EXHIBIT 10.1
SECOND AMENDMENT TO THE CO-PROMOTION AGREEMENT
BETWEEN HORIZON MEDICAL PRODUCTS, INC. AND MEDTRONIC, INC.
This Amendment (the "Amendment") is made to the Copromotion Agreement (the
"Agreement") first effective March 14, 2002, by and between MEDTRONIC, INC., a
Minnesota corporation having its principal place of business at 000 Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxxx, XX 00000-0000 ("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"). This Amendment is effective as of the date all parties have signed
the Amendment.
RECITALS
A. Medtronic and Horizon desire to change the compensation and reporting
obligations of the Agreement, in response to the Health Information Portability
and Accountability Act of 1996.
B. Medtronic and Horizon desire to remove from the scope of the Agreement
Products sold for HAI Therapy, because the parties intend to address such
Products in a separate distribution agreement, to be entered into
contemporaneously with, or after this Amendment.
AGREEMENT
The parties agree as follows:
I. Capitalized terms in this Amendment shall have the same meanings
ascribed to such terms in the Agreement.
II. As of the effective date of this Amendment:
A. The term Products no longer includes Products that are used
for HAI Therapy; and
B. The term Therapies shall be interpreted to mean only Pain
Therapy.
III. Sections 7 (Compensation and Reporting Requirements) and 8 (Minimum
Implant Targets) of the Agreement are deleted in their entirety, and replaced
with the following:
"7. COMPENSATION
Beginning with April 2003, Medtronic will pay Horizon compensation each
month based on a comparison of the month's sales to a baseline sales amount, as
follows:
(a) The "Monthly Baseline Sales Amount" for a month shall be the
number of units of Products implanted into patients in the Territory during such
month in the period
from April 2002 through March 2003 (the "Baseline Period"), as determined from
Medtronic device registration data. Medtronic shall be entitled to rely on its
device registration data to determine the Monthly Baseline Sales Amount and any
other sales information under this Section 7, notwithstanding any imprecision or
unreliability of device registration data. The date and location of implant
shown on the registration shall be deemed the date and location of sale. If the
Agreement is renewed following expiration of the Term, the parties shall meet
and agree to any appropriate adjustments to the Monthly Baseline Sales Amounts.
In the absence of any mutual agreement to change the Monthly Baseline Sales
Amounts, the amounts provided by Medtronic under this Paragraph 7 will continue
to be the Monthly Baseline Sales Amounts provided in this Subsection (a).
(b) As of March 25, 2003, Medtronic shall provide to Horizon a
list of each account in the Territory that purchased the Products from Medtronic
during the Baseline Period. As of April 1, 2003, Horizon shall identify to
Medtronic the specific Horizon sales territory that corresponds to each of the
Medtronic accounts. If an account falls outside the scope of any Horizon sales
territory, Horizon shall so indicate. No later than one week after receiving
this sales territory information from Horizon, Medtronic shall provide Horizon
with a schedule showing the number of units of Product Medtronic sold in each
month of the Baseline Period in each of the Horizon sales territories. Such
amounts shall be the Monthly Baseline Sales Amounts for each month in each
Horizon territory. If Horizon adds new sales territories after the initial
calculation of Monthly Baseline Sales Amounts under this section, the Monthly
Baseline Sales Amounts for the new territories shall be calculated as described
under this section as if the new territories existed at the time of the initial
calculations of Monthly Baseline Sales amounts under this section.
(c) In addition, at the time Medtronic provides to Horizon the
Baseline Monthly Sales Amounts, Medtronic shall provide to Horizon the
Semi-Annual Growth Targets for each Horizon sales territory. The Semi-Annual
Growth Targets shall apply to the periods (the "Growth Target Periods") April
through September 2003 and October 2003 through March 2004, and, if the
Agreement is renewed, each succeeding six-month period of any renewal term. For
each of the first two Growth Target Periods, the Semi-Annual Growth Target for a
Horizon territory shall be 120 percent of the sum of the six Baseline Monthly
Sales Amounts for that territory corresponding to the six months of the Growth
Target Period. If the Agreement is renewed, the Semi-Annual Growth Target for a
territory for a Growth Target Period shall be, unless the parties otherwise
agree in writing, 120 percent of the Semi-Annual Growth Target for that
territory during the same months of the year from one year earlier.
(d) Within 30 days after the end of each month, Medtronic shall
report to Horizon the number of units of Products that were implanted into
patients in each Horizon territory during such month, based on Medtronic device
registration data ("Monthly Sales Amount"). If in any month, the Monthly Sales
Amount for a Horizon territory is less than the Baseline Sales Amount for that
territory, the difference shall be carried forward to succeeding months as a
deficit, and shall be added to any other deficit
carried forward from past months, to make the Cumulative of Monthly Deficits for
that territory. Each month, the Cumulative of Monthly Deficits for a territory
shall be subtracted from the Monthly Sales Amount for that territory, and the
difference shall be the Adjusted Monthly Sales Amount for that territory.
(e) For each Horizon territory, Medtronic shall pay to Horizon
each month $600 for each unit of Product by which the Adjusted Monthly Sales
Amount for that territory exceeds the Baseline Sales Amount for that territory
(the "Improvement over Baseline"); except that at the end of each Growth Target
Period, Medtronic shall pay a bonus of $300 for each unit sold in that territory
during that Growth Target Period after the sum of all Monthly Sales Amounts for
that territory in all months of that Growth Target Period (the "Cumulative Sales
Amount") exceeds the corresponding Semi-Annual Growth Target for that territory
for that Growth Target Period.
(f) In each 12-month period, the Semi-Annual Growth Target for a
territory for the second Growth Target Period in that 12-month period shall be
increased by the number of units of Product by which the Cumulative Sales Amount
for that territory in the preceding Growth Target Period fell short of the
Semi-Annual Growth Target for that territory for that period.
(g) Medtronic shall pay each month's compensation by no later than
the end of the succeeding month.
"8. PASS-THROUGH OF COMPENSATION
(a) Horizon shall pass through and pay to its sales
representatives and sales managers the full amount of any compensation Horizon
receives from Medtronic under Section 7, in amounts to each Horizon sales
territory that reflects the Improvement Over Baseline in that Horizon sales
territory in that month.
(b) The records and audit provisions of Section 9 apply to each
party's obligations under this Section 8."
IV. The following new Subsection (f) is added to Section 3 (Co-Promotion by
Horizon; Sales Training):
"(f) Each month, Horizon shall provide to Medtronic a detailed
report describing its co-promotion activities, including sales calls and
specific marketing events. Each quarter, Horizon shall provide to Medtronic a
detailed proposed plan of marketing activities for the upcoming quarter,
including specific events and budgets. Any financial support for such activities
from Medtronic shall be upon mutual agreement of the parties."
V. Subsection (a) of Section 11 (Term and Termination) is amended to read
as follows:
"(a) This Agreement shall be effective for a period of an initial
term commencing on the Effective Date and expiring on March 31, 2004 (the
"Term") unless either party gives the other party notice of termination at least
sixty (60) days prior to the end of the first year of the Term or unless the
Agreement is previously terminated under subsection (b) or (c) below. This
Agreement may be renewed by Medtronic for additional two (2) year terms, upon
delivery of notice by Medtronic at least sixty (60) days prior to the expiration
of the then-current term. The terms and conditions of this Agreement, including
those relating to termination set forth in this Section, shall continue to apply
to any such renewal terms."
VI. The following new Subsection (g) is added to Section 11 (Term and
Termination):
"(g) Medtronic may terminate this agreement, upon sixty (60) days'
written notice to Horizon, if in any two consecutive three-month periods, the
aggregate of all Monthly Sales Amounts is less than the aggregate of all Monthly
Baseline Sales Amounts."
VII. Except to the extent provided above, the remaining terms and conditions
of the Agreement remain in full force and effect.
MEDTRONIC, INC. HORIZON MEDICAL PRODUCTS, INC.
By /s/ Xxxxx Xxxxxxx By /s/ Xxxxxxxx X. Xxxx
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Xxxxx Xxxxxxx, Vice President and
General Manager, Global Pain Management Xxxxxxxx X. Xxxx
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(Please print name)
Date 4/15/03 Title Chairman and CEO
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Date 4/15/03
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