exv10w17



 







Exhibit 10.17




CONSULTING AND MANUFACTURING AGREEMENT




     This Consulting and Manufacturing Agreement (the “Agreement”) is made and entered into by and
between Broncus Technologies, Inc., a California corporation
(“Company”) and Stellartech Research
Corporation (“Consultant”) effective December 8, 1997 (the “Effective Date”). Whereas the Company
and Consultant desire to create an “independent contractor” relationship in connection with certain
consulting and manufacturing services to be provided by Consultant to the Company, as described
below, the parties agree to the following terms of this engagement.



1. CONSULTING AND MANUFACTURING




     Consultant, as an independent contractor, agrees to provide the consulting and
manufacturing services to the Company as set forth in Exhibit A (“Services”).



2. TERM




     2.1 Completion of Services. This Agreement will become effective on the Effective Date and
shall continue in effect until December 31,2000, unless terminated earlier as set forth in Section
2.2. This Agreement can be renewed for additional periods upon written agreement by Company and
Consultant.



     2.2 Termination. This Agreement may be terminated as follows:



          (a) by either party by giving the other party written notice of termination if any of the
following events should occur: (i) if the other party becomes insolvent or admits in writing its
inability to pay its debts as they mature or makes an assignment for the benefit of creditors; (ii)
if a petition under the United State Bankruptcy Act, as it now exists or as it may be amended, or
any similar law of any other jurisdiction, is filed by the other party; or (iii) if a petition is
filed by any third party, or an application for a receiver of the other party, is made by anyone
and such petition or application is not resolved favorably to that party within sixty (60) days.




          (b) If either party defaults in the performance of any obligation or provision of this
Agreement and, assuming such default is capable of cure, fails to cure such default within thirty
(30) days after written notice specifying the default, the non-defaulting party giving notice may,
at its option, terminate this Agreement immediately upon written notice to the defaulting party.




          (c) at any time, upon the mutual written consent of the parties.




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          (d) If the electrosurgical generators contain Consultant’s Technology (as defined in Exhibit
B), then at the option of the Company, with sixty (60) days prior written notice to Consultant,
after the Company has purchased $1,000,000.00 worth (the “Minimum Purchase Amount”) of
electrosurgical generators (“Products”) in accordance with Exhibit B hereto or made the payment
contemplated by Section B (4) of Exhibit B.




          (e) If the design of the electrosurgical generators do not contain Consultant’s Technology,
then at the option of Company, with sixty (60) days prior written notice to Consultant, after the
Company has purchased $500,000.00 worth (the “Minimum Purchase Amount”) of Products in accordance
with Exhibit B hereto or made the payment contemplated by Section B(4) of Exhibit B.




          (f) at the tune that Consultant and Company can not come to agreement on changes to the
Product Specifications.




          At any time, before its then-scheduled termination date this Agreement may be extended for
such period of time, and upon such terms, as the Company and Consultant agree upon in writing.




          In the event of termination the Company will pay Consultant for any services rendered
up to the date of termination in accordance with Exhibit B and all licenses granted
hereunder shall terminate, except as expressly set forth in Exhibit B hereto.




3. COMPENSATION




     Consultant shall be paid compensation in the amount and at the times set forth in Exhibit B.



4. REIMBURSEMENT




     Consultant shall be reimbursed for Consultant’s out-of-pocket expenses, if any, in
connection with the performance of Consultant’s responsibilities under Paragraph 5 only to the
extent previously authorized in writing by an officer of the Company and reasonably incurred in the
performance of Consultant’s duties under this Agreement. Expenses will be reimbursed at cost plus
15%.



     Estimate of out-of-pocket expenses requiring reimbursement:




Auto
mileage: $30.00 per month cost.

Airfare : $600.00 per trip cost. Two trips per the term of this agreement.



5. RESPONSIBILITIES




          (a) Consultant shall use its reasonable best efforts to perform and promptly complete the
Services set forth in Exhibit A.




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          (b) Consultant will determine the method, details and means of performing the Services
described above, but shall not employ any agents or consultants in these matters without the prior
written consent of the Company.




          (c) Consultant agrees to accept exclusive liability for the payment of payroll taxes,
self-employment taxes, and social security and other contributions that are based on the
compensation to be paid to Consultant under this Agreement and on the wages or other compensation
paid to any agents or employees of Consultant which the Company has authorized Consultant to
engage. Consultant agrees to indemnify and defend the Company against all such taxes or
contributions. Consultant shall also make all necessary workman’s compensation payments.




6. OWNERSHIP OF INVENTIONS: GRANT OF LICENSE




     6.1 Invention and Original Works Assigned to the Company. Consultant will promptly make full
disclosure to the Company in writing, will hold in trust for the sole right and benefit of the
Company, and will assign, and does hereby assign, to the Company all Consultant’s world wide right,
title, and interest in and to any and all inventions, original works of authorship, developments,
designs, improvements, or trade secrets developed in the course of Consultant’s performance of the
Services (collectively ‘Inventions”) which Consultant may solely or jointly conceive or make or
reduce to practice, at any time during the term of Consultant’s consulting agreement with the
Company, together with all patent and other rights therein Consultant has or may acquire in all
countries. Consultant will require all of its employees and consultants, if any, to enter into
similar agreements with Consultant.



     6.2 Obtaining Letters Patent and Copyright Registration. Consultant agrees to assist the
Company in every lawful way to obtain, prepare and prosecute applications for, to perfect the
Company’s title to, and to protect and enforce the Company’s rights in the United States or foreign
countries, letters patent, and copyright registrations covering Inventions, assigned hereunder to
the Company. Such obligations shall continue beyond the termination of Consultant’s engagement, but
the Company shall compensate Consultant at a reasonable rate for time actually spent by Consultant
at the Company’s request on such assistance after such termination. If the Company is unable for
any reason to secure Consultant’s signature to apply for or to pursue any application for an United
States or foreign letters patent, or copyright registrations covering Inventions assigned to the
Company, then Consultant hereby irrevocably designates and appoints the Company and its duly
authorized officers and agents as Consultant’s agent and attorney-in-fact, to act for and in
Consultant’s behalf and stead to execute and file any such application and to do all other lawfully
permitted acts to further the prosecution and issuance of letters patent, copyright, or mask work
registrations with the same legal force and effect as if executed by Consultant.



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     6.3 Grant of Licenses. It is understood by and between the parties that Consultant owns and
may in the future own certain intellectual property rights to certain intellectual properties,
design, know-how, trade secrets, patents and/or inventions other than the Inventions, including,
without limitation, Consultant’s proprietary technology in the field of RF and electrosurgical
generators for medical applications commonly referred to as the Stellartech RF Generator
(collectively, the “Consultant’s Technology”) that it may utilize in the provision of the Service
and the Products to be manufactured in connection therewith. Consultant shall notify the Company in
writing in advance of using any of Consultant’s Technology and will define what technology is being
used. To the extent that said intellectual properties are so utilized, Consultant shall retain all
right, title and interest therein.



     Subject to, and in accordance with, the terms of this Agreement, including Exhibit B,
Consultant grants to the Company a nonexclusive, irrevocable, nontransferable, worldwide,
royalty-free license to use the Consultant’s Technology solely in connection with the use, sale and
distribution of Products manufactured by Consultant; provided that such license shall be exclusive
to the Company in the field of the treatment of Obstructive Pulmonary Diseases or Asthma during the
term of this Agreement. Except as specifically set forth in Exhibit B hereto, the Company shall not
be entitled to use, license or otherwise commercially exploit the Consultant’s Technology without
the Consultant’s prior written consent, which may be withheld in Consultant’s sole discretion.



     The Company hereby grants to Consultant an unlimited nonexclusive, irrevocable, worldwide,
royalty-free license to use, license, sublicense, incorporate into products, manufacture or
otherwise commercially exploit any Inventions related to Consultant’s RF generators commonly
referred to by Consultant as the Stellartech RF Generators; provided, however, that such license
shall not extend to use in connection with products primarily designed for the treatment of
Obstructive Pulmonary Diseases or Asthma.



7. WARRANTIES: LIMITATION OF LIABILITY: INDEMNIFICATION OF CONSULTANT



CONSULTANT MAKES NO WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THIS
AGREEMENT, THE CONSULTANT’S TECHNOLOGY OR ANY SERVICES, GOODS OR DEVELOPMENTS TO BE PROVIDED BY
CONSULTANT TO THE COMPANY IN CONNECTION WITH THIS AGREEMENT, INCLUDING, BUT NOT LIMITED, TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS OR DESCRIPTION, OR THE ABSENCE OF INFRINGEMENT
UPON ANY THIRD PARTY’S INTELLECTUAL PROPERTY RIGHTS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT AND THE EXHIBITS HERETO, INCLUDING, WITHOUT LIMIT, EXHIBIT A



IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR EXEMPLARY DAMAGES





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ARISING OUT OF, PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO,
LOSS OF PROFIT OR OTHER MONETARY LOSS, EVEN IF SUCH PARTY IS ADVISED IN WRITING IN ADVANCE OF THE
POSSIBILITY OF SUCH DAMAGES. EITHER PARTY’S LIABILITY FOR DAMAGES TO FROM ANY CAUSE WHATSOEVER,
EXCLUDING THE INTENTIONAL MISAPPROPRIATION OF TECHNOLOGY OR INFORMATION BY EITHER PARTY, AND
REGARDLESS OF FORM, WHETHER IN CONTRACT OR IN TORT, INCLUDING NEGLIGENCE, SHALL IN NO EVENT EXCEED
THE LESSOR OF THE TOTAL AMOUNT OF MONIES PAID BY THE COMPANY TO CONSULTANT PURSUANT TO THIS
AGREEMENT OR $100,000.




     The Company will indemnify Consultant and hold it harmless from and against all claims,
damages, losses and expenses (including reasonable attorneys’ fees) arising out of or resulting
from or otherwise related to the performance of the services to be provided by Consultant pursuant
to this Agreement (including, without limitation, claims related to patent or other intellectual
property infringement, product liability, fraud, breach of warranty, etc.), except to the extent
any such claims, damages, losses and expenses are attributable to a breach by Consultant of any of
its express obligations pursuant to this Agreement or Consultant’s negligence or willful
misconduct.



8. INDEPENDENT CONTRACTOR STATUS




     Consultant acknowledges that the Services rendered under this Agreement are for a
specified fee for certain intended results, and that Consultant is under the control of the Company
only as to the result of the Services and not as to the means by which this result is accomplished.
As such, Consultant acknowledges that Consultant is an independent contractor and accepts the legal
consequences of this status, including without limitation that (1) Consultant is excluded from the
benefits of any applicable state worker’s compensation insurance and acknowledges that Consultant
must maintain his own desired levels of medical, disability, life and other insurance benefits,
whether or not he is injured while performing Services for the Company, (2) Consultant is excluded
from receiving state employment and disability insurance benefits, (3) the Company will not deduct
from Consultant’s compensation any amounts for federal or state income tax withholding, “FICA”
contributions, contributions to state disability funds or similar withholding, and (4) Consultant
is excluded from coverage of state and federal labor laws that may regulate the payment of overtime
wages or other matters affecting employees.



9. COOPERATION AFTER TERMINATION




     Following any notice of termination of this Agreement given pursuant to Paragraph 2.2 above or
upon expiration of the term of this Agreement, Consultant shall fully cooperate with the Company in
all matters relating to the winding up of Consultant’s pending work on behalf of the Company and
the orderly transfer of any work or documents to the Company or a manufacturer other than the
Company at the rates set forth in Exhibit B; provided that such obligations shall be contingent
upon the Company




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having paid to Consultant all amounts owing to Consultant hereunder. In the event that the Company
has purchased the Minimum Purchase Amount of Products from Consultant or made the payments
contemplated by Section B(4) of Exhibit B and the Company desires to use a manufacturer other than
Consultant for the Products, Consultant will aid the Company in initiating manufacturing of
Products by the Company or a third party with no additional compensation other than normal
consulting fees as shown in Exhibit B. Without the prior written consent of the Company, Consultant
shall not be entitled to retain and shall not retain copies of any information owned by the Company
at any time designated by the Company as confidential or proprietary.




     Consultant agrees that, at the time of terminating Consultant’s agreement with the Company and
at any other time the Company requests, Consultant will deliver to the Company (and will not keep
in Consultant’s possession or deliver to anyone else) any and all devices, materials, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, equipment, other documents or property, or reproductions of any aforementioned items
belonging to the Company, its successors, or assigns. Consultant will not, during or after
Consultant’s engagement with the Company, deliver or transfer to any person, or use, without
authorization by the Company any property owned by the Company.



10. ASSIGNMENT




     The rights and obligations of the parties hereto are personal in nature and may not be
assigned without the other party’s prior written consent, which consent will not be unreasonably
withheld provided, however, that the Company may assign its rights hereunder in connection with an
acquisition of the Company or the Product line to which this pertains. The rights and obligations
of the Company under this Agreement shall insure to the benefit of and shall be binding upon the
permitted successors and assignees of the Company.



11. CONFIDENTIAL INFORMATION




     The parties hereby agree that: (a) any Confidential Information received by either party (the
“Receiving Party”) from the other (the “Disclosing Party”) under this Agreement, whether for the
Receiving Party’s own internal use or otherwise, and whether provided orally, in writing or in any
other medium, is and shall be treated as the confidential property of the Disclosing Party; (b) the
Receiving Party shall hold such Confidential Information in strictest confidence and shall exercise
at least the same degree of care to safeguard the confidentiality of the Confidential Information
as it does with its own confidential information; and (c) except as provided in this Agreement, the
Confidential Information shall not be duplicated or in any way disclosed to others in whole or in
part without the prior express written permission of Disclosing Party. As used herein, the term
“Confidential Information” means, collectively, the Products and any documentation, information and
intellectual property rights related thereto, or any part or component thereof, as well as all
specifications, processes, drawings, memoranda, data, technical or business information or trade
secrets, confidential knowledge, data or other



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proprietary information relating to products, processes, inventions, developments, improvements,
know-how, designs, formulas, developmental or experimental work, computer programs, data bases,
other original works or authorship, customer lists, business plans, financial information or other
subject matter pertaining to or of possible use in any present or prospective business of either
party or any of either party’s other clients, consultants, or licensees. Notwithstanding the
foregoing, Consultant agrees to cooperate with the Company’s preparation of service manuals and
other necessary and appropriate Product-related documents which do not contain Confidential
Information.




     The prohibition on disclosure set forth above shall not apply to disclosures by the Receiving
Party based on a need to know provided such disclosures are reasonably necessary to the Receiving
Party’s performance hereunder or use of products delivered hereunder in accordance with this
Agreement, and provided further that the Receiving Party shall take all reasonable steps to insure
that such persons or entities to whom disclosure is made shall have been advised of the
confidential nature thereof and shall be under an express written obligation to maintain such
confidentiality and to be bound by the obligations of this Section.



     Consultant agrees not to disclose that it is working on this project, or with the Company, or
use Company’s name or other identifying characteristics in any publicity without written consent
from the President of Broncus Technologies, Inc. which will not be unreasonably withheld.



     Each Receiving Party agrees to indemnify and hold harmless the Disclosing Party from and
against any expenses (including court costs and reasonable fees of attorneys, accountants and
expert witnesses), claim, costs, action, demand, proceeding, award, liability, loss and damages
suffered by the Disclosing Party in connection with any failure by the Receiving Party to (a)
satisfy any of their obligations under this Section and (b) to undertake whatever reasonable action
is necessary to remedy any such failure.



     This Section shall not apply to information received from the Disclosing Party which (a) is or
becomes publicly available through no fault of Receiving Party (b) is declared not confidential by
the Disclosing Party in writing (c) is lawfully obtained without violation of any confidentiality
obligations from third parties or (d) is required by law to be disclosed by Receiving Party.



12. CONFLICTING ENGAGEMENTS




     Consultant agrees that, during the term of Consultant’s engagement with the Company,
Consultant, including, without limitation, Roger Stern, will not, without the Company’s prior
written consent, engage in any consulting, or other business activity in the field of the treatment
of Obstructive Pulmonary Diseases or Asthma. Additionally, the Company has a first right of refusal
on any technology invented by Consultant in the area of Obstructive Pulmonary Diseases or Asthma
for five years following Consultant’s engagement.




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13. GOVERNING LAW: DISPUTE RESOLUTION




     This Agreement shall be governed by and interpreted in accordance with the laws of the State
of California applicable to contracts between residents of and to be performed entirely within that
state. In the event of a dispute between the parties to this Agreement, the parties agree to
promptly meet and confer with the goal of settling such dispute. If the parties are unable to reach
a prompt, amicable agreement concerning such dispute, the parties agree to submit the matter to
non-binding mediation. If the parties cannot agree on a mediator, the Judicial Arbitration and
Mediation Service, Inc., San Francisco, California office (“J.A.M.S.”) will be requested to provide
a mediator with expertise in technology license agreements. The mediation fee, if any, shall be
divided equally between the parties. Failing the resolution of their dispute by mediation, each
party hereto hereby submits to the jurisdiction of any state or federal court located in Santa
Clara County, California. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which such party may be
entitled. Nothing in this Section 13 shall be deemed to prohibit either party from seeking
equitable relief in a court at any time.



14. ENTIRE AGREEMENT




     This Agreement constitutes the entire agreement between the parties respecting the
Services expected to be rendered by Consultant to the Company, and there are no representations,
warranties, or commitments which may be relied upon by either party except as specifically set
forth in this Agreement. This Agreement supersedes all prior or contemporaneous agreements,
commitments, representations, writings, and discussions between the Company and Consultant, whether
oral or written. This Agreement may be amended only by an instrument in writing executed by the
parties hereto. Consultant expressly acknowledges that Consultant has read the terms of this
Agreement, has had the opportunity to discuss those terms with his own legal counsel, and
understands that this is a legally binding contract. All references to the Agreement include the
exhibits hereto.



15. NOTICES




     Any notice, request, demand or other communication hereunder shall be in writing and shall be
deemed to be duly given when personally delivered to an officer of the Company or to Consultant, as
the case may be, or one day after delivery to an express courier service or three days after
deposit in the United States Mail with postage prepaid addressed, if to the Company, at 1400 N.
Shoreline Blvd., Building A, Suite 8, Mountain View, CA 94043 or if to Consultant, at 2665 Marine
Way, Mountain View, California 94043, or to such other address as either party may specify by
notice to the other as provided in the Paragraph.



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16. SAVINGS CLAUSE




     Should any valid federal or state law or final determination of any administrative agency or
court of competent jurisdiction invalidate or otherwise affect any provision of this Agreement, the
provision or provisions so affected shall be conformed automatically and to the extent possible to
the law or determination in question with the goal of effecting the intent of the parties to the
greatest extent possible, and in all events the remaining provisions of this Agreement shall
continue in full force and effect.



17. COUNTERPARTS




     This Agreement and the other agreements referred to above may be executed in counterparts,
each of which shall be deemed to be an original.




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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the
first date written above.




	 	 	 	 	 
	Broncus Technologies, Inc.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Glendon E. French	 	 
	 

	 	 	 	 
	Name:

	 	Glendon E. French	 	 
	Title:

	 	President and CEO	 	 
	 
	 	 	 	 
	Stellartech Research Corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Roger Stern	 	 
	 

	 	 	 	 
	Name:

	 	Roger Stern	 	 
	Title:

	 	President	 	 





12/8/97



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Exhibit A




Services




     A. Engineering and design services



     Engineering, design, prototype development, and manufacture of Products specifically for
treatment of the lungs and other specifically agreed indications for laboratory testing, testing in
animals and human clinical trials, including documentation and controls suitable for obtaining IDE
approval, FDA approval to market, CE mark, UL approval, and CSA approval.



     Consulting with Company on design of disposable instruments to be used in conjunction with
Products specifically for treatment of the lungs and other specifically agreed indications.



     B. Manufacture of Products



     Consultant will manufacture Products in the USA for the Company as ordered by the Company.
This will include purchasing and stocking of raw materials; design, installation, validation,
calibration and maintenance of an assembly line; hiring and training personnel; creation and
maintenance of all necessary documentation including a quality system, device master record, and
device history records; stocking and managing a finished goods inventory; and all other tasks
normally associated with being a contract manufacturer of a medical device. The specifics of how
the preceding items are handled are up to Consultant and should be adequate to handle demand
expressed elsewhere in this document.



     C. Warranty and repair of Products



          1.
Consultant warrants that the Products will use best efforts to manufacture in compliance with FDA requirements and other laws. Additionally, that no technology
provided by consultant infringes on another party’s intellectual property.




          2. Products manufactured prior to validation of Consultant’s manufacturing line are not
warranted by Consultant.




          3. Product not under warranty. Products returned within the warranty period that can be shown
to have malfunctioned for non-Product quality related reasons will not be investigated, serviced or
repaired under warranty. Any costs associated with this Product will be borne by Company.




          4. Warranty of reusable Product: Consultant hereby warrants all Products to be free of defects
in design and workmanship and to meet the revision of the specification stated in the device
history record of the Product for fifteen months after date of manufacture or one year after sale
to a distributor or end user, whichever comes first.
Product in breach of warranty will be replaced or repaired by Consultant within thirty
(30)days of delivery to Consultant. All warranty repair or replacement costs including shipping to
the Company or end user will be borne by Consultant. Additionally,




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Consultant will maintain a “loaner pool” of Products for the intention of allowing the user
to continue providing treatments while their Product is being serviced. Quantity of Products in the
pool will be reviewed and determined approximately semi-annually. Quantity of products in the pool
is expected to be based on the following formula




(Number of units within warranty in the field) x (mean repair time)

(Mean time between failures)




          5. Warranty of disposable Product: Consultant will warrant all Products to be free of defects
in design and workmanship and to meet the revision of the specification stated in the device
history record of the Product for a period of fifteen months from date of manufacture or one year
after sale to a distributor or end user, whichever comes first. Failure of Product to function for
its intended use within the warranty period will trigger replacement within thirty (30) days by a
new unit at no charge to Company.





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Exhibit B




A. Engineering, design, and prototyping fees




     The consulting engagement will be broken into discrete parts. The Company and Consultant
will work together to frame and agree on the scope of each part. Consultant will then provide to
Company an estimate of the cost to complete the defined part of the project. If the estimate is
acceptable, Company will provide Consultant with a purchase order to execute the defined part of
the project. If Consultant subsequently anticipates that the cost to complete the work may exceed
that which was outlined in the purchase order, then Consultant will notify Company as soon as
practicable.



     All Consultant invoices must reference a valid purchase order. No payment will be made to
Consultant for services or products not covered by a Company approved purchase order.



     Consultant will bill for services at the following rates.



	 	 	 	 	 	 	 	 	 	 	 
	Administrative Services
	 	$25/hr	 	Assembly	 	$     35/hr
	Technician
	 	$50/hr	 	Graphic Design	 	$     50/hr
	Documentation/Drafting
	 	$55/hr	 	Engineer	 	$     75/hr
	Senior Engineer
	 	$95/hr	 	Senior Manager	 	$   135/hr






     Estimate:



          Typical fees may lie in the range of $5,000 to $30,000 per month. Typical projects range from
three months to twelve months. Hours typically break down by these approximate percentages:




	 	 	 	 	 	 	 	 	 	 	 
	Administrative Services
	 	 	5	%	 	Assembly	 	 	5	%
	Technician
	 	 	15	%	 	Graphic Design	 	 	2	%
	Documentation/Drafting
	 	 	10	%	 	Engineer	 	 	20	%
	Senior Engineer
	 	 	40	%	 	Senior Manager	 	 	3	%






     It is currently estimated that this engagement will involve design, development,
validation, set up of manufacturing, and the manufacture of an RF Generator similar to the one
described in Broncus Draft Specification Document 10089revl. The cost of these activities is
estimated below. Consultant will promptly notify Company in the event that actual costs are
projected to significantly exceed these estimates.



     1. Design and development starting with generic Stellartech RF Generator,
(please note that the mechanical specifications are significantly different than our current
generic design and will require redesign to fit in the enclosure size specified.) Delivery of
one prototype. Estimated at $60,000.




     2. Preliminary design validation to FDA and IEC requirements. Software
validation. Estimated at $30,000.



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     3. Manufacture of 5 pilot units. Estimated at $30,000.



     4. Design validation to FDA and IEC requirements for electrical safety, EMC,
environmental, shipping. Includes TUV type testing to IEC601. Estimated at $30,000.



     5. Set up for manufacturing including fully released Rev. A Device Master
Record and construction or procurement of all test fixtures. Estimated at $30,000.



Estimated total cost = $180,000.



     Notes:



     1. Consultant agrees to hold these prices constant through the duration of this
Product’s design cycle or one year, whichever is earlier.



     2. Out-of-town trips are charged at 10 hours per day and Consultant will
work exclusively for Company during this time or charges will be reduced accordingly.



     3. Project manager will be Jerry Smith.


B. Manufacturing Costs; Prices and Licenses




     1. Direct labor rates are defined as follows:



	 	 	 	 	 
	 	 	Per Hour
	Senior Engineer
	 	$	47.50	 
	Engineer
	 	$	27.50	 
	Technician
	 	$	17.50	 
	Assembler
	 	$	13.00	 






     2. Price



          a. Standard Price and Cost are defined as follows. All prices and costs are for a single
Product.:




          Standard Price = Cost + Standard Gross Margin + Special Demand Cost




          Cost = Materials Cost + Materials Burden + Direct Labor + Overhead




          Special Demand Cost = Carrying Cost  ̧ Minimum Yearly Order Quantity




          Carrying Cost = Materials Cost + Material Burden x Prime Rate x Number of Special
Demand Units Carried




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Where:

“Standard Gross Margin” is 35% of Transfer Price

“Material Burden” is 20% of material cost 

Overhead is 200% of direct labor



b. Transfer price. Consultant will sell to Company each Product for the Standard Price except those listed in “c.,” below.



Example:




The following is given to clarify the calculation and is not an estimate of Transfer Price.




	 	 
	If:
	 
	Materials cost

	 = $1000
	Direct labor

	 = $400

	Prime Rate

	 = 8.5%
	Minimum expected yearly order quantity

	 = 100 units
	Number of Special Demand Units Carried

	 = 10 units
	then,
	 
	Material Burden

	 = $1000 x 0.2 = $200
	Overhead

	 = $400X2 = $800
	Carrying Cost

	 = ($1000 + $200) X 0.085 X 10 = $1020
	and,
	 
	Cost

	 = 1000 + 200 + 400 + 800 = $2400
	Std Gross Margin

	 = $2400 / (1 - 0.35) = $3692 - $2400 = $1292
	and,
	 
	Transfer Price


	 = $3692

	Special Demand Cost

	 = $1020 /100 = $10.20
	Standard Price

	 = $2400 + $1292 + $10.20 = $3702.20






                       
c. Reduced Price. Consultant will sell to Company each Product for Cost
if this Product meets all three of these requirements: No more than 25% of any written
purchase order, no more than 25 units for the term of this contract unless mutually
decided upon by the parties, and Company’s intention is not to sell the individual Products
obtained at the Reduced Price.




     Example:



	 	 	 
	Reduced Price = $2400.00                  







     Consultant will be provide Company with access to audit Consultant’s relevant cost
information, no more than twice per calendar year at the Company’s expense. Consultant will provide
Company with full access to observe manufacturing.



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     3. Delivery



          Consultant will provide the following delivery times to Company:




          a. Standard Lead-Time. Standard Lead-Time for delivery to Company of
Products is ninety days after receipt by Consultant of a written purchase order.




          b. Special Demand. Up to once per every three months, Consultant must
be able to deliver ten Products to Company thirty days after receipt by Consultant of a
written purchase order that specifies “Special Demand.”




     4. Definition of Consultant’ s Technology



          Consultant’s proprietary technology includes a generic RF system for medical applications
consisting of a mechanical enclosure design, RF power generation and measurement PC board, CPU
board and software, and front panel board, including all documentation associated with this design.




          Consultant also owns several other designs that can be used as starting points to expedite
development of alternate configurations. These other designs include circuitry to generate and
measure RF energy in the following configurations: 15 watts, 100 watts, and circuitry to measure
one or more thermocouples or thermistors. Included is the software to work with such systems, and
all documentation associated with such systems.




     5. Minimum Purchase Amount



          a. In consideration of the Consultant’s contributions to the development of
the Products and such Consultant’s assignment of any right, title and interest in and to any
Inventions related to the provision of the Services as set forth in Section 6 of the
Agreement, the Company agrees to purchase not fewer than $1,000,000 worth of
Products if the Products contain Consultant’s Technology (the “Minimum Purchase
Amount”) or $500,000 worth of Products if Products do not contain Consultant’s
Technology (the “Minimum Purchase Amount”) of Products from Consultant before it
purchases any such Products from a manufacturer other than Consultant.




          b. If the Company has purchased fewer than half of the Minimum Purchase
Amount of Products from Consultant and desires to use a manufacturer other than
Consultant for the manufacture of Products, the Company shall pay to Consultant a fee
(“Alternate Manufacturer Fee”) of one tenth of the Minimum Purchase Amount,
whereupon the license granted by Consultant to the Company in Section 6.3 shall continue
and be extended to include the manufacture of the Products by the Company or its
contractors and shall survive any termination of this Agreement.




          Examples:




          If the Consultant’s Technology is used in the Product, and Company has purchased $450,000.00
worth of Products by the time production is transferred to a manufacturer other than the
Consultant, then the Alternate Manufacturer Fee amount will be (0.1 X 1,000,000) = $100,000.




          If the Consultant’s Technology is not used in the Product, and Company has purchased
$200,000.00 worth of Products by the time production is transferred to a




Page 16 of 18









 




manufacturer other than the Consultant, then the Alternate Manufacturer Fee amount will be
(0.1X500,000) = $50,000.




          c. If the Company has purchased more than half but less than the entire Minimum Purchase
Amount of Products from Consultant and desires to use a manufacturer other than Consultant for the
manufacture of Products, the Company shall pay to Consultant an Alternate Manufacturer Fee,
whereupon the license granted by Consultant to the Company in Section 6.3 shall continue and be
extended to include the manufacture of the Products by the Company or its contractors and shall
survive any termination of this Agreement. The Alternate Manufacturer Fee will be equal to one
fifth of the difference between the Minimum Purchase Amount and the amount of Products already
purchased.




          Example:




          If the Consultant’s Technology is used in the Product, and Company has purchased $850,000.00
worth of Products by the time production is transferred to a manufacturer other than the
Consultant, then the Alternate Manufacturer Fee amount will be
(1,000,000 - 850,000 ) / 5 =
$30,000.00.




     Notwithstanding the provisions of this Section B (“Manufacturing Costs, Prices and Licenses”),
in the event that the Company does not purchase the Minimum Purchase Amount of Products from
Consultant due to an act or omission on the part of Consultant or the failure of Consultant to
deliver Products reasonably acceptable to the Company, the Company shall not be liable to
Consultant for any such fee. The license granted by Consultant to the Company in Section 6.3 shall
continue and be extended to include the manufacture of the Products by the Company or its
contractors.



     In the event that this Agreement is terminated by the Company pursuant to Section 2.2(a),
2.2(b), or 2.2(d) of this Agreement, or upon expiration of the Agreement, the license granted by
Consultant to the Company in Section 6.3 shall continue and be extended to include the manufacture
of the Products by the Company or its contractors.



C. Payments; Late Fees




     All payments shall be due within thirty (30) days of invoicing. The Company shall pay a late
fee equal to the lesser of 12% per annum or the maximum amount permitted by law upon any amounts
that have not been received within sixty (60) days of invoicing.



D. Equity and milestones




     Company will grant Consultant an option for 20,000 shares of common Broncus Technologies, Inc.
shares, subject to approval by the Board of Directors, at the board meeting following the signing
of this contract. The exercise price will be at the fair market value of the shares on the date of
grant. The options will only vest upon completion of milestones listed below. The options may be
exercised up to ten years from the date of grant. If this agreement is terminated prior to
achievement of any milestone, those options




Page 17 of 18









 








Consulting and Manufacturing Agreement



This Consulting and Manufacturing Agreement (the “Agreement”) is made and entered into by and
between Asthmatx, Inc., a California corporation (“Company”) and Stellartech Research Corporation
(“Consultant”).



The terms of this Agreement shall be as follows:



Consultant and Corporation agree to incorporate the terms of the Base Agreement given the
amendments listed in the section below entitled “Changes.”




Reference Documents:





	 	1.	 	Document entitled “Consulting and Manufacturing Agreement” entered into by Broncus
Technologies and the Consultant on December 8,1997 (“Base Agreement”)
	 
	 	2.	 	Document entitled “Broncus Technologies Addendum to Consulting and Manufacturing
Agreement” signed by Gary Kaplan and Gary Seeger on November 11,1998
	 
	 	3.	 	Letter to Roger Stern, President of Stellartech Research Corporation from Glen French
dated September 13, 2001.





Changes:




	 	 	 
	In Reference Document:	 	Make the Following Change:
	3

	 	Incorporate this document into the Base Agreement
	1 and 3 — all applicable
sections

	 	•   Change “Broncus” or “Broncus Technologies” to “Asthmatx” 

•   Change the Agreement Effective Date from December 8, 1997 to January 1 ,
2004

	1 (section 15)

	 	Change Company’s address from “1400 N. Shoreline Blvd., Building A,
Suite 8” to “1340 Space Park Way”.
	2 (entire agreement)

	 	Replace the entire document entitled “Broncus Technologies Addendum
to Consulting and Manufacturing Agreement” with the attached document
entitled “Asthmatx Inc. Addendum to Consulting and
Manufacturing Agreement.”
	1 (section 2.1)

3 (paragraph 2)

	 	This agreement shall continue in effect until December 31 , 2006

unless terminated earlier as set forth in the Base Agreement.
	1 (Exhibit B, section B5 on
pages 16 and 17)

	 	Change each dollar figure listed to a dollar figure that represents
the original dollar figure divided by 2.





The following representatives have been authorized to sign this agreement and hereby agree to
the provisions listed in this agreement.




	 	 	 
	For Stellartech Research Corporation

	 	For Asthmatx, Inc.
	 
	 	 
	/s/ Roger A. Stern

	 	/s/ Glendon E. French
	 

	 	 
	Authorized Signature

	 	Authorized Signature
	 
	 	 
	Roger A. Stern

	 	Glendon E. French
	 

	 	 
	Name (print)

	 	Name (print)
	 
	 	 
	President

	 	President & CEO
	 

	 	 
	Title

	 	Title
	 
	 	 
	3/1/2004

	 	2/17/04
	 

	 	 
	Date

	 	Date






Page 1 of 1









 




not already vested will be deemed unexercisable. The option will be subject to the terms of
the Company’s stock option plan.




     Milestones:



     1. 5,000 options will vest upon the successful clinical experience using
Consultant’s design.



     2. 5,000 options will vest upon sale of the first Product that uses Consultant’s
design.



     3. 5,000 options will vest upon sale of the 50th Product that uses Consultant’s
design.



     4. 5,000 options will vest upon Company’s receipt of the 100th Product from
Consultant if the 50th through 100th Products meet the Company’s incoming acceptance
and standard delivery time criteria with no more than one late or returned shipment.



E. Product:




     Product will be composed of an electrosurgical generator that may contain or utilize
Consultant’s Technology as defined in section 6.3 of the Agreement. A detail definition of Product
is contained in written specifications held by Company (“Specifications”). For the purposes of this
Agreement, Price and Cost are specifically excluded from the definition of “Specifications.” All
revisions to Specifications must be reasonable, and require the approval of Consultant prior to
then- effectivity. This approval is not to be unreasonably withheld. If Consultant does not approve
of changes and no agreement can be met between Consultant and Company, the Agreement can be
terminated by Company.



     In the event that this Agreement is terminated pursuant to Section 2.2(f) of this Agreement,
the license granted by Consultant to the Company in Section 6.3 shall continue and be extended to
include the manufacture of the Products by the Company or its contractors.



Page 18 of 18









 





Broncus Technologies




Addendum to Consulting and Manufacturing Agreement





	1.	 	PURPOSE
	 
	 	 	This agreement is made between Broncus Technologies, Inc. (Broncus) and Stellartech Research
Corporation (SRC), is effective November 11, 1998, and specifies the general requirements
regarding Broncus labeled, CE Marked Medical Devices.
	 
	2.	 	SCOPE






	 	2.1	 	These requirements apply to Broncus labeled Medical Devices (including
accessories), which are designed and manufactured by SRC for sale by
Broncus in the European Union with a CE Mark. These requirements do not
apply in full to materials, components or spare parts.
	 
	 	2.2	 	As appropriate, specific application and/or clarification of these requirements
may need to be negotiated between Broncus and SRC. MDD Device
Classification will impact these requirements.






	3.	 	APPLICABILITY
	 
	 	 	This agreement applies to the following configurations of SRC manufactured/ Broncus
distributed product:






	 	3.1.	 	Broncus label; Broncus CE Mark; Broncus design; SRC manufactured;
Broncus distributed.
	 
	 	3.2.	 	Broncus label; Broncus CE Mark; SRC design; SRC manufactured;
Broncus distributed.
	 
	 	3.3.	 	Broncus label; Broncus CE Mark based upon SRC CE Mark; SRC design;
SRC manufactured; Broncus distributed.
	 
	 	3.4.	 	Broncus label; Broncus CE Mark; SRC design; Broncus manufactured;
Broncus distributed.






	4.	 	REFERENCES






	 	4.1.	 	 International Standard for Quality Systems, ISO 9001 : 1994
	 
	 	4.2.	 	European Std. for Quality Systems for Medical Devices, EN 46001 : 1997
	 
	 	4.3.	 	European Commission Medical Device Directive, Council Directive
93/42/EEC (EU MDD)






	5.	 	PRODUCT DESIGN/TECHNICAL FILES






	 	5.1.	 	For Broncus designed products, Broncus must establish and maintain
product design specifications. Broncus must prepare and maintain a
Technical File for product CE Marking. SRC must provide to Broncus,
upon request, all documentation necessary to describe production
processes, inspection/test procedures, labeling and other information as
needed to prepare the technical file for Broncus product.
	 
	 	5.2.	 	For SRC designed products, Broncus must approve and maintain a
Technical File for product CE Marking. SRC must either:






	 	•	 	prepare the Technical File or





Page 1 of 4









 





Broncus Technologies




Addendum to Consulting and Manufacturing Agreement





	 	•	 	provide to Broncus upon request, all necessary product design specifications, design test
data, production process, inspection/test procedure, labeling, clinical data, post market
performance data, and other information needed for Broncus to prepare the Technical File for
Broncus product.






	 	5.3.	 	In case of SRC proprietary design or production processes, SRC must
grant access to requested information concerning Broncus product to
Broncus’ Notified Body and/or to EU Competent Authorities, as necessary,
to comply with MDD requirements.






	6.	 	PRODUCTION CONTROLS






	 	6.1.	 	SRC must have in place and maintain a Quality System that meets the
appropriate requirements of ISO 9001/2, EN46001/2, and EU MDD for the
production of Broncus product.






	 	6.1.1.	 	If the SRC Quality System is certified, SRC must provide Broncus
with copy of certificates.
	 
	 	6.1.2.	 	If the SRC Quality System is hot certified or registered, Broncus
must evaluate the SRC Quality System per Broncus Assessment procedures.






	 	6.2.	 	SRC must grant access for inspection/audit of its facilities, its Quality
System, and its production/inspection/test processes used for the
production of Broncus product to Broncus, to Broncus’ Notified Body, and
to other Regulatory Authorities/Organizations. Where appropriate and
upon Broncus request, SRC must ensure that access for inspection/audit
of its Sub-Contractors involved in the production of Broncus product is
also granted.
	 
	 	6.3.	 	Broncus may review SRC production methods and inspection/test
procedures for Broncus product and specify for which, if any, Broncus
approval is required.
	 
	 	6.4.	 	SRC must inform Broncus in advance of any substantial changes to
product specifications, product indications for use, product safety, product
sterilization, materials, production processes, inspection procedures, and
product labeling. SRC must obtain written approval from Broncus for such
changes.






	7.	 	LABELING






	 	7.1.	 	All Broncus labeling must be reviewed and approved by Broncus prior to
use.
	 
	 	7.2.	 	All Labeling must comply with EU MDD requirements. Labeling must
carry the Broncus CE Mark, Broncus must be identified as the
“Manufacturer” on product labeling, and labeling must contain the address
of Broncus’ Authorized EU Representative.





Page 2 of 4









 





Broncus Technologies




Addendum to Consulting and Manufacturing Agreement





	8.	 	POST MARKET VIGILANCE






	 	8.1.	 	Complaints






	 	8.1.1.	 	 Broncus must receive and process ail Customer technical, service, and
complaint calls concerning Broncus product. SRC must immediately inform Broncus
of any complaints concerning Broncus product that it may receive. As
appropriate, Broncus must inform SRC of complaint information relevant to SRC’s
product design and/or production/inspection processes. SRC must investigate,
determine appropriate SRC corrective action, and inform Broncus of the results
in writing.






	 	8.2.	 	Medical Events






	 	8.2.1.	 	Broncus must process and report all MDRs concerning Broncus
product, per U.S. 21 CFR Section 803 and 804, to the FDA. SRC
must assist as needed and as requested by Broncus. Broncus
must notify SRC of any MDR report submissions.
	 
	 	8.2.2.	 	For products with a Broncus CE Mark, Broncus must process and
report all incidents/near incidents per European Community
Vigilance Requirements. SRC must assist as needed and
requested by Broncus. Broncus must notify SRC of any
incident/near incident submissions.






	 	8.3.	 	Field Action






	 	8.3.1.	 	If the need arises, Broncus must determine the need for and
coordinate any Product Field Action activities of Broncus distributed product.
SRC must assist as needed and requested by Broncus. If, at any time,
information should come into the possession of the SRC, which would indicate
the need or the necessity for a review of possible field action, the SRC must
notify Broncus immediately and abide by Broncus’ current product field action
policy and procedure.






	9.	 	SERVICE AND REPAIR






	 	9.1.	 	Product returned from the field for repair or routine service must be
received by Broncus for preliminary evaluation and documentation per the
Broncus Returned Product Procedure. If it is determined that repair or
service will be required, Broncus will document general repair/service and
disposition instructions (as well as cost guidelines if required) on its
Returned Product Record for the unit in question. The unit, along with a
copy of the Returned Product Record will be transported to SRC for
service.
	 
	 	9.2.	 	If requested, SRC will determine the cost of service and notify Broncus
before work begins. Service will be performed per SRC documented
procedures followed by the testing necessary to ensure that the serviced
unit meets all product and final release requirements.
	 
	 	9.3.	 	All serviced units will be transported to Broncus with a copy of the SRC
Service Report describing the work and testing performed.






Page 3 of 4









 







Broncus Technologies




Addendum to Consulting and Manufacturing Agreement





	10.	 	DOCUMENTATION






	 	10.1.	 	Product Design Records (Design History Records)
and/or Technical Files
	 
	 	 	 	For SRC designed product, SRC must maintain all
Product Design records for Broncus product for a
period of time consistent with EU MDD and other
regulatory requirements.
	 
	 	10.2.	 	Device Master Records and Device History Records
	 
	 	 	 	For SRC produced product, SRC must maintain, unless
otherwise specified, all Device Master and History
Records (e.g. product drawings and specifications;
raw material and component specifications and
purchase orders; production, inspection, test and
packaging procedures; product lot records;
traceability records; labeling; etc.) for Broncus
product for a period of time consistent with EU MDD
and other regulatory requirements. SRC must provide
copies of documentation and/or records to Broncus
upon request.
	 
	 	10.3.	 	Quality System Records
	 
	 	 	 	For SRC designed and/or produced product, SRC must
maintain all Quality System records (general
procedures and documentation of activities not
specific to a product) for Broncus product for a
period of time consistent with EU MDD and other
regulatory requirements. SRC must provide
documentation and/or records to Broncus upon
request.
	 
	 	10.4.	 	Distribution Records
	 
	 	 	 	Broncus must maintain all distribution records for
Broncus distributed products for a period of time
consistent with EU MDD and other regulatory
requirements.




This agreement will remain in force after mutual approval unless notification is given
in writing by either Broncus or SRC to the other party at the address of record. The
following representatives have been authorized to sign this agreement and hereby agree to
the provisions listed in this agreement.




	 	 	 	 	 
	For Stellartech Research Corporation

	 	 	 	For Broncus Technologies, Inc.
	 
	 	 	 	 
	/s/ Gary A. Seeger

	 	 	 	/s/ Gary Kaplan
	 

	 	 	 	 
	Authorized Signature

	 	 	 	Authorized signature
	 
	 	 	 	 
	GARY A. SEEGER

	 	 	 	GARY KAPLAN
	 

	 	 	 	 
	Name (print)

	 	 	 	Name (print)
	 
	 	 	 	 
	VP QA/RA

	 	 	 	VP, OPERATIONS
	 

	 	 	 	 
	Title

	 	 	 	Title
	 
	 	 	 	 
	11/11/98

	 	 	 	11/11/98
	 

	 	 	 	 
	Date

	 	 	 	Date






Page 4 of 4









 





Asthmatx, Inc.




Addendum to Consulting and Manufacturing Agreement





	1.	 	PURPOSE
	 
	 	 	This agreement is made between Asthmatx, Inc. (Asthmatx) and Stellartech Research Corporation (SRC),
is effective January 1 , 2004, and specifies the general requirements regarding Asthmatx labeled, CE Marked
Medical Devices.
	 
	2.	 	SCOPE






	 	2.1	 	These requirements apply to Asthmatx labeled Medical Devices (including accessories), which are
designed and manufactured by SRC for sale by Asthmatx in the European Union with a CE Mark. These
requirements do not apply in full to materials, components or spare parts.
	 
	 	2.2	 	As appropriate, specific application and/or clarification of these requirements may need to be
negotiated between Asthmatx and SRC. MDD Device Classification will impact these requirements.






	3.	 	APPLICABILITY
	 
	 	 	This agreement applies to the following configurations of SRC manufactured/ Asthmatx distributed
product:






	 	3.1.	 	Asthmatx label; Asthmatx CE Mark; Asthmatx design; SRC manufactured;
Asthmatx distributed.
	 
	 	3.2.	 	Asthmatx label; Asthmatx CE Mark; SRC design; SRC manufactured; Asthmatx
distributed.
	 
	 	3.3.	 	Asthmatx label; Asthmatx CE Mark based upon SRC CE Mark; SRC design; SRC
manufactured; Asthmatx distributed.
	 
	 	3.4.	 	Asthmatx label; Asthmatx CE Mark; SRC design; Asthmatx manufactured;
Asthmatx distributed.






	4.	 	REFERENCES






	 	4.1.	 	ISO 9001: 1994 — International Standard for Quality Systems
	 
	 	4.2.	 	EN 46001: 1997 — European Std. for Quality Systems for Medical Devices
	 
	 	4.3.	 	ISO 13485:1996 — Quality Systems — Medical Devices — Particular
Requirements for the Application of ISO 9001
	 
	 	4.4.	 	Council Directive 93/42/EEC (EU MDD) — European Commission Medical Device
Directive,






	5.	 	PRODUCT DESIGN/TECHNICAL FILES






	 	5.1.	 	For Asthmatx designed products, Asthmatx must establish and maintain
product design specifications. Asthmatx must prepare and maintain a Technical File
for product CE Marking. SRC must provide to Asthmatx, upon request, all
documentation necessary to describe production processes, inspection/test
procedures, labeling and other information as needed to prepare the technical file
for Asthmatx product.
	 
	 	5.2.	 	For SRC designed products, Asthmatx must approve and maintain a Technical
File for product CE Marking. SRC must either:






	 	•	 	prepare the Technical File or





Page 1 of 4









 





Asthmatx, Inc.




Addendum to Consulting and Manufacturing Agreement





	 	•	 	provide to Asthmatx upon request
all necessary product design
specifications, design test data,
production process, inspection/test
procedure, labeling, clinical data, post
market performance data, and other
information needed for Asthmatx to
prepare the Technical File for Asthmatx
product.






	 	5.3.	 	In case of SRC proprietary design
or production processes, SRC must grant
access to requested information
concerning Asthmatx product to
Asthmatx’s Notified Body and/or to EU
Competent Authorities, as necessary, to
comply with MOD requirements.






	6.	 	PRODUCTION CONTROLS






	 	6.1.	 	SRC must have in place and maintain
a Quality System that meets the
appropriate requirements of ISO 13485
and the EU’s MDD for the production of
Asthmatx product.






	 	6.1.1.	 	If the SRC Quality System is
certified, SRC must provide Asthmatx
with copy of certificates.
	 
	 	6.1.2.	 	If the SRC Quality System is
not certified or registered, Asthmatx
must evaluate the SRC Quality System per
Asthmatx Assessment procedures.






	 	6.2.	 	SRC must grant access for
inspection/audit of its facilities, its
Quality System, and its
production/inspection/test processes
used for the production of Asthmatx
product to Asthmatx, to Asthmatx’s
Notified Body, and to other Regulatory
Authorities/Organizations. Where
appropriate and upon Asthmatx request,
SRC must use its best efforts to secure
access for inspection/audit of its
Sub-Contractors involved in the
production of Asthmatx product.
	 
	 	6.3.	 	Asthmatx may review SRC production
methods and inspection/test procedures
for Asthmatx product and specify for
which, if any, Asthmatx approval is
required.
	 
	 	6.4.	 	SRC must inform Asthmatx in advance
of any substantial changes to product
specifications, product indications for
use, product safety, product
sterilization, materials, production
processes, inspection procedures, and
product labeling. SRC must obtain
written approval from Asthmatx for such
changes.






	7.	 	LABELING






	 	7.1.	 	For products produced by SRC for
Asthmatx, all Asthmatx labeling must be
reviewed and approved by Asthmatx prior
to release at SRC.
	 
	 	7.2.	 	All Labeling must comply with EU
MDD requirements. Labeling must carry
the Asthmatx CE Mark, Asthmatx must be
identified as the “Manufacturer” on
product labeling, and labeling must
contain the address of Asthmatx’s
Authorized EU Representative.





Page 2 of 4









 





Asthmatx, Inc.




Addendum to Consulting and Manufacturing Agreement





	8.	 	POST MARKET VIGILANCE






	 	8.1.	 	Complaints






	 	8.1.1.	 	Asthmatx must receive
and process all Customer technical,
service, and complaint calls
concerning Asthmatx product. SRC
must immediately inform Asthmatx of
any complaints concerning Asthmatx
product that it may receive. As
appropriate, Asthmatx must inform
SRC of complaint information
relevant to SRC’s product design
and/or production/inspection
processes. SRC must investigate,
determine appropriate SRC
corrective action, and inform
Asthmatx of the results in
writing.






	 	8.2.	 	Medical Events






	 	8.2.1.	 	Asthmatx must process
and report all MDRs concerning
Asthmatx product, per U.S. 21 CFR
Section 803 and 804, to the FDA.
SRC must assist as needed and as
requested by Asthmatx. Asthmatx
must notify SRC of any relevant MDR
report submissions.
	 
	 	8.2.2.	 	For products with an
Asthmatx CE Mark, Asthmatx must
process and report all
incidents/near incidents per
European Community Vigilance
Requirements. SRC must assist as
needed and requested by Asthmatx.
Asthmatx must notify SRC of any
relevant incident/near incident
submissions.






	 	8.3.	 	Field Action






	 	8.3.1.	 	If the need arises,
Asthmatx must determine the need
for and coordinate any Product
Field Action activities of Asthmatx
distributed product. SRC must
assist as needed and requested by
Asthmatx. If, at any time,
information should come into the
possession of the SRC, which would
indicate the need or the necessity
for a review of possible field
action, the SRC must notify
Asthmatx immediately and abide by
Asthmatx’s current product field
action policy and procedure.






	9.	 	SERVICE AND REPAIR






	 	9.1.	 	Product returned from the
field for repair or routine service
must be received by Asthmatx for
preliminary evaluation and
documentation per the Asthmatx
Returned Product Procedure. If it
is determined that repair or
service will be required, Asthmatx
will document general
repair/service and disposition
instructions (as well as cost
guidelines if required) on its
Returned Product Record (or other
applicable form) for the unit in
question. The unit, along with a
copy of the Returned Product Record
(or other applicable form) will be
transported to SRC for
service.
	 
	 	9.2.	 	If requested, SRC will
determine the cost of service and
notify Asthmatx before work begins.
Service will be performed per SRC
documented procedures followed by
the testing necessary to ensure
that the serviced unit meets all
product and final release
requirements.
	 
	 	9.3.	 	All serviced units will be
transported to Asthmatx with a copy
of the SRC Service Report
describing the work and testing
performed.





Page 3 of 4









 





Asthmatx, Inc.




Addendum to Consulting and Manufacturing Agreement





	10.	 	DOCUMENTATION






	 	10.1.	 	Product Design Records (Design History Records) and/or Technical
Files
	 
	 	 	 	For SRC designed product, SRC must maintain all
Product Design records for Asthmatx product for a period of
time consistent with EU MDD and other regulatory
requirements.
	 
	 	10.2.	 	Device Master Records and Device History Records
	 
	 	 	 	For SRC produced product, SRC must maintain, unless
otherwise specified, all Device Master and History Records
(e.g. product drawings and specifications; raw material and
component specifications and purchase orders; production,
inspection, test and packaging procedures; product lot
records; traceability records; labeling; etc.) for Asthmatx
product for a period of time consistent with EU MDD and
other regulatory requirements. SRC must provide copies of
documentation and/or records to Asthmatx upon request.
	 
	 	10.3.	 	Quality System Records
	 
	 	 	 	For SRC designed and/or produced product, SRC must
maintain all Quality System records (general procedures and
documentation of activities not specific to a product) for
Asthmatx product for a period of time consistent with EU
MDD and other regulatory requirements. SRC must provide
documentation and/or records to Asthmatx upon request.
	 
	 	10.4.	 	Distribution Records
	 
	 	 	 	Asthmatx must maintain all distribution records for
Asthmatx distributed products for a period of time
consistent with EU MDD and other regulatory
requirements.




This agreement will remain in force after mutual approval unless notification is
given in writing by either Asthmatx or SRC to the other party at the address of record. The
following representatives have been authorized to sign this agreement and hereby agree to
the provisions listed in this agreement.




	 	 	 	 	 
	For Stellartech Research Corporation

	 	 	 	For Asthmatx, Inc.
	 
	 	 	 	 
	/s/ Gary A. Seeger

	 	 	 	/s/ Gary S. Kaplan
	 

	 	 	 	 
	Authorized Signature

	 	 	 	Authorized signature
	 
	 	 	 	 
	GARY A. SEEGER

	 	 	 	Gary S.Kaplan
	 

	 	 	 	 
	Name (print)

	 	 	 	Name (print)
	 
	 	 	 	 
	VP QA/RA

	 	 	 	VP, OPERATIONS & QA
	 

	 	 	 	 
	Title

	 	 	 	Title
	 
	 	 	 	 
	01/26/04

	 	 	 	01/26/04
	 

	 	 	 	 
	Date

	 	 	 	Date






Page 4 of 4









 





BRONCUS



Technologies, Inc.




	 	 	 
	Roger Stern, PhD

	 	September 13, 2001
	President
	 	 
	Stellartech Research Corporation
	 	 
	1346 Bordeaux Drive
	 	 
	Sunnyvale, CA 94089
	 	 






Dear Roger:



Thank you for your voice message last week regarding our Consulting and Manufacturing
Agreement, effective date December 8,1997, and Addendum dated November 11,1998. We have
been functioning under the Agreement and Addendum (herein after the “Agreement”), and only
recently recognized that the term of the Agreement has expired. The purpose of this letter
is to formally extend (per Section 2.1) and amend (per Section 14) this Agreement.



We agree
to extend the Agreement from December 31, 2000 to
December 31, 2005, unless
terminated by either party as provided for in the Agreement.



We also agree to the following amendments to the Agreement:





	 	1.	 	Section 4, delete lines 6, 7, and 8
	 
	 	2.	 	Section 5(a), line 2, change “Exhibit A” to “Exhibit A and the Addendum to
Consulting and Manufacturing Agreement signed by Gary Kaplan and Gary Seeger on
11/11/98.”
	 
	 	3.	 	Section 9, line 9, change “B(4)” to “B(5)”
	 
	 	4.	 	Section 10, line 5, change “insure” to “inure”.
	 
	 	5.	 	Section 15, line 6, change Stellartech address to the one listed above.
	 
	 	6.	 	Exhibit A, Section C. 1., change first sentence to read: “Consultant
warrants that the Consultant will use best efforts to manufacture Product in
conformance with FDA requirements, the MDD, and other applicable laws.”
	 
	 	7.	 	Exhibit B, Section A, lines 12 through 15 and section B.1. — Broncus agrees
to pay Stellartech its current standard consulting rates and manufacturing labor
rates.
	 
	 	8.	 	Exhibit B, Section A, delete notes 1 and 3.




Please indicate your acceptance of this extension and these amendments by signing below.




	 	 	 	 	 	 	 
	/s/ Glendon E. French

	 	 	 	/s/ Roger A. Stern	 	 
	 

	 	 	 	 	 	 
	Glendon E. French

	 	 	 	Roger A. Stern	 	 
	President and CEO

	 	 	 	President	 	 
	 

	 	 	 	Stellartech Research Corporation	 	 
	 

	 	 	 	 	 	 





 









 





Consulting and Manufacturing Agreement Amendment



This Consulting and Manufacturing Agreement Amendment (the “Amendment”) is made and
entered into by and between Asthmatx, Inc., a California corporation (“Company”) and
Stellartech Research Corporation (“Consultant”).



The terms of this Amendment shall be as follows:



The Consultant and Company recognize that the documents listed below (“Reference Documents”)
have already been executed. They furthermore agree to incorporate the terms of this
Amendment into the agreement between the Consultant and the Company as specified in the
section below entitled “Changes.”




Reference Documents:





	 	1.	 	Document entitled “Consulting
and Manufacturing Agreement” entered
into by Broncus Technologies and the
Consultant on December 8, 1997
(“Base Agreement”)
	 
	 	2.	 	Letter to Roger Stern,
President of Stellartech Research
Corporation from Glen French dated
September 13, 2001.
	 
	 	3.	 	Document entitled “Asthmatx,
Inc. Addendum to Consulting and
Manufacturing Agreement” signed by
Gary Kaplan and Gary Seeger on
1/26/04.
	 
	 	4.	 	Amendment entitled “Consulting
and Manufacturing Agreement” signed
by Glen French on 2/17/04 and by
Roger Stern on 3/1/04.





Changes.



In Reference Document #3, replace the entire paragraph 6.4 with the following paragraph:





SRC must inform Asthmatx in advance of any substantial changes to product
specifications, software requirements specifications, hardware requirements
specifications, software design specifications, software verifications, software
validations, product indications for use, product safety, product sterilization,
materials, production processes, inspection procedures, and product labeling. SRC
must obtain written approval from Asthmatx for such changes.


The following representatives have been authorized to sign this agreement and hereby agree
to the provisions listed in this agreement.




	 	 	 	 	 
	For Stellartech Research Corporation

	 	 	 	For Asthmatx, Inc.
	 
	 	 	 	 
	/s/ Gary A. Seeger

	 	 	 	/s/ Gary Kaplan
	 

	 	 	 	 
	Authorized Signature

	 	 	 	Authorized Signature
	 
	 	 	 	 
	GARY A. SEEGER

	 	 	 	GARY KAPLAN
	 

	 	 	 	 
	Name (print)

	 	 	 	Name (print)
	 
	 	 	 	 
	VP QA/RA

	 	 	 	SVP, TECHNOLOGY & OPERATIONS
	 

	 	 	 	 
	Title

	 	 	 	Title
	 
	 	 	 	 
	08/27/05

	 	 	 	08/25/05
	 

	 	 	 	 
	Date

	 	 	 	Date







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