally delivered to an
authorized representative of the Company or Xxxxxx (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: Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
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
8.2 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 Xxxxxx and its
successors and assigns; provided, however, that neither the Company
nor Xxxxxx 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, Xxxxxx may assign its rights hereunder after July31, 1999
without the Company's prior written consent.
8.3 SURVIVAL OF COVENANTS AND REPRESENTATIONS. All covenants,
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection
with the Disbursement Date, shall survive the closing and the delivery
of this Agreement and the Credit Facility Note.
8.4 SEVERABILITY. Should any part of this Agreement for any reason be
declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining
portion shall remain in force and effect as if this Agreement had been
executed with the invalid or unenforceable portion thereof eliminated
and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement
without including therein any such part, parts or portion which may,
for any reason, be hereafter declared invalid or unenforceable.
8.5 WAIVER OF CONDITIONS. If on any Disbursement Date, either party
hereto fails to fulfill each of the conditions specified in Section4
hereof, the other party may thereupon elect to be relieved of all
further obligations under this Agreement. Without limiting the
foregoing, if the conditions specified in Section4 hereof have not
been fulfilled, the other party may waive compliance by such party
with any such condition to such extent as such party may in its sole
discretion determine. Nothing in this Section8.5 shall operate to
relieve either party of any obligations hereunder or to waive any of
the other party's rights against such party.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
8.7 GOVERNING LAW. This Agreement and the Credit Facility Note issued and
sold hereunder shall be governed by and construed in accordance with
Delaware law, without regard to the conflict of laws provisions
thereof.
8.8 CAPTIONS. The descriptive headings of the various sections or parts
of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
8.9 DISPUTE RESOLUTION. Disputes shall be resolved as provided in Annex 2
attached hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
XXXXXX LABORATORIES
By:
Its:
MICRO THERAPEUTICS, INC.
By:
Its:
ANNEX 1
FORM OF CREDIT FACILITY NOTE
MICRO THERAPEUTICS, INC.
5% Convertible Credit Facility Note, due on August 19, 2003.
San Clemente, California
[Up to $5,000,000] [Date]
Micro Therapeutics, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"), for value received, hereby
promises to pay to Xxxxxx Laboratories, an Illinois corporation ("Xxxxxx"), or
its registered assigns (the "Holder"), the principal sum of [Up to Five Million
Dollars ($5,000,000)] on August 19, 2003 (the "Maturity"), and to pay interest
(i) on the unpaid principal balance thereof from the date of this Credit
Facility Note at the rate of five percent (5%) per annum, payable quarterly in
arrears on January 31, April 30, July 31 and October 31 of each year (each, an
"Interest Payment Date") (commencing on the first Interest Payment Date
following the date hereof) until such unpaid balance shall become due and
payable (whether at Maturity, or by declaration, acceleration or otherwise) and
(ii) on each overdue payment of principal or any overdue payment of interest, at
a rate per annum equal to ten percent (10%).
The interest and principal payments payable with respect to this Credit Facility
Note, on any Interest Payment Date, at Maturity or by declaration, acceleration
or otherwise, pursuant to the Credit Agreement (as defined herein), shall be
paid to Xxxxxx in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
Such interest and principal payments shall be made to Xxxxxx in accordance with
the provisions of the Credit Agreement.
This Credit Facility Note is the sole issue of a 5% Convertible Credit Facility
Note, due on the fifth anniversary of the date hereof, the Company issued in an
aggregate principal amount of [Up to Five Million Dollars ($5,000,000)] pursuant
to the Credit Agreement, dated August 12, 1998 by and between the Company and
Xxxxxx (the "Credit Agreement"). The Holder of this Credit Facility Note is
entitled to the benefits of the Credit Agreement,
and may enforce the Credit Agreement and exercise the remedies provided for
thereby or otherwise available in respect thereof.
This Credit Facility Note may be transferred or assigned as provided in the
Credit Agreement, upon surrender of this Credit Facility Note for registration
of transfer, duly endorsed, or accompanied by a written instrument of transfer
duly executed by Xxxxxx or Xxxxxx'x attorney duly authorized in writing, a new
Credit Facility Note for a like aggregate principal amount and otherwise of
similar tenor, will be issued to, and registered in the name of, the transferee
or transferees. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Credit Facility Note is
registered as the Holder and owner hereof for the purpose of receiving payments
and for all other purposes, and the Company shall not be affected by any notice
to the contrary.
In the case of an Event of Default (as defined in the Credit Agreement), the
principal of this Credit Facility Note in certain circumstances shall become due
and payable and in other circumstances may be declared and become due and
payable in the manner and with the effect provided in the Credit Agreement.
This Credit Facility Note is subject to conversion into Common Stock pursuant to
the terms and conditions of the Credit Agreement and conversion shall be
evidenced by a Notice of Conversion as attached hereto.
The indebtedness evidenced by this Credit Facility Note is, to the extent
provided in the Credit Agreement, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the Credit
Agreement), and this Credit Facility Note is issued subject to the provisions of
the Credit Agreement with respect thereto. Each Holder of this Credit Facility
Note, by accepting the same, agrees to and shall be bound by such provisions.
No reference herein to the Note Agreement or Credit Agreement and no provision
of this Credit Facility Note, the Note Agreement or the Credit Agreement shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Credit Facility Note at the times, place and rate, and in the coin or
currency, herein prescribed or to convert this Credit Facility Note as provided
in the Credit Agreement.
All terms used in this Credit Facility Note which are defined in the Credit
Agreement shall have the meanings assigned to them in the Credit Agreement.
This Credit Facility Note, the Note Agreement and the Credit Agreement are
governed by and construed in accordance with the law of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed
under its corporate seal.
Dated: ___________________
MICRO THERAPEUTICS, INC.
By:
Its:
ATTEST:
By:
Its:
NOTICE OF CONVERSION
Micro Therapeutics, Inc. hereby irrevocably exercises the option to convert this
Credit Facility Note, or portion hereof below designated (which is One Million
Dollars ($1,000,000) or an integral multiple thereof), into shares of Common
Stock in accordance with the terms of the Credit Agreement, and represents that
the shares issuable and deliverable upon such conversion, together with any
check in payment for fractional shares and any Credit Facility Note representing
any unconverted principal amount hereof, will be issued and delivered to the
current Holder of the Credit Facility Note.
Principal amount to be converted (if less than all): $__________
MICRO THERAPEUTICS, INC.
By:
Its:
ANNEX 2
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.
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 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 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.
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.
