Exclusive Distributor Agreement

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 710 Medtronic Parkway, Minneapolis, Minnesota 55432, U.S.A. ("Medtronic") and HORIZON MEDICAL PRODUCTS, INC., a Georgia corporation having its principal place of business at Seven North Parkway Square, 4200 Northside Parkway NW, Atlanta, Georgia 30327 ("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 Pam Balthazor, 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. Mark Roh, Paul Hansen, and Robert Warren. 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 pr ...