EXHIBIT 10.2
EXCLUSIVE
DISTRIBUTOR AGREEMENT
This Agreement is effective as of April 17, 2003 ("Effective Date") and is by
and between MEDTRONIC, INC., a Minnesota corporation having its principal place
of business at 000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, X.X.X.
("Medtronic") and HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation having
its principal place of business at Seven North Parkway Square, 0000 Xxxxxxxxx
Xxxxxxx XX, Xxxxxxx, Xxxxxxx 00000 ("Horizon").
ARTICLE 1
DEFINITIONS
1.1 Field of Use. "Field of Use" shall mean delivery of chemotherapy
agents for use in hepatic arterial infusion (HAI) therapy, a treatment for
patients with colorectal liver cancer.
1.2 Fiscal Year. "Fiscal Year" shall mean the Medtronic fiscal year.
1.3 Medtronic. "Medtronic" shall mean Medtronic, Inc. and any of its
affiliates which directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the first
entity. Control shall mean owning more than 50 percent of the total voting
rights in the entity.
1.4 Products. "Products" shall mean (a) models 8472-20-10, 8472-35-10
and 8472-35-15 of the IsoMed Constant-Flow Infusion Systems (which are those
models having a reservoir capacity greater than or equal to 20 milliliters) in
the Field of Use, including the pump, catheter (models 8700A, 8702, and 8708)
and including all improvements and enhancements by Medtronic to these models
specifically for their use in the Field of Use (a pump and catheter together
being a "System"), and (b) associated catheter access ports, refill kits, and
other related ancillary items commonly sold or used with the Systems ("Ancillary
and Related Items"). Medtronic is entitled, at any time, to make improvements,
enhancements, or other changes to Products.
1.5 Territory. "Territory" shall mean all states and territories of the
United States.
ARTICLE 2
APPOINTMENT
Medtronic hereby appoints Horizon, and Horizon accepts such appointment as
Medtronic's distributor during the term of this Agreement, with the exclusive
right to market, sell and distribute the Products in Subsection 1.4(a), and the
non-exclusive right to market, sell and distribute the Products in Subsection
1.4(b) directly to customers in the Territory in the Field of Use, effective
June 2, 2003 (the "Transition Date").
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ARTICLE 3
MARKETING AND PROMOTION
3.1 Horizon Promotion and Marketing. Horizon shall use commercially
reasonable efforts to promote and market the Products in the Territory in the
Field of Use at its sole cost and expense. Each Fiscal Year quarter, Horizon
shall submit a quarterly marketing report and plan to Medtronic, detailing sales
calls, marketing meetings, marketing events and their budgets held during that
quarter and to be held in the upcoming quarter. The plan shall be subject to
review and comment by Medtronic, and Horizon shall not unreasonably reject
Medtronic suggestions and requests for marketing plans. Among other commercially
reasonable promotion efforts, Horizon shall conduct appropriate promotions at
its expense at relevant major medical conventions, including renting and
staffing a booth and other appropriate promotions. At a minimum, relevant
conventions include the regular meetings of the American Society of Clinical
Oncology (ASCO), Oncology Nursing Society (ONS), and Society of Surgical
Oncology (SSO). Unless otherwise notified by Medtronic, Horizon's principal
contact point at Medtronic for the review of marketing plans shall be Xxx
Xxxxxxxxx, Market Development Manager, Pain Therapy Marketing.
3.2 Marketing Materials. Horizon may not use promotional or advertising
materials other than those materials supplied by Medtronic, unless Horizon has
received Medtronic's prior written approval to use such materials and has
accurately reproduced a Medtronic-approved copyright notice on original text,
pictures, graphics or other materials provided by Medtronic. Promptly after
execution of this Agreement, Medtronic shall provide to Horizon, free of charge,
all copies of current, relevant marketing literature for the Product in the
Field of Use that Medtronic then has in stock, if any; except that Medtronic may
keep a limited number of copies for business purposes not inconsistent with this
Agreement. Thereafter, Horizon may request from Medtronic additional copies of
such literature or new marketing materials. The design and content of any such
new materials shall be at Medtronic's discretion. Horizon shall pay Medtronic's
cost to design, prepare and provide new marketing materials and to reproduce and
provide additional copies of existing materials that Horizon requests. Horizon
shall be responsible for all other expenses associated with its advertising of
Products.
3.3 Staffing. Horizon shall maintain adequate experienced and trained
sales personnel necessary to carry out its obligations under this Agreement,
which shall include at least 40 full time sales representatives with substantial
experience and relationships relevant to the Field of Use. Horizon may not make
use of third party or independent sales representatives or agents. All Horizon
sales of Products shall be directly by employees of Horizon under Horizon's
direction and control, who are trained on the provisions of this Agreement and
obligated to Horizon to maintain confidential information, protect patient
privacy, appropriately handle the Products, and act in accordance with the law
and ethical business practices consistently with Horizon's obligations under
this Agreement.
3.4 Restrictions on Promotion. Horizon shall not market or promote the
Products, solicit orders, or make any sale or delivery of Products for use
outside the Territory or for a use outside the Field of Use, unless otherwise
requested to do so by Medtronic. Horizon shall promptly
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refer to Medtronic all inquiries and orders received by Horizon from customers
located outside the Territory or for uses outside the Field of Use. Within
thirty (30) days after the execution of this Agreement, Horizon shall enter into
good faith negotiations with Medtronic regarding distribution of Horizon port
products outside the United States.
3.5 Physician Education and Training. Medtronic and Horizon shall
propose to the following physicians that Medtronic's rights and obligations
under the education and training contracts with the physicians be assigned to
Horizon: Drs. Xxxx Xxx, Xxxx Xxxxxx, and Xxxxxx Xxxxxx. If the physicians agree,
the parties shall make such assignment. Horizon shall sponsor and support an
adequate level of physician education and training to ensure sufficient
awareness and skill among physicians to achieve the sales targets under this
Agreement.
ARTICLE 4
FORECASTS; ORDERS; DELIVERY
4.1 Rolling, Binding Forecast. Beginning on the Transition Date, each
month Horizon shall provide to Medtronic a good faith, rolling, twelve-month
forecast of all Product purchases to be made by Horizon over the twelve-month
forecast. Each forecast shall identify Products and quantities to be purchased
by month for the first three months of the forecast. Such first three months of
each forecast shall be binding obligations to purchase the stated amounts in the
stated months ("Purchase Commitments").
4.2 Purchase Orders. Horizon shall submit to Medtronic purchase orders
for the Product in writing, whether by mail, facsimile, or electronic mail. The
purchase orders shall identify Products and quantity to be purchased
consistently with the Purchase Commitments, and shall set forth requested
delivery dates (minimum ninety (90) days from order date) and shipping
instructions. All purchase orders from Horizon are subject to acceptance and
confirmation in writing by Medtronic. The acceptance of any purchase order by
Medtronic shall not constitute its acceptance of any such document's terms
except the ordered Products' identification, quantity, delivery date, and price
per the terms of this Agreement; all other terms thereof shall be without
effect.
4.3 Delivery. All deliveries of Products will be F.O.B. Mounds View,
Minnesota. Medtronic will have no further responsibility for the Products, and
all risk of damage to or loss or delay of the Products will pass to Horizon upon
their delivery at the F.O.B. point to a common carrier specified by Horizon or,
in the event that no carrier shall have been specified by Horizon on or before
fifteen days prior to the requested shipment date, a common carrier reasonably
selected by Medtronic.
4.4 Discrepancy. Horizon shall notify Medtronic of the existence of any
shortage or discrepancy within thirty (30) working days after receipt of
invoice. If Medtronic is responsible, Medtronic shall correct such shortage or
discrepancy by delivering substitute Products to Horizon within ten (10) days
after Horizon's notice.
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4.5 Sales Reports. Each month, Horizon shall send to Medtronic a true
and correct report of sales of the Products, in a form and level of detail
satisfactory to Medtronic. Among other relevant information, such report shall
identify sales by account and, to the extent known by Horizon, the referral
physician and implanting physician for each System sold by Horizon. Horizon also
shall report its monthly shipments and inventory. Upon reasonable request by
Medtronic, Horizon shall meet with Medtronic to discuss the Products' acceptance
in the marketplace, customer reactions and recommended improvements in the
Products, marketing, or other matters affecting sales of the Products.
ARTICLE 5
PRICE AND QUANTITY REQUIREMENTS
5.1 Quantity Requirements. Horizon shall purchase:
(a) A minimum stocking order of 100 Systems by April 25, 2003,
which 100 shall be at the prices set forth in Section 5.2, and 50 in
May 2003, which shall be at Medtronic's cost; and
(b) The following additional minimum amounts:
(i) 570 by the end of Fiscal Year 2004;
(ii) 850 during Fiscal Year 2005;
(iii) 975 during Fiscal Year 2006; and
(iv) In any Fiscal Year thereafter, an amount equal
to a fifteen percent increase over the prior Fiscal Year's
actual volume purchased.
The failure to purchase the required minimum will result in the termination of
Horizon's exclusivity of distribution of the Products as Medtronic's sole remedy
for such failure. Medtronic and Horizon will negotiate and agree to reasonable
reductions of such minimum purchase numbers in the event that Medtronic is
unable to deliver to Horizon the Products in a purchase order within ten (10)
days after the scheduled delivery date as a result of (a) a Medtronic supply
shortage, (b) a product recall or regulatory action or requirement with respect
to the Products, (c) a cease and desist letter to Medtronic or Horizon from a
third party claiming patent or trademark infringement with respect to the
Products.
5.2 Prices. Horizon shall pay Medtronic the following prices for the
Products:
(a) Pumps: $3,125 per pump for any volume purchased, subject
to the following rebates:
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(i) $200 per pump rebate on each pump purchased
during any Fiscal Year when purchases of pumps during such
Fiscal Year exceed Volume Target 1 (as defined below); and
(ii) an additional $200 per pump rebate on each pump
purchased during any Fiscal Year when purchases of pumps
during such Fiscal Year exceed Volume Target 2 (as defined
below).
(b) Catheters: $310 per catheter for any volume purchased.
(c) Other Products: Medtronic list price at the time the
purchase order is received.
(d) Notwithstanding Subsections (a) and (b), Medtronic shall
sell Horizon a reasonable number of demonstration Products, non-sterile
and not intended for human implant, at Medtronic's cost, in bulk where
appropriate.
(e) Volume Target 1 and Volume Target 2 shall be the amounts
described in the following table:
Fiscal Year Minimum Purchase Volume Target 1 Volume Target 2
--------------- ------------------- --------------- ---------------
2004 570 715* 765*
2005 850 905 965
2006 975 1035 1105
Each Succeeding Per Para. 5.1(b)(iv) See Note 1 See Note 1
Fiscal Year
*includes the 100 Systems purchased under Section 5.1(a).
Note 1: In any Fiscal Year after 2006, Volume Target 1 and Volume Target 2 shall
be amounts agreed to by the parties and set forth in an addendum to this
agreement. In the absence of such mutually agreed amounts, there shall be no
rebates in such Fiscal Years.
5.3 Payment Terms. Horizon shall pay Medtronic for the initial 150
Systems within ninety (90) days from the date of Product delivery, and shall pay
Medtronic for all other orders within forty-five (45) days from the date of
Product delivery. Medtronic shall pay Horizon any rebates owed for a Fiscal Year
within thirty (30) days after the close of the quarter in that Fiscal Year
during which the rebate is earned.
5.4 Failure to Pay. Horizon shall be liable to Medtronic for all costs
incurred by Medtronic in its collection of any amount owing by Horizon which are
not paid when due, including reasonable attorneys' fees, regardless whether
actual suit is brought. Should any payment(s) be more than ten (10) days past
due, Medtronic reserves the right to stop all shipments of Products until all
late payment(s) have been made. Additionally, failure to pay on time will be
deemed a material breach and, therefore, just cause for termination of this
Agreement in accordance with Article 16 of this Agreement.
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5.5 Taxes. Horizon shall be responsible for and shall pay for all
taxes, assessments and other governmental charges however designated, imposed by
any governmental authorities in the Territory (except Medtronic's net income
taxes) associated with the execution or performance of this Agreement; provided
that Horizon shall not be responsible for any inventory taxes imposed on the
Systems while in the possession of Medtronic.
5.6 Maintenance of Inventory. At all times during the term of this
Agreement, Horizon shall maintain adequate inventory of Products to serve the
market for Products within the Territory.
ARTICLE 6
TRAINING, CUSTOMER TRANSITION, AND CUSTOMER SUPPORT
6.1 Packaging. Medtronic shall be responsible for packaging the
Products in accordance with applicable law. The Medtronic company and brand
names shall be maintained on all of the Products.
6.2 Training. Medtronic shall provide sales and technical training to
Horizon personnel. The content and frequency of such training shall be at
Medtronic's discretion. Medtronic at its discretion may require Horizon sales
staff to receive the equivalent training, in content and frequency, as is given
to Medtronic sales representatives regarding implantable drug infusion systems.
Horizon agrees to make its sales staff available to attend, and to require them
to attend, such training by Medtronic, subject to reasonable arrangements by the
parties on the specific dates and locations for the training. Horizon shall pay
the travel expenses for the Medtronic instructors and any forum costs for
training not held at Medtronic. Horizon shall be responsible for the expenses of
its personnel to attend training, except that Medtronic shall pay reasonable
meal expenses for Horizon representatives attending the first such training at
Medtronic. The parties intend to conduct initial training before the Transition
Date.
6.3 Customer Transition Plan. During the period between the Effective
Date and the Transition Date, Medtronic shall take appropriate steps, in
Medtronic's discretion (giving due consideration to reasonable suggestions from
Horizon), to introduce Horizon sales representatives to current Medtronic
customers for the Systems in the Field of Use. Among such steps, (a) Medtronic
shall send an appropriate written notice to customers that Horizon will be
selling the Products in the Territory to Medtronic's customers in the Field of
Use; and (b) Medtronic shall strongly encourage Medtronic sales representatives
and clinical services representatives experienced with the Systems to invite
Horizon representatives to attend implants of Systems sold by the Medtronic
representatives. The goal is for each Horizon sales representative to have
attended, jointly with a Medtronic representative, 2 implants of Systems by the
Transition Date (the "Training Goal"). Medtronic shall pay the cost of the
customer mailing and any communications or travel expenses incurred by Medtronic
employees in carrying out its responsibilities under this Section 6.3. Horizon
shall pay any communications or travel expenses incurred by Horizon employees in
carrying out its responsibilities under this Section 6.3.
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6.4 Sales Force Support. For three months after the Transition Date,
Medtronic shall strongly encourage Medtronic clinical specialists to attend as
available and upon request from Horizon, implants of Systems sold by the Horizon
representatives. During this three-month period, Horizon shall pay travel
expenses and a fee of $300.00 for each implant attended by one or more Medtronic
clinical specialists at the request of Horizon. The above fees shall be waived
(but not Horizon's obligation to pay travel expenses) for the number of
surgeries attended by Medtronic clinical specialists equivalent to the number by
which the Training Goal was not met by reason of Medtronic's failure to offer
sufficient opportunities for Horizon representatives to attend implants before
the Transition Date.
6.5 Horizon Customer Support. Horizon shall establish and maintain high
levels of customer service, including for processing and handling customer
orders and inquiries for the Products. HMP's customer services systems shall be
subject to audit by Medtronic at any time. HMP customer service standards shall
be equal to the level currently provided by Medtronic.
6.6 Medtronic Technical Support. Medtronic shall provide reasonable
technical and patient support to Horizon, customers of Horizon, and patients
served by such customers, regarding the Systems in the Field of Use. Such
support shall include telephone support similar to the level of telephone
support Medtronic currently provides regarding the Systems in the Field of Use.
During the first six months after the Transition Date, Medtronic shall provide
such support at Medtronic's expense. After such six months, Medtronic shall
provide such support at Medtronic's expense up to the first 200 calls per month
that Medtronic receives from Horizon, a physician or medical center, or a
patient regarding the Systems in the Field of Use. For each call above such 200
per month, Medtronic shall invoice Horizon and Horizon shall pay Medtronic
within 30 days of receipt of the invoice, a fee of $100. The parties shall
reasonably cooperate to ensure appropriate communication and coordination
between them, consistently with the other provisions of this Agreement,
regarding technical support issues, in order to protect patient safety and meet
customer needs. Without limitation of the foregoing provisions of this Section
6.6, Horizon shall use reasonable efforts to provide technical support to its
own sales representatives.
6.7 Customer Information. No later than ten (10) days prior to the
Transition Date, Medtronic promptly shall deliver to Horizon reasonable
information in Medtronic's possession regarding Medtronic's customers and
potential customers for the Products in the Field of Use including addresses,
telephone numbers, and contact persons.
6.8 Unfilled Orders. As of the Transition Date, Medtronic promptly
shall turn over to Horizon, for completion, all unfilled purchase orders held by
Medtronic from customers for the Products in the Field of Use in the Territory.
6.9 Sales Leads Referral. Before the Transition Date and during the
term, Medtronic promptly shall turn over to Horizon all inquiries concerning the
Products in the Field of Use in the Territory. Horizon shall ensure that it has
adequate staff and communications systems in place to provide for seamless
service in receiving customer enquiries or orders for the System in the Field of
Use transferred or referred to Horizon from Medtronic.
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ARTICLE 7
REGULATORY MATTERS
7.1 Medtronic Responsibility. Medtronic shall maintain responsibility
for matters relating to FDA approval of the Products.
7.2 Horizon Adverse Event Notification. Horizon shall notify Medtronic
within two (2) working days of the receipt by Horizon of any complaints or
adverse events ("AE") associated with the Products, and shall submit to
Medtronic a copy of any records or other documentation, which Horizon has
received or created relating thereto. Horizon and Medtronic shall develop a
mutually acceptable referral system under which Horizon shall refer and forward
to Medtronic for appropriate resolution any complaints or adverse events ("AE")
related to the Products. An acceptable referral system means a formalized,
well-defined process set forth in appropriate work instructions and procedures
at Horizon and Medtronic. Medtronic shall have the right to review and audit, at
any time, the AE handling procedures at Horizon. Without limitation of the
foregoing, upon Medtronic's request Horizon shall provide Medtronic with a copy
of Horizon's AE handling procedures and Horizon's quality system manual, and
shall take other appropriate steps to demonstrate its AE handling process.
Medtronic shall be responsible for making all decisions and undertaking any
reporting obligations or other actions with respect to communicating with any
governmental regulatory agency as a result of any AEs or other reports or
inquiries, or taking any other action that Medtronic may deem necessary or
appropriate under all applicable government rules and regulations.
7.3 Medtronic Serious Adverse Event Information. During the term of
this Agreement, Medtronic shall inform Horizon of any serious AE reported to
Medtronic involving a patient implanted with a Product (or with any component
thereof) within two (2) working days of the receipt of such report (but in any
event no later than the date on which such serious AE must be reported to the
FDA). For purposes of this subsection, a serious AE shall be deemed to include
any adverse event which is either (1) fatal, (2) life threatening, (3) results
in permanent impairment of a body function or permanent damage to body
structure, or (4) necessitates medical or surgical intervention by a health care
professional to preclude permanent impairment of a body function or permanent
damage to body structure, or to relieve unanticipated temporary impairment of a
body function or unanticipated damage to body structure. Horizon understands
that such information provided to it will be as reported as required and will
not be deemed to be determinative as to whether or not the Product contributed
to the serious AE.
7.4 Governmental Actions. Beginning as of the date of this Agreement,
each party shall promptly notify the other party in writing of any order,
request or directive of a court or other governmental authority to recall, issue
a field notification, conduct an audit relating to Product safety, or withdraw
the Product in any jurisdiction. Medtronic shall be responsible, at its sole
cost and expense, for the costs (including any costs incurred by Horizon) of any
recall, field notification or withdrawal of the Product arising from Medtronic's
activities. Horizon shall be responsible for the costs of any recall, field
notification, or withdrawal of the Product arising from Horizon's activities.
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ARTICLE 8
HORIZON COMPLIANCE MATTERS
8.1 Compliance with Law. Horizon shall comply with all applicable laws,
regulations, ordinances, and rules concerning Horizon's activities under this
Agreement, including those pertaining to the promotion and sale of the Product
and medical device registration and tracking (including, without limitation, 21
CFR Parts 820 and 821.25(c)), state and federal fraud and abuse laws, the Health
Information Portability and Accountability Act of 1996, and all other applicable
laws. Horizon's violation of any law or regulation concerning the activities
contemplated by this Agreement shall be grounds for immediate termination of
this Agreement. Horizon shall maintain in full force and effect all necessary
licenses, permits and other authorizations required by law to carry out its
duties and obligations under this Agreement.
8.2 Ethics. As a condition to this Agreement, Horizon shall maintain a
high standard of moral and ethical behavior concerning its activities under this
Agreement and conduct its business with the highest degree of integrity. Horizon
agrees to comply with the terms and conditions contained in Medtronic's Code of
Conduct attached as EXHIBIT A, the Medtronic Business Conduct Standards attached
as EXHIBIT B, and any medical device industry business conduct policy
promulgated by the ADVAMED industry association (jointly referred to as
"Medtronic Policies"). Horizon shall ensure that its employees and agents are
provided a copy, are familiar with and agree to comply with the terms of the
Medtronic Policies. Failure of Horizon or its agents and employees to comply
with the Medtronic Policies will result in Medtronic taking appropriate action,
including possible termination of this Agreement. At any reasonable time,
Medtronic may audit Horizon business practices in relation to the marketing and
sale of the Products for compliance with the Medtronic Policies. Horizon shall
reasonably cooperate in any such audit.
ARTICLE 9
COMPLIANCE WITH ISO REQUIREMENTS
9.1 Packaging and Sterilization. Horizon shall under no circumstances
modify, repackage, re-sterilize, encase, insert any other product into, combine
as a unit with any other product, adulterate, misbrand, alter or add labels or
remove labels from any Product, either for display or for sale, without the
prior written consent of Medtronic. Notwithstanding the foregoing, Horizon may
pack Medtronic-packaged Products into a shipping box that identifies Medtronic
and Horizon as appropriate. Also, Medtronic and Horizon shall discuss, upon
Horizon's request, other issues regarding packaging that may arise (e.g.,
affixing Horizon product code prefix), and work in good faith to resolve the
issues appropriately to the regulatory and commercial considerations of both
parties.
9.2 Handling Environment and Process. Horizon shall handle and preserve
the products in an appropriate environment and with appropriate process controls
to protect the products against contamination or other damage that could affect
Product's quality, safety, or reliability. Horizon storage conditions shall meet
Product labeling instructions, including in regard to temperature,
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humidity, and shelf stack height. Horizon shall have procedures to provide for
holding Product in a physically segregated area of the warehouse if necessary to
address quality or safety issues. Horizon's procedures for delivery of Products
shall ensure that appropriate handling and storage conditions are not
compromised in delivery. At any reasonable time, Medtronic may audit Horizon
practices relating to Product safety and handling. Horizon shall reasonably
cooperate in any such audit.
9.3 Traceability. Horizon shall have in place appropriate process and
inventory controls and procedures to ensure its and Medtronic's ability to trace
each Product sold to each purchaser in the event of any recall, safety notice,
or to address any other legal or quality concerns. Horizon's inventory control
system shall ensure that the status (e.g., expiration date, location,
release/hold, etc.) of each Product is identified and known.
9.4 Customers. All Products are restricted to sales to a physician or
by order of a physician, unless otherwise agreed by Medtronic. Horizon agrees to
sell Products only to such customers as required by the labeling.
9.5 Training and Record-Keeping. Horizon shall have in place adequate
record-keeping and employee training to ensure compliance with the requirements
set forth above in Articles 8 and 9. Horizon's record management shall ensure
the ability to track specific Products (product identification number,
expiration date, order number, customer) to specific accounts. Such records
shall be available to Medtronic on demand within 24 hours.
ARTICLE 10
NON-COMPETITION AND NON-RECRUITMENT
10.1 Non-Competition. During the term of the agreement and for one year
after its expiration or termination for any reason, Horizon shall not market,
distribute, or sell any product that competes with Medtronic implantable drug
infusion or implantable neurostimulation systems.
10.2 Non-Recruitment. Except as mutually agreed by Horizon and
Medtronic or as expressly permitted by this Agreement, neither party will,
during the Term of this Agreement or for a period of twelve (12) months
thereafter, solicit for employment the other party's sales representatives or
technical service representatives without prior authorization from the other
party. In the event Horizon discontinues doing business for any reason
(including, without limitation, upon the occurrence of any of the instances
listed in Subsections 16.2 (c), (d), or (e) hereof) or undergoes a change of
control, Medtronic has the right to solicit and hire up to seven (7) of
Horizon's sales representatives for potential employment opportunities with
Medtronic. In any such instance Horizon hereby agrees not to enforce any
non-competition provisions contained in any employment agreement and/or
non-compete agreement Horizon may have with its Sales Representatives.
10.3 Exception. Horizon may recruit the following Medtronic sales
representatives to accept employment with Horizon: Xxxx Xxxxxxx, Xxxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxxx-
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Xxxxxxxxx, Xxxxxxxx See, Xxxxxxxx Xxxxxxxx-Xxxxx, and Xxxxx Xxxxxxxxx. Medtronic
shall reimburse Horizon any cash bonus paid by Horizon to each such employee
upon their recruitment by Horizon within six months of the Transition Date, up
to an amount of $10,000 each.
ARTICLE 11
PRODUCT WARRANTY
Medtronic extends to Horizon a warranty in terms identical to the applicable
warranty enclosed and delivered with each Product. Medtronic may change such
warranty at its sole discretion upon written notice to Horizon. No agent,
employee or representative of Horizon has any authority to bind Medtronic to any
additional affirmation, representation or warranty concerning the Products. The
warranty period will begin upon sale of Product to the customer. Horizon shall
be responsible for providing appropriate documentation of sale to customer so as
to identify the start of the warranty period. In no event shall the warranty
period exceed the useful life indicated on the Products.
EXCEPT AS IS EXPRESSLY PROVIDED IN THE WARRANTY APPLICABLE TO EACH PRODUCT,
MEDTRONIC EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, WHETHER AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER MATTER. THE REMEDIES SET FORTH IN SUCH WARRANTY POLICY ARE
THE ONLY REMEDIES AVAILABLE TO ANY PERSON FOR BREACH OF WARRANTY. MEDTRONIC
SHALL HAVE NO LIABILITY TO ANY PERSON FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY DESCRIPTION, WHETHER ARISING OUT OF WARRANTY, OTHER CONTRACT, TORT OR
OTHERWISE.
ARTICLE 12
INDEMNIFICATION AND INSURANCE
12.1 Medtronic Indemnification. Medtronic shall defend, indemnify and
hold Horizon and its employees, agents, officers, directors and affiliates (an
"Horizon Party") harmless from and against any and all losses, liabilities,
obligations, claims, fees (including, without limitation, attorneys fees),
expenses incurred by an Horizon Party and resulting from or arising in
connection with (i) the breach of any covenant, representation or warranty of
Medtronic contained in this Agreement, (ii) the manufacturing, sale or
distribution of the Product by Medtronic (or any component part thereof),
including, without limitation, any claim of patent infringement or any claim,
lawsuit or other action resulting solely from Horizon's proper use of a
Medtronic trademark in accordance with the terms hereof, (iii) any product
liability claim related to the Product, including, without limitation, the use
by any person of any Product that was manufactured, sold or distributed by
Medtronic or any licensee or affiliate thereof, (iv) any contamination to a
Product before delivery to Horizon or defect in the Product, (v) Medtronic's
negligence, and (vi) the successful enforcement by an Horizon Party of its
rights under this Section 12.1 except to the extent such losses, liabilities,
obligations, claims, fees or expenses are based upon negligence or willful
malfeasance by Horizon. In addition, Medtronic shall not be obligated to
indemnify Horizon for
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any liability related to the Product for which Horizon has assumed an
indemnification obligation under Section 12.2 below.
12.2 Horizon Indemnification. Horizon shall defend, indemnify and hold
Medtronic and its employees, agents, officers, directors and affiliates (a
"Medtronic Party") harmless from and against any and all losses, liabilities,
obligations, claims, fees (including, without limitation, attorney fees),
expenses and lawsuits brought against or incurred by a Medtronic Party resulting
from or arising in connection with (i) the breach of Horizon of any covenant,
representation or warranty of Horizon contained in this Agreement, (ii)
Horizon's negligence, or (iii) the successful enforcement by a Medtronic Party
of its rights under this Section 12.2.
12.3 Notice; Defense of Claim. To receive the benefits of the indemnity
under Sections 12.1 or 12.2 above, as applicable, the indemnified party must
give the indemnifying party written notice of any claim or potential claim,
promptly after the indemnified party receives notice of any such claim. The
indemnifying party shall have the right to assume the defense of any such claim
if it assumes responsibility to the indemnified party under this Article 12. If
the indemnifying party defends the claim, the indemnified party may participate
in, but not control, the defense of such claim at its sole costs and expense. An
indemnifying party shall have no liability under this Section 12 as to any claim
for which settlement or compromise or an offer of settlement or compromise is
made by the indemnified party without the prior consent of the indemnifying
party.
12.4 Limitation of Damages. Neither party shall be liable to the other
party under this Article 11 for any special, consequential or indirect damages
suffered by the other party including, without limitation, any lost profits that
would be special, consequential, or indirect damages.
12.5 Insurance. Each party shall use its commercially reasonable
efforts to maintain insurance against such risks (including product liability)
and upon such terms (including coverages, deductible limits and self-insured
retentions) as is customary for the activities to be conducted by it under this
Agreement and is appropriate to cover its indemnification obligations hereunder.
Each party shall furnish to the other party evidence of such insurance, upon
request.
ARTICLE 13
PATENTS AND TRADEMARKS
13.1 Rights. No rights are granted hereunder to Horizon under any
patents or trademarks except as are incidental only to the sale of Products by
Horizon and the right to use such Products by Horizon's customers.
13.2 Relationship; Use of Medtronic Trademarks. Whenever Horizon shall
make reference to its relationship with Medtronic, whether in advertising or
otherwise, Horizon shall describe its relationship only as a distributor of the
Products. Any other use by Horizon of Medtronic's trade name and/or trademark or
any other trade names or trademarks associated with the Products must be
previously approved in writing by a duly authorized officer of Medtronic.
Horizon shall not use any "Medtronic" or other Product names and/or trademarks
or any variation thereof, alone or in combination with other words, in
connection with any Product which has not
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been supplied by Medtronic. All use of Medtronic trademarks by Horizon shall
conform to Medtronic standards and instructions. All use of Medtronic trademarks
and associated good will by Horizon shall inure to the benefit of Medtronic.
Horizon shall not at any time claim rights in or contest or put in issue the
validity or ownership of any Medtronic trademarks, or cause or permit anything
that may tend to disparage, confuse, or lessen the significance of any Medtronic
trademarks. Horizon shall not use or register in any country any trademark that
resembles or is confusingly similar to Medtronic's trademarks, trade names, or
logos. Upon expiration or termination of the Agreement for any reason, Horizon
immediately shall cease all use of Medtronic trademarks. Upon Medtronic's
request, Horizon shall provide Medtronic with representative samples of
Horizon's use of Medtronic trademarks.
ARTICLE 14
CONFIDENTIALITY
14.1 Non-Disclosure. Each party agrees not to use any Confidential
Information (as defined below) of the other party during the term of this
Agreement and for a period of two (2) years thereafter for any purpose other
than as permitted or required for performance by a party hereunder. Each party
further agrees not to disclose or provide any of such Confidential Information
to any third party and to take appropriate measures to prevent any such
disclosure by its present and future employees, officers, agents, subsidiaries,
or consultants during the term of this Agreement and for a period of two (2)
years thereafter.
14.2 Definition of Confidential Information. Any information acquired
by a party from the other or otherwise in the course of carrying out a party's
activities hereunder concerning the other party's existing or contemplated
Products, services, processes, techniques, know-how, customers, sales methods,
or data, unless otherwise identified as non-confidential by the disclosing
party, is "Confidential Information."
14.3 Limitations to Non-Disclosure. Nothing herein shall prevent a
party from using, disclosing or authorizing the disclosure of the other party's
Confidential Information to the extent such Confidential Information:
(a) Was already in the possession of the using or disclosing
party prior to its receipt from other party; provided that the using or
disclosing party shall provide the other party with reasonable
documentary proof thereof;
(b) Is or becomes part of the public domain by reason of acts
not attributable to the using or disclosing party;
(c) Is or becomes available to the using or disclosing party
from a source other than the other party, which source has rightfully
obtained such information and has no obligation of non-disclosure or
confidentiality to the other party with respect thereto; or
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(d) Is made available by the other party to an unaffiliated
third party on an unrestricted basis.
ARTICLE 15
REPRESENTATIONS AND WARRANTIES
15.1 By Medtronic. Medtronic represents and warrants to Horizon that
(a) the execution, delivery and performance of this Agreement by Medtronic does
not conflict with, or constitute a breach of any order, judgment, agreement, or
instrument to which Medtronic is a party, (b) the execution, delivery and
performance of this Agreement by Medtronic does not require the consent of any
person or the authorization of (by notice or otherwise) any governmental or
regulatory authority, (c) the rights granted by Medtronic to Horizon hereunder
do not conflict with any rights granted by Medtronic to any third party; (d)
Medtronic has not received any notice, and is not aware of the basis for, any
claim that the manufacture, use or sale of the Product infringes any patent or
other intellectual property right of any third party; and (e) it has not been
excluded from participation in the Medicare or Medicaid program, or another
state or federal health insurance program, and neither it nor any of its
officers or directors has ever been convicted of a felony under the laws of the
United States for conduct relating to the development or approval of a medical
product or relating to the marketing or sale of a medical product.
15.2 By Horizon. Horizon represents and warrants to Medtronic that (a)
the execution, delivery and performance of this Agreement by Horizon does not
conflict with, or constitute a breach of any order, judgment, agreement, or
instrument to which Horizon is a party; (b) the execution, delivery and
performance of this Agreement by Horizon does not require the consent of any
person or the authorization of (by notice or otherwise) any governmental or
regulatory authority; and (c) Horizon has not been excluded from participation
in the Medicare or Medicaid program, or another state or federal health
insurance program, and neither it nor any of its officers or directors has ever
been convicted of a felony under the laws of the United States for conduct
relating to the development or approval of a medical product or relating to the
marketing or sale of a medical product.
ARTICLE 16
TERM AND TERMINATION
16.1 Term. This Agreement shall take effect as of the date first
written above and shall continue in force for three years from the Transition
Date, unless terminated as provided herein. The Agreement shall be automatically
renewed for an additional two succeeding one-year terms unless and until either
party, prior to the end of a term, provides 60 days' written notice of
termination. In the event Medtronic provides such notice of termination after
the initial term or the initial one-year renewal term and Horizon has satisfied
the minimum quantity requirements under Section 5.1 for the initial term or for
the initial one-year renewal term, as the case may be, then upon such
termination the non-compete provisions of Section 10.1 shall terminate.
16.2 Termination. Notwithstanding the provisions of Section 16.1 above,
this Agreement may be terminated in accordance with the following provisions:
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(a) In the event Horizon or any of its employees or agents
fails to comply with Articles 8 or 9 relating to laws and regulations,
the Medtronic Policies, and ISO requirements, Medtronic may, at its
sole discretion, immediately terminate this Agreement upon written
notice to Horizon.
(b) A party may terminate this Agreement by giving notice in
writing to the other party in the event the other party is in breach of
any material representation, warranty or covenant of this Agreement and
shall have failed to cure such breach within fifteen (15) days of
receipt of written notice thereof from the first party.
(c) A party may terminate this Agreement at any time by giving
notice in writing to the other party, which notice shall be effective
upon dispatch, should the other party file a petition of any type as to
its bankruptcy, be declared bankrupt, become insolvent, make an
assignment for the benefit of creditors, go into liquidation or
receivership or otherwise lose legal control of its business.
(d) Medtronic may terminate this Agreement immediately upon
written notice to Horizon, if Horizon's cash reserves (plus
availability under Horizon's line of credit borrowing) fall below an
amount equal to the net cash used in operating, investing and financing
activities during the prior twelve months (as reflected in the monthly
cash flow and trailing twelve month financial schedule that Horizon
intends to provide to Medtronic or similar documentation; or, at
Medtronic's discretion, an independent audit (i) by an auditor selected
and paid for by Medtronic, and (ii) with respect to which Horizon shall
reasonably cooperate).
(e) Medtronic may terminate this Agreement immediately upon
written notice to Horizon, if Horizon is in default on any loan to
Horizon from Medtronic or other financial obligation of Horizon to
Medtronic arising from another agreement of the parties.
(f) A party may terminate this Agreement by giving notice in
writing to the other party should an event arise under Article 18
(Excuse of Performance) and continue for more than 90 consecutive days.
(g) The Agreement automatically shall terminate if
substantially all the assets or a majority or at least 15 percent of
the issued and outstanding voting shares of Horizon is acquired by a
company that sells any product that competes with Medtronic's
implantable drug infusion or implantable neurostimulation systems. Upon
such termination, the non-compete provisions of Section 10.1 shall
terminate.
(h) In circumstances where Subsection (g) does not apply, a
party may terminate this Agreement at any time by giving written notice
to the other party in the event all or substantially all of the assets
or a majority of the voting shares of the other party are
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acquired by any third party. Upon such termination by Medtronic, the
non-compete provisions of Section 10.1 shall terminate.
16.3 Fulfillment of Orders; Repurchase of Inventory. Upon termination,
Horizon may fulfill orders for Products received from customers before the
effective date of termination, but Horizon shall not accept new orders from
customers after such date. Medtronic shall re-purchase from Horizon inventory in
saleable condition, up to an amount equal to three (3) months of average monthly
purchase orders from Horizon to Medtronic under this Agreement, where such
monthly average is determined based on the twelve completed months before the
notice of termination or, if twelve months have not then elapsed under this
Agreement, the number of completed months that have elapsed. The price for such
repurchased inventory shall be the purchase price paid by Horizon plus the
actual cost of shipment of such Products, against which amounts due from Horizon
may be applied.
16.4 Return of Materials; Non-promotion. Upon purchase of the Products
pursuant to the foregoing paragraph, or ten (10) days after the expiration or
termination of this Agreement, whichever is earlier, Horizon shall cease to
display or use any signs, labels, marks or other indications identifying Horizon
in any way with Medtronic or any Product. Horizon shall deliver to Medtronic all
printed materials, including advertising, promotional and instructional
materials, all labels and packages relating to the Products, all samples, parts,
tools or other equipment relating to Products that Medtronic may have furnished
free of charge to Horizon (except for shipping and import costs), and all
records of Horizon's sales as may be necessary for Medtronic to ascertain any
outstanding obligations of Horizon thereunder.
16.5 Non-Waiver. Unless otherwise specified, the acceptance of any
order from or the sale of any Products to Horizon after notice to terminate this
Agreement has been sent or the expiration or termination of this Agreement shall
be subject to all the pertinent terms of this Agreement, but shall not be
construed as a renewal or extension of this Agreement nor as a waiver of the
right to terminate the same.
16.6 Performance until Termination. Before the effective date of
expiration or termination of this Agreement for any reason, Horizon shall
continue to maintain the sales of the Products in the Territory by servicing
customers and performing its obligations hereunder.
16.7 Rights and Obligations on Termination. Upon the expiration or
termination of this Agreement, all rights granted or obligations undertaken
hereunder shall terminate forthwith, except that the parties shall have the
following rights and obligations:
(a) Termination of this Agreement shall not release either
party from the obligation to make payment of all amounts previously due
and payable, including Horizon's obligation to pay for all Products
shipped to Horizon before termination.
(b) The Parties' rights and obligations with respect to
Articles 12 (Indemnification and Insurance), 13 (Patents and
Trademarks), and 14 (Confidentiality) hereof shall survive termination
of this Agreement.
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(c) Neither Medtronic nor Horizon shall be liable to the other
for damages of any kind resulting from or caused by said termination
including, but not limited to, damages related to losses through
commitments on obligations or leases, loss of investment, or present or
prospective profits, inability to meet obligations, or any other causes
or reasons whatsoever.
ARTICLE 17
ASSIGNMENT
This Agreement is personal in its nature and is therefore not assignable, in
whole or in part, by Horizon, without the written permission of Medtronic.
Medtronic may, upon written notice to Horizon, assign or delegate the
performance of part or all of its obligations under this Agreement to one or
more of its Affiliated companies or to any other party with the prior written
consent of Horizon.
ARTICLE 18
EXCUSE OF PERFORMANCE
If either party shall be rendered wholly or partly unable to carry out its
obligations under this Agreement by reason of causes beyond its control,
including but not limited to fire, flood, explosion, acts of God, accidents,
riots, shortage of material, equipment or transportation, then the performance
of the obligations of either party shall be excused during the continuance of
any inability so caused, provided that the party affected shall give prompt
notice to the other party, use its best efforts to avoid or remove such causes
and continue performance hereunder whenever such causes are removed or settled.
ARTICLE 19
MISCELLANEOUS
19.1 Notice. Notices permitted or required to be given under this
Agreement will be deemed sufficient if delivered by hand, overnight courier,
fax, U.S. mail, or registered or certified mail, postage prepaid, addressed to
the respective parties at the address first noted on page one of this Agreement
or at such other addresses as the respective parties may have furnished each
other in writing.
19.2 Governing Law. Except as specifically provided for herein, the
validity, interpretation, construction and enforcement of this Agreement shall
be governed solely by the laws of the State of Minnesota without giving effect
to any conflict of laws provision thereof.
19.3 Waiver. The failure of a party to enforce, at any time, any of the
provisions of this Agreement, or to require at any time performance by the other
parties of any of the provisions hereof, will in no way be construed to be a
waiver of such provisions, nor in any way to affect the validity of this
Agreement or any part thereof, or the right of a party to thereafter enforce
each and every such provision.
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19.4 Severability. If any provision of this Agreement is held to be
unenforceable or illegal, the other provisions of this Agreement will not be
affected by any such holding and will remain in full force and effect. In such
event the parties hall use all reasonable efforts to replace any such
unenforceable or illegal provision with a provision reflecting as nearly as
possible the intent, purpose and economic effect of such provision.
19.5 Independent Contractor. Each party will act solely as an
independent contractor. Nothing in this Agreement will be construed to give
either party the power of authority to act for, bind, or commit the other party.
19.6 Headings and Numbering; Presumptions. The headings and numbering
are inserted and included solely for convenience and reference and will not be
considered or given any effect in construing this Agreement or any part hereof.
This Agreement will be interpreted without regard to any rule or presumption
favoring interpretation hereof against the party causing this Agreement to be
drafted.
19.7 Entire Agreement; Amendments. This Agreement represents the entire
agreement between the parties and supersedes all prior or contemporaneous oral
or written agreements of the parties with respect to the subject matter hereof.
This Agreement may be modified, amended or changed only by a written instrument
signed by the parties.
19.8 Survival. All of the representations, warranties, and
indemnifications made in this Agreement, and all terms and provisions hereof
intended to be observed and performed by the parties after the termination
hereof, will survive such termination and continue thereafter in full force and
effect, subject to applicable statute of limitations.
19.9 Expenses. Except as expressly provided herein, Medtronic and
Horizon will each bear its own expenses incurred on its behalf with respect to
this Agreement and the transactions contemplated herein and therein.
19.10 Third Party Benefit. Nothing in this Agreement or the agreements
referred to herein, expressed or implied, will confer on any person other than
the parties hereto or thereto, or their respective permitted successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, the agreements referred to herein, or the transactions
contemplated herein or therein.
19.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all of which
taken together will be considered one and the same instrument.
19.12 Agreements To Be in Writing. Whenever this Agreement provides for
the parties to make a decision, take, or forego action based on their agreement,
such agreement by the parties will not be valid unless set forth in a writing
that is dated and signed by both parties. Each party represents and warrants
that the person signing any such writing on its behalf will have the authority
to enter into such agreement on behalf of the party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
date first written above.
MEDTRONIC, INC. HORIZON MEDICAL PRODUCTS, INC.
By /s/ Xxxxx X. Xxxx By /s/ Xxxxxxxx X. Xxxx
------------------------------- -----------------------------------
Xxxxx X. Xxxx, Senior Vice
President and President,
Neurological and Diabetes
Xxxxxxxx X. Xxxx
----------------
(print name)
Date: April 18, 2003 Title Chairman and CEO
--------------------------- -----------------------------
Date April 18, 2003
-----------------------------
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