Exhibit 10. 2

 

Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.  Asterisks denote omissions.

 

 

 

 

CONTRIBUTION, DEVELOPMENT AND
MANUFACTURING AGREEMENT

 

by and among

 

PLC SYSTEMS, INC.,

 

PLC MEDICAL SYSTEMS, INC.

 

AND

 

EDWARDS LIFESCIENCES LLC

 

dated as of February 24, 2004

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS

 

 

ARTICLE II CONTRIBUTION OF ASSETS

 

 

Section 2.1

 

Contribution of Assets

 

 

Section 2.2

 

[Intentionally deleted.]

 

 

Section 2.3

 

License of Intellectual Property and Know-How

 

 

Section 2.4

 

Rights Upon Termination by Edwards

 

 

Section 2.5

 

Rights Upon Termination by PLC

 

 

Section 2.6

 

Transition Period

 

 

ARTICLE III PROSECUTION AND MAINTENANCE OF RIGHTS IN INVENTION(S)

 

 

Section 3.1

 

Rights To Invention(s)

 

 

Section 3.2

 

Disclosure of Invention(s)

 

 

Section 3.3

 

Prosecution and Maintenance of Patents and Patent Applications

 

 

Section 3.4

 

Alternate Responsibility for Prosecution

 

 

Section 3.5

 

Power of Attorney

 

 

Section 3.6

 

Enforcement of Patents

 

 

ARTICLE IV DEVELOPMENT OF SURGICAL PRODUCTS

 

 

Section 4.1

 

Scope of Collaboration

 

 

Section 4.2

 

Steering Committee

 

 

Section 4.3

 

Responsibilities of the Steering Committee

 

 

Section 4.4

 

Project Manager

 

 

Section 4.5

 

Meetings

 

 

Section 4.6

 

Decision Making Criteria

 

 

Section 4.7

 

Dispute Resolution

 

 

Section 4.8

 

Selection of Trademarks

 

 

Section 4.9

 

PLC Investment in Additional Surgical Products

 

 

ARTICLE V MANUFACTURE OF SURGICAL PRODUCTS

 

 

Section 5.1

 

Appointment

 

 

 

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Section 5.2

 

Legal Requirements

 

 

Section 5.3

 

Facilities

 

 

Section 5.4

 

Inspection

 

 

Section 5.5

 

Adverse Experience Reporting

 

 

Section 5.6

 

Records

 

 

Section 5.7

 

Recall

 

 

ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS

 

 

Section 6.1

 

Representations and Warranties of Edwards

 

 

Section 6.2

 

Representations and Warranties of PLC and PLC Parent

 

 

Section 6.3

 

Edwards’ Covenants

 

 

Section 6.4

 

PLC and PLC Parent’s Covenants

 

 

Section 6.5

 

Warranty Disclaimer

 

 

ARTICLE VII INDEMNITY

 

 

Section 7.1

 

Indemnification by PLC and PLC Parent

 

 

Section 7.2

 

Indemnification by Edwards

 

 

Section 7.3

 

Indemnification Procedures

 

 

Section 7.4

 

Limitation of Liability

 

 

ARTICLE VIII OTHER AGREEMENTS

 

 

Section 8.1

 

Confidential Information Generally

 

 

Section 8.2

 

Restrictions on Confidential Information

 

 

Section 8.3

 

Publicity

 

 

ARTICLE IX TERM; TERMINATION

 

 

Section 9.1

 

Term of this Agreement

 

 

Section 9.2

 

Termination of this Agreement

 

 

Section 9.3

 

Effect of Termination

 

 

Section 9.4

 

Survival

 

 

ARTICLE X MISCELLANEOUS

 

 

Section 10.1

 

Relationship

 

 

Section 10.2

 

No Conflict

 

 

Section 10.3

 

Governing Law

 

 

 

ii

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Section 10.4

 

Escalation

 

 

Section 10.5

 

Jurisdiction and Consent to Service

 

 

Section 10.6

 

Notices

 

 

Section 10.7

 

Interpretation

 

 

Section 10.8

 

Severability

 

 

Section 10.9

 

Counterparts

 

 

Section 10.10

 

Entire Agreement; No Third Party Beneficiaries

 

 

Section 10.11

 

Amendments and Modifications; Waivers and Extensions

 

 

Section 10.12

 

Assignment

 

 

Section 10.13

 

Exhibits and Schedules

 

 

Section 10.14

 

Expenses

 

 

Section 10.15

 

Force Majeure

 

 

 

 

 

 

 

Schedules and Exhibits

 

 

 

iii

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CONTRIBUTION, DEVELOPMENT
AND MANUFACTURING AGREEMENT

 

This CONTRIBUTION, DEVELOPMENT AND MANUFACTURING AGREEMENT (“Agreement”) is
entered into as of February 24, 2004 (the “Effective Date”), by and among
Edwards Lifesciences LLC, a Delaware limited liability company (“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, Edwards owns assets related to products for the surgical treatment of
atrial fibrillation and atrial flutter, including a laser and related disposable
products, and desires to contribute certain of such assets to PLC for the
purposes of developing and manufacturing “Surgical Products” (as defined herein)
by PLC;

 

WHEREAS, in addition to the contribution of assets to PLC, Edwards will license
to PLC intellectual property and know-how and shall collaborate with PLC in the
development and manufacturing of Surgical Products, subject to the terms and
conditions of this Agreement;

 

WHEREAS, PLC has experience in the development and manufacturing of laser
related products for medical uses and desires to develop and manufacture
Surgical Products that are derived from the assets to be contributed by Edwards
to PLC pursuant to this Agreement and the technology and know-how to be licensed
from Edwards to PLC pursuant to, and subject to the terms and conditions of this
Agreement; and

 

WHEREAS, concurrently with the execution of this Agreement, Edwards, PLC and PLC
Parent shall enter into a Distribution Agreement (the “Distribution Agreement”)
that will provide for the distribution and sale by Edwards of any Surgical
Products developed and manufactured pursuant to this Agreement;

 

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:

 

1

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ARTICLE I
DEFINITIONS

 

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

 

“Additional Period” shall have the meaning set forth in Schedule 2.6.

 

“Additional Surgical Products” shall have the meaning set forth under the
definition of Surgical Products below.

 

“Affiliate” of any Person means any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first Person.  For purposes of the definition of
affiliate, “control” has the meaning specified in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as in effect on the date of this Agreement.

 

“Agreement” shall have the meaning specified in the Recitals.

 

“Applicable Regulatory Approval” means the approval or clearance received from
any Applicable Regulatory Authority to market and sell the Surgical Products in
the Territory, including, without limitation, the approval or clearance to
market and sell expanded or enhanced indications.  By way of example, and not by
limitation, in the United States, an FDA approval of a pre-market approval
application (“PMA”)) or a clearance of a pre-market notification (“510(k)”) or
approval of an investigational device exemption (“IDE”) may be an Applicable
Regulatory Approval.

 

“Applicable Regulatory Authority” means any agency or regulatory authority or
its designee having authority over the approval and sale of the Surgical
Products within the Territory.  By way of example, and not by limitation, in the
United States, the FDA is an Applicable Regulatory Authority.

 

“Bankruptcy” of any Party means any of the following events:

 

(a)                                  Such Party admits it is generally unable to
pay its debts as they come due;

 

(b)                                 The institution by such Party of proceedings
to be adjudicated as bankrupt, or insolvent or the consent by such Party to the
institution of bankruptcy or Insolvency proceedings against such Party or the
filing by such Party of a petition or answer or consent seeking reorganization
or release under any applicable law, or the consent by such Party to the filing
of any such petition or the appointment of a receiver, liquidator, assignee,
trustee, or other similar official of such Party, or of any substantial part of
such Party’s property, or the making by such Party of an assignment for the
benefit of creditors; or

 

2

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(c)                                  The institution, consent, or filing by (or
against) such Party of any composition, reorganization, or bankruptcy
liquidation proceedings under applicable law provided that in the case of any
such involuntary proceeding, such proceeding is not dismissed within sixty (60)
days.

 

“CardioFocus License” means that certain exclusive license agreement between
Edwards Lifesciences LLC and CardioFocus, Inc., dated December 27, 2002,
attached hereto as Exhibit B.

 

“Claim” means any claim, action, arbitration, proceeding, review, audit,
hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, informal or threatened).

 

“Clinical Studies” means those studies designed to obtain clinical data in
support of a Product approval or clearance (for example, pre-market approval
application (“PMA”) or 510(k) clearance) as required by the FDA or other
Regulatory Authority.

 

“Complaint” means any written, electronic, or oral communication that alleges
deficiencies related to the identity, quality, durability, reliability, safety,
effectiveness, or performance of a Product after it is released for
distribution.

 

“Confidential Information” means all information which is disclosed by a Party
(the “Disclosing Party”) to the other Party (the “Receiving Party”) 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. 
“Confidential Information” does not include 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 disclosure,
(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 Disclosing Party.

 

“Contributed Assets” shall have the meaning set forth in Section 2.1.

 

“Development Plans” shall have the meaning set forth in Section 4.4.

 

“Disclosing Party” shall have the meaning set forth above in the definition of
Confidential Information.

 

“Dispute” shall have the meaning set forth in Section 10.4.

 

“Distribution Agreement” shall have the meaning set forth in the recitals.

 

“Edwards Copyright Rights” means all (a) U.S. and foreign copyrights and all
other similar or related rights, whether statutory or arising under common law,
owned by or

 

3

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licensed to Edwards Parent or its Subsidiaries relating to the Field of Use
(whenever such copyrights, applications or registrations are filed or issued),
or that may result from Edwards Intellectual Property, (b) copyright
applications and registrations, and certificates of copyright pertaining
thereto, including but not limited to, copyright registrations and applications,
and (c) any extensions and renewals of any of the foregoing.

 

“Edwards Indemnitees” means Edwards and its directors, officers, employees,
Affiliates and agents.

 

“Edwards Intellectual Property” means Edwards Technology and Trade Secrets,
Edwards Patents, the CardioFocus License and Edwards Copyright Rights.

 

“Edwards Parent” shall mean Edwards Lifesciences Corporation, a Delaware
corporation.

 

“Edwards Patents” means (a) all U.S. and foreign patents and patent applications
owned by or licensed to Edwards Parent or its Subsidiaries relating to the Field
of Use (whenever such patents or patent applications are filed or issued), or
that may result from any of Edwards Intellectual Property, together with any
patents that may issue based thereon; including but not limited to the patents
and patent applications set forth on Exhibit A1 and Exhibit A2 of the
CardioFocus License, (b) all foreign counterpart, continuation, divisional,
continuation-in-part, re-issue and substitution applications that may be filed
by or for the benefit of Edwards based on the foregoing, together with any
patents that may issue based thereon.

 

“Edwards Regulatory Plans” shall have the meaning set forth in
Section 4.1(a)(iv).

 

“Edwards Technology and Trade Secrets” means all inventions, discoveries,
formulas, processes, methods, designs, techniques, developments, technology, and
related improvements, whether or not patentable or copyrightable, and any work
that incorporates, is based upon, derived from, or otherwise uses any of the
foregoing, including, without limitation, all Information, and any trade secret
or other intellectual property rights in any of the foregoing, owned by or
licensed to Edwards Parent or its Subsidiaries, that relate to the Field of Use.

 

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

 

“Encumbrance” means any claim, charge, easement, encumbrance lease, covenant,
security interest, lien, option, pledge, rights of others (including, but not
limited to, options and rights of first refusal), or restriction (whether on
sale, transfer, disposition or otherwise), whether imposed by agreement,
understanding, law, equity or otherwise.

 

“Escalation Notice” shall have the meaning set forth in Section 10.4.

 

“ETL” shall have the meaning set forth in Section 4.1(b)(iii).

 

4

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“FDA” means the United States Food and Drug Administration and any successor
agency thereto.

 

“Field of Use” means the surgical treatment of atrial fibrillation and atrial
flutter, including, without limitation, minimally invasive surgical treatment of
atrial fibrillation and atrial flutter.

 

“First Amendment to TMR Distribution Agreement” means that certain First
Amendment to Distribution Agreement, dated as of the date of this Agreement, by
and among Edwards, PLC Parent and PLC.

 

“First Amendment to Shareholder Agreement” means that certain First Amendment to
Shareholders Agreement, dated as of the date of this Agreement, by and among
Edwards Lifesciences Corporation and PLC Parent.

 

“Force Majeure Event” shall have the meaning set forth in Section 10.15.

 

“Governmental Entity” means any government or political subdivision thereof,
governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.

 

“Indemnified Party” shall have the meaning set forth in Section 7.3.

 

“Indemnifying Party” shall have the meaning set forth in Section 7.3.

 

“Initial Surgical Products” shall have the meaning set forth in the definition
of Surgical Products below.

 

“Intellectual Property” means all intellectual property rights of any nature or
form of protection of a similar nature or having equivalent or similar effect to
any of the foregoing, including, without limitation:  (a) inventions,
discoveries, processes, designs, techniques, developments, technology, and
related improvements, whether or not patentable; (b) United States patents,
patent applications, divisionals, continuations, reissues, renewals,
registrations, confirmations, re-examinations, certificates of inventorship,
extensions, and the like, and any provision applications of any such patents or
patent applications, and any foreign or international equivalent of any of the
foregoing; (c) any word, name, symbol, color, designation, or device or any
combination thereof, including, without limitation, any United States or pending
trademark, trade dress, service mark, service name, trade name, brand name,
logo, domain name, or business symbol, and any foreign or international
equivalent of any of the foregoing and all goodwill associated therewith; (d)
any work, whether or not registered in the United States or elsewhere, that
incorporate, is based upon, derived from, or otherwise uses any intellectual
property, including, without limitation, mechanical and electronic design
drawings (including, without limitation, computer-aided design files),
specification, software (including, without limitation,

 

5

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documentation and object and source code listing), processes, technical or
engineering data, test procedures, schematics, writings, materials, products,
artwork, packaging and advertising materials; and (e) technical, scientific, and
other know-how and information, trade secrets, knowledge, technology, means,
methods, processed, practices, formulas, assembly procedures, computer programs,
apparatuses, specifications, books, records, production data, publications,
databases, reports, manuals, data and results, in written, electronic, or any
other form not known or hereafter developed.

 

“Invention(s)” as used herein shall include, without restriction or limitation,
any and all devices, processes (including without limitation processes of using
devices or of manufacturing such devices), compositions of matter, computer
software, chemical formulations or compositions or products whether patentable
or unpatentable, and any and all written materials or other works which may be
subject to copyright, which are reduced to practice, conceived or written during
the Term of this Agreement, which is/are based upon any Edwards Intellectual
Property, or developed as a result of work done by either or both Parties under
this Agreement.

 

“Law” means a constitutional provision, statute, or other law, rule, regulation,
or interpretation of any Governmental Entity and any Order.

 

“Legal Requirements” means all laws, statutes, ordinances, codes, rules,
regulations, published standards, permits, judgments, decrees, writs,
injunctions, rulings, orders and other requirements of all Public Authorities
and shall include, without limitation, all applicable requirements of QSR/ISO
and all Legal Requirements applicable to the import or export of the Surgical
Products to any destination where they are to be delivered pursuant to
Section 6.1 hereof.

 

“Losses” means all Claims, losses, liabilities, damages, costs, obligations,
assessments, penalties and interest, demands and expenses (including, without
limitation, actual attorneys’ fees), whether direct or indirect, known or
unknown, absolute or contingent (including, without limitation, settlement costs
and any legal, accounting and other expenses for investigation or defending any
Claims).

 

“Major Decisions” shall have the meaning set forth in Section 4.3.

 

“Marketing/Clinical Plans” shall have the meaning set forth in
Section 4.1(a)(vi).

 

“Marketing Studies” means those studies conducted after Product approval or
clearance designed to enhance or further develop a market.

 

“Net Sales” shall have the meaning set forth in Section 2.4(b).

 

“Order” means any decree, injunction, judgment, order, ruling, assessment or
writ.

 

6

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“Party” means Edwards, PLC or PLC Parent and “Parties” means collectively,
Edwards, PLC and PLC Parent.

 

“Person” means any individual, partnership, corporation, limited liability
company, joint venture, association, joint-stock company, trust, incorporated
organization, government or agency or political subdivision thereof, or other
entity.

 

“PLC Indemnitee(s)” means any or all of PLC, PLC Parent and their respective
directors, officers, employees, Affiliates and agents.

 

“PLC Intellectual Property” means any Intellectual Property owned by or licensed
to PLC or PLC Parent but does not include the Intellectual Property licensed to
PLC pursuant to this Agreement.

 

“PLC Regulatory Plans” shall have the meaning set forth in Section 4.1(b)(iii).

 

“Pre-Clinical Studies” shall have the meaning set forth in Section 4.1(b)(v).

 

“Products” means products, processes, technology and services, along with
accessories related to the use thereof.

 

“Project Manager” shall have the meaning set forth in Section 4.4.

 

“Public Authority” means any supranational, national, regional, state or local
government, court, governmental agency, authority, board, bureau,
instrumentality or regulatory body, and shall include, without limitation, the
FDA.

 

“QSR/ISO” means the Quality System Regulation, as such term is defined by the
FDA which is in force and effect or hereafter adopted by the FDA, and the ISO
9001 requirements as established for the European Community, or other applicable
regulatory requirements and standards, as amended or supplemented from time to
time.

 

“Receiving Party” shall have the meaning set forth above in the definition of
Confidential Information.

 

“Roles and Responsibilities” shall have the meaning set forth in Section 4.1.

 

“Steering Committee” or “SC” shall have the meaning set forth in Section 4.2.

 

“Subsidiaries” means any Person controlled directly or indirectly by Edwards
Parent.

 

“Surgical Products” means Products related to or with applications in the Field
of Use.  A list of initial Surgical Products is set forth in Schedule 1.1
(“Initial Surgical Products”).

 

7

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The Parties may identify additional Surgical Products from time-to-time.  Such
Additional Surgical Products shall be set forth in Schedule 1.2 (“Additional
Surgical Products”), which the Parties may supplement from time-to-time after
the Effective Date.

 

“Temporary Outside Member” shall have the meaning set forth in Section 4.7.

 

“Term of this Agreement” shall have the meaning set forth in Section 9.1.

 

“Territory” means the entire world.

 

“Transaction Documents” means this Agreement, the Distribution Agreement, the
First Amendment to TMR Distribution Agreement and the First Amendment to
Shareholders Agreement and all related agreements and documents, collectively.

 

“Transactions” means the transactions contemplated by the Transaction Documents.

 

“Transition Period” shall have the meaning set forth in Schedule 2.6.

 

“Transition Products” shall have the meaning set forth in Schedule 2.6.

 

“UL” shall have the meaning set forth in Section 4.1(b)(iii).

 

ARTICLE II
CONTRIBUTION OF ASSETS

 

Section 2.1                                      Contribution of Assets.  In
consideration of PLC’s agreements contained herein, Edwards hereby contributes,
assigns, transfers, conveys and delivers to PLC, and PLC acquires and accepts
from Edwards, all assets of Edwards listed on Schedule 2.1 (the “Contributed
Assets”) in accordance with the delivery schedule set forth in Schedule 2.1.  In
furtherance of the contribution of the Contributed Assets, concurrently with the
execution of this Agreement, Edwards and PLC shall execute a Bill of Sale and
Assignment in the form of Exhibit A.  The Contributed Assets are contributed by
Edwards to PLC free and clear of all Encumbrances, except as described in
Schedule 2.1.  PLC shall have no obligation to make any cash payment to Edwards
for the Contributed Assets.  Delivery of certain of the Contributed Assets to
PLC as indicated on Schedule 2.1 will take place as soon as practicable
following the completion of the Transition Period pursuant to Section 2.6

 

Section 2.2                                      [Intentionally deleted.]

 

8

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Section 2.3                                      License of Intellectual
Property and Know-How.  Except as described in the following sentence, subject
to the terms and conditions of this Agreement, Edwards hereby grants to PLC and
its Affiliates a royalty-free, exclusive limited license in, to and under
Edwards Intellectual Property and to Edwards’ rights in the Invention(s), with
the right to sublicense, to develop, make, have made and use Surgical Products
in the Territory during the Term of this Agreement for the sole purpose of
supplying said Surgical Products (including any Surgical Products offered by
Edwards and accepted by PLC pursuant to Section 2.2 of the Distribution
Agreement) to Edwards in accordance with the Distribution Agreement. 
Notwithstanding the foregoing, the license granted by Edwards in the previous
sentence shall be co-exclusive with Edwards during the Transition Period and
will become exclusive to PLC and its Affiliates as soon as practicable following
completion of the Transition Period but no later than expiration of the
Additional Period.

 

Section 2.4                                      Rights Upon Termination by
Edwards.  In the event that Edwards terminates the Agreement pursuant to either
Section 9.2(c), 9.2(d) or 9.2(e) below, or in the event PLC terminates the
Agreement pursuant to Section 9.2(b), Edwards shall grant to PLC the following
license:

 

(a)                                  Edwards hereby grants to PLC and its
Affiliates an exclusive, irrevocable, worldwide, perpetual license in, to and
under Edwards Intellectual Property and to Edwards’ rights in the Invention(s),
with the right to sublicense, to develop, make, have made, use, import, offer
for sale and sell Surgical Products (including any Surgical Products offered by
Edwards and accepted by PLC pursuant to Section 2.2 of the Distribution
Agreement at the time of, or prior to, such termination) in the Territory, and
PLC hereby accepts the license granted under this Section 2.4 and in
consideration therefore agrees to pay to Edwards a royalty of [**] percent
([**]%) of the Net Sales, defined below, of any Surgical Product that but for
the license granted under this Section 2.4 would infringe a valid, unexpired
claim of any of the Edwards Patents, or a patent that issues on any of the
Invention(s).

 

(b)                                 “Net Sales” shall mean the actual proceeds
received by PLC or its Affiliates from the sale, rent, lease of or otherwise
making available to third parties, not affiliated with PLC, Surgical Products,
net of any royalty paid to any third party, and less the following, to the
extent the same are credited or deducted from the sales:  refunds, discounts,
credits allowed to purchasers for return of Surgical Products or as
reimbursement for damaged Surgical Products, freight, insurance, and other
shipping charges, sales and use taxes, customs duties, and any other
governmental tax or charge (except income taxes) imposed on or at the time of
the production, importation, use, or sale of Surgical Products, including any
value added taxes (VAT), as adjusted for rebates and refunds.

 

Section 2.5                                      Rights Upon Termination by
PLCIn the event that PLC terminates this Agreement pursuant to either
Section 9.2(c) or 9.2(d), or in the event Edwards terminates this Agreement
pursuant to Section 9.2(b), then PLC shall grant to Edwards the same rights
granted to Edwards pursuant to Sections 6.3 and 6.5 of the Distribution
Agreement as though a

 

9

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“Supply Breach” (as defined in the Distribution Agreement) had occurred pursuant
to Section 6.4 of the Distribution Agreement (without regard to Section 6.4(b)
of the Distribution Agreement).

 

Section 2.6                                      Transition Period.  Edwards and
PLC understand and agree that during the Transition Period Edwards shall
manufacture Transition Products which may be sold by Edwards during the
Transition Period and the Additional Period without being subject to the
Distribution Agreement.  Schedule 2.6 describes the roles and responsibilities
of the Parties during the Transition Period, and other terms and conditions of
the Transition Period, which Schedule is subject to amendment or modification
from time to time by the SC.

 

ARTICLE III
PROSECUTION AND MAINTENANCE OF RIGHTS IN INVENTION(S)

 

Section 3.1                                      Rights To Invention(s).  Any
and all Invention(s) shall be jointly owned by Edwards and PLC, which shall be
effected in accordance with the assignments jointly to Edwards and PLC described
in  Section 6.3(c) and 6.4(c) of this Agreement.  Such ownership shall be in
accordance with 35 USC 262 of the U.S. patent laws in the United States, and
with no obligation to obtain the consent of, or to provide an accounting to, the
other Party with respect to the Invention(s) in every other jurisdiction in the
Territory, provided, however, that Edwards shall have the exclusive right to the
Invention(s) in the Field of Use.  PLC agrees to grant to Edwards and hereby
grants to Edwards an exclusive, irrevocable, worldwide, perpetual, royalty-free
license, with the right to grant sublicenses, in, to and under any and all
rights to such Invention(s) in the Field of Use, including rights under the
patent or copyright laws of the United States or any other country, to make,
have made, import, use, lease, offer to sell, sell, and/or otherwise dispose of
Products in the Field of Use.  Each of the Parties further agrees to use
reasonable efforts to protect the confidentiality of the Invention(s).

 

Section 3.2                                      Disclosure of Invention(s). 
PLC shall promptly disclose to Edwards each such Invention within thirty (30)
days of conceiving and/or reducing to practice such Invention and, Edwards shall
promptly disclose to PLC each such Invention within thirty (30) days of
conceiving and/or reducing to practice such Invention.  The Parties intend that
there be timely and full exchange of information arising from work performed
under this Agreement.  Each Party shall promptly disclose to the other Party any
data or development that it reasonably believes would or could have a material
effect, whether positive or negative, on the development or sale of Surgical
Products.

 

Section 3.3                                      Prosecution and Maintenance of
Patents and Patent Applications.  Subject to review by the Steering Committee,
Edwards will evaluate Invention(s) disclosed pursuant to Section 3.2 and
determine the advisability of filing patent applications directed to any
Invention(s).  Edwards shall, at its expense, diligently file, prosecute, issue
and maintain patents, patent applications or other forms of intellectual
property rights or registrations that embody, express or are directed to
Invention(s), according to its own internal standards and for effectively
covering other inventions made by employees or consultants.  Edwards will submit
a

 

10

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substantially complete draft of each patent application to PLC prior to filing
with such advance notice as it reasonably can under the circumstances.  The
Parties will confer with each other regarding the prosecution of such patent
applications.  Upon Edwards’ request and at Edwards’ expense, PLC shall provide
reasonable assistance to Edwards, or anyone it designates, with the filing and
prosecution of any patent or copyright application in any country in the world. 
PLC will execute all papers and do all things which may be necessary or
advisable, in the reasonable opinion of Edwards, to prepare, file and prosecute
such applications.

 

Section 3.4                                      Alternate Responsibility for
Prosecution.  In the event that Edwards determines that it will not file,
prosecute, issue or maintain, a patent or patent application directed to any
Invention(s) in any country it shall so notify PLC on a timely basis.  PLC shall
then have the right, but not the obligation, to assume responsibility, at its
own expense, for such patent or patent application.  Upon PLC’s request and at
PLC’s expense, Edward shall provide reasonable assistance to PLC, or anyone it
designates, with the filing and prosecution of any patent or copyright
application in any country in the world.  Edwards will execute all papers and do
all things which may be necessary or advisable, in the reasonable opinion of
PLC, to prepare, file and prosecute such applications.

 

Section 3.5                                      Power of Attorney.  If for any
reason Edwards is unable to obtain PLC’s execution of any paper necessary to
prepare, file and/or prosecute any patent or copyright application in any
Invention(s), PLC hereby conveys to Edwards its power of attorney only for the
purpose of executing any such papers necessary to prepare, file and/or prosecute
such applications and/or maintain such patent or copyright.  Pursuant to
Section 3.4 above, if PLC assumes responsibility for a patent or a copyright in
any Invention(s) and if for any reason PLC is unable to obtain Edward’s
execution of any paper necessary to prepare, file and/or prosecute any patent or
copyright application in such Invention(s), Edwards hereby conveys to PLC its
power of attorney only for the purpose of executing any such papers necessary to
prepare, file and/or prosecute such applications and/or maintain such patent or
copyright.

 

Section 3.6                                      Enforcement of Patents. 
Edwards and PLC may, but shall not be required to, prosecute any alleged
infringement or threatened infringement of a patent directed to any Invention(s)
of which they are aware or which is brought to their attention.  The prosecuting
Party shall act in its own name and at its own expense unless the other Party,
at its option, agrees in writing, within ten (10) business days after
notification by the prosecuting Party of its prosecution of any such
infringement, to pay fifty percent (50%) of all out-of-pocket costs associated
with the prosecution.  Edwards and PLC shall cooperate fully with each other
including, if required to bring such action, the furnishing of a power of
attorney.  Any recovery obtained shall belong to the prosecuting Party unless
the other Party has paid fifty percent (50%) of said costs pursuant to the
second sentence of this Section 3.6, in which case each Party will receive fifty
percent (50%) of any recovery.

 

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ARTICLE IV
DEVELOPMENT OF SURGICAL PRODUCTS

 

Section 4.1                                      Scope of Collaboration.  The
Parties will work together to research, develop and commercialize Surgical
Products pursuant to this Agreement in the Territory in accordance with their
respective roles and responsibilities set forth below (the “Roles and
Responsibilities”).  The Parties shall use commercially reasonable efforts in
performing their obligations under this Agreement.  Subject to the previous
sentence, the Parties’ respective primary responsibilities for these activities
shall be as follows:

 

(a)                                  Responsibility of Edwards:

 

(i)                       Edwards will identify and specify Surgical Products
for development and manufacture by PLC.

 

(ii)                    Edwards will distribute and market Surgical Products.

 

(iii)                 Edwards will inform the SC of its sales and marketing
plans and efforts, including customer requirements, market research results and
competitor activities.

 

(iv)                All regulatory filings including, without limitation, those
filings made in connection with an Applicable Regulatory Approval, with respect
to the Surgical Products, in the Territory, excluding the United States and all
countries of the European Union, shall be funded and undertaken by Edwards
according to plans (“Edwards Regulatory Plans”) established by Edwards and
reviewed by the SC.  Edwards shall obtain and maintain all approvals and
clearances with respect to the sale of Surgical Products in the Territory
excluding the United States and all countries of the European Union.  PLC shall
provide Edwards with all necessary information for the preparation of such
regulatory filings and reasonable assistance necessary to support such filings.

 

(v)                   Edwards shall provide PLC with the necessary information
on all applicable regulatory requirements including, without limitation, with
respect to the manufacture, promotion, marketing, sale or use of Surgical
Products for any country where Edwards elects to sell Surgical Products except
the United States and countries of the European Union.

 

(vi)                All Clinical Studies or Marketing Studies with respect to
the Surgical Products that are conducted within the Territory will be approved,
funded and conducted by Edwards according to plans (“Marketing/Clinical Plans”)
established by Edwards and reviewed by the SC.

 

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(vii)             At no cost to Edwards, Edwards shall provide reasonable access
to its principal clinical investigators in the Field of Use and to Edwards’
animal lab facilities for purposes of Pre-Clinical Studies (as defined in
Section 4.1(b)(v) below), taking into account Edwards’ research priorities.

 

(viii)          Edwards shall reimburse PLC for [**] percent ([**]%) of the cost
of work performed by [**] as described in that written quote, dated February 9,
2004 (the “Quote”), provided by [**] to Edwards, a copy of which is attached
hereto as Schedule 4.1(a)(viii).

 

(b)                                 Responsibilities of PLC:

 

(i)                       PLC will research, develop and manufacture Surgical
Products.

 

(ii)                    PLC will inform the SC with respect to research and
development plans, manufacturing and design plans, and costs associated
therewith.

 

(iii)                 All regulatory filings including, without limitation,
those filings made in connection with an Applicable Regulatory Approval, with
respect to the Surgical Products, in the United States and all countries of the
European Union, shall be funded and undertaken by PLC according to plans (“PLC
Regulatory Plans”) established by PLC and reviewed by the SC.  PLC shall and PLC
Parent shall cause PLC to obtain and maintain all approvals and clearances
required with respect to the sale of the Surgical Products in the United States
and the European Union, including, without limitation, approvals from the FDA
and certifications from the Electrical Testing Laboratory (“ETL”) and/or
Underwriter’s Laboratories (“UL”), as applicable.  Edwards shall provide PLC
with all necessary information for the preparation of such regulatory filings
and reasonable assistance necessary to support such filings.

 

(iv)                Notwithstanding Sections   4.1(a)(iv) and 4.1(b)(iii), but
subject to Section 4.1(b)(v) PLC shall be responsible for making Surgical
Products in compliance with all regulatory requirements with respect to the
Surgical Products in any country where Edwards elects to market and sell
Surgical Products.

 

(v)                   PLC shall be responsible for all costs and expenses
associated with “Pre-Clinical Studies.”  “Pre-Clinical Studies” shall mean
animal studies, in vitro studies, cadaver studies and other similar studies
associated with the research, development and manufacture of Surgical Products.

 

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Notwithstanding the foregoing, PLC shall not be responsible for human clinical
studies.

 

(c)                                  Notwithstanding the foregoing division of
responsibilities contained in Section 4.1(a) and (b) above, a Surgical Product
shall be deemed ready for human use only if both Edwards and PLC reasonably deem
such Surgical Product to be ready for human use.

 

Section 4.2                                      Steering Committee.  The work
under this Agreement shall be performed by the Parties pursuant to the oversight
of a Steering Committee to be constituted as below.  The Steering Committee or
“SC” may delegate its responsibilities to such other committees as it may
establish.  Notwithstanding this Section 4.2, the Steering Committee shall not
delegate the “Major Decisions” set forth in Section 4.3.  The Steering Committee
shall initially consist of four (4) members with two (2) members designated by
each Party.  The initial members are listed on Schedule 4.2.  A chairperson of
the Steering Committee shall annually be nominated alternately by Edwards and
PLC.  The Parties will be free to change their respective representatives on
notice to the other Party.  The number of representatives may be subsequently
amended from time to time by the mutual written agreement of Edwards and PLC;
provided, however, Edwards and PLC shall have at all times an equal number of
representatives on the Steering Committee.  The Steering Committee shall exist
until the termination of this Agreement.  The first meeting of the Steering
Committee shall occur within sixty (60) days of the Effective Date.

 

Section 4.3                                      Responsibilities of the
Steering Committee.  The Steering Committee shall be responsible for the
following decisions (“Major Decisions”):

 

(a)                                  Approval of all budgets, timelines,
development priorities and long-range plans developed pursuant to this
Agreement, including without limitation, any of the Development Plans, defined
below;

 

(b)                                 Determination of whether an Additional
Product shall be added to the list of Surgical Products set forth in
Schedule 1.2;

 

(c)                                  Determination of whether a Surgical Product
under development should proceed to manufacturing; and

 

(d)                                 Review and monitor the compliance of the
Surgical Products with all relevant rules and regulations promulgated by
Applicable Regulatory Authorities.

 

The SC shall also have oversight of the Project Managers and their work under
this Agreement, which responsibility it shall not delegate.

 

Section 4.4                                      Project Manager.  PLC and
Edwards shall each appoint a project manager (“Project Manager”) who shall be
responsible for day-to-day management of the respective roles associated with
the development and commercialization of Surgical Products

 

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hereunder.  The activities of each Project Manager shall be overseen by the
Steering Committee.  Subject to Section 4.6 and Section 4.7, if a dispute arises
between the respective Project Managers for the parties on a matter, the matter
shall be referred for further review to the SC.  If the SC cannot resolve the
disputed matter, the dispute shall be resolved in accordance with the Dispute
Resolution provisions of Section 4.7. The Project Managers shall be responsible
for:  (a) preparation of budgets and timelines for each Party’s respective
responsibilities, for the development, research, and manufacture of Surgical
Products (collectively, “Development Plans”), which shall be submitted to the SC
for approval; and (b) day-to-day oversight of the implementation of the
Development Plans and activities in support of the commercial launch and ongoing
sales of Products.

 

Section 4.5                                      Meetings.  The SC will meet
according to an Annual Meeting Schedule to be determined by the SC annually but,
notwithstanding the foregoing, the SC shall meet at least two (2) times per
calendar year and the Project Managers will meet at least four (4) times per
calendar year, and either or both entities may meet at additional times as the
Parties shall agree.  The Annual Meeting Schedule for the SC for the year 2004
is attached herewith as Schedule 4.5.  Either Party may call a special meeting
of the SC on fifteen (15) days notice to the other Party.  Additionally, the SC
shall meet within ten (10) business days of the Project Managers’ request to
approve any Major Decision.  In addition to the SC members, three
representatives of each Party may attend each SC meeting as ex-officio
observers.  The chairperson shall send to all SC members notices of all regular
meetings and agendas for such meetings.  The Party convening a special meeting
shall send notices and agendas for such meetings.  The meetings will alternate
between the offices of the parties, or may be held via teleconference,
videoconference or such other place or manner as the Parties may mutually agree
to.  Members of the SC shall be empowered to make decisions within the scope of
their responsibilities and shall have the right to participate in and vote at
meetings in person, by telephone, by videoconference or by proxy.  The Party
hosting any meeting shall appoint a secretary to the meeting, who will record
the minutes of the meeting which will be circulated to the members of the SC
promptly following the meeting for review, comment and adoption.

 

Section 4.6                                      Decision Making Criteria.  All
decisions of the SC shall be made by majority vote and in the exercise of good
faith.  Such decisions shall adhere to the ethical and legal standards for the
medical-device industry and shall be based on the principle that each party
shall be required to utilize commercially reasonable efforts to research,
develop, manufacture and commercialize Surgical Products.  Notwithstanding this
Section 4.6 regarding an SC majority vote, (i) Edwards shall have the
tie-breaking vote in the SC with respect to determining whether an Additional
Surgical Product shall be added to the list of Additional Surgical Products set
forth in Schedule 1.2, and (ii) PLC shall have the tie-breaking vote in the SC
with respect to the setting of budgets (including all amendments thereto) for
the research and development expenses associated with the Initial Surgical
Products.

 

Section 4.7                                      Dispute Resolution.  Subject to
Section 4.6, if the SC is deadlocked or cannot resolve a disputed matter within
thirty (30) days, the SC shall refer the matter to the

 

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Chairman or CEO of PLC and a Corporate Vice President of Edwards who is not a
member of the SC (“Executives”).  If the Executives cannot resolve the issue
within thirty (30) days, the Executives shall mutually agree upon and appoint to
the SC a “Temporary Outside Member.”  “Temporary Outside Member” means a person
who is knowledgeable in the medical-device industry, possessing senior executive
experience and skills and not associated with either Party or a competitor of
either Party.  If the Executives cannot agree on the identity of such Temporary
Outside Member within fifteen (15) days of the end of such thirty (30) day
period, the Parties shall request a three-member arbitration panel composed as
described below, sitting in Orange County, California to appoint to the SC a
Temporary Outside Member.  The arbitration panel shall be composed of three (3)
impartial arbitrators with each party selecting one (1) arbitrator within
fifteen (15) days of the Executives inability to agree on the identity of the
Temporary Outside Member and the two (2) selected arbitrators selecting a third
arbitrator who is experienced in the US medical device industry within thirty
(30) days of their selection.  The SC shall meet and resolve the dispute within
one week of the appointment of the Temporary Outside Member by the arbitration
panel.  All decisions with respect to the issue in dispute shall be made by a
majority vote of the SC.  The Temporary Outside Member shall be instructed to
render his or her votes consistent with the decision-making criteria of the SC
set forth in Section 4.6.

 

Section 4.8                                      Selection of Trademarks. 
Edwards shall have the sole right to choose the trademarks related to the
Surgical Products.  Edwards shall provide PLC with copies of the trademarks
related to the Surgical Products for review and comment.  Edwards shall be
solely responsible for all costs, fees and other expenses associated with the
prosecution, maintenance and enforcement of the trademarks related to the
Surgical Products and any such applications shall be filed solely in the name of
Edwards and owned solely by Edwards.

 

Section 4.9                                      PLC Investment in Additional
Surgical Products.  After completion of the development of (i) Phase 1 of the
Initial Surgical Products set forth in Schedule 1.1 attached hereto, and (ii) if
approved by the SC, Phase 2 of the Initial Surgical Products set forth in
Schedule 1.1 attached hereto, PLC shall make available ten percent (10%) of
PLC’s revenues from the Distribution Agreement (based on trailing 12 months
sales) for investment in the development of Additional Surgical Products
pursuant to this Agreement.  Schedule 4.9 sets forth a description of how this
Section 4.9 shall be implemented by the Parties.

 

ARTICLE V
MANUFACTURE OF SURGICAL PRODUCTS

 

Section 5.1                                      Appointment.  Subject to the
terms and conditions of this Agreement, (i) Edwards agrees that PLC shall be the
exclusive manufacturer of Surgical Products listed in Schedules 1.1 and 1.2, and
(ii) PLC hereby agrees to manufacture or have manufactured and supply to Edwards
such quantities of Surgical Products as Edwards may from time to time order in
accordance with the terms of the Distribution Agreement.  PLC shall remain
qualified with Edwards as an approved vendor during the term of this Agreement.

 

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Section 5.2                                      Legal Requirements.  PLC shall
manufacture each Surgical Product pursuant to its specifications and in
accordance with all Legal Requirements.  PLC acknowledges that it is familiar
with and shall abide by QSR/ISO.  PLC and Edwards undertake to comply with all
applicable Legal Requirements and all regulations of any Public Authority having
jurisdiction over the manufacturing, storage, import, export, handling or sale
of Surgical Products and materials or related to obtaining and maintaining legal
approval for the manufacture, storage, import, export, handling, marketing and
sale of Surgical Products.

 

Section 5.3                                      Facilities.  Surgical Products
shall be manufactured by PLC at its facility at Franklin, MA, or such other
facility as may be reasonably determined by PLC and communicated to Edwards in
writing.  PLC represents and warrants that Surgical Products shall only be
manufactured at a facility which has been qualified by all applicable Public
Authorities for the manufacture of such Surgical Products.  Upon request by
Edwards, PLC shall provide to Edwards copies of the relevant licenses and
permits with respect to all such facilities.

 

Section 5.4                                      Inspection.  Upon the
reasonable request of Edwards, PLC shall permit duly authorized employees of
Edwards and, with the consent of PLC (not to be unreasonably withheld), other
representatives of Edwards, to inspect the facilities or its contract
facilities, procedures and capabilities to insure continued compliance with this
Agreement and applicable Legal Requirements; provided that PLC may, in its sole
discretion, refuse to grant access to any areas of its facilities or
manufacturing records to the extent that such access would jeopardize the
confidentiality of any of PLC’s or any third party’s proprietary technology not
related to this Agreement.

 

Section 5.5                                      Adverse Experience Reporting. 
During and after the Term of this Agreement, each Party shall notify the other
Parties in a reasonably timely fashion, or sooner if required by law, of any
information on any Complaint (howsoever obtained and from whatever source)
associated with the clinical uses, studies, investigations, testing and
marketing of Surgical Products.  Each Party shall provide the Other Party with
reasonable assistance in investigating Complaints.  Each Party shall further
notify the other Parties immediately of any information received regarding any
threatened or pending action by any Public Authority, which may affect the
safety and effectiveness claims of any Product.  Nothing contained herein shall
be construed as restricting any Party’s right to make a timely report of such
matter to any Public Authority or take other action that it deems to be
appropriate or required by applicable Legal Requirements.

 

Section 5.6                                      Records.  All technical records
relating to the manufacturing of any Surgical Product by or on behalf of PLC
shall be retained (i) in accordance with PLC’s internal policies, a copy of
which has been provided to Edwards, or, if greater,  (ii) for the period
required by any applicable Legal Requirements.

 

Section 5.7                                      Recall.  The Parties hereto
shall observe at all times all Legal Requirements in order to maintain an
effective system for the recall from the market of Surgical

 

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Products.  Notwithstanding anything herein to the contrary, if either PLC or
Edwards deems it necessary to effect a recall of any Surgical Product, it shall
give the other Party reasonable notice under the circumstances of such intended
recall and an appropriate time to discuss and agree on such intended recall. 
All costs of the recall shall be borne by the party at fault, e.g., PLC shall
pay for a recall due to the Surgical Products not being manufactured under the
QSR or if the Surgical Products do not meet specifications upon release from
PLC, and Edwards shall pay for a recall due to the Surgical Products not being
stored or installed under the QSR or if Edwards provides PLC with false or
misleading labeling.  Where a violation of the law occurs that is not the fault
of either PLC or Edwards, e.g., the Surgical Products are mishandled in a
shipment by a common carrier, then PLC and Edwards shall share the cost of the
recall equally.  In the event that agreement cannot be reached on effecting the
recall within five (5) business days, the Party who desires, in its reasonable
judgment, to effect the recall may do so.  The other Party or Parties shall take
no action contrary to the recall and shall cooperate fully with the Party
effecting the recall.

 

ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 6.1                                      Representations and Warranties
of Edwards.  Edwards represents and warrants to PLC and PLC Parent as follows:

 

(a)                                  Edwards is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware.  Edwards has all necessary power and authority to execute, deliver and
perform its obligations under the Transaction Documents and to consummate the
Transactions.

 

(b)                                 The execution, delivery and performance by
Edwards of the Transaction Documents and the consummation by it of the
Transactions have been duly authorized, and no other action on the part of
Edwards or its Affiliates is necessary to authorize the execution and delivery
by Edwards of the Transaction Documents or the consummation by it of the
Transactions.  The Transaction Documents have been duly executed and delivered
by Edwards and, assuming due and valid authorization, execution and delivery
thereof by PLC and PLC Parent, the Transaction Documents are valid and binding
obligations of Edwards enforceable against Edwards in accordance with their
respective terms, except (i) as limited by applicable Bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors’ rights generally and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.

 

(c)                                  The execution, delivery and performance of
the Transaction Documents by Edwards will not (with the passage of time, notice
or both) violate the provisions of, or constitute a breach or default under (i)
the organizational documents of Edwards, (ii) any

 

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Law to which Edwards is subject, or (iii) any material contract to which Edwards
or any Affiliate is a party, in any case, that would result in the imposition of
any lien, claim, charge or other Encumbrance against any of the Contributed
Assets or violate any Law or Order of any Governmental Entity or any arbitrator,
having jurisdiction over Edwards, or otherwise affect the ability of the Parties
to exercise their rights or fulfill their obligations under the Transaction
Documents.

 

(d)                                 Edwards has good title to each of the
Contributed Assets, free and clear of any Encumbrances, except as described in
Schedule 2.1.  Edwards has all right, power and authority to sell, convey,
assign, transfer and deliver the Contributed Assets to PLC in accordance with
the terms of this Agreement.  Edwards has delivered the Contributed Assets to
PLC, free and clear of any and all Encumbrances except as described in
Schedule 2.1.

 

(e)                                  (i)                                     To
the best of its knowledge, as of the Effective Date, Edwards and its Affiliates
have taken all reasonable measures to protect the proprietary nature of each
item of Edwards Intellectual Property, and to maintain in confidence all trade
secrets and confidential information.  As of the Effective Date, neither Edwards
nor any of its Affiliates have previously granted any rights to any third party
that are inconsistent with the rights granted to PLC under this Agreement and
neither it nor they have entered into any agreement pursuant to which it or they
have licensed, assigned, or otherwise disposed of any interest it or they have
under the Edwards Intellectual Property in the Field of Use.

 

(ii)                                  To the best of its knowledge, on the
Effective Date none of the Edwards Intellectual Property constitutes a
misappropriation of any Intellectual Property Rights of any person or entity.

 

(f)                                    UNLESS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE PARTIES AGREE THAT THE CONTRIBUTED ASSETS ARE BEING CONTRIBUTED
TO PLC AND ACCEPTED BY PLC IN THEIR PRESENT, STRICT “AS IS, WHERE IS” CONDITION
AND WITH ALL FAULTS, AND THAT PLC AND PLC PARENT ARE NOT RELYING ON ANY
REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM
EDWARDS, OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, CONSULTANTS OR AGENTS
RELEVANT TO THE CONTRIBUTED ASSETS.

 

Section 6.2                                      Representations and Warranties
of PLC and PLC Parent.  PLC and PLC Parent jointly and severally represent to
Edwards as follows:

 

(a)                                  PLC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. 
PLC Parent is a corporation duly organized, validly existing and in good
standing under the laws of the Yukon Territory.  Each of PLC and

 

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PLC Parent has the necessary power and authority to execute, deliver and perform
the Transaction Documents to which they are a Party and to consummate the
Transactions.

 

(b)                                 The execution, delivery and performance of
the Transaction Documents by PLC and PLC Parent and the consummation by them of
the Transactions have been duly authorized by PLC and PLC Parent, and no other
corporate action on the part of PLC or PLC Parent is necessary to authorize the
execution and delivery by PLC and PLC Parent of the Transaction Agreement or the
consummation of the Transactions.  The Transaction Documents have been duly
executed and delivered by PLC and PLC Parent, as applicable, and, assuming due
and valid authorization, execution and delivery thereby by Edwards, the
Transaction Documents are valid and binding obligations of PLC and PLC Parent,
enforceable against PLC and PLC Parent in accordance with their respective
terms, except (i) as limited by applicable Bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors’ rights generally and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.

 

(c)                                  The execution, delivery and performance of
the Transaction Documents by PLC and PLC Parent, as applicable, will not (with
the passage of time, notice or both) violate the provisions of, or constitute a
breach or default under (i) the charter or bylaws of PLC or PLC Parent, (ii) any
Law to which PLC or PLC Parent is subject, or (iii) any material contract to
which PLC or PLC Parent is a party, in any case, that would result in the
imposition of any lien, claim, charge or other Encumbrance against any of the
Contributed Assets or violate any Law or Order of any Governmental Entity or any
arbitrator, having jurisdiction over PLC and PLC Parent, or otherwise affect the
ability of the Parties to exercise their rights or fulfill their obligations
under the Transaction Documents.

 

Section 6.3                                      Edwards’ Covenants.  Edwards
covenants as follows:

 

(a)                                  Edwards will comply in all material
respects with all local, state, federal and international  laws and regulations
and shall use commercially reasonable efforts to obtain and at all times
maintain any and all permits and certificates necessary to perform its
obligations for the research, development, testing and commercial exploitation
of the Surgical Products to be performed by it under this Agreement in
accordance with the terms and conditions of this Agreement.

 

(b)                                 Edwards will take every reasonable action to
protect the confidentiality of all Edwards Intellectual Property, PLC
Intellectual Property and Invention(s).

 

(c)                                  Edwards will ensure that all of its
employees, consultants, or agents involved in creation of the Edwards
Intellectual Property on behalf of Edwards shall assign to Edwards all of their
right, title and interest in and to such Edwards Intellectual Property

 

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and jointly developed Intellectual Property.  Edwards will ensure that all of
its employees, consultants, or agents involved in creation of Invention(s) on
behalf of Edwards shall assign to Edwards and PLC all of their right, title and
interest in and to such Invention(s).

 

(d)                                 Edwards will comply with and not terminate
the CardioFocus License or any other license agreement pursuant to which Edwards
has any rights contained in Edwards Intellectual Property, and Edwards will not
modify any such licenses in any way that would have a material adverse effect on
PLC’s rights or obligations under the Transaction Documents.

 

Section 6.4                                      PLC and PLC Parent’s
Covenants.  PLC and PLC Parent covenant as follows:

 

(a)                                  PLC will comply in all material respects
with all local, state, federal and international laws and regulations and shall
use commercially reasonable efforts to obtain and at all times maintain any and
all permits and certificates necessary to perform its obligations for the
research, development, testing, manufacturing and commercial exploitation of the
Surgical Products to be performed by it under this Agreement in accordance with
the terms and conditions of this Agreement.

 

(b)                                 PLC and PLC Parent will take every
reasonable action to protect the confidentiality of all PLC Intellectual
Property, Edwards Intellectual Property and Inventions(s).

 

(c)                                  PLC and PLC Parent will ensure that all of
their employees, consultants, or agents involved in creation of PLC Intellectual
Property shall assign to PLC all of their right, title and interest in and to
such PLC Intellectual Property.  PLC and PLC Parent will ensure that all of
their employees, consultants, or agents involved in creation of Invention(s)
shall assign to PLC and Edwards all of their right, title and interest in and to
such Invention(s).

 

Section 6.5                                      Warranty Disclaimer.  EXCEPT AS
SET FORTH IN THIS AGREEMENT NO PARTY MAKES ADDITIONAL WARRANTIES, EXPRESS,
IMPLIED, OR STATUTORY, WHETHER WRITTEN OR ORAL, AS TO ANY OTHER MATTER
WHATSOEVER INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.

 

ARTICLE VII
INDEMNITY

 

Section 7.1                                      Indemnification by PLC and PLC
Parent.  PLC and PLC Parent shall defend, indemnify and hold harmless Edwards
Indemnitees from and against any and all Losses which any Edwards Indemnitee may
suffer or incur by reason of:

 

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(a)                                  Any breach by PLC and PLC Parent of any of
its representations, warranties, agreements, or covenants contained in this
Agreement or by the willful misconduct of PLC or PLC Parent, including, without
limitation, by way of any misappropriation, willful misstatement, or fraud on
any Governmental Entity;

 

(b)                                 Any third party Claim that any PLC
Intellectual Property constitutes a misappropriation of any Intellectual
Property of such third party; or

 

(c)                                  Any third party Claim of harm or injury
arising out of, related to, or in connection with a product recall for which PLC
is required to pay the expenses pursuant to Section 5.7 or the manufacture of
the Surgical Products that is attributable to any PLC Intellectual Property.

 

Section 7.2                                      Indemnification by Edwards. 
Edwards shall defend, indemnify and hold harmless the PLC Indemnitees from and
against any and all Losses which any PLC Indemnitee may suffer or incur by
reason of:

 

(a)                                  Any breach by Edwards of its
representations, warranties, agreements, or covenants contained in this
Agreement or by the willful misconduct of Edwards, including, without
limitation, by way of any misappropriation, willful misstatement, or fraud on
any Governmental Entity;

 

(b)                                 Any third party Claim that any Edwards
Intellectual Property constitutes a misappropriation of any Intellectual
Property of such third party; or

 

(c)                                  Any third party Claim of harm or injury
arising out of, related to, or in connection with a product recall for which
Edwards is required to pay the expenses pursuant to Section 5.7 or the
manufacture of the Surgical Products that is attributable to any Edwards
Intellectual Property.

 

Section 7.3                                      Indemnification Procedures. 
The Party seeking indemnification (the “Indemnified Party”) pursuant to this
ARTICLE VII 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

 

22

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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 and such settlement or compromise requires only the payment of monetary
damages.  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 this
ARTICLE VII, 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 VII will not be exclusive of
or limit any other remedies that may be available to the Indemnified Parties.

 

Section 7.4                                      Limitation of Liability. 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NEITHER PARTY SHALL
BE LIABLE TO THE OTHER PARTY OR THE OTHER PARTY’S AFFILIATES FOR ANY INCIDENTAL,
PUNITIVE, SPECIAL, MULTIPLE, INDIRECT OR CONSEQUENTIAL DAMAGES, HOWEVER
CHARACTERIZED, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR BUSINESS
OPPORTUNITIES, ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT
OR ITS EARLY TERMINATION.  IRRESPECTIVE OF WHETHER SUCH LIABILITY IS ASSERTED IN
TORT OR CONTRACT AND IRRESPECTIVE OF WHETHER THE PARTIES HAVE BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, ALL REMEDIES OF THE PARTIES SHALL BE LIMITED TO
ACTUAL DIRECT DAMAGES.

 

ARTICLE VIII
OTHER AGREEMENTS

 

Section 8.1                                      Confidential Information
Generally.  The existence and terms and conditions of the Transaction Documents
are confidential, and neither Party may make any disclosures regarding the
Transaction Documents without the express prior written consent of the other
Party, except:

 

(a)                                  as may be required by law or legal process;

 

(b)                                 during the course of litigation so long as
the disclosure of such terms and conditions are restricted in the same manner as
is the confidential information of other

 

23

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

 

litigating parties and so long as:  (i) the Disclosing Party seeks to protect
the information in a court-entered protective order; and (ii) the Disclosing
Party informs the Receiving Party in writing in advance of the disclosure; or

 

(c)                                  in confidence to its legal counsel,
accountants, banks and financing sources and their advisors solely in connection
with complying with financial transactions.

 

Section 8.2                                      Restrictions on Confidential
Information.

 

(a)                                  The Receiving Party agrees not to disclose
any Confidential Information of the Disclosing Party and to maintain such
Confidential Information in strictest confidence, to take all reasonable
precautions to prevent its unauthorized dissemination and to refrain from
sharing any or all of the information with any third party for any reason
whatsoever except as required by court order, both during and after the Term of
this Agreement.

 

(b)                                 The Receiving Party agrees not to use the
Confidential Information of the Disclosing Party for its own benefit or for the
benefit of any third party other than in accordance with the terms and
conditions of this Agreement.

 

(c)                                  All Confidential Information of PLC and PLC
Parent remains the sole property of PLC and PLC Parent and all Confidential
Information of Edwards remains the sole property of Edwards.

 

(d)                                 Upon written request of the Disclosing
Party, or upon the expiration or other termination of this Agreement for any
reason whatsoever, the Receiving Party agrees to return to the Disclosing Party
all such provided Confidential Information, including, without limitation, all
copies thereof.

 

Section 8.3                                      Publicity.  No Party or any of
its Affiliates shall issue or cause the publication of any press release or
other announcement with respect to the existence of, the terms, or
implementation of the Transaction Documents without the prior written approval
of the other Parties, except as may be required by law, and thereafter each
Party shall reasonably consult with the other Parties on the language of such
release or announcement prior to its publication.

 

ARTICLE IX
TERM; TERMINATION

 

Section 9.1                                      Term of this Agreement.  This
Agreement shall commence on the date hereof, and, unless extended by the mutual
written agreement of the Parties (and then only upon the terms and conditions
set forth therein) or sooner terminated in accordance with Section 9.2 hereof,
shall continue for the enforceable life of the last to expire patent within
Edwards Intellectual Property (“Initial Term”).  This Agreement shall be
renewable for additional three (3) year terms by Edwards, at its option, as long
as Edwards’ trailing twelve month sales of

 

24

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Surgical Products under this Agreement for the period immediately prior to
expiration of the Term of the Agreement, defined below, is at least three
million dollars ($3,000,000).  The “Term of this Agreement” shall mean the
Initial Term and such additional three-year terms, if any, for which Edwards
renews the Agreement.

 

Section 9.2                                      Termination of this Agreement. 
Upon the occurrence of any of the following, this Agreement, including any
licenses granted herein (except as otherwise specified herein), may be
terminated by:

 

(a)                                  Edwards immediately upon written notice to
PLC or PLC Parent, or PLC or PLC Parent immediately upon written notice to
Edwards, if PLC or PLC Parent, or Edwards, as applicable, breaches any material
provision of this Agreement and such breach is:  (i) incapable of cure; or (ii)
capable of cure, but not cured within ninety (90) days of the breaching Party’s
receipt of written notice of such default from the non-breaching Party.

 

(b)                                 Edwards immediately upon the Bankruptcy of
PLC or PLC Parent or PLC immediately upon the Bankruptcy of Edwards.

 

(c)                                  Either PLC or Edwards upon thirty (30) days
written notice to Edwards or PLC, as applicable, if the research, development,
or commercialization of the Surgical Products or any component thereof is
blocked or otherwise rendered commercially unfeasible by adverse legal or
regulatory action, or by the Intellectual Property rights of any third party.

 

(d)                                 Beginning two (2) years after the Effective
Date, either Edwards or PLC, at any time upon one hundred eighty (180) days
prior written notice to the other Party.  During such 180-day period, PLC shall
no longer be obligated to advance the development of any Products.

 

(e)                                  Edwards at any time upon at least sixty
(60) days prior written notice to PLC, provided that on the date of termination
Edwards shall deliver to PLC a termination fee in the sum of $2,000,000 by wire
transfer of immediately available funds.  During such notice period, PLC shall
no longer be obligated to advance the development of any Products.

 

(f)                                    Mutual written agreement of the Parties.

 

Section 9.3                                      Effect of Termination.  Upon
expiration or early termination of this Agreement, the following shall
immediately occur:

 

(a)                                  Within thirty (30) days of such expiration
or early termination, PLC and PLC Parent shall return all Confidential
Information of Edwards, and vice versa, in its possession or under its control.

 

25

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(b)                                 Within thirty (30) days of such expiration
or early termination, PLC and/or PLC Parent shall provide Edwards, and vice
versa, with a copy of all relevant Initial Surgical Product or Additional
Surgical Product documentation in its possession or under its control.

 

(c)                                  The Distribution Agreement shall terminate
provided, however, that, for six months following such expiration or early
termination, Edwards shall be allowed to sell any Surgical Products in its
inventory and all applicable terms of the Distribution Agreement will continue
with respect to such sales.

 

Section 9.4                                      Survival.  Expiration or early
termination of this Agreement shall not relieve any Party of its obligations
incurred prior to the expiration or early termination.  The following
provisions, subject to any restrictions or limitations contained therein shall
survive expiration or early termination of this Agreement:  Section 2.4,
ARTICLE III, ARTICLE VII and ARTICLE X hereof, Sections 5.5, 5.6, 5.7, 8.1, 8.2,
9.3 hereof and this Section 9.4.

 

ARTICLE X
MISCELLANEOUS

 

Section 10.1                                Relationship.  The relationship of
Edwards and PLC established by this Agreement and the Transaction Documents is
of independent contractors and not agents, and nothing in this Agreement or any
Transaction Document shall be construed:

 

(a)                                  To give either Edwards or PLC the power to
direct or control the daily activities of the other beyond the obligations
imposed on Edwards and PLC, respectively, by this Agreement;

 

(b)                                 To constitute Edwards and PLC as partners,
joint ventures, co-owners or otherwise as participants in joint undertaking; or

 

(c)                                  To allow either Edwards or PLC to create or
assume any obligation on behalf of the other for any purpose whatsoever.

 

Section 10.2                                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 10.3                                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 10.4                                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

 

26

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

 

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 Party in
receipt of the Escalation Notice 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 10.4 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 10.4 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 Section 10.4 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 10.5                                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.  The foregoing shall not apply to actions for injunctive relief, as to
which such jurisdiction shall be non-exclusive.

 

Section 10.6                                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 10.6

 

27

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(or in accordance with the latest unrevoked written direction from such Party),
(ii) if by certified mail, four (4) business days after mailing or (iii) if
given by facsimile when such facsimile is transmitted to the fax number
specified in this Section 10.6 (or in accordance with the latest unrevoked
written direction from such Party), provided the appropriate confirmation is
received.

 

To PLC:

 

PLC Medical 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:

 

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:  General Counsel
Fax:  (949) 250-6850

 

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 10.7                                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

 

28

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

 

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 10.8                                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 10.9                                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 10.10                          Entire Agreement; No Third Party
Beneficiaries.  The Transaction Documents, including all exhibits and schedules
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

 

(b)                                 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 10.10.

 

Section 10.11                          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

 

29

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

 

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 10.12                          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, provided, however, any Party may assign this
Agreement and all rights, duties or obligations hereunder in connection with the
sale of more than 51% of the outstanding capital stock of such Party in one or
more related transactions, a merger or the transfer of all or substantially all
the assets to which this Agreement relates.  Any attempted assignment or
delegation of rights, duties or obligations hereunder in contravention hereof
shall be void and of no effect.

 

Section 10.13                          Exhibits and Schedules.  Each of the
exhibits and schedules referred to herein and attached hereto is an integral
part of this Agreement and is incorporated herein by reference.

 

Section 10.14                          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 10.15                          Force Majeure.  Notwithstanding anything
to the contrary contained in this Agreement, no liability or loss of rights
hereunder shall result to any Party from delay or failure in performance (other
than payment) caused by governmental restrictions (excluding any regulatory
actions taken by the FDA or similar bodies), war, acts of terrorism, commotions,
riots, strikes, lockouts and acts of God such as fire, flood or other similar
causes that are beyond the control of the parties (each a “Force Majeure
Event”).  Except to the extent caused by the foregoing, Force Majeure Events
shall not include shortage of labor, lack of or inability to obtain materials,
fuel or supplies (unless caused solely by priorities, restrictions or
allocations imposed by governmental authority), or any other industrial
disturbance.

 

30

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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 &

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

PLC MEDICAL SYSTEMS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ James G. Thomasch

 

 

Name:

James G. Thomasch

 

 

Title:

Senior Vice President &

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

EDWARDS LIFESCIENCES LLC

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ John H. Kehl, Jr.

 

 

Name:

John H. Kehl, Jr.

 

 

Title:

Corporate Vice President,

 

 

 

 

Strategy and Business Development

 

 

31

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SCHEDULE 1.1

 

Initial Surgical Products

 

Summary Description of Initial Surgical Products

 

The following are Phase 1 Surgical Products, as more fully described in the
specifications attached as Exhibit I to this Schedule 1.1 as may be modified
from time to time by the Steering Committee:

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

Phase 2 Surgical Products:  Edwards and PLC shall jointly specify and establish
feasibility for the development, design and manufacture of the following
Surgical Products provided, however, that the decision to develop, design and
manufacture such Surgical Products shall be made by the Steering Committee:

 

•                  [**].

 

•                  [**].

 

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

 

EXHIBIT I

 

Preliminary Product Specification
Optimaze™ Surgical Laser Console
Edwards Part Nos. 692457001A (Model 1); 692457002A (Model 3)

 

Device Name:

 

Official-

 

Laser Console

Common-

 

Medical Laser

 

Intended Use:

 

The Optimaze™ Surgical Laser Console is intended for the delivery of 980 nm
laser light to soft tissue in contact or non-contact mode during surgical
procedures including via endoscopes, introducers or catheters. Indications
include the incision, excision, dissection, vaporization, ablation or
coagulation of soft tissue.

 

General Description:

 

Overview:

 

The Laser Console includes the laser instrument and optical and electronic
components.  The instrument includes a diode laser module as the therapeutic
energy source, as well as an internal thermal safety system for monitoring and
disabling laser power output.  Handpiece irrigation is controlled via a
side-mounted pinch valve that is footswitch actuated.

 

The surgical laser, Model 60-980 Optimaze™ Surgical Laser Console, is to be used
with the Optimaze™ Surgical Ablation Handpiece.

 

Surgical laser:

Model 60-980 Optimaze™ Surgical Laser Console Edwards Model No. 60980

 

 

Part Number:

P/N 18-0628

 

 

Edwards Part Nos.:

692457001A (Model 1) and 692457002A (Model 3)

Maximum power output:

66W

 

 

Output Wavelength:

980nm +/-15nm

 

 

Input Voltage:

100VAC ± 15% to 240VAC ± 15% and 50 or 60 Hz ± 1 Hz

Size:

23”D x 16”W x11.5”H

Weight:

< 60 lb

 

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Packaging Configuration:

 

Each Laser Console will ship in two (2) containers. One (1) console box
containing the laser console and labeling indicating the user manual can be
found in the accessory box, and one (1) accessory box containing a foot pedal,
keys, user manual, interlock bypass plug, and one country specific power cord.

Console Box containing the laser console only:

 

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

 

(1)                                  Model 60-980 Optimaze Surgical Laser
Console

P/N:

18-0628

 

 

Edwards Model 60980 Optimaze Surgical Laser Console

P/Ns:

692457001A (Model 1)

 

692457002A (Model 3)

 

Accessory Box containing:

 

(1)          Laser Installation
kit                                                                                                           
P/N 18-0632
Foot pedal

 

Laser Keys (2)

 

User manual

 

Interlock bypass plug

 

 

 

Power cord - US -120v 60 Hz

P/N 18-0633

Power cord - 120v 50 Hz - Japan plug

P/N 18-0634

Power cord – 2/20v 50 Hz (Europe plug 1)

P/N 18-0635

Power cord - 220v 50 Hz (Europe plug 2)

P/N 18-0636

Power cord - 220v 50 Hz (Europe plug 3)

P/N 18-0637

Power cord - 220v 50 Hz (Europe plug 4)

P/N 18-0638

 

User Supplied Items (Accessories):

 

Item

 

Manufacturer

 

Size

 

Part Numbers

 

 

 

 

 

 

 

Optimaze Surgical Ablation Handpiece

 

Edwards

 

NA

 

18-0498

 

 

 

 

 

 

 

 

 

Edwards

 

NA

 

692577001A

 

Optional Accessories

 

Item

 

Manufacturer

 

Size

 

Part Numbers

 

 

 

 

 

 

 

Laser safety glasses

 

Uvex

 

N/A

 

DVO LOTG-YAG/CO2

 

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

 

Compatibility:
Optimaze™ Surgical Ablation Handpiece
Administration Tubing Sets:  Irrigation connection has a standard female luer
fitting for connection to commercially available tubing sets.

 

Regulatory Classifications

 

FDA Laser Class 1M
FDA Medical Device Class II
EN60601-1 Class I, Type CF
EN55011 (CISPR 11) Class B, Group 1

 

Glossary

 

• Delivery device: Optimaze™ Surgical Ablation Handpieces.

• Laser Console: The electronic instrument used to generate, control and monitor
laser output

• Wavelength: Color of laser emission spectrum.

• Laser product: Optimaze™ Surgical Laser Console with automatic thermal safety
system that constitutes, incorporates, or is intended to incorporate a laser or
laser system.

• Low OH: Low water content glass for transmission of IR light.

• Numerical Aperture (NA): Numerical Aperture is defined as the sine of the half
angle of light emitted from the output port of the system.

• U/I: User interface.

• Thermal safety system: Automatic system to detect excessive heat in the
optical path and shut system down when a predetermined threshold is exceeded.

• Optical path: the path of travel of laser energy.

 

System Components

 

System Controller:

the system controller block represents the hardware and software that monitors
and controls the functioning of the laser instrument.

Thermal Safety System (TSS):

the thermal safety system is a safety circuit, intended to monitor the black
body radiation associated with excessive heating in the disposable device and
associated optics and to disable the laser in the event that excessive black
body radiation is detected.

Optics Module:

the optics module is an optical subsystem which provides means for sending laser
energy to the delivery device and also provides means for directing black body
radiation from the disposable device to the safety system IR detector.

User Interface:

the user interface provides means for information display to the user as well as
a mechanism for user input. The user interface for the laser instrument will
likely include an LCD display

 

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

 

 

and a keypad.

Footswitch:

the laser instrument will interface to a footswitch for on/off control of the
laser emission.

Diode Driver:

the diode driver block represents the electronics required to control power
supplied to the laser module

Diode Module:

the diode module is a purchased component, comprised of a series of laser
diodes, which produces the output laser energy.

Power Supply:

an AC/DC power supply provides DC power necessary to run the system electronic
components. The supply is internal to the laser instrument.

 

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Detailed Requirements Specifications:

 

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SCHEDULE 2.1

 

Contributed Assets

 

** Indicates assets that must stay at Edwards and vendors to support Transition
Period Endo & Encircle product builds

 

Asset

 

Current Location

 

Asset #

 

Status

 

Physical Transfer

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Laser Assets List

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset

 

Current
Location

 

Asset #

 

Status

 

Physical
Transfer

[**]

 

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SCHEDULE 2.6

 

Transition Period

 

•                  “Transition Period” shall mean from the Effective Date
through [**].

 

•                  “Transition Products” shall mean Disposable Products
manufactured by Edwards during the Transition Period.

 

•                  During the Transition Period, Edwards shall have the right to
develop, make, use and sell Transition Products.  Thereafter, Edwards shall have
the right to sell Transition Products for any additional period needed for
Edwards to sell down any inventory of finished Transition Products permitted to
be made by Edwards pursuant to this Schedule 2.6 (the “Additional Period”).

 

•                  Edwards shall make the Transition Products at Edwards’ cost
and Edwards shall retain all revenues associated with the sale of Transition
Products.  Edwards shall not be obligated to sell any Disposable Products made
by PLC and shall not be obligated to share any Disposable Product Margin with
PLC until the expiration of the Additional Period.

 

•                  During the Transition Period, Edwards shall have the right to
use any raw materials Edwards owns for making Transition Products.  After the
end of the Transition Period, Edwards shall make any remaining raw materials
inventory for Surgical Products available to PLC for purchase for making
Surgical Products, all in accordance with Section  7.2(f) of the  Distribution
Agreement.  Edwards shall also have the right to retain possession of and make
use of, the assets identified on Schedule 2.1 of the CD & M Agreement for
purposes of making Transition Products.  As soon as practicable following the
end of the Transition Period, Edwards, at its cost, shall transfer such assets
to PLC in their condition at such time.

 

•                  Edwards, at its election, may purchase from [**] the first
[**] Laser Power Sources and any subsequent number of Laser Power Sources
approved by the SC.  Thereafter, in accordance with the terms of the
Distribution Agreement, PLC shall provide Edwards with Laser Power Sources to
meet customer demand during the Transition Period and continuing thereafter for
the Term of the Distribution Agreement.  To the extent Edwards purchases any
such lasers from [**] it shall look to [**] for the product warranty for such
lasers.

 

•                  Consistent with its roles and responsibilities under the CD&M
Agreement, PLC shall remain responsible for managing the research, development
and manufacture of the Laser Power Sources during the Transition Period,
including managing the relationship with [**].  During the Transition Period,
Edwards shall be permitted to assist with and/or perform development of
Transition Products.

 

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•                  After the expiration of the Additional Period, all customer
demand for Disposable Products shall be met by PLC, provided that:

 

(i)             [**] prior to the end of the Transition Period, PLC has
reasonably demonstrated to the SC that the Disposable Products produced by PLC
meet the specifications for such products; and

 

(ii)          [**] prior to the end of the Transition Period, PLC has reasonably
demonstrated to the SC that PLC has the ability to produce the Disposable
Products in sufficient quantities to meet customer demand; and

 

(iii)       PLC has provided Edwards with an initial stocking order of
Disposable Products (the “Initial Stocking Order”), pursuant to a purchase order
from Edwards, no later than [**] prior to the end of the Transition Period.  If
PLC is late in providing Edwards with the Initial Stocking Order, the Transition
Period shall extend one day for each day PLC is late in delivering the Initial
Stocking Order to PLC.

 

If PLC is late with respect to items (i) or (ii) above, then the Transition
Period shall automatically extend an additional [**].

 

•                  During the Transition Period, Edwards shall make for sale no
more than [**] Transition Products, provided that if customer demand during the
Transition Period is greater than [**] Transition Products, the SC shall
evaluate and reasonably determine whether PLC is ready and able to produce
Disposable Products for sale by Edwards.  If the SC determines that PLC is not
ready and able to produce sufficient quantities of Disposable Products to meet
customer demand, then Edwards shall be permitted to make reasonable quantities
of Transition Products in excess of [**] nits to satisfy customer demand until
such time as the SC reasonably determines that PLC is ready and able to make
Disposable Products in quantities sufficient to satisfy customer demand.  No new
Disposable Products may be manufactured by or on behalf of Edwards during the
Additional Period.  Notwithstanding the foregoing, during the Additional Period,
Edwards may complete any Transition Products made during the Transition Period.

 

The foregoing is subject to modification by the SC, in accordance with the terms
and conditions of the CD & M Agreement.

 

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SCHEDULE 4.2

 

Initial Members of Steering Committee

 

Edwards Members:

1.               Keith Reisinger

2.               Pawan Tomkorea.

 

PLC Members:

1.               Mike Adams

2.               Ken Luppi

 

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SCHEDULE 4.5

 

Steering Committee Meeting Schedule for 2004

 

First Meeting:  First Calendar Quarter of 2004

 

Second Meeting:  Second Calendar Quarter of 2004

 

Third Meeting:  Third Calendar Quarter of 2004

 

Fourth Meeting:  Fourth Calendar Quarter of 2004

 

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SCHEDULE 4.9

 

Investment in Additional Surgical Products

 

In order for the Parties to determine how the investment in Additional Surgical
Products shall be determined, the following description shall be used as a guide
by the Parties:

 

1.                                       Edwards or PLC proposes an Additional
Surgical Product to the SC for development.

 

2.                                       The SC approves the Additional Surgical
Product for development and it is added to Schedule 1.2.  Edwards has the tie
breaking vote for this SC decision pursuant to Section 4.6.

 

3.                                       The SC approval shall include a budget
and a timeline for the development of such Additional Surgical Product.

 

4.                                       For each quarter in the timeline PLC
and Edwards shall determine PLC’s Surgical Product revenues from the
Distribution Agreement for the trailing 12 months and shall make available [**]%
of the revenue to the development of all Additional Surgical Products without
carryover from quarter to quarter.

 

5.                                       In the event the budgets for all
Additional Surgical Products for any quarter in the timeline require more funds
than PLC is obligated to provide pursuant to Section 4.9 and item 4 above, then
Edwards shall be obligated to fund such shortfall in full.

 

6.                                       Steps 4 and 5 above shall be repeated
for each quarter in the timeline.

 

An example of the foregoing is attached to this Schedule as Exhibit II.

 

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EXHIBIT II

 

R&D Funding of Additional Products

 

Example (For illustrative purposes only)

 

Quarter

 

1

 

2

 

3

 

4

 

5

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLC Surgical Product Sales (000)

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

Trailing Twelve Month (TTM) Sales

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available R&D Fund ([**]% of TTM)

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funding requirements for Additional Product programs

 

 

 

 

 

 

 

 

 

 

 

 

 

Example Program 1

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

Example Program 2

 

 

 

 

 

 

 

[**]

 

[**]

 

[**]

 

Utilized Fund for Additional Product programs

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R&D Fund excess / (shortfall)

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EW pays to PLC for shortfall

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

R&D Fund expiration

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

Absolute numbers are for illustrative purposes only.

 

All terms are defined in the agreement.

 

Concept Explanation:

 

At the beginning of each quarter, PLC will make available for that quarter an
amount equal to [**]% of PLC’s trailing twelve month sales from Surgical
Products for investment in research and development and related expenses of
Additional Product programs.

 

If PLC’s available investment for the given quarter is not utilized by an
Additional Product program for that quarter, the funding commitment will expire
at the end of that quarter and shall be refreshed using the same approach for
the next quarter.

 

If at the end of any given quarter PLC has spent more than their required R&D
investment for the Additional Product program, subject to the SC approved
budget, EW shall compensate PLC for the differential.

 

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