Friday, December 11, 2009

Luna, Hansen Reach Surprising Settlement

Luna's Kent Murphy says the settlement "clears the largest hurdle on our pathway to emerge from Chapter 11 reorganization and pay our creditors what they are owed."

Luna Innovations and Hansen Medical have reached a lawsuit settlement that will include a supply and development agreement over a period of years that will integrate Luna's fiber optic sensing technology into Hansen's surgical products. That is huge and positive news for this region of Virginia, where Luna has made a significant economic impact and has promise of even greater success.

The settlement resolves the outstanding litigation between the companies. Roanoke-based Luna Innovations develops and manufactures new-generation products for the healthcare, telecommunications, energy and defense markets. Hansen Medical, based in California and a former partner with Luna on projects, designs and manufactures medical robotic instruments.

Luna has filed with the bankruptcy court its First Amended Joint Plan of Reorganization and other bankruptcy documents to implement the Settlement Agreement and allow the Company to emerge from Chapter 11 reorganization as quickly as possible.

Under the plan, the Luna proposes to pay 100 percent of its alid claims and Luna stockholders will retain their shares of Luna's Common Stock. All agreements are subject to court approval. The agreement suggests that Luna and Hansen will enter into a number of additional documents, which will include:
  • A development and supply agreement between Luna and Hansen for purposes of integrating Luna's fiber optic shape sensing technology into Hansen's medical robotic instruments.
  • A license of Luna's shape sensing technology to Hansen in the fields of medical robotics and medical non-robotics.
  • A $5 million secured promissory note payable over four years from Luna to Hansen, whose security interest may be subordinated in favor of a working capital credit facility.
  • Issuance of shares of Luna Common Stock to Hansen in the amount equal to 9.9 percent of the total outstanding shares and a warrant for Hansen to maintain that equity position for three years.
  • A mutual release of outstanding claims in litigation between Hansen and Luna.

"This settlement with Hansen Medical clears the largest hurdle on our pathway to emerge from Chapter 11 reorganization and pay our creditors what they are owed," says Kent Murphy, Luna's chairman and CEO. "We look forward to integrating our shape sensing technology with Hansen's surgical devices, as we expand the potential market for our products in robotically assisted procedures. It's exciting for Luna and Hansen to move forward together in a long-term partnership that is focused on creating enhanced procedures that help save lives."

Luna's shape sensing and localization technology can provide real-time position measurements to help surgeons navigate through the body. The system consists of software, instrumentation and disposable optical sensing fiber. Luna's technology, originally developed at NASA, is unique and designed to provide the user with an accurate, direct and continuous measurement of device location with no adverse effect from line of sight limitations and without introducing electrical signals or radiation into the body.

(Adapted from press release.)

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