Exhibit 10.2


Confidential Materials
omitted and filed separately with the


Securities and Exchange
Commission.  Asterisks denote omissions.


March 9,
2006


 


Edwards Lifesciences LLC

One Edwards Way
Irvine, California 92614
Attention:  General Counsel


Gentlemen:


As
you know, Edwards Lifesciences LLC (“Edwards”), PLC Systems Inc. (“PLC Parent”)
and PLC Medical Systems, Inc. (“PLC”) are parties to a certain
Contribution, Development and Manufacturing Agreement (the “CDM Agreement”)
dated as of February 24, 2004, and a certain Distribution Agreement (the “Distribution
Agreement”), also dated as of February 24, 2004, pursuant to which, among
other things, PLC has agreed to develop and manufacture certain “Surgical
Products”, as defined in the CDM Agreement, and Edwards has agreed to
distribute and sell such products so developed and manufactured by PLC.


Edwards,
PLC and PLC Parent have agreed that it is in their respective best interests
for all rights and obligations of PLC in the development and manufacture of
Disposable Products as granted under the CDM Agreement and the Distribution
Agreement to be transferred back to Edwards, as set forth herein. Capitalized
terms not otherwise defined herein shall have the meanings set forth in the CDM
Agreement 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 Edwards
following the date hereof), and the Distribution Agreement are hereby
terminated, and each of the parties thereto hereby expressly agrees that
neither party shall have any liability or continuing obligation to the other on
account of such agreements, except such continuing obligations as are expressly
set forth in the following sections of such agreements, which sections shall
survive the termination of such agreements: 
(i) CDM Agreement—Articles III, VII and X, Sections 2.3 (to the
extent necessary to enable PLC to fulfill its obligations to Edwards following
the date hereof), 5.5, 5.6, 5.7, 8.1, 8.2, 9.3 and 9.4, and (ii) Distribution
Agreement—Articles IX, X and XI, and Sections 4.2, 4.3, 4.5 and 8.3(a).


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


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









 



 


b.    Disposable Royalty Payments.


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


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


(iii)   Within
thirty (30) days following the end of each calendar quarter, Edwards will
provide PLC with a statement that summarizes the Net Sales for the royalty
payments for such quarter.


(iv)   Notwithstanding
the 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 invoiced
sales recorded as revenues by Edwards or its Affiliates under its accounting
policies (as approved by Edwards’ auditors), from the sale, rent, lease of or
otherwise making available to third parties, not affiliated with Edwards,
Disposable Products, net of any royalty paid to any third party (other than
PLC), and less the following, as applicable: 
refunds, discounts, credits allowed to purchasers for return of
Disposable Products or as reimbursement for damaged Disposable Products,
freight, insurance, and other shipping charges, sales and use taxes, customs
duties, and any other governmental tax or charge (except income taxes) imposed
on or at the time of the production, importation, use, or sale of Disposable
Products, including any value added taxes (VAT), as adjusted for rebates and
refunds. 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’
financial statements, such conversion to be calculated in accordance with
generally accepted accounting principles in the United States, applied
consistently.


                PLC
shall have the following right to audit Edwards’ books and records to the
extent necessary to verify Edwards’ calculation of Net Sales. PLC, through an
independent certified public accountant (provided that such independent
certified public accountant is not compensated on a contingency basis) or,
alternatively, a senior PLC financial executive, subject in either case to a
written non-disclosure agreement with Edwards, shall have the right, during
normal business hours and upon thirty (30) days advance written notice to
Edwards, and no more often than once per calendar year, to inspect Edwards’ Net
Sales records specifically relating to Edwards’ Disposable Royalty Payment
obligations under this letter agreement. Edwards shall have the right to have a
representative present at all such inspections. Further, such certified public
accountant agrees to comply with all of Edwards’ safety and security
requirements during any visits to Edwards’ facilities. In the event the
examination shows an underpayment, Edwards shall pay PLC the amounts underpaid
plus interest on the underpayment at the Prime Rate published from time to time
in the Wall Street Journal. PLC acknowledges that Edwards’ records contain
confidential trade information. Except in connection with resolving issues
concerning disputed Disposable Royalty Payments in accordance with the dispute
resolution









 



 


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


4.     
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 paragraph 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 paragraph 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 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 or
defense.


5.    Neither Party nor or any of its Affiliates,
shall issue or cause the publication of any press release or other announcement
with respect to the existence of, the terms, or implementation of this letter
agreement or any documents contemplated hereby, without prior  consultation, including the reasonable
opportunity to provide comments, with the other Parties, except as may be
required by law.









 



 


If the foregoing accurately reflects our agreement, please sign in the
space 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 of
the 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