EXHIBIT 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 August12, 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 Subsection1(b) below, in order to
secure the payment and performance of the obligations of Debtor to
Secured Party described in Subsection1(d) below.
(b) COLLATERAL. As used herein, the term "Collateral" shall mean:
(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 Section1 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 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.
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
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;
(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 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.
(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 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: 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.: (847) (937-0805
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 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"Debtor"
MICRO THERAPEUTICS, INC.,
a Delaware corporation
By:
Its:
"Secured Party"
XXXXXX LABORATORIES,
an Illinois corporation
By:
Its:
EXHIBIT A
INTELLECTUAL PROPERTY
TRADEMARKS
REGISTERED TRADEMARKS
---------------------
NAME TRADEMARK-TM- REGISTERED-Registered Trademark-
1. ProStream TM Reg. No. 2,035,778
2. MicroMewi TM Reg. No. 2,137,320
TRADEMARKS - NOT YET REGISTERED
-------------------------------
NAME TRADEMARKTM REGISTERED-Registered Trademark-
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
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.
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.
