Exhibit 10.10
SERVICE & SUPPLY AGREEMENT
by and between
VNUS MEDICAL TECHNOLOGIES, INC.
and
XXXXX PEAK, INC.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 2 OF 21
--------------------------------------------------------------------------------
COMPANY / XXXXX PEAK
SERVICE & SUPPLY AGREEMENT
This Agreement is effective the 20th day of the month of February, 2004
("Effective Date") between Xxxxx Peak, Inc. ("Xxxxx Peak"), and VNUS Medical
Technologies, Inc. ("VNUS"), a Delaware Corporation, with offices at 0000 Xxxxxx
Xx. Xxxxx X, Xxx Xxxx, XX (in the aggregate, "VNUS"), which entities are
collectively referred to herein as the "parties".
RECITALS
WHEREAS, Xxxxx Peak is in the business of providing contract design,
manufacturing repair depot, field and product distribution services and
new product development to third parties; and
WHEREAS, the parties desire to enter into this Agreement to have Xxxxx
Peak supply development support for VNUS (as defined below) for the
Products (as defined in Exhibit A), and manufacture, package & ship, and
repair the Products in accordance with the terms and conditions of this
Agreement.
WHEREAS, VNUS has paid for the development of and owns certain
confidential and proprietary information for the design of the device
noted in Exhibit B identified as a radiofrequency generator;
DEFINITIONS
"AFFILIATE" means an entity which for purposes of this Agreement, "works in
conjunction with" Xxxxx Peak.
"AGREEMENT" means this Agreement and all appendices, attachments, exhibits, and
schedules hereto as well as all properly executed modifications, amendments and
supplements hereto.
"COMMENCEMENT OF THE PROJECT" means the date VNUS delivers to Xxxxx Peak, the
purchase order necessary to begin the processing the Product noted on Exhibit A
attached hereto and incorporated by this reference for the purpose of
manufacturing Product.
"DMR" means the Device Master Record for the Product described in this
Agreement.
"ECO" means an Engineering Change Order, whether initiated by VNUS or Xxxxx Peak
relating to the Product.
Initials R.M. Initials PDP
------ -----
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 3 OF 21
--------------------------------------------------------------------------------
"FULLY BURDENED LABOR" means the labor content required to build and test
product. This rate includes all overhead expenses (both fixed and variable) as
well as incoming freight.
"INVENTIONS" mean all data, materials, information, enhancement, developments,
and improvements relating to the Product or other VNUS equipment.
"PROCESS" and cognates thereof means the designing, manufacturing, and/or
servicing/repair of components by Xxxxx Peak, to produce or repair Product.
"PRODUCT(S)" mean those devices and components of VNUS equipment identified in
Exhibit A.
"PROJECT" means supporting the development of the DMR for the Product, and
manufacturing, packaging & shipping and repairing Products noted on
Attachment A.
"QA" means Quality Assurance systems in place at either VNUS or Xxxxx Peak.
"QUALITY CONTROL STANDARDS" mean the Products must be in compliance with
applicable Regulations as noted in Exhibit A.
"SAFETY CHANGE" means an engineering change to a Product which must be
implemented for reasons of safety.
"SPECIFICATIONS" mean the design, performance, manufacture, & testing
specifications of the Product, and any modifications, amendments and
supplements thereto.
"TERM" means the initial term plus any renewal period thereafter which is
mutually agreed to by the parties in writing.
NOW, THEREFORE, in consideration of the recitals, which are hereby incorporated
by reference, and the mutual covenants contained herein and for good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows:
1. TERM
Unless terminated earlier as provided herein, this Agreement shall have an
initial Term of 3 (three) years. After the initial Term period, this Agreement
will continue indefinitely until terminated by either party, as described below.
Initials R.M. Initials PDP
---- ---
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 4 OF 21
--------------------------------------------------------------------------------
2. PRODUCTS AND SERVICES
Services include Product manufacturing and Product repair depot service,
including sustaining engineering. The services include VNUS' Product and may be
expanded to include other services for other VNUS equipment.
3. VNUS COVENANTS AND DUTIES
VNUS is responsible for and will provide to, collaborate with and will approve
for Xxxxx Peak the Specifications of the Products on a timely basis. VNUS will
"file" all necessary documentation, owning the responsibility of gaining
regulatory approvals, as needed, to market the Products processed by Xxxxx
Peak. Such specifications may be amended in accordance with the terms of this
Agreement without affecting any other terms herein.
VNUS shall, at its own expense, ensure applicable product safety and efficacy
requirements and exercises as identified in Exhibit A, if required to meet
applicable regulatory, internal VNUS' & Xxxxx Peak's quality control standards.
VNUS shall render prompt technical support to Xxxxx Peak on a continuing basis
when reasonably requested by Xxxxx Peak.
VNUS agrees to provide to Xxxxx Peak on a timely basis VNUS' approval or
rejection of any proposed ECO submitted in accordance with Section 10,
providing Xxxxx Peak with the reason for any rejection.
4. COVENANTS AND DUTIES OF XXXXX PEAK
VNUS shall request Product manufacturing or repair/service by placing purchase
orders for such goods or services provided, however, that (i) VNUS may change
the quantities covered by a purchase order so long as VNUS gives Xxxxx Peak
written notice of such changes at least forty-five (45) calendar days prior to
the requested delivery date; (ii) in the event Xxxxx Peak is unable to meet the
terms of the VNUS purchase order, it shall notify VNUS within thirty (30)
calendar days of the scheduled ship date with proposed order modifications. If
Company does not expressly agree with such proposed order modifications, the
parties will within three days of notification negotiate a mutually agreeable
modification. Except for any order modifications agreed to by both parties in
writing, all terms and conditions in this Agreement shall prevail over the
printed terms and conditions contained in any purchase order or invoice.
Xxxxx Peak shall meet or beat ***% of VNUS' scheduled delivery dates of new
units within five (5) calendar days in any rolling 6-month period.
During the Term, Xxxxx Peak agrees to maintain an inventory of spare parts
(including printed circuit boards) sufficient to enable Xxxxx Peak to perform
all repairs within 14 calendar days.
Xxxxx Peak understands and agrees that it is providing a service hereunder as a
customer-transparent contractor of VNUS under VNUS's name. VNUS acknowledges
that Xxxxx Peak is in the business of providing contract manufacturing and
services, and developing
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 5 OF 21
--------------------------------------------------------------------------------
new products, and that Xxxxx Peak may manufacture or develop products for itself
or for other persons. Xxxxx Peak retains the right and nothing shall prevent
Xxxxx Peak from using the ideas, concepts, methods, processes, know-how,
organization or techniques owned, leased or licensed by Xxxxx Peak from anyone
other than VNUS in manufacturing or developing products for itself or for any
third person, so long as such work does not incorporate any confidential
information of VNUS. Xxxxx Peak shall also be free to use for any purpose (other
than for producing Products for direct competitors of VNUS) any residual
knowledge or skills resulting from performing design, Processing Products and
providing services in accordance with this Agreement.
Xxxxx Peak's name shall not appear on the Products, except that Xxxxx Peak's
name may appear on documentation not visible to VNUS' customers, and may be in
documents required to obtain regulatory approval of the Product. Nothing in this
Agreement shall be deemed to xxxxx Xxxxx Peak any right to use VNUS' name for
any purpose other than as expressly provided herein.
Xxxxx Peak shall use commercially reasonable efforts, skill, and experience to
Process all Products in strict conformity with the Specifications and all
applicable U.S. laws and regulations. Xxxxx Peak shall not make any change in or
deviate in any way from such Specifications, except pursuant to an ECO approved
as provided in Section 10 of this Agreement.
Xxxxx Peak shall Process Products in its 0000 Xxxxxx Xxxxxx in Wheat Ridge,
Colorado, unless VNUS authorizes Xxxxx Peak in writing to Process Products in
another plant location.
Xxxxx Peak shall maintain all Process files and records in its main facility.
VNUS shall have complete access to all files and records upon payment, in full
for its products or services associated with those records.
Products shall be packaged and labeled in accordance with VNUS' requirements and
specifications.
Xxxxx Peak shall report to VNUS, as soon as possible, all delays related to the
Design, Support, Processing and/or shipping of Products to VNUS.
Xxxxx Peak represents and warrants to VNUS that: (1) Xxxxx Peak has the right to
enter into this Agreement; (2) all necessary actions, corporate and otherwise,
have been taken to authorize Xxxxx Peak's execution and delivery of this
Agreement and the same is the valid and binding obligation of Xxxxx Peak; (3)
all licenses, consents and approvals necessary for Xxxxx Peak to carry out all
of the transactions contemplated in this Agreement will be obtained by Xxxxx
Peak; (4) Xxxxx Peak has the experience and technical capacity to fulfill its
obligations under this Agreement; (5) Xxxxx Peak has and shall pass to VNUS good
title to the Products free and clear of all liens and encumbrances; and (6) no
claim or action is pending or threatened against Xxxxx Peak or,
Initials R.M. Initials PDP
------- -------
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 6 OF 21
-------------------------------------------------------------------------------
to Xxxxx Peak's knowledge, against any supplier of Xxxxx Peak that could
adversely affect the ability of Xxxxx Peak to produce the Products, or the right
of VNUS or any customer of VNUS to use the Products for their intended use.
Xxxxx Peak shall submit upon VNUS' request for documents including, but not
limited to: income statement & cash-flow statements and customer revenue
proportion of total sales. The financial statements (cash flow and income
statements) shall be provided to VNUS monthly for the initial six months of the
Term and then quarterly for the first year of the Term. The customer revenue
proportion report shall be provided quarterly for the first eight quarters of
the Term.
5. DISTRIBUTION/WAREHOUSING
The Products shall be sold by Xxxxx Peak to VNUS at the prices indicated in
Exhibit A, noting that the project is a time and materials quotation and design
services fees and product costs will be adjusted to conform to this cost
structure.
Xxxxx Peak shall ship the Products via VNUS designated carriers to VNUS or to
VNUS' customers as directed by VNUS, with the cost of such freight and insurance
paid by VNUS.
VNUS shall be responsible for payment of all export and import duties, taxes and
similar charges with respect to the Products. Xxxxx Peak shall be responsible
for all such costs with respect to the raw materials it purchases.
Title and risk of loss of manufactured Products shall transfer to VNUS upon
shipment of such Products pursuant to a purchase order or on receipt of a
written request from VNUS to hold completed, quality released, invoiced Products
at Xxxxx Peak's facility for future delivery, provided (i) Xxxxx Peak uses
commercially reasonable storage methods; and (ii) VNUS reimburses Xxxxx Peak for
any reasonable storage costs incurred by Xxxxx Peak in respect to such held
Products.
6. PRODUCTION ENGINEERING COSTS
Prior to commencement of production, Xxxxx Peak will complete all tasks related
to Processing Product noted in Exhibit A. This includes but is not limited to;
development of the Product structure including the Device Master Record (DMR),
creating support component drawings, assembly procedures and testing approaches,
designing, fabricating and or installing existing test fixtures and assembly
jigs, and generating the documentation package and drafting and executing
appropriate validations. The cost of compiling such documents and making such
copies shall be at VNUS' expense. When product certification(s) are requested by
VNUS, costs for product certification(s) will be invoiced to VNUS upon receipt
of the charges. Payments terms for all charges noted above are due on receipt of
the invoice.
VNUS will, (i) reimburse Xxxxx Peak for all capital equipment/tooling costs
needed for the Design and Product (e.g., molds, test equipment) or (ii) provide
and capital
INITIALS R.M. INITIALS PDP
----- ------
VNUS XXXXX PEAK, INC.
VNUS / XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 7 OF 21
--------------------------------------------------------------------------------
equipment/tooling to Xxxxx Peak. VNUS shall be the sole owner of all such
equipment and tooling and Xxxxx Peak will use such equipment and tooling solely
for VNUS in accordance with this Agreement. Xxxxx Peak will not make such
investments without prior written approval and purchase order receipt. Payments
for all charges noted above are due on receipt of the invoice.
7. PRICING/VOLUME
Pricing for the volumes outlined in Exhibit A is based on a ***. Fully burdened
overhead rates for the manufacture of Product is noted in Exhibit A.
During the initial design transfer, raw materials transferred from VNUS to Xxxxx
Peak will be at ***. *** products will be deducted from the total product cost.
When applicable, VNUS will provide Xxxxx Peak with an inventory of items to be
transferred to Xxxxx Peak for use in the manufacture of Product. VNUS will
provide the proper traceability for such components in compliance to applicable
regulations.
Prior to the commencement of production, VNUS shall provide a firm commitment
for orders (subject to VNUS' ability to change orders pursuant to Section 4
above). Purchase orders will be structured one per part number.
Xxxxx Peak will place orders with its suppliers of raw materials based on VNUS'
agreement to the Device Master Record and will issue purchase orders based on
VNUS' *** firm commitment and *** forecast. In the event that VNUS wishes to
revise its firm commitment, forecasts, cancels orders, or terminates the
Agreement, VNUS will purchase ***, *** based on Xxxxx Peak's orders from
suppliers against the current firm commitment and forecast from VNUS and any
minimum purchase requirement or other agreed to quantities. This purchase will
be done at *** and VNUS will pay *** charges actually imposed by Xxxxx Peak's
suppliers resulting from cancellation of such orders.
The parties agree to review each ECO, which effects the specifications of the
Product and Xxxxx Peak will determine if such change directly affects material
or labor costs. If such change impacts these costs, the price of the Product
shall be adjusted accordingly. Exhibit A and purchase orders will be amended or
updated to reflect such changes. Such changes or amendments to exhibit A
requires the approvals of both Xxxxx Peak, Inc. and VNUS. Only VNUS is required
to approve the changes to existing purchase orders.
Prior to the implementation of any ECO which effects a Product change, both
parties will agree on who is responsible for costs arising out of failures due
to the Product change.
8. COST OF REWORK OR SCRAP
Xxxxx Peak will absorb all costs related to scrap or rework resulting from Xxxxx
Peak's processing errors or workmanship. VNUS will be charged all costs related
to rework and scrapping of inventory as a result of design changes by VNUS or as
a result of
Initials R.M. Initials PDP
------- -------
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 8 OF 21
________________________________________________________________________________
scrapping Products, which are within Specifications but rejected by VNUS.
Payment terms for charges noted above are due upon receipt of the invoice.
9. MANUFACTURING/ENGINEERING
Xxxxx Peak will provide continuing design and manufacturing engineering services
required (i) to ensure that the Product conforms with Xxxxx Peak's quality
standards; and (ii) to support continuing design, cost and reliability
improvements at rates noted in Exhibit A.
All products shall be subject to quality control inspection and release by
Xxxxx Peak, in accordance and conformance with Xxxxx Peak's quality control
system. VNUS shall subject Product to quality control inspection and final
release prior to distribution in accordance with applicable laws and
regulations.
Xxxxx Peak's quality control standards shall be sufficient to ensure that all
Products conform to the Specifications and Device Master Record (DMR). At VNUS'
request, Xxxxx Peak shall provide a copy of its standards to VNUS and shall
permit VNUS to periodically review Xxxxx Peak's production and quality control
procedures and records and to inspect Xxxxx Peak's facilities at reasonable
times, with a minimum of 48 hours notice, with a representative of Xxxxx Peak
present in order to assure satisfaction of the requirements of this Agreement.
10. PRODUCT CHANGES
Xxxxx Peak shall maintain the DMR for the Product in compliance with its
quality control standards. Upon request, Xxxxx Peak shall provide to VNUS
updates to the DMR. All changes to the DMR will be controlled by the ECO
procedures set out in this Agreement or, if not addressed herein, by Xxxxx
Peak's ECO procedures and VNUS will be on the required approval list.
VNUS and Xxxxx Peak anticipate that during the Term, modifications to the
Product design will occur. Xxxxx Peak will make no design changes without
written authorization by VNUS.
VNUS may request an ECO for the Product. Within five (5) business days of
receipt of such request, Xxxxx Peak will inform VNUS in writing of the earliest
possible implementation date for the proposed engineering change. Xxxxx Peak
will notify VNUS as soon as possible of any effect in the price of the Product
as a result of such change, as well as any effect on scheduling or QA test
coverage. If VNUS elects to proceed with the change, Xxxxx Peak will prepare an
ECO for approval. Xxxxx Peak shall be required to accept and implement all
reasonable engineering changes to the Products.
VNUS will reimburse the costs of raw materials for which Xxxxx Peak has
incurred purchase order obligations where excess or scrap result from an ECO.
Xxxxx Peak will provide these expenses for approval at the time VNUS is
notified of the implementation change.
Initials R.M. Initials PDP
----- -----
VNUS Xxxxx, Peak, Inc.
VNUS / XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 9 OF 21
--------------------------------------------------------------------------------
In support of its ongoing efforts to improve product performance, process
efficiency and reduce the costs of Processing Products, Xxxxx Peak may from time
to time suggest that an engineering change be made to a Product by delivering a
proposal to VNUS. Each proposal shall include a description of the proposed
change, a description of any improvements in the Product or cost reductions
which will result from the change, and the effect of the change, if any, on
production scheduling or Product testing. Each proposal shall provide detail
sufficient to permit VNUS to evaluate the desirability of such change. VNUS
agrees to consider each proposal it receives from Xxxxx Peak, but reserves the
right to accept or reject each such proposal in its sole discretion.
In the event either VNUS or Xxxxx Peak identifies an engineering change that
must be implemented for reasons of safety or efficacy, the parties agree to
cooperate so as to effect such a change as soon as possible after discovery.
Once the need for such a change is discovered, the parties agree that no
affected Product shall be Processed or shipped until such a change has been
implemented, notwithstanding any delay in scheduled ship dates. The parties
further agree to cooperate in the implementation of such a change on Product
shipped prior to discovery of the hazard. In this regard, Xxxxx Peak agrees to
provide a field and factory retrofit method (including materials and/or labor),
as appropriate, including spares. VNUS and Xxxxx Peak shall agree in writing on
appropriate charges for the implementation of a change prior to each change
implementation.
Xxxxx Peak agrees to provide VNUS such method at rates noted in Exhibit A, with
all assistance required to develop and release such methods at the engineering
rate of $***/hour.
VNUS and Xxxxx Peak agree to determine if the change directly impacts material
or labor costs. If such a change results in a Product modification, and cost is
impacted, the price of the units will be adjusted, Amendments to Exhibit A and
outstanding purchase orders will also be made in accordance to the requirements
set forth in this contract.
Initials R.M. Initials PDP
-------- -------
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS / XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 10 OF 21
--------------------------------------------------------------------------------
11. PRODUCT WARRANTY
(a) Xxxxx Peak warrants that Products shall conform to the
Specifications for a period of *** days from the date Xxxxx Peak
ships the unit to VNUS. If at any time during the Period, such
Product does not meet Specifications, Xxxxx Peak shall repair the
unit in accordance with the Warrantee Repair provisions.
(b) Xxxxx Peak represents and warrants, for a period of *** months from
the date of initial shipment to VNUS or *** months from the date of
first use, whichever elapses first ("Warrantee Period"), that all
Products supplied in connection with this Agreement shall be free
from controllable defects in workmanship and materials. This
warranty shall not apply if a Product's non-conformity to the
Specifications is due to modifications or changes requested by or
made by VNUS or any third party after the Product is no longer in
Xxxxx Peak's control. Without limiting the foregoing, Xxxxx Peak
represents and warrants that it shall comply with all present
statutes, laws, ordinances and regulations relating to the
processing and supply of the Product. In the event that any Product
does not conform as aforementioned, VNUS' sole and exclusive remedy
shall be the repair or replacement (at Xxxxx Peak's option and
expense, inclusive of freight) of such nonconforming Product within
14 calendar days within receipt of said unit. Any repairs to
Product made by Xxxxx Peak to correct or repair out-of-warranty
Product shall be charged and billed to VNUS at an agreed to labor
rate, plus material plus ***% margin on materials and labor.
Further, Xxxxx Peak warrants to VNUS that: All warrantees available
to VNUS under this agreement shall be also available to VNUS'
customers.
(c) No inspection or acceptance, approval or acquiescence by VNUS with
respect to Product Processed by Xxxxx Peak shall relieve Xxxxx Peak
from any portion of its warrantee obligation, nor shall waiver by
VNUS of any inspection criteria for Product constitute a waiver of
such requirements for any other Product unless expressly agreed by
VNUS in writing.
OUT OF WARRANTEE REPAIR SERVICES
Within seven calendar days after Xxxxx Peak receives a unit identified in need
of repair, Xxxxx Peak will provide a written estimate of the repair costs.
Within 14 calendar days of VNUS' authorization the unit shall be fully repaired,
tested, and shipped to VNUS. If during the repair services Xxxxx Peak determines
the actual repair costs will exceed the estimated costs by more than 10%, Xxxxx
Peak will issue a revised estimate of the repair costs within three business
days. Xxxxx Peak shall ship the Product back to VNUS according to VNUS' standing
freight instructions, at VNUS' expense.
WARRANTEE REPAIR SERVICES
Within 14 calendar days after Xxxxx Peak receives a unit identified in need of
repair the unit shall be fully repaired, tested, and shipped to VNUS. Xxxxx Peak
shall ship the Product back to VNUS according to VNUS' freight instructions, at
Xxxxx Peak's expense.
Forecasts will be provided by VNUS to identify the estimated rate of repairs for
both Warrantee and Out of Warrantee Products. A deposit for an agreed to amount
may be
Initials R.M. Initials PDP
----- ----
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 11 OF 21
--------------------------------------------------------------------------------
required to establish an effective inventory level of spare parts required for
repair services.
SUBCONTRACTING OF REPAIR SERVICES
Xxxxx Peak may subcontract all or any portion of the repair services, provided
that VNUS provides prior written approval of such an arrangement. The
subcontractor must agree in writing to perform repair services in accordance
with the terms of this Agreement. In no event shall subcontracting relieve Xxxxx
Peak of any of its obligations or responsibilities under this Agreement. Xxxxx
Peak shall be solely responsible for any of the repair services subcontracted
and for the work performed by each of its subcontractors. Xxxxx Peak agrees that
VNUS shall not be liable for any amounts owned by Xxxxx Peak to any of its
subcontractors.
Xxxxx Peak warrants that out-of-warrantee repaired Products shall conform to the
Specifications for a period of 90 days from the date Xxxxx Peak ships the unit
to VNUS ("Repair Warrantee Period"). If at any time during the Repair Warrantee
Period such Product does not meet Specifications, Xxxxx Peak shall repair the
unit in accordance with the Warrantee Repair provisions.
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, XXXXX PEAK DISCLAIMS ALL
WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THE
PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY WARRANT OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.
XXXXX PEAK SHALL IN NO EVENT BE LIABLE FOR ANY LOSS OF DATA, PROFITS OR USE OF
THE PRODUCTS, OR FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE PROCESS, USE OR
PERFORMANCE OF THE PRODUCT, EVEN IF XXXXX PEAK HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES OR LOSSES.
12. NOTICE
All notices and demands required or permitted to be given or made pursuant to
this Agreement shall be in writing and shall be effective when given or
forwarded via United States mail postage prepaid, addressed as follows:
IF TO VNUS: IF TO XXXXX PEAK:
VNUS Medical Technologies, Inc. Xxxxx Peak
0000 Xxxxxx Xx. Xxxxx X 0000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxxxx Xxxxx, XX 00000
or to such other address as to which either party may notify the other.
Initials R.M Initials PDP
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 12 OF 21
--------------------------------------------------------------------------------
13. GOVERNING LAW; MEDIATION
This Agreement shall be governed by, and construed and enforced in accordance
with, and any mediation hereunder shall apply the laws of California, without
regard to its principles of conflict of laws. If any dispute, difference or
question shall arise at any time after the Effective Date between the parties in
respect of or in connection with this Agreement, the parties agree to make a
good faith attempt to negotiate an amicable resolution to any and all such
disputes. If any dispute is not resolved by the parties within thirty (30) days
after delivery of written notice thereof from a party to the other parties
involved with such dispute, prior to commencing a cause of action in any court
of law, the parties shall submit the dispute to non-binding mediation in the
county where the non-complaining party has its principal place of business. The
parties shall use their best efforts to schedule mediation within thirty (30)
days from the date on which the dispute is submitted to mediation. If the
parties in good faith do not settle the dispute through mediation, any party may
file an action in California District Court. Each party irrevocably waives any
objection that it may now or hereafter have to the laying of the venue of any
suit, action or proceeding brought in such court and any claim that the suit,
action or proceeding has been brought in an inconvenient forum. Each party shall
pay its own attorney fees and expenses, except that the mediator's fees shall be
split between the parties. If a prevailing party in court is required to
initiate proceedings to enforce the award or confirm judgement, the prevailing
party shall be entitled to recover its costs and attorney fees associated with
such enforcement action.
14. LIABILITY INSURANCE
By June 18th, 2004, Xxxxx Peak will obtain and keep in force during the
remainder of the Term, comprehensive general and product liability insurance
covering each occurrence for an amount not less than ***. Prior to that date,
Xxxxx Peak will maintain general and product liability insurance coverage of at
least $*** per occurrence.
For the first year of the increase in coverage of general and product liability
insurance, VNUS agrees to pay *** of the premium difference (i.e. the cost
difference to increase the current coverage of *** per occurrence to *** per
occurrence). Xxxxx Peak will invoice VNUS monthly for *** of this additional
coverage cost. Invoices are due upon receipt. [BM2]
Xxxxx Peak will cause its insurance carrier(s) to add VNUS as an additional
insured to Xxxxx Peak's Liability insurance coverage. VNUS will cause its
insurance carrier(s) to add Xxxxx Peak as an additional insured to VNUS'
liability insurance coverage. Xxxxx Peak shall provide to VNUS and VNUS to Xxxxx
Peak, a certificate of insurance evidencing coverage levels and showing the
other party as an additional insured.
15. TERMINATION/EXCLUSIVITY
Either party may choose to terminate the relationship. Termination requires
either party gives written notice to the other not less than 180 days prior to
the termination of this Agreement. Also, either party may terminate this
Agreement by written notice to the other party following the occurrence of any
of the following events:
Initials R.M. Initials PDP
------ -----
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 13 OF 21
________________________________________________________________________________
(a) if the other party ceases doing business as a going concern, becomes
insolvent, or makes an assignment for the benefit of creditors; or
(b) if the other party files a petition for reorganization or bankruptcy under
the United States Bankruptcy Code or any other similar law of any other
jurisdiction, or if any petition for reorganization or bankruptcy under
such Code or under any other similar law of any other jurisdiction is filed
against the other party and is not dismissed or vacated within 30 days
thereafter; or
(c) if the other party is in breach of any material terms or provisions of this
Agreement and has failed to cure such breach within 30 days after receipt
of written notice thereof from the party alleging the breach.
The parties hereby agree that, during the Term of this Agreement, Xxxxx Peak
will be the exclusive supplier to VNUS of the Product identified in Exhibit X.
Xxxxx Peak has the first right of refusal to match any competitive costs.
Upon any termination of this Agreement, Xxxxx Peak will sell and transfer to
VNUS, free and clear of all liens and encumbrances, all of Xxxxx Peak's
inventory and work-in-process of Products in accordance with the terms of
Section 7; and all of Xxxxx Peak's capital equipment relating to the Processing
of the Product as purchased or paid for by VNUS. For equipment owned by Xxxxx
Peak, the purchase price for Product capital equipment shall be the fair market
value or net book value whichever is higher. In addition, upon termination Xxxxx
Peak will transfer all Device History Records for all VNUS Products Processed by
Xxxxx Peak.
In case of any termination of this Agreement by either party, it is expressly
agreed that no termination indemnity or payment of any kind shall be due from
one party to the other hereunder for loss of goodwill or profit expectations or
otherwise, except for funds received in advance where work for such funds was
not performed.
16. SURVIVAL
Sections 11, 13, 16, 17, 18, 19(b), 19(d), 19(e), 20, 21, & 22 shall survive the
termination of this Agreement for any reason.
17. TERMS OF PAYMENT
VNUS shall pay Xxxxx Peak the full amount of each invoice within 30 days after
the date of the invoice for Product services. Payment shall not constitute
acceptance of non-conforming Products. All payments hereunder shall be made in
United States Dollars.
18. INDEMNIFICATIONS
(a) VNUS hereby agrees to indemnify, defend and hold harmless Xxxxx
Peak, its affiliates, directors, officers, employees and agents,
from and against all claims, liabilities, losses or expenses
(including reasonable attorney's fees) ("Losses") arising out of
or in connection with VNUS' use, commercialization, marketing,
distribution or sale of any Product, including, but not limited
to, any actual or alleged injury, damage, death or other
Initials R.M. Initials PDP
---- ---
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS / XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 14 OF 21
--------------------------------------------------------------------------------
consequence occurring to any person as a result, directly or
indirectly, of the possession or use of any Product, whether claimed
by reason of breach of warranty, negligence, Product defect or
otherwise, and regardless of the form in which any such claim is made.
Notwithstanding the foregoing, the foregoing indemnity shall not apply
to the extent that any such losses are due to (1) the failure of a
Product Processed by Xxxxx Peak to meet the warranty provided in
Section 11 above or (2) the gross negligence or willful misconduct of
Xxxxx Peak or its affiliates, directors, officers, employees and
agents.
(b) Xxxxx Peak hereby agrees to indemnify, defend and hold harmless VNUS,
its affiliates, directors, officers employees and agents, from and
against all Losses arising out of or in connection with (1) the gross
negligence or willful misconduct of Xxxxx Peak or its affiliates,
directors, officers, employees or agents and (2) the failure of a
Product manufactured by Xxxxx Peak to meet the warranty provided in
Section 11, including, but not limited to, any actual or alleged
injury, damage, death or other consequence occurring to any person as
a result, directly or indirectly, of such failure, regardless of the
form in which any such claim is made. The foregoing indemnity shall
not apply to the extent that any such Losses are due to the gross
negligence or willful misconduct of VNUS or its affiliates, directors,
officers, employees and agents.
(c) VNUS hereby agrees to indemnify, defend and hold harmless Xxxxx Peak,
its affiliates, directors, officers, employees and agents, from and
against all Losses arising out of, or in connection with, any claim by
a third party that the Processing, use, or sale of a Product infringes
any intellectual property right claimed by such third party, except to
the extent Xxxxx Peak indemnifies VNUS under Subsection (d) of this
Section 17. Indemnification and defense shall proceed as provided
under Section 17(f).
(d) Xxxxx Peak hereby agrees to indemnify, defend and hold harmless VNUS,
its affiliates, directors, officers, employees and agents, from and
against all Losses arising out of or in connection with, any claim by
a third party that (1) the method of manufacturing of a Product
infringes any intellectual property right claimed by such third party;
or (2) the Processing, sale or use of a Product resulting from an ECO
initiated by Xxxxx Peak, infringes any intellectual property right
claimed by such third party. Indemnification and defense shall proceed
as provided under Section 17(f).
(e) In the event that either party becomes aware of the possible
infringement or other misuse by a third party of intellectual property
rights of VNUS or Xxxxx Peak into or used in Processing the Products,
such party will promptly notify the other party.
(f) If either VNUS or Xxxxx Peak becomes aware of an infringement
allegation which might give rise to a right or obligation of
indemnification and defense under applicable sub-sections of Section
4, or becomes aware of possible
Initials R.M. Initials PDP
------- -------
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 15 OF 21
-------------------------------------------------------------------------------
infringement or misuse of intellectual property rights which might
give rise to a right or obligation under Section 15(e), such party
shall promptly notify the other. The party in the role of indemnitor
shall control, bear the full expense of, and retain all proceeds of,
the defense against or settlement of such allegation, unless the
indemnified party subsequently agrees otherwise. The indemnitee shall
cooperate in such action if reasonably requested by the indemnitor. In
no event shall the indemnitor settle or otherwise terminate any
allegation, or allow any infringement or misuse to be terminated, in a
manner which might abrogate any obligations, rights or licenses
between VNUS and Xxxxx Peak, granted or which might be granted under
this Agreement. Any settlement of any such claims that imposes any
liability or limitation on the indemnified party shall not be entered
into without the prior written consent of the indemnified party. The
indemnitee may, in its own discretion, be represented in the defense
or settlement of any such allegation by counsel of its own choosing at
its sole expense.
(g) In the event a claim is based partially on an indemnified claim
described in Sections 17(a), (b), (c) or (d) above and partially on a
non-indemnified claim, or is based partially on a claim indemnified by
VNUS pursuant to Section 17(a) or 17(c) above and partially on a claim
indemnified by Xxxxx Peak pursuant to Section 17(b) or (d) above, any
payments and reasonable attorney fees incurred in connection with such
claims are to be apportioned between the parties in accordance with
the degree of cause attributable to each party.
19. REGULATORY MATTERS
(a) Regulatory Obligations. Each party agrees to conduct its activities in
connection with this Agreement in accordance with all applicable
state, federal, and foreign laws applicable to the Product, including,
without limitation, laws applicable to medical device
commercialization and the protection of consumer health, welfare, and
safety.
(b) Notification. Each party agrees to notify the other party in a timely
manner any adverse event, technical or clinical, which involves or may
involve the Product.
(c) Regulatory Cooperation. Xxxxx Peak shall furnish to VNUS any
information requested or required by VNUS during the Term or any
extensions hereof to enable VNUS to comply with the requirements of
any US or foreign federal, state, and/or government agency.
(d) Regulatory Inquiries. Each party agrees to notify the other of any FDA
or equivalent foreign regulatory inspection, notification, or
communication which involves or may involve the Product. Xxxxx Peak
agrees to cooperate with VNUS in responding to FDA or equivalent
foreign regulatory queries regarding the Product.
Initials R.M. Initials PDP
----- -----
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 16 OF 21
-------------------------------------------------------------------------------
(e) Inspections by Government or Regulatory Agencies. Xxxxx Peak shall
promptly notify VNUS of any inspection by federal, state, local, or
foreign representatives of any facility at which the Product is or
will be Processed and shall provide VNUS with the results of any such
inspections, including actions taken by Xxxxx Peak or any other entity
to remedy conditions cited in such inspections. Without limiting the
generality of the foregoing, Xxxxx Peak shall provide copies of any
written inspection reports issued in connection with such inspection,
and all correspondence between Xxxxx Peak and the government agency or
regulatory body involved. Xxxxx Peak shall permit the FDA and/or
similar foreign agency or regulatory bodies to conduct inspections of
the facilities at which the Product is or will be Processed. Xxxxx
Peak will give VNUS prompt written notice of any such inspections and
allow representatives of VNUS to be present at such facilities during
any such inspections.
20. PRODUCT COMPLAINTS/RECALL
VNUS will have primary responsibility for receiving, investigating and
responding to any complaints relating to Product. Xxxxx Peak agrees to provide
VNUS, at rates of $***/hour, with all assistance required to investigate the
complaint, determine the cause of any Product failure or defect, and develop a
plan to assure that the cause of such failure or defect is eliminated.
In the event that VNUS or Xxxxx Peak recalls or takes any corrective action with
respect to the Product because the Product is believed to violate any provision
of applicable law, Xxxxx Peak shall bear the costs and expenses of any recall or
corrective action related to matters covered by Xxxxx Peak's warranty including,
without limitation, (i) the cost of notifying customers and (ii) costs
associated with the shipment of recalled Product from customers to VNUS, or
Xxxxx Peak and shipping replacement Products to the customer. Similarly, VNUS
shall bear all costs and expenses of any recall unrelated to the Product
processing by Xxxxx Peak.
Each of the parties shall maintain complete and accurate records, for such
periods as may be required by applicable law, identifying the customer of each
individual Product lot in order to assure full traceability of Products. The
parties will cooperate fully with each other in effecting any recall of, or
corrective action with respect to, the Products, including communications with
any purchasers or users.
21. CONFIDENTIALITY
Definition of Confidential Information. "Confidential Information" means
any non-public (i) information, (ii) technical data or (iii) know-how,
including, but not limited to, that which relates to clinical data,
research, manufacturing, product plans, products, services, customers,
markets, software, developments, inventions, processes, designs, drawings,
engineering, hardware configuration information, marketing or finances of
or relating to VNUS. Confidential Information does not include information,
technical data or know-how that (i) is in the possession of
Initials R.M. Initials PDP
----- -----
VNUS Xxxxx Peak, Inc.
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 17 OF 21
--------------------------------------------------------------------------------
Xxxxx Peak on a non-confidential basis at the time of disclosure as shown
by the Xxxxx Peak's files and records immediately prior to the time of
disclosure; (ii) prior to or after the time of disclosure becomes
generally part of the public knowledge or literature, not as a result of
any inaction or action of Xxxxx Peak; (iii) was rightfully disclosed to
Xxxxx Peak on a non-confidential basis by a third party without
restriction or (iv) is approved for release by VNUS in writing.
Non-Disclosure of Confidential Information. Except as required by a
governmental or judicial law, regulation or ruling, including pursuant to
subpoena or other court order, Xxxxx Peak agrees not to use any
Confidential Information for any purpose except to Process Product as
defined in this Agreement. Xxxxx Peak will not disclose any Confidential
Information of VNUS to third parties or to employees or agents of Xxxxx
Peak, except such employees or agents who are required to have the
information to carry out the purpose of this agreement. Xxxxx Peak further
agrees that all of its employees or agents who are given access to the
Confidential Information shall be notified of the confidential nature of
the Confidential Information and shall be required to abide by the
restrictions herein. Xxxxx Peak agrees that it will take all necessary
measures to protect the secrecy of and avoid disclosure or use of
Confidential Information in order to prevent it from becoming available in
the public domain or the possession of persons other than those persons
authorized hereunder to have any such information, which measures shall
include the highest degree of care that Xxxxx Peak utilizes to protect its
own Confidential Information of a similar nature and in no event less than
commercially reasonable care. Xxxxx Peak agrees to notify VNUS in writing
of any misuse or misappropriation of Confidential Information of VNUS
which may come to Xxxxx Peak's attention.
Return of Materials. Any confidential materials or documents which have
been furnished by VNUS to Xxxxx Peak will be returned or destroyed at any
time upon written request of VNUS, together with all copies of such
documentation.
No Rights Granted. Nothing in this Agreement is intended to grant any
rights under any patent or copyright or other rights, nor shall this
Agreement grant any rights in or to VNUS's Confidential Information,
except the limited right to use such Confidential Information solely for
the purpose of Processing Product as defined in this Agreement.
Continued Treatment of Confidential Information. The foregoing commitments
regarding Confidential Information shall survive any termination of this
agreement and shall remain in effect until, and to the extent that,
Confidential Information shall enter the public domain through no default
by Xxxxx Peak of its obligations hereunder.
CONFIDENTIALITY OF AGREEMENT: Except as required by any applicable US or foreign
law, Xxxxx Peak shall not disclose the contents of any term of this Agreement to
any person or
Initials R.M. Initials PDP
------ -----
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 18 OF 21
--------------------------------------------------------------------------------
entity without the prior written consent of VNUS.
22. COMPLIANCE WITH LAW
Xxxxx Peak represents that it is, and will remain, in compliance with all
applicable federal, state and local laws, regulations and orders.
23. MISCELLANEOUS
NON-COMPETE: Xxxxx Peak will not sell any of VNUS' Products directly or
indirectly to any third party either during the Term or after termination of
this Agreement. During the Term or after termination of this Agreement, Xxxxx
Peak agrees not to contact VNUS customers unless express consent is provided to
do so by VNUS.
INDEPENDENT CONTRACTOR: The relationship of the parties under this Agreement
shall be and at all times remain one of independent contractors.
(a) VNUS, its employees and agents, are not and shall not act or purport to
act as employees, agents, or representatives of Xxxxx Peak, but they
are, and shall act as, independent contractors, maintaining full
responsibility and complete control over all of their employees and
operations. VNUS shall have no authority to represent or bind Xxxxx
Peak in any way.
(b) Xxxxx Peak, its employees and agents, are not and shall not act or
purport to act as employees, agents, or representatives of VNUS, but
they are, and shall act as, independent contractors, maintaining full
responsibility and complete control over all of their employees and
operations. Xxxxx Peak shall have no authority to represent or bind
VNUS in any way.
Nothing contained herein shall be deemed to create a partnership, joint venture,
or relationship of principal and agent between the parties hereto or between
Xxxxx Peak and VNUS.
BINDING EFFECT; ASSIGNMENT: This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. Neither
this Agreement nor any rights granted hereby may be assigned by either party
without the other party's prior written consent; provided, however, that: (i)
each party reserves the right to assign this Agreement, without the other
party's prior written consent, to one of its Affiliates or an acquiror of all or
substantially all of its stock or assets related to the transactions
contemplated by this Agreement, whether by purchaser, merger, consolidation or
otherwise; and (ii) in the event of a change of control of either party, the
other party shall have the right to compel specific performance of the terms of
this Agreement by the successor in interest.
Initials R.M. Initials PDP
---- ---
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 19 of 21
________________________________________________________________________________
ENTIRE AGREEMENT: This Agreement constitutes the entire agreement between Xxxxx
Peak and VNUS relating to the subject matter hereof and shall not be amended,
altered, or changed except by a written agreement signed by the parties hereto.
WAIVERS: No delay or omission on the part of either party to this Agreement in
requiring performance by the other party hereunder, or in exercising any right
hereunder, shall operate as a waiver of any provision hereof or of any right or
rights hereunder, and the waiver or omission or delay in requiring performance
or exercising any right hereunder on one occasion shall not be construed as a
bar to or waiver of such performance or right, or of any right or remedy under
this Agreement, on any future occasion.
FORCE MAJEURE: Xxxxx Peak shall not be liable, in any respect, for failure to
manufacture or ship, for any supplier's failure to ship or for delays in
transportation, nor shall VNUS be liable for failure to receive Products where
such failure or delay shall have been due, wholly or in part, to the elements,
acts of God, acts of civil or military authority, fires, floods, epidemics,
quarantine restrictions, war, riots, accidents to machinery, acts of terrorism,
or any other like or different events beyond the control of the party whose
performance is interfered with. In any such case, prompt written notice shall be
given by the affected party to the other of the existence of such cause and of
readiness to resume performance. It is understood that neither party shall be
required to settle a labor dispute against its will. Notwithstanding the
foregoing, if any such delay continues for a period in excess of two (2) months,
the other party shall have the immediate right to terminate this Agreement,
without liability to either party.
INVENTIONS: Xxxxx Peak shall promptly disclose to VNUS all Inventions relating
to Products, but not relating to processing Products, generated by Xxxxx Peak
and its Project affiliates or any of its employees in connection with or as a
result of Design and processing of the Product. Title to all Inventions relating
to Products, but not relating to processing the Product, shall be in VNUS' name.
Xxxxx Peak hereby assigns and agrees to assign to VNUS the entire right, title
and interest in each such Invention, agrees to obtain an assignment thereof from
each employee or agent involved, and agrees to furnish and execute all such
documents and provide such further assistance (at VNUS' expense) as VNUS may
reasonably require in order to perfect and maintain VNUS' rights in such
Inventions. Notwithstanding anything contained in this Agreement to the
contrary, title to all data, materials, information, enhancements, developments,
and improvements relating to the processes for the Product shall be in Xxxxx
Peak's name and Xxxxx Peak shall have no obligation to disclose to VNUS any
data, materials, information, enhancements, developments, or improvements
relating to those processes.
SPECIFIC PERFORMANCE: The parties to this Agreement recognize that any breach of
their respective obligations under this Agreement could result in irreparable
injury to the other party. Each party shall, therefore, be entitled, without
restricting such party from other legal and equitable remedies, to injunctive
and other equitable relief to prevent or restrain the breach of this Agreement,
including, without limitation, the return and delivery of property immediately
upon any termination of this Agreement as provided herein.
Initials R.M. Initials PDP
---- ---
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 20 OF 21
--------------------------------------------------------------------------------
MARKETING RIGHTS: With prior written consent, VNUS permits Xxxxx Peak to market
its services via the demonstration of the Product. Xxxxx Peak will promote the
manufacture of Products in forms not limited to their literature,
presentations, articles, displays, electronic media and trade shows.
NO CONFLICTING OBLIGATIONS: Xxxxx Peak agrees not to engage in any work or
services on its behalf or for any other party which would conflict with its
obligations under this Agreement.
FURTHER ASSURANCES: At any time from time to time during the Term of this
Agreement, Xxxxx Peak shall at the request of VNUS (a) deliver to VNUS such
records, data, or other documents consistent with the provision of this
Agreement, and (b) execute, and deliver or cause to be delivered, all such
assignments, consents, documents or further instruments of transfer or license
consistent with the provisions of this Agreement, and (c) take or cause to be
taken all such other actions, as VNUS may reasonably deem necessary or desirable
in order for VNUS to obtain the full benefits of this Agreement and the
transactions contemplated hereby.
SEVERABILITY: If any of the provisions herein is held to be invalid or
unenforceable for any reason, the remaining provisions will continue in full
force without being impaired or invalidated in any way. The parties agree to
replace any invalid provision with a valid provision that most closely
approximates the intent and economic effect of the invalid provision.
IN WITNESS WHEREOF, authorized representatives of the parties have executed
this Agreement as of the dates indicated below, to be effective as of the
Effective Date nevertheless.
VNUS MEDICAL TECHNOLOGIES, INC. XXXXX PEAK, INC.
BY: X. XxXxx/X. XxXxx BY: Xxxxxx X. Xxxxxxxx [ILLEGIBLE]
------------------------------ ------------------------------
TITLE: VP, Manufacturing and R&D TITLE: President
------------------------------ ------------------------------
DATE: 5/6/04 DATE: May 11, 2004
------------------------------ ------------------------------
Initials R.M Initials PDP
VNUS Xxxxx Peak, Inc.
VNUS/XXXXX PEAK SERVICE & SUPPLY AGREEMENT PAGE 21 OF 21
________________________________________________________________________________
EXHIBIT A
XXXXX PEAK PROPOSAL #020901-1
Initials R.M. Initials PDP
----- -----
VNUS Xxxxx Peak, Inc.
[XXXXX PEAK LOGO]
VNUS RF GENERATOR
MANUFACTURING
PROPOSAL
FROM: TO:
XXXXX PEAK, INCORPORATED RBC PRODUCT DEVELOPMENT
0000 X. 0XX XXXXXX 00000 XXXX 000XX XXXXXX
XXXXXXXX, XX 00000 XXXXXX, XX 00000-0000
PROPOSAL 180201-1
NOVEMBER 3, 2003
This proposal is considered "Xxxxx Peak Confidential" and must be treated
according to the mutual non-disclosure provisions signed between RBC Product
Development, VNUS Medical Technologies and Xxxxx Peak, Inc. Permission from
Xxxxx Peak, Inc. is required for distribution and/or disclosure to any parties.
INTRODUCTION
Xxxxx Peak, Incorporated (Xxxxx Peak) is pleased to present this manufacturing
proposal to RBC Product Development (RBC) for the VNUS RF Generator.
Xxxxx Peak is an FDA registered contract manufacturing and services company
whose goal is dedicated to exceed customer expectations in:
- Cost
- Quality
- Delivery
Xxxxx Peak accomplishes this with a customer-first, open-book, and no-hassle
business philosophy. As a result, we focus on the direct needs of the customer
and their product.
Xxxxx Peak's full-service low to mid-volume flexible manufacturing capabilities
includes:
o Project Management o Value Engineering
o Product Design & Validation o Sustaining Engineering
o Process Design & Validation o Depot Repair & Refurbishment
o Quick-turn Prototyping o Field Service
o World-Wide Distribution
-------------------------------------------------------------------------------
[Mountain Graphic]
XXXXX PEAK [ELEVATION 12,804 FT.] IS LOCATED WEST OF WINTER PARK,
COLORADO. THE PEAK IS NAMED AFTER XXXXXXX X. BUYERS, FOUNDER OF THE
ROCKY MOUNTAIN NEWS IN 1859.
IN A RACE TO BE THE FIRST PUBLISHED NEWSPAPER IN COLORADO, XX. XXXXX'
INNOVATION AND DETERMINATION BEAT HIS COMPETITION BY 20 MINUTES
[XXXXXXX'X XXXXXX CREEK PIONEER]. TODAY, THE ROCKY MOUNTAIN NEWS IS
DENVER'S LARGEST CIRCULATING NEWSPAPER!.
SIMILARLY, XXXXX PEAK 'THE COMPANY' STRIVES TO BE THE LEADER IN ITS
MARKETPLACE THROUGH AN EXTREMELY COMPETITIVE PRICE STRUCTURE,
UNSURPASSED QUALITY AND EXCEEDING CUSTOMER'S DELIVERY EXPECTATIONS.
VNUS RF Generator Mfg. Proposal #180201-1 Rev.01 Page 2 of 10
PROJECT SUMMARY
OBJECTIVE
To provide finished VNUS RF Generator units that meet the following:
- Specification
- Cost target
- Timely delivery requirements, including scalable production
- Flexibility in monthly forecasted volumes
- Depot repair service (tbd)
- Regulatory/quality preparedness
SCOPE OF WORK
The proposed scope of this manufacturing project includes these work products:
- Project Planning
- Product & Manufacturing Process Requirements definition
- Design Transfer
- Assembly & Tooling implementation
- Materials Management, assembly, test, packaging, finished goods
warehousing, and product delivery to VNUS Medical Technologies, San
Jose, California facility.
- Manufacturing Engineering (ongoing)
DELIVERABLES
Xxxxx Peak will provide for this manufacturing effort:
- Project Plan
- Process validation (draft responsibilities are tbd)
- Device Master Record (DMR)- [Product Structure Release into Xxxxx Peak
Quality System]
- Production of finished device
- First Article
- Pilot Production (volume tbd)
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 01 Page 3 of 10
MANUFACTURING PHASE PROCESS
Xxxxx Peak utilizes a phased manufacturing process for consistency,
optimization of internal resources, experience and expertise. Each project is
unique and may not require elements of this process, especially since an
established DMR exists. It is expected that the execution of these activities
will be a joint effort with RBC. Specific details will be finalized upon the
awarding of the contract.
PROJECT PLANNING AND TRACKING
- Develop project plan
- Transfer product documentation
- Provide scheduled project updates
REQUIREMENTS DEFINITION
- Define project/product requirements
- Determine regulatory needs
- Identify Risks
- Develop validation plans & project requirements [after gap-analysis
is completed]
DESIGN
- Define design concept/develop detailed specifications
- Complete and document design, prototype, analysis work
- Complete/review FMEA's/FTA's, as required
- Draft product/process Design Master Records (DMR's), labels, manuals
VERIFICATION/VALIDATION
- Construct Prototypes
- Complete design verification and validation per Validation Plan (VP)
- Execute equipment and/or processes validation (IQ OQ PQ) per VP
- Plan/execute field/plant trials and pilot production
DESIGN TRANSFER
- Review validation results
- Material Management including movement of inventory, planning
- Transfer applicable fixtures or other capital equipment (as required)
- Entrance into metrology and/or maintenance programs, as applicable
- Perform component first article and inspection & release
- Customer acceptance
- ECO release
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 01 Page 4 of 10
MANUFACTURING ESTIMATES
MANUFACTURING-NRE
Outlined below are the projected NRE's for this project.
There is Non-Recurring Engineering costs associated with transferring the VNUS
RF Generator to Xxxxx Peak. These activities include:
- Project Plan development
- Oversight of product Device Master Record (DMR) transfer and release
- Incorporation of DMR into Quality System
- Approved Vendor List (AVL) management
- Generate component files, perform first article inspection & release
- Execute process validation/documentation generation
- Pilot plant initial assembly
ESTIMATED NON-RECURRING EXPENSES (NRE) EFFORTS
----------------------------------------------------------------------------------------------------------------
Resource Type Rate/Hr. Est. Hours Ext Cost Typical Job Responsibilities Description
----------------------------------------------------------------------------------------------------------------
Project Manager *** *** *** Project oversight for process design and
Engineering Manager validation, and Device Master release.
Includes design reviews with customer,
development of project plan and validation
plan, and includes project updates.
----------------------------------------------------------------------------------------------------------------
Engineer II *** *** *** Analysis, review of any current design,
technical evaluation, project planning,
tracking, verification of current
documentation. Generation of component
specifications and assembly process
instructions as needed. Corrections to
drawings as verifications are performed.
Generate FMEA's, PFMEA's and validations as needed.
----------------------------------------------------------------------------------------------------------------
Materials Manager *** *** *** Drawing/Specification Review. Part File
compilation Component Sourcing, Supplier
Review/Selection. Material Purchase, F/A
Inspection oversight & Release
----------------------------------------------------------------------------------------------------------------
CAD Technician *** *** *** Generate assembly drawings
----------------------------------------------------------------------------------------------------------------
Technical Assistance *** *** *** Execute required process validation, First
Article Inspection
----------------------------------------------------------------------------------------------------------------
First Article Production *** *** *** Initial product assembly and validation execution
----------------------------------------------------------------------------------------------------------------
CCA NRE *** *** *** Tooling charge is based on panelizing up to 3 PCBs
Bare Board Tooling (Horizontal, Vertical control PWBs).
Solder Fixtures
(paste stencils) Test: It is estimated *** fixtures will be
Component placement needed. This is based on utilizing ***
programming methods. Each is estimated at a cost of ***.
Text Fixtures This includes both hardware and software
development and assumes each fixture is Single-sided.
----------------------------------------------------------------------------------------------------------------
1. Xxxxx Peak's NRE costs are estimated above at ***. Xxxxx Peak proposes a
fixed cost at ***.
2. NRE costs for CCA fixture development is only an estimate and will be
charged ***.
VNUS FR Generator Mfg. Proposal #180201-1 Rev. 01 Page 5 of 10
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
- Xxxxx Peak does not attach margins to any NRE expenditure and sustaining
engineering.
- Estimates above do not include labor or materials associated with the
achievement of product certification, if desired.
- NRE expenses above do not reflect charges that may be incurred by outside
agencies for regulatory approval/conformity testing (e.g. testing costs
associated with meeting requirements of TUV, UL, CE, etc.).
- NRE estimates do not include pre-production assembly labor, materials or
software any implementation.
NOTE: XXXXX PEAK IS WILLING TO AMORTIZE DOCUMENTATION/DEVELOPMENT LABOR EXPENSE
INTO FIRST PRODUCTION PURCHASE ORDER [NOT TO EXCEED THREE MONTHS]. OTHER
AMORTIZATION OPTIONS MAY BE AVAILABLE UPON REQUEST.
MANUFACTURING - PRODUCTION VOLUME
Manufacturing Product Estimates are provided below:
PRODUCT COST DESCRIPTION
RANGE
Estimate Pricing per unit will be calculated as follows:
VNUS ***
RF GENERATOR
Material
*** unit *** CIRCUIT CARD ASSEMBLIES ARE STILL UNDER QUOTE. MATERIAL QUOTE
build qty IS COMPRISED OF ALL OTHER MATERIALS IN DEVICE.
Labor
*** hours *** Fully burdened overhead labor (FBL) is *** per hour.
Assy and Test FBL includes all and fixed and variable overhead expenses and
labor associated with material and finished product inspection.
Margin *** Margin is calculated as noted above
Total Unit Cost ***
NOTE:
Xxxxx Peak proposes a *** per unit cost pricing structure that will commence
after the first *** unit build. At that time, Xxxxx Peak with re-quote to RBC
with a *** program that will not change the unit price for *** months.
Thereafter, Xxxxx Peak will again re-quote on a fixed-cost program that will
remain for a period of ***.
Additional benefits of selecting Xxxxx Peak include:
- NO RAW MATERIAL STOCKING FEE.
- NO XXXX-UP OR ADMINISTRATIVE FEES ON CAPITAL EQUIPMENT PURCHASES.
- NO FINISHED GOODS STORAGE FEES ANTICIPATED.
REPAIR DEPOT OPTION
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 01 Page 6 of 10
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
Xxxxx Peak's strength comes from its ability to provide comprehensive,
cost-effective repair depot services.
- Optional Post Warranty Repair and Complaint Investigation rates are $***/hour
for labor plus materials with *** margin added to both.
- Repair Depot includes root cause analysis, repair, report generation
and trending (if desired).
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 01 Page 7 of 10
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
ASSUMPTIONS/NOTATIONS
1. The Xxxx of Materials provided by RBC was utilized for device material
estimates and the accuracy of the material cost is based on this
information.
2. Suppliers initially involved in RBC's quote process for fabricated
assemblies were used to determine material costs in this proposal.
Xxxxx Peak will review the utilization of other suppliers if/when it
becomes appropriate for improvements in cost, quality and delivery.
3. Xxxxx Peak's quality system will be utilized for any validations
required, DMR structure and the production of this product.
4. Customer and or RBC (tbd) will provide direction for, and participate
in, sustained engineering efforts for product and process as required:
a. Change-order review and approval process
b. Review and approval of planning and risk mitigation
c. Product configuration release (DMR)
d. Configuration change review and approval
5. Patent requirements are not within the scope of Xxxxx Peak's
responsibilities.
6. NRE estimate is based on the assumption that a Device Master Record
exists in a complete structure and is available to Xxxxx Peak in
electronic format.
7. Product certification efforts, such as UL, CE, ASTM ship qualifications
are not included.
8. Our proposal to address the current inventory of materials at RBC is to
transfer these materials to Xxxxx Peak with no carrying cost applied.
Depending on inventories, Material Purchase Orders will either be
issued to RBC for the entire stock of materials or as materials are
needed for product build. Materials will be purchased at RBC's "last
paid" pricing.
VNUS RF Generator Mfg. Proposal #180201-1 Rev.01 Page 8 of 10
BUSINESS DETAILS
The costs associated within this proposal are three-fold:
1) NRE efforts will begin once Xxxxx Peak receives an approved copy of this
proposal and a purchase order for the amount noted in the NRE section. The
purchase order should be indicated with a "not to exceed" amount.
2) Production will begin once a second purchase order is received and a Supply
Agreement has been approved.
NOTE:
A minimum build of *** units is required to attain acceptable quantities
for process validation per Xxxxx Peak's current quality system [should RBC
request such validation].
Xxxxx Peak acknowledges that a different quantity may be required to
satisfy RBCs' Quality System requirements.
3) If desired, Repair Depot services will require a separate purchase order.
ESTIMATED LEAD-TIME
First Article: *** from the time Xxxxx Peak has taken receipt of all
documentation, materials and capital equipment. Product lead-times are based on
current supplier quoted delivery lead-times.
Production volumes can begin upon customer First Article sample approval.
TERMS
NRE Payment terms are net ***.
Product Payment and Repair Depot terms are ***.
Should client opt to cancel or modify the program, they will be invoiced for
work performed and equipment & materials committed (not to exceed purchase
order quantity).
FREIGHT
Freight FOB Xxxxx Peak, Lakewood, CO.
PROJECT INITIATION
Xxxxx Peak currently has the capacity to initiate the project upon approval.
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 01 Page 9 of 10
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
Acknowledged by:
--------------------------------------
Signature
--------------------------------------
Print
--------------------------------------
Title
--------------------------------------
Date
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 01 Page 10 of 10
[XXXXX PEAK LOGO]
VNUS RF GENERATOR
MANUFACTURING PRODUCT COSTING
PROPOSAL UPDATE
FROM: TO:
XXXXX PEAK, INCORPORATED RBC PRODUCT DEVELOPMENT
0000 X. 0XX XXXXXX 00000 XXXX 000XX XXXXXX
XXXXXXXX, XX 00000 XXXXXX, XX 00000-0000
PROPOSAL 180201-1
JANUARY 28, 2004
REV. 02
This proposal is considered "Xxxxx Peak Confidential" and must be treated
according to the mutual non-disclosure provisions signed between RBC Product
Development, VNUS Medical Technologies and Xxxxx Peak, Inc. Permission from
Xxxxx Peak, Inc. is required for distribution and/or disclosure to any parties.
INTRODUCTION
Xxxxx Peak, Inc. is submitting a second revision of the manufacturing
proposal. This document is intended to capture the estimated product cost that
is based on an updated product structure and Xxxx of Material.
Quote is based on request for second quote email dated January 15, 2004 from
Xxxxx Xxxxxxx of RBC and referencing file: Second_Quote_Package.zip.
PROJECT SUMMARY
OBJECTIVE
To provide finished VNUS RF Generator units that meet the following:
- Specification
- Cost target
- Timely delivery requirements, including scalable production
- Flexibility in monthly forecasted volumes
- Depot repair service (if requested)
- Regulatory/quality preparedness
SCOPE OF WORK
- The NRE scope of this manufacturing project is yet to be determined. NRE
activities may include but are not limited to: internal costs for
engineering efforts to transfer/supplement the Design History File and
Device Master Record, external efforts associated to Circuit Card
Assembly set-up and test processes/fixtures. CCA Test approaches are
still in discussion (flying probe verses ICT (in-circuit test), etc.).
PROPOSAL DELIVERABLES
Xxxxx Peak is providing the estimated cost associated to materials, assembly,
test and margin for the VNUS RF Generator:
MANUFACTURING TRANSFER AND MANUFACTURING NRE
The elements associated with product transfer responsibilities will be
allocated to RBC, VNUS or Xxxxx Peak, Inc. As the definition of these
responsibilities is refined, another iteration of this proposal will be
submitted.
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 02 Page 2 of 5
PRODUCT ESTIMATES
Manufacturing Product Estimates are provided below:
PRODUCT COST DESCRIPTION
RANGE
Pricing per unit will be calculated as follows:
VNUS ***
RF Generator
Material
*** unit *** Circuit Card Assemblies quote is preliminary. Updated CCA quote
Build qty is due January 30th.
Labor Fully-burdened overhead labor (FBL) is *** per hour.
*** hours *** FBL includes all (fixed and variable) overhead expenses and labor
Assy and Test associated with material and finished product inspection.
Margin *** Margin is calculated as noted above
Total Unit Cost ***
NOTE:
Xxxxx Peak will submit a final product cost estimate once the Xxxx of Material
is finalized.
ASSUMPTIONS/NOTATIONS
1. The Xxxx of Materials provided by RBC was utilized for device material
estimates and the accuracy of the material cost is based on this
information.
2. Suppliers initially involved in RBC's quote process for fabricated
assemblies were used to determine material costs in this proposal. Xxxxx
Peak will review the utilization of other suppliers if/when it becomes
appropriate for improvements in cost, quality and delivery.
3. Our proposal to address the current inventory of materials at RBC is to
transfer these materials to Xxxxx Peak with no carrying cost applied.
Depending on inventories, Material Purchase Orders will either be issued
to RBC for the entire stock of materials or as materials are needed for
product build. Materials will be purchased at RBC's "last paid" pricing.
4. A minimum build of *** units is required to attain acceptable quantities
for process validation per Xxxxx Peak's current quality system [should RBC
request such validation]. Xxxxx Peak acknowledges that a different
quantity may be required to satisfy RBCs' Quality System Requirements.
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 02 Page 3 of 5
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
REPAIR DEPOT OPTION
Xxxxx Peak's strength comes from its ability to provide comprehensive,
cost-effective repair depot services.
- Optional Post-Warranty Repair and Complaint Investigation rates are $*** hour
for labor plus materials with *** margin added to both.
- Repair Depot includes root cause analysis, repair, report generation
and trending (if desired).
BUSINESS DETAILS
ESTIMATED LEAD-TIME
First Article: *** from the time Xxxxx Peak has taken receipt of all
documentation, materials and capital equipment. Product lead-times are based on
current supplier quoted delivery lead-times and do not consider the possibility
of expediting.
Production volumes can begin upon customer First Article sample approval.
TERMS
Product Payment and Repair Depot terms are ***.
Should VNUS opt to cancel or modify the program, they will be invoiced for work
performed and equipment & materials committed (not to exceed purchase order
quantity).
FREIGHT
Freight FOB Xxxxx Peak, Lakewood, CO.
Acknowledged by:
---------------------------------
Signature
---------------------------------
Print
---------------------------------
Title
---------------------------------
Date
VNUS RF GENERATOR MFG. PROPOSAL #180201-1 REV. 02 PAGE 4 OF 5
*** Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to such portions.
VNUS RF Generator Mfg. Proposal #180201-1 Rev. 02 Page 5 of 5
NONDISCLOSURE AGREEMENT
The purpose of this Agreement is to establish an understanding of
confidentiality between you and VNUS Medical Technologies, Inc. (the Company)
with respect to a planned disclosure to you of Proprietary Information relating
to venous medical devices, their intended use, company business plans, results,
and target markets for the purpose of helping you to conduct your duties and/or
to determine the desirability of entering into a business relationship. It is
extremely important to us that the disclosure be in confidence and that the
information disclosed be maintained confidential and secret. Accordingly, we
would appreciate your assurance in advance that the disclosure will be under the
following conditions:
1. You will hold in confidence and not use (except for conducting your duties
and/or determining the desirability of entering into a business relationship
with the Company) or disclose any Proprietary Information, except
information you can document in writing (a) as in the public domain, (b) was
known to you prior to disclosure by the Company, or (c) was properly
disclosed to you by another person without restriction.
2. No prints or other reproductions shall be made of documents or other record
bearing media disclosed to you, nor shall information be copied therefrom.
3. All such documents and media shall be returned to us upon demand, and in any
event, when your need for them no longer exists.
4. You will promptly notify the Company of any unauthorized release of
Proprietary Information.
5. You understand that this Agreement does not obligate the Company to disclose
any information or negotiate or enter into any agreement or relationship
with you.
6. You agree that we shall, without further consideration, have sole ownership
to all ideas relevant to our Proprietary Information, whether patentable or
not, which arise from your evaluation.
7. It is understood that the disclosure to be made is not a public disclosure
or sale or offer for sale of any VNUS Medical Technologies, Inc. product or
equipment, but is made for the limited purpose of enabling you to enter into
a business relationship with the Company.
8. You acknowledge and agree that, due to the unique nature of the Proprietary
Information, any breach of this Agreement would cause irreparable harm to
the Company and that the Company shall therefore be entitled to equitable
relief in addition to all other remedies available by law. In addition, any
party which prevails in any legal dispute hereunder shall be entitled to
collect its attorneys' fees and expenses from the other party.
COMPANY RECIPIENT
------- ---------
VNUS Medical Technologies, Inc. Acknowledged and agreed:
By: /s/ X. XxXxx Name: /s/ Xxxxxx X. Xxxxxxxx
---------------------------- ------------------------------
(Signature)
Title: VP, Manufacturing & R&D Name: Xxxxxx X. Xxxxxxxx
------------------------- ------------------------------
(Print)
Date: 10/23/03 Representing: Xxxxx Peak, Inc.
-------------------------- ----------------------
(Print)
Date: October 09, 2003
------------------------------
