Exhibit 10.9
[VNUS LETTERHEAD]
May 25, 2000
Xxxxx X. Xxxxx, Ph.D.
President
Stellartech Research Corporation
0000 Xxxxxxx Xx.
Xxxxxxxxx, XX 00000
Re: Agreement Between VNUS Medical Technologies, Inc. and Stellartech
Research Corporation
Dear Xxxxx:
As you know, Stellartech Research Corporation ("Stellartech") and VNUS
Medical Technologies, Inc. ("VNUS") entered into a Letter of Understanding dated
June 18, 1996, a copy of which is attached to this letter as "Exhibit A" (the
"Letter of Understanding"). The Letter of Understanding outlines the terms and
conditions under which Stellartech has developed and manufactured the RF
Generator for VNUS. The Letter of Understanding contemplated that the terms and
conditions set forth therein would serve as the basis for a final written
contract between VNUS and Stellartech. Since the date of the Letter of
Understanding, VNUS and Stellartech have worked together with respect to the
design and development of the RF Generator and Stellartech has manufactured RF
Generators for delivery to VNUS.
The purpose of this letter is to confirm our agreement that,
notwithstanding those provisions of the Letter of Understanding which
contemplate a further written contract, the Letter of Understanding is the
parties' binding agreement with respect to the rights and obligations of the
parties in connection with the manufacture and distribution of the RF Generator.
Such agreement constitutes the entire agreement between the parties with respect
to the matter thereof and superceedes all previous agreements, negotiations,
representations and communications between the parties. The Letter of
Understanding may not be modified except by a writing signed by a duly
authorized representative of each of the parties. Furthermore, the Letter of
Understanding will be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns.
If you are in agreement with the foregoing, please execute and return
one copy of this letter, which thereupon will constitute the Company's
agreement with respect to this subject matter.
Xxxxx X. Xxxxx, Ph.D.
May 22, 2000
Page 2
Sincerely,
VNUS MEDICAL TECHNOLOGIES, INC.
/s/ XXXXX X. XXXXXX
-------------------------------------
Xxxxx X. Xxxxxx
President and Chief Executive Officer
Xxxx executed and agreed to on May 26, 2000.
STELLARTECH RESEARCH CORPORATION
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx, Ph.D.
President
Enclosure
EXHIBIT A
[VNUS CORPORATION LETTERHEAD]
C O N F I D E N T I A L
June 18, 1996
Xxxxx X. Xxxxx, Ph.D.
President
Stellartech Research Corporation
0000 Xxxxxx Xxx
Xxxxxxxx Xxxx, XX 00000
Dear Xxxxx:
Here is a letter of understanding that upon agreeing to we can use to begin the
work on the RF Generator for VNUS. This letter is intended to serve as the basis
for a written contract between the two companies and reflects the changes we
agreed to this morning.
RF GENERATOR DEVELOPMENT AGREEMENT
LETTER OF UNDERSTANDING BETWEEN VNUS AND STELLARTECH
BACKGROUND
VNUS Medical Technologies, Inc. (VNUS or the Company) has intentions to enter
into a development contract with Stellartech Research Corporation (Stellartech
or the Contractor) for the development of a radio frequency generator for use
with VNUS proprietary vein treatment products.
Stellartech is in the final stages of completing the development of a "generic"
RF generator that will serve as a platform for the RF generator developed for
VNUS. It is the Company's understanding that the design of the generic RF
generator will be completed by early July and that approximately one month
later, the comprehensive testing of the hardware and software validation will be
completed and submitted to Stellartech RA/QA for later submission to FDA in a
510(k). Furthermore, it is the Company's understanding that the generic RF
generator will be designed and tested by a recognized testing agency at the
Contractor's expense and in accordance with TUV, LEC601-2-2 requirements.
Stellartech assumes all costs associated in assuring the platform generic RF
generator will pass this testing and achieve both USA and international
regulatory agency approvals. It is the Company's understanding that the 510(k)
submission for the generic RF generator will be filed after the VNUS IDE filing
due to the higher priority of the VNUS IDE filing milestone. VNUS' choice of
working with Stellartech is based highly upon Stellartech's ability to deliver
both a functional prototype and IDE ready product with test data in a timely
manner.
TERMS TO BE INCLUDED INTO A WRITTEN CONTRACT
Stellartech will modify the Stellartech generic RF generator in order to meet
the needs of VNUS. These needs will be initially spelled out in a requirements
specification and written contract to be supplied by VNUS.
In the event that the Stellartech work on the generic RF generator is either not
completed in the time frame described above, Stellartech will promptly take
action at its sole cost, to complete the design and development.
XXXX agrees to pay Stellartech for the modification of the generic RF generator
and completion of an IDE-ready documentation package as per the estimate
provided in the June 14, 1996 letter from Xxxxx Xxxxx. The total cost of this
project is expected to be $144,300 for completion of milestones 1, 2, and 3 as
described below.
The key milestones are as follows:
1. Delivery of prototype 1 (without temperature measurement) and any
available documentation to VNUS by 8/8/96
2. Completion of prototype 2 (with temperature measurement and control
capability) by 9/1/96. Unit stays at Stellartech but is accessible to
VNUS for testing.
3. Delivery to VNUS of an IDE-ready package containing all safety testing,
and as much design verification and qualification information as
possible by 9/30/96.
4. Delivery of one clinical-ready and fully tested unit and documentation
package to VNUS by 10/21/96.
5. In the event of a deficiency letter from FDA on the IDE filing: Delivery
to VNUS, information and data necessary to successfully address any RF
generator-related deficiencies -- within 30 days of receipt of
deficiency information.
6. Delivery of up to nine additional clinical-ready, tested units by
12/2/96.
Costs for milestones 4, 5, and 6 are not included in the $144,300 estimate. The
cost of completing milestone 6, (delivery of up to nine additional clinical
units) will be at a rate of $*** for each unit purchased.
VNUS will have a royalty-free world-wide license to the design of the RF
generator developed per this agreement. In exchange for this license,
Stellartech will be the sole manufacturer of the RF generator for a period of
three years after regulatory approval to sell the device commercially in the
United States. VNUS may acquire the rights to manufacture the VNUS RF generator
for $*** or by purchasing from Stellartech a cumulative total of *** units.
Furthermore, Stellartech agrees to provide these units at a transfer price of no
more than $*** ea. for purchases of 15 per month. The $*** transfer price can be
adjusted in the future to reflect specific changes to costs of components and
direct labor. Furthermore, if VNUS orders more or less than approximately 15
units per month, there will be a materials and direct labor adjustment to the
transfer price to reflect the change in volume. Once sales begin, VNUS agrees to
provide Stellartech a production forecast, and a fixed order on a quarterly
basis. Stellartech agrees to complete delivery of the fixed order of units
within 90 days of order receipt. If delivery times for certain components make
it difficult to meet a 90 day delivery schedule, Stellartech will provide to
VNUS an advance notification of this issue so these long lead-time components
can be stocked in inventory.
Stellartech agrees to provide a twelve month warranty on units it manufactures
and will service these units at no cost to VNUS for repairs due to normal use or
storage.
--------------
*** 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 will provide to Stellartech an option to purchase 5,000 shares of VNUS
Common stock at the next VNUS Board meeting following the completion of a
written contract. This option will be exercisable at the fair market value of
the stock as determined by the VNUS Board of Directors at the date of the grant.
Additional stock options will be granted for the successful completion of the
milestones by the dates specified above.
Milestone 1 - 1,000 shares, or 500 shares if late by no more than one week
Milestone 2 - 2,000 shares, or 1,000 shares if late by no more than one week
Milestone 3 - 5,000 shares, No bonus for late delivery
Milestone 4 - 2,000 shares, or 1,000 shares if late by no more than one week
Milestone 5 - 3,000 shares for beating milestone 5 by 10 days; 2,000 shares
for meeting milestone 5 on time. Bonus applies
only in the event there are no deficiencies from
RF generator-related matters in the second IDE
submission
Milestone 6 - 1,000 shares, or 750 if no more than one week late;
500 shares if no more than two weeks late;
250 shares if no more than three weeks late
Early delivery of Milestone 3 will result in an additional 2,000 shares for each
week of early delivery.
Stellartech intends to produce an RF Generator with temperature measurement and
control but since it does not currently own an RF generator design with
temperature monitoring and control and VNUS is funding this development.
Stellartech may not sell a VNUS RF generator that contains the same temperature
measurement/control board, or front panel board, or software, or documentation
set without prior VNUS written consent. Furthermore, Stellartech agrees not to
make minor changes to the VNUS RF generator strictly for the purpose of
avoiding conflict with this provision.
For the period of time during which XXXX and Stellartech have a business
relationship, Stellartech agrees not to work with companies competitive to VNUS.
Companies competitive to VNUS are defined as those companies working in the
field: "treatment of venous disease."
Stellartech will deliver to VNUS a full set of documentation including, but not
limited to product engineering specifications, design history files, schematics,
bill of materials, material specifications and certifications, a vendor list,
assembly instructions if any, design verification test plan with complementary
data and report, safety and EMI/RFI test protocol with data and report, and
appropriate sections of an instruction manual. Furthermore, VNUS will receive
from Stellartech a documentation package that is suitable for submitting to FDA
for an IDE filing. It is understood that the full set of documentation may not
be delivered to VNUS until after the IDE is filed.
Stellartech and VNUS agree to conduct design reviews on the VNUS RF generator.
In addition, Stellartech agrees to submit to VNUS prior to testing, protocols
used to define the
testing procedures done in conjunction with data intended to be submitted to a
regulatory agency.
Stellartech will assist VNUS in obtaining an IDE approval for the VNUS vein
treatment system by providing to VNUS a full set of appropriate documentation
and test data on the VNUS RF generator.
Stellartech agrees to assist XXXX in obtaining a CE mark for the VNUS vein
treatment system by supplying the appropriate information on the VNUS RF
generator developed by Stellartech.
Stellartech will not subcontract out any design-related work without VNUS' prior
written consent. Stellartech agrees to allow XXXX the opportunity to meet and
approve the primary senior engineer and technician assigned by Stellartech to
this project. Stellartech agrees that it will not change the primary project
engineer or technician on the VNUS project without prior written VNUS consent.
Stellartech agrees to notify VNUS in writing of proposed changes to the RF
generator, thereby allowing an assessment of the impact of the proposed changes
on the system.
Stellartech warrants that it is registered with and in good standing with the
Federal Government to manufacture medical devices. Furthermore, it is on track
to obtaining a license from the state of California to manufacture medical
devices. Stellartech furthermore agrees to conduct its business in a manner
that maintains its good standing with regulatory agencies.
If Stellartech loses its ability to manufacture the VNUS RF generator, (to be
defined in written contract) VNUS will acquire, at no cost, the rights to have
the RF generator manufactured elsewhere and Stellartech will assist in providing
any documentation or consulting (at standard Stellartech rates) required to
support this activity.
Xxxxx X. Xxxxx, Ph.D., will provide consulting services to VNUS in the areas
of RF generators, temperature-based measurements of RF in medical devices,
thermal effects in biological tissue, regulatory considerations with the use of
RF and thermal technologies, plus general insights relative to the VNUS methods
of treating venous disease.
Xxxxx, I look forward to working with you and Stellartech on this project.
Sincerely,
/s/ XXXXX X. XXXXXX 6-18-96
-----------------------
Xxxxx X. Xxxxxx
President
These terms are agreed to for the purposes of providing a basis for a written
contract.
/s/ XXXXX X. XXXXX 6/19/96
----------------------- ------------
Xxxxx X. Xxxxx, Ph.D. Date
