Exhibit 10.17

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

 

 

DISTRIBUTION AGREEMENT

 

by and among

 

PLC SYSTEMS INC.,

 

PLC MEDICAL SYSTEMS, INC.

 

and

 

EDWARDS LIFESCIENCES LLC

 

dated

 

January 9, 2001

 

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TABLE OF CONTENTS

 

ARTICLE I - Definitions

1

 

 

 

ARTICLE II - Appointment

3

 

 

 

Section 2.1

Appointment

3

Section 2.2

Competition

3

 

 

 

ARTICLE III - Obligations of Distributor

3

 

 

 

Section 3.1

General Obligations of Edwards

3

Section 3.2

Costs and Expenses

4

Section 3.3

Sales and Marketing Option

4

 

 

 

ARTICLE IV - Obligations of PLC

4

 

 

 

Section 4.1

Transition Services

4

Section 4.2

Approvals

4

Section 4.3

Labeling of Products

4

Section 4.4

Clinical or Marketing Studies

5

Section 4.5

Installation Services and Services Provided Under Extended Service Agreements

5

Section 4.6

Warranty and Preventive Maintenance Services

5

Section 4.7

Recall of Products

5

Section 4.8

Product Liability Insurance

6

Section 4.9

Costs and Expenses

6

 

 

 

ARTICLE V - Sales and Marketing

6

 

 

 

Section 5.1

Marketing Plan

6

Section 5.2

Sales Plan

6

Section 5.3

Sales Material and Literature

6

Section 5.4

Training and Retention of Sales Personnel

6

Section 5.5

Performance Record of Sales Personnel

7

 

 

 

ARTICLE VI - Purchase Arrangements

7

 

 

 

Section 6.1

Purchase Forecasts for Products

7

Section 6.2

Purchaser Orders; No Minimum Product Quantities

7

Section 6.3

Placement of Orders

7

 

 

 

ARTICLE VII - Pricing, Payment, Shipping

8

 

 

 

Section 7.1

TMR Disposable Kit.

8

Section 7.2

HL-1 Laser Systems

8

Section 7.3

HL-2 Laser Systems

8

Section 7.4

Product Accessories

9

Section 7.5

Shipping

9

Section 7.6

Payment

9

 

 

 

ARTICLE VIII - Term and Termination; Annual Meeting

9

 

 

 

Section 8.1

Term and Renewal

9

 

i

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Section 8.2

Immediate Termination

10

Section 8.3

Annual Meeting

10

 

 

 

ARTICLE IX - Warranties and Indemnification

10

 

 

 

Section 9.1

Warranties

10

Section 9.2

Indemnification by PLC

10

Section 9.3

Indemnification by Edwards

11

Section 9.4

Indemnification Procedures

11

 

 

 

ARTICLE X - Intellectual Property Rights and Confidentiality

12

 

 

 

Section 10.1

Trademarks

12

Section 10.2

Confidential Information

12

 

 

 

ARTICLE XI - MISCELLANEOUS

13

 

 

 

Section 11.1

Relationship

13

Section 11.2

No Conflict

13

Section 11.3

Governing Law

13

Section 11.4

Escalation

13

Section 11.5

Jurisdiction and Consent to Service

14

Section 11.6

Notices

14

Section 11.7

Interpretation

15

Section 11.8

Severability

15

Section 11.9

Counterparts

15

Section 11.10

Entire Agreement; No Third Party Beneficiaries

15

Section 11.11

Amendments and Modifications; Waivers and Extensions.

16

Section 11.12

Assignment

16

Section 11.13

Exhibits

16

Section 11.14

Expenses

16

Section 11.15

No Consequential or Punitive Damages

16

 

Exhibits and Schedules

 

 

 

 

 

Exhibit A

 

Description of Products

 

Schedule 2.1

 

Distributors

 

Schedule 3.3

 

Sales Personnel

 

Schedule 4.1

 

Transition Services

 

Schedule 4.5

 

Installation Services and Services Relating to Extended Service Agreements

 

Schedule 4.6

 

Warranty and Preventive Maintenance Services

 

Schedule 4.8

 

Product Liability Insurance

 

Schedule 5.1

 

Marketing Plan

 

Schedule 5.2

 

Sales Plan

 

Schedule 7.3

 

HL-2 Laser System Customers

 

Schedule 7.4

 

Product Accessories

 

 

ii

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DISTRIBUTION AGREEMENT

 

DISTRIBUTION AGREEMENT, dated as of January 9, 2001 this “Agreement”), by and
among Edwards Lifesciences LLC, a Delaware corporation (“Edwards”), PLC Systems
Inc., a Yukon Territory corporation (“PLC Parent”), and PLC Medical
Systems, Inc., a Delaware corporation (“PLC”), which is a wholly owned
subsidiary of PLC Parent.

 

WHEREAS, PLC has developed a carbon dioxide laser system and related accessories
described in Exhibit A hereto (as set forth in Exhibit A, the “Products”), and
desires that the sale and use of the Products be actively promoted in the fifty
states of the United States of America and the District of Columbia (the
“Territory”);

 

WHEREAS, Edwards is a company in the medical devices field with experience and
expertise in the commercialization and distribution of medical devices;

 

WHEREAS, PLC desires to engage Edwards to purchase, resell and distribute the
Products in the Territory; and

 

WHEREAS, Edwards desires to obtain rights to purchase, resell and distribute the
Products in the Territory;

 

NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Agreement” shall have the meaning set forth in the Recitals.

 

“Automatic Renewal Threshold” shall have the meaning set forth in Section 8.1.

 

“Average End User Price” shall have the meaning set forth in Section 7.1.

 

“Damages” shall have the meaning set forth in Section 9.2.

 

“DBMR” shall have the meaning set forth in Section 2.2.

 

“Dispute” shall have the meaning set forth in Section 11.4.

 

“Edwards” shall have the meaning set forth in the Recitals.

 

“Edwards Facility” shall have the meaning set forth in Section 7.5.

 

“Effective Date” shall have the meaning set forth in Section 8.1.

 

1

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“Escalation Notice” shall have the meaning set forth in Section 11.4.

 

“Estimated End User Price “ shall have the meaning set forth in Section 7.1.

 

“ETL” shall have the meaning set forth in Section 4.2.

 

“FDA” shall have the meaning set forth in Section 4.2.

 

“HL-1 Laser System” shall have the meaning set forth in Exhibit A.

 

“HL-2 Laser System” shall have the meaning set forth in Exhibit A.

 

“HL-2 Purchase Price” shall have the meaning set forth in Section 7.3.

 

“Indemnified Party” shall have the meaning set forth in Section 9.3.

 

“Indemnifying Party” shall have the meaning set forth in Section 9.3.

 

“Initial Term” shall have the meaning set forth in Section 8.1.

 

“PLC” shall have the meaning set forth in the Recitals.

 

“PLC Parent” shall have the meaning set forth in the Recitals.

 

“Products” shall have the meaning set forth in the Recitals.

 

“Sales and Marketing Option” shall have the meaning set forth in Section 3.3.

 

“Scheduled Employees” shall have the meaning set forth in Section 3.3

 

“Services” shall have the meaning set forth in Section 4.5.

 

“Territory” shall have the meaning set forth in the Recitals.

 

“TMR Disposable Kit” shall have the meaning set forth in Exhibit A.

 

“Transaction Agreements” shall have the meaning set forth in Section 11.10.

 

“Usage Premium” shall mean, with respect to each contract pursuant to which an
HL-1 Laser System or HL-2 Laser System is sold, the dollar amount by which the
per-usage charge set forth in such contract exceeds the TMR Disposable Kit price
set forth in such contract or if the TMR Disposable Kit price is not explicitly
stated in such contract, the list price of a TMR Disposable Kit at the time the
contract was entered into. In addition, Usage Premium shall also include the
amount of any additional payments related exclusively to the use of the
applicable Laser System, including, but not limited to, rental or lease
payments.

 

“Warehouse Retesting” shall mean retesting an HL-2 Laser System to its original
factory specifications due to the fact that it has been warehoused by Edwards
for longer than the Warehouse Life.

 

2

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

 

“Warehouse Life” shall mean [**], unless PLC reasonably determines, at any time
during the term of this Agreement, that such period may be extended, but in no
event shall such period be extended to more than [**]; provided, however that
PLC shall provide Edwards with the data upon which it makes the determination to
extend or maintain the Warehouse Life.

 

“Warranty Period” shall mean in the event (a) an HL-2 Laser System is shipped
before the expiration of the Warehouse Life, the period from the date of
installation until the [**] anniversary of such installation, but not to exceed
[**] from the date of shipment to the end user; (b) an HL-2 Laser System is
shipped after the expiration of the Warehouse Life and PLC has requested that
such HL-2 Laser System be Warehouse Retested and Edwards ships without such
Warehouse Retesting, the period from the date of sale to Edwards until the date
which is [**] plus the Warehouse Life; (c) a proposed shipment of an HL-2 Laser
System would occur after the expiration of the Warehouse Life, and Edwards and
PLC agree to the Warehouse Retesting of such HL-2 Laser System, the period from
the date of installation until the [**] anniversary of such installation, but
not to exceed [**] from the date of shipment to the end user; and (d) a proposed
shipment of an HL-2 Laser System would occur after the expiration of the
Warehouse Life, and Edwards and PLC agree that Warehouse Retesting of such HL-2
Laser System is not necessary, the period from the date of installation until
the [**] anniversary of such installation, but not to exceed [**] from the date
of shipment to the end user.

 

ARTICLE II

 

APPOINTMENT

 

SECTION 2.1  APPOINTMENT. SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THIS
AGREEMENT, PLC HEREBY APPOINTS EDWARDS AS PLC’S EXCLUSIVE INDEPENDENT
DISTRIBUTOR OF THE PRODUCTS IN THE TERRITORY. EDWARDS MAY NOT APPOINT A
SECONDARY OR SUB-DISTRIBUTOR TO SELL THE PRODUCTS WITHOUT PLC’S PRIOR WRITTEN
CONSENT, OTHER THAN THOSE SET FORTH ON SCHEDULE 2.1. PLC SHALL NOT APPOINT ANY
OTHER AGENTS, REPRESENTATIVES, OR DISTRIBUTORS FOR THE PURPOSE OF SELLING THE
PRODUCTS IN THE TERRITORY.

 

SECTION 2.2  COMPETITION. EDWARDS SHALL NOT SELL ANY DEVICES IN THE TERRITORY
WHICH DIRECTLY COMPETE WITH THE PRODUCTS IN THE FIELD OF MYOCARDIAL
REVASCULARIZATION EITHER INTRAOPERATIVE OR PERCUTANEOUS THAT USES A DEVICE-BASED
CHANNELING MEANS (“DBMR”) DURING THE TERM OF THIS AGREEMENT. EDWARDS MAY MARKET
AND SELL MEDICAL DEVICES, INCLUDING, WITHOUT LIMITATION, PRODUCTS THAT MAY BE
USED IN CONNECTION WITH REVASCULARIZATION OF THE HEART, AS LONG AS SUCH MEDICAL
DEVICES ARE NOT WITHIN THE FIELD OF DBMR AND ALL OTHER MEDICAL DEVICES WHICH IT
IS SELLING AS OF THE DATE HEREOF. EDWARDS DOES NOT CURRENTLY SELL ANY DEVICES IN
THE FIELD OF DBMR.

 

ARTICLE III

 

OBLIGATIONS OF DISTRIBUTOR

 

SECTION 3.1  GENERAL OBLIGATIONS OF EDWARDS. EDWARDS SHALL USE COMMERCIALLY
REASONABLE EFFORTS TO DISTRIBUTE AND SELL THE PRODUCTS IN THE TERRITORY
INCLUDING, WITHOUT LIMITATION, THE FOLLOWING:

 

3

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

 

(A)                                  PROMOTE THE SALE AND USE OF PRODUCTS IN THE
TERRITORY;

 

(B)                                 PROVIDE CUSTOMER SERVICE, INCLUDING
RESPONDING TO CUSTOMER INQUIRIES AND REQUESTS FOR QUOTES ON PRODUCT PRICING; AND

 

(C)                                  PROVIDE INVOICES TO CUSTOMERS AND MANAGE
ACCOUNTS RECEIVABLE AND COLLECTION RESPONSIBILITIES FOR SALES BY EDWARDS OF THE
PRODUCTS.

 

SECTION 3.2  COSTS AND EXPENSES. EDWARDS SHALL BEAR ALL THE COSTS AND EXPENSES
ASSOCIATED WITH ITS OBLIGATIONS SET FORTH IN THIS AGREEMENT.

 

SECTION 3.3  SALES AND MARKETING OPTION. EDWARDS SHALL HAVE THE OPTION (THE
“SALES AND MARKETING OPTION”) WHICH MUST BE EXERCISED, IF AT ALL, UPON 30 DAYS
PRIOR WRITTEN NOTICE TO PLC GIVEN DURING OR BEFORE THE THREE-MONTH PERIOD
FOLLOWING THE FIRST ANNIVERSARY OF THE DATE HEREOF, TO ASSUME FULL SALES AND
MARKETING RESPONSIBILITY FOR THE PRODUCTS IN THE TERRITORY AND TO OFFER
EMPLOYMENT, SUBJECT TO EDWARDS’ STANDARD EMPLOYMENT QUALIFICATIONS, WITH BASE
COMPENSATION, COMMISSION AND BENEFITS SUBSTANTIALLY COMPETITIVE TO THOSE
PROVIDED BY PLC IMMEDIATELY PRIOR TO SUCH OFFER TO EACH PLC EMPLOYEE SET FORTH
ON SCHEDULE 3.3 (THE “SCHEDULED EMPLOYEES”), PROVIDED THEY MEET THE PERFORMANCE
CRITERIA SET FORTH ON SCHEDULE 3.3. UPON EXERCISE OF THE SALES AND MARKETING
OPTION, PLC SHALL RELEASE PERFORMANCE REVIEWS OF THE SCHEDULED EMPLOYEES TO
EDWARDS, SUBJECT TO THE WAIVER OF EACH SUCH EMPLOYEE. IF SUCH SCHEDULED EMPLOYEE
REFUSES TO WAIVE ACCESS TO HIS OR HER PERFORMANCE REVIEWS, SUCH REFUSAL SHALL
CONSTITUTE A REJECTION OF AN OFFER OF EMPLOYMENT FROM EDWARDS AND EDWARDS SHALL
HAVE NO FURTHER OBLIGATIONS WITH RESPECT TO SUCH EMPLOYEE AND PLC SHALL BE
RESPONSIBLE FOR ANY SEVERANCE PAY PURSUANT TO THE LAST SENTENCE OF THIS SECTION.
IF EDWARDS CHOOSES NOT TO OFFER EMPLOYMENT TO ANY SCHEDULED EMPLOYEE THAT MEETS
THE PERFORMANCE CRITERIA SET FORTH ON SCHEDULE 3.3 AND EDWARDS’ STANDARD
EMPLOYMENT QUALIFICATIONS, EDWARDS SHALL PAY TO PLC THE AMOUNT ON SCHEDULE 3.3
PER SUCH EMPLOYEE. IN THE EVENT A SCHEDULED EMPLOYEE REJECTS THE EMPLOYMENT
OFFER BY EDWARDS, PLC SHALL BE RESPONSIBLE FOR SEVERANCE PAY TO SUCH EMPLOYEE,
IF ANY, PURSUANT TO PLC’S THEN EXISTING SEVERANCE POLICY, IF ANY.

 

ARTICLE IV

 

OBLIGATIONS OF PLC

 

SECTION 4.1  TRANSITION SERVICES. PLC SHALL AND PLC PARENT SHALL CAUSE PLC TO
PROVIDE TO EDWARDS AT NO COST THE TRANSITION SERVICES SET FORTH ON SCHEDULE 4.1
FOR A PERIOD OF UP TO TWO MONTHS FROM THE EFFECTIVE DATE WHICH SERVICES EDWARDS
MAY TERMINATE IN WHOLE OR IN PART AT ANY TIME PRIOR TO THE EXPIRATION OF SUCH
TWO-MONTH PERIOD.

 

SECTION 4.2  APPROVALS. PLC SHALL AND PLC PARENT SHALL CAUSE PLC TO USE
COMMERCIALLY REASONABLE EFFORTS TO OBTAIN AND MAINTAIN ALL APPROVALS AND
CLEARANCES REQUIRED WITH RESPECT TO THE SALE OF THE PRODUCTS IN THE TERRITORY,
INCLUDING, WITHOUT LIMITATION, APPROVALS FROM THE FOOD AND DRUG ADMINISTRATION
(THE “FDA”) AND THE ELECTRICAL TESTING LABORATORY (“ETL”).

 

SECTION 4.3  LABELING OF PRODUCTS. PLC SHALL AND PLC PARENT SHALL CAUSE PLC TO
PROVIDE AND TO ASSUME REGULATORY RESPONSIBILITY FOR ALL FINISHED PRODUCT AND
PRODUCT-RELATED

 

4

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

 

LABELING, INCLUDING ALL SALES AND MARKETING LITERATURE, SUCH THAT IT COMPLIES
WITH ALL APPLICABLE LAWS AND REGULATIONS IN THE TERRITORY DURING THE TERM OF
THIS AGREEMENT. ALL LABELING FOR THE PRODUCTS SHALL INCLUDE THE STATEMENT
“DISTRIBUTED BY EDWARDS LIFESCIENCES LLC, MANUFACTURED BY PLC MEDICAL
SYSTEMS, INC.”

 

SECTION 4.4  CLINICAL OR MARKETING STUDIES. PLC SHALL AND PLC PARENT SHALL CAUSE
PLC TO USE COMMERCIALLY REASONABLE EFFORTS TO CONDUCT ANY CLINICAL STUDY WITH
RESPECT TO THE PRODUCTS REQUIRED BY THE FDA OR OTHER GOVERNMENTAL AGENCIES TO
SELL OR MARKET THE PRODUCTS IN THE TERRITORY. ALL OTHER CLINICAL OR MARKETING
STUDIES WITH RESPECT TO THE PRODUCTS THAT ARE CONDUCTED WITHIN THE TERRITORY
WILL BE APPROVED, FUNDED, AND CONDUCTED ON TERMS AND CONDITIONS MUTUALLY AGREED
TO BY PLC AND EDWARDS.

 

SECTION 4.5  INSTALLATION SERVICES AND SERVICES PROVIDED UNDER EXTENDED SERVICE
AGREEMENTS. PLC SHALL AND PLC PARENT SHALL CAUSE PLC TO PROVIDE THE SERVICES AND
TECHNICAL SUPPORT RELATING TO THE PRODUCTS AS SET FORTH ON SCHEDULE 4.5 (THE
“SCHEDULE 4.5 SERVICES”). PLC SHALL RETAIN ALL SERVICE FEES AND REVENUES THAT IT
RECEIVES FROM END USERS FOR PROVIDING THE SCHEDULE 4.5 SERVICES, PROVIDED THAT
PLC SHALL PAY TO EDWARDS A COMMISSION OF [**]% OF ALL SUCH FEES AND REVENUES. IF
AND TO THE EXTENT THAT PLC FAILS TO PERFORM ITS OBLIGATION IN THE FIRST SENTENCE
OF THIS SECTION 4.5, EDWARDS MAY PROVIDE THOSE SCHEDULE 4.5 SERVICES OR CONTRACT
WITH A THIRD PARTY TO PROVIDE THOSE SCHEDULE 4.5 SERVICES. IN SUCH EVENT,
EDWARDS SHALL KEEP ALL SERVICE FEES AND REVENUES RESULTING THEREFROM AND PLC
SHALL TRAIN THE PERSONNEL (AT A RATE OF $[**] PER DAY) PERFORMING SUCH
SCHEDULE 4.5 SERVICES (WHETHER EMPLOYED BY EDWARDS OR A THIRD PARTY) AND PROVIDE
FACTORY SUPPORT, INCLUDING, WITHOUT LIMITATION, SPARE PARTS, TECHNICAL
TROUBLESHOOTING, AND PROCESSING PRODUCT RETURNS. PLC SHALL ALSO PROVIDE EDWARDS
WITH MONTHLY REPORTS WITH RESPECT TO PRODUCT RETURNS AND COMPLAINTS. EDWARDS
SHALL LOG IN ANY PRODUCTS RETURNED BY CUSTOMERS TO EDWARDS AND RETURN SUCH
PRODUCTS TO PLC. IF AN HL-2 LASER SYSTEM IS INSTALLED AND THE PRICE TO BE PAID
BY THE END USER FOR SUCH INSTALLATION IS LESS THAN $[**] PER DAY, PLC SHALL
INSTALL SUCH HL-2 LASER SYSTEM AND EDWARDS SHALL PAY PLC THE DIFFERENCE BETWEEN
$[**] AND THE AMOUNT TO BE PAID BY THE END USER PER DAY FOR SUCH INSTALLATION,
BUT IN NO EVENT SHALL EDWARDS’ PAYMENT EXCEED $[**] PER INSTALLATION.

 

SECTION 4.6  WARRANTY AND PREVENTIVE MAINTENANCE SERVICES. PLC SHALL AND PLC
PARENT SHALL CAUSE PLC TO PROVIDE ALL WARRANTY AND TWO SCHEDULED PREVENTIVE
MAINTENANCE SERVICES ON ALL HL-2 LASER SYSTEMS AS SET FORTH ON SCHEDULE 4.6
DURING THE WARRANTY PERIOD. EDWARDS SHALL REIMBURSE PLC FOR THE COSTS SET FORTH
ON SCHEDULE 4.6 INCURRED BY PLC IN THE PERFORMANCE OF ITS OBLIGATION IN THE
PRIOR SENTENCE DURING THE WARRANTY PERIOD, BUT IN NO EVENT SHALL SUCH
REIMBURSEMENT EXCEED $[**] PER HL-2 LASER SYSTEM. IN THE EVENT PLC IS REQUIRED
TO CONDUCT WAREHOUSE RETESTING ON AN HL-2 LASER SYSTEM, EDWARDS SHALL REIMBURSE
PLC $[**] PER SUCH HL-2 LASER SYSTEM, UPON COMPLETION OF WAREHOUSE RETESTING.

 

SECTION 4.7  RECALL OF PRODUCTS. IN THE EVENT OF A RECALL OF ANY OF THE
PRODUCTS, PLC SHALL AND PLC PARENT SHALL CAUSE PLC TO BEAR ALL COSTS AND
EXPENSES OF SUCH RECALL, INCLUDING, WITHOUT LIMITATION, EXPENSES OR OBLIGATIONS
TO THIRD PARTIES, THE COST OF NOTIFYING CUSTOMERS AND END USERS, AND COSTS
ASSOCIATED WITH THE SHIPMENT OF RECALLED PRODUCTS FROM CUSTOMERS TO PLC. EDWARDS
SHALL COOPERATE WITH PLC IN EFFECTING ANY RECALL OF THE PRODUCTS SOLD BY EDWARDS
BY PRODUCING CUSTOMER LISTS AND ASSISTING WITH THE NOTIFICATION OF CUSTOMERS AND
END USERS OF THE RECALLED PRODUCTS.

 

5

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SECTION 4.8  PRODUCT LIABILITY INSURANCE. SET FORTH ON SCHEDULE 4.8 IS A COPY OF
PLC’S PRODUCT LIABILITY INSURANCE POLICY WHICH IS IN FULL FORCE AND EFFECT. PLC
SHALL AND PLC PARENT SHALL CAUSE PLC TO OBTAIN AND KEEP IN FORCE DURING THE TERM
OF THIS AGREEMENT A PRODUCT LIABILITY INSURANCE POLICY IN AN AMOUNT NOT LESS
THAN $10,000,000 IN A FORM REASONABLY ACCEPTABLE TO EDWARDS. DURING THE TERM OF
THIS AGREEMENT AND FOR A PERIOD OF [**] FOLLOWING THE EXPIRATION OR TERMINATION
OF THIS AGREEMENT, SUCH INSURANCE POLICY SHALL EVIDENCE EDWARDS AND ALL OF ITS
AFFILIATES AS ADDITIONAL INSURED ENTITIES AND SHALL PROVIDE FOR WRITTEN
NOTIFICATION TO EDWARDS BY THE INSURER NOT LESS THAN 30 DAYS PRIOR TO
CANCELLATION, EXPIRATION OR MODIFICATION. PLC SHALL AND PLC PARENT SHALL CAUSE
PLC TO PROVIDE A CERTIFICATE OF INSURANCE EVIDENCING COMPLIANCE WITH THIS
SECTION 4.8 TO EDWARDS WITHIN 30 DAYS OF THE DATE HEREOF.

 

SECTION 4.9  COSTS AND EXPENSES. PLC SHALL AND PLC PARENT SHALL CAUSE PLC TO
BEAR ALL THE COSTS AND EXPENSES ASSOCIATED WITH PLC’S OBLIGATIONS SET FORTH IN
THIS AGREEMENT.

 

ARTICLE V

 

SALES AND MARKETING

 

SECTION 5.1  MARKETING PLAN. PLC AND EDWARDS SHALL JOINTLY EXECUTE THE MARKETING
PLAN FOR THE PRODUCTS SET FORTH IN SCHEDULE 5.1 AND FUND SUCH PLAN BASED ON THE
PERCENTAGES SET FORTH ON SUCH SCHEDULE DURING THE FIRST SIX MONTHS OF THE TERM
OF THIS AGREEMENT. DURING SUCH PERIOD, PLC AND EDWARDS SHALL JOINTLY DEVELOP A
MARKETING PLAN FOR THE PRODUCTS FOR THE NEXT SIX MONTHS AND PLC SHALL PROVIDE
[**]% OF THE FUNDING FOR SUCH PLAN AND EDWARDS SHALL PROVIDE THE REMAINING [**]%
OF THE FUNDING. PLC AND EDWARDS SHALL CONTINUE TO JOINTLY DEVELOP A MARKETING
PLAN FOR THE PRODUCTS AND PROVIDE FUNDING FOR SUCH PLAN ACCORDING TO MUTUALLY
AGREEABLE ALLOCATIONS UNTIL SUCH TIME AS EDWARDS EXERCISES THE SALES AND
MARKETING OPTION.

 

SECTION 5.2  SALES PLAN. EDWARDS AND PLC AGREE TO THE SALES PLAN SET FORTH ON
SCHEDULE 5.2. EDWARDS SHALL REIMBURSE ANY OUT-OF-POCKET COSTS FOR TRAVEL
INCURRED BY PLC IN CONNECTION WITH TRAINING EDWARDS’ SALES PERSONNEL BEYOND THE
SCOPE OF THE TRAINING REQUIREMENTS ANTICIPATED IN SCHEDULE 5.2.

 

SECTION 5.3  SALES MATERIAL AND LITERATURE. PLC SHALL INITIALLY PROVIDE ALL
SALES MATERIAL AND LITERATURE FOR THE PRODUCTS. PLC AND EDWARDS SHALL JOINTLY
DEVELOP ANY NEW LITERATURE. THE COSTS AND EXPENSES ASSOCIATED WITH DEVELOPING
AND PRODUCING ANY NEW LITERATURE SHALL BE PAID JOINTLY BY PLC AND EDWARDS
ACCORDING TO THE FUNDING PERCENTAGES SET FORTH IN SECTION 5.1 UNTIL SUCH TIME AS
EDWARDS EXERCISES THE SALES AND MARKETING OPTION. IF EDWARDS EXERCISES SUCH
OPTION, EDWARDS THEREAFTER SHALL BE SOLELY RESPONSIBLE FOR PAYING THE COST OF
SUCH LITERATURE. NOTHING IN THIS SECTION 5.3 SHALL HAVE ANY EFFECTS ON PLC’S
OBLIGATIONS SET FORTH IN SECTION 4.3.

 

SECTION 5.4  TRAINING AND RETENTION OF SALES PERSONNEL. PLC SHALL PROVIDE
PRODUCTS AND SALES TRAINING TO ALL PLC AND EDWARDS SALES PERSONNEL THAT ARE
ENGAGED IN MARKETING AND SELLING THE PRODUCTS IN THE TERRITORY. PLC SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO RETAIN THE SALES PERSONNEL SET FORTH ON
SCHEDULE 3.3. DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF [**] AFTER
THE TERMINATION OR EXPIRATION OF THIS AGREEMENT, NEITHER PLC PARENT NOR PLC
SHALL HIRE OR SOLICIT FOR EMPLOYMENT ANY OF EDWARDS’ PERSONNEL WITHOUT THE PRIOR
WRITTEN CONSENT OF

 

6

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EDWARDS. DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF ONE YEAR AFTER
THE TERMINATION OR EXPIRATION OF THIS AGREEMENT, EDWARDS SHALL NOT HIRE OR
SOLICIT FOR EMPLOYMENT ANY PERSONNEL OF PLC PARENT OR PLC WITHOUT THE PRIOR
WRITTEN CONSENT OF PLC; PROVIDED, HOWEVER, THAT IF EDWARDS EXERCISES THE SALES
AND MARKETING OPTION, THE FOREGOING LIMITATIONS SHALL BE INAPPLICABLE TO
PERSONNEL LISTED OR OTHERWISE REFERENCED ON SCHEDULE 3.3.

 

SECTION 5.5  PERFORMANCE RECORD OF SALES PERSONNEL. PLC SHALL KEEP AN ACCURATE
AND COMPLETE RECORD OF THE PERFORMANCE OF ALL SCHEDULED EMPLOYEES, INCLUDING THE
SALES FIGURES FOR EACH SCHEDULED EMPLOYEE, AND WILL PROVIDE QUARTERLY UPDATES TO
EDWARDS OF THE SALES FIGURES FOR EACH TERRITORY.

 

ARTICLE VI

 

PURCHASE ARRANGEMENTS

 

SECTION 6.1  PURCHASE FORECASTS FOR PRODUCTS. PLC AND EDWARDS SHALL CONFER
MONTHLY AND JOINTLY PRODUCE A ROLLING TWELVE-MONTH FORECAST OF THE EXPECTED
DEMAND FOR THE PRODUCTS UNTIL SUCH TIME AS EDWARDS EXERCISES THE SALES AND
MARKETING OPTION. AFTER EDWARDS EXERCISES SUCH OPTION, FOR THE REMAINING TERM OF
THE AGREEMENT, EDWARDS SHALL PROVIDE QUARTERLY TO PLC A ROLLING FOUR QUARTER
FORECAST OF THE EXPECTED DEMAND FOR THE PRODUCTS.

 

SECTION 6.2  PURCHASER ORDERS; NO MINIMUM PRODUCT QUANTITIES. EDWARDS SHALL
SUBMIT A NON-CANCELABLE PURCHASE ORDER TO PLC FOR TMR DISPOSAL KITS FOR THE
UPCOMING CALENDAR QUARTER ON THE FIRST DAY OF THE MONTH PRECEDING SUCH QUARTER
EXCEPT THAT UNTIL JUNE 30, 2001, EDWARDS SHALL SUBMIT NON-CANCELABLE PURCHASE
ORDERS ON A MONTHLY BASIS FOR TMR DISPOSAL KITS. UNTIL SUCH TIME AS EDWARDS
EXERCISES THE SALES AND MARKETING OPTION, EDWARDS SHALL SUBMIT NON-CANCELABLE
PURCHASE ORDERS TO PLC FOR HL-2 LASER SYSTEMS ON AN AS NEEDED BASIS. IF EDWARDS
EXERCISES SUCH OPTION, THEREAFTER, EDWARDS SHALL SUBMIT A NON-CANCELABLE
PURCHASE ORDER TO PLC FOR HL-2 LASER SYSTEMS FOR THE UPCOMING CALENDAR QUARTER
ON THE FIRST DAY OF THE MONTH PRECEDING SUCH QUARTER. NOTWITHSTANDING ITS
PROVISION OF DEMAND FORECASTS FOR THE PRODUCTS AND ANYTHING ELSE SET FORTH
HEREIN, EDWARDS SHALL DETERMINE IN ITS SOLE DISCRETION THE QUANTITY OF PRODUCTS
IT SHALL PURCHASE AND THERE SHALL BE NO MINIMUM PURCHASE REQUIREMENTS FOR ANY
PRODUCTS. TO THE EXTENT THAT THE TERMS OF ANY PURCHASE ORDER AND THE TERMS OF
THIS AGREEMENT CONFLICT, THE TERMS OF THIS AGREEMENT SHALL CONTROL.

 

SECTION 6.3  PLACEMENT OF ORDERS. ALL ORDERS FOR PRODUCTS SUBMITTED BY EDWARDS
SHALL BE INITIATED BY WRITTEN PURCHASE ORDERS SENT TO PLC WHICH SHALL SPECIFY
THE DESIRED DELIVERY DATE, LOCATION AND METHOD OF TRANSPORTATION FOR THE
PRODUCTS INCLUDED IN SUCH ORDER. WITH RESPECT TO ANY PRODUCT FOR WHICH EDWARDS
MAY SUBMIT PURCHASE ORDERS TO PLC ON AN AS NEEDED BASIS, EDWARDS AGREES TO
PROMPTLY SUBMIT PURCHASE ORDERS TO PLC AFTER ITS RECEIPT OF ORDERS FROM ITS
CUSTOMERS, BUT, IN ANY EVENT, SHALL SUBMIT PURCHASE ORDERS TO PLC WITHIN TEN
BUSINESS DAYS OF ITS RECEIPT OF A CUSTOMER ORDER. QUARTERLY PURCHASE ORDERS
SUBMITTED TO PLC BY EDWARDS WILL INDICATE THE QUANTITY OF PRODUCTS TO BE
DELIVERED FOR EACH MONTH OF THE QUARTER, PROVIDED, HOWEVER, THE QUANTITY FOR ANY
INDIVIDUAL MONTH SHALL IN NO CASE BE LESS THAN [**]% OF THE TOTAL TO BE
DELIVERED FOR THE ENTIRE QUARTER. THE QUANTITY FOR THE QUARTER SHALL NOT EXCEED
[**]% OF THE MOST RECENT FORECASTED QUANTITY FOR THE QUARTER. PLC SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO DELIVER THE PRODUCTS ON THE AGREED UPON
DELIVERY DATES SET FORTH IN ACCEPTED

 

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PURCHASE ORDERS, BUT, IN ANY EVENT, SHALL MAKE ALL DELIVERIES WITHIN [**] DAYS
OF THE AGREED UPON DELIVERY DATES SET FORTH IN ACCEPTED PURCHASE ORDERS.

 

ARTICLE VII

 

PRICING, PAYMENT, SHIPPING

 

SECTION 7.1  TMR DISPOSABLE KIT. (A)  EDWARDS SHALL PURCHASE THE TMR DISPOSABLE
KITS FROM PLC AT 55% OF THE AVERAGE END USER PRICE. IF EDWARDS EXERCISES THE
SALES AND MARKETING OPTION, THEREAFTER EDWARDS SHALL PURCHASE THE TMR DISPOSABLE
KITS FROM PLC AT 45% OF THE AVERAGE END USER PRICE. THE “AVERAGE END USER PRICE”
SHALL MEAN THE AVERAGE OF THE ACTUAL SALES PRICE FOR EACH TMR DISPOSABLE KIT
SOLD DURING A CALENDAR QUARTER. EDWARDS SHALL CALCULATE THE AVERAGE END USER
PRICE AND DELIVER SUCH CALCULATION TO PLC WITHIN 15 DAYS AFTER THE END OF EACH
QUARTER.

 

(B)                                 PLC SHALL BILL TMR DISPOSABLE KITS TO
EDWARDS ON A PRELIMINARY BASIS AT 55% OF THE ESTIMATED END USER PRICE BEFORE
EDWARDS EXERCISES THE SALES AND MARKETING OPTION AND 45% OF THE ESTIMATED END
USER PRICE AFTER EDWARDS EXERCISES SUCH OPTION. THROUGH JUNE 30, 2001, THE
“ESTIMATED END USER PRICE” SHALL BE $2,000. DURING SUBSEQUENT QUARTERS OF THE
AGREEMENT, THE “ESTIMATED END USER PRICE” SHALL BE EQUAL TO THE AVERAGE END USER
PRICE FOR THE MOST RECENT QUARTER THAT SUCH DATA IS AVAILABLE AND CALCULABLE.

 

(C)                                  THE DIFFERENCE BETWEEN THE PRELIMINARY
AMOUNT BILLED DURING A QUARTER USING THE ESTIMATED END USER PRICE AND THE ACTUAL
AMOUNT OWED USING THE AVERAGE END USER PRICE SHALL BE CREDITED TO EDWARDS BY PLC
OR PAID BY EDWARDS TO PLC, AS THE CASE MAY BE, WITHIN [**] DAYS OF THE DATE SUCH
AVERAGE END USER PRICE IS DETERMINED. WITH RESPECT TO TMR DISPOSABLE KITS THAT
PLC HAS SOLD PRIOR TO THE DATE OF THIS AGREEMENT TO PLC CUSTOMERS USING THE HL-1
LASER SYSTEM, BUT AS TO WHICH DELIVERY HAS NOT YET BEEN REQUESTED BY THE
APPLICABLE CUSTOMER, UPON SUCH REQUEST FOR DELIVERY PLC SHALL PROVIDE THE
REQUESTED TMR DISPOSABLE KITS TO EDWARDS [**], AND EDWARDS SHALL PROVIDE SUCH
TMR DISPOSABLE KITS TO THE APPLICABLE CUSTOMER [**].

 

(D)                                 WITHIN [**] DAYS OF THE END OF EACH CALENDAR
MONTH, EDWARDS SHALL PROVIDE TO PLC A WRITTEN REPORT SHOWING, FOR THE MONTH
IMMEDIATELY PRECEDING THE REPORT, EDWARDS’ SALES OF THE PRODUCTS, INCLUDING THE
NAME OF THE CUSTOMER, THE DATE OF THE SHIPMENT, THE PRICE OF THE PRODUCT AND THE
ALLOCATION OF THE PRICE BETWEEN EDWARDS AND PLC. EDWARDS SHALL MAINTAIN FOR AT
LEAST TWO YEARS ITS RECORDS, CONTRACTS AND ACCOUNTS RELATING TO SALES OF THE
PRODUCTS, AND SHALL PERMIT EXAMINATION THEREOF BY AUTHORIZED REPRESENTATIVES OF
PLC AT ALL REASONABLE TIMES.

 

SECTION 7.2  HL-1 LASER SYSTEMS. EDWARDS SHALL DELIVER TO PLC 100% OF ALL USAGE
PREMIUMS RECEIVED IN CONNECTION WITH THE SALE OF TMR DISPOSABLE KITS FOR USE
WITH, AND SERVICE REVENUE RELATED TO, HL-1 LASER SYSTEMS. EDWARDS SHALL DELIVER
ANY AND ALL MONIES RECEIVED IN CONNECTION WITH THE PURCHASE OF AN HL-1 LASER
SYSTEM TO PLC.

 

SECTION 7.3  HL-2 LASER SYSTEMS. SUBJECT TO ANY ADJUSTMENT PROVIDED HEREIN,
EDWARDS SHALL PURCHASE THE HL-2 LASER SYSTEMS FROM PLC FOR $[**] PER UNIT, WHICH
AMOUNT

 

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INCLUDES WAREHOUSING FEES AT PLC’S FACILITY (THE “HL-2 PURCHASE PRICE”). IN
ADDITION, EDWARDS SHALL PAY PLC [**]% OF THE AMOUNT THE HL-2 LASER SYSTEM END
USER PRICE EXCEEDS THE HL-2 PURCHASE PRICE FOR EACH SUCH HL-2 LASER SYSTEM SOLD.
EDWARDS SHALL RETAIN THE USAGE PREMIUMS IT RECEIVES FROM EACH HL-2 LASER SYSTEM
THAT IS PLACED UNTIL THE AGGREGATE USAGE PREMIUMS RECEIVED WITH RESPECT TO SUCH
HL-2 LASER SYSTEM EQUALS THE [**]. THEREAFTER, EDWARDS SHALL PAY PLC [**]% OF
SUCH USAGE PREMIUMS. PLC AND EDWARDS AGREE TO PERIODICALLY REVIEW IN GOOD FAITH
THE HL-2 LASER PURCHASE PRICE AND TO MAKE ADJUSTMENTS, SUBJECT TO THEIR MUTUAL
AGREEMENT, TO THE HL-2 PURCHASE PRICE DUE TO INFLATION, CHANGE IN PRODUCT COST
AND/OR OTHER MARKET OR COMPETITIVE CONDITIONS. EDWARDS SHALL PAY PLC WITHIN [**]
DAYS OF THE SALE THE AMOUNT SET FORTH IN THE COLUMN TITLED “PROTECTION”
SPECIFIED IN SCHEDULE 7.3 FOR EACH SUCH HL-2 LASER SYSTEM THAT IS SOLD TO A
CUSTOMER LISTED ON SCHEDULE 7.3 WITHIN THREE MONTHS OF EFFECTIVE DATE OF THIS
AGREEMENT.

 

SECTION 7.4  PRODUCT ACCESSORIES. EDWARDS SHALL PURCHASE FROM PLC F.O.B PLC’S
MANUFACTURING FACILITY ANY PRODUCT ACCESSORY SET FORTH ON SCHEDULE 7.4 FOR THE
TRANSFER PRICE LISTED FOR SUCH ACCESSORY ON SCHEDULE 7.4.

 

SECTION 7.5  SHIPPING. AT EDWARDS’ REQUEST, PLC SHALL WAREHOUSE ALL HL-2 LASER
SYSTEMS PURCHASED BY EDWARDS AT EDWARDS’ SEGREGATED WAREHOUSE WITHIN PLC’S
FACILITY (“EDWARDS FACILITY”). UNTIL THE DATE 60 DAYS AFTER THE DATE OF THE
TERMINATION OF THE TRANSITION SERVICES PROVIDED IN SECTION 4.1, PLC SHALL
DELIVER TMR DISPOSABLE KITS DIRECTLY TO THE END USER. THEREAFTER, PLC SHALL
DELIVER TMR DISPOSABLE KITS DIRECTLY TO EDWARDS. ALL PRICES FOR THE PRODUCTS
SHALL BE F.O.B. PLC’S MANUFACTURING FACILITY. THE PRICES WILL NOT INCLUDE ANY
FEDERAL, STATE OR LOCAL SALES, USE, EXCISE OR VALUE ADDED TAX THAT MAY BE
APPLICABLE. IF PLC HAS THE LEGAL OBLIGATION TO COLLECT SUCH TAXES, THE
APPROPRIATE AMOUNT SHALL BE ADDED TO EDWARDS’ INVOICE AND PAID BY EDWARDS UNLESS
EDWARDS PROVIDES PLC WITH A VALID TAX EXEMPTION CERTIFICATE AUTHORIZED BY THE
APPROPRIATE TAXING AUTHORITY. PLC SHALL SHIP THE PRODUCTS USING THE METHOD OF
TRANSPORTATION SPECIFIED BY EDWARDS IN THE PURCHASE ORDER. IN ALL CASES, TITLE,
RISK OF LOSS AND ALL RESPONSIBILITY FOR TRANSPORTATION, INSURANCE AND STORAGE
SHALL PASS FROM PLC TO EDWARDS UPON TRANSFER OF FINISHED HL-2 LASER SYSTEMS FROM
PLC TO THE EDWARDS FACILITY AND AFTER SUCH TRANSFER PLC SHALL PROMPTLY ISSUE AN
INVOICE RELATED THERETO TO EDWARDS.

 

SECTION 7.6  PAYMENT. FULL PAYMENT SHALL BE MADE BY EDWARDS TO PLC WITHIN [**]
DAYS FROM THE INVOICE DATE WHICH SHALL BE SHIPPING DATE FOR THE PRODUCTS TO
EDWARDS.

 

ARTICLE VIII

 

TERM AND TERMINATION; ANNUAL MEETING

 

SECTION 8.1  TERM AND RENEWAL. THIS AGREEMENT SHALL COMMENCE ON THE DALE HEREOF
(THE “EFFECTIVE DATE”) AND BE VALID FOR AN INITIAL TERM OF FIVE (5) YEARS
(“INITIAL TERM”). EDWARDS SHALL HAVE THE OPTION TO EXTEND THE AGREEMENT ON THE
SAME TERMS AND CONDITIONS FOR AN ADDITIONAL TERM OF FIVE (5) YEARS, PROVIDED
THAT THE TMR DISPOSABLE KITS SOLD BY EDWARDS, MEASURED FOR THE TWELVEMONTH
PERIOD ENDING SIX MONTHS PRIOR TO THE EXPIRATION OF THE INITIAL TERM, ARE USED
IN AT LEAST 35% OF ALL INTRAOPERATIVE LASER-BASED TRANSMYOCARDIAL
REVASCULARIZATION PROCEDURES IN THE TERRITORY FOR SUCH PERIOD AS MEASURED BY A
THIRD-PARTY STUDY REASONABLY ACCEPTABLE TO PLC AND EDWARDS (THE “AUTOMATIC
RENEWAL THRESHOLD”). IF THE PARTIES CANNOT

 

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AGREE ON ANY SUCH STUDY, THEN THEY SHALL JOINTLY COMMISSION A STUDY BY
MCKINSEY & COMPANY AND WILL BE BOUND BY SUCH STUDY. PLC AND EDWARDS SHALL SPLIT
THE COST OF THE MCKINSEY & COMPANY STUDY EQUALLY. IF THE SALE OF PRODUCTS BY
EDWARDS DOES NOT MEET THE AUTOMATIC RENEWAL THRESHOLD, THE PARTIES MAY AGREE TO
EXTEND THE AGREEMENT ON MUTUALLY ACCEPTABLE TERMS AND CONDITIONS.

 

SECTION 8.2  IMMEDIATE TERMINATION. THIS AGREEMENT MAY BE TERMINATED BY EITHER
EDWARDS OR PLC IMMEDIATELY IN THE EVENT THAT (A) ANY BREACH BY PLC OF
SECTION 4.8; (B) ANY MATERIAL BREACH BY THE OTHER PARTY REMAINS UNCURED 60 DAYS
AFTER WRITTEN NOTICE CONTAINING DETAILS OF THE BREACH HAS BEEN DELIVERED TO THE
OTHER PARTY; OR (C) THE OTHER PARTY SHALL FILE FOR PROTECTION FROM ITS CREDITORS
UNDER ANY APPLICABLE BANKRUPTCY OR INSOLVENCY LAWS, SHALL MAKE AN ASSIGNMENT FOR
THE BENEFIT OF CREDITORS, OR SHALL HAVE A RECEIVER APPOINTED FOR ITS PROPERTY.
THIS AGREEMENT MAY BE TERMINATED BY EDWARDS UPON ONE-YEAR NOTICE, IN THE EVENT
EDWARDS DECIDES IN ITS SOLE REASONABLE DISCRETION THAT UNFAVORABLE MARKET
CONDITIONS EXIST FOR THE PRODUCTS IN THE TERRITORY.

 

SECTION 8.3  ANNUAL MEETING. THE CHIEF EXECUTIVE OFFICER OF PLC AND THE
EXECUTIVE IN CHARGE OF THE DBMR BUSINESS FOR EDWARDS SHALL AGREE TO MEET
ANNUALLY IN ORDER TO DISCUSS SALES OPPORTUNITIES, CURRENT MARKET TRENDS AND TO
KEEP EACH OTHER INFORMED OF PERTINENT EVENTS AND COMPETING PRODUCTS HAVING AN
IMPACT UPON THE PRODUCTS’ MARKETABILITY, INCLUDING, BUT NOT LIMITED TO,
FORECASTS AS TO FUTURE DEMAND.

 

ARTICLE IX

 

WARRANTIES AND INDEMNIFICATION

 

SECTION 9.1  WARRANTIES. PLC WARRANTS THAT (A) IT POSSESSES GOOD AND MARKETABLE
TITLE TO ALL PRODUCTS SOLD TO EDWARDS UNDER THIS AGREEMENT; (B) EACH PRODUCT
CONFORMS TO ITS SPECIFICATIONS AND IS FIT FOR THE PURPOSES AND INDICATIONS
DESCRIBED IN ITS LABELING; (C) WHEN AVAILABLE FOR SALE IN THE TERRITORY THE
PRODUCTS ARE OR WILL BE MANUFACTURED IN CONFORMITY WITH ALL FDA AND ETL
RULES AND REGULATIONS AND APPLICABLE LAWS OF THE TERRITORY; (D) THE PRODUCTS
HAVE OR WILL HAVE OBTAINED FDA APPROVAL TO MARKET AND SELL THE PRODUCTS WHEN THE
PRODUCTS ARE AVAILABLE FOR SALE IN THE TERRITORY; (E) IT IS THE OWNER OR
LICENSOR OF THE ENTIRE RIGHT, TITLE AND INTEREST IN THE INTELLECTUAL PROPERTY
RELATING TO THE PRODUCTS AND, TO THE KNOWLEDGE OF PLC AND PLC PARENT, THE USE BY
EDWARDS OF ANY SUCH INTELLECTUAL PROPERTY WILL NOT VIOLATE ANY RIGHT OF ANY
THIRD PARTY; AND (F) IT COMPLIES AND WILL CONTINUE TO COMPLY WITH ALL APPLICABLE
LAWS AND REGULATIONS OF THE TERRITORY WITH RESPECT TO THE PRODUCTS.

 

SECTION 9.2  INDEMNIFICATION BY PLC. PLC AND PLC PARENT SHALL INDEMNIFY AND HOLD
HARMLESS EDWARDS, ITS OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, PARENTS,
SUCCESSORS, AFFILIATES, ASSIGNS, CUSTOMERS AND USERS OF PRODUCTS, IN EACH CASE,
FROM AND AGAINST ANY AND ALL COSTS OR EXPENSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS’ FEES, AND THE REASONABLE OUT-OF-POCKET EXPENSES OF
TESTIFYING AND PREPARING FOR TESTIMONY AND RESPONDING TO DOCUMENT AND OTHER
INFORMATION REQUESTS, WHETHER OR NOT A PARTY TO SUCH LITIGATION), JUDGMENTS,
FINES, LOSSES, CLAIMS (WHETHER OR NOT MERITORIOUS) AND DAMAGES (COLLECTIVELY,
“DAMAGES”), AS INCURRED, TO THE EXTENT THEY RELATE TO, ARISE OUT OF OR ARE THE
RESULT OF (I) THE MANUFACTURE BY PLC OR USE OF ANY PRODUCTS; (II) THE DESIGN OF
ANY PRODUCTS OR COMPONENT OF THE PRODUCTS NOT DEVELOPED

 

10

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EXCLUSIVELY BY EDWARDS; (III) THE FAILURE OF THE PRODUCTS TO SATISFY ANY
WARRANTY MADE BY PLC; (IV) BY REASON OF THE SALE OR USE OF THE PRODUCTS ANY
CLAIM OF INFRINGEMENT OF PATENTS, TRADEMARKS, TRADE NAMES, OR COPYRIGHTS, ANY
CLAIM OF MISAPPROPRIATION OR MISUSE OF TRADE SECRETS OR INFORMATION OR ANY
SIMILAR CLAIM; (V) ANY CLAIMS WITH RESPECT TO ANY SCHEDULED EMPLOYEE ARISING
FROM ACTIONS TAKEN BY PLC PRIOR TO THE DATE HEREOF, AND (VI) ANY CLAIMS WITH
RESPECT TO ANY SCHEDULED EMPLOYEE ARISING FROM ACTIONS TAKEN BY PLC, UNRELATED
TO THIS AGREEMENT, PRIOR TO THE EXERCISE OF THE SALES AND MARKETING OPTION,
PROVIDED, HOWEVER, THAT SUCH INDEMNIFICATION SHALL IN NO EVENT EXCEED $[**].

 

SECTION 9.3  INDEMNIFICATION BY EDWARDS. EDWARDS SHALL INDEMNIFY AND HOLD
HARMLESS PLC, ITS SUCCESSORS, AFFILIATES AND ASSIGNS, IN EACH CASE, FROM AND
AGAINST ANY AND ALL DAMAGES, AS INCURRED, TO THE EXTENT THEY RELATE TO, ARISE
OUT OF OR ARE THE RESULT OF EDWARDS’ GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN
THE PROMOTION AND SALE OF THE PRODUCTS BY EDWARDS.

 

SECTION 9.4  INDEMNIFICATION PROCEDURES. THE PARTY SEEKING INDEMNIFICATION (THE
“INDEMNIFIED PARTY”) PURSUANT TO THIS ARTICLE EX SHALL PROMPTLY NOTIFY THE
INDEMNIFYING PARTY (THE “INDEMNIFYING PARTY”), IN WRITING, OF SUCH CLAIM
DESCRIBING SUCH CLAIM IN REASONABLE DETAIL, PROVIDED THAT THE FAILURE TO PROVIDE
SUCH NOTICE SHALL NOT AFFECT THE OBLIGATIONS OF THE INDEMNIFYING PARTY UNLESS
AND ONLY TO THE EXTENT IT IS ACTUALLY PREJUDICED THEREBY. IN THE EVENT THAT SUCH
CLAIM INVOLVES A CLAIM BY A THIRD PARTY AGAINST AN INDEMNIFIED PARTY, THE
INDEMNIFYING PARTY SHALL HAVE 30 DAYS AFTER RECEIPT OF SUCH NOTICE TO DECIDE
WHETHER IT WILL UNDERTAKE, CONDUCT AND CONTROL, THROUGH COUNSEL OF ITS OWN
CHOOSING (BUT REASONABLY ACCEPTABLE TO THE INDEMNIFIED PARTY) AND AT ITS OWN
EXPENSE, THE SETTLEMENT OR DEFENSE THEREOF UNLESS (I) THE INDEMNIFYING PARTY IS
ALSO A PARTY TO THE PROCEEDING AND THE INDEMNIFIED PARTY DETERMINES IN GOOD
FAITH THAT JOINT REPRESENTATION WOULD BE INAPPROPRIATE OR (II) THE INDEMNIFYING
PARTY FAILS TO PROVIDE REASONABLE ASSURANCE TO THE INDEMNIFIED PARTY OF ITS
FINANCIAL CAPACITY TO DEFEND SUCH PROCEEDING, AND PROVIDE INDEMNIFICATION WITH
RESPECT THERETO, AND IF IT SO DECIDES, THE INDEMNIFIED PARTY SHALL COOPERATE
WITH IT IN CONNECTION THEREWITH, PROVIDED THAT THE INDEMNIFIED PARTY
MAY PARTICIPATE IN SUCH SETTLEMENT OR DEFENSE THROUGH COUNSEL CHOSEN BY IT, AND
PROVIDED FURTHER THAT THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE BORNE BY
THE INDEMNIFIED PARTY. THE INDEMNIFYING PARTY SHALL NOT, WITHOUT THE WRITTEN
CONSENT OF THE INDEMNIFIED PARTY (WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD, CONDITIONED OR DELAYED), SETTLE OR COMPROMISE ANY ACTION, UNLESS SUCH
SETTLEMENT OR COMPROMISE INCLUDES AN UNCONDITIONAL RELEASE OF THE INDEMNIFIED
PARTY. IF THE INDEMNIFYING PARTY DOES NOT NOTIFY THE INDEMNIFIED PARTY WITHIN 30
DAYS AFTER THE RECEIPT OF NOTICE OF A CLAIM OF INDEMNITY HEREUNDER THAT IT
ELECTS TO UNDERTAKE THE DEFENSE THEREOF, THE INDEMNIFIED PARTY SHALL HAVE THE
RIGHT TO CONTEST, SETTLE OR COMPROMISE THE CLAIM BUT SHALL NOT PAY OR SETTLE ANY
SUCH CLAIM WITHOUT THE CONSENT OF THE INDEMNIFYING PARTY (WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD, CONDITIONED OR DELAYED). THE INDEMNIFYING PARTY
AND THE INDEMNIFIED PARTY SHALL COOPERATE FULLY IN ALL ASPECTS OF ANY
INVESTIGATION, DEFENSE, PRE-TRIAL ACTIVITIES, TRIAL, COMPROMISE, SETTLEMENT OR
DISCHARGE OF ANY CLAIM IN RESPECT OF WHICH INDEMNITY IS SOUGHT PURSUANT TO
ARTICLE IX, INCLUDING, BUT NOT LIMITED TO, PROVIDING THE OTHER PARTY WITH
REASONABLE ACCESS TO EMPLOYEES AND OFFICERS (INCLUDING AS WITNESSES) AND OTHER
INFORMATION. THE REMEDIES PROVIDED IN THIS ARTICLE IX WILL NOT BE EXCLUSIVE OF
OR LIMIT ANY OTHER REMEDIES THAT MAY BE AVAILABLE TO THE INDEMNIFIED PARTIES.

 

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ARTICLE X

 

INTELLECTUAL PROPERTY RIGHTS AND CONFIDENTIALITY

 

SECTION 10.1  TRADEMARKS. EDWARDS SHALL HAVE THE RIGHT TO INDICATE TO THE PUBLIC
THAT IT IS AN AUTHORIZED DISTRIBUTOR OF THE PRODUCTS AND TO MARKET AND SELL THE
PRODUCTS UNDER THE TRADEMARKS, SERVICE MARKS AND TRADE NAMES THAT PLC MAY ADOPT
FROM TIME TO TIME. EDWARDS SHALL NOT ALTER, OBSCURE OR REMOVE ANY TRADEMARKS,
SERVICE MARKS OR TRADE NAMES OF PLC WHICH ARE CONTAINED ON OR IN OR AFFIXED TO
THE PRODUCTS AT THE TIME OF SHIPMENT. EDWARDS SHALL NOT USE ANY TRADEMARKS,
SERVICE MARKS OR TRADE NAMES OF PLC IN CONNECTION WITH ANY BUSINESS CONDUCTED BY
EDWARDS OTHER THAN DEALING WITH THE PRODUCTS IN ACCORDANCE WITH THE TERMS OF
THIS AGREEMENT. EDWARDS AGREES THAT ITS USE OF THE TRADEMARKS, SERVICE MARKS AND
TRADE NAMES OF PLC SHALL NOT CREATE IN ITS FAVOR ANY RIGHT, TITLE OR INTEREST
THEREIN AND ACKNOWLEDGES PLC’S EXCLUSIVE RIGHT, TITLE AND INTEREST THERETO.
EDWARDS AGREES THAT IT WILL NOT USE, WITHOUT PLC’S PRIOR WRITTEN CONSENT, ANY
MARK WHICH IS SIMILAR TO OR IS LIKELY TO BE CONFUSED WITH ANY TRADEMARKS,
SERVICE MARKS OR TRADE NAMES OF PLC. EDWARDS’ RIGHTS TO USE THE TRADEMARKS,
SERVICE MARKS AND TRADE NAMES OF PLC AS SET FORTH IN THIS SECTION 10.1 SHALL
TERMINATE UPON TERMINATION OR EXPIRATION OF THIS AGREEMENT.

 

SECTION 10.2  CONFIDENTIAL INFORMATION. IN ORDER TO AVOID DISCLOSURE OF
CONFIDENTIAL AND PROPRIETARY INFORMATION TO ANY OTHER PERSON, FIRM OR
CORPORATION, THE PARTIES AGREE THAT DURING THE TERM OF THIS AGREEMENT AND FOR A
PERIOD OF THREE YEARS FROM THE TERMINATION OF THIS AGREEMENT EACH WILL TREAT ANY
SUCH INFORMATION WHICH IS RECEIVED FROM ONE ANOTHER IN WRITING AND CLEARLY
MARKED AS “CONFIDENTIAL” OR IF DISCLOSED ORALLY, WHICH IS CONFIRMED IN WRITING
AS “CONFIDENTIAL” WITHIN THIRTY (30) DAYS OF INITIAL DISCLOSURE, WITH THE SAME
DEGREE OF CARE THAT EACH EMPLOYS WITH RESPECT TO ITS OWN INFORMATION WHICH IT
DOES NOT DESIRE TO HAVE PUBLISHED OR DISSEMINATED. IT IS UNDERSTOOD THAT EACH
PARTY SHALL BE LIABLE FOR ANY UNAUTHORIZED DISCLOSURE SHOULD IT FAIL TO
SAFEGUARD THE DISCLOSED INFORMATION WITH SUCH CARE. THIS OBLIGATION SHALL
SURVIVE THE TERMINATION OR EXPIRATION OF THIS AGREEMENT. THE PARTIES SHALL NOT
HAVE ANY OBLIGATION WITH RESPECT TO SUCH INFORMATION WHICH IS:

 

(A)                                  INDEPENDENTLY DEVELOPED BY THE RECEIVING
PARTY WITHOUT THE BENEFIT OF THE DISCLOSURE OR IS ALREADY KNOWN TO THE RECEIVING
PARTY AT THE TIME OF THE DISCLOSURE, AS EVIDENCED BY WRITTEN DOCUMENTATION;

 

(B)                                 PUBLICLY KNOWN OR BECOMES PUBLICLY KNOWN
WITHOUT THE WRONGFUL ACT OR BREACH OF THIS AGREEMENT BY THE RECEIVING PARTY; OR

 

(C)                                  RIGHTFULLY RECEIVED BY THE RECEIVING PARTY
FROM A THIRD-PARTY WHO IS NOT UNDER ANY OBLIGATION OF CONFIDENTIALITY OR TRADE
SECRET OBLIGATION TO THE ORIGINATING PARTY.

 

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ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1  RELATIONSHIP. THE RELATIONSHIP OF EDWARDS AND PLC ESTABLISHED BY
THIS AGREEMENT IS OF INDEPENDENT CONTRACTORS AND NOT AGENTS (EXCEPT AS SET FORTH
IN SECTION 2.1), AND NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED:

 

(A)                                  TO GIVE EITHER PARTY THE POWER TO DIRECT OR
CONTROL THE DAILY ACTIVITIES OF THE OTHER PARTY BEYOND THE OBLIGATIONS IMPOSED
ON EDWARDS AND PLC, RESPECTIVELY, BY THIS AGREEMENT;

 

(B)                                 TO CONSTITUTE THE PARTIES AS PARTNERS, JOINT
VENTURES, CO-OWNERS OR OTHERWISE AS PARTICIPANTS IN JOINT UNDERTAKING; OR

 

(C)                                  TO ALLOW EITHER PARTY TO CREATE OR ASSUME
ANY OBLIGATION ON BEHALF OF THE OTHER PARTY FOR ANY PURPOSE WHATSOEVER. THE
PURCHASE, PROMOTION, AND RESALE OF, OR ANY OTHER LEGAL TRANSACTIONS CONCERNING
THE PRODUCTS HEREUNDER SHALL BE CARRIED OUT IN THE NAME OF AND FOR THE ACCOUNT
OF EDWARDS AS PRINCIPAL, AND EDWARDS SHALL NOT ENTER INTO ANY AGREEMENT WITH
THIRD PERSONS BINDING IN ANY WAY ON PLC.

 

SECTION 11.2  NO CONFLICT. EACH PARTY REPRESENTS AND WARRANTS TO THE OTHER
PARTIES THAT IT IS NOT SUBJECT TO ANY CONTRACTUAL OBLIGATION OR RESTRAINT WHICH
WILL MATERIALLY INTERFERE WITH ITS RIGHT AND ABILITY TO PERFORM PURSUANT TO THE
TERMS OF THIS AGREEMENT.

 

SECTION 11.3  GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, INTERPRETED
UNDER, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401, 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS AND RULES 327(B).

 

SECTION 11.4  ESCALATION. EDWARDS AND PLC (AND/OR PLC PARENT) WILL ATTEMPT IN
GOOD FAITH TO RESOLVE EXPEDITIOUSLY ANY DISPUTE, CLAIM OR CONTROVERSY ARISING
OUT OF OR RELATING TO THIS AGREEMENT (THE “DISPUTE”) PROMPTLY BY NEGOTIATIONS
BETWEEN EXECUTIVES WHO HAVE AUTHORITY TO SETTLE THE CONTROVERSY AND WHO ARE AT A
HIGHER LEVEL OF MANAGEMENT THAN THE PERSONS WITH DIRECT RESPONSIBILITY FOR THE
ADMINISTRATION OF THIS AGREEMENT. EITHER PARTY MAY GIVE THE OTHER PARTY WRITTEN
NOTICE (THE “ESCALATION NOTICE”) OF ANY DISPUTE NOT RESOLVED IN THE NORMAL
COURSE OF BUSINESS. WITHIN 15 DAYS AFTER DELIVERY OF THE ESCALATION NOTICE, THE
RECEIVING PARTY SHALL SUBMIT TO THE OTHER A WRITTEN RESPONSE. THE ESCALATION
NOTICE AND THE RESPONSE THERETO SHALL INCLUDE (A) A STATEMENT OF EACH PARTY’S
POSITION AND A SUMMARY OF ARGUMENTS SUPPORTING THAT POSITION, AND (B) THE NAME
AND TITLE OF THE EXECUTIVE WHO WILL REPRESENT THAT PARTY AND OF ANY OTHER PERSON
WHO WILL ACCOMPANY THE EXECUTIVE. WITHIN 30 DAYS AFTER DELIVERY OF THE
ESCALATION NOTICE, THE EXECUTIVES OF BOTH PARTIES SHALL MEET AT A MUTUALLY
ACCEPTABLE TIME AND PLACE, AND THEREAFTER AS OFTEN AS THEY REASONABLY DEEM
NECESSARY, TO ATTEMPT TO RESOLVE THE DISPUTE. ALL REASONABLE REQUESTS FOR
INFORMATION MADE BY ONE PARTY TO THE OTHER WILL BE HONORED. ALL NEGOTIATIONS
PURSUANT TO THIS CLAUSE ARE CONFIDENTIAL AND SHALL BE TREATED AS COMPROMISE AND
SETTLEMENT NEGOTIATIONS FOR PURPOSES OF APPLICABLE RULES OF EVIDENCE. THE
PARTIES SHALL ATTEMPT TO RESOLVE ANY DISPUTE PURSUANT TO THE PROCEDURE SET FORTH
IN THIS SECTION 11.4 FOR A PERIOD UP TO 60 DAYS FROM THE DATE OF DELIVERY OF THE
ESCALATION NOTICE BEFORE RESORTING TO OTHER AVAILABLE REMEDIES; PROVIDED,
HOWEVER, NOTHING CONTAINED IN THIS SECTION 11.4 SHALL PREVENT ANY PARTY FROM
RESORTING TO JUDICIAL PROCESS IF INJUNCTIVE OR OTHER EQUITABLE RELIEF FROM A
COURT IS NECESSARY TO PREVENT SERIOUS AND IRREPARABLE INJURY TO IT OR TO OTHERS.
THE USE OF THE PROCEDURE SET FORTH IN THIS

 

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SECTION 11.4 WILL NOT BE CONSTRUED UNDER THE DOCTRINE OF LACHES, WAIVER OR
ESTOPPEL TO AFFECT ADVERSELY ANY PARTY’S RIGHT TO ASSERT ANY CLAIM OR DEFENSE.

 

SECTION 11.5  JURISDICTION AND CONSENT TO SERVICE. IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, AND WITHOUT LIMITING THE JURISDICTION OR VENUE OF ANY
OTHER COURT, THE PARTIES (A) AGREE THAT ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR
FEDERAL COURTS OF NEW YORK; (B) CONSENT TO THE EXCLUSIVE JURISDICTION OF EACH
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING RELATING TO OR ARISING OUT OF THIS
AGREEMENT; (C) WAIVE ANY OBJECTION WHICH ANY OF THEM MAY HAVE TO THE LAYING OF
VENUE IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY SUCH COURT; AND (D) AGREE
THAT SERVICE OF ANY COURT PAPER IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE
MADE IN ANY MANNER AS MAY BE PROVIDED UNDER THE APPLICABLE LAWS OR COURT
RULES GOVERNING SERVICE OF PROCESS IN SUCH COURT.

 

SECTION 11.6  NOTICES. ALL NOTICES, DEMANDS, REQUESTS, CONSENTS, APPROVALS OR
OTHER COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN HEREUNDER OR WHICH ARE
GIVEN WITH RESPECT TO THIS AGREEMENT SHALL BE IN WRITING AND SHALL BE DELIVERED
(CHARGES PREPAID, RECEIPT CONFIRMED OR RETURN RECEIPT REQUESTED (IF AVAILABLE))
BY HAND, BY NATIONALLY RECOGNIZED AIR COURIER SERVICE, BY CERTIFIED MAIL OR
FACSIMILE, ADDRESSED AS SET FORTH BELOW OR TO SUCH OTHER ADDRESS AS SUCH PARTY
SHALL HAVE SPECIFIED MOST RECENTLY BY WRITTEN NOTICE. NOTICE SHALL BE DEEMED
GIVEN AND EFFECTIVE (I) IF DELIVERED BY HAND OR BY NATIONALLY RECOGNIZED COURIER
SERVICE, WHEN DELIVERED AT THE ADDRESS SPECIFIED IN THIS SECTION 11.6 (OR IN
ACCORDANCE WITH THE LATEST UNREVOKED WRITTEN DIRECTION FROM SUCH PARTY), (II) IF
BY CERTIFIED MAIL, UPON MAILING OR (III) IF GIVEN BY FACSIMILE WHEN SUCH
FACSIMILE IS TRANSMITTED TO THE FAX NUMBER SPECIFIED IN THIS SECTION 11.6 (OR IN
ACCORDANCE WITH THE LATEST UNREVOKED WRITTEN DIRECTION FROM SUCH PARTY),
PROVIDED THE APPROPRIATE CONFIRMATION IS RECEIVED.

 

To PLC:

 

PLC Systems Inc.
10 Forge Park
Franklin, MA 02038
Attention:  Chief Executive Officer
Fax:  (508) 541-7990

 

with a copy (which shall not constitute notice) to:

 

Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention:  Steven D. Singer, Esq.
Fax:  (617) 526-5000

 

To Edwards:

 

Edwards Lifesciences LLC

One Edwards Way

Irvine, California 92614

Attention:  Associate General Counsel

Fax:  (949) 250-6850

 

14

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

 

with a copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California 90071-3144

Attention:  Joseph J. Giunta, Esq.

Fax:  (213) 687-5600

 

SECTION 11.7  INTERPRETATION. WHEN A REFERENCE IS MADE IN THIS AGREEMENT TO A
SECTION, SCHEDULE OR EXHIBIT, SUCH REFERENCE SHALL BE TO A SECTION, SCHEDULE OR
EXHIBIT OF THIS AGREEMENT UNLESS OTHERWISE INDICATED. WHEN A REFERENCE IS MADE
IN THIS AGREEMENT TO A SPECIFIC SCHEDULE, SUCH REFERENCE SHALL BE DEEMED TO
INCLUDE, TO THE EXTENT APPLICABLE, ALL THE OTHER SCHEDULES. THE TABLE OF
CONTENTS, TABLE OF DEFINITIONS, TITLES AND HEADINGS CONTAINED IN THIS AGREEMENT
ARE FOR REFERENCE PURPOSES ONLY AND SHALL NOT AFFECT IN ANY WAY THE MEANING OR
INTERPRETATION OF THIS AGREEMENT. WHEN THE WORDS “INCLUDES” OR “INCLUDING” ARE
USED IN THIS AGREEMENT, THEY SHALL BE DEEMED TO BE FOLLOWED BY THE WORDS
“WITHOUT LIMITATION.” ALL ACCOUNTING TERMS NOT DEFINED IN THIS AGREEMENT SHALL
HAVE THE MEANINGS DETERMINED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AS OF
THE DATE HEREOF. ALL CAPITALIZED TERMS DEFINED HEREIN ARE EQUALLY APPLICABLE TO
BOTH THE SINGULAR AND PLURAL FORMS OF SUCH TERMS.

 

SECTION 11.8  SEVERABILITY. IN THE EVENT THAT ANY ONE OR MORE OF THE PROVISIONS
CONTAINED HEREIN, OR THE APPLICATION THEREOF IN ANY CIRCUMSTANCES, IS HELD
INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT FOR ANY REASON, THE PARTIES
SHALL NEGOTIATE IN GOOD FAITH WITH A VIEW TO THE SUBSTITUTION THEREFORE OF A
SUITABLE AND EQUITABLE SOLUTION IN ORDER TO CARRY OUT, SO FAR AS MAY BE VALID
AND ENFORCEABLE, THE INTENT AND PURPOSE OF SUCH INVALID PROVISION; PROVIDED,
HOWEVER, THAT THE VALIDITY, LEGALITY AND ENFORCEABILITY OF ANY SUCH PROVISION IN
EVERY OTHER RESPECT AND OF THE REMAINING PROVISIONS CONTAINED HEREIN SHALL NOT
BE IN ANY WAY IMPAIRED THEREBY, IT BEING INTENDED THAT ALL OF THE RIGHTS AND
PRIVILEGES OF THE PARTIES HERETO SHALL BE ENFORCEABLE TO THE FULLEST EXTENT
PERMITTED BY LAW.

 

SECTION 11.9  COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL AND ALL OF WHICH SHALL,
TAKEN TOGETHER, BE CONSIDERED ONE AND THE SAME AGREEMENT, IT BEING UNDERSTOOD
THAT THE PARTIES NEED NOT SIGN THE SAME COUNTERPART.

 

SECTION 11.10  ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. THIS AGREEMENT
AND THE OTHER TRANSACTION AGREEMENTS (AS SUCH TERM IS DEFINED IN THE SECURITIES
PURCHASE AGREEMENT, DATED AS OF JANUARY 7, 2001, BY AND AMONG EDWARDS
LIFESCIENCES CORPORATION, PLC AND PLC PARENT), INCLUDING ALL EXHIBITS HERETO AND
THERETO, BY AND AMONG THE PARTIES HERETO,

 

(A)                                  CONSTITUTE THE ENTIRE AGREEMENT OF THE
PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AND
CONTEMPORANEOUS AGREEMENTS, REPRESENTATIONS, UNDERSTANDINGS, NEGOTIATIONS AND
DISCUSSIONS BETWEEN THE PARTIES, WHETHER ORAL OR WRITTEN, WITH RESPECT TO THE
SUBJECT MATTER HEREOF; AND

 

15

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

 

(B)                                 AND SHALL BE BINDING UPON AND SHALL INURE TO
THE BENEFIT OF EACH OF THE PARTIES HERETO AND THERETO AND THEIR RESPECTIVE
SUCCESSORS AND PERMITTED ASSIGNS AND IS NOT INTENDED TO CONFER ANY RIGHTS,
REMEDIES OR BENEFITS ON ANY PERSONS OTHER THAN AS EXPRESSLY SET FORTH IN THIS
SECTION 11.10.

 

SECTION 11.11  AMENDMENTS AND MODIFICATIONS; WAIVERS AND EXTENSIONS.

 

(A)                                  NO AMENDMENT, MODIFICATION OR TERMINATION
OF THIS AGREEMENT SHALL BE BINDING UPON ANY OTHER PARTY UNLESS EXECUTED IN
WRITING BY THE PARTIES HERETO INTENDING TO BE BOUND THEREBY.

 

(B)                                 ANY PARTY TO THIS AGREEMENT MAY WAIVE ANY
RIGHT, BREACH OR DEFAULT WHICH SUCH PARTY HAS THE RIGHT TO WAIVE; PROVIDED THAT
SUCH WAIVER WILL NOT BE EFFECTIVE AGAINST THE WAIVING PARTY UNLESS IT IS IN
WRITING, IS SIGNED BY SUCH PARTY, AND SPECIFICALLY REFERS TO THIS AGREEMENT.
WAIVERS MAY BE MADE IN ADVANCE OR AFTER THE RIGHT WAIVED HAS ARISEN OR THE
BREACH OR DEFAULT WAIVED HAS OCCURRED. ANY WAIVER MAY BE CONDITIONAL. NO WAIVER
OF ANY BREACH OF ANY AGREEMENT OR PROVISION HEREIN CONTAINED SHALL BE DEEMED A
WAIVER OF ANY PRECEDING OR SUCCEEDING BREACH THEREOF NOR OF ANY OTHER AGREEMENT
OR PROVISION HEREIN CONTAINED. NO FAILURE OR DELAY IN EXERCISING ANY RIGHT,
POWER OR PRIVILEGE HEREUNDER SHALL BE DEEMED A WAIVER OR EXTENSION OF THE TIME
FOR PERFORMANCE OF ANY OTHER OBLIGATIONS OR ACTS NOR SHALL ANY SINGLE OR PARTIAL
EXERCISE THEREOF PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE EXERCISE
OF ANY OTHER RIGHT, POWER OR PRIVILEGE.

 

SECTION 11.12  ASSIGNMENT. NEITHER THIS AGREEMENT NOR ANY OF THE RIGHTS, DUTIES
OR OBLIGATIONS HEREUNDER MAY BE ASSIGNED OR DELEGATED BY ANY OF THE PARTIES
HERETO WITHOUT THE PRIOR WRITTEN CONSENT OF PLC OR EDWARDS, AS THE CASE MAY BE,
WHICH MAY BE WITHHELD IN ITS SOLE DISCRETION EXCEPT THAT EDWARDS MAY ASSIGN ALL
ITS RIGHTS AND OBLIGATIONS TO ANY SUBSIDIARY OF EDWARDS LIFESCIENCES
CORPORATION. ANY ATTEMPTED ASSIGNMENT OR DELEGATION OF RIGHTS, DUTIES OR
OBLIGATIONS HEREUNDER IN CONTRAVENTION HEREOF SHALL BE VOID AND OF NO EFFECT.

 

SECTION 11.13  EXHIBITS. EACH OF THE EXHIBITS REFERRED TO HEREIN AND ATTACHED
HERETO IS AN INTEGRAL PART OF THIS AGREEMENT AND IS INCORPORATED HEREIN BY
REFERENCE.

 

SECTION 11.14  EXPENSES. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, EACH
PARTY TO THIS AGREEMENT SHALL BEAR ITS RESPECTIVE EXPENSES INCURRED IN
CONNECTION WITH THE PREPARATION, EXECUTION, AND PERFORMANCE OF THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING ALL FEES AND EXPENSES OF
AGENTS, REPRESENTATIONS, COUNSEL AND ACCOUNTANTS.

 

SECTION 11.15  NO CONSEQUENTIAL OR PUNITIVE DAMAGES. IF ANY PARTY CLAIMS ANY
BREACH OF THIS AGREEMENT BY THE OTHER PARTY OR OTHERWISE BECOMES DISSATISFIED
WITH ANY MATTER RELATING HERETO OR ARISING HEREFROM, IT SHALL HAVE NO RIGHT TO
SEEK CONSEQUENTIAL OR PUNITIVE DAMAGES AND EACH PARTY HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO SEEK SUCH PUNITIVE OR CONSEQUENTIAL DAMAGES.

 

16

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

 

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

 

 

PLC SYSTEMS INC.

 

 

 

By:

/s/ James G. Thomasch

 

 

 

Name:

James G. Thomasch

 

 

Title:

Senior Vice President and Chief Financial

 

 

Officer

 

 

 

PLC MEDICAL SYSTEMS, INC.

 

 

 

By:

/s/ James G. Thomasch

 

 

 

Name:

James G. Thomasch

 

 

Title:

Senior Vice President and Chief Financial

 

 

Officer

 

 

 

EDWARDS LIFESCIENCES LLC

 

 

 

By:

/s/ John H. Kehl, Jr.

 

 

 

Name:

John H. Kehl, Jr.

 

 

Title:

Corporate Vice President

 

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

 

Exhibit A

 

Description of Products

 

1.                                      HL-2 LASER SYSTEM INCLUDING:

 

[**]

 

2.                                      TMR DISPOSABLE KIT INCLUDING:

 

[**]

 

Products shall also include [**] and or [**] the products, [**] and [**]
products [**] in the field [**].

 

Products do not include the HL-1 Laser System.

 

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

 

Schedule 2.1

 

Distributors

 

1.                                       CRITICOR (WEST COAST)

 

2.                                       CENTRAL MEDICAL (WISCONSIN, MINNESOTA)

 

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

 

Schedule 3.3

 

Sales Personnel

 

Capital Sales Representatives
[**]

 

Manager of Clinical Training

 

[**]

 

Clinical Specialists

 

[**]

 

(i)                                     $[**]

 

(ii)                                  A ranking of no less than “satisfactory”
(or PLC’s equivalent) on the most recent performance review immediately prior to
Edwards’ exercise of the Sales and Marketing Option.

 

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

 

Schedule 4.1

 

Transition Services

 

1.                                       CUSTOMER SERVICE:  PROVIDE SEAMLESS
SUPPORT TO CUSTOMERS DURING TRANSITION TO INCLUDE ORDER PLACEMENT, RETURNS,
PROBLEM RESOLUTION, QUESTIONS, ETC. IN ADDITION, PROVIDE SUPPORT AND DATA TO
EDWARDS CUSTOMER SERVICE RELATIVE TO CUSTOMERS, PRODUCTS AND THE SALES FORCE.

 

2.                                       INVOICING:  PROVIDE ACCOUNTS RECEIVABLE
SUPPORT TO CUSTOMERS DURING TRANSITION TO INCLUDE INVOICING, COLLECTIONS,
PROBLEM RESOLUTION, QUESTIONS, ETC. IN ADDITION, PROVIDE SUPPORT AND DATA TO
EDWARDS ACCOUNTS RECEIVABLE RELATIVE TO CUSTOMERS, AGING AND OTHER INFORMATION.

 

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

 

Schedule 4.5

 

Installation Services and Services Relating to Extended Service Agreements

 

Installation Support Service includes:

 

(I)                                     INSTALLATION OF HL-2 LASER SYSTEM AT
HOSPITAL

 

(II)                                  LASER OPERATOR IN-SERVICE TRAINING AT
HOSPITAL

 

Extended Service Agreements can include:

 

all or part of the services defined in Schedule 4.6. The exact services are
detailed in extended service contract agreements with the customer and are
tailored to the customer requirements.

 

PLC is not responsible for the re-installation or transportation of the Product
among multiple facilities.

 

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

 

Schedule 4.6

 

Warranty and Preventive Maintenance Services

 

Preventive Maintenance are planned services which include:

 

(i)                                     Cleaning of optics

(ii)                                  In-service for any new operating
room personnel

(iii)                               Calibration of energy readings

(iv)                              Safety checks

(v)                                 Replacement of air purge filter

(vi)                              any adjustments to make the product meet
performance specifications

 

Warranty Service is unplanned services which include:

 

(I)                                     ANY NECESSARY TRAVEL, LABOR AND MATERIAL
EXPENSE TO REPAIR OR REPLACE A DEFECTIVE PRODUCT OR PRODUCT COMPONENT THAT IS
NOT MEETING PUBLISHED PLC PERFORMANCE SPECIFICATIONS.

 

“costs” shall include all material costs at PLC’s fully absorbed standard
manufacturing cost and labor and travel-related costs for PLC personnel
calculated at the rate of $[**] per day, billed in whole day increments

 

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

 

Schedule 4.8

 

Product Liability Insurance

 

To be provided.

 

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

 

Schedule 5.1

 

Marketing Plan

 

To be provided.

 

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

 

Schedule 5.2

 

Sales Plan

 

PLC and Edwards have developed a joint sales strategy to drive utilization
during the first year of the agreement. Edwards and PLC anticipate a transition
of the sales and marketing functions from PLC to Edwards at the end of the first
twelve months based on the success of the partnership in 2001. Specific
objectives, actions and activities to accomplish the goals are highlighted below
and the details are supported by the jointly developed master Sales Plan.

 

Objective:

 

Drive procedural growth in assigned territory.

 

 

 

Expectation:

 

Edwards sales organization will develop skill sets that allow them to
successfully manage the process of increasing kit sales by gaining necessary
knowledge & devoting time needed to drive procedural increases in assigned
territory.

 

 

 

Action:

 

A training curriculum will be established for the Edwards Sales Representatives
that develops core competencies in the key areas of clinical knowledge, concept
selling and capital acquisition.

 

 

 

Activities:

 

The following activities have been schedules to ensure core competencies are
attained:

 

Activity

 

Location

 

Date

 

Attendees

 

 

 

 

 

 

 

A. Implementation/Launch

 

Chicago

 

January 8-11

 

PLC/EW

B. Training-Patient Selection

 

STS

 

January 29

 

EW/PLC

C. Edwards National Meeting

 

Irvine, CA

 

Feb. 7

 

EW/PLC mgmt

D. Combine Training Event

 

not determined

 

April 2

 

EW/PLC

E. Combine Training Event

 

not determined

 

September 2

 

EW/PLC

F. PLC representative will spend approximately 20% of selling time supporting
Edwards activity to assist in the attainment of sales objectives.

 

 

 

 

 

 

 

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

*Measurements will be established to monitor progress in key areas.

 

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

 

Schedule 7.3

 

HL-2 Laser System Customers

 

EST. COMMISSION
ACCOUNT

 

CITY

 

REP

 

DEAL

 

CLOSE

 

PROTECTION

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

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

 

Schedule 7.4

 

Product Accessories

 

Part
Number

 

Description

 

Model
used
on

 

Qty

 

Unit

 

Shelf
life

 

PLC
Sale
Price

 

Edwards
Transfer
Price

 

Shipping
Weight
(lbs)

 

Shipping
Dimensions
(inches)

 

Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

P00100

 

Footswitch

 

both

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

8

 

12x6.5x5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

L00002

 

Safety Goggles

 

both

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

7.5x6.5x5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B00056

 

Remote Enable Cable

 

both

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

11x13x1.5

 

Fedex small box

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B00076

 

Lens Cell

 

both

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

11x13x1.5

 

Fedex small box

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A00097

 

ECG Trunk Cable

 

HL-2

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

11x13x1.5

 

Fedex small box

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A00098

 

ECG 5 Lead Set

 

HL-2

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

11x13x1.5

 

Fedex small box

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

L00004

 

Filter, Hepa, 0.3 micron

 

HL-2

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

11x13x1.5

 

Fedex small box

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A00181

 

HL-2 Operators Manual

 

HL-2

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

3

 

13.5x11.5x2.5

 

Fedex medium box

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A00202

 

Warning Sign HL-2

 

HL-2

 

1

 

ea

 

n/a

 

[**]

 

[**]

 

1

 

11x13x1.5

 

Fedex small box

 

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