Document:

Exhibit 10.4

 

AMENDMENT AND WAIVER

 

This Amendment and Waiver (this “Amendment”), dated as of February 22, 2013, is made to the Securities Purchase Agreement, dated as of February 22, 2011, as amended by an Amendment and Waiver to Securities Purchase Agreement dated as of July 2, 2012 and as further amended by an Amendment and Waiver to Securities Purchase Agreement dated as of January 16, 2013 (the “Purchase Agreement”), between PLC Systems Inc., a Yukon Territory corporation (the “Company”) and GCP IV LLC (the “Holder”) and the Transactions Documents entered into in connection with the Purchase Agreement.  The Holder is the “Purchaser” under the Purchase Agreement.  Terms used as defined terms herein and not otherwise defined shall have the meanings provided therefor in the Purchase Agreement.

 

WHEREAS, pursuant to the Purchase Agreement, the Company issued (i) at the First Closing, the 5% Senior Secured Convertible Debenture due on February 22, 2014 in the aggregate principal amount of $4,000,000 (the “2011 Debenture”) and Common Stock purchase warrants to purchase up to 40,000,000 shares of Common Stock (the “2011 Warrants”), (ii) at the Second Closing, the 5% Senior Secured Convertible Debenture due on July 2, 2015 in the aggregate principal amount of $1,000,000 (the “2012 Debenture”) and Common Stock purchase warrants to purchase up to 10,000,000 shares of Common Stock (the “2012 Warrants” and collectively with the 2011 Warrants, the “Warrants”) and (iii) at the Third Closing, the 5% Senior Secured Convertible Debenture due on January 16, 2016 (the “2013 Debenture” and collectively with the 2011 Debenture and the 2012 Debenture, the “Debentures”).  For the purposes of clarification, the additional Common Stock purchase warrants to purchase up to 10,000,000 shares of Common Stock issued at the Second Closing (the “2012 Additional Warrants”) and Common Stock purchase warrants to purchase up to 2,500,000 shares of Common Stock (the “2013 Warrants”) issued at the Third Closing are not being amended nor are any provisions contained in the such warrants being waived, but rather such warrants are being cancelled;

 

WHEREAS, the Company wishes to engage in a private offering wherein the Company will issue to certain investors (the “New Investors”) up to $7,500,000, in the aggregate, of Common Stock and Common Stock purchase warrants (the “Initial New Investment Warrants”), along with the additional issuances of shares of Common Stock and warrants to purchase shares of Common Stock (the “Additional Investment Warrants” and collectively with the Initial New Investment Warrants, the “New Investment Warrants”) pursuant to the terms and conditions of that certain Securities Purchase Agreement dated as of the date hereof and substantially in the form attached hereto as Exhibit A (the “New Investment Agreement,”  such issuance and sale, the “New Investment”).  For the avoidance of doubt, the term “New Investment” shall be deemed to include the Palladium Warrants (as defined on Schedule 3.1(g) of the New Investment Agreement) (the “Palladium Warrants”) and the Right to Shares Letter Agreement

 

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between the Company and GCP IV, LLC and securities issued or issuable pursuant to such warrants or letter agreement; and

 

WHEREAS, the Company and the Holder wish to amend and waive certain terms and conditions of the Transaction Documents pursuant to the terms hereof;

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Holder agree as follows:

 

1.             Waivers.

 

(a)           Waiver of Variable Rate Transactions.  Solely for the purposes of enabling the consummation of the New Investment, the Holder hereby waives the Company’s prohibition of effecting or entering into an agreement to effect any issuance by the Company of Common Stock or Common Stock Equivalents for cash consideration (or a combination of units thereof) involving a Variable Rate Transaction.

 

(b)           Waiver of Negative Covenants of the Debentures.

 

i.          Solely for the purpose of issuing 3,180,942 shares of Common Stock, in the aggregate, to Mark R. Tauscher and Gregory W. Mann pursuant to the Company’s stock option plan, on the terms and conditions in the Company’s stock option plan as of the date hereof, the Holder hereby waives Section 7(i) of the Debentures.

 

ii.         Solely for the purpose of issuing the Palladium Warrants to Palladium Capital Advisors, LLC (or its designees) on the terms and conditions of such warrants, as of the date hereof, the Holder hereby waives Section 7(f) of the Debentures.

 

(c)           Consummation of New Investment.  Notwithstanding the foregoing, in the event that the Initial Closing (as defined in the New Investment Agreement) of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or before February 22, 2013 (the “New Investment Closing Date”), the waivers made by the Holder in this Section 1 shall no longer be applicable and in effect.

 

2.             Amendments.

 

(a)           Amendment to the Maturity Date of the Debentures.  The due date and the definition of “Maturity Date” in the 2011 Debentures and in the form of Debenture attached as Exhibit A to the Purchase Agreement is hereby amended to read “June 30, 2015.”

 

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(b)           Amendment to Anti-dilution.  The Holder hereby agrees to remove from the Debentures and Warrants (and the form of Debenture and form of Warrant attached as Exhibits A and B to the Purchase Agreement) the anti-dilution protection.  As such, each of the Debentures and the form of Debenture attached as Exhibit A to the Purchase Agreement is hereby amended to delete Section 5(b) thereof in its entirety and each of the Warrants and the form of Warrant attached as Exhibit B to the Purchase Agreement is hereby amended to delete Section 3(b) thereof in its entirety ; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000  is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and Section 5(b) of the Debentures and Section 3(b) of the Warrants shall remain in full force and effect.

 

(c)           Amendment to Exercise Price of Warrants.  The Holder and the Company hereby agree to reduce the Exercise Price of the 2011 Warrants and the 2012 Warrants to $0.098, subject to adjustment therein; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and the Exercise Price as of the date hereof of the 2011 Warrants and the 2012 Warrants the shall remain in full force and effect.  As such, Section 2(b) of the 2011 Warrants and the 2012 Warrants is hereby amended and restated in its entirety to read as follows:

 

“The exercise price per share of the Common Stock under this Warrant shall be $0.098, subject to adjustment hereunder (the “Exercise Price”).”

 

(d)           Amendment to Number of Warrant Shares.  The Holder and the Company hereby agree to increase the aggregate number of shares of Common Stock underlying the 2011 Warrants and the 2012 Warrants such that the aggregate number of Warrant Shares of the 2011 Warrants and 2012 Warrants is equal to 81,578,946 shares.  As such, each of the outstanding 2011 Warrants and 2012 Warrants is amended to replace the number of Warrant Shares on the first page thereof with the number of Warrant Shares indicated on Schedule I attached hereto and the aggregate number of Warrant Shares underlying the 2011 Warrants shall thereby be increased to 65,263,156 Warrant Shares and the aggregate number of Warrant Shares underlying the 2012 Warrants shall thereby be increased to 16,315,790; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and the number of Warrant Shares as of the date hereof shall remain the same.

 

(e)           Amendment to Cashless Exercise.  Section 2(c) of the 2011 Warrants and the 2012 Warrants shall be amended such that part “(A)” of the cashless exercise formula which currently reads as “= the VWAP on the Trading Day immediately

 

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preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise” is hereby amended to read “0.155 (subject to adjustment for reverse and forward stock splits and the like)”; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and Section 2(c) shall remain unchanged and in full force and effect.

 

(f)            Amendment to Exhibit J to Security Agreement.  Schedule J to the Security Agreement shall be amended to include thereon the agreements listed on Schedule II attached hereto; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and Schedule J to the Security Agreement shall remain unchanged and in full force and effect.

 

(g)           Amendment to Definition of Exempt Issuance.  The definition of Exempt Issuance shall be amended to include the shares of Common Stock issuable to the Holder pursuant to the Right to Shares Letter Agreement between the Company and the Holder dated as of the date hereof.  As such, the definition of Exempt Issuance is amended by inserting the following new clause (e) at the end of such definition:

 

“and (e) shares of Common Stock issuable pursuant to the Rights to Shares Letter Agreement between the Company and GCP IV LLC, dated as of February 22, 2013.”

 

;provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and the definition of Exempt Issuance shall remain unchanged and in full force and effect.

 

(h)           Additional Company Representations.  The Company has the requisite corporate power and authority to enter into this Amendment and otherwise to carry out its obligations hereunder.  The execution and delivery of this Amendment by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection therewith.  This Amendment has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other

 

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equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.  The waivers, agreements and obligations of the Holders set forth herein shall be null and void in the event the New Investment with gross cash proceeds of at least $4,000,000 is not consummated by February 22, 2013.

 

(i)            Additional Holder Representations.  The Holder represents and warrants to the Company that the Holder was the Purchaser at the First Closing, Second Closing and Third Closing and has not assigned, transferred or encumbered any of its rights under the Purchase Agreement or any of the Securities.

 

3.             Forbearance on Debentures.  From the date hereof until February 22, 2014, without the prior written consent from the majority of the investors in the New Investment Securities (based on initial subscription amounts thereunder), the Holder hereby agrees that it shall forbear from accelerating the maturity date of the Debentures due to an Event of Default (as defined in the Debentures); provided, however, such forbearance shall not limit the Holder from taking any such necessary action to protect and maintain its security interest in the Collateral (as defined in that certain Security Agreement between the Company and the Holder, dated as of February 22, 2011, as amended (the “Security Agreement”)) or any of its security interests provided for in the German Security Agreements (as defined in the Purchase Agreement), taking any action in the event of a Bankruptcy Event (as defined in the Debentures) or seeking equitable remedies to enforce its contractual rights against the Company and its subsidiaries under the Transaction Documents which do not include the right to compel the direct or indirect payment of Debenture principal.  Notwithstanding the foregoing, in the event that any investor in the New Investment other than Holder or its Affiliates brings an action against the Company or any subsidiary in respect of the New Investment except enforcement of the rights to receive liquidated damages or injunctive relief, such forbearance provided in this Section 3 shall no longer apply.  For clarity, this forbearance shall not prohibit the Holder from enforcing its rights with respect to obligations as an equity holder (including, without limitation, rights with respect to delivery of shares of Common Stock on conversions and exercises).

 

4.             Right of Participation.  The Holder hereby acknowledges that with regard to the New Investment as a Subsequent Financing, the Company is not in breach of its obligations in Section 4.12 of the Purchase Agreement, including timely delivering all required notices, and that the Holder has exercised the right to participate in the New Investment.

 

5.             Cancellation of Warrants.  The Company and Holder hereby agree that the 2012 Additional Warrants and the 2013 Warrants are hereby cancelled.  The Holder acknowledges and agrees that upon the execution and delivery of this Amendment by the Company and the consummation by it of the transactions contemplated hereby, the 2012 Additional Warrants and the 2013 Warrants will be deemed cancelled; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then

 

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this Section shall no longer be applicable and the 2012 Additional Warrants and the 2013 Warrants shall remain outstanding.

 

6.             No Additional Closings.  Notwithstanding the $250,000 raised by the Company in the Third Closing held on January 16, 2013, the Company and the Holder hereby agree that no additional Closings may occur pursuant to the Purchase Agreement and that the right to proceed with an additional Third Closing for up to $750,000 is hereby terminated; provided, however, that if the Initial Closing of the New Investment with gross cash proceeds of at least $4,000,000 is not consummated on or by the New Investment Closing Date, then this Section shall no longer be applicable and the right to proceed with an additional Third Closing for up to $750,000, subject to the terms and conditions of the Purchase Agreement, shall remain reserved.

 

7.             Fees and Expenses.  The Company agrees to reimburse Genesis Capital Advisors LLC $10,000 for its legal fees and expenses in connection herewith.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Amendment.

 

8.             Public Disclosure.  On or before 9:30 am (New York City time) on the first Trading Day immediately following the date hereof, the Company shall file a Current Report on Form 8-K, reasonably acceptable to the Holder disclosing the material terms of the transactions contemplated hereby and attaching this Amendment as an exhibit thereto. From and after the filing of such Current Report, the Company represents to the Holder that it shall have publicly disclosed all material, non-public information delivered to the Holder by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by this Amendment.

 

9.             Reference to the Purchase Agreement.  On and after the date hereof, each reference to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean and be a reference to the Purchase Agreement as amended hereby.  On and after the date hereof, each reference to “the Debentures” shall mean and be a reference to the Debentures as amended hereby.  On and after the date hereof, each reference to “the Warrants” shall mean and be a reference to the Warrants as amended hereby.  No reference to this Amendment need be made in any instrument or document at any time referring to the Purchase Agreement, the Debentures or the Warrants, and a reference to the Purchase Agreement, the Debentures or the Warrants in any such instrument or document shall be deemed to be a reference to the Purchase Agreement, the Debentures or the Warrants, all as amended hereby.

 

10.          Effect on Transaction Documents.  Except as expressly set forth above, all of the terms and conditions of the Purchase Agreement and the Transaction Documents shall continue in full force and effect after the execution of this Amendment and shall not be in any way changed, modified or superseded by the terms set forth herein.  Notwithstanding

 

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the foregoing, this Amendment shall be deemed for all purposes as an amendment to the Purchase Agreement as required to serve the purposes hereof, and in the event of any conflict between the terms and provisions of the Purchase Agreement, on the one hand, and the terms and provisions of this Amendment, on the other hand, the terms and provisions of this Amendment shall prevail.

 

11.          Amendments and Waivers. The provisions of this Amendment can be amended or waived in the manner permitted under the Purchase Agreement, subject to the consent of holders of at least a majority of the New Investment Securities then outstanding (calculated on an as exercised basis).

 

12.          Execution. This Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

13.          No Third-Party Beneficiaries.  The holders of New Investment Securities are made third party beneficiaries of this Agreement with rights of enforcement.

 

14.          Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Amendment shall be determined pursuant to the Governing Law provision of the Purchase Agreement.

 

15.          Entire Agreement.  This Amendment contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Amendment.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the date first indicated above.

 

 

	
 
    	
PLC   SYSTEMS INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
Agreed   to and Accepted:
    	
 
    
	
 
    	
 
    
	
PLC   MEDICAL SYSTEMS INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Mark R. Tauscher
    	
 
    	
 
    
	
Name:   Mark R. Tauscher
    	
 
    
	
Title:   President
    	
 
    
	
 
    	
 
    
	
PLC   SYSTEMAS MEDICOS INTERNACIONAIS
    	
 
    
	
(DEUTSCHLAND)   GMBH
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Vincent Puglisi
    	
 
    	
 
    
	
Name:   Vincent Puglisi
    	
 
    
	
Title:   Managing Director
    	
 
    

 

[SIGNATURE PAGE OF HOLDER FOLLOWS]

 

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[SIGNATURE PAGE OF HOLDERS TO PLCSF AMENDMENT]

 

 

	
Name   of Holder:
    	
 
    	
 
    
	
 
    	
 
    
	
Signature   of Authorized Signatory of Holder:
    	
 
    	
 
    
	
 
    	
 
    
	
Name   of Authorized Signatory:
    	
 
    	
 
    
	
 
    	
 
    
	
Title   of Authorized Signatory:
    	
 
    	
 
    
								

 

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Schedule I

 

	
Warrant
    	
 
    	
Amended Number of Warrant Shares
    
	
 
    	
 
    	
 
    
	
Warrant   No. R-1
    	
 
    	
[                                ]
    
	
 
    	
 
    	
 
    
	
Warrant   No. R-2
    	
 
    	
[                                ]
    

 

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Schedule II

 

Additions to Schedule J to Security Agreement

 

The New Investment Agreement.

 

The Escrow Agreement entered into in connection with the New Investment Agreement, dated as of the date hereof.

 

The Consulting Agreements between the Company and investor relations consultants entered into in connection with the New Investment Agreement, dated as of the date hereof.

 

The separate Securities Purchase Agreements of even date between GCP IV, LLC and the respective purchasers , Alpha Capital Anstalt, Barry Honig, Denville and Dover Fund LLC, GRQ Consultants, Inc. 401k, Brio Capital Master Fund Ltd. And Congregation Tifereth Israel, named therein, and acknowledged and agreed to by the Issuer;

 

11Exhibit 10.5

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into effective the 22nd day of February, 2013 by and between ZA Capital, LLC, with its principal place of business at PO Box 416 Penns Park PA 18943, (the “Consultant”), and PLC Systems Inc. (the “Client), with its principal place of business at 459 Fortune Boulevard, Milford, MA 01757.

 

WHEREAS, Consultant is in the business of providing services for management consulting, business advisory, shareholder information and public relations; and

 

WHEREAS, the Client is a public company, and deems it to be in its best interest to retain Consultant to render to the Client such services as described below; and

 

WHEREAS, Consultant is ready, willing and able to render such consulting and advisory services to Client.

 

NOW THEREFORE, in consideration of the mutual promises and covenants set forth in this Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Consulting Services.  The client hereby retains the Consultant as an independent consultant to the Client and the Consultant hereby accepts and agrees to such retention.  The services provided by the Consultant are:

 

(a)           PRODUCT DESCRIPTION: Public relations campaign that include: any content supplied by the Client, interviews and multi-media material, research reports, press releases, and other information as determined by the Client and Consultant.

 

(b)           PACKAGE INCLUDES:

 

a.     Content aggregation/editing (2.5% of budget*)

b.     The writing, design, and revisions of marketing materials with company management (5% of budget*)

c.     The coordination of third party vendors to disseminate marketing materials such as direct mail (35 % of budget*)

d.     Database Management (2.5% of budget*)

e.     Investor Website review and recommendations (2.5% of budget*)

f.     Presentation assessment and revisions (2.5% of budget*)

g.     Copywriting, replication and printing, shipping and delivery to distribution point (25% of budget*)

h.     All pre and post production labor (2.5% of budget*)

i.      Server and data usage (2.5% of budget*)

j.      Email marketing via ZA’s propriety databases (15% of budget*)

k.     Retention of third party research analyst and financial writers (5% of budget*)

 

*based on estimated spend (these amount are expected to change based on market conditions)

 

It is acknowledged and agreed by the Client that Consultant carries no professional licenses, and is not rendering legal advice or performing accounting services, nor acting as an investment advisor or brokerage/dealer within the meaning of the applicable state and federal securities laws.  The services of Consultant shall not be exclusive nor shall Consultant be required to render any specific number of hours or assign specific personnel to the Client or its projects.

 

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2.             Independent Contractor.  The Consultant agrees to perform its consulting duties hereto as an independent contractor.  Nothing contained herein shall be considered as creating an employer-employee relationship between the parties to this Agreement.  The Client shall not make social security, worker’s compensation or unemployment insurance payments on behalf of Consultant.  The parties hereto acknowledge and agree that Consultant cannot guarantee the results or effectiveness of any of the services rendered or to be rendered by Consultant.

 

Rather, Consultant shall conduct its operations and provide its services in a professional manner and in accordance with good industry practice. Consultant will use its best efforts and does not promise results.

 

3.             Time, Place and Manner of Performance.  The Consultant shall be available for advice and counsel to the officers and directors of the Client as such reasonable and convenient times and places as may be mutually agreed upon.  Except as aforesaid, the time, place and manner of performance of the services hereunder, including the amount of time to be allocated by the Consultant to any specific service, shall be determined at the sole discretion of the Consultant.

 

4.             Compensation.  In providing the foregoing services, Consultant shall be responsible for all costs incurred. Client shall pay Consultant for its services hereunder as follows:  $500,000 due upon execution and $500,000 due six months after the initial $500,000 payment.

 

5.             Consultant’s Representation.  Consultant (on its own behalf and on behalf of any and all related parties, affiliates, owners, members, employees, officers, and directors) agrees it (and such persons) will comply with all laws, rules and regulations related to the activities on behalf of the Client contemplated pursuant to this Agreement.  Consultant shall provide a prominent notice on all newsletters and websites/webcasts/interview materials and other communications with investors or prospective investors in which Consultant may be reasonably deemed to be giving advice or making a recommendation that Consultant has been compensated for its services and, if applicable, received or owns stock of the Client (directly or indirectly) specifically referencing Client by name and the number of shares received (directly or indirectly) and will profit from its promotional activities for Client, including the number of shares and whether it has or will be making sales during any period. Consultant agrees that it will not conceal at any time if it will, directly or indirectly, be selling shares while promoting the stock and recommending that investors purchase the stock of Client.  Consultant covenants and agrees that it will at all times engage in acts, practices and courses of business that comply with Section 17(a) and (b) of the Securities Act of 1933, as amended, as well as Section 10(b) of the Securities Exchange Act of 1934, as amended, and has adopted policies and procedures adequate to assure all of Consultant’s personnel are aware of the limitation on their activities, and the disclosure obligations, imposed by such laws and the rules and regulations promulgated thereunder.  Consultant is aware that the federal securities laws restrict trading in the Client securities while in possession of material non-public information concerning the Client as well as the Requirements of Regulation FD that prohibit communications of material non public information, and the requirements thereof in the event of an unintentional or inadvertent non public disclosure.  Consultant agrees to immediately inform Client in the event that an actual or potential Regulation FD disclosure has occurred and assist counsel in the method by which corrective steps should be taken.  Consultant acknowledges that with respect to any Client securities now or at any time hereafter beneficially owned by Consultant or any of its affiliates, that it will refrain from trading in the Client’s securities while he or any such affiliate is in possession of material non-public information concerning the Client, its financial condition, or its business and affairs or prospects.

 

6.             Termination.

 

(a)           Consultant’s relationship with the Client hereunder may be terminated for any reason whatsoever, with or without cause, at any time, by Client, upon three (3) days written prior notice.

 

(b)           This Agreement may be terminated by either party upon giving written notice to the other party if the other party is in default hereunder and such default is not cured within fifteen (15) days of receipt of written notice of such default.

 

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(c)           Consultant and Client shall have the right and discretion to terminate this Agreement should the other party in performing their duties hereunder, violate any law, ordinance, permit or regulation of any governmental entity, except for violations which either singularly or in the aggregate do not have of will not have a material adverse effect on the operations of the Client.

 

(d)           In the event of any termination hereunder all funds due to or paid to the Consultant through the date of termination shall be fully earned and non-refundable and the parties shall have no further responsibilities to each other except that the Client shall be responsible to make any and all payments if any, due to the Consultant through the date of the termination and the Consultant shall be responsible to comply with the provisions of Section 8 hereof.

 

7.             Confidentiality.  The Consultant recognizes and acknowledges that it has and will have access to certain confidential information of the Client and its affiliates that are valuable, special and unique assets and property of the Client and such affiliates.  The Consultant will not, during the term of this Agreement, disclose, without the prior written consent or authorization of the Client, any of such information to any person, for any reason or purpose whatsoever.  In this regard, the Client agrees that such authorization or consent to disclose may be conditioned upon the disclosure being made pursuant to a secrecy agreement, protective order, provision of statute, rule, regulation or procedure under which the confidentiality of the information is maintained in the hands of the person to whom the information is to be disclosed or in compliance with the terms of a judicial order or administrative process.

 

8.             Indemnification.  The Client shall protect, defend, indemnify and hold Consultant and its assigns and attorneys, accountants, employees, officers and director harmless from and against all losses, liabilities, damages, judgments, claims, counterclaims, demands, actions, proceedings, costs and expenses (including reasonable attorneys’ fees) of every kind and character resulting from, relating to or arising our of (a) the inaccuracy, non-fulfillment or breach of any representation, warranty, covenant or agreement made by the Client herein, or (b) negligent or willful misconduct, occurring during the term thereof with respect to any of the decisions made by the Client (c) a violation of state or federal securities laws, other than in the event of the Consultant’s gross negligence or willful misconduct.

 

The Consultant shall protect, defend, indemnify and hold Client and its assigns and attorneys, accountants, employees, officers and director harmless from and against all losses, liabilities, damages, judgments, claims, counterclaims, demands, actions, proceedings, costs and expenses (including reasonable attorneys’ fees) of every kind and character resulting from, relating to or arising out of (a) the inaccuracy, non-fulfillment or breach of any representation, warranty, covenant or agreement made by the Consultant herein, or (b) negligent or willful misconduct, occurring during the term thereof with respect to any of the decisions made by the Consultant (c) a violation of state or federal securities laws.

 

9.             Work Product.  It is agreed that all information and materials produced for the Client shall be deemed “work made for hire” and the property of the Client.

 

10.          Notices.  Any notices required or permitted to be given under this Agreement shall be sufficient if in writing and delivered or sent by registered or certified mail, or by Federal Express or other recognized overnight courier to the principal office of each party set forth above.

 

11.          Waiver of Breach.  Any waiver by either party or a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by any party.

 

11.          Assignment.  This Agreement and the right and obligations of the Consultant hereunder shall not be assignable without the written consent of the Client.

 

12.          Applicable Law.  It is the intention of the parties hereto that this Agreement and the performance hereunder and all suits and special proceedings hereunder be construed in accordance with and under and pursuant to the laws of the State of New York and that in any action, special proceeding or other proceedings that may be brought arising out of, in connection with or by reason of this Agreement, the law of the State of New York shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction on which any action or special proceeding may be instituted.

 

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13.          Severability.  All agreements and covenants contained herein are severable, and in the event any of them shall be held to be invalid by any competent court, the Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein.

 

14.          Entire Agreement.  This Agreement constitutes and embodies the entire understanding and agreement of the parties and supersedes and replaces all other or prior understandings, agreements and negotiations between the parties.

 

15.          Waiver and Modification.  Any waiver, alteration, or modification of any of the provisions of this Agreement shall be valid only if made in writing and signed by the parties hereto.  Each party hereto, may waive any of its rights hereunder without affecting a waiver with respect to any subsequent occurrences or transactions hereof.

 

16.          Binding Arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall be conducted in New York County, New York.

 

17.          Counterparts and Facsimile Signature.  This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Execution and delivery of this Agreement by exchange of facsimile copies bearing the facsimile signature of a party hereto shall constitute a valid and binding execution and delivery of this Agreement by such party.  Such facsimile copies shall constitute enforceable original documents.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement, effective as of the date set forth above.

 

 

	
CONSULTANT:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Za Capital, LLC
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ David Zazoff, President
    	
 
    	
DATE: February 22, 2013
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
CLIENT:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
PLC Systems Inc.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
Mark R. Tauscher,
    	
 
    	
DATE: February 22, 2013
    
	
 
    	
President and CEO
    	
 
    	
 
    

 

5

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