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


 




 





 

















 


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

  	
   

  



 


ii

















 


	
  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

  	
   

  



 


iii

















 


	
  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

  	
   

  



 


iv

















 


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).


 


1

















 


“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.


 


2

















 


“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

















 


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

















 


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

















 


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

















 


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

















 


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


 


8

















 


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.


 


9

















 


(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

















 


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


 


11

















 


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

















 


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


 


13

















 


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).


 


14

















 


(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,


 


15

















 


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,


 


16

















 


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


 


17

















 


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.


 


18

















 


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.


 


19

















 


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


 


20

















 


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