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                                                                    EXHIBIT 10.2

                         VNUS MEDICAL TECHNOLOGIES, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

        VNUS Medical Technologies, Inc., a Delaware corporation (the "Company"),
hereby adopts the VNUS Medical Technologies, Inc. Employee Stock Purchase Plan
(the "Plan"), effective as of the Effective Date (as defined below).

        The purposes of the Plan are as follows:

                (1)     To assist eligible employees of the Company and its
Designated Subsidiary Corporations (as defined below) in acquiring stock
ownership in the Company pursuant to a plan which is intended to qualify as an
"employee stock purchase plan", within the meaning of Section 423(b) of the Code
(as defined below).

                (2)     To help such employees provide for their future security
and to encourage them to remain in the employment of the Company and its
Designated Subsidiary Corporations.

        1.      DEFINITIONS. Whenever any of the following terms is used in the
Plan with the first letter or letters capitalized, it shall have the following
meaning unless the context clearly indicates to the contrary (such definitions
to be equally applicable to both the singular and the plural forms of the terms
defined):

                (a)     "Account" shall mean the account established for an
Eligible Employee under the Plan with respect to an Offering Period.

                (b)     "Agent" shall mean the brokerage firm, bank or other
financial institution, entity or person(s) engaged, retained, appointed or
authorized to act as the agent of the Company or an Employee with regard to the
Plan.

                (c)     "Authorization" shall mean an Eligible Employee's
payroll deduction authorization with respect to an Offering Period provided by
such Eligible Employee in accordance with Section 3(b).

                (d)     "Base Compensation" of an Eligible Employee shall mean
the gross base compensation received by such Eligible Employee on each Payday as
compensation for services to the Company or any Designated Subsidiary
Corporation, excluding overtime payments, sales commissions, incentive
compensation, bonuses, expense reimbursements, fringe benefits and other
special-payments.

                (e)     "Board" means the Board of Directors of the Company.

                (f)     "Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute or statutes thereto. Reference to any
particular Code section shall include any successor section.

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                (g)     "Committee" means the committee of the Board appointed
to administer the Plan pursuant to Section 13.

                (h)     "Company" means VNUS Medical Technologies, Inc., a
Delaware corporation.

                (i)     "Date of Exercise" of any Option means the date on which
such Option is exercised, which shall be the last day of the Offering Period
with respect to which the Option was granted, in accordance with Section 4(a)
(except as provided in Section 9).

                (j)     "Date of Grant" of any Option means the date on which
such Option is granted, which shall be the first day of the Offering Period with
respect to which the Option was granted, in accordance with Section 3(a).

                (k)     "Designated Subsidiary Corporation" means any Subsidiary
Corporation designated by the Board in accordance with Section 14.

                (l)     "Effective Date" means the first day of the first
Offering Period, which shall be the date immediately preceding the first date on
which a share of Stock is traded on an exchange or quoted on Nasdaq or a
successor quotation system.

                (m)     "Eligible Employee" means an Employee of the Company or
any Designated Subsidiary Corporation: (i) who does not, immediately after the
Option is granted, own (directly or through attribution) stock possessing five
percent (5%) or more of the total combined voting power or value of all classes
of Stock or other stock of the Company, a Parent Corporation or a Subsidiary
Corporation (as determined under Section 423(b)(3) of the Code); (ii) whose
customary employment is for more than twenty (20) hours per week and (iii) whose
customary employment is for more than five (5) months in any calendar year. For
purposes of clause (i) above, the rules of Section 424(d) of the Code with
regard to the attribution of stock ownership shall apply in determining the
stock ownership of an individual, and stock which an Employee may purchase under
outstanding options shall be treated as stock owned by the Employee. During a
leave of absence meeting the requirements of Treasury Regulation Section
1.421-7(h)(2), an individual shall be treated as an Employee of the Company or
Subsidiary Corporation employing such individual immediately prior to such
leave.

                (n)     "Employee" shall mean an individual who renders services
to the Company or a Subsidiary Corporation in the status of an "employee",
within the meaning of Section 3401(c) of the Code. "Employee" shall not include
any director of the Company or a Subsidiary Corporation who does not render
services to the Company or a Subsidiary Corporation in the status of an
"employee", within the meaning of Section 3401(c) of the Code.

                (o)     "Offering Period" shall mean each six-month period
commencing on any November 1 and May 1 on or after the Effective Date; provided,
however, that the first Offering Period under the Plan shall be the period
commencing on the Effective Date and ending April 30, 2001. Options shall be
granted on the Date of Grant and exercised on the Date of Exercise, as provided
in Sections 3(a) and 4(a), respectively.

(p) "Option" means an option to purchase shares of Stock granted under the Plan
to an Eligible Employee in accordance with Section 3(a).

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                (q)     "Option Price" means the option price per share of Stock
determined in accordance with Section 4(b).

                (r)     "Parent Corporation" means any corporation, other than
the Company, in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the Option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

                (s)     "Payday" means the regular and recurring established day
for payment of Base Compensation to an Employee of the Company or any Subsidiary
Corporation.

                (t)     "Plan" means the VNUS Medical Technologies, Inc.
Employee Stock Purchase Plan.

                (u)     "Stock" means the shares of the Company's Common Stock,
$0.001 par value.

                (v)     "Subsidiary Corporation" means any corporation, other
than the Company, in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the corporations
other than the last corporation in an unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

        2.      STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
9 hereof (relating to adjustments upon changes in the Stock) and Section 12
hereof (relating to amendments of the Plan), the Stock that may be sold pursuant
to Options granted under the Plan shall not exceed in the aggregate Two Hundred
Thousand (200,000) shares of Stock. The shares of Stock sold pursuant to Options
granted under the Plan may be unissued shares or treasury shares of Stock, or
shares of Stock bought on any nationally-recognized exchange, or other market,
for purposes of the Plan.

        3.      GRANT OF OPTIONS.

                (a)     Option Grants. The Company shall grant Options under the
Plan to all Eligible Employees in successive Offering Periods until the earlier
of: (i) the date on which the number of shares of Stock available under the Plan
have been sold, or (ii) the date on which the Plan is suspended or terminates.
Each Employee who is an Eligible Employee on the first day of an Offering Period
shall be granted an Option with respect to

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such Offering Period. The Date of Grant of such an Option shall be the first day
of the Offering Period with respect to which such Option was granted. Each
Option shall expire on the Date of Exercise immediately after the automatic
exercise of the Option in accordance with Section 4(a), unless such Option
terminates earlier in accordance with Section 5, 6 or 9. The number of shares of
Stock subject to an Eligible Employee's Option shall equal the cumulative
payroll deductions authorized by such Eligible Employee in accordance with
Section 3(b) for the Option Period (if any), divided by the Option Price;
provided, however, that the number of shares of Stock subject to such Option
shall not exceed the number determined in accordance with subsection (c). The
Company shall not grant an Option with respect to an Offering Period to any
individual who is not an Eligible Employee on the first day of such Offering
Period.

                (b)     Election to Participate; Payroll Deduction
Authorization. Except as provided in subsection (d), an Eligible Employee shall
participate in the Plan only by means of payroll deduction. Each Eligible
Employee who elects to participate in the Plan with respect to an Offering
Period shall deliver to the Company, not later than fifteen (15) days before the
first day of the Offering Period (or such shorter period as determined by the
Committee in its discretion), a completed and executed written payroll deduction
authorization in a form prepared by the Committee (the "Authorization"). An
Eligible Employee's Authorization shall give notice of such Eligible Employee's
election to participate in the Plan for the next following Offering Period (and
subsequent Offering Periods) and shall designate a whole percentage of such
Eligible Employee's Base Compensation to be withheld by the Company or the
Designated Subsidiary Corporation employing such Eligible Employee on each
Payday during the Offering Period. An Eligible Employee may designate any whole
percentage of Base Compensation which is not be less than one percent (1%) and
not more than fifteen percent (15%). An Eligible Employee's Base Compensation
payable during an Offering Period shall be reduced each Payday through payroll
deduction in an amount equal to the percentage specified in the Authorization,
and such amount shall be credited to such Eligible Employee's Account under the
Plan. Notwithstanding the preceding sentence, at the Committee's discretion
payroll deductions with respect to the initial Offering Period under the Plan
may commence as of the second Payday following the Effective Date and not the
initial Payday following the Effective Date. An Eligible Employee may change the
percentage of Base Compensation designated in the Authorization, subject to the
limits of this subsection (b), or may suspend the Authorization, at any time
during the Offering Period, provided, that any such change or suspension shall
become effective not later than thirty (30) days after receipt by the Company.
Any Authorization shall remain in effect for each subsequent Offering Period,
unless the Eligible Employee submits a new Authorization pursuant to this
subsection (b), withdraws from the Plan pursuant to Section 5, ceases to be an
Eligible Employee as defined in Section 1(m) or terminates employment as
provided in Section 6.

                (c)     $25,000 Limitation. No Eligible Employee shall be
granted an Option under the Plan which permits his rights to purchase shares of
Stock under the Plan, together with other options to purchase shares of Stock or
other stock under all other employee stock purchase plans of the Company, any
Parent Corporation or any Subsidiary Corporation subject to Section 423 of the
Code, to accrue at a rate which exceeds $25,000 of Fair Market Value of such
shares of Stock or other stock (determined at the time the Option or other
option is granted) for each calendar year in which the Option is outstanding at
any time. For purpose of the limitation imposed by this subsection, (i) the
right to purchase shares of Stock or other stock

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under an Option or other option accrues when the Option or other option (or any
portion thereof) first becomes exercisable during the calendar year, (ii) the
right to purchase shares of Stock or other stock under an Option or other option
accrues at the rate provided in the Option or other option, but in no case may
such rate exceed $25,000 of the Fair Market Value of such Stock or other stock
(determined at the time such Option or other option is granted) for any one
calendar year, and (iii) a right to purchase Stock or other stock which has
accrued under an Option or other option may not be carried over to any Option or
other option. This limitation shall be applied in accordance with Section
423(b)(8) of the Code and the Treasury Regulations thereunder.

                (d)     Leaves of Absence. During a leave of absence meeting the
requirements of Treasury Regulation Section 1.421-7(h)(2), an Employee may
continue to participate in the Plan by making cash payments to the Company on
each Payday equal to the amount of the Employee's payroll deduction under the
Plan for the Payday immediately preceding the first day of such Employee's leave
of absence.

        4.      EXERCISE OF OPTIONS; OPTION PRICE.

                (a)     Option Exercise. Each Employee automatically and without
any act on such Employee's part shall be deemed to have exercised such
Employee's Option on the Date of Exercise to the extent that the balance then in
the Employee's Account is sufficient to purchase, at the Option Price, shares of
the Stock subject to the Option (including fractional shares).

                (b)     Option Price Defined. The option price per share of
Stock (the "Option Price") to be paid by an Employee upon the exercise of the
Employee's Option shall be equal to 85% of the lesser of: (i) the Fair Market
Value of a share of Stock on the Date of Exercise and (ii) the Fair Market Value
of a share of Stock on the Date of Grant. The "Fair Market Value" of a share of
Stock as of a given date shall be: (A) the closing price of a share of Stock on
the principal exchange on which the Stock is then trading, if any, on such date
(or, if shares of Stock were not traded on such date, then on the next preceding
trading day during which a sale occurred); (B) if the Stock is not traded on an
exchange, but is quoted on Nasdaq or a successor quotation system, (I) the last
sales price (if the Stock is then listed as a National Market Issue under the
NASD National Market System), or (II) the mean between the closing
representative bid and asked prices (in all other cases) for a share of Stock on
such date (or, if shares of Stock were not traded on such date, then on the next
preceding trading day during which a sale occurred) as reported by Nasdaq or
such successor quotation system; (C) if the Stock is not publicly traded on an
exchange and not quoted on Nasdaq or a successor quotation system, the mean
between the closing bid and asked prices for a share of Stock on such date (or,
if shares of Stock were not traded on such date, then on the next preceding
trading day during which a sale occurred), as determined in good faith by the
Committee; or (D) if the Stock is not publicly traded, the fair market value of
a share of Stock established by the Committee acting in good faith.

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                (c)     Book Entry/Share Certificates. As soon as practicable
after the purchase of shares of Stock upon the exercise of an Option by an
Employee, the Company shall issue the shares of Stock to such Employee and such
shares shall be held in the custody of the Agent for the benefit of the
Employee. The Company or the Agent shall make an entry on its books and records
indicating that the shares of Stock purchased in connection with such exercise
(including any partial share) have been duly issued as of that date to such
Employee. An Employee shall have the right at any time to request in writing a
certificate or certificates for all or a portion of the whole shares of Stock
purchased hereunder. Upon receipt of an Employee's written request for any such
certificate, the Company shall (or shall cause the Agent to), within thirty (30)
days after the date of such receipt, deliver any such certificate to the
Employee; provided, however, that no certificate shall be issued to an Employee
with respect to Stock purchased hereunder until the expiration of eighteen (18)
months from the date of exercise of the Option to purchase such Stock. Nothing
in this subsection (c) shall prohibit the sale or other disposition by an
Employee of shares of Stock purchased hereunder. In the event the Company is
required to obtain authority from any commission or agency to issue any
certificate or certificates for all or a portion of the whole shares of Stock
purchased hereunder, the Company shall seek to obtain such authority as soon as
reasonably practicable.

                (d)     Pro Rata Allocations. If the total number of shares of
Stock for which Options are to be exercised on any date exceeds the number of
shares of Stock remaining unsold under the Plan (after deduction for all shares
of Stock for which Options have theretofore been exercised), the Committee shall
make a pro rata allocation of the available remaining shares of Stock in as
nearly a uniform manner as shall be practicable and the balance of the amount
credited to the Account of each Employee which has not been applied to the
purchase of shares of Stock shall be paid to such Employee in one lump sum in
cash within thirty (30) days after the Date of Exercise, without any interest
thereon.

                (e)     Information Statement. The Company shall provide each
Employee whose Option is exercised with an information statement in accordance
with Section 6039(a) of the Code and the Treasury Regulations thereunder. The
Company shall maintain a procedure for identifying certificates of shares of
Stock sold upon the exercise of Options in accordance with Section 6039(b) of
the Code.

        5.      WITHDRAWAL FROM THE PLAN.

                (a)     Withdrawal Election. An Employee may withdraw from
participation under the Plan at any time, except that an Employee may not
withdraw during the last fifteen (15) days of any Option Period. An Employee
electing to withdraw from the Plan must deliver to the Company a notice of
withdrawal in a form prepared by the Committee (the "Withdrawal Election"), not
later than fifteen (15) days prior to the Date of Exercise for such Option
Period. Upon receipt of an Employee's Withdrawal Election, the Company or
Subsidiary Corporation employing the Employee shall pay to the Employee the
amount credited to the Employee's Account in one lump sum payment in cash,
without any interest thereon, and subject to Section 4(c), the Company shall (or
shall cause the Agent to) deliver to the Employee certificates for any whole
shares of Stock previously purchased by the Employee (the value of

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any fractional share to be returned to such Employee by check), in either case
within thirty (30) days of receipt of the Employee's Withdrawal Election. Upon
receipt of an Employee's Withdrawal Election by the Company, the Employee shall
cease to participate in the Plan and the Employee's Option for such Option
Period shall terminate.

                (b)     Eligibility following Withdrawal. An Employee who
withdraws from the Plan with respect to an Option Period, and who is still an
Eligible Employee, may elect to participate again in the Plan for any subsequent
Offering Period by delivering to the Company an Authorization pursuant to
Section 3(b).

        6.      TERMINATION OF EMPLOYMENT.

                (a)     Termination of Employment Other than by Death. If the
employment of an Employee with the Company and the Subsidiary Corporation
terminates other than by death, the Employee's participation in the Plan
automatically and without any act on the Employee's part shall terminate as of
the date of the termination of the Employee's employment. As soon as practicable
after such a termination of employment, the Company or Subsidiary Corporation
employing the Employee shall pay to the Employee the amount credited to the
Employee's Account in one lump sum payment in cash, without any interest
thereon, and subject to Section 4(c), the Company shall (or shall cause the
Agent to) deliver to the Employee certificates for any whole shares of Stock
previously purchased by the Employee (the value of any fractional share to be
returned to such Employee by check). Upon an Employee's termination of
employment covered by this subsection, the Employee's Authorization and Option
under the Plan shall terminate.

                (b)     Termination by Death. If the employment of an Employee
is terminated by the Employee's death, the executor of the Employee's will or
the administrator of the Employee's estate, by written notice to the Company,
may request payment of the balance in the Employee's Account, in which event the
Company or Subsidiary Corporation employing the Employee shall pay the amount
credited to the Employee's Account in one lump sum payment in cash, without any
interest thereon, and subject to Section 4(c), the Company shall (or shall cause
the Agent to) deliver to the Employee certificates for any whole shares of Stock
previously purchased by the Employee (the value of any fractional share to be
returned to such Employee by check) as soon as practicable after receiving such
notice. Upon receipt of such notice, the Employee's Authorization and Option
under the Plan shall terminate. If the Company does not receive such notice
prior to the next Date of Exercise, the Employee's Option shall be deemed to
have been exercised on such Date of Exercise.

        7.      RESTRICTION UPON ASSIGNMENT. An Option granted under the Plan
shall not be transferable other than by will or the laws of descent and
distribution, and is exercisable during the Employee's lifetime only by the
Employee. Except as provided in Section 6(b) hereof, an Option may not be
exercised to any extent except by the Employee. The Company shall not recognize
and shall be under no duty to recognize any assignment or alienation of the
Employee's interest in the Plan, the Employee's Option or any rights under the
Employee's Option.

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        8.      NO RIGHTS OF STOCKHOLDERS UNTIL SHARES ISSUED. With respect to
shares of Stock subject to an Option, an Employee shall not be deemed to be a
stockholder of the Company, and the Employee shall not have any of the rights or
privileges of a stockholder, until such shares have been issued to the Employee
or his or her nominee following exercise of the Employee's Option. No
adjustments shall be made for dividends (ordinary or extraordinary, whether in
cash securities, or other property) or distribution or other rights for which
the record date occurs prior to the date of such issuance, except as otherwise
expressly provided herein.

        9.      CHANGES IN THE STOCK AND CORPORATE EVENTS; ADJUSTMENT OF
OPTIONS.

                (a)     Subject to Section 9(c), in the event that the
Committee, in its sole discretion, determines that any dividend or other
distribution (whether in the form of cash, Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Stock or other securities of the Company, issuance of warrants or
other rights to purchase Stock or other securities of the Company, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to an Option, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of:

                (i)     the number and kind of shares of Stock (or other
        securities or property) with respect to which Options may be granted
        (including, but not limited to, adjustments of the limitation in Section
        3(a) on the maximum number of shares of Stock which may be purchased),

                (ii)    the number and kind of shares of Stock (or other
        securities or property) subject to outstanding Options, and

                (iii)   the exercise price with respect to any Option.

                (b)     Subject to Section 9(c), in the event of any transaction
or event described in Section 9(a) or any unusual or nonrecurring transactions
or events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations, or accounting principles, the Committee, in its sole discretion,
and on such terms and conditions as it deems appropriate, either by the terms of
the Option or by action taken prior to the occurrence of such transaction or
event and either automatically or upon the Employee's request, is hereby
authorized to take any one or more of the following actions whenever the
Committee determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to any Option under the Plan, to
facilitate such transactions or events or to give effect to such changes in
laws, regulations or principles:

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                (i)     To provide that all Options outstanding shall terminate
         without being exercised on such date as the Committee determines in its
        sole discretion;

                (ii)    To provide that all Options outstanding shall be
         exercised prior to the Date of Exercise of such Options on such date as
        the Committee determines in its sole discretion and such Options shall
        terminate immediately after such exercises.

                (iii)   To provide for either the purchase of any Option
        outstanding for an amount of cash equal to the amount that could have
        been obtained upon the exercise of such Option had such Option been
        currently exercisable, or the replacement of such Option with other
        rights or property selected by the Committee in its sole discretion;

                (iv)    To provide that such Option be assumed by the successor
        or survivor corporation, or a parent or subsidiary thereof, or shall be
        substituted for by similar options, covering the stock of the successor
        or survivor corporation, or a parent or subsidiary thereof, with
        appropriate adjustments as to the number and kind of shares and prices;
        and

                (v)     To make adjustments in the number and type of shares of
        Stock (or other securities or property) subject to outstanding Options,
        or in the terms and conditions of outstanding Options, or Options which
        may be granted in the future.

                (c)     No adjustment or action described in this Section 9 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause the Plan to fail to satisfy the requirements of
Section 423 of the Code. Furthermore, no such adjustment or action shall be
authorized to the extent such adjustment or action would result in short-swing
profits liability under Section 16 of the Securities and Exchange Act of 1934,
as amended, or violate the exemptive conditions of Rule 16b-3 unless the
Committee determines that the Option is not to comply with such exemptive
conditions. The number of shares of Stock subject to any Option shall always be
rounded to the next whole number.

                (d)     The existence of the Plan and the Options granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Stock or the rights thereof of which are convertible into or
exchangeable for Stock, or the dissolution or liquidation of the company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

        10.     USE OF FUNDS; NO INTEREST PAID. All funds received or held by
the Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction and may be used for any corporate
purpose. No interest will be paid to any Employee or credited to any Employee's
Account with respect to such funds.

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        11.     DIVIDENDS.

                (a)     Cash dividends and other cash distributions received by
the Agent with respect to Stock held in its custody hereunder will be credited
to each Employee's Account in accordance with such Employee's interests in such
Stock, and shall be applied, as soon as practicable after the receipt thereof by
the Agent, to the purchase in the open market at prevailing market prices of the
number of whole shares of Stock that may be purchased with such funds (after
deductions of any bank service fees, brokerage charges, transfer taxes, and any
other transaction fee, expense or cost payable in connection with the purchase
of such shares of Stock and not otherwise paid by the Employer.)

                (b)     All purchases of shares of Stock made pursuant to this
Section 11 will be made in the name of the Agent or its nominee, and shall be
transferred and credited to the Account(s) of the Employees to which such
dividends or other distributions were credited. Dividends paid in the form of
shares of Stock will be allocated by the Agent, as and when received, with
respect to Stock held in its custody hereunder to the Account of each Employee
in accordance with such Employee's interests in such Stock. Property, other than
Stock or cash, received by the Agent as a distribution on Stock held in its
custody hereunder, shall be sold by the Agent for the accounts of Employees, and
the Agent shall treat the proceeds of such sale in the same manner as cash
dividends received by the Agent on Stock held in its custody hereunder.

        12.     AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN. The Board may
amend, suspend, or terminate the Plan at any time and from time to time,
provided that approval by a vote of the holders of the outstanding shares of the
Company's capital stock entitled to vote shall be required to amend the Plan to:
(a) change the number of shares of Stock that may be sold pursuant to Options
under the Plan, (b) alter the requirements for eligibility to participate in the
Plan, or (c) in any manner that would cause the Plan to no longer be an
"employee stock purchase plan" within the meaning of Section 423(b) of the Code.

        13.     ADMINISTRATION BY COMMITTEE; RULES AND REGULATIONS.

                (a)     Appointment of Committee. The Plan shall be administered
by the Committee, which shall be composed of not less than two members of the
Board, each of whom shall be a "non-employee director" within the meaning of
Rule 16b-3 which has been adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended. Each member of the
Committee shall serve for a term commencing on a date specified by the Board and
continuing until the member dies, resigns or is removed from office by the
Board. The Committee at its option may utilize the services of an agent to
assist in the administration of the Plan, including establishing and maintaining
an individual securities account under the Plan for each Employee.

                (b)     Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of the Plan in accordance
with the provisions of the Plan. The Committee shall have the power to interpret
the Plan and the terms of the Options and to adopt such rules for the
administration, interpretation, and application of the Plan as are

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consistent therewith and to interpret, amend or revoke any such rules. In its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan.

                (c)     Majority Rule. The Committee shall act by a majority of
its members in office. The Committee may act either by vote at a meeting or by a
memorandum or other written instrument signed by a majority of the Committee.
(d) Compensation; Professional Assistance; Good Faith Actions. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Employees, the Company and all other interested persons. No member of
the Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Options, and
all members of the Committee shall be fully protected by the Company in respect
to any such action, determination, or interpretation.

        14.     DESIGNATION OF SUBSIDIARY CORPORATIONS. The Board shall
designate from among the Subsidiary Corporations, as determined from time to
time, the Subsidiary Corporation or Subsidiary Corporations whose Employees
shall be eligible to be granted Options under the Plan. The Board may designate
a Subsidiary Corporation, or terminate the designation of a Subsidiary
Corporation, without the approval of the stockholders of the Company.

        15.     NO RIGHTS AS AN EMPLOYEE. Nothing in the Plan shall be construed
to give any person (including any Eligible Employee) the right to remain in the
employ of the Company, a Parent Corporation or a Subsidiary Corporation or to
affect the right of the Company, any Parent Corporation or any Subsidiary
Corporation to terminate the employment of any person (including any Eligible
Employee) at any time, with or without cause.

        16.     TERM; APPROVAL BY STOCKHOLDERS. Subject to approval by the
stockholders of the Company in accordance with this Section, the Plan shall be
in effect until May 1, 2010, unless sooner terminated in accordance with Section
12. No Option may be granted during any period of suspension of the Plan or
after termination of the Plan. The Plan shall be submitted for the approval of
the Company's stockholders within twelve (12) months after the date of the
adoption of the Plan by the Board. Options may be granted prior to such
stockholder approval; provided, however, that such Options shall not be
exercisable prior to the time when the Plan is approved by the Company's
stockholders; and, provided, further, that if such approval has not been
obtained by the end of said 12-month period, all Options previously granted
under the Plan shall thereupon terminate without being exercised.

        17.     EFFECT UPON OTHER PLANS. The adoption of the Plan shall not
affect any other compensation or incentive plans in effect for the Company, any
Parent Corporation or any

                                       11
<PAGE>   12

Subsidiary Corporation. Nothing in this Plan shall be construed to limit the
right of the Company, any Parent Corporation or any Subsidiary Corporation to:
(a) establish any other forms of incentives or compensation for employees of the
Company, any Parent Corporation or any Subsidiary Corporation or (b) grant or
assume options otherwise than under the Plan in connection with any proper
corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.

        18.     CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company shall
not be required to issue or deliver any certificate or certificates for shares
of Stock purchased upon the exercise of Options prior to fulfillment of all the
following conditions:

                (a)     The admission of such shares to listing on all stock
exchanges, if any, on which is then listed; and

                (b)     The completion of any registration or other
qualification of such shares under any state or federal law or under the rulings
or regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable; and

                (c)     The obtaining of any approval or other clearance from
any state or federal governmental agency which the Committee shall, in its
absolute discretion, determine to be necessary or advisable; and

                (d)     The payment to the Company of all amounts which it is
required to withhold under federal, state or local law upon exercise of the
Option; and

                (e)     The lapse of such reasonable period of time following
the exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

        19.     NOTIFICATION OF DISPOSITION. Each Employee shall give prompt
notice to the Company of any disposition or other transfer of any shares of
Stock purchased upon exercise of an Option if such disposition or transfer is
made: (a) within two (2) years from the Date of Grant of the Option, or (b)
within one (1) year after the transfer of such shares of Stock to such Employee
upon exercise of such Option. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other property,
assumption of indebtedness or other consideration, by the Employee in such
disposition or other transfer.

        20.     NOTICES. Any notice to be given under the terms of the Plan to
the Company shall be addressed to the Company in care of its Secretary and any
notice to be given to any Employee shall be addressed to such Employee at such
Employee's last address as reflected in the Company's records. By a notice given
pursuant to this Section, either party may designate a different address for
notices to be given to it, him or her. Any notice which is

                                       12
<PAGE>   13

required to be given to an Employee shall, if the Employee is then deceased, be
given to the Employee's personal representative if such representative has
previously informed the Company of his status and address by written notice
under this Section. Any notice shall have been deemed duly given if enclosed in
a properly sealed envelope or wrapper addressed as aforesaid at the time it is
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

        21.     HEADINGS. Headings are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of the Plan.

* * * * * * *

                                       13
<PAGE>   14

        I hereby certify that the VNUS Medical Technologies, Inc. Employee Stock
Purchase Plan was adopted by the Board of Directors of VNUS Medical
Technologies, Inc. on May 1, 2000.

        Executed at Sunnyvale, California on this ___th day of _______, 2000.

                                           -------------------------------------

                                           -------------------------------------
                                           Secretary

* * * * * * *

        I hereby certify that the VNUS Medical Technologies, Inc. Employee Stock
Purchase Plan was approved by the stockholders of VNUS Medical Technologies,
Inc. on _________________, 2000.

        Executed at Sunnyvale, California on this ___th day of _______, 2000.

                                           -------------------------------------

                                           -------------------------------------
                                           Secretary

                                       14<PAGE>   1
                                                                    EXHIBIT 10.7

[VNUS LETTERHEAD]

May 25, 2000

Roger A. Stern, Ph.D.
President
Stellartech Research Corporation
1346 Bordeux Dr.
Sunnyvale, CA 94089

        Re:  Agreement Between VNUS Medical Technologies, Inc. and Stellartech
             Research Corporation

Dear Roger:

        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.
<PAGE>   2
Roger A. Stern, Ph.D.
May 22, 2000
Page 2

                                           Sincerely,

                                           VNUS MEDICAL TECHNOLOGIES, INC.

                                           /s/ BRIAN E. FARLEY
                                           -------------------------------------
                                           Brian E. Farley
                                           President and Chief Executive Officer

Duly executed and agreed to on May 26, 2000.

STELLARTECH RESEARCH CORPORATION

/s/ ROGER A. STERN
-------------------------------------
Roger A. Stern, Ph.D.
President

Enclosure
<PAGE>   3
                                   EXHIBIT A
<PAGE>   4
[VNUS CORPORATION LETTERHEAD]

                            C O N F I D E N T I A L

June 18, 1996

Roger A. Stern, Ph.D.
President
Stellartech Research Corporation
2665 Marine Way
Mountain View, CA 94043

Dear Roger:

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.

<PAGE>   5
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.

VNUS 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 Roger Stern. 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.
<PAGE>   6

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 VNUS 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
<PAGE>   7
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 VNUS 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 VNUS 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.

Roger A. Stern, 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.

Roger, I look forward to working with you and Stellartech on this project.

Sincerely,

/s/ BRIAN E. FARLEY                  6-18-96
-----------------------
Brian E. Farley
President

These terms are agreed to for the purposes of providing a basis for a written
contract.

/s/ ROGER A. STERN                   6/19/96
-----------------------           ------------
Roger A. Stern, Ph.D.             Date

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