1
EXHIBIT 10.21
This document will evidence the following agreement between Horizon Medical
Products, Inc. ("Horizon") and ACT Medical, Inc. concerning ACT's development,
manufacture and sale to Horizon of vascular access ports:
1. Representations of Horizon. Horizon represents the following:
a. This agreement has been duly authorized by all necessary corporate
and other action on the part of Horizon.
b. The execution and delivery by Horizon of this agreement, and the
performance by Horizon of its obligations hereunder, do not and will not
infringe or constitute a breach of the charter of by-laws of Horizon or any
other agreement or obligation to which it is a party.
c. The product as specified in the specifications does not and will
not infringe the proprietary or intellectual property rights of any third party.
2. Development. Horizon and ACT will develop and prepare engineering
specifications ("Specifications"), which include drawings, for a "standard"
single titanium vascular access port product ("Product"). From the
specifications, ACT will develop the necessary processes and procedures and
will purchase the necessary fixtures, molds and tooling to manufacture products
for sale to Horizon. The specifications will be finalized and initialed for
approval by Horizon and ACT upon completion. Horizon has delivered to ACT the
current Horizon specifications for the standard vascular access port
(ES-00-0002-Revision D). In the Specifications for the product, the catheter
will have a marking on the catheter.
During the development process, ACT will provide monthly reports to
Horizon concerning the development process. ACT will meet with a representative
of Horizon when requested by Horizon, and travel expenses of ACT employees,
when Horizon expressly requests ACT employees to travel, will be paid by
Horizon.
3. Payment for Development. In consideration for developing the Product
and performing such testing and qualifications as required to confirm that the
ACT
Page 1 of 9 January 13, 1995 Horizon/ACT Agreement
2
produced product meets the specifications of the existing Horizon 510k or the
then current Horizon specifications as agreed to by ACT, which will enable ACT
to manufacture and sell the Product to Horizon for resale, Horizon will pay to
ACT the amount of $106,500. Such amount will be paid by Horizon as follows:
(a) Consecutive monthly payments beginning in February 1995, payable
first day of each month:
February - $4,000 May - $4,000
March - $4,000 June - $4,000
April - $4,000 July - $4,000
(b) Milestone payments to ACT as follows:
(i) $8,000, payable on April 30, 1995 if all tooling, fixtures
and molds for manufacture of the Product have been purchased, or
completed, or delivered to ACT or applicable vendor by that date, or
payable on such later date upon purchase or completion, or delivery to
ACT or applicable vendor of such tooling, fixtures and molds.
(ii) $10,500, payable on July 31, 1995 if 667 units of saleable
Products have been delivered to Horizon for sale, or payable on such
later date when such units are delivered to Horizon.
(c) The amount of $12.00 will be added to the price of each unit of
Product, including the initial 667 units, delivered to Horizon. This
payment of $12.00 per unit will continue for 667 units per month delivered
in months 7 through 14. The total of all $12 charges will not exceed
$64,000.
(d) If Horizon delays this delivery schedule, the payment to ACT of
$8,000 per month will be made monthly in months 7 through 14.
4. Regulatory Matters. ACT understands that Horizon has a 510k release
from the FDA to market this product. Therefore, ACT will be performing testing
and qualifications as required to confirm that the ACT produced "Product" meets
the Specifications of the existing Horizon 510k or the then current Horizon
specifications as
Page 2 of 9 January 13, 1995 Horizon/ACT Agreement
3
agreed to by ACT. Any resubmissions or new submissions required to obtain a
510k release or other regulatory approval are not part of this agreement.
At Horizon's request ACT will investigate and analyze all product problems
and complaints arising from use of the Product and will review with Horizon the
results of such investigation and analysis. In the event that the problem is not
related to an ACT manufacturing issue Horizon will compensate ACT for the costs
of this work. Charges will be billed at ACT's standard rates.
5. Manufacture and Sale to Horizon. Act will manufacture and sell
Products to Horizon at the purchase price of $85.00 per unit, plus the $12.00
charge per unit (where applicable) described in paragraph 3 (c) above. Horizon
will place purchase orders from time to time for a minimum of 10,000 units
during the first 24 months after ACT's delivery of the initial 667 units to
Horizon, consisting of 4,000 units in the first 12 months and 6,000 units in the
second 12 months, with purchase orders on a quarterly basis and with a 60 day
lead time. The initial delivery products is for 667 units on July 31, 1995.
6. Term. The term of this agreement is five years, provided Horizon
purchases, in addition to the 10,000 units in the first 24 months after initial
delivery, a minimum of 5,000 units (consisting of all vascular access port
products manufactured by ACT for Horizon) for each of the years three, four, and
five, and the term will expire on December 31, 1999. At the end of three years
after the initial delivery by ACT to Horizon, ACT may renegotiate a price
increase based on actual increases in labor costs, materials or requested design
changes. Horizon may renew the term of this agreement for an additional three
years by (1) giving ACT prior written notice of renewal within 120 days prior to
December 31, 1999 and (2) provided Horizon meets the minimum purchase
requirements of 5,000 units per year consisting of all vascular access port
products manufactured by ACT for Horizon during each year in the initial term
and each year in the renewal term and (3) subject to ACT negotiating a price
increase as described above in this paragraph.
If ACT is unable to manufacture Product that meets the Specifications or if
ACT has committed some other material breach of this agreement, then in any of
such events Horizon may terminate this agreement by written notice to ACT if ACT
does
Page 3 of 9 January 13, 1995 Horizon/ACT Agreement
4
not cure such breach within sixty (60) days after Horizon's written notice
describing the breach.
If Horizon has committed a material breach of this agreement and does not
cure such breach within sixty (60) days after ACT's written notice describing
the breach, ACT may terminate this agreement by written notice to Horizon. If
Horizon's purchases fall below the minimum quantity of 10,000 during months 1
through 24 after the initial delivery, and 5,000 in subsequent years then ACT
has the right to renegotiate pricing to reflect increased cost of production.
Horizon may terminate this agreement during the term without breach by ACT
by giving ninety (90) days prior written notice to ACT; provided that Horizon
(1) has paid the entire $106,500 described in paragraph 2 above, (2) purchases
all finished goods inventory in ACT's possession when it receives the notice of
termination, and (3) purchases, for an amount equal to ACT's cost, all raw
materials on order (where order cannot be cancelled without cost to ACT), raw
materials on hand, and work in process inventory in ACT's possession when it
receives the notice of termination.
7. Providing Product Information: Ownership. Upon delivery of payment of
the $10,500 to ACT provided for in paragraph 3(b) above, ACT will have available
for review or delivery to Horizon at Horizon's request information describing
the Product and other items developed by ACT specifically for this contract
(including a description of all tooling, fixtures, molds, raw materials and
piece parts used by ACT in manufacturing the product) and for which ACT will be
compensated by payments specified in paragraph 3 above. This will include
Product specifications produced by ACT, quality control information, drawings,
procedures, protocols.
Upon Horizon's payment of the $106,500 to ACT described in paragraph 2
above, legal title and sole ownership to all tooling, fixtures and molds
developed by ACT, and for which ACT has been compensated through the payment
schedule specified in paragraph 3 above, will be transferred and conveyed to
Horizon. ACT will execute appropriate documentation requested by Horizon to
evidence such transfer of title and sole ownership to Horizon, and the title
conveyed by ACT to Horizon will be free of all liens and encumbrances. The
Specifications are and shall remain the sole and exclusive property of Horizon.
During the term of this agreement Horizon will continue to make the molds,
tools, dies, and fixtures freely available to ACT for
Page 4 of 9 January 13, 1995 Horizon/Act Agreement
5
purposes of manufacturing the Product. ACT will be responsible for normal
maintenance on the molds, tools, dies and fixtures. ACT and Horizon will share
the cost of needed repairs and replacements to the molds, tools, dies and
fixtures on the following basis with discussions between representative of both
parties prior to the expenditure of funds in excess of $500:
Year of Term Horizon's Share ACT's Share
------------ --------------- -----------
1 20% 80%
2 40% 60%
3 60% 40%
4 80% 20%
5 100% 0%
Horizon will pay for (at ACT's actual cost) any additional molds, tools,
dies and fixtures required to support Horizon requested changes to the
Specifications.
ACT shall provide to Horizon upon request from time to time the names and
addresses of all vendors and suppliers from whom ACT purchases goods or services
in connection with the manufacture of the Product. Horizon will have the right
to inspect any such vendors from time to time during the term of this agreement.
Upon Horizon's payment of $106,500 under Paragraph 3, and with prior
written notice to ACT, Horizon will have the right to purchase goods and
supplies from such vendors and suppliers utilizing the tooling, fixtures and
molds which are in the possession of such vendors and suppliers and which are
purchased for this agreement, and ACT agrees that it will not interfere with
Horizon's exercise of such rights, and Horizon agrees it will not disrupt flow
of product from such vendors and suppliers.
Upon termination or expiration of this agreement and payment of the
$106,500 to ACT described in paragraph 3 above, at Horizon's request, ACT will
promptly deliver to Horizon all tooling, fixtures and molds used by ACT in the
manufacture of the Product and all information described in the first paragraph
of this paragraph 7. Horizon will pay for costs of transfer of equipment,
materials and information to Horizon.
Page 5 of 9 January 13, 1995 Horizon/ACT Agreement
6
8. Terms of Payment and Shipping. The terms of payment are net 60 days
from date of invoice for shipments during the 6 months after the initial
delivery of the first 667 units to Horizon and net 45 days for all other
invoices. Products will be shipped and delivered to Horizon FOB Waltham with
Horizon responsible for the expense of shipping and insurance to Horizon. With
each shipment of Products to Horizon, ACT will certify in writing to Horizon
that the Products shipped conform to the Specifications and are free from
defects in materials and workmanship.
9. Product Packaging; Change in Specifications. ACT will be responsible
for shipping all Products in their final packaging as specified in the
Specifications. Each packaged Product shall include the port the required
labeling, patient identification cards, tray and instructions for use. Other
accessories to be included in the package, e.g. introducer and needle, will be
included at an additional charge at ACT's actual cost plus 15%. The
Specifications will designate the introducer to be included.
Horizon will have the right from time to time to request that changes be
made in the Specifications. Implementation of these changes will be subject to
ACT's agreement. The cost for such changes will be negotiated in good faith
between Horizon and ACT and ACT will have no obligation to implement these
changes until agreement on charges has been reached.
10. Horizon's Right to Reject. For a period of 1 year following delivery
to Horizon, Horizon will have the right to reject Products which fail to conform
to the Specifications or which have defects in material or workmanship and to
return such Products to ACT at ACT's expense. In any case Horizon may not reject
any product beyond 60 days past the termination or expiration of this contract.
11. Warranties; Indemnification; Insurance. ACT warrants to Horizon that
on the date of delivery the Products sold to Horizon will conform to the
Specifications and will be free from defects in materials and workmanship and
will be packaged in accordance with the packaging described in the
Specifications.
Horizon agrees to indemnify and hold harmless ACT, its officials, agents,
and employees from any damages (a) arising from or out of or in connection with
any defect in the design of the Product, (b) arising from or out of any
infringement of any proprietary or intellectual property rights of any third
party concerning the product or
Page 6 of 9 January 13, 1995 Horizon/ACT Agreement
7
(c) any breach by Horizon of any of the representations described above in
paragraph 1.
ACT agrees to defend, indemnify and hold harmless Horizon, its officers,
agents, and employees, from and against any and all claims, losses, damages,
causes of action, suits and liability of every kind, including all expenses of
litigation, court costs and reasonable attorney fees, for injury to or death of
any person or damage to any property, arising from or out of or in connection
with any Product that has defects in materials and workmanship or that does not
conform to the Specifications or any Product that is not packaged in accordance
with the packaging described in the Specifications. The indemnity set forth in
this paragraph shall be available only to the extent such claims, losses,
damages, causes of action, suits, and liabilities have been determined by a
court of competent jurisdiction, subject to no further appeal, to have arisen
out of or in connection with the acts and omissions of ACT set forth above in
this paragraph.
Both Horizon and ACT will continue to maintain the comprehensive general
liability insurance that is presently outstanding for each, including coverage
for Product completed during the term of this agreement. Each party will
include the other as an additional insured under such insurance policy, with
notice provided by the insurance carrier to the other party of any
cancellation, non-renewal or coverage reduction. Either party may request a
certificate of insurance at any time during the term of this agreement
describing such insurance coverage and confirming that it has been named as an
additional insured.
12. Sale of other Port Products. During the term of this agreement, ACT
will not manufacture and sell to others any products using the Specifications,
Horizon's confidential information, or trade secrets developed for this
project. After the expiration or termination of this agreement, ACT will not
use the Specifications to manufacture a vascular access port product for sale
to others.
13. Confidential Information. Information disclosed by one party to the
other party pursuant to this agreement, that is labelled or otherwise
designated as confidential, will be deemed to be confidential. The party that
receives such confidential information will hold all such information in strict
confidence and will use it solely for the purposes for which it is supplied
under this agreement. The receiving
Page 7 of 9 January 13, 1996 Horizon/ACT Agreement
8
party will not disclose such information other than as provided in this
agreement or for the benefit of any third party. The foregoing restrictions
will not apply to any information which (i) is known to the receiving party
prior to receipt thereof from the disclosing party, (ii) is public knowledge
without disclosure by receiving party hereunder, (iii) is rightfully received
by the receiving party from a third party without restriction on disclosure or
use, or (iv) is independently developed by personnel of the receiving party who
have not had access to or knowledge of the contents of the information
disclosed by the disclosing party; provided that the receiving party can
demonstrate one or more of the events described in this sentence to the
reasonable satisfaction of the disclosing party.
14. Miscellaneous. (a) Neither party will have the right to assign this
agreement, in whole or in part, to any third party without the prior written
consent of a duly authorized officer of the other party. Notwithstanding the
foregoing, either party may freely assign this agreement to any entity acquiring
all or substantially all of the business of that party. This agreement will be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns.
(b) This agreement constitutes the entire agreement and understanding
between the parties in respect to the subject matter of this agreement and
supersedes all prior agreements, understanding, discussions and communications
between the parties respecting such subject matter. No modification of this
agreement will be effective unless made in writing signed by a duly authorized
officer of each party. The provisions of paragraphs 7, 11, 12, 13 and 14c will
survive the termination of this agreement.
(c) All notices required or permitted under this agreement must be made
in writing and delivered in person or by certified or registered mail, postage
prepaid, addressed to the attention of the president of the other party at the
respective address written below, or such other address as may be given by
notice.
Page 8 of 9 January 13, 1996 Horizon/ACT Agreement
9
Both parties acknowledge that good and valuable consideration has been
received by both parties in connection with this agreement. ACT's and Horizon's
agreement to all of the provisions set forth in this agreement should be
indicated by signature below.
HORIZON MEDICAL PRODUCTS, INC. ACT MEDICAL, INC.
By: /S/ By: /S/ X X Tolhoff
------------------------------- ------------------------------
Title: Chief Executive Officer Title: President
--------------------------- --------------------------
Address: Seven North Parkway Square Address: 000 Xxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxxx, XX Xxxxxxx, XX 00000
Xxxxxxx, XX 00000
Page 9 of 9 January 13, 1995 Horizon/ACT Agreement
