**Exhibit 10.2**

Confidential Materialsomitted and filed separately with the

Securities and ExchangeCommission.  Asterisks denote omissions.

March 9,2006

 

Edwards Lifesciences LLCOne Edwards WayIrvine, California 92614Attention:  General Counsel

Gentlemen:

Asyou know, Edwards Lifesciences LLC (“Edwards”), PLC Systems Inc. (“PLC Parent”)and PLC Medical Systems, Inc. (“PLC”) are parties to a certainContribution, Development and Manufacturing Agreement (the “CDM Agreement”)dated as of February 24, 2004, and a certain Distribution Agreement (the “DistributionAgreement”), also dated as of February 24, 2004, pursuant to which, amongother things, PLC has agreed to develop and manufacture certain “SurgicalProducts”, as defined in the CDM Agreement, and Edwards has agreed todistribute and sell such products so developed and manufactured by PLC.

Edwards,PLC and PLC Parent have agreed that it is in their respective best interestsfor all rights and obligations of PLC in the development and manufacture ofDisposable Products as granted under the CDM Agreement and the DistributionAgreement to be transferred back to Edwards, as set forth herein. Capitalizedterms not otherwise defined herein shall have the meanings set forth in the CDMAgreement and the Distribution Agreement.

Accordingly,we have agreed as follows:

1.    The CDM Agreement, including the license described in Section 2.3(except as necessary to enable PLC to fulfill its obligations to Edwardsfollowing the date hereof), and the Distribution Agreement are herebyterminated, and each of the parties thereto hereby expressly agrees thatneither party shall have any liability or continuing obligation to the other onaccount of such agreements, except such continuing obligations as are expresslyset forth in the following sections of such agreements, which sections shallsurvive the termination of such agreements: (i) CDM Agreement—Articles III, VII and X, Sections 2.3 (to theextent necessary to enable PLC to fulfill its obligations to Edwards followingthe date hereof), 5.5, 5.6, 5.7, 8.1, 8.2, 9.3 and 9.4, and (ii) DistributionAgreement—Articles IX, X and XI, and Sections 4.2, 4.3, 4.5 and 8.3(a).

2.    In consideration of the foregoing, Edwardsagrees to make the following nonrefundable payments to PLC:

a.           Initial Payment. Within three (3) businessdays of the date hereof, $1,500,000 in cash;

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b.    Disposable Royalty Payments.

(i)     Calculatedmonthly and paid in cash within 30 days after the end of the subject month, anamount equal to [**] of all Net Sales of Disposable Products on or prior to thesecond anniversary of the date of this letter agreement.

(ii)    Calculatedmonthly and paid in cash within 30 days after the end of the subject month, anamount equal to [**] of all Net Sales of Disposable Products following thesecond anniversary of the date of this letter agreement.

(iii)   Withinthirty (30) days following the end of each calendar quarter, Edwards willprovide PLC with a statement that summarizes the Net Sales for the royaltypayments for such quarter.

(iv)   Notwithstandingthe foregoing, the aggregate amount paid pursuant to clauses (b)(i) and(b)(ii) above shall not exceed $1,700,000.

3.    “Net Sales” shall mean the actual invoicedsales recorded as revenues by Edwards or its Affiliates under its accountingpolicies (as approved by Edwards’ auditors), from the sale, rent, lease of orotherwise making available to third parties, not affiliated with Edwards,Disposable Products, net of any royalty paid to any third party (other thanPLC), and less the following, as applicable: refunds, discounts, credits allowed to purchasers for return ofDisposable Products or as reimbursement for damaged Disposable Products,freight, insurance, and other shipping charges, sales and use taxes, customsduties, and any other governmental tax or charge (except income taxes) imposedon or at the time of the production, importation, use, or sale of DisposableProducts, including any value added taxes (VAT), as adjusted for rebates andrefunds. For conversion of foreign currency to U.S. dollars with respect tosales of Disposable Products in a foreign currency, the conversion method andrate shall be the conversion method and rate used by Edwards to convert theapplicable sales into U.S. dollars for purposes of the preparation of Edwards’financial statements, such conversion to be calculated in accordance withgenerally accepted accounting principles in the United States, appliedconsistently.

                PLCshall have the following right to audit Edwards’ books and records to theextent necessary to verify Edwards’ calculation of Net Sales. PLC, through anindependent certified public accountant (provided that such independentcertified public accountant is not compensated on a contingency basis) or,alternatively, a senior PLC financial executive, subject in either case to awritten non-disclosure agreement with Edwards, shall have the right, duringnormal business hours and upon thirty (30) days advance written notice toEdwards, and no more often than once per calendar year, to inspect Edwards’ NetSales records specifically relating to Edwards’ Disposable Royalty Paymentobligations under this letter agreement. Edwards shall have the right to have arepresentative present at all such inspections. Further, such certified publicaccountant agrees to comply with all of Edwards’ safety and securityrequirements during any visits to Edwards’ facilities. In the event theexamination shows an underpayment, Edwards shall pay PLC the amounts underpaidplus interest on the underpayment at the Prime Rate published from time to timein the Wall Street Journal. PLC acknowledges that Edwards’ records containconfidential trade information. Except in connection with resolving issuesconcerning disputed Disposable Royalty Payments in accordance with the disputeresolution

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provisions in this letter,neither PLC nor its representatives shall at any time communicate to others oruse any facts or information obtained as a result of such inspection or auditof Edwards’ Net Sales records. Under no circumstances shall such independentcertified public accountant or such senior PLC financial executive provideother employees of PLC with any information regarding the identity of Edwards’customers or provide PLC with any copies of Edwards’ customer lists. PLC’s rightto inspect Edwards’ Net Sales records shall be limited to the current year forwhich Net Sales of the Disposable Products are payable and the immediatelypreceding one (1) calendar year period. Notwithstanding anything in thisletter agreement to the contrary, such audit right shall extend only one (1) calendaryear beyond the final royalty payment on Disposable Product Sales.

4.     Edwards and PLC (and/or PLC Parent) will attempt in good faith toresolve expeditiously any dispute, claim or controversy arising out of orrelating to this Agreement (the “Dispute”) promptly by negotiations betweenexecutives who have authority to settle the controversy and who are at a higherlevel of management than the persons with direct responsibility for theadministration of this Agreement. Either Party may give the other Party,written notice (the “Escalation Notice”) of any Dispute not resolved in thenormal course of business. Within 15 days after delivery of the EscalationNotice, the Party in receipt of the Escalation Notice shall submit to the othera written response. The Escalation Notice and the response thereto shallinclude (a) a statement of each Party’s position and a summary ofarguments supporting that position, and (b) the name and title of theexecutive who will represent that Party and of any other person who willaccompany the executive. Within 30 days after delivery of the EscalationNotice, the executives of both Parties shall meet at a mutually acceptable timeand place, and thereafter as often as they reasonably deem necessary, toattempt to resolve the Dispute. All reasonable requests for information made byone Party to the other will be honored. All negotiations pursuant to thisclause are confidential and shall be treated as compromise and settlementnegotiations for purposes of applicable rules of evidence. The Partiesshall attempt to resolve any Dispute pursuant to the procedure set forth inthis paragraph 4 for a period up to 60 days from the date of delivery of theEscalation Notice before resorting to other available remedies; *provided, however*, nothing contained inthis paragraph 4 shall prevent any Party from resorting to judicial process ifinjunctive or other equitable relief from a court is necessary to preventserious and irreparable injury to it or to others. The use of the procedure setforth in this paragraph 4 will not be construed under the doctrine of laches,waiver or estoppel to affect adversely any Party’s right to assert any claim ordefense.

5.    Neither Party nor or any of its Affiliates,shall issue or cause the publication of any press release or other announcementwith respect to the existence of, the terms, or implementation of this letteragreement or any documents contemplated hereby, without prior  consultation, including the reasonableopportunity to provide comments, with the other Parties, except as may berequired by law.

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If the foregoing accurately reflects our agreement, please sign in thespace provided below.

 
|        | 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 |

 

Agreed and accepted as ofthe date set forth above
| EDWARDS LIFESCIENCES LLC |                                                         |
|--------------------------|--------------------------------------------------------------|
|                     |                                                         |   |
| By:                      | /s/ John H.  Kehl, Jr.                                  |   |
| Name:                    | John H.  Kehl, Jr.                                      |   |
| Title:                   | Corporate Vice  President, Strategy and Business Development |   |

 

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