Exhibit 10.1

 

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

 

 

DISTRIBUTION AGREEMENT

 

by and among

 

PLC SYSTEMS INC.,

 

PLC MEDICAL SYSTEMS, INC.

 

and

 

EDWARDS LIFESCIENCES LLC

 

dated

 

February 24, 2004

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I Definitions

 

 

 

 

ARTICLE II Appointment

 

 

 

 

Section 2.1.

Appointment

 

Section 2.2.

Competition

 

 

 

 

ARTICLE III Obligations of Distributor

 

 

 

 

Section 3.1.

General Obligations of Edwards

 

Section 3.2.

Costs and Expenses

 

 

 

 

ARTICLE IV Obligations of PLC

 

 

 

 

Section 4.1.

Labeling of Surgical Products

 

Section 4.2.

Manufacturer’s Warranty

 

Section 4.3.

Insurance

 

Section 4.4.

Production of User Manuals

 

Section 4.5.

Costs and Expenses

 

 

 

 

ARTICLE V Sales and Marketing

 

 

 

 

Section 5.1.

Sales & Marketing

 

 

 

 

ARTICLE VI Purchase Arrangements

 

 

 

 

Section 6.1.

Purchaser Orders; Product Quantities

 

Section 6.2.

Placement of Orders

 

Section 6.3.

PLC License

 

Section 6.4.

Failure to Supply

 

Section 6.5.

Technology Escrow and Transfer

 

 

 

 

ARTICLE VII Pricing, Shipping, Payment

 

 

 

 

Section 7.1.

Determination of Disposable Transfer Price

 

Section 7.2.

Procedures for Determination of Disposable Transfer Price

 

Section 7.3.

Laser Power Source

 

Section 7.4.

Product Accessories

 

Section 7.5.

Shipping

 

Section 7.6.

Payment

 

 

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ARTICLE VIII Term and Termination;

 

 

 

 

Section 8.1.

Term and Renewal

 

Section 8.2.

Immediate Termination

 

Section 8.3.

Effect of Termination

 

 

 

 

ARTICLE IX Warranties and Indemnification

 

 

 

 

Section 9.1.

Warranties

 

Section 9.2.

Indemnification by PLC

 

Section 9.3.

Indemnification by Edwards

 

Section 9.4.

Indemnification Procedures

 

Section 9.5.

Limitations on Liability

 

 

 

 

ARTICLE X Trademarks and Confidentiality

 

 

 

 

Section 10.1.

Trademarks

 

Section 10.2.

Confidential Information

 

 

 

 

ARTICLE XI MISCELLANEOUS

 

 

 

 

Section 11.1.

Relationship

 

Section 11.2.

No Conflict

 

Section 11.3.

Governing Law

 

Section 11.4.

Escalation

 

Section 11.5.

Jurisdiction and Consent to Service

 

Section 11.6.

Notices

 

Section 11.7.

Interpretation

 

Section 11.8.

Severability

 

Section 11.9.

Counterparts

 

Section 11.10.

Entire Agreement; No Third Party Beneficiaries

 

Section 11.11.

Amendments and Modifications; Waivers and Extensions.

 

Section 11.12.

Assignment

 

Section 11.13.

Schedules

 

Section 11.14.

Expenses

 

Section 11.15.

No Consequential or Punitive Damages

 

Section 11.16.

Force Majeure

 

 

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Schedules

 

 

 

 

 

Schedule 4.3(a)

Product Liability Insurance of PLC

 

 

 

 

Schedule 4.3(b)

Product Liability Certificate of Insurance of Edwards

 

 

 

 

Schedule 7.2(a)(i)

Example of Determination of Disposable Transfer Price

 

 

 

 

Schedule 7.2(a)(ii)

Example of Determination of Disposable Transfer Price

 

 

 

 

Schedule 7.2(e)

Materials Inventory

 

 

 

 

Schedule 7.3(i)

Example of Determination of Laser Transfer Price

 

 

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DISTRIBUTION AGREEMENT

 

DISTRIBUTION AGREEMENT, dated as of February 24, 2004 this (“Agreement”), 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, PLC will develop and manufacture Surgical Products pursuant to the
Contribution, Development and Manufacturing Agreement (the “CD&M Agreement”), by
and among Edwards, PLC Parent and PLC, dated as of February 24, 2004, and
desires that the sale and use of Surgical Products be promoted by Edwards in the
Territory.

 

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

 

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

 

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

 

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

 

ARTICLE I
Definitions

 

As used in this Agreement, defined terms not otherwise defined herein shall have
the meanings ascribed to them in the CD&M Agreement.  Further, the following
terms shall have the following meanings:

 

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

 

“Average Sales Price” shall have the meaning set forth in Section 7.1(d).

 

“CD&M Agreement” shall have the meaning set forth in the recitals.

 

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

 

“Direct Disposable Cost of Goods Sold” shall have the meaning set forth in
Section 7.1(b).

 

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“Direct Disposable Materials Cost” shall have the meaning set forth in Section
7.1(b).

 

“Direct Disposable Labor Cost” shall have meaning set forth in Section 7.1(b).

 

“Direct Laser Costs” shall have the meaning set forth Section 7.3(c).

 

“Direct Laser Materials” shall have the meaning set forth in Section 7.3(c).

 

“Direct Laser Labor” shall have the meaning set forth in Section 7.3(c).

 

“Disposable Margin Share” shall have the meaning set forth in Section 7.1(c).

 

“Disposable Product Margin” shall have the meaning set forth in Section 7.1(c).

 

“Disposable Product” shall mean a finished Surgical Product that is not a Laser
Power Source.

 

“Disposable Transfer Price” shall have the meaning set forth in Section 7.1(a).

 

“Disposable Warranty Period” shall have the meaning set forth in Section 4.2(a).

 

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

 

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

 

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

 

“Edwards Margin Factor” shall have the meaning set forth in Section 7.2(a)(ii).

 

“Edwards’ Representative” shall have the meaning set forth in Section 7.2(d).

 

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

 

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

 

“Firm Forecast” shall have the meaning set forth in Section 6.1.

 

“Force Majeure Event” shall have the meaning set forth in Section 11.16.

 

“Forecast” shall have the meaning set forth in Section 6.1.

 

“Indemnified Party” shall have the meaning set forth in Section 9.4.

 

“Indemnifying Party” shall have the meaning set forth in Section 9.4.

 

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“Laser Power Source” shall mean a medical laser power source and the associated
control system (including all necessary hardware and software) for tissue
ablation in the Field of Use.

 

“Laser System” shall mean a Laser Power Source and a Disposable Product designed
to function together as a system for treating atrial fibrillation and/or atrial
flutter.

 

“Laser Transfer Price” shall have the meaning set forth in Section 7.3.

 

“Laser Warranty Period” shall have the meaning set forth in Section 4.2(a).

 

“Materials Inventory” shall have the meaning set forth in Section 7.2(e).

 

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

 

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

 

“PLC License” shall have the meaning set forth in Section 6.3.

 

“PLC Margin Factor” shall have the meaning set forth in Section 7.2(a)(iii).

 

“PLC’s Representative” shall have the meaning set forth in Section 7.2(d).

 

“PLC Surgical Products Intellectual Property” shall have the meaning set forth
in Section 6.3.

 

“Supply Breach” shall have the meaning set forth in Section 6.4(a).

 

“Transfer Price Documents” shall have the meaning set forth in Section 7.2(d).

 

ARTICLE II
Appointment

 

Section 2.1.            Appointment.  Subject to the terms and conditions
contained in this Agreement, PLC hereby appoints Edwards as PLC’s exclusive
independent distributor of Surgical Products in the Territory.  Edwards may
appoint a secondary or sub-distributor to sell Surgical Products without PLC’s
prior written consent.

 

Section 2.2.            Competition.  With respect to competitive Surgical
Products in the Field Of Use, before Edwards Parent or any of its Subsidiaries
offers for sale or sells items in the Field of Use that are directly competitive
with Surgical Products, Edwards shall offer such items to PLC for manufacture
under the CD&M Agreement on the same terms and conditions as apply to Surgical
Products by written notice to PLC.  If PLC does not accept such offer in writing

 

3

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within sixty (60) days of receipt of such written notice, Edwards shall be free
to manufacture and sell these items without limitation provided that neither
Edwards Parent nor any of its Subsidiaries shall offer to any third party the
right to manufacture such items on terms more favorable to such third party than
those offered to PLC without first offering to PLC the right to manufacture such
items on such more favorable terms.  For purposes of clarification, Products
that are not used to ablate tissue shall not be deemed to be competitive with
Surgical Products.

 

ARTICLE III
Obligations of Distributor

 

Section 3.1.            General Obligations of Edwards.  Edwards shall use
commercially reasonable efforts to distribute and sell Surgical Products in the
Territory including, without limitation, commercially reasonable efforts to do
the following:

 

(a)           Promote the sale and use of Surgical Products in the Territory;

 

(b)           Provide customer service, including responding to customer
inquiries and requests for quotes on Product pricing; and

 

(c)           Provide invoices to customers and manage accounts receivable and
collection responsibilities for sales by Edwards of Surgical Products.  Edwards
shall be responsible for any uncollectable sales of Surgical Products to third
parties.

 

(d)           Provide all marketing, sales, training and education collateral
material.

 

(e)           Provide all installation, in-service training, in-service
education and customer training.

 

(f)            Edwards shall manage the warranty service relationships with the
customers.

 

Section 3.2.            Costs and Expenses.  Edwards shall bear all the costs
and expenses associated with its obligations set forth in this Agreement.

 

ARTICLE IV
Obligations of PLC

 

Section 4.1.            Labeling of Surgical Products.  PLC shall and PLC Parent
shall cause PLC to provide and to assume regulatory responsibility for all
finished Surgical Product-related labeling such that it complies with all
applicable laws and regulations in the United States and the European Union
during the term of this Agreement.  All labeling for Surgical Products shall
include the statement “Distributed by Edwards Lifesciences LLC, Manufactured by
PLC Medical Systems, Inc” or, if applicable, a similar statement reflecting the
appropriate Edwards entity in a given jurisdiction.  For all countries of the
Territory excluding the United States and the countries of the European Union,
Edwards shall provide camera-ready labels in compliance

 

4

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with all regulatory requirements related to such labeling for Surgical Products
to be sold in such countries to PLC, which shall be affixed to Surgical Products
by PLC.  PLC shall label, as appropriate and in accordance with applicable laws
and regulations, Surgical Products to be sold in the United States or in any
country of the European Union.

 

Section 4.2.            Manufacturer’s Warranty.  PLC shall, and PLC Parent
shall cause PLC to, provide the manufacturer’s warranty described in this
Section 4.2 to Edwards on all Laser Power Sources for a period (the “Laser
Warranty Period”) consisting of the earlier of (i) twelve (12) months from the
date of delivery of the Surgical Products by Edwards to its customer, or
(ii) fifteen (15) months from the date of shipment from PLC to Edwards of such
Laser Power Sources.  Such Laser Power Sources must be delivered to PLC for
repair or replacement for this warranty to be valid and enforceable.

 

(a)           PLC shall, and PLC Parent shall cause PLC to, provide the
manufacturer’s warranty described in this Section 4.2 on all Disposable Products
for a period of time equal to the shelf life as reasonably determined by the
Steering Committee, taking into account appropriate tests for determining shelf
life, provided, however, that such shelf life shall be at least one year (the
“Disposable Warranty Period”).  Such Disposable Products must be delivered to
PLC for repair or replacement for this warranty to be valid and enforceable.

 

(b)           Subject to the restrictions in (d) below, PLC warrants to Edwards
that all Surgical Products shall be free from defects in materials and
workmanship under normal use and service during the Laser Warranty Period or the
Disposable Warranty Period, as applicable.  PLC shall repair or replace such
defective Surgical Products at its reasonable option during the Laser Warranty
Period or the Disposable Warranty Period, as applicable, at its own cost and
expense.  PLC shall pay all costs associated with shipping and transportation of
the defective part or Surgical Product if said defect appears during the Laser
Warranty Period or the Disposable Warranty Period, as applicable. 
Notwithstanding the previous sentence PLC shall not be responsible for any
shipping and transportation costs for any parts or Surgical Products that are
not covered by the manufacturer’s warranty described in this Section 4.2, and
Edwards shall pay, or reimburse PLC for, all such shipping and transportation
costs.  For any product failure that appears after the expiration of the Laser
Warranty Period or the Disposable Warranty Period, as applicable, Edwards shall
pay PLC for all usual and reasonable charges of PLC to repair such product
failure including any shipping and transportation costs, if Edwards elects to
have such product failure repaired by PLC.

 

(c)           The warranties described in Section 4.2(a)-(c) shall not cover
failure due to negligence, accident, deliberate abuse, misuse, nor improper
storage, installation and/or maintenance, nor components supplied by Edwards. 
Any use of a Surgical Product inconsistent with such Surgical Product’s
operating instructions and any modifications made to such Surgical Product shall
void such warranty in its entirety.  Such warranty does not cover any Surgical
Product which has been altered, serviced, repaired or changed in any manner
whatsoever by

 

5

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anyone other than PLC, or an authorized service representative of PLC, provided,
however, that such warranty shall not be voided by proper installation of
Surgical Products.

 

Section 4.3.            Insurance.  (a)      Set forth on Schedule 4.3(a) is a
copy of PLC’s product liability insurance policy which is in full force and
effect.  PLC shall and PLC Parent shall cause PLC to obtain and keep in force
during the term of this Agreement product liability insurance coverage in an
amount not less than $10,000,000, and from an insurer rated A- or better by A.M.
Best Company and in a form reasonably acceptable to Edwards.  During the term of
this Agreement and for a period of [**] following the expiration or termination
of this Agreement, such insurance coverage shall evidence Edwards and all of its
Affiliates that sell Surgical Products manufactured by PLC as additional insured
entities and shall provide for written notification to Edwards by the insurer
not less than 30 days prior to cancellation, expiration or modification.  PLC
shall and PLC Parent shall cause PLC to provide a certificate of insurance
evidencing compliance with this Section 4.3(a) to Edwards within 30 days of the
date hereof.

 

(b)           Set forth on Schedule 4.3(b) is a copy of a certificate of
insurance evidencing that Edwards currently has product liability insurance
coverage in an amount not less than $10,000,000, and from an insurer rated A- or
better by A.M. Best Company.  Edwards shall maintain product liability insurance
in an amount not less than $10,000,000 and from an insurer rated A- or better by
A.M. Best Company during the term of this Agreement.  During the term of this
Agreement and for a period of [**] following expiration or termination of this
Agreement, such insurance coverage shall evidence PLC and all of its Affiliates
that manufacture Surgical Products as additional insured entities and shall
provide for written notification to PLC by the insurer not less than 30 days
prior to cancellation, expiration or modification.  Edwards shall provide PLC
with a certificate of insurance evidencing compliance with this Section 4.3(b)
within 30 days of the date hereof.

 

Section 4.4.            Production of User Manuals.  PLC shall produce all user
manuals provided, however, that Edwards shall provide, at no cost to PLC,
translation of user interface manuals and end-user interface menus that are not
in English.

 

Section 4.5.            Costs and Expenses.  PLC shall and PLC Parent shall
cause PLC to bear all the costs and expenses associated with PLC’s obligations
set forth in this Agreement.

 

ARTICLE V
Sales and Marketing

 

Section 5.1.            Sales & Marketing.  Edwards shall be responsible, in its
sole discretion, for all sales and marketing activities; including, without
limitation, the preparation and implementation of all sales and marketing plans
and the preparation of all sales literature and marketing materials.

 

6

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ARTICLE VI
Purchase Arrangements

 

Section 6.1.            Purchaser Orders; Product Quantities.  Edwards shall
provide an updated twelve (12) month forecast (the “Forecast”) for Surgical
Products on or before the first day of the month preceding each calendar
quarter.  The Forecast is non-binding and will be used for planning purposes
only, except for the first two (2) quarters within each Forecast (the “Firm
Forecast”).  The Forecast for the first quarter within the Firm Forecast cannot
be changed and the forecast for the second quarter within the Firm Forecast
cannot be decreased by more than [**] percent ([**]%) when such forecasted
amount for the second quarter rolls forward and becomes the forecasted amount
for the first quarter.  Edwards shall be obligated to purchase, and shall submit
a purchase order to purchase not less than [**] percent ([**]%) of the
quantities of Surgical Products as specified for the first quarter of the most
recent Firm Forecast.  Subject to the foregoing, Edwards shall determine in its
sole discretion the quantity of Surgical Products it shall forecast and purchase
and there shall be no minimum purchase requirements for any Surgical Products. 
To the extent that the terms of any purchase order and the terms of this
Agreement conflict, the terms of this Agreement shall control.

 

Section 6.2.            Placement of Orders.  All orders for Surgical Products
submitted by Edwards shall be initiated by written purchase orders sent to PLC
no later than the first day of the month preceding each calendar quarter, which
purchase orders shall specify the desired delivery date (which shall not be
later than 10 days before the end of a calendar quarter) and the Edwards
Facility as the location for delivery in accordance with Section 7.5.  Quarterly
purchase orders submitted to PLC by Edwards will indicate the quantity of
Surgical Products to be delivered for each month of the quarter, provided,
however, the quantity for any individual month shall in no case be less than
[**]% of the total to be delivered for the entire quarter.  There shall be no
upper limit on the quantity of Surgical Products Edwards may order in a quarter,
provided, however, PLC will have no liability under this Agreement for failure
to deliver, in a timely manner, any amount of Product in excess of [**]% of the
quantity most recently forecasted pursuant to Section 6.1 for the quarter.  PLC
shall use commercially reasonable efforts to deliver Surgical Products on the
agreed upon delivery dates set forth in accepted purchase orders, but, in any
event, shall make all deliveries within ten days of the agreed upon delivery
dates set forth in accepted purchase orders.

 

Section 6.3.            PLC License.  Subject to the restrictions set forth
herein and only upon the occurrence of a Supply Breach as described in Section
6.4 or pursuant to Section 2.5 of the CD&M Agreement, PLC grants to Edwards and
its Affiliates a non-exclusive license (the “PLC License”), in the Territory, to
all intellectual property owned or licensed to PLC, to the extent sublicensable,
that PLC uses to develop, make or have made the Surgical Products for Edwards,
including, without limitation, the right to use PLC’s manufacturing methods to
manufacture Surgical Products (including all necessary trade secrets, technical
know-how and other intellectual property of PLC) (collectively, the “PLC
Surgical Products Intellectual Property”) to make, have made, import, sell,
market, or offer for sale, Surgical Products listed on

 

7

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Schedules 1.1 or 1.2 of the CD&M Agreement (including any Surgical Products
offered by Edwards and accepted by PLC pursuant to Section 2.2 of this
Agreement) that but for the license granted in this Section 6.3 would infringe
or misappropriate PLC Intellectual Property.  Edwards covenants not to exercise
the license granted under this Section 6.3 unless a Supply Breach by PLC occurs.

 

Section 6.4.            Failure to Supply.  (a)        In the event PLC (in each
case, a “Supply Breach”):  (i) refuses (including a failure to respond in a
reasonably timely matter to a written inquiry, excluding a purchase order) to
timely supply either the Laser Power Source or the Disposable Product in
accordance with a timely issued purchase order that conforms to all the
applicable requirements of this Agreement or (ii) subject to the limits set
forth in Section 6.1, fails twice in any twelve (12) month period to timely
supply Edwards with at least [**] percent ([**]%) of the quantity of the Laser
Power Source forecasted for the first calendar quarter of any rolling Forecast,
or fails twice in any twelve (12) month period to timely supply Edwards with at
least [**] percent ([**]%) of the quantity of the Disposable Product forecasted
for the first calendar quarter of any rolling Forecast (provided that, in each
case, Edwards orders at least [**] percent ([**]%) of such forecasted quantity),
Edwards shall have the right to use the PLC License granted above under Section
6.3 and Edwards shall have the right to terminate its license to PLC under
Section 2.3 of the CD&M Agreement.  Notwithstanding the foregoing, any Supply
Breach under Section 6.4(b) above shall be excused if such failure to supply is
the direct result of (i) the failure of Edwards to timely supply the necessary
quantity of laser diodes, optics blocks or any other required Edwards supplied
material to PLC within the specified lead times necessary for PLC to timely
manufacture the quantity of product requested on Edwards purchase order; or
(ii) the failure of another PLC supplier to supply an adequate quantity of
materials for the Laser System through no fault of PLC, and where PLC has
exercised commercially reasonable efforts to find an alternative source of
supply for such materials.

 

(b)           In the event of (i) an uncured Supply Breach related to the Laser
Power Source, Edwards may exercise the license granted pursuant to Section 6.3
with respect to all Surgical Products listed on Schedules 1.1 or 1.2 of the CD&M
Agreement, and (ii) an uncured Supply Breach related to Disposable Products,
Edwards may only exercise the license granted pursuant to Section 6.3 with
respect to Disposable Products listed on Schedules 1.1 or 1.2 of the CD&M
Agreement.  Following such exercise by Edwards, PLC shall no longer be obligated
to advance the development of any Products.

 

Section 6.5.            Technology Escrow and Transfer.  PLC shall place the PLC
Surgical Products Intellectual Property in a technology escrow arrangement with
Iron Mountain.  The information placed in escrow by PLC shall include all trade
secrets, know-how, and other intellectual property to allow Edwards to
manufacture the Surgical Products (subject to Section 6.4(b)) in the manner
manufactured by PLC immediately prior to Edwards exercise of the rights under
the license granted under Section 6.3.  PLC shall refresh the escrow in a prompt
and timely manner with any new innovations or know-how developed or acquired by
PLC that relate to the Surgical Products.  Edwards shall have the right to
periodically assess PLC’s compliance with

 

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PLC’s obligations under this section.  All escrow fees shall be paid by PLC.  In
the event of an escrow release due to an uncured Supply Breach or pursuant to
Section 2.5 of the CD&M Agreement, (i) PLC shall provide Edwards with training
in the use of the know-how and such other assistance as is reasonably required
to enable Edwards to manufacture the Surgical Products in the manner
manufactured by PLC immediately prior to the exercise of such rights by Edwards,
and (ii) PLC shall transfer to Edwards at no cost to Edwards all (x) Contributed
Assets that are still owned by PLC, and (y) all other movable assets used by PLC
that are dedicated to manufacture the Surgical Products, in order to enable
Edwards to manufacture the Surgical Products in the manner manufactured by PLC
immediately prior to the exercise of such rights by Edwards.

 

ARTICLE VII
Pricing, Shipping, Payment

 

Section 7.1.            Determination of Disposable Transfer Price.  Edwards
shall purchase the Disposable Products from PLC at the “Disposable Transfer
Price”, as determined below.

 

(a)           The “Disposable Transfer Price” shall be the sum of the “Direct
Disposable Cost of Goods Sold” and PLC’s “Disposable Margin Share,” each as
determined below.

 

(b)           The “Direct Disposable Cost of Goods Sold” is the sum of PLC’s
“Direct Disposable Materials Cost” and PLC’s “Direct Disposable Labor Cost.” 
“Direct Disposable Materials Cost” shall mean the direct cost of the materials
used in a Disposable Product, including reasonable scrap, but excluding spoilage
and excess and obsolete charges.  PLC’s “Direct Disposable Labor Cost” shall
mean the assembler manufacturing time for such product multiplied by the
assembler hourly wage rate (including fringe and benefits).

 

(c)           PLC’s “Disposable Margin Share” shall be the PLC Margin Factor
multiplied by the “Disposable Product Margin.”  The “Disposable Product Margin”
shall be the “Average Sales Price” as defined below for the Disposable Product
less the Direct Disposable Cost of Goods Sold.

 

(d)           “Average Sales Price” shall mean the average of the actual sales
price for each Disposable Product (other than Transition Products) sold by
Edwards or its Affiliates to an unaffiliated third party during a calendar
month, net of any royalty paid to any third party.  For conversion of foreign
currency to U.S. dollars with respect to sales of Disposable products in a
foreign currency, the conversion method and rate shall be the conversion method
and rate used by Edwards to convert the applicable sales into U.S. dollars for
purposes of the preparation of Edwards’s financial statements, such conversion
to be calculated in accordance with generally accepted accounting principles in
the United States, applied consistently.

 

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(e)           If Edwards or any of its Affiliates sells Disposable Products to a
customer, together with other Products that are not Surgical Products
manufactured by PLC, in one unified sale, then any discounts given to such
customer for such Disposable Products or such other Products shall not be
applied in a manner that discriminates against PLC, taking into account the fair
value of such Disposable Products.  In the event such discrimination takes
place, the Average Sales Price shall be appropriately adjusted to reflect the
sale of Disposable Products at their fair value.

 

(f)            Within 15 days after the end of each calendar quarter Edwards
shall provide to PLC a written report showing, for such quarter:  (i) Edwards’
sales of Surgical Products, (ii) the names of the customers; (iii) the dates of
shipment of Surgical Products, (iv) serial numbers for Laser Power Sources that
have been sold, and (v) Edward’s inventory of Surgical Products at the end of
such quarter.

 

Section 7.2.            Procedures for Determination of Disposable Transfer
Price.  (a)              For the first calendar quarter of sales of the
Disposable Products, Edwards shall purchase Disposable Products at an estimated
Disposable Transfer Price of $[**] for the Encircle Disposable Product and at an
estimated Disposable Transfer Price of $[**] for the Endocardial Disposable
Product (as each such product is defined on Schedule 1.1 of the CD&M
Agreement).  Within 20 days following the end of such period, Edwards and PLC
shall determine the actual Disposable Transfer Price for such products and shall
adjust the transfer price paid for such products during such period to reflect
the actual transfer prices for these Disposable Products.

 

To determine the actual Disposable Transfer Price, Edwards and PLC shall take
the following steps:

 

(i)            Determine the actual Average Selling Price, the actual Direct
Disposable Cost of Goods Sold, and the actual Disposable Product Margin for such
period.

 

(ii)           Multiply the actual Average Selling Price for each such
Disposable Product by [**]% and then divide this amount by the actual Disposable
Product Margin to determine the “Edwards Margin Factor.”

 

(iii)          Subtract the Edwards Margin Factor from 1 to determine the “PLC
Margin Factor.”

 

(iv)          Multiply the actual Disposable Product Margin by the PLC Margin
Factor to determine PLC’s Disposable Margin Share for such product for such
period.

 

(v)           Add PLC’s Disposable Margin Share to the Direct Disposable Cost of
Goods Sold to obtain the Disposable Transfer Price for such completed quarter.

 

(vi)          Once determined by steps (i) – (v), Edwards Margin Factor and PLC
Margin Factor shall remain unchanged.

 

10

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Schedule 7.2(a)(i) sets forth an example of the procedures for the determination
of the Disposable Transfer Price.  An additional example is set forth in
Schedule 7.2(a)(ii) which shows how this calculation and the calculation in
Section 7.1 will work going forward.

 

(b)           At the end of the first calendar quarter of sales of Disposable
Products, the actual Direct Disposable Cost of Goods Sold and the actual Average
Sales Price of the Disposable Product for such completed quarter shall be used
to determine the Disposable Transfer Price for the next calendar quarter of
sales of this product, taking into account the PLC Margin Factor and the Edwards
Margin Factor already determined under Section 7.2(a), and continuing with this
approach for each calendar quarter thereafter.

 

(c)           Edwards and PLC shall use all commercially reasonable efforts to
establish the Disposable Transfer Price for each quarter no later than the end
of the first month of each such quarter.

 

(d)           Each of Edwards and PLC shall keep full, true, and accurate books
of account containing information necessary for the purpose of determining the
Disposable Transfer Price and amounts payable to PLC hereunder (the “Transfer
Price Documents”).  Upon 30-days prior written notice, such books and Transfer
Price Documents shall be made available for inspection by an agent or
representative of PLC (“PLC’s Representative”) and reasonably acceptable to
Edwards, or an agent or representative of Edwards (“Edwards’ Representative”)
and reasonably acceptable to PLC, as applicable, for the sole purpose of
verifying the accuracy of the Transfer Price Documents and the amounts payable
to PLC hereunder, and PLC’s Representative or Edwards’ Representative, as
applicable, shall be entitled to inspect only such information as is reasonably
necessary for such verification.  PLC’s Representative shall report to PLC only
whether Edward has accurately determined the Disposable Transfer Price and
amounts payable to PLC hereunder and, if not, the correct determination, and
Edwards’ Representative shall report to Edwards only whether PLC has accurately
determined the Direct Disposable Cost of Goods Sold and, if not, the correct
determination.  Any such inspection shall take place during Edwards’ or PLC’s
normal business hours, as applicable, at the place where such books and records
are ordinarily maintained and shall be conducted in a manner reasonably
calculated to minimize the disruption of Edwards’ business or PLC’s business, as
applicable.  PLC and PLC’s Representative and Edwards and Edwards’
Representative shall keep any information obtained during such inspection
confidential and, upon request of Edwards or PLC, PLC’s Representative or
Edwards’ Representative, as applicable, shall enter into a written
confidentiality agreement prior to commencing said inspection.  Such inspection
may take place no more frequently than once in any calendar year, and shall be
limited to the books and records necessary to verify the determination of the
Disposable Transfer Price and amounts payable to PLC hereunder for no more than
two calendar years prior to the date of the commencement of the inspection.  In
the event PLC’s Representative concludes that additional amounts were owed to
PLC with respect to any such period, PLC shall notify Edwards of such
discrepancy, and in the event Edwards’ Representative concludes that PLC was
paid more than it was owed, it shall notify PLC of such discrepancy.  If an
agreement between the Parties is not reached within (30) days after such

 

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notice, then no later than ten (10) days after the expiration of such (30)
thirty day period, at a mutually convenient time, PLC or PLC’s Representative
shall meet or consult with Edwards and/or Edwards’ Representative to attempt to
reconcile the difference between the calculations of the respective
Representatives.  All fees charged and expenses incurred by PLC’s Representative
or Edwards’ Representative, as applicable, in connection with any inspections,
meetings, or consultations provided for herein shall be paid by the Party who
retained such representatives. Any payments to be made to Edwards or PLC, as
applicable, pursuant to this Section 7.2(d) shall be made promptly after
agreement of the parties is reached.

 

(e)           Schedule 7.2(e) contains a list of raw material and other
inventory items of Edwards (“Materials Inventory”) related to Surgical Products
together with Edward’s actual direct material cost of such Materials Inventory,
which Schedule shall be updated by Edwards at the end of the Transition Period. 
PLC shall purchase such Materials Inventory remaining at the end of the
Transition Period from Edwards on an as-needed first priority basis for use in
the manufacture of Surgical Products, provided such Materials Inventory is
appropriate and its condition is reasonably acceptable to PLC.  PLC shall pay
for such Materials Inventory by crediting the Disposable Transfer Price (or, if
applicable, the Laser Transfer Price) on an as-used basis in an amount equal to
Edwards’s actual direct material cost of such Materials Inventory as set forth
in Schedule 7.2(e).  All Materials Inventory remaining at the end of the
Transition Period shall be delivered to PLC promptly following the completion of
the Transition Period.

 

Section 7.3.            Laser Power Source.  Subject to any adjustment provided
below, Edwards shall purchase the Laser Power Source from PLC for $[**] per unit
(the “Laser Transfer Price”).  Edwards shall provide laser diodes and optics
blocks to PLC for incorporation by PLC into each Laser Power Source.  These
laser diodes and optics blocks shall be provided by Edwards to PLC at no cost to
PLC.  The Laser Transfer Price shall adjust from time to time as follows:

 

(a)           If the cost per Laser Power Source of the laser diodes and optics
blocks supplied by Edwards varies from the initial cost to Edwards of $[**],
then the Laser Transfer Price shall be adjusted to take into account [**]% of
the positive or negative variance from $[**].  If the variance from $[**]is a
positive variance (i.e. the actual cost of the laser diodes and optics blocks
are greater than $[**]), then [**]% of this positive variance shall be deducted
from the Laser Transfer Price.  Conversely, if the variance from $[**]is a
negative variance (i.e. the actual cost of the laser diodes and optics blocks
are less than $[**]), then [**]% of this negative variance shall be added to the
Laser Transfer Price.

 

(b)           If the “Direct Laser Costs” as defined below vary from $[**], then
the Laser Transfer Price shall be adjusted to take into account [**]% of the
positive or negative variance from $[**].  If the variance from $[**] is a
positive variance (i.e. the actual Direct Laser Costs are greater than $[**]),
then [**]% of this positive variance shall be added to the Laser Transfer
Price.  Conversely, if the variance from $[**] is a negative variance (i.e. the
actual Direct Laser Costs are

 

12

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less than $[**]), then [**]% of this negative variance shall be deducted from
the Laser Transfer Price.

 

(c)           “Direct Laser Costs” shall mean the sum of “Direct Laser
Materials” and “Direct Laser Labor.”  “Direct Laser Materials” is equal to the
direct cost of the materials used in a Laser Power Source, excluding spoilage
and excess and obsolete charges and the laser diodes and optics blocks supplied
by Edwards.  “Direct Laser Labor” shall mean the assembler manufacturing time
for the Laser Power Source multiplied by the assembler hourly wage rate plus
fringe and benefits.

 

(d)           Within one hundred-twenty (120) days after the Effective Date, the
Steering Committee shall approve the estimated initial cost of the Direct Laser
Materials.  This estimate shall be prepared by Minnetronix, Inc. and shall only
address the Direct Laser Materials.  If this cost estimate is greater than
$[**], then each dollar of the positive variance from $[**] (i.e. the amount by
which the estimated cost is greater than $[**]) shall be added to the Laser
Transfer Price.  Conversely, if this cost estimate is less than $[**], then each
dollar of this negative variance from $[**] (i.e. the amount by which the
estimated cost is less than $[**]) shall be subtracted from the Laser Transfer
Price.

 

(e)           At the end of the first calendar quarter of sales, the actual cost
per Laser Power Source of the laser diodes and optics blocks supplied by Edwards
shall be prepared by Edwards for such completed quarter, and shall be subject to
review and approval by PLC, and following such approval shall be used to
determine the Laser Transfer Price for the next calendar quarter of sales of
this product, and continuing with this approach for each calendar thereafter.

 

(f)            At the end of the first calendar quarter of sales, the actual
Direct Laser Costs shall be prepared by PLC for such completed quarter, and
shall be subject to review and approval by Edwards, and following such approval
shall be used to determine the Laser Transfer Price for the next calendar
quarter of sales of this product, and continuing with this approach for each
calendar quarter thereafter.

 

(g)           Edwards and PLC shall use all commercially reasonable efforts to
establish the Laser Transfer Price for each quarter no later than the end of the
first month of each such quarter.

 

(h)           Edwards and PLC shall afford to each other audit rights with
respect to Laser Power Sources and the determination of the Laser Transfer Price
substantially the same as the audit rights granted to Edwards and PLC with
respect to Disposable Products and the determination of the Disposable Transfer
Price in Section 7.2(d).

 

(i)            An example of the above described calculation is attached as
Schedule 7.3(i).

 

Section 7.4.            Product Accessories.  PLC shall supply such customary
product accessories, including, without limitation cables and an operation
manual, for each Laser Power

 

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Source that it supplies to Edwards.  The price for the product accessories is
included in the Laser Power Source price set forth in Section 7.3.

 

Section 7.5.            Shipping.  PLC shall deliver Products directly to
Edwards.  All prices for Surgical Products shall be F.O.B. to a single facility
of Edwards located in the United States, as designated in writing by Edwards
(“Edwards Facility”), which Edwards Facility may be changed to another facility
in the United States by Edwards upon advance written notice to PLC.  The prices
will not include any federal, state or local sales, use, excise or value added
tax that may be applicable.  If PLC has the legal obligation to collect such
taxes, the appropriate amount shall be added to Edwards’ invoice and paid by
Edwards unless Edwards provides PLC with a valid tax exemption certificate
authorized by the appropriate taxing authority.  PLC shall ship Surgical
Products using the method of transportation reasonably determined by PLC.  In
all cases, title, risk of loss and all responsibility for transportation,
insurance and storage shall pass from PLC to Edwards upon transfer of finished
Surgical Products from PLC to the Edwards Facility and after such transfer PLC
shall promptly issue an invoice related thereto to Edwards.

 

Section 7.6.            Payment.  Full payment shall be made by Edwards to PLC
within sixty (60) days from the invoice date which shall be the shipping date
for Surgical Products to Edwards.  In the event Edwards fails to timely pay more
than four (4) invoices in any twelve month period, then payment shall be due to
PLC under this Section 7.6 within thirty (30) days from such invoice date.

 

ARTICLE VIII
Term and Termination

 

Section 8.1.            Term and Renewal.  This Agreement shall commence on the
date hereof (the “Effective Date”) and be valid for as long as the CD&M
Agreement is valid and in effect.

 

Section 8.2.            Immediate Termination.  This Agreement may be terminated
by either Edwards or PLC immediately in the event (a) of any breach by the other
Party of Section 4.3; (b) of any material breach by the other Party remaining
uncured 60 days after written notice containing details of the breach has been
delivered to the other Party; or (c) that the other Party shall file for
protection from its creditors under any applicable Bankruptcy or insolvency
laws, shall make an assignment for the benefit of creditors, or shall have a
receiver appointed for its property.

 

Section 8.3.            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 (subject to any continuing
licenses under the CD&M Agreement).

 

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(b)           The CD&M Agreement shall terminate.

 

ARTICLE IX
Warranties and Indemnification

 

Section 9.1.            Warranties.  (a)    PLC warrants that it possesses good
and marketable title to all Surgical Products sold to Edwards under this
Agreement upon delivery to Edwards of such Surgical Products; (b) at the time of
delivery, each Product conforms to its specifications and will operate according
to the indications described in its labeling; (c) when available for sale in the
Territory Surgical Products are or will be manufactured pursuant to the CD&M
Agreement in conformity with all applicable FDA, UL and/or ETL rules and
regulations and applicable laws of the Territory; (d) Surgical Products have or
will have obtained FDA approval or clearance to market and sell Surgical
Products when Surgical Products are available for sale in the Territory; and
(e) it complies and will continue to comply with all applicable laws and
regulations of the Territory with respect to Surgical Products provided that the
foregoing representation, insofar as it relates to laws of countries outside the
United States or the European Union, is conditioned on PLC’s receipt of accurate
and complete information from Edwards pursuant to Section 4.1(a)(v) of the CD&M
Agreement.  Edwards warrants that it complies and will continue to comply with
all applicable laws and regulations of the Territory with respect to Surgical
Products and the sale thereof.

 

(b)           EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT OR IN ANY OF THE
TRANSACTION DOCUMENTS, PLC AND ITS THIRD PARTY LICENSORS AND SUPPLIERS EXPRESSLY
DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS, CONDITIONS, GUARANTEES OR
UNDERTAKINGS OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

(c)           EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT OR IN ANY OF THE
TRANSACTION DOCUMENTS, EDWARDS AND ITS THIRD PARTY LICENSORS AND SUPPLIERS
EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS, CONDITIONS, GUARANTEES
OR UNDERTAKINGS OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

Section 9.2.            Indemnification by PLC.  PLC and PLC Parent shall
indemnify and hold harmless Edwards, its officers, directors, shareholders,
employees, parents, successors, Affiliates, assigns, in each case, from and
against any and all costs or expenses (including, without limitation, reasonable
attorneys’ fees, and the reasonable out-of-pocket expenses of testifying and
preparing for testimony and responding to document and other information
requests, whether or not a party to such litigation), judgments, fines, losses,
claims (whether or not meritorious) and damages (collectively, “Damages”), as
incurred, to the extent they relate to,

 

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arise out of or are the result of (i) the manufacture by PLC of any Surgical
Products (except to the extent attributable to components supplied by Edwards);
(ii) the design of any Surgical Products or component of Surgical Products not
developed exclusively by Edwards except to the extent designed and built in
accordance with the specifications provided by Edwards; (iii) the failure of
Surgical Products to satisfy any warranty made by PLC; (iv) PLC failing to
perform any of its covenants and responsibilities under the Transaction
Documents; and (v) PLC’s gross negligence, willful misconduct or fraud in the
development, labeling, supply and manufacture of Surgical Products by PLC.

 

Section 9.3.            Indemnification by Edwards.  Edwards shall indemnify and
hold harmless PLC, its officers, directors, shareholders, employees, parents,
successors, Affiliates and assigns, in each case, from and against any and all
Damages, as incurred, to the extent they relate to, arise out of or are the
result of (i) the specifications of the Surgical Products provided by Edwards;
(ii) the sale by Edwards of any Surgical Products except to the extent Edwards
is indemnified by PLC (iii) Edwards failing to perform any of its covenants and
responsibilities under the Transaction Documents and (iv) Edwards’ gross
negligence, willful misconduct or fraud in the promotion and sale of Surgical
Products by Edwards.

 

Section 9.4.            Indemnification Procedures.  The Party seeking
indemnification (the “Indemnified Party”) pursuant to this Article IX shall
promptly notify the indemnifying party (the “Indemnifying Party”), in writing,
of such claim describing such claim in reasonable detail, provided that the
failure to provide such notice shall not affect the obligations of the
Indemnifying Party unless and only to the extent it is actually prejudiced
thereby.  In the event that such claim involves a claim by a third party against
an Indemnified Party, the Indemnifying Party shall have 30 days after receipt of
such notice to decide whether it will undertake, conduct and control, through
counsel of its own choosing (but reasonably acceptable to the Indemnified Party)
and at its own expense, the settlement or defense thereof unless (i) the
Indemnifying Party is also a party to the proceeding and the Indemnified Party
determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Party fails to provide reasonable assurance to the
Indemnified Party of its financial capacity to defend such proceeding, and
provide indemnification with respect thereto, and if it so decides, the
Indemnified Party shall cooperate with it in connection therewith, provided that
the Indemnified Party may participate in such settlement or defense through
counsel chosen by it, and provided further that the fees and expenses of such
counsel shall be borne by the Indemnified Party.  The Indemnifying Party shall
not, without the written consent of the Indemnified Party (which consent shall
not be unreasonably withheld, conditioned or delayed), settle or compromise any
action, unless such settlement or compromise includes an unconditional release
of the Indemnified Party.  If the Indemnifying Party does not notify the
Indemnified Party within 30 days after the receipt of notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
Indemnified Party shall have the right to contest, settle or compromise the
claim but shall not pay or settle any such claim without the consent of the
Indemnifying Party (which consent shall not be unreasonably withheld,
conditioned or delayed).  The Indemnifying Party and the Indemnified Party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial,

 

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compromise, settlement or discharge of any claim in respect of which indemnity
is sought pursuant to Article IX, including, but not limited to, providing the
other Party with reasonable access to employees and officers (including as
witnesses) and other information.  The remedies provided in this Article IX will
not be exclusive of or limit any other remedies that may be available to the
Indemnified Parties.

 

Section 9.5.            Limitations on 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
OR 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 X
Trademarks and Confidentiality

 

Section 10.1.          Trademarks.  Subject to PLC’s consent, which consent
shall not be unreasonably withheld, delayed or conditioned, Edwards shall have
the right to indicate to the public that it is an authorized distributor of
Surgical Products and, at Edwards’ election, to market and sell Surgical
Products under any trademarks, service marks and trade names that PLC adopts
from time to time.  Edwards shall state and confirm in all advertising and
promotional literature that its use of PLC’s trademarks, service marks and trade
names is pursuant to a license from PLC and shall identify PLC as the owner of
such marks and names and any proprietary rights.  Edwards shall not alter,
obscure or remove any trademarks, service marks or trade names of PLC which are
contained on or in or affixed to Surgical Products at the time of shipment. 
Edwards shall not use any trademarks, service marks or trade names of PLC in
connection with any business conducted by Edwards other than dealing with
Surgical Products in accordance with the terms of this Agreement.  Edwards
agrees that its use of the trademarks, service marks and trade names of PLC
shall not create in its favor any right, title or interest therein and
acknowledges PLC’s exclusive right, title and interest thereto.  Edwards agrees
that it will not use, without PLC’s prior written consent, any mark which is
similar to or is likely to be confused with any trademarks, service marks or
trade names of PLC.  In order to comply with PLC’s quality control standards,
Edwards shall:  (i) not modify any of PLC’s trademarks, service marks or trade
names in any way; (ii) use PLC’s trademarks, service marks or trade names in
compliance with all applicable laws and regulations; and (iii) upon 30 days
written notice, accord PLC the right to inspect during normal business hours,
Edwards’ or its Affiliates facilities used in connection with efforts to promote
and sell the Surgical Products in order to confirm that Edwards’ use of any of
PLC’s trademarks, service marks or trade names is in compliance with

 

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this Section 10.1.  Edwards’ rights to use the trademarks, service marks and
trade names of PLC as set forth in this Section 10.1 shall terminate upon
termination or expiration of this Agreement.

 

Section 10.2.          Confidential Information.  In order to avoid disclosure
of confidential and proprietary information to any other person, firm or
corporation, the Parties agree that each will treat any such information which
is received from one another in writing and clearly marked as “Confidential” or
if disclosed orally, which is confirmed in writing as “Confidential” within
thirty (30) days of initial disclosure, with the same degree of care that each
employs with respect to its own information which it does not desire to have
published or disseminated.  It is understood that each Party shall be liable for
any unauthorized disclosure should it fail to safeguard the disclosed
information with such care.  This obligation shall survive the termination or
expiration of this Agreement.  The Parties shall not have any obligation with
respect to such information which is:

 

(a)           independently developed by the receiving Party without the benefit
of the disclosure or is already known to the receiving Party at the time of the
disclosure;

 

(b)           publicly known or becomes publicly known without the wrongful act
or breach of this Agreement by the receiving Party; or

 

(c)           rightfully received by the receiving Party from a third-party who
is not under any obligation of confidentiality or trade secret obligation to the
originating Party.

 

ARTICLE XI
MISCELLANEOUS

 

Section 11.1.          Relationship.  The relationship of Edwards and PLC
established by this Agreement and the Transaction Documents is of independent
contractors and not agents (except as set forth in Section 2.1), and nothing in
this Agreement or any Transaction Document shall be construed:

 

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

 

(b)           To constitute the Parties as partners, joint venturers, co-owners
or otherwise as participants in joint undertaking; or

 

(c)           To allow either PLC or PLC Parent to create or assume any
obligation on behalf of Edwards, or vice versa, for any purpose whatsoever.  The
purchase, promotion, and resale of, or any other legal transactions concerning
Surgical Products hereunder shall be carried out in the name of and for the
account of Edwards as principal, and Edwards shall not enter into any agreement
with third persons binding in any way on PLC or PLC Parent.

 

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Section 11.2.          No Conflict.  Each Party represents and warrants to the
other Parties that it is not subject to any contractual obligation or restraint
which will materially interfere with its right and ability to perform pursuant
to the terms of this Agreement.

 

Section 11.3.          Governing Law.  This Agreement shall be governed by,
interpreted under, and construed in accordance with the internal laws of the
State of New York, including, without limitation, Sections 5-1401, 5-1402 of the
New York General Obligations Law and New York Civil Practice Laws and Rules
327(b).

 

Section 11.4.          Escalation.  Edwards and PLC (and/or PLC Parent) will
attempt in good faith to resolve expeditiously any dispute, claim or controversy
arising out of or relating to this Agreement (the “Dispute”) promptly by
negotiations between executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for the administration of this Agreement.  Either Party may give
the other Party, written notice (the “Escalation Notice”) of any Dispute not
resolved in the normal course of business.  Within 15 days after delivery of the
Escalation Notice, the 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 11.4 for a
period up to 60 days from the date of delivery of the Escalation Notice before
resorting to other available remedies; provided, however, nothing contained in
this Section 11.4 shall prevent any Party from resorting to judicial process if
injunctive or other equitable relief from a court is necessary to prevent
serious and irreparable injury to it or to others.  The use of the procedure set
forth in this Section 11.4 will not be construed under the doctrine of laches,
waiver or estoppel to affect adversely any Party’s right to assert any claim or
defense.

 

Section 11.5.          Jurisdiction and Consent to Service.  In accordance with
the laws of the State of New York, and without limiting the jurisdiction or
venue of any other court, the Parties (a) agree that any suit, action or
proceeding arising out of or relating to this Agreement shall be brought solely
in the state or federal courts of New York; (b) consent to the exclusive
jurisdiction of each such court in any suit, action or proceeding relating to or
arising out of this Agreement; (c) waive any objection which any of them may
have to the laying of venue in any such suit, action or proceeding in any such
court; and (d) agree that service of any court paper in any such suit, action or
proceeding may be made in any manner as may be provided under the applicable
laws or court rules governing service of process in such court.  The foregoing
shall not apply to actions for injunctive relief, as to which such jurisdiction
shall be non-exclusive.

 

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Section 11.6.          Notices.  All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
which are given with respect to this Agreement shall be in writing and shall be
delivered (charges prepaid, receipt confirmed or return receipt requested (if
available)) by hand, by nationally recognized air courier service, by certified
mail or facsimile, addressed as set forth below or to such other address as such
Party shall have specified most recently by written notice.  Notice shall be
deemed given and effective (i) if delivered by hand or by nationally recognized
courier service, when delivered at the address specified in this Section 11.6
(or in accordance with the latest unrevoked written direction from such Party),
(ii) if by certified mail, 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 11.6 (or in accordance with the latest unrevoked
written direction from such Party), provided the appropriate confirmation is
received.

 

To PLC:

 

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

 

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

 

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

 

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Section 11.7.          Interpretation  When a reference is made in this
Agreement to a Section, Schedule or Exhibit, such reference shall be to a
Section, Schedule or Exhibit of this Agreement unless otherwise indicated.  When
a reference is made in this Agreement to a specific Schedule, such reference
shall be deemed to include, to the extent applicable, all the other Schedules. 
The table of contents, table of definitions, titles and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.  When the words “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation.”  All accounting terms not defined in this
Agreement shall have the meanings determined by generally accepted accounting
principles as of the date hereof.  All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.

 

Section 11.8.          Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
Parties shall negotiate in good faith with a view to the substitution therefore
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Parties hereto shall be enforceable to the
fullest extent permitted by law.

 

Section 11.9.          Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall, taken together, be considered one and the same agreement, it being
understood that the Parties need not sign the same counterpart.

 

Section 11.10.        Entire Agreement; No Third Party Beneficiaries.  This
Agreement and the other Transaction Documents, including all schedules and
exhibits hereto and thereto, by and among the Parties hereto,

 

(a)           constitute the entire agreement of the Parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
Parties, whether oral or written, with respect to the subject matter hereof; and

 

(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 11.10.

 

21

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

 

Section 11.11.        Amendments and Modifications; Waivers and Extensions.

 

(a)           No amendment, modification or termination of this Agreement shall
be binding upon any other Party unless executed in writing by the Parties hereto
intending to be bound thereby.

 

(b)           Any Party to this Agreement may waive any right, breach or default
which such Party has the right to waive; provided that such waiver will not be
effective against the waiving Party unless it is in writing, is signed by such
Party, and specifically refers to this Agreement.  Waivers may be made in
advance or after the right waived has arisen or the breach or default waived has
occurred.  Any waiver may be conditional.  No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained.  No failure or delay in exercising any right, power or
privilege hereunder shall be deemed a waiver or extension of the time for
performance of any other obligations or acts nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.

 

Section 11.12.        Assignment.  Neither this Agreement nor any of the rights,
duties or obligations hereunder may be assigned or delegated by any of the
Parties hereto without the prior written consent of PLC or Edwards, as the case
may be, which may be withheld in its sole discretion except that Edwards may
assign all its rights and obligations to any subsidiary of Edwards Lifesciences
Corporation, 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 11.13.        Schedules.  Each of the schedules referred to herein and
attached hereto is an integral part of this Agreement and is incorporated herein
by reference.

 

Section 11.14.        Expenses.  Except as otherwise provided in this Agreement,
each Party to this Agreement shall bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the transactions contemplated hereby, including all fees and expenses of
agents, representations, counsel and accountants.

 

Section 11.15.        No Consequential or Punitive Damage.  If any Party claims
any breach of this Agreement by the other Party or otherwise becomes
dissatisfied with any matter relating hereto or arising herefrom, it shall have
no right to seek consequential or punitive damages and each Party hereby waives
any right it may have to seek such punitive or consequential damages.

 

22

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

 

Section 11.16.        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.

 

23

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

 

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

 

 

 

PLC SYSTEMS INC.

 

 

 

 

 

 

 

By:

 

/s/James G. Thomasch

 

 

Name:

James G. Thomasch

 

Title:

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

PLC MEDICAL SYSTEMS, INC.

 

 

 

 

 

 

 

By:

 

/s/James G. Thomasch

 

 

Name:

James G. Thomasch

 

Title:

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

EDWARDS LIFESCIENCES LLC

 

 

 

 

 

 

 

By:

 

/s/ John H. Kehl, Jr

 

 

Name:

John H. Kehl, Jr.

 

Title:

Corporate Vice President, Strategy and Business
Development

 

24

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

 

Schedule 4.3(a)

Product Liability Insurance of

 

 

To be provided

 

1

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

 

Schedule 4.3(b)

Product Liability Certificate of Insurance of Edwards

 

 

To be provided

 

1

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

 

Schedule 7.2(a)(i)

A-Fib Disposable Margin Factor
(Examples to PLC Margin Factor Calculation With variances in ASP & COGS)

 

Assumptions

 

Encircle
with ASP Variances

 

Encircle
With COGS Variances

 

EW Average Selling Price

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLC’s Direct Disposable COGS

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Disposable Materials Costs

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

Direct Disposable Labor Costs

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposable Product Margin

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EW Margin Factor

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

PLC Margin Factor

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLC’s Disposable Margin Share

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposable Transfer Price

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

Absolute numbers are for illustrative purposes only.
All terms are defined in the agreement.

 

1

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

 

Schedule 7.2(a)(ii)
A-Fib Margin Sharing Disposable — (Examples to Show Margin Sharing with Various
ASP’s and Costs)

 

Assumptions

 

Encircle

 

COGS (-)

 

Probe

 

COGS (-)

EW Average Selling Price

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

$1,500

 

 

 

 

 

 

 

 

[**]

 

 

 

 

 

 

 

[**]

PLC’s Direct Disposable COGS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Disposable Materials Costs

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

Direct Disposable Labor Costs

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposable Product Margin

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EW Margin Factor

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

PLC Margin Factor

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLC’s Disposable Margin Share

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposable Transfer Price

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

2

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

 

Schedule 7.2(e)

Materials Inventory

 

A-Fib Inventory as of 1/1/2004

 

Part Number

 

Description

 

Cost per Unit

 

Quantity

 

Total Inventory $

 

 

 

 

 

 

 

 

 

 

 

193769002

 

MIRROR, COATED

 

[**]

 

2,832.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597311001

 

FIBER-MESH ASSEMBLY

 

[**]

 

525.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597310001

 

ASSY, LIGHTSTIC

 

[**]

 

166.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597369001

 

ASSY, LIGHTSTIC, EPI

 

[**]

 

137.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193784001

 

TUBE CONNECTOR

 

[**]

 

1,124.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193787001

 

SHEATH FORMING

 

[**]

 

1,382.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193777001

 

FIBER ASSEMBLY 600UM

 

[**]

 

145.99

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193863001

 

TUBE,EXTRUSION. DUAL W/FLAT

 

[**]

 

1,217.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193770002

 

MIRROR, POLISHING

 

[**]

 

6,549.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193768001

 

TUBE, DIFFUSER

 

[**]

 

4,163.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

692577001

 

PKG. ASSY, OPTIMAZE HANDPIECE

 

[**]

 

26.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193876001

 

SHRINK TUBE, GOLD

 

[**]

 

1,078.63

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193770001

 

MIRROR, POLISHING

 

[**]

 

1,923.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193800001

 

TUBING, GRAY

 

[**]

 

17,684.85

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193791001

 

TUBING, IRRIGANT

 

[**]

 

20,242.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

491136001

 

CARBON SPHERICAL POWDER

 

[**]

 

49.99

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193776001

 

TRAY, OPTIMAZE

 

[**]

 

1,805.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193875001

 

GOLD, WINGED LASER CUT

 

[**]

 

472.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597314001

 

ASSY, SHEATH TUBE 5CM

 

[**]

 

264.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193772001

 

GOLD, LASER CUT

 

[**]

 

439.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193767001

 

GOLD FOIL LS 18

 

[**]

 

26.00

 

[**]

 

 

1

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

 

193786001

 

HANDLE CLS180

 

[**]

 

1,659.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193946001

 

TUBE,EXTRUSION DUAL W/FLAT,EPI

 

[**]

 

430.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597315001

 

ASSY, SUPPLY TUBE

 

[**]

 

491.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193799001

 

CARTON, FOLDING WHITE SBS

 

[**]

 

1,141.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193797001

 

POUCH, OUTER OPTIMAZE

 

[**]

 

1,593.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193780001

 

LID, TYVEK BLANK OPTIMAZE

 

[**]

 

2,072.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193795001

 

TUBING, 2 LUMEN PEBAX SHEATH

 

[**]

 

750.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193803001

 

STRAIN RELIEF, HANDLE

 

[**]

 

1,308.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193796001

 

TUBE, OUTER SHEATH

 

[**]

 

1,197.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193778001

 

WIRE MESH BRAID, SL 180

 

[**]

 

5,515.97

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193794001

 

BOND HEAT SHRINK TUBING, FEP

 

[**]

 

168.10

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193785001

 

LINED SHRINK SLEEVE, .250” ADH

 

[**]

 

927.69

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193781001

 

BLANK FLAG LABEL STOCK

 

[**]

 

4,886.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

491101001

 

ADH, MASTERBOND SIL MSIL151

 

[**]

 

2.85

 

[**]

 

 

 

 

 

 

 

 

 

 

 

491100001

 

ADH, UV CURE, DYMAX 1187-M

 

[**]

 

21.30

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193944001

 

SHEATH FORMING, EPI

 

[**]

 

100.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597405001

 

OUTPUT PORT SHIELD

 

[**]

 

54.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193798001

 

SHPNG BOX,OPTIMAZE HNDPC 10 PK

 

[**]

 

241.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193945001

 

TUBE, OUTER SHEATH, EPI

 

[**]

 

500.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193947001

 

WIRE, MALLEABLE, EPI

 

[**]

 

7,372.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

299391001

 

CONNECTOR SMA 641 UM

 

[**]

 

56.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193793001

 

CAPLUGS, FIBER PROTECTIVE CAP

 

[**]

 

7,552.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

491102001

 

ADHESIVE, LOCTITE 4081

 

[**]

 

8.97

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193789001

 

WIRE, MALLEABLE

 

[**]

 

2,533.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597316001

 

ASSY, PINCH TUBE.

 

[**]

 

504.00

 

[**]

 

 

2

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

 

597317001

 

WIRE, SUPPORT FORMED

 

[**]

 

931.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193788001

 

SCREW, #4 X 1/4”

 

[**]

 

2,338.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193766001

 

HEAT SHRINK TUB. DIFFUSER CSL

 

[**]

 

24.17

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597313001

 

SILICONE, PIGMENTED

 

[**]

 

5.99

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193779001

 

CAPLUGS, VINYL CAP

 

[**]

 

3,150.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193802001

 

WASHER, STAINLESS STEEL

 

[**]

 

189.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193940001

 

RIBBON,PRINTER THERMAL TRANSFE

 

[**]

 

2.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

491137001

 

EPO-TEC 353ND

 

[**]

 

0.99

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193967002

 

DFU,EW SURG. ABLATION HNDP

 

[**]

 

128.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

193801001

 

CONNECTOR , Y

 

[**]

 

166.00

 

[**]

 

 

 

 

 

 

 

 

 

 

 

491103001

 

TITANIUM DIOXIDE (TIO2) POWER

 

[**]

 

5.99

 

[**]

 

 

 

 

 

 

 

 

 

 

 

299393001

 

BALL CHAIN

 

[**]

 

180.80

 

[**]

 

 

 

 

 

 

 

 

 

 

 

597312001

 

SILICONE MASTER

 

[**]

 

4.98

 

[**]

 

 

 

 

 

 

 

 

 

 

 

299395001

 

SS ROUND BEAD CHAIN

 

[**]

 

36.00

 

[**]

 

 

 

 

 

 

 

 

 

[**]

 

Summary

 

 

 

 

 

 

 

[**]

 

 

3

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

 

A-Fib Laser Transfer Price — Schedule 7.3(i) (Examples to Show Laser Transfer
Price with Various Costs)

 

 

 

Base

 

PLC Costs

 

EW Costs

 

 

 

Laser Assumptions

 

Case

 

Up 10%

 

Down 10%

 

Up 10%

 

Down 10%

 

Comments

 

Direct Laser COGS

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct Laser Materials Costs (EW)

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

Fiber Optic Blocks & Laser Diodes

 

Direct Laser Materials Costs (PLC)

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

All Other Materials

 

Direct Labor Laser Costs (PLC)

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

Direct Laser Labor

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variances to Direct Laser Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

Variances to EW Direct Laser Costs

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

Variances to PLC Direct Laser Costs

 

 

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sharing of Variances to Direct Laser Costs

 

 

 

 

 

 

 

 

 

 

 

 

 

EW Portion

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

PLC Portion

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Laser Transfer Price

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

 

 

Absolute numbers are for illustrative purposes only.

All terms are defined in the agreement.

 

1

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