Document:

Exhibit 10. 2

 

Confidential Materials omitted
and filed separately with the

Securities and Exchange Commission. 
Asterisks denote omissions.

 

 

 

 

CONTRIBUTION, DEVELOPMENT AND

MANUFACTURING AGREEMENT

 

by and among

 

PLC SYSTEMS,
INC.,

 

PLC MEDICAL
SYSTEMS, INC.

 

AND

 

EDWARDS
LIFESCIENCES LLC

 

dated as of
February 24, 2004

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  DEFINITIONS

  	
   

  	
   

  
	
  ARTICLE II
  CONTRIBUTION OF ASSETS

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Contribution of Assets

  	
   

  	
   

  
	
  Section 2.2

  	
   

  	
  [Intentionally deleted.]

  	
   

  	
   

  
	
  Section 2.3

  	
   

  	
  License of Intellectual Property and
  Know-How

  	
   

  	
   

  
	
  Section 2.4

  	
   

  	
  Rights Upon Termination by Edwards

  	
   

  	
   

  
	
  Section 2.5

  	
   

  	
  Rights Upon Termination by PLC

  	
   

  	
   

  
	
  Section 2.6

  	
   

  	
  Transition Period

  	
   

  	
   

  
	
  ARTICLE III
  PROSECUTION AND MAINTENANCE OF RIGHTS IN INVENTION(S)

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Rights To Invention(s)

  	
   

  	
   

  
	
  Section 3.2

  	
   

  	
  Disclosure of Invention(s)

  	
   

  	
   

  
	
  Section 3.3

  	
   

  	
  Prosecution and Maintenance of Patents and
  Patent Applications

  	
   

  	
   

  
	
  Section 3.4

  	
   

  	
  Alternate Responsibility for Prosecution

  	
   

  	
   

  
	
  Section 3.5

  	
   

  	
  Power of Attorney

  	
   

  	
   

  
	
  Section 3.6

  	
   

  	
  Enforcement of Patents

  	
   

  	
   

  
	
  ARTICLE IV
  DEVELOPMENT OF SURGICAL PRODUCTS

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Scope of Collaboration

  	
   

  	
   

  
	
  Section 4.2

  	
   

  	
  Steering Committee

  	
   

  	
   

  
	
  Section 4.3

  	
   

  	
  Responsibilities of the Steering Committee

  	
   

  	
   

  
	
  Section 4.4

  	
   

  	
  Project Manager

  	
   

  	
   

  
	
  Section 4.5

  	
   

  	
  Meetings

  	
   

  	
   

  
	
  Section 4.6

  	
   

  	
  Decision Making Criteria

  	
   

  	
   

  
	
  Section 4.7

  	
   

  	
  Dispute Resolution

  	
   

  	
   

  
	
  Section 4.8

  	
   

  	
  Selection of Trademarks

  	
   

  	
   

  
	
  Section 4.9

  	
   

  	
  PLC Investment in Additional Surgical
  Products

  	
   

  	
   

  
	
  ARTICLE V
  MANUFACTURE OF SURGICAL PRODUCTS

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Appointment

  	
   

  	
   

  

 

i

 

	
  Section 5.2

  	
   

  	
  Legal Requirements

  	
   

  	
   

  
	
  Section 5.3

  	
   

  	
  Facilities

  	
   

  	
   

  
	
  Section 5.4

  	
   

  	
  Inspection

  	
   

  	
   

  
	
  Section 5.5

  	
   

  	
  Adverse Experience Reporting

  	
   

  	
   

  
	
  Section 5.6

  	
   

  	
  Records

  	
   

  	
   

  
	
  Section 5.7

  	
   

  	
  Recall

  	
   

  	
   

  
	
  ARTICLE VI
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Representations and Warranties of Edwards

  	
   

  	
   

  
	
  Section 6.2

  	
   

  	
  Representations and Warranties of PLC and
  PLC Parent

  	
   

  	
   

  
	
  Section 6.3

  	
   

  	
  Edwards’ Covenants

  	
   

  	
   

  
	
  Section 6.4

  	
   

  	
  PLC and PLC Parent’s Covenants

  	
   

  	
   

  
	
  Section 6.5

  	
   

  	
  Warranty Disclaimer

  	
   

  	
   

  
	
  ARTICLE VII
  INDEMNITY

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Indemnification by PLC and PLC Parent

  	
   

  	
   

  
	
  Section 7.2

  	
   

  	
  Indemnification by Edwards

  	
   

  	
   

  
	
  Section 7.3

  	
   

  	
  Indemnification Procedures

  	
   

  	
   

  
	
  Section 7.4

  	
   

  	
  Limitation of Liability

  	
   

  	
   

  
	
  ARTICLE VIII OTHER AGREEMENTS

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  Confidential Information Generally

  	
   

  	
   

  
	
  Section 8.2

  	
   

  	
  Restrictions on Confidential Information

  	
   

  	
   

  
	
  Section 8.3

  	
   

  	
  Publicity

  	
   

  	
   

  
	
  ARTICLE IX TERM; TERMINATION

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  Term of this Agreement

  	
   

  	
   

  
	
  Section 9.2

  	
   

  	
  Termination of this Agreement

  	
   

  	
   

  
	
  Section 9.3

  	
   

  	
  Effect of Termination

  	
   

  	
   

  
	
  Section 9.4

  	
   

  	
  Survival

  	
   

  	
   

  
	
  ARTICLE X
  MISCELLANEOUS

  	
   

  	
   

  
	
  Section 10.1

  	
   

  	
  Relationship

  	
   

  	
   

  
	
  Section 10.2

  	
   

  	
  No Conflict

  	
   

  	
   

  
	
  Section 10.3

  	
   

  	
  Governing Law

  	
   

  	
   

  

 

ii

 

	
  Section 10.4

  	
   

  	
  Escalation

  	
   

  	
   

  
	
  Section 10.5

  	
   

  	
  Jurisdiction and Consent to Service

  	
   

  	
   

  
	
  Section 10.6

  	
   

  	
  Notices

  	
   

  	
   

  
	
  Section 10.7

  	
   

  	
  Interpretation

  	
   

  	
   

  
	
  Section 10.8

  	
   

  	
  Severability

  	
   

  	
   

  
	
  Section 10.9

  	
   

  	
  Counterparts

  	
   

  	
   

  
	
  Section 10.10

  	
   

  	
  Entire Agreement; No Third Party
  Beneficiaries

  	
   

  	
   

  
	
  Section 10.11

  	
   

  	
  Amendments and Modifications; Waivers and
  Extensions

  	
   

  	
   

  
	
  Section 10.12

  	
   

  	
  Assignment

  	
   

  	
   

  
	
  Section 10.13

  	
   

  	
  Exhibits and Schedules

  	
   

  	
   

  
	
  Section 10.14

  	
   

  	
  Expenses

  	
   

  	
   

  
	
  Section 10.15

  	
   

  	
  Force Majeure

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedules
  and Exhibits

  	
   

  	
   

  

 

iii

 

CONTRIBUTION,
DEVELOPMENT

AND MANUFACTURING AGREEMENT

 

This CONTRIBUTION, DEVELOPMENT AND MANUFACTURING AGREEMENT
(“Agreement”) is entered into as of February 24, 2004 (the “Effective
Date”), 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, Edwards owns assets related to products for the surgical
treatment of atrial fibrillation and atrial flutter, including a laser and
related disposable products, and desires to contribute certain of such assets
to PLC for the purposes of developing and manufacturing “Surgical Products” (as
defined herein) by PLC;

 

WHEREAS, in addition to the contribution of assets to PLC, Edwards will
license to PLC intellectual property and know-how and shall collaborate with
PLC in the development and manufacturing of Surgical Products, subject to the
terms and conditions of this Agreement;

 

WHEREAS, PLC has experience in the development and manufacturing of
laser related products for medical uses and desires to develop and manufacture
Surgical Products that are derived from the assets to be contributed by Edwards
to PLC pursuant to this Agreement and the technology and know-how to be
licensed from Edwards to PLC pursuant to, and subject to the terms and
conditions of this Agreement; and

 

WHEREAS, concurrently with the execution of this Agreement, Edwards,
PLC and PLC Parent shall enter into a Distribution Agreement (the “Distribution
Agreement”) that will provide for the distribution and sale by Edwards of any
Surgical Products developed and manufactured pursuant to this Agreement;

 

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:

 

1

 

ARTICLE I

DEFINITIONS

 

As used in this Agreement, the following terms shall have the following
meanings:

 

“Additional Period” shall have the meaning set forth in
Schedule 2.6.

 

“Additional Surgical Products” shall have the meaning set forth under
the definition of Surgical Products below.

 

“Affiliate” of any Person means any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person.  For purposes of the definition of affiliate, “control” has the
meaning specified in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as in effect on
the date of this Agreement.

 

“Agreement” shall have the meaning specified in the Recitals.

 

“Applicable Regulatory Approval” means the approval or clearance
received from any Applicable Regulatory Authority to market and sell the
Surgical Products in the Territory, including, without limitation, the approval
or clearance to market and sell expanded or enhanced indications.  By way of example, and not by limitation, in
the United States, an FDA approval of a pre-market approval application
(“PMA”)) or a clearance of a pre-market notification (“510(k)”) or approval of
an investigational device exemption (“IDE”) may be an Applicable Regulatory
Approval.

 

“Applicable Regulatory Authority” means any agency or regulatory
authority or its designee having authority over the approval and sale of the
Surgical Products within the Territory. 
By way of example, and not by limitation, in the United States, the FDA
is an Applicable Regulatory Authority.

 

“Bankruptcy” of any Party means any of the following events:

 

(a)                                  Such Party admits it
is generally unable to pay its debts as they come due;

 

(b)                                 The institution by
such Party of proceedings to be adjudicated as bankrupt, or insolvent or the
consent by such Party to the institution of bankruptcy or Insolvency
proceedings against such Party or the filing by such Party of a petition or
answer or consent seeking reorganization or release under any applicable law,
or the consent by such Party to the filing of any such petition or the
appointment of a receiver, liquidator, assignee, trustee, or other similar
official of such Party, or of any substantial part of such Party’s property, or
the making by such Party of an assignment for the benefit of creditors; or

 

2

 

(c)                                  The institution,
consent, or filing by (or against) such Party of any composition, reorganization,
or bankruptcy liquidation proceedings under applicable law provided that in the
case of any such involuntary proceeding, such proceeding is not dismissed
within sixty (60) days.

 

“CardioFocus License” means that certain exclusive license agreement
between Edwards Lifesciences LLC and CardioFocus, Inc., dated December 27,
2002, attached hereto as Exhibit B.

 

“Claim” means any claim, action, arbitration, proceeding, review,
audit, hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, informal or threatened).

 

“Clinical Studies” means those studies designed to obtain clinical data
in support of a Product approval or clearance (for example, pre-market approval
application (“PMA”) or 510(k) clearance) as required by the FDA or other
Regulatory Authority.

 

“Complaint” means any written, electronic, or oral communication that
alleges deficiencies related to the identity, quality, durability, reliability,
safety, effectiveness, or performance of a Product after it is released for
distribution.

 

“Confidential Information” means all information which is disclosed by
a Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) 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.  “Confidential Information”
does not include 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
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 Disclosing
Party.

 

“Contributed Assets” shall have the meaning set forth in
Section 2.1.

 

“Development Plans” shall have the meaning set forth in
Section 4.4.

 

“Disclosing Party” shall have the meaning set forth above in the
definition of Confidential Information.

 

“Dispute” shall have the meaning set forth in Section 10.4.

 

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

 

“Edwards Copyright Rights” means all (a) U.S. and foreign copyrights
and all other similar or related rights, whether statutory or arising under
common law, owned by or

 

3

 

licensed to Edwards Parent or its Subsidiaries relating to the Field of
Use (whenever such copyrights, applications or registrations are filed or
issued), or that may result from Edwards Intellectual Property, (b) copyright
applications and registrations, and certificates of copyright pertaining
thereto, including but not limited to, copyright registrations and
applications, and (c) any extensions and renewals of any of the foregoing.

 

“Edwards Indemnitees” means Edwards and its directors, officers,
employees, Affiliates and agents.

 

“Edwards Intellectual Property” means Edwards Technology and Trade
Secrets, Edwards Patents, the CardioFocus License and Edwards Copyright Rights.

 

“Edwards Parent” shall mean Edwards Lifesciences Corporation, a
Delaware corporation.

 

“Edwards Patents” means (a) all U.S. and foreign patents and patent
applications owned by or licensed to Edwards Parent or its Subsidiaries
relating to the Field of Use (whenever such patents or patent applications are
filed or issued), or that may result from any of Edwards Intellectual Property,
together with any patents that may issue based thereon; including but not
limited to the patents and patent applications set forth on Exhibit A1 and
Exhibit A2 of the CardioFocus License, (b) all foreign counterpart,
continuation, divisional, continuation-in-part, re-issue and substitution
applications that may be filed by or for the benefit of Edwards based on the
foregoing, together with any patents that may issue based thereon.

 

“Edwards Regulatory Plans” shall have the meaning set forth in
Section 4.1(a)(iv).

 

“Edwards Technology and Trade Secrets” means all inventions,
discoveries, formulas, processes, methods, designs, techniques, developments,
technology, and related improvements, whether or not patentable or
copyrightable, and any work that incorporates, is based upon, derived from, or
otherwise uses any of the foregoing, including, without limitation, all
Information, and any trade secret or other intellectual property rights in any
of the foregoing, owned by or licensed to Edwards Parent or its Subsidiaries,
that relate to the Field of Use.

 

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

 

“Encumbrance” means any claim, charge, easement, encumbrance lease,
covenant, security interest, lien, option, pledge, rights of others (including,
but not limited to, options and rights of first refusal), or restriction
(whether on sale, transfer, disposition or otherwise), whether imposed by
agreement, understanding, law, equity or otherwise.

 

“Escalation Notice” shall have the meaning set forth in Section 10.4.

 

“ETL” shall have the meaning set forth in Section 4.1(b)(iii).

 

4

 

“FDA” means the United States Food and Drug Administration and any
successor agency thereto.

 

“Field of Use” means the surgical treatment of atrial fibrillation and
atrial flutter, including, without limitation, minimally invasive surgical
treatment of atrial fibrillation and atrial flutter.

 

“First Amendment to TMR Distribution Agreement” means that certain
First Amendment to Distribution Agreement, dated as of the date of this
Agreement, by and among Edwards, PLC Parent and PLC.

 

“First Amendment to Shareholder Agreement” means that certain First
Amendment to Shareholders Agreement, dated as of the date of this Agreement, by
and among Edwards Lifesciences Corporation and PLC Parent.

 

“Force Majeure Event” shall have the meaning set forth in
Section 10.15.

 

“Governmental Entity” means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.

 

“Indemnified Party” shall have the meaning set forth in
Section 7.3.

 

“Indemnifying Party” shall have the meaning set forth in
Section 7.3.

 

“Initial Surgical Products” shall have the meaning set forth in the
definition of Surgical Products below.

 

“Intellectual Property” means all intellectual property rights of any
nature or form of protection of a similar nature or having equivalent or
similar effect to any of the foregoing, including, without limitation:  (a) inventions, discoveries, processes,
designs, techniques, developments, technology, and related improvements,
whether or not patentable; (b) United States patents, patent applications,
divisionals, continuations, reissues, renewals, registrations, confirmations,
re-examinations, certificates of inventorship, extensions, and the like, and
any provision applications of any such patents or patent applications, and any
foreign or international equivalent of any of the foregoing; (c) any word,
name, symbol, color, designation, or device or any combination thereof,
including, without limitation, any United States or pending trademark, trade
dress, service mark, service name, trade name, brand name, logo, domain name,
or business symbol, and any foreign or international equivalent of any of the
foregoing and all goodwill associated therewith; (d) any work, whether or not
registered in the United States or elsewhere, that incorporate, is based upon,
derived from, or otherwise uses any intellectual property, including, without
limitation, mechanical and electronic design drawings (including, without
limitation, computer-aided design files), specification, software (including,
without limitation,

 

5

 

documentation and object and source code listing), processes, technical
or engineering data, test procedures, schematics, writings, materials,
products, artwork, packaging and advertising materials; and (e) technical,
scientific, and other know-how and information, trade secrets, knowledge,
technology, means, methods, processed, practices, formulas, assembly
procedures, computer programs, apparatuses, specifications, books, records,
production data, publications, databases, reports, manuals, data and results,
in written, electronic, or any other form not known or hereafter developed.

 

“Invention(s)” as used herein shall include, without restriction or
limitation, any and all devices, processes (including without limitation
processes of using devices or of manufacturing such devices), compositions of
matter, computer software, chemical formulations or compositions or products
whether patentable or unpatentable, and any and all written materials or other
works which may be subject to copyright, which are reduced to practice,
conceived or written during the Term of this Agreement, which is/are based upon
any Edwards Intellectual Property, or developed as a result of work done by
either or both Parties under this Agreement.

 

“Law” means a constitutional provision, statute, or other law, rule,
regulation, or interpretation of any Governmental Entity and any Order.

 

“Legal Requirements” means all laws, statutes, ordinances, codes,
rules, regulations, published standards, permits, judgments, decrees, writs,
injunctions, rulings, orders and other requirements of all Public Authorities
and shall include, without limitation, all applicable requirements of QSR/ISO
and all Legal Requirements applicable to the import or export of the Surgical
Products to any destination where they are to be delivered pursuant to
Section 6.1 hereof.

 

“Losses” means all Claims, losses, liabilities, damages, costs,
obligations, assessments, penalties and interest, demands and expenses
(including, without limitation, actual attorneys’ fees), whether direct or
indirect, known or unknown, absolute or contingent (including, without
limitation, settlement costs and any legal, accounting and other expenses for
investigation or defending any Claims).

 

“Major Decisions” shall have the meaning set forth in Section 4.3.

 

“Marketing/Clinical Plans” shall have the meaning set forth in
Section 4.1(a)(vi).

 

“Marketing Studies” means those studies conducted after Product
approval or clearance designed to enhance or further develop a market.

 

“Net Sales” shall have the meaning set forth in Section 2.4(b).

 

“Order” means any decree, injunction, judgment, order, ruling,
assessment or writ.

 

6

 

“Party” means Edwards, PLC or PLC Parent and “Parties” means
collectively, Edwards, PLC and PLC Parent.

 

“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 Indemnitee(s)” means any or all of PLC, PLC Parent and their
respective directors, officers, employees, Affiliates and agents.

 

“PLC Intellectual Property” means any Intellectual Property owned by or
licensed to PLC or PLC Parent but does not include the Intellectual Property
licensed to PLC pursuant to this Agreement.

 

“PLC Regulatory Plans” shall have the meaning set forth in
Section 4.1(b)(iii).

 

“Pre-Clinical Studies” shall have the meaning set forth in
Section 4.1(b)(v).

 

“Products” means products, processes, technology and services, along
with accessories related to the use thereof.

 

“Project Manager” shall have the meaning set forth in Section 4.4.

 

“Public Authority” means any supranational, national, regional, state
or local government, court, governmental agency, authority, board, bureau,
instrumentality or regulatory body, and shall include, without limitation, the
FDA.

 

“QSR/ISO” means the Quality System Regulation, as such term is defined
by the FDA which is in force and effect or hereafter adopted by the FDA, and
the ISO 9001 requirements as established for the European Community, or other
applicable regulatory requirements and standards, as amended or supplemented
from time to time.

 

“Receiving Party” shall have the meaning set forth above in the
definition of Confidential Information.

 

“Roles and Responsibilities” shall have the meaning set forth in
Section 4.1.

 

“Steering Committee” or “SC” shall have the meaning set forth in
Section 4.2.

 

“Subsidiaries” means any Person controlled directly or indirectly by
Edwards Parent.

 

“Surgical Products” means Products related to or with applications in
the Field of Use.  A list of initial
Surgical Products is set forth in Schedule 1.1 (“Initial Surgical
Products”).

 

7

 

The Parties may identify additional Surgical Products from
time-to-time.  Such Additional Surgical
Products shall be set forth in Schedule 1.2 (“Additional Surgical
Products”), which the Parties may supplement from time-to-time after the
Effective Date.

 

“Temporary Outside Member” shall have the meaning set forth in
Section 4.7.

 

“Term of this Agreement” shall have the meaning set forth in
Section 9.1.

 

“Territory” means the entire world.

 

“Transaction Documents” means this Agreement, the Distribution
Agreement, the First Amendment to TMR Distribution Agreement and the First
Amendment to Shareholders Agreement and all related agreements and documents,
collectively.

 

“Transactions” means the transactions contemplated by the Transaction
Documents.

 

“Transition Period” shall have the meaning set forth in
Schedule 2.6.

 

“Transition Products” shall have the meaning set forth in
Schedule 2.6.

 

“UL” shall have the meaning set forth in Section 4.1(b)(iii).

 

ARTICLE II

CONTRIBUTION OF ASSETS

 

Section 2.1                                      Contribution
of Assets.  In consideration of
PLC’s agreements contained herein, Edwards hereby contributes, assigns,
transfers, conveys and delivers to PLC, and PLC acquires and accepts from
Edwards, all assets of Edwards listed on Schedule 2.1 (the “Contributed
Assets”) in accordance with the delivery schedule set forth in
Schedule 2.1.  In furtherance of the
contribution of the Contributed Assets, concurrently with the execution of this
Agreement, Edwards and PLC shall execute a Bill of Sale and Assignment in the
form of Exhibit A.  The Contributed
Assets are contributed by Edwards to PLC free and clear of all Encumbrances,
except as described in Schedule 2.1. 
PLC shall have no obligation to make any cash payment to Edwards for the
Contributed Assets.  Delivery of certain
of the Contributed Assets to PLC as indicated on Schedule 2.1 will take
place as soon as practicable following the completion of the Transition Period
pursuant to Section 2.6

 

Section 2.2                                      [Intentionally
deleted.]

 

8

 

Section 2.3                                      License
of Intellectual Property and Know-How. 
Except as described in the following sentence, subject to the terms and conditions
of this Agreement, Edwards hereby grants to PLC and its Affiliates a
royalty-free, exclusive limited license in, to and under Edwards Intellectual
Property and to Edwards’ rights in the Invention(s), with the right to
sublicense, to develop, make, have made and use Surgical Products in the
Territory during the Term of this Agreement for the sole purpose of supplying
said Surgical Products (including any Surgical Products offered by Edwards and
accepted by PLC pursuant to Section 2.2 of the Distribution Agreement) to
Edwards in accordance with the Distribution Agreement.  Notwithstanding the foregoing, the license
granted by Edwards in the previous sentence shall be co-exclusive with Edwards
during the Transition Period and will become exclusive to PLC and its
Affiliates as soon as practicable following completion of the Transition Period
but no later than expiration of the Additional Period.

 

Section 2.4                                      Rights
Upon Termination by Edwards.  In the
event that Edwards terminates the Agreement pursuant to either
Section 9.2(c), 9.2(d) or 9.2(e) below, or in the event PLC terminates the
Agreement pursuant to Section 9.2(b), Edwards shall grant to PLC the
following license:

 

(a)                                  Edwards
hereby grants to PLC and its Affiliates an exclusive, irrevocable, worldwide,
perpetual license in, to and under Edwards Intellectual Property and to
Edwards’ rights in the Invention(s), with the right to sublicense, to develop,
make, have made, use, import, offer for sale and sell Surgical Products
(including any Surgical Products offered by Edwards and accepted by PLC
pursuant to Section 2.2 of the Distribution Agreement at the time of, or
prior to, such termination) in the Territory, and PLC hereby accepts the
license granted under this Section 2.4 and in consideration therefore
agrees to pay to Edwards a royalty of [**] percent ([**]%) of the Net Sales,
defined below, of any Surgical Product that but for the license granted under
this Section 2.4 would infringe a valid, unexpired claim of any of the
Edwards Patents, or a patent that issues on any of the Invention(s).

 

(b)                                 “Net
Sales” shall mean the actual proceeds received by PLC or its Affiliates from
the sale, rent, lease of or otherwise making available to third parties, not
affiliated with PLC, Surgical Products, net of any royalty paid to any third
party, and less the following, to the extent the same are credited or deducted
from the sales:  refunds, discounts,
credits allowed to purchasers for return of Surgical Products or as
reimbursement for damaged Surgical Products, freight, insurance, and other
shipping charges, sales and use taxes, customs duties, and any other
governmental tax or charge (except income taxes) imposed on or at the time of
the production, importation, use, or sale of Surgical Products, including any
value added taxes (VAT), as adjusted for rebates and refunds.

 

Section 2.5                                      Rights
Upon Termination by PLCIn the event that PLC terminates this Agreement
pursuant to either Section 9.2(c) or 9.2(d), or in the event Edwards
terminates this Agreement pursuant to Section 9.2(b), then PLC shall grant
to Edwards the same rights granted to Edwards pursuant to Sections 6.3 and 6.5
of the Distribution Agreement as though a

 

9

 

“Supply Breach” (as defined in the Distribution Agreement) had occurred
pursuant to Section 6.4 of the Distribution Agreement (without regard to
Section 6.4(b) of the Distribution Agreement).

 

Section 2.6                                      Transition
Period.  Edwards and PLC understand
and agree that during the Transition Period Edwards shall manufacture
Transition Products which may be sold by Edwards during the Transition Period
and the Additional Period without being subject to the Distribution
Agreement.  Schedule 2.6 describes
the roles and responsibilities of the Parties during the Transition Period, and
other terms and conditions of the Transition Period, which Schedule is
subject to amendment or modification from time to time by the SC.

 

ARTICLE III

PROSECUTION AND MAINTENANCE OF RIGHTS IN INVENTION(S)

 

Section 3.1                                      Rights
To Invention(s).  Any and all
Invention(s) shall be jointly owned by Edwards and PLC, which shall be effected
in accordance with the assignments jointly to Edwards and PLC described in  Section 6.3(c) and 6.4(c) of this
Agreement.  Such ownership shall be in
accordance with 35 USC 262 of the U.S. patent laws in the United States, and
with no obligation to obtain the consent of, or to provide an accounting to,
the other Party with respect to the Invention(s) in every other jurisdiction in
the Territory, provided, however, that Edwards shall have the exclusive right
to the Invention(s) in the Field of Use. 
PLC agrees to grant to Edwards and hereby grants to Edwards an
exclusive, irrevocable, worldwide, perpetual, royalty-free license, with the
right to grant sublicenses, in, to and under any and all rights to such
Invention(s) in the Field of Use, including rights under the patent or
copyright laws of the United States or any other country, to make, have made,
import, use, lease, offer to sell, sell, and/or otherwise dispose of Products
in the Field of Use.  Each of the
Parties further agrees to use reasonable efforts to protect the confidentiality
of the Invention(s).

 

Section 3.2                                      Disclosure
of Invention(s).  PLC shall promptly
disclose to Edwards each such Invention within thirty (30) days of conceiving
and/or reducing to practice such Invention and, Edwards shall promptly disclose
to PLC each such Invention within thirty (30) days of conceiving and/or
reducing to practice such Invention. 
The Parties intend that there be timely and full exchange of information
arising from work performed under this Agreement.  Each Party shall promptly disclose to the other Party any data or
development that it reasonably believes would or could have a material effect,
whether positive or negative, on the development or sale of Surgical Products.

 

Section 3.3                                      Prosecution
and Maintenance of Patents and Patent Applications.  Subject to review by the Steering Committee,
Edwards will evaluate Invention(s) disclosed pursuant to Section 3.2 and
determine the advisability of filing patent applications directed to any
Invention(s).  Edwards shall, at its
expense, diligently file, prosecute, issue and maintain patents, patent
applications or other forms of intellectual property rights or registrations
that embody, express or are directed to Invention(s), according to its own
internal standards and for effectively covering other inventions made by
employees or consultants.  Edwards will
submit a

 

10

 

substantially complete draft of each patent application to PLC prior to
filing with such advance notice as it reasonably can under the
circumstances.  The Parties will confer
with each other regarding the prosecution of such patent applications.  Upon Edwards’ request and at Edwards’
expense, PLC shall provide reasonable assistance to Edwards, or anyone it
designates, with the filing and prosecution of any patent or copyright
application in any country in the world. 
PLC will execute all papers and do all things which may be necessary or
advisable, in the reasonable opinion of Edwards, to prepare, file and prosecute
such applications.

 

Section 3.4                                      Alternate
Responsibility for Prosecution.  In
the event that Edwards determines that it will not file, prosecute, issue or
maintain, a patent or patent application directed to any Invention(s) in any
country it shall so notify PLC on a timely basis.  PLC shall then have the right, but not the obligation, to assume
responsibility, at its own expense, for such patent or patent application.  Upon PLC’s request and at PLC’s expense,
Edward shall provide reasonable assistance to PLC, or anyone it designates,
with the filing and prosecution of any patent or copyright application in any
country in the world.  Edwards will
execute all papers and do all things which may be necessary or advisable, in
the reasonable opinion of PLC, to prepare, file and prosecute such
applications.

 

Section 3.5                                      Power
of Attorney.  If for any reason
Edwards is unable to obtain PLC’s execution of any paper necessary to prepare,
file and/or prosecute any patent or copyright application in any Invention(s),
PLC hereby conveys to Edwards its power of attorney only for the purpose of
executing any such papers necessary to prepare, file and/or prosecute such
applications and/or maintain such patent or copyright.  Pursuant to Section 3.4 above, if PLC
assumes responsibility for a patent or a copyright in any Invention(s) and if
for any reason PLC is unable to obtain Edward’s execution of any paper
necessary to prepare, file and/or prosecute any patent or copyright application
in such Invention(s), Edwards hereby conveys to PLC its power of attorney only
for the purpose of executing any such papers necessary to prepare, file and/or
prosecute such applications and/or maintain such patent or copyright.

 

Section 3.6                                      Enforcement
of Patents.  Edwards and PLC may,
but shall not be required to, prosecute any alleged infringement or threatened
infringement of a patent directed to any Invention(s) of which they are aware
or which is brought to their attention. 
The prosecuting Party shall act in its own name and at its own expense
unless the other Party, at its option, agrees in writing, within ten (10)
business days after notification by the prosecuting Party of its prosecution of
any such infringement, to pay fifty percent (50%) of all out-of-pocket costs
associated with the prosecution. 
Edwards and PLC shall cooperate fully with each other including, if
required to bring such action, the furnishing of a power of attorney.  Any recovery obtained shall belong to the
prosecuting Party unless the other Party has paid fifty percent (50%) of said
costs pursuant to the second sentence of this Section 3.6, in which case
each Party will receive fifty percent (50%) of any recovery.

 

11

 

ARTICLE IV

DEVELOPMENT OF SURGICAL PRODUCTS

 

Section 4.1                                      Scope
of Collaboration.  The Parties will
work together to research, develop and commercialize Surgical Products pursuant
to this Agreement in the Territory in accordance with their respective roles
and responsibilities set forth below (the “Roles and Responsibilities”).  The Parties shall use commercially
reasonable efforts in performing their obligations under this Agreement.  Subject to the previous sentence, the
Parties’ respective primary responsibilities for these activities shall be as
follows:

 

(a)                                  Responsibility
of Edwards:

 

(i)                       Edwards will identify and
specify Surgical Products for development and manufacture by PLC.

 

(ii)                    Edwards will distribute and market
Surgical Products.

 

(iii)                 Edwards will inform the SC of its
sales and marketing plans and efforts, including customer requirements, market
research results and competitor activities.

 

(iv)                All regulatory filings including,
without limitation, those filings made in connection with an Applicable
Regulatory Approval, with respect to the Surgical Products, in the Territory,
excluding the United States and all countries of the European Union, shall be
funded and undertaken by Edwards according to plans (“Edwards Regulatory
Plans”) established by Edwards and reviewed by the SC.  Edwards shall obtain and maintain all
approvals and clearances with respect to the sale of Surgical Products in the
Territory excluding the United States and all countries of the European
Union.  PLC shall provide Edwards with
all necessary information for the preparation of such regulatory filings and
reasonable assistance necessary to support such filings.

 

(v)                   Edwards shall provide PLC with the
necessary information on all applicable regulatory requirements including,
without limitation, with respect to the manufacture, promotion, marketing, sale
or use of Surgical Products for any country where Edwards elects to sell
Surgical Products except the United States and countries of the European Union.

 

(vi)                All Clinical Studies or Marketing
Studies with respect to the Surgical Products that are conducted within the
Territory will be approved, funded and conducted by Edwards according to plans
(“Marketing/Clinical Plans”) established by Edwards and reviewed by the SC.

 

12

 

(vii)             At no cost to Edwards, Edwards shall
provide reasonable access to its principal clinical investigators in the Field
of Use and to Edwards’ animal lab facilities for purposes of Pre-Clinical
Studies (as defined in Section 4.1(b)(v) below), taking into account
Edwards’ research priorities.

 

(viii)          Edwards shall reimburse PLC for [**] percent
([**]%) of the cost of work performed by [**] as described in that written
quote, dated February 9, 2004 (the “Quote”), provided by [**] to Edwards,
a copy of which is attached hereto as Schedule 4.1(a)(viii).

 

(b)                                 Responsibilities
of PLC:

 

(i)                       PLC will research, develop and
manufacture Surgical Products.

 

(ii)                    PLC will inform the SC with respect
to research and development plans, manufacturing and design plans, and costs
associated therewith.

 

(iii)                 All regulatory filings including,
without limitation, those filings made in connection with an Applicable
Regulatory Approval, with respect to the Surgical Products, in the United
States and all countries of the European Union, shall be funded and undertaken
by PLC according to plans (“PLC Regulatory Plans”) established by PLC and
reviewed by the SC.  PLC shall and PLC
Parent shall cause PLC to obtain and maintain all approvals and clearances
required with respect to the sale of the Surgical Products in the United States
and the European Union, including, without limitation, approvals from the FDA
and certifications from the Electrical Testing Laboratory (“ETL”) and/or
Underwriter’s Laboratories (“UL”), as applicable.  Edwards shall provide PLC with all necessary information for the
preparation of such regulatory filings and reasonable assistance necessary to support
such filings.

 

(iv)                Notwithstanding Sections   4.1(a)(iv) and 4.1(b)(iii), but subject to
Section 4.1(b)(v) PLC shall be responsible for making Surgical Products in
compliance with all regulatory requirements with respect to the Surgical
Products in any country where Edwards elects to market and sell Surgical
Products.

 

(v)                   PLC shall be responsible for all
costs and expenses associated with “Pre-Clinical Studies.”  “Pre-Clinical Studies” shall mean animal
studies, in vitro studies, cadaver studies and other similar studies associated
with the research, development and manufacture of Surgical Products.

 

13

 

Notwithstanding the foregoing, PLC shall not be responsible for human
clinical studies.

 

(c)                                  Notwithstanding
the foregoing division of responsibilities contained in Section 4.1(a) and
(b) above, a Surgical Product shall be deemed ready for human use only if both
Edwards and PLC reasonably deem such Surgical Product to be ready for human
use.

 

Section 4.2                                      Steering
Committee.  The work under this
Agreement shall be performed by the Parties pursuant to the oversight of a
Steering Committee to be constituted as below. 
The Steering Committee or “SC” may delegate its responsibilities to such
other committees as it may establish. 
Notwithstanding this Section 4.2, the Steering Committee shall not
delegate the “Major Decisions” set forth in Section 4.3.  The Steering Committee shall initially
consist of four (4) members with two (2) members designated by each Party.  The initial members are listed on
Schedule 4.2.  A chairperson of the
Steering Committee shall annually be nominated alternately by Edwards and PLC.  The Parties will be free to change their
respective representatives on notice to the other Party.  The number of representatives may be
subsequently amended from time to time by the mutual written agreement of
Edwards and PLC; provided, however, Edwards and PLC shall have at all times an
equal number of representatives on the Steering Committee.  The Steering Committee shall exist until the
termination of this Agreement.  The
first meeting of the Steering Committee shall occur within sixty (60) days of
the Effective Date.

 

Section 4.3                                      Responsibilities
of the Steering Committee.  The
Steering Committee shall be responsible for the following decisions (“Major
Decisions”):

 

(a)                                  Approval
of all budgets, timelines, development priorities and long-range plans
developed pursuant to this Agreement, including without limitation, any of the
Development Plans, defined below;

 

(b)                                 Determination
of whether an Additional Product shall be added to the list of Surgical
Products set forth in Schedule 1.2;

 

(c)                                  Determination
of whether a Surgical Product under development should proceed to
manufacturing; and

 

(d)                                 Review
and monitor the compliance of the Surgical Products with all relevant rules and
regulations promulgated by Applicable Regulatory Authorities.

 

The SC shall also have oversight of the Project Managers and their work
under this Agreement, which responsibility it shall not delegate.

 

Section 4.4                                      Project
Manager.  PLC and Edwards shall each
appoint a project manager (“Project Manager”) who shall be responsible for
day-to-day management of the respective roles associated with the development
and commercialization of Surgical Products

 

14

 

hereunder.  The activities of
each Project Manager shall be overseen by the Steering Committee.  Subject to Section 4.6 and
Section 4.7, if a dispute arises between the respective Project Managers
for the parties on a matter, the matter shall be referred for further review to
the SC.  If the SC cannot resolve the
disputed matter, the dispute shall be resolved in accordance with the Dispute
Resolution provisions of Section 4.7. The Project Managers shall be
responsible for:  (a) preparation of
budgets and timelines for each Party’s respective responsibilities, for the
development, research, and manufacture of Surgical Products (collectively, “Development
Plans”), which shall be submitted to the SC for approval; and (b) day-to-day
oversight of the implementation of the Development Plans and activities in
support of the commercial launch and ongoing sales of Products.

 

Section 4.5                                      Meetings.  The SC will meet according to an Annual
Meeting Schedule to be determined by the SC annually but, notwithstanding
the foregoing, the SC shall meet at least two (2) times per calendar year and
the Project Managers will meet at least four (4) times per calendar year, and
either or both entities may meet at additional times as the Parties shall
agree.  The Annual Meeting
Schedule for the SC for the year 2004 is attached herewith as
Schedule 4.5.  Either Party may
call a special meeting of the SC on fifteen (15) days notice to the other
Party.  Additionally, the SC shall meet
within ten (10) business days of the Project Managers’ request to approve any
Major Decision.  In addition to the SC
members, three representatives of each Party may attend each SC meeting as ex-officio
observers.  The chairperson shall send
to all SC members notices of all regular meetings and agendas for such
meetings.  The Party convening a special
meeting shall send notices and agendas for such meetings.  The meetings will alternate between the
offices of the parties, or may be held via teleconference, videoconference or
such other place or manner as the Parties may mutually agree to.  Members of the SC shall be empowered to make
decisions within the scope of their responsibilities and shall have the right
to participate in and vote at meetings in person, by telephone, by
videoconference or by proxy.  The Party
hosting any meeting shall appoint a secretary to the meeting, who will record
the minutes of the meeting which will be circulated to the members of the SC
promptly following the meeting for review, comment and adoption.

 

Section 4.6                                      Decision
Making Criteria.  All decisions of
the SC shall be made by majority vote and in the exercise of good faith.  Such decisions shall adhere to the ethical
and legal standards for the medical-device industry and shall be based on the
principle that each party shall be required to utilize commercially reasonable
efforts to research, develop, manufacture and commercialize Surgical
Products.  Notwithstanding this
Section 4.6 regarding an SC majority vote, (i) Edwards shall have the
tie-breaking vote in the SC with respect to determining whether an Additional
Surgical Product shall be added to the list of Additional Surgical Products set
forth in Schedule 1.2, and (ii) PLC shall have the tie-breaking vote in
the SC with respect to the setting of budgets (including all amendments
thereto) for the research and development expenses associated with the Initial
Surgical Products.

 

Section 4.7                                      Dispute
Resolution.  Subject to
Section 4.6, if the SC is deadlocked or cannot resolve a disputed matter
within thirty (30) days, the SC shall refer the matter to the

 

15

 

Chairman or CEO of PLC and a Corporate Vice President of Edwards who is
not a member of the SC (“Executives”). 
If the Executives cannot resolve the issue within thirty (30) days, the
Executives shall mutually agree upon and appoint to the SC a “Temporary Outside
Member.”  “Temporary Outside Member”
means a person who is knowledgeable in the medical-device industry, possessing
senior executive experience and skills and not associated with either Party or
a competitor of either Party.  If the
Executives cannot agree on the identity of such Temporary Outside Member within
fifteen (15) days of the end of such thirty (30) day period, the Parties shall
request a three-member arbitration panel composed as described below, sitting
in Orange County, California to appoint to the SC a Temporary Outside
Member.  The arbitration panel shall be
composed of three (3) impartial arbitrators with each party selecting one (1)
arbitrator within fifteen (15) days of the Executives inability to agree on the
identity of the Temporary Outside Member and the two (2) selected arbitrators
selecting a third arbitrator who is experienced in the US medical device
industry within thirty (30) days of their selection.  The SC shall meet and resolve the dispute within one week of the
appointment of the Temporary Outside Member by the arbitration panel.  All decisions with respect to the issue in
dispute shall be made by a majority vote of the SC.  The Temporary Outside Member shall be instructed to render his or
her votes consistent with the decision-making criteria of the SC set forth in
Section 4.6.

 

Section 4.8                                      Selection
of Trademarks.  Edwards shall have
the sole right to choose the trademarks related to the Surgical Products.  Edwards shall provide PLC with copies of the
trademarks related to the Surgical Products for review and comment.  Edwards shall be solely responsible for all
costs, fees and other expenses associated with the prosecution, maintenance and
enforcement of the trademarks related to the Surgical Products and any such
applications shall be filed solely in the name of Edwards and owned solely by
Edwards.

 

Section 4.9                                      PLC
Investment in Additional Surgical Products.  After completion of the development of (i) Phase 1 of the Initial
Surgical Products set forth in Schedule 1.1 attached hereto, and (ii) if
approved by the SC, Phase 2 of the Initial Surgical Products set forth in Schedule 1.1
attached hereto, PLC shall make available ten percent (10%) of PLC’s revenues
from the Distribution Agreement (based on trailing 12 months sales) for
investment in the development of Additional Surgical Products pursuant to this
Agreement.  Schedule 4.9 sets forth
a description of how this Section 4.9 shall be implemented by the Parties.

 

ARTICLE V

MANUFACTURE OF SURGICAL PRODUCTS

 

Section 5.1                                      Appointment.  Subject to the terms and conditions of this
Agreement, (i) Edwards agrees that PLC shall be the exclusive manufacturer of
Surgical Products listed in Schedules 1.1 and 1.2, and (ii) PLC hereby agrees
to manufacture or have manufactured and supply to Edwards such quantities of
Surgical Products as Edwards may from time to time order in accordance with the
terms of the Distribution Agreement. 
PLC shall remain qualified with Edwards as an approved vendor during the
term of this Agreement.

 

16

 

Section 5.2                                      Legal
Requirements.  PLC shall manufacture
each Surgical Product pursuant to its specifications and in accordance with all
Legal Requirements.  PLC acknowledges
that it is familiar with and shall abide by QSR/ISO.  PLC and Edwards undertake to comply with all applicable Legal
Requirements and all regulations of any Public Authority having jurisdiction
over the manufacturing, storage, import, export, handling or sale of Surgical
Products and materials or related to obtaining and maintaining legal approval
for the manufacture, storage, import, export, handling, marketing and sale of
Surgical Products.

 

Section 5.3                                      Facilities.  Surgical Products shall be manufactured by
PLC at its facility at Franklin, MA, or such other facility as may be
reasonably determined by PLC and communicated to Edwards in writing.  PLC represents and warrants that Surgical
Products shall only be manufactured at a facility which has been qualified by
all applicable Public Authorities for the manufacture of such Surgical
Products.  Upon request by Edwards, PLC
shall provide to Edwards copies of the relevant licenses and permits with
respect to all such facilities.

 

Section 5.4                                      Inspection.  Upon the reasonable request of Edwards, PLC
shall permit duly authorized employees of Edwards and, with the consent of PLC
(not to be unreasonably withheld), other representatives of Edwards, to inspect
the facilities or its contract facilities, procedures and capabilities to
insure continued compliance with this Agreement and applicable Legal
Requirements; provided that PLC may, in its sole discretion, refuse to grant
access to any areas of its facilities or manufacturing records to the extent
that such access would jeopardize the confidentiality of any of PLC’s or any
third party’s proprietary technology not related to this Agreement.

 

Section 5.5                                      Adverse
Experience Reporting.  During and
after the Term of this Agreement, each Party shall notify the other Parties in
a reasonably timely fashion, or sooner if required by law, of any information
on any Complaint (howsoever obtained and from whatever source) associated with
the clinical uses, studies, investigations, testing and marketing of Surgical
Products.  Each Party shall provide the
Other Party with reasonable assistance in investigating Complaints.  Each Party shall further notify the other Parties
immediately of any information received regarding any threatened or pending
action by any Public Authority, which may affect the safety and effectiveness
claims of any Product.  Nothing
contained herein shall be construed as restricting any Party’s right to make a
timely report of such matter to any Public Authority or take other action that
it deems to be appropriate or required by applicable Legal Requirements.

 

Section 5.6                                      Records.  All technical records relating to the
manufacturing of any Surgical Product by or on behalf of PLC shall be retained
(i) in accordance with PLC’s internal policies, a copy of which has been
provided to Edwards, or, if greater, 
(ii) for the period required by any applicable Legal Requirements.

 

Section 5.7                                      Recall.  The Parties hereto shall observe at all
times all Legal Requirements in order to maintain an effective system for the
recall from the market of Surgical

 

17

 

Products.  Notwithstanding
anything herein to the contrary, if either PLC or Edwards deems it necessary to
effect a recall of any Surgical Product, it shall give the other Party
reasonable notice under the circumstances of such intended recall and an
appropriate time to discuss and agree on such intended recall.  All costs of the recall shall be borne by
the party at fault, e.g., PLC shall pay for a recall due to the Surgical
Products not being manufactured under the QSR or if the Surgical Products do
not meet specifications upon release from PLC, and Edwards shall pay for a
recall due to the Surgical Products not being stored or installed under the QSR
or if Edwards provides PLC with false or misleading labeling.  Where a violation of the law occurs that is
not the fault of either PLC or Edwards, e.g., the Surgical Products are
mishandled in a shipment by a common carrier, then PLC and Edwards shall share
the cost of the recall equally.  In the
event that agreement cannot be reached on effecting the recall within five (5)
business days, the Party who desires, in its reasonable judgment, to effect the
recall may do so.  The other Party or
Parties shall take no action contrary to the recall and shall cooperate fully
with the Party effecting the recall.

 

ARTICLE VI

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 6.1                                      Representations
and Warranties of Edwards.  Edwards
represents and warrants to PLC and PLC Parent as follows:

 

(a)                                  Edwards
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware.  Edwards has all necessary power and authority to execute, deliver
and perform its obligations under the Transaction Documents and to consummate
the Transactions.

 

(b)                                 The
execution, delivery and performance by Edwards of the Transaction Documents and
the consummation by it of the Transactions have been duly authorized, and no
other action on the part of Edwards or its Affiliates is necessary to authorize
the execution and delivery by Edwards of the Transaction Documents or the
consummation by it of the Transactions. 
The Transaction Documents have been duly executed and delivered by
Edwards and, assuming due and valid authorization, execution and delivery
thereof by PLC and PLC Parent, the Transaction Documents are valid and binding
obligations of Edwards enforceable against Edwards in accordance with their
respective terms, except (i) as limited by applicable Bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors’ rights generally and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.

 

(c)                                  The
execution, delivery and performance of the Transaction Documents by Edwards
will not (with the passage of time, notice or both) violate the provisions of,
or constitute a breach or default under (i) the organizational documents of
Edwards, (ii) any

 

18

 

Law to which Edwards is subject, or (iii) any material contract to
which Edwards or any Affiliate is a party, in any case, that would result in
the imposition of any lien, claim, charge or other Encumbrance against any of
the Contributed Assets or violate any Law or Order of any Governmental Entity
or any arbitrator, having jurisdiction over Edwards, or otherwise affect the
ability of the Parties to exercise their rights or fulfill their obligations
under the Transaction Documents.

 

(d)                                 Edwards
has good title to each of the Contributed Assets, free and clear of any
Encumbrances, except as described in Schedule 2.1.  Edwards has all right, power and authority
to sell, convey, assign, transfer and deliver the Contributed Assets to PLC in
accordance with the terms of this Agreement. 
Edwards has delivered the Contributed Assets to PLC, free and clear of
any and all Encumbrances except as described in Schedule 2.1.

 

(e)                                  (i)                                     To the best of its
knowledge, as of the Effective Date, Edwards and its Affiliates have taken all
reasonable measures to protect the proprietary nature of each item of Edwards
Intellectual
Property, and to maintain in confidence all trade secrets and confidential
information.  As of the Effective Date,
neither Edwards nor any of its Affiliates have previously granted any rights to
any third party that are inconsistent with the rights granted to PLC under this
Agreement and neither it nor they have entered into any agreement pursuant to
which it or they have licensed, assigned, or otherwise disposed of any interest
it or they have under the Edwards Intellectual Property in the Field of Use.

 

(ii)                                  To
the best of its knowledge, on the Effective Date none of the Edwards Intellectual
Property constitutes a misappropriation of any Intellectual Property Rights of
any person or entity.

 

(f)                                    UNLESS
OTHERWISE PROVIDED IN THIS AGREEMENT, THE PARTIES AGREE THAT THE CONTRIBUTED
ASSETS ARE BEING CONTRIBUTED TO PLC AND ACCEPTED BY PLC IN THEIR PRESENT,
STRICT “AS IS, WHERE IS” CONDITION AND WITH ALL FAULTS, AND THAT PLC AND PLC
PARENT ARE NOT RELYING ON ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, FROM EDWARDS, OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, CONSULTANTS OR AGENTS RELEVANT TO THE CONTRIBUTED ASSETS.

 

Section 6.2                                      Representations
and Warranties of PLC and PLC Parent. 
PLC and PLC Parent jointly and severally represent to Edwards as
follows:

 

(a)                                  PLC
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.  PLC
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the Yukon Territory. 
Each of PLC and

 

19

 

PLC Parent has the necessary power and authority to execute, deliver
and perform the Transaction Documents to which they are a Party and to
consummate the Transactions.

 

(b)                                 The
execution, delivery and performance of the Transaction Documents by PLC and PLC
Parent and the consummation by them of the Transactions have been duly
authorized by PLC and PLC Parent, and no other corporate action on the part of
PLC or PLC Parent is necessary to authorize the execution and delivery by PLC
and PLC Parent of the Transaction Agreement or the consummation of the
Transactions.  The Transaction Documents
have been duly executed and delivered by PLC and PLC Parent, as applicable,
and, assuming due and valid authorization, execution and delivery thereby by
Edwards, the Transaction Documents are valid and binding obligations of PLC and
PLC Parent, enforceable against PLC and PLC Parent in accordance with their
respective terms, except (i) as limited by applicable Bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors’ rights generally and
(ii) the availability of the remedy of specific performance or injunctive or
other forms of equitable relief may be subject to equitable defenses and would
be subject to the discretion of the court before which any proceeding therefor
may be brought.

 

(c)                                  The
execution, delivery and performance of the Transaction Documents by PLC and PLC
Parent, as applicable, will not (with the passage of time, notice or both)
violate the provisions of, or constitute a breach or default under (i) the
charter or bylaws of PLC or PLC Parent, (ii) any Law to which PLC or PLC Parent
is subject, or (iii) any material contract to which PLC or PLC Parent is a party,
in any case, that would result in the imposition of any lien, claim, charge or
other Encumbrance against any of the Contributed Assets or violate any Law or
Order of any Governmental Entity or any arbitrator, having jurisdiction over
PLC and PLC Parent, or otherwise affect the ability of the Parties to exercise
their rights or fulfill their obligations under the Transaction Documents.

 

Section 6.3                                      Edwards’
Covenants.  Edwards covenants as
follows:

 

(a)                                  Edwards
will comply in all material respects with all local, state, federal and
international  laws and regulations and
shall use commercially reasonable efforts to obtain and at all times maintain
any and all permits and certificates necessary to perform its obligations for
the research, development, testing and commercial exploitation of the Surgical
Products to be performed by it under this Agreement in accordance with the
terms and conditions of this Agreement.

 

(b)                                 Edwards
will take every reasonable action to protect the confidentiality of all Edwards
Intellectual Property, PLC Intellectual Property and Invention(s).

 

(c)                                  Edwards
will ensure that all of its employees, consultants, or agents involved in
creation of the Edwards Intellectual Property on behalf of Edwards shall assign
to Edwards all of their right, title and interest in and to such Edwards
Intellectual Property

 

20

 

and jointly developed Intellectual Property.  Edwards will ensure that all of its employees, consultants, or
agents involved in creation of Invention(s) on behalf of Edwards shall assign
to Edwards and PLC all of their right, title and interest in and to such
Invention(s).

 

(d)                                 Edwards
will comply with and not terminate the CardioFocus License or any other license
agreement pursuant to which Edwards has any rights contained in Edwards
Intellectual Property, and Edwards will not modify any such licenses in any way
that would have a material adverse effect on PLC’s rights or obligations under
the Transaction Documents.

 

Section 6.4                                      PLC
and PLC Parent’s Covenants.  PLC and
PLC Parent covenant as follows:

 

(a)                                  PLC
will comply in all material respects with all local, state, federal and
international laws and regulations and shall use commercially reasonable
efforts to obtain and at all times maintain any and all permits and
certificates necessary to perform its obligations for the research,
development, testing, manufacturing and commercial exploitation of the Surgical
Products to be performed by it under this Agreement in accordance with the terms
and conditions of this Agreement.

 

(b)                                 PLC
and PLC Parent will take every reasonable action to protect the confidentiality
of all PLC Intellectual Property, Edwards Intellectual Property and
Inventions(s).

 

(c)                                  PLC
and PLC Parent will ensure that all of their employees, consultants, or agents
involved in creation of PLC Intellectual Property shall assign to PLC all of
their right, title and interest in and to such PLC Intellectual Property.  PLC and PLC Parent will ensure that all of
their employees, consultants, or agents involved in creation of Invention(s)
shall assign to PLC and Edwards all of their right, title and interest in and
to such Invention(s).

 

Section 6.5                                      Warranty
Disclaimer.  EXCEPT AS SET FORTH IN
THIS AGREEMENT NO PARTY MAKES ADDITIONAL WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY, WHETHER WRITTEN OR ORAL, AS TO ANY OTHER MATTER WHATSOEVER
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

 

ARTICLE VII

INDEMNITY

 

Section 7.1                                      Indemnification
by PLC and PLC Parent.  PLC and PLC
Parent shall defend, indemnify and hold harmless Edwards Indemnitees from and
against any and all Losses which any Edwards Indemnitee may suffer or incur by
reason of:

 

21

 

(a)                                  Any
breach by PLC and PLC Parent of any of its representations, warranties,
agreements, or covenants contained in this Agreement or by the willful
misconduct of PLC or PLC Parent, including, without limitation, by way of any
misappropriation, willful misstatement, or fraud on any Governmental Entity;

 

(b)                                 Any
third party Claim that any PLC Intellectual Property constitutes a
misappropriation of any Intellectual Property of such third party; or

 

(c)                                  Any
third party Claim of harm or injury arising out of, related to, or in
connection with a product recall for which PLC is required to pay the expenses
pursuant to Section 5.7 or the manufacture of the Surgical Products that
is attributable to any PLC Intellectual Property.

 

Section 7.2                                      Indemnification
by Edwards.  Edwards shall defend,
indemnify and hold harmless the PLC Indemnitees from and against any and all
Losses which any PLC Indemnitee may suffer or incur by reason of:

 

(a)                                  Any
breach by Edwards of its representations, warranties, agreements, or covenants
contained in this Agreement or by the willful misconduct of Edwards, including,
without limitation, by way of any misappropriation, willful misstatement, or
fraud on any Governmental Entity;

 

(b)                                 Any
third party Claim that any Edwards Intellectual Property constitutes a
misappropriation of any Intellectual Property of such third party; or

 

(c)                                  Any
third party Claim of harm or injury arising out of, related to, or in
connection with a product recall for which Edwards is required to pay the
expenses pursuant to Section 5.7 or the manufacture of the Surgical
Products that is attributable to any Edwards Intellectual Property.

 

Section 7.3                                      Indemnification
Procedures.  The Party seeking
indemnification (the “Indemnified Party”) pursuant to this ARTICLE VII
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

 

22

 

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 and such settlement or compromise requires only the payment of monetary
damages.  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, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to this ARTICLE VII, 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 VII will not be exclusive of or limit
any other remedies that may be available to the Indemnified Parties.

 

Section 7.4                                      Limitation
of 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, 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 VIII

OTHER AGREEMENTS

 

Section 8.1                                      Confidential
Information Generally.  The
existence and terms and conditions of the Transaction Documents are
confidential, and neither Party may make any disclosures regarding the
Transaction Documents without the express prior written consent of the other
Party, except:

 

(a)                                  as
may be required by law or legal process;

 

(b)                                 during
the course of litigation so long as the disclosure of such terms and conditions
are restricted in the same manner as is the confidential information of other

 

23

 

litigating parties and so long as: 
(i) the Disclosing Party seeks to protect the information in a
court-entered protective order; and (ii) the Disclosing Party informs the
Receiving Party in writing in advance of the disclosure; or

 

(c)                                  in
confidence to its legal counsel, accountants, banks and financing sources and
their advisors solely in connection with complying with financial transactions.

 

Section 8.2                                      Restrictions
on Confidential Information.

 

(a)                                  The
Receiving Party agrees not to disclose any Confidential Information of the
Disclosing Party and to maintain such Confidential Information in strictest
confidence, to take all reasonable precautions to prevent its unauthorized
dissemination and to refrain from sharing any or all of the information with
any third party for any reason whatsoever except as required by court order,
both during and after the Term of this Agreement.

 

(b)                                 The
Receiving Party agrees not to use the Confidential Information of the
Disclosing Party for its own benefit or for the benefit of any third party
other than in accordance with the terms and conditions of this Agreement.

 

(c)                                  All
Confidential Information of PLC and PLC Parent remains the sole property of PLC
and PLC Parent and all Confidential Information of Edwards remains the sole
property of Edwards.

 

(d)                                 Upon
written request of the Disclosing Party, or upon the expiration or other
termination of this Agreement for any reason whatsoever, the Receiving Party
agrees to return to the Disclosing Party all such provided Confidential
Information, including, without limitation, all copies thereof.

 

Section 8.3                                      Publicity.  No Party or any of its Affiliates shall
issue or cause the publication of any press release or other announcement with
respect to the existence of, the terms, or implementation of the Transaction
Documents without the prior written approval of the other Parties, except as
may be required by law, and thereafter each Party shall reasonably consult with
the other Parties on the language of such release or announcement prior to its
publication.

 

ARTICLE IX

TERM; TERMINATION

 

Section 9.1                                      Term
of this Agreement.  This Agreement
shall commence on the date hereof, and, unless extended by the mutual written
agreement of the Parties (and then only upon the terms and conditions set forth
therein) or sooner terminated in accordance with Section 9.2 hereof, shall
continue for the enforceable life of the last to expire patent within Edwards
Intellectual Property (“Initial Term”). 
This Agreement shall be renewable for additional three (3) year terms by
Edwards, at its option, as long as Edwards’ trailing twelve month sales of

 

24

 

Surgical Products under this Agreement for the period immediately prior
to expiration of the Term of the Agreement, defined below, is at least three
million dollars ($3,000,000).  The “Term
of this Agreement” shall mean the Initial Term and such additional three-year
terms, if any, for which Edwards renews the Agreement.

 

Section 9.2                                      Termination
of this Agreement.  Upon the occurrence
of any of the following, this Agreement, including any licenses granted herein
(except as otherwise specified herein), may be terminated by:

 

(a)                                  Edwards
immediately upon written notice to PLC or PLC Parent, or PLC or PLC Parent
immediately upon written notice to Edwards, if PLC or PLC Parent, or Edwards,
as applicable, breaches any material provision of this Agreement and such
breach is:  (i) incapable of cure; or
(ii) capable of cure, but not cured within ninety (90) days of the breaching
Party’s receipt of written notice of such default from the non-breaching Party.

 

(b)                                 Edwards
immediately upon the Bankruptcy of PLC or PLC Parent or PLC immediately upon
the Bankruptcy of Edwards.

 

(c)                                  Either
PLC or Edwards upon thirty (30) days written notice to Edwards or PLC, as
applicable, if the research, development, or commercialization of the Surgical
Products or any component thereof is blocked or otherwise rendered commercially
unfeasible by adverse legal or regulatory action, or by the Intellectual Property
rights of any third party.

 

(d)                                 Beginning
two (2) years after the Effective Date, either Edwards or PLC, at any time upon
one hundred eighty (180) days prior written notice to the other Party.  During such 180-day period, PLC shall no
longer be obligated to advance the development of any Products.

 

(e)                                  Edwards
at any time upon at least sixty (60) days prior written notice to PLC, provided
that on the date of termination Edwards shall deliver to PLC a termination fee
in the sum of $2,000,000 by wire transfer of immediately available funds.  During such notice period, PLC shall no
longer be obligated to advance the development of any Products.

 

(f)                                    Mutual
written agreement of the Parties.

 

Section 9.3                                      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.

 

25

 

(b)                                 Within
thirty (30) days of such expiration or early termination, PLC and/or PLC Parent
shall provide Edwards, and vice versa, with a copy of all relevant Initial
Surgical Product or Additional Surgical Product documentation in its possession
or under its control.

 

(c)                                  The
Distribution Agreement shall terminate provided, however, that, for six months
following such expiration or early termination, Edwards shall be allowed to
sell any Surgical Products in its inventory and all applicable terms of the
Distribution Agreement will continue with respect to such sales.

 

Section 9.4                                      Survival.  Expiration or early termination of this
Agreement shall not relieve any Party of its obligations incurred prior to the
expiration or early termination.  The
following provisions, subject to any restrictions or limitations contained
therein shall survive expiration or early termination of this Agreement:  Section 2.4, ARTICLE III,
ARTICLE VII and ARTICLE X hereof, Sections 5.5, 5.6, 5.7, 8.1, 8.2,
9.3 hereof and this Section 9.4.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.1                                Relationship.  The relationship of Edwards and PLC
established by this Agreement and the Transaction Documents is of independent
contractors and not agents, and nothing in this Agreement or any Transaction
Document shall be construed:

 

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

 

(b)                                 To
constitute Edwards and PLC as partners, joint ventures, co-owners or otherwise
as participants in joint undertaking; or

 

(c)                                  To
allow either Edwards or PLC to create or assume any obligation on behalf of the
other for any purpose whatsoever.

 

Section 10.2                                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 10.3                                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 10.4                                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

 

26

 

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 10.4 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 10.4 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 10.4 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 10.5                                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.

 

Section 10.6                                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 10.6

 

27

 

(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 10.6 (or in accordance with the latest
unrevoked written direction from such Party), provided the appropriate
confirmation is received.

 

To PLC:

 

PLC Medical 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

 

Section 10.7                                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

 

28

 

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 10.8                                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 10.9                                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 10.10                          Entire
Agreement; No Third Party Beneficiaries. 
The Transaction Documents, including all exhibits and schedules 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 10.10.

 

Section 10.11                          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

 

29

 

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 10.12                          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 10.13                          Exhibits
and Schedules.  Each of the exhibits
and schedules referred to herein and attached hereto is an integral part of
this Agreement and is incorporated herein by reference.

 

Section 10.14                          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 10.15                          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.

 

30

 

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 &

  	
   

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PLC MEDICAL SYSTEMS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ James G. Thomasch

  	
   

  
	
   

  	
  Name:

  	
  James G. Thomasch

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President &

  	
   

  
	
   

  	
   

  	
   

  	
  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

  	
   

  

 

31

 

SCHEDULE 1.1

 

Initial
Surgical Products

 

Summary Description of Initial Surgical Products

 

The following are Phase 1 Surgical Products, as more fully described in
the specifications attached as Exhibit I to this Schedule 1.1 as may be
modified from time to time by the Steering Committee:

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

•                  [**].

 

Phase 2 Surgical Products: 
Edwards and PLC shall jointly specify and establish feasibility for the
development, design and manufacture of the following Surgical Products
provided, however, that the decision to develop, design and manufacture such
Surgical Products shall be made by the Steering Committee:

 

•                  [**].

 

•                  [**].

 

 

EXHIBIT I

 

Preliminary
Product Specification

OptimazeTM Surgical Laser Console

Edwards Part Nos. 692457001A (Model 1); 692457002A (Model 3)

 

Device Name:

 

	
  Official-

  	
   

  	
  Laser Console

  
	
  Common-

  	
   

  	
  Medical Laser

  

 

Intended Use:

 

The OptimazeTM Surgical Laser Console is intended for the delivery of
980 nm laser light to soft tissue in contact or non-contact mode during
surgical procedures including via endoscopes, introducers or catheters.
Indications include the incision, excision, dissection, vaporization, ablation
or coagulation of soft tissue.

 

General Description:

 

Overview:

 

The Laser Console includes the laser instrument and optical and
electronic components.  The instrument
includes a diode laser module as the therapeutic energy source, as well as an
internal thermal safety system for monitoring and disabling laser power
output.  Handpiece irrigation is
controlled via a side-mounted pinch valve that is footswitch actuated.

 

The surgical laser, Model 60-980 OptimazeTM Surgical Laser Console, is
to be used with the OptimazeTM Surgical Ablation Handpiece.

 

	
  Surgical laser:

  	
  Model 60-980 OptimazeTM Surgical Laser Console Edwards Model No. 60980

  
	
   

  	
   

  
	
  Part Number:

  	
  P/N 18-0628

  
	
   

  	
   

  
	
  Edwards Part Nos.:

  	
  692457001A (Model 1) and 692457002A (Model 3)

  
	
  Maximum power output:

  	
  66W

  
	
   

  	
   

  
	
  Output Wavelength:

  	
  980nm +/-15nm

  
	
   

  	
   

  
	
  Input Voltage:

  	
  100VAC ± 15% to 240VAC ± 15% and 50 or 60 Hz ± 1 Hz

  
	
  Size:

  	
  23”D x 16”W x11.5”H

  
	
  Weight:

  	
  < 60 lb

  

 

 

Packaging
Configuration:

 

Each Laser Console will ship in two (2) containers. One (1) console box
containing the laser console and labeling indicating the user manual can be
found in the accessory box, and one (1) accessory box containing a foot pedal,
keys, user manual, interlock bypass plug, and one country specific power cord.

Console
Box containing the laser console only:

 

 

(1)                                  Model
60-980 Optimaze Surgical Laser Console

	
  P/N:

  	
  18-0628

  
	
   

  	
   

  
	
  Edwards Model 60980 Optimaze Surgical Laser Console

  
	
  P/Ns:

  	
  692457001A (Model 1)

  
	
   

  	
  692457002A (Model 3)

  

 

Accessory
Box containing:

 

(1)          Laser Installation kit                                                                                                            P/N
18-0632

Foot pedal

 

	
  Laser Keys (2)

  	
   

  
	
  User manual

  	
   

  
	
  Interlock bypass plug

  	
   

  
	
   

  	
   

  
	
  Power cord - US -120v 60 Hz

  	
  P/N 18-0633

  
	
  Power cord - 120v 50 Hz - Japan plug

  	
  P/N 18-0634

  
	
  Power cord – 2/20v 50 Hz (Europe plug 1)

  	
  P/N 18-0635

  
	
  Power cord - 220v 50 Hz (Europe plug 2)

  	
  P/N 18-0636

  
	
  Power cord - 220v 50 Hz (Europe plug 3)

  	
  P/N 18-0637

  
	
  Power cord - 220v 50 Hz (Europe plug 4)

  	
  P/N 18-0638

  

 

User
Supplied Items (Accessories):

 

	
  Item

  	
   

  	
  Manufacturer

  	
   

  	
  Size

  	
   

  	
  Part
  Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Optimaze Surgical Ablation Handpiece

  	
   

  	
  Edwards

  	
   

  	
  NA

  	
   

  	
  18-0498

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Edwards

  	
   

  	
  NA

  	
   

  	
  692577001A

  

 

Optional
Accessories

 

	
  Item

  	
   

  	
  Manufacturer

  	
   

  	
  Size

  	
   

  	
  Part
  Numbers

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Laser safety glasses

  	
   

  	
  Uvex

  	
   

  	
  N/A

  	
   

  	
  DVO LOTG-YAG/CO2

  

 

 

Compatibility:
OptimazeTM Surgical Ablation Handpiece

Administration Tubing Sets:  Irrigation
connection has a standard female luer fitting for connection to commercially
available tubing sets.

 

Regulatory
Classifications

 

FDA Laser Class 1M

FDA Medical Device Class II

EN60601-1 Class I, Type CF

EN55011 (CISPR 11) Class B, Group 1

 

Glossary

 

•  Delivery device:
OptimazeTM Surgical Ablation Handpieces.

• Laser
Console: The electronic instrument used to generate, control and monitor laser
output

• Wavelength:
Color of laser emission spectrum.

• Laser
product: OptimazeTM Surgical Laser Console with automatic thermal safety system
that constitutes, incorporates, or is intended to incorporate a laser or laser
system.

• Low
OH: Low water content glass for transmission of IR light.

• Numerical
Aperture (NA): Numerical Aperture is defined as the sine of the half angle of
light emitted from the output port of the system.

• U/I:
User interface.

• Thermal
safety system: Automatic system to detect excessive heat in the optical path
and shut system down when a predetermined threshold is exceeded.

• Optical
path: the path of travel of laser energy.

 

System Components

 

	
  System Controller:

  	
  the system controller block represents the hardware and software that
  monitors and controls the functioning of the laser instrument.

  
	
  Thermal Safety System (TSS):

  	
  the thermal safety system is a safety circuit, intended to monitor
  the black body radiation associated with excessive heating in the disposable
  device and associated optics and to disable the laser in the event that
  excessive black body radiation is detected.

  
	
  Optics Module:

  	
  the optics module is an optical subsystem which provides means for
  sending laser energy to the delivery device and also provides means for
  directing black body radiation from the disposable device to the safety
  system IR detector.

  
	
  User Interface:

  	
  the user interface provides means for information display to the user
  as well as a mechanism for user input. The user interface for the laser
  instrument will likely include an LCD display 

  

 

 

	
   

  	
  and a keypad.

  
	
  Footswitch:

  	
  the laser instrument will interface to a footswitch for on/off
  control of the laser emission.

  
	
  Diode Driver:

  	
  the diode driver block represents the electronics required to control
  power supplied to the laser module

  
	
  Diode Module:

  	
  the diode module is a purchased component, comprised of a series of
  laser diodes, which produces the output laser energy.

  
	
  Power Supply:

  	
  an AC/DC power supply provides DC power necessary to run the system
  electronic components. The supply is internal to the laser instrument.

  

 

 

Detailed
Requirements Specifications:

 

 

SCHEDULE 2.1

 

Contributed
Assets

 

** Indicates assets that must stay at Edwards and vendors to support
Transition Period Endo & Encircle product builds

 

	
  Asset

  	
   

  	
  Current
  Location

  	
   

  	
  Asset #

  	
   

  	
  Status

  	
   

  	
  Physical
  Transfer

  
	
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  Laser Assets List

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Asset

  	
   

  	
  Current

  Location

  	
   

  	
  Asset #

  	
   

  	
  Status

  	
   

  	
  Physical

  Transfer

  
	
  [**]

  	
   

  	
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SCHEDULE 2.6

 

Transition
Period

 

•                  “Transition
Period” shall mean from the Effective Date through [**].

 

•                  “Transition
Products” shall mean Disposable Products manufactured by Edwards during the
Transition Period.

 

•                  During the
Transition Period, Edwards shall have the right to develop, make, use and sell
Transition Products.  Thereafter,
Edwards shall have the right to sell Transition Products for any additional
period needed for Edwards to sell down any inventory of finished Transition
Products permitted to be made by Edwards pursuant to this Schedule 2.6
(the “Additional Period”).

 

•                  Edwards shall
make the Transition Products at Edwards’ cost and Edwards shall retain all
revenues associated with the sale of Transition Products.  Edwards shall not be obligated to sell any
Disposable Products made by PLC and shall not be obligated to share any
Disposable Product Margin with PLC until the expiration of the Additional
Period.

 

•                  During the
Transition Period, Edwards shall have the right to use any raw materials
Edwards owns for making Transition Products. 
After the end of the Transition Period, Edwards shall make any remaining
raw materials inventory for Surgical Products available to PLC for purchase for
making Surgical Products, all in accordance with Section  7.2(f) of
the  Distribution Agreement.  Edwards shall also have the right to retain
possession of and make use of, the assets identified on Schedule 2.1 of
the CD & M Agreement for purposes of making Transition Products.  As soon as practicable following the end of
the Transition Period, Edwards, at its cost, shall transfer such assets to PLC
in their condition at such time.

 

•                  Edwards, at its
election, may purchase from [**] the first [**] Laser Power Sources and any
subsequent number of Laser Power Sources approved by the SC.  Thereafter, in accordance with the terms of
the Distribution Agreement, PLC shall provide Edwards with Laser Power Sources
to meet customer demand during the Transition Period and continuing thereafter
for the Term of the Distribution Agreement. 
To the extent Edwards purchases any such lasers from [**] it shall look
to [**] for the product warranty for such lasers.

 

•                  Consistent with
its roles and responsibilities under the CD&M Agreement, PLC shall remain
responsible for managing the research, development and manufacture of the Laser
Power Sources during the Transition Period, including managing the relationship
with [**].  During the Transition
Period, Edwards shall be permitted to assist with and/or perform development of
Transition Products.

 

 

•                  After the
expiration of the Additional Period, all customer demand for Disposable
Products shall be met by PLC, provided that:

 

(i)             [**] prior to the end of the Transition
Period, PLC has reasonably demonstrated to the SC that the Disposable Products
produced by PLC meet the specifications for such products; and

 

(ii)          [**] prior to the end of the Transition
Period, PLC has reasonably demonstrated to the SC that PLC has the ability to
produce the Disposable Products in sufficient quantities to meet customer
demand; and

 

(iii)       PLC has provided Edwards with an initial
stocking order of Disposable Products (the “Initial Stocking Order”), pursuant
to a purchase order from Edwards, no later than [**] prior to the end of the
Transition Period.  If PLC is late in
providing Edwards with the Initial Stocking Order, the Transition Period shall
extend one day for each day PLC is late in delivering the Initial Stocking
Order to PLC.

 

If PLC is late with respect to items (i) or (ii) above, then the
Transition Period shall automatically extend an additional [**].

 

•                  During the Transition
Period, Edwards shall make for sale no more than [**] Transition Products,
provided that if customer demand during the Transition Period is greater than
[**] Transition Products, the SC shall evaluate and reasonably determine
whether PLC is ready and able to produce Disposable Products for sale by
Edwards.  If the SC determines that PLC
is not ready and able to produce sufficient quantities of Disposable Products
to meet customer demand, then Edwards shall be permitted to make reasonable
quantities of Transition Products in excess of [**] nits to satisfy customer
demand until such time as the SC reasonably determines that PLC is ready and
able to make Disposable Products in quantities sufficient to satisfy customer
demand.  No new Disposable Products may
be manufactured by or on behalf of Edwards during the Additional Period.  Notwithstanding the foregoing, during the
Additional Period, Edwards may complete any Transition Products made during the
Transition Period.

 

The foregoing is subject to modification by the SC, in accordance with
the terms and conditions of the CD & M Agreement.

 

 

SCHEDULE 4.2

 

Initial
Members of Steering Committee

 

Edwards Members:

1.               Keith
Reisinger

2.               Pawan
Tomkorea.

 

PLC Members:

1.               Mike
Adams

2.               Ken
Luppi

 

 

SCHEDULE 4.5

 

Steering
Committee Meeting Schedule for 2004

 

First Meeting:  First Calendar
Quarter of 2004

 

Second Meeting:  Second Calendar
Quarter of 2004

 

Third Meeting:  Third Calendar
Quarter of 2004

 

Fourth Meeting:  Fourth Calendar
Quarter of 2004

 

 

SCHEDULE 4.9

 

Investment in
Additional Surgical Products

 

In order for the Parties to determine how the investment in Additional
Surgical Products shall be determined, the following description shall be used
as a guide by the Parties:

 

1.                                       Edwards
or PLC proposes an Additional Surgical Product to the SC for development.

 

2.                                       The
SC approves the Additional Surgical Product for development and it is added to
Schedule 1.2.  Edwards has the tie
breaking vote for this SC decision pursuant to Section 4.6.

 

3.                                       The
SC approval shall include a budget and a timeline for the development of such
Additional Surgical Product.

 

4.                                       For
each quarter in the timeline PLC and Edwards shall determine PLC’s Surgical
Product revenues from the Distribution Agreement for the trailing 12 months and
shall make available [**]% of the revenue to the development of all Additional
Surgical Products without carryover from quarter to quarter.

 

5.                                       In
the event the budgets for all Additional Surgical Products for any quarter in
the timeline require more funds than PLC is obligated to provide pursuant to
Section 4.9 and item 4 above, then Edwards shall be obligated to fund such
shortfall in full.

 

6.                                       Steps
4 and 5 above shall be repeated for each quarter in the timeline.

 

An example of the foregoing is attached to this Schedule as
Exhibit II.

 

 

EXHIBIT II

 

R&D Funding of
Additional Products

 

Example (For illustrative purposes only)

 

	
  Quarter

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PLC Surgical Product Sales (000)

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  Trailing Twelve Month (TTM) Sales

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Available R&D Fund ([**]% of TTM)

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Funding requirements for Additional Product programs

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Example Program 1

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Example Program 2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  Utilized Fund for Additional Product
  programs

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R&D Fund excess / (shortfall)

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EW pays to PLC for shortfall

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  R&D Fund expiration

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  

 

Absolute numbers are for illustrative purposes only.

 

All terms are defined in the agreement.

 

Concept Explanation:

 

At the beginning of each quarter, PLC will make available for that
quarter an amount equal to [**]% of PLC’s trailing twelve month sales from
Surgical Products for investment in research and development and related
expenses of Additional Product programs.

 

If PLC’s available investment for the given quarter is not utilized by
an Additional Product program for that quarter, the funding commitment will
expire at the end of that quarter and shall be refreshed using the same
approach for the next quarter.

 

If at the end of any given quarter PLC has spent more than their
required R&D investment for the Additional Product program, subject to the
SC approved budget, EW shall compensate PLC for the differential.Exhibit 10.3

 

FIRST AMENDMENT TO SHAREHOLDERS AGREEMENT

 

This FIRST
AMENDMENT TO SHAREHOLDERS AGREEMENT, is made and entered into as of February
24, 2004 (this “Amendment”), by and between Edwards Lifesciences Corporation, a
Delaware corporation (“Edwards”), and PLC Systems Inc., a Yukon Territory
corporation (“PLC”).  Certain capitalized terms used herein have the
meanings ascribed to them in the Agreement (defined below).

 

RECITALS

 

WHEREAS, the parties hereto have previously
entered into a Shareholders Agreement, dated as of January 9, 2001, by and
between Edwards and PLC (the “Agreement”); and

 

WHEREAS, the
parties hereto desire to amend certain provisions of the Agreement pursuant to
Section 9.9 thereof.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the foregoing and the respective covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

 

1.                                       AMENDMENT
OF AGREEMENT.  The Agreement is
hereby amended as follows:

 

1.1                                 Section
5.1 of the Agreement is hereby amended by striking therefrom the word “third,” and replacing it with the word “fifth,” so that the expiration of the
voting agreement shall be January 9, 2006.

 

2.                                       MISCELLANEOUS.

 

2.1                                 Governing
Law.  This Amendment 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).

 

2.2                                 Counterparts.  This Amendment 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 amendment, it being
understood that the parties need not sign the same counterpart.

 

 

2.3                                 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.

 

2.4                                 Ratification
and Reaffirmation.  Except as
otherwise expressly provided herein, the Agreement remains in full force and
effect unamended, and all of the terms and provisions of the Agreement, as
modified by this Amendment, are hereby ratified and reaffirmed by Edwards and
PLC.  All references to the Agreement
contained in the Agreement shall mean the Agreement as modified hereby.

 

Remainder of the page intentionally left
blank.

 

2

 

IN WITNESS
WHEREOF, the parties have caused this Amendment to be duly executed and
delivered, all as of the date first set forth above.

 

 

	
   

  	
  EDWARDS LIFESCIENCES CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/John H. Kehl, Jr.

  	
   

  
	
   

  	
  Name:

  	
  John H. Kehl, Jr.

  
	
   

  	
  Title:

  	
  Corporate Vice President,

  Strategy and Business Development

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PLC SYSTEMS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/James G. Thomasch

  	
   

  
	
   

  	
  Name:

  	
  James G. Thomasch

  
	
   

  	
  Title:

  	
  Senior Vice President &

  Chief Financial Officer

  
							

 

3

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