Document:

Exhibit 10.17

 

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

 

 

DISTRIBUTION AGREEMENT

 

by and among

 

PLC SYSTEMS INC.,

 

PLC MEDICAL SYSTEMS, INC.

 

and

 

EDWARDS LIFESCIENCES LLC

 

dated

 

January 9, 2001

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I - Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II - Appointment

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Appointment

  	
  3

  
	
  Section 2.2

  	
  Competition

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE III - Obligations of Distributor

  	
  3

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  General Obligations of Edwards

  	
  3

  
	
  Section 3.2

  	
  Costs and Expenses

  	
  4

  
	
  Section 3.3

  	
  Sales and Marketing Option

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV - Obligations of PLC

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Transition Services

  	
  4

  
	
  Section 4.2

  	
  Approvals

  	
  4

  
	
  Section 4.3

  	
  Labeling of Products

  	
  4

  
	
  Section 4.4

  	
  Clinical or Marketing Studies

  	
  5

  
	
  Section 4.5

  	
  Installation Services and Services Provided Under
  Extended Service Agreements

  	
  5

  
	
  Section 4.6

  	
  Warranty and Preventive Maintenance Services

  	
  5

  
	
  Section 4.7

  	
  Recall of Products

  	
  5

  
	
  Section 4.8

  	
  Product Liability Insurance

  	
  6

  
	
  Section 4.9

  	
  Costs and Expenses

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE V - Sales and Marketing

  	
  6

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Marketing Plan

  	
  6

  
	
  Section 5.2

  	
  Sales Plan

  	
  6

  
	
  Section 5.3

  	
  Sales Material and Literature

  	
  6

  
	
  Section 5.4

  	
  Training and Retention of Sales Personnel

  	
  6

  
	
  Section 5.5

  	
  Performance Record of Sales Personnel

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI - Purchase Arrangements

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Purchase Forecasts for Products

  	
  7

  
	
  Section 6.2

  	
  Purchaser Orders; No Minimum Product Quantities

  	
  7

  
	
  Section 6.3

  	
  Placement of Orders

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII - Pricing, Payment, Shipping

  	
  8

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  TMR Disposable Kit.

  	
  8

  
	
  Section 7.2

  	
  HL-1 Laser Systems

  	
  8

  
	
  Section 7.3

  	
  HL-2 Laser Systems

  	
  8

  
	
  Section 7.4

  	
  Product Accessories

  	
  9

  
	
  Section 7.5

  	
  Shipping

  	
  9

  
	
  Section 7.6

  	
  Payment

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII - Term and Termination; Annual
  Meeting

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Term and Renewal

  	
  9

  

 

i

 

	
  Section 8.2

  	
  Immediate Termination

  	
  10

  
	
  Section 8.3

  	
  Annual Meeting

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX - Warranties and Indemnification

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Warranties

  	
  10

  
	
  Section 9.2

  	
  Indemnification by PLC

  	
  10

  
	
  Section 9.3

  	
  Indemnification by Edwards

  	
  11

  
	
  Section 9.4

  	
  Indemnification Procedures

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE X - Intellectual Property Rights and
  Confidentiality

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Trademarks

  	
  12

  
	
  Section 10.2

  	
  Confidential Information

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI - MISCELLANEOUS

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Relationship

  	
  13

  
	
  Section 11.2

  	
  No Conflict

  	
  13

  
	
  Section 11.3

  	
  Governing Law

  	
  13

  
	
  Section 11.4

  	
  Escalation

  	
  13

  
	
  Section 11.5

  	
  Jurisdiction and Consent to Service

  	
  14

  
	
  Section 11.6

  	
  Notices

  	
  14

  
	
  Section 11.7

  	
  Interpretation

  	
  15

  
	
  Section 11.8

  	
  Severability

  	
  15

  
	
  Section 11.9

  	
  Counterparts

  	
  15

  
	
  Section 11.10

  	
  Entire Agreement; No Third Party Beneficiaries

  	
  15

  
	
  Section 11.11

  	
  Amendments and Modifications; Waivers and
  Extensions.

  	
  16

  
	
  Section 11.12

  	
  Assignment

  	
  16

  
	
  Section 11.13

  	
  Exhibits

  	
  16

  
	
  Section 11.14

  	
  Expenses

  	
  16

  
	
  Section 11.15

  	
  No Consequential or Punitive Damages

  	
  16

  

 

	
  Exhibits and Schedules

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Description of Products

  	
   

  
	
  Schedule 2.1

  	
   

  	
  Distributors

  	
   

  
	
  Schedule 3.3

  	
   

  	
  Sales Personnel

  	
   

  
	
  Schedule 4.1

  	
   

  	
  Transition Services

  	
   

  
	
  Schedule 4.5

  	
   

  	
  Installation Services
  and Services Relating to Extended Service Agreements

  	
   

  
	
  Schedule 4.6

  	
   

  	
  Warranty and Preventive
  Maintenance Services

  	
   

  
	
  Schedule 4.8

  	
   

  	
  Product Liability
  Insurance

  	
   

  
	
  Schedule 5.1

  	
   

  	
  Marketing Plan

  	
   

  
	
  Schedule 5.2

  	
   

  	
  Sales Plan

  	
   

  
	
  Schedule 7.3

  	
   

  	
  HL-2 Laser System
  Customers

  	
   

  
	
  Schedule 7.4

  	
   

  	
  Product Accessories

  	
   

  

 

ii

 

DISTRIBUTION AGREEMENT

 

DISTRIBUTION AGREEMENT, dated as of January 9,
2001 this “Agreement”), by and among Edwards Lifesciences LLC, a Delaware
corporation (“Edwards”), PLC Systems Inc., a Yukon Territory corporation (“PLC
Parent”), and PLC Medical Systems, Inc., a Delaware corporation (“PLC”),
which is a wholly owned subsidiary of PLC Parent.

 

WHEREAS, PLC has developed a carbon dioxide laser
system and related accessories described in Exhibit A hereto (as
set forth in Exhibit A, the “Products”), and desires that the sale and use
of the Products be actively promoted in the fifty states of the United States
of America and the District of Columbia (the “Territory”);

 

WHEREAS, Edwards is a company in the medical devices
field with experience and expertise in the commercialization and distribution
of medical devices;

 

WHEREAS, PLC desires to engage Edwards to purchase,
resell and distribute the Products in the Territory; and

 

WHEREAS, Edwards desires to obtain rights to purchase,
resell and distribute the Products in the Territory;

 

NOW, THEREFORE, in consideration of the mutual
agreements and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE I

 

Definitions

 

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

 

“Agreement” shall have
the meaning set forth in the Recitals.

 

“Automatic Renewal
Threshold” shall have the meaning set forth in Section 8.1.

 

“Average End User Price”
shall have the meaning set forth in Section 7.1.

 

“Damages” shall have the meaning
set forth in Section 9.2.

 

“DBMR” shall have the
meaning set forth in Section 2.2.

 

“Dispute” shall have the
meaning set forth in Section 11.4.

 

“Edwards” shall have the
meaning set forth in the Recitals.

 

“Edwards Facility” shall
have the meaning set forth in Section 7.5.

 

“Effective Date” shall
have the meaning set forth in Section 8.1.

 

1

 

“Escalation Notice” shall
have the meaning set forth in Section 11.4.

 

“Estimated End User Price
“ shall have the meaning set forth in Section 7.1.

 

“ETL” shall have the
meaning set forth in Section 4.2.

 

“FDA” shall have the
meaning set forth in Section 4.2.

 

“HL-1 Laser System” shall
have the meaning set forth in Exhibit A.

 

“HL-2 Laser System” shall
have the meaning set forth in Exhibit A.

 

“HL-2 Purchase Price”
shall have the meaning set forth in Section 7.3.

 

“Indemnified Party” shall
have the meaning set forth in Section 9.3.

 

“Indemnifying Party”
shall have the meaning set forth in Section 9.3.

 

“Initial Term” shall have
the meaning set forth in Section 8.1.

 

“PLC” shall have the
meaning set forth in the Recitals.

 

“PLC Parent” shall have
the meaning set forth in the Recitals.

 

“Products” shall have the
meaning set forth in the Recitals.

 

“Sales and Marketing
Option” shall have the meaning set forth in Section 3.3.

 

“Scheduled Employees”
shall have the meaning set forth in Section 3.3

 

“Services” shall have the
meaning set forth in Section 4.5.

 

“Territory” shall have
the meaning set forth in the Recitals.

 

“TMR Disposable Kit”
shall have the meaning set forth in Exhibit A.

 

“Transaction Agreements”
shall have the meaning set forth in Section 11.10.

 

“Usage Premium” shall
mean, with respect to each contract pursuant to which an HL-1 Laser System or
HL-2 Laser System is sold, the dollar amount by which the per-usage charge set
forth in such contract exceeds the TMR Disposable Kit price set forth in such
contract or if the TMR Disposable Kit price is not explicitly stated in such
contract, the list price of a TMR Disposable Kit at the time the contract was
entered into. In addition, Usage Premium shall also include the amount of any
additional payments related exclusively to the use of the applicable Laser
System, including, but not limited to, rental or lease payments.

 

“Warehouse Retesting”
shall mean retesting an HL-2 Laser System to its original factory
specifications due to the fact that it has been warehoused by Edwards for
longer than the Warehouse Life.

 

2

 

“Warehouse Life” shall
mean [**], unless PLC reasonably determines, at any time during the term of
this Agreement, that such period may be extended, but in no event shall
such period be extended to more than [**]; provided, however that PLC shall
provide Edwards with the data upon which it makes the determination to extend
or maintain the Warehouse Life.

 

“Warranty Period” shall
mean in the event (a) an HL-2 Laser System is shipped before the
expiration of the Warehouse Life, the period from the date of installation
until the [**] anniversary of such installation, but not to exceed [**]
from the date of shipment to the end user; (b) an HL-2 Laser System is
shipped after the expiration of the Warehouse Life and PLC has requested that
such HL-2 Laser System be Warehouse Retested and Edwards ships without such
Warehouse Retesting, the period from the date of sale to Edwards until the date
which is [**] plus the Warehouse Life; (c) a proposed shipment of an HL-2
Laser System would occur after the expiration of the Warehouse Life, and
Edwards and PLC agree to the Warehouse Retesting of such HL-2 Laser System, the
period from the date of installation until the [**] anniversary of such
installation, but not to exceed [**] from the date of shipment to the end user;
and (d) a proposed shipment of an HL-2 Laser System would occur after the
expiration of the Warehouse Life, and Edwards and PLC agree that Warehouse
Retesting of such HL-2 Laser System is not necessary, the period from the date
of installation until the [**] anniversary of such installation, but not to
exceed [**] from the date of shipment to the end user.

 

ARTICLE II

 

Appointment

 

SECTION 2.1 
Appointment. Subject to
the terms and conditions contained in this Agreement, PLC hereby appoints
Edwards as PLC’s exclusive independent distributor of the Products in the
Territory. Edwards may not appoint a secondary or sub-distributor to sell
the Products without PLC’s prior written consent, other than those set forth on
Schedule 2.1. PLC shall not appoint any other agents, representatives, or
distributors for the purpose of selling the Products in the Territory.

 

SECTION 2.2 
Competition. Edwards shall
not sell any devices in the Territory which directly compete with the Products
in the field of myocardial revascularization either intraoperative or
percutaneous that uses a device-based channeling means (“DBMR”) during the term
of this Agreement. Edwards may market and sell medical devices, including,
without limitation, products that may be used in connection with revascularization
of the heart, as long as such medical devices are not within the field of DBMR
and all other medical devices which it is selling as of the date hereof. Edwards
does not currently sell any devices in the field of DBMR.

 

ARTICLE III

 

Obligations of Distributor

 

SECTION 3.1 
General Obligations of Edwards. Edwards
shall use commercially reasonable efforts to distribute and sell the Products
in the Territory including, without limitation, the following:

 

3

 

(a)                                  Promote
the sale and use of Products in the Territory;

 

(b)                                 Provide
customer service, including responding to customer inquiries and requests for
quotes on Product pricing; and

 

(c)                                  Provide
invoices to customers and manage accounts receivable and collection
responsibilities for sales by Edwards of the Products.

 

SECTION 3.2 
Costs and Expenses. Edwards
shall bear all the costs and expenses associated with its obligations set forth
in this Agreement.

 

SECTION 3.3 
Sales and Marketing Option. Edwards
shall have the option (the “Sales and Marketing Option”) which must be
exercised, if at all, upon 30 days prior written notice to PLC given during or
before the three-month period following the first anniversary of the date
hereof, to assume full sales and marketing responsibility for the Products in
the Territory and to offer employment, subject to Edwards’ standard employment
qualifications, with base compensation, commission and benefits substantially
competitive to those provided by PLC immediately prior to such offer to each
PLC employee set forth on Schedule 3.3 (the “Scheduled Employees”),
provided they meet the performance criteria set forth on Schedule 3.3. Upon
exercise of the Sales and Marketing Option, PLC shall release performance
reviews of the Scheduled Employees to Edwards, subject to the waiver of each
such employee. If such Scheduled Employee refuses to waive access to his or her
performance reviews, such refusal shall constitute a rejection of an offer of
employment from Edwards and Edwards shall have no further obligations with
respect to such employee and PLC shall be responsible for any severance pay
pursuant to the last sentence of this section. If Edwards chooses not to offer
employment to any Scheduled Employee that meets the performance criteria set
forth on Schedule 3.3 and Edwards’ standard employment qualifications,
Edwards shall pay to PLC the amount on Schedule 3.3 per such employee. In
the event a Scheduled Employee rejects the employment offer by Edwards, PLC
shall be responsible for severance pay to such employee, if any, pursuant to
PLC’s then existing severance policy, if any.

 

ARTICLE IV

 

Obligations of PLC

 

SECTION 4.1 
Transition Services. PLC
shall and PLC Parent shall cause PLC to provide to Edwards at no cost the transition
services set forth on Schedule 4.1 for a period of up to two months from
the Effective Date which services Edwards may terminate in whole or in part at
any time prior to the expiration of such two-month period.

 

SECTION 4.2 
Approvals. PLC shall and
PLC Parent shall cause PLC to use commercially reasonable efforts to obtain and
maintain all approvals and clearances required with respect to the sale of the
Products in the Territory, including, without limitation, approvals from the
Food and Drug Administration (the “FDA”) and the Electrical Testing Laboratory
(“ETL”).

 

SECTION 4.3 
Labeling of Products. PLC
shall and PLC Parent shall cause PLC to provide and to assume regulatory
responsibility for all finished Product and Product-related

 

4

 

labeling, including all sales and marketing literature, such that it
complies with all applicable laws and regulations in the Territory during the
term of this Agreement. All labeling for the Products shall include the
statement “Distributed by Edwards Lifesciences LLC, Manufactured by PLC Medical
Systems, Inc.”

 

SECTION 4.4 
Clinical or Marketing Studies. PLC
shall and PLC Parent shall cause PLC to use commercially reasonable efforts to
conduct any clinical study with respect to the Products required by the FDA or
other governmental agencies to sell or market the Products in the Territory. All
other clinical or marketing studies with respect to the Products that are
conducted within the Territory will be approved, funded, and conducted on terms
and conditions mutually agreed to by PLC and Edwards.

 

SECTION 4.5 
Installation Services and Services
Provided Under Extended Service Agreements. PLC shall and PLC Parent
shall cause PLC to provide the services and technical support relating to the
Products as set forth on Schedule 4.5 (the “Schedule 4.5 Services”). PLC
shall retain all service fees and revenues that it receives from end users for
providing the Schedule 4.5 Services, provided
that PLC shall pay to Edwards a commission of [**]% of all such fees and revenues. If and to
the extent that PLC fails to perform its obligation in the first sentence
of this Section 4.5, Edwards may provide those Schedule 4.5
Services or contract with a third party to provide those Schedule 4.5
Services. In such event, Edwards shall keep all service fees and revenues
resulting therefrom and PLC shall train the personnel (at a rate of $[**] per
day) performing such Schedule 4.5 Services (whether employed by Edwards or
a third party) and provide factory support, including, without limitation,
spare parts, technical troubleshooting, and processing product returns. PLC
shall also provide Edwards with monthly reports with respect to Product returns
and complaints. Edwards shall log in any Products returned by customers to
Edwards and return such Products to PLC. If an HL-2 Laser System is installed
and the price to be paid by the end user for such installation is less than
$[**] per day, PLC shall install such HL-2 Laser System and Edwards shall pay
PLC the difference between $[**] and the amount to be paid by the end user per
day for such installation, but in no event shall Edwards’ payment exceed $[**]
per installation.

 

SECTION 4.6 
Warranty and Preventive Maintenance
Services. PLC shall and PLC Parent shall cause PLC to provide all
warranty and two scheduled preventive maintenance services on all HL-2 Laser
Systems as set forth on Schedule 4.6 during the Warranty Period. Edwards
shall reimburse PLC for the costs set forth on Schedule 4.6 incurred by
PLC in the performance of its obligation in the prior sentence during the
Warranty Period, but in no event shall such reimbursement exceed $[**] per HL-2
Laser System. In the event PLC is required to conduct Warehouse Retesting on an
HL-2 Laser System, Edwards shall reimburse PLC $[**] per such HL-2 Laser
System, upon completion of Warehouse Retesting.

 

SECTION 4.7 
Recall of Products. In the
event of a recall of any of the Products, PLC shall and PLC Parent shall cause
PLC to bear all costs and expenses of such recall, including, without
limitation, expenses or obligations to third parties, the cost of notifying
customers and end users, and costs associated with the shipment of recalled
Products from customers to PLC. Edwards shall cooperate with PLC in effecting
any recall of the Products sold by Edwards by producing customer lists and
assisting with the notification of customers and end users of the recalled
Products.

 

5

 

SECTION 4.8 
Product Liability Insurance. Set
forth on Schedule 4.8 is a copy of PLC’s product liability insurance
policy which is in full force and effect. PLC shall and PLC Parent shall cause
PLC to obtain and keep in force during the term of this Agreement a product
liability insurance policy in an amount not less than $10,000,000 in a form reasonably
acceptable to Edwards. During the term of this Agreement and for a period of
[**] following the expiration or termination of this Agreement, such insurance
policy shall evidence Edwards and all of its affiliates as additional insured
entities and shall provide for written notification to Edwards by the insurer
not less than 30 days prior to cancellation, expiration or modification. PLC
shall and PLC Parent shall cause PLC to provide a certificate of insurance
evidencing compliance with this Section 4.8 to Edwards within 30 days of
the date hereof.

 

SECTION 4.9 
Costs and Expenses. PLC
shall and PLC Parent shall cause PLC to bear all the costs and expenses
associated with PLC’s obligations set forth in this Agreement.

 

ARTICLE V

 

Sales and Marketing

 

SECTION 5.1 
Marketing Plan. PLC and
Edwards shall jointly execute the marketing plan for the Products set forth in Schedule 5.1
and fund such plan based on the percentages set forth on such schedule during
the first six months of the term of this Agreement. During such period, PLC and
Edwards shall jointly develop a marketing plan for the Products for the next
six months and PLC shall provide [**]% of
the funding for such plan and Edwards shall provide the remaining [**]% of the
funding. PLC and Edwards shall continue to jointly develop a marketing plan for
the Products and provide funding for such plan according to mutually agreeable
allocations until such time as Edwards exercises the Sales and Marketing
Option.

 

SECTION 5.2 
Sales Plan. Edwards and
PLC agree to the sales plan set forth on Schedule 5.2. Edwards shall
reimburse any out-of-pocket costs for travel incurred by PLC in connection with
training Edwards’ sales personnel beyond the scope of the training requirements
anticipated in Schedule 5.2.

 

SECTION 5.3 
Sales Material and Literature. PLC
shall initially provide all sales material and literature for the Products. PLC
and Edwards shall jointly develop any new literature. The costs and expenses
associated with developing and producing any new literature shall be paid
jointly by PLC and Edwards according to the funding percentages set forth in Section 5.1
until such time as Edwards exercises the Sales and Marketing Option. If Edwards
exercises such option, Edwards thereafter shall be solely responsible for
paying the cost of such literature. Nothing in this Section 5.3 shall have
any effects on PLC’s obligations set forth in Section 4.3.

 

SECTION 5.4 
Training and Retention of Sales
Personnel. PLC shall provide products and sales training to all PLC
and Edwards sales personnel that are engaged in marketing and selling the
Products in the Territory. PLC shall use commercially reasonable efforts to
retain the sales personnel set forth on Schedule 3.3. During the term of
this Agreement and for a period of [**] after the termination or expiration of
this Agreement, neither PLC Parent nor PLC shall hire or solicit for employment
any of Edwards’ personnel without the prior written consent of

 

6

 

Edwards. During the term of this Agreement and for a period of one year
after the termination or expiration of this Agreement, Edwards shall not hire
or solicit for employment any personnel of PLC Parent or PLC without the prior
written consent of PLC; provided, however, that
if Edwards exercises the Sales and Marketing Option, the foregoing limitations
shall be inapplicable to personnel listed or otherwise referenced on Schedule 3.3.

 

SECTION 5.5 
Performance Record of Sales Personnel.
PLC shall keep an accurate and complete record of the performance of
all Scheduled Employees, including the sales figures for each Scheduled
Employee, and will provide quarterly updates to Edwards of the sales figures
for each territory.

 

ARTICLE VI

 

Purchase Arrangements

 

SECTION 6.1 
Purchase Forecasts for Products. PLC
and Edwards shall confer monthly and jointly produce a rolling twelve-month
forecast of the expected demand for the Products until such time as Edwards
exercises the Sales and Marketing Option. After Edwards exercises such option,
for the remaining term of the Agreement, Edwards shall provide quarterly to PLC
a rolling four quarter forecast of the expected demand for the Products.

 

SECTION 6.2 
Purchaser Orders; No Minimum Product
Quantities. Edwards shall submit
a non-cancelable purchase order to PLC for TMR Disposal Kits for the upcoming
calendar quarter on the first day of the month preceding such quarter except
that until June 30, 2001, Edwards shall submit non-cancelable purchase
orders on a monthly basis for TMR Disposal Kits. Until such time as Edwards
exercises the Sales and Marketing Option, Edwards shall submit non-cancelable
purchase orders to PLC for HL-2 Laser Systems on an as needed basis. If Edwards
exercises such option, thereafter, Edwards shall submit a non-cancelable
purchase order to PLC for HL-2 Laser Systems for the upcoming calendar quarter
on the first day of the month preceding such quarter. Notwithstanding its
provision of demand forecasts for the Products and anything else set forth
herein, Edwards shall determine in its sole discretion the quantity of Products
it shall purchase and there shall be no minimum purchase requirements for any
Products. To the extent that the terms of any purchase order and the terms of
this Agreement conflict, the terms of this Agreement shall control.

 

SECTION 6.3 
Placement of Orders. All
orders for Products submitted by Edwards shall be initiated by written purchase
orders sent to PLC which shall specify the desired delivery date, location and
method of transportation for the Products included in such order. With respect
to any Product for which Edwards may submit purchase orders to PLC on an
as needed basis, Edwards agrees to promptly submit purchase orders to PLC after
its receipt of orders from its customers, but, in any event, shall submit
purchase orders to PLC within ten business days of its receipt of a customer
order. Quarterly purchase orders submitted to PLC by Edwards will indicate the
quantity of Products to be delivered for each month of the quarter, provided,
however, the quantity for any individual month shall in no case be less than
[**]% of the total to be delivered for the entire quarter. The quantity for the
quarter shall not exceed [**]% of the most recent forecasted quantity for the
quarter. PLC shall use commercially reasonable efforts to deliver the Products
on the agreed upon delivery dates set forth in accepted

 

7

 

purchase orders, but, in any event, shall make all deliveries within
[**] days of the agreed upon delivery dates set forth in accepted purchase
orders.

 

ARTICLE VII

 

Pricing, Payment, Shipping

 

SECTION 7.1 
TMR Disposable Kit. (a)  Edwards shall purchase the TMR Disposable
Kits from PLC at 55% of the Average End User Price. If Edwards exercises the
Sales and Marketing Option, thereafter Edwards shall purchase the TMR
Disposable Kits from PLC at 45% of the Average End User Price. The “Average End
User Price” shall mean the average of the actual sales price for each TMR
Disposable Kit sold during a calendar quarter. Edwards shall calculate the
Average End User Price and deliver such calculation to PLC within 15 days after
the end of each quarter.

 

(b)                                 PLC
shall bill TMR Disposable Kits to Edwards on a preliminary basis at 55% of the
Estimated End User Price before Edwards exercises the Sales and Marketing
Option and 45% of the Estimated End User Price after Edwards exercises such
option. Through June 30, 2001, the “Estimated End User Price” shall be
$2,000. During subsequent quarters of the Agreement, the “Estimated End User
Price” shall be equal to the Average End User Price for the most recent quarter
that such data is available and calculable.

 

(c)                                  The
difference between the preliminary amount billed during a quarter using the
Estimated End User Price and the actual amount owed using the Average End User
Price shall be credited to Edwards by PLC or paid by Edwards to PLC, as the
case may be, within [**] days of the date such Average End User Price is
determined. With respect to TMR Disposable Kits that PLC has sold prior to the
date of this Agreement to PLC customers using the HL-1 Laser System, but as to
which delivery has not yet been requested by the applicable customer, upon such
request for delivery PLC shall provide the requested TMR Disposable Kits to
Edwards [**], and Edwards shall provide such TMR Disposable Kits to the
applicable customer [**].

 

(d)                                 Within
[**] days of the end of each calendar month, Edwards shall provide to PLC a written
report showing, for the month immediately preceding the report, Edwards’ sales
of the Products, including the name of the customer, the date of the shipment,
the price of the Product and the allocation of the price between Edwards and
PLC. Edwards shall maintain for at least two years its records, contracts and
accounts relating to sales of the Products, and shall permit examination
thereof by authorized representatives of PLC at all reasonable times.

 

SECTION 7.2 
HL-1 Laser Systems. Edwards
shall deliver to PLC 100% of all Usage Premiums received in connection with the
sale of TMR Disposable Kits for use with, and service revenue related to, HL-1
Laser Systems. Edwards shall deliver any and all monies received in connection
with the purchase of an HL-1 Laser System to PLC.

 

SECTION 7.3 
HL-2 Laser Systems. Subject
to any adjustment provided herein, Edwards shall purchase the HL-2 Laser
Systems from PLC for $[**] per unit, which amount

 

8

 

includes warehousing fees at PLC’s facility (the “HL-2 Purchase Price”).
In addition, Edwards shall pay PLC [**]% of the amount the HL-2 Laser System
end user price exceeds the HL-2 Purchase Price for each such HL-2 Laser System
sold. Edwards shall retain the Usage Premiums it receives from each HL-2 Laser
System that is placed until the aggregate Usage Premiums received with respect
to such HL-2 Laser System equals the [**]. Thereafter, Edwards shall pay PLC
[**]% of such Usage Premiums. PLC and Edwards agree to periodically review in
good faith the HL-2 Laser Purchase Price and to make adjustments, subject to
their mutual agreement, to the HL-2 Purchase Price due to inflation, change in
product cost and/or other market or competitive conditions. Edwards shall pay
PLC within [**] days of the sale the amount set forth in the column titled “Protection”
specified in Schedule 7.3 for each such HL-2 Laser System that is sold to
a customer listed on Schedule 7.3 within three months of Effective Date of
this Agreement.

 

SECTION 7.4 
Product Accessories. Edwards
shall purchase from PLC F.O.B PLC’s manufacturing facility any Product
accessory set forth on Schedule 7.4 for the transfer price listed for such
accessory on Schedule 7.4.

 

SECTION 7.5 
Shipping. At Edwards’
request, PLC shall warehouse all HL-2 Laser Systems purchased by Edwards at
Edwards’ segregated warehouse within PLC’s facility (“Edwards Facility”). Until
the date 60 days after the date of the termination of the transition services
provided in Section 4.1, PLC shall deliver TMR Disposable Kits directly to
the end user. Thereafter, PLC shall deliver TMR Disposable Kits directly to
Edwards. All prices for the Products shall be F.O.B. PLC’s manufacturing
facility. The prices will not include any federal, state or local sales, use,
excise or value added tax that may be applicable. If PLC has the legal
obligation to collect such taxes, the appropriate amount shall be added to
Edwards’ invoice and paid by Edwards unless Edwards provides PLC with a valid
tax exemption certificate authorized by the appropriate taxing authority. PLC
shall ship the Products using the method of transportation specified by Edwards
in the purchase order. In all cases, title, risk of loss and all responsibility
for transportation, insurance and storage shall pass from PLC to Edwards upon
transfer of finished HL-2 Laser Systems from PLC to the Edwards Facility and
after such transfer PLC shall promptly issue an invoice related thereto to
Edwards.

 

SECTION 7.6 
Payment. Full payment
shall be made by Edwards to PLC within [**] days from the invoice date which
shall be shipping date for the Products to Edwards.

 

ARTICLE VIII

 

Term and Termination; Annual Meeting

 

SECTION 8.1 
Term and Renewal. This
Agreement shall commence on the dale hereof (the “Effective Date”) and be valid
for an initial term of five (5) years (“Initial Term”). Edwards shall have
the option to extend the Agreement on the same terms and conditions for an
additional term of five (5) years, provided
that the TMR Disposable Kits sold by Edwards, measured for the
twelvemonth period ending six months prior to the expiration of the Initial
Term, are used in at least 35% of all intraoperative laser-based
transmyocardial revascularization procedures in the Territory for such period
as measured by a third-party study reasonably acceptable to PLC and Edwards
(the “Automatic Renewal Threshold”). If the parties cannot

 

9

 

agree on any such study, then they shall jointly commission a study by
McKinsey & Company and will be bound by such study. PLC and Edwards
shall split the cost of the McKinsey & Company study equally. If the
sale of Products by Edwards does not meet the Automatic Renewal Threshold, the
parties may agree to extend the Agreement on mutually acceptable terms and
conditions.

 

SECTION 8.2 
Immediate Termination. This
Agreement may be terminated by either Edwards or PLC immediately in the
event that (a) any breach by PLC of Section 4.8; (b) any
material breach by the other party remains uncured 60 days after written notice
containing details of the breach has been delivered to the other party; or (c) the
other party shall file for protection from its creditors under any applicable
bankruptcy or insolvency laws, shall make an assignment for the benefit of
creditors, or shall have a receiver appointed for its property. This Agreement may be
terminated by Edwards upon one-year notice, in the event Edwards decides in its
sole reasonable discretion that unfavorable market conditions exist for the
Products in the Territory.

 

SECTION 8.3 
Annual Meeting. The chief
executive officer of PLC and the executive in charge of the DBMR business for
Edwards shall agree to meet annually in order to discuss sales opportunities,
current market trends and to keep each other informed of pertinent events and
competing products having an impact upon the Products’ marketability,
including, but not limited to, forecasts as to future demand.

 

ARTICLE IX

 

Warranties and Indemnification

 

SECTION 9.1 
Warranties. PLC warrants that
(a) it possesses good and marketable title to all Products sold to Edwards
under this Agreement; (b) each Product conforms to its specifications and
is fit for the purposes and indications described in its labeling; (c) when
available for sale in the Territory the Products are or will be manufactured in
conformity with all FDA and ETL rules and regulations and applicable laws
of the Territory; (d) the Products have or will have obtained FDA approval
to market and sell the Products when the Products are available for sale in the
Territory; (e) it is the owner or licensor of the entire right, title and
interest in the intellectual property relating to the Products and, to the
knowledge of PLC and PLC Parent, the use by Edwards of any such intellectual
property will not violate any right of any third party; and (f) it
complies and will continue to comply with all applicable laws and regulations
of the Territory with respect to the Products.

 

SECTION 9.2 
Indemnification by PLC. PLC
and PLC Parent shall indemnify and hold harmless Edwards, its officers,
directors, shareholders, employees, parents, successors, affiliates, assigns,
customers and users of Products, in each case, from and against any and all
costs or expenses (including, without limitation, reasonable attorneys’ fees,
and the reasonable out-of-pocket expenses of testifying and preparing for
testimony and responding to document and other information requests, whether or
not a party to such litigation), judgments, fines, losses, claims (whether or not
meritorious) and damages (collectively, “Damages”), as incurred, to the extent
they relate to, arise out of or are the result of (i) the manufacture by
PLC or use of any Products; (ii) the design of any Products or component
of the Products not developed

 

10

 

exclusively by Edwards; (iii) the failure of the Products to
satisfy any warranty made by PLC; (iv) by reason of the sale or use of the
Products any claim of infringement of patents, trademarks, trade names, or
copyrights, any claim of misappropriation or misuse of trade secrets or
information or any similar claim; (v) any claims with respect to any
Scheduled Employee arising from actions taken by PLC prior to the date hereof,
and (vi) any claims with respect to any Scheduled Employee arising from
actions taken by PLC, unrelated to this Agreement, prior to the exercise of the
Sales and Marketing Option, provided, however, that such indemnification shall
in no event exceed $[**].

 

SECTION 9.3 
Indemnification by Edwards. Edwards
shall indemnify and hold harmless PLC, its successors, affiliates and assigns,
in each case, from and against any and all Damages, as incurred, to the extent
they relate to, arise out of or are the result of Edwards’ gross negligence or
willful misconduct in the promotion and sale of the Products by Edwards.

 

SECTION 9.4 
Indemnification Procedures. The
party seeking indemnification (the “Indemnified Party”) pursuant to this Article EX
shall promptly notify the indemnifying party (the “Indemnifying Party”), in
writing, of such claim describing such claim in reasonable detail, provided that the failure to provide such
notice shall not affect the obligations of the Indemnifying Party unless and
only to the extent it is actually prejudiced thereby. In the event that such
claim involves a claim by a third party against an Indemnified Party, the
Indemnifying Party shall have 30 days after receipt of such notice to decide
whether it will undertake, conduct and control, through counsel of its own
choosing (but reasonably acceptable to the Indemnified Party) and at its own
expense, the settlement or defense thereof unless (i) the Indemnifying
Party is also a party to the proceeding and the Indemnified Party determines in
good faith that joint representation would be inappropriate or (ii) the
Indemnifying Party fails to provide reasonable assurance to the Indemnified
Party of its financial capacity to defend such proceeding, and provide
indemnification with respect thereto, and if it so decides, the Indemnified
Party shall cooperate with it in connection therewith, provided that the Indemnified Party may participate
in such settlement or defense through counsel chosen by it, and provided further that the fees and
expenses of such counsel shall be borne by the Indemnified Party. The
Indemnifying Party shall not, without the written consent of the Indemnified
Party (which consent shall not be unreasonably withheld, conditioned or
delayed), settle or compromise any action, unless such settlement or compromise
includes an unconditional release of the Indemnified Party. If the Indemnifying
Party does not notify the Indemnified Party within 30 days after the receipt of
notice of a claim of indemnity hereunder that it elects to undertake the
defense thereof, the Indemnified Party shall have the right to contest, settle
or compromise the claim but shall not pay or settle any such claim without the
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld, conditioned or delayed). The Indemnifying Party and the Indemnified
Party shall cooperate fully in all aspects of any investigation, defense,
pre-trial activities, trial, compromise, settlement or discharge of any claim
in respect of which indemnity is sought pursuant to Article IX, including,
but not limited to, providing the other party with reasonable access to
employees and officers (including as witnesses) and other information. The
remedies provided in this Article IX will not be exclusive of or limit any
other remedies that may be available to the Indemnified Parties.

 

11

 

ARTICLE X

 

Intellectual Property Rights and Confidentiality

 

SECTION 10.1 
Trademarks. Edwards shall
have the right to indicate to the public that it is an authorized distributor
of the Products and to market and sell the Products under the trademarks,
service marks and trade names that PLC may adopt from time to time. Edwards
shall not alter, obscure or remove any trademarks, service marks or trade names
of PLC which are contained on or in or affixed to the Products at the time of
shipment. Edwards shall not use any trademarks, service marks or trade names of
PLC in connection with any business conducted by Edwards other than dealing
with the Products in accordance with the terms of this Agreement. Edwards
agrees that its use of the trademarks, service marks and trade names of PLC
shall not create in its favor any right, title or interest therein and
acknowledges PLC’s exclusive right, title and interest thereto. Edwards agrees
that it will not use, without PLC’s prior written consent, any mark which is
similar to or is likely to be confused with any trademarks, service marks or
trade names of PLC. Edwards’ rights to use the trademarks, service marks and
trade names of PLC as set forth in this Section 10.1 shall terminate upon
termination or expiration of this Agreement.

 

SECTION 10.2 
Confidential Information. In
order to avoid disclosure of confidential and proprietary information to any
other person, firm or corporation, the parties agree that during the term of
this Agreement and for a period of three years from the termination of this
Agreement each will treat any such information which is received from one
another in writing and clearly marked as “Confidential” or if disclosed orally,
which is confirmed in writing as “Confidential” within thirty (30) days of
initial disclosure, with the same degree of care that each employs with respect
to its own information which it does not desire to have published or disseminated.
It is understood that each party shall be liable for any unauthorized
disclosure should it fail to safeguard the disclosed information with such care.
This obligation shall survive the termination or expiration of this Agreement. The
parties shall not have any obligation with respect to such information which
is:

 

(a)                                  independently
developed by the receiving party without the benefit of the disclosure or is
already known to the receiving party at the time of the disclosure, as
evidenced by written documentation;

 

(b)                                 publicly
known or becomes publicly known without the wrongful act or breach of this
Agreement by the receiving party; or

 

(c)                                  rightfully
received by the receiving party from a third-party who is not under any
obligation of confidentiality or trade secret obligation to the originating
party.

 

12

 

ARTICLE XI

 

MISCELLANEOUS

 

SECTION 11.1 
Relationship. The
relationship of Edwards and PLC established by this Agreement is of independent
contractors and not agents (except as set forth in Section 2.1), and
nothing in this Agreement shall be construed:

 

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

 

(b)                                 To
constitute the parties as partners, joint ventures, co-owners or otherwise as
participants in joint undertaking; or

 

(c)                                  To
allow either party to create or assume any obligation on behalf of the other
party for any purpose whatsoever. The purchase, promotion, and resale of, or
any other legal transactions concerning the Products hereunder shall be carried
out in the name of and for the account of Edwards as principal, and Edwards
shall not enter into any agreement with third persons binding in any way on
PLC.

 

SECTION 11.2 
No Conflict. Each party
represents and warrants to the other parties that it is not subject to any
contractual obligation or restraint which will materially interfere with its
right and ability to perform pursuant to the terms of this Agreement.

 

SECTION 11.3 
Governing Law. This
Agreement shall be governed by, interpreted under, and construed in accordance
with the internal laws of the State of New York, including, without limitation,
Sections 5-1401, 5-1402 of the New York General Obligations Law and New York
Civil Practice Laws and Rules 327(b).

 

SECTION 11.4 
Escalation. Edwards and
PLC (and/or PLC Parent) will attempt in good faith to resolve expeditiously any
dispute, claim or controversy arising out of or relating to this Agreement (the
“Dispute”) promptly by negotiations between executives who have authority to
settle the controversy and who are at a higher level of management than the
persons with direct responsibility for the administration of this Agreement. Either
party may give the other party written notice (the “Escalation Notice”) of
any Dispute not resolved in the normal course of business. Within 15 days after
delivery of the Escalation Notice, the receiving party shall submit to the other
a written response. The Escalation Notice and the response thereto shall
include (a) a statement of each party’s position and a summary of
arguments supporting that position, and (b) the name and title of the
executive who will represent that party and of any other person who will
accompany the executive. Within 30 days after delivery of the Escalation
Notice, the executives of both parties shall meet at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to attempt
to resolve the Dispute. All reasonable requests for information made by one
party to the other will be honored. All negotiations pursuant to this clause
are confidential and shall be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence. The parties shall attempt to
resolve any Dispute pursuant to the procedure set forth in this Section 11.4
for a period up to 60 days from the date of delivery of the Escalation
Notice before resorting to other available remedies; provided, however, nothing contained in this Section 11.4
shall prevent any party from resorting to judicial process if injunctive or
other equitable relief from a court is necessary to prevent serious and
irreparable injury to it or to others. The use of the procedure set forth in
this

 

13

 

Section 11.4 will not be construed under the doctrine of laches,
waiver or estoppel to affect adversely any party’s right to assert any claim or
defense.

 

SECTION 11.5 
Jurisdiction and Consent to Service. In
accordance with the laws of the State of New York, and without limiting the
jurisdiction or venue of any other court, the parties (a) agree that any
suit, action or proceeding arising out of or relating to this Agreement shall
be brought solely in the state or federal courts of New York; (b) consent
to the exclusive jurisdiction of each such court in any suit, action or
proceeding relating to or arising out of this Agreement; (c) waive any
objection which any of them may have to the laying of venue in any such
suit, action or proceeding in any such court; and (d) agree that service
of any court paper in any such suit, action or proceeding may be made in
any manner as may be provided under the applicable laws or court rules governing
service of process in such court.

 

SECTION 11.6 
Notices. All notices,
demands, requests, consents, approvals or other communications required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be delivered (charges prepaid, receipt
confirmed or return receipt requested (if available)) by hand, by nationally
recognized air courier service, by certified mail or facsimile, addressed as
set forth below or to such other address as such party shall have specified
most recently by written notice. Notice shall be deemed given and effective (i) if
delivered by hand or by nationally recognized courier service, when delivered
at the address specified in this Section 11.6 (or in accordance with the
latest unrevoked written direction from such party), (ii) if by certified
mail, upon mailing or (iii) if given by facsimile when such facsimile is
transmitted to the fax number specified in this Section 11.6 (or in
accordance with the latest unrevoked written direction from such party),
provided the appropriate confirmation is received.

 

To PLC:

 

PLC Systems Inc.

10 Forge Park

Franklin, MA 02038

Attention:  Chief Executive Officer

Fax:  (508) 541-7990

 

with a copy (which shall not constitute notice) to:

 

Wilmer Cutler Pickering 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: 
Associate General Counsel

Fax:  (949)
250-6850

 

14

 

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 11.7 
Interpretation. When a
reference is made in this Agreement to a Section, Schedule or Exhibit,
such reference shall be to a Section, Schedule or Exhibit of this
Agreement unless otherwise indicated. When a reference is made in this
Agreement to a specific Schedule, such reference shall be deemed to include, to
the extent applicable, all the other Schedules. The table of contents, table of
definitions, titles and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. When the words “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” All accounting terms not defined in this Agreement shall have the
meanings determined by generally accepted accounting principles as of the date
hereof. All capitalized terms defined herein are equally applicable to both the
singular and plural forms of such terms.

 

SECTION 11.8 
Severability. In the event
that any one or more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the parties shall negotiate in good faith with a view
to the substitution therefore of a suitable and equitable solution in order to
carry out, so far as may be valid and enforceable, the intent and purpose
of such invalid provision; provided,
however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the fullest
extent permitted by law.

 

SECTION 11.9 
Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which shall, taken together, be considered one
and the same agreement, it being understood that the parties need not sign the
same counterpart.

 

SECTION 11.10 
Entire Agreement; No Third Party
Beneficiaries. This Agreement and the other Transaction Agreements
(as such term is defined in the Securities Purchase Agreement, dated as of January 7,
2001, by and among Edwards Lifesciences Corporation, PLC and PLC Parent),
including all exhibits hereto and thereto, by and among the parties hereto,

 

(a)                                  constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written, with respect to the subject matter hereof; and

 

15

 

(b)                                 and
shall be binding upon and shall inure to the benefit of each of the parties
hereto and thereto and their respective successors and permitted assigns and is
not intended to confer any rights, remedies or benefits on any Persons other
than as expressly set forth in this Section 11.10.

 

SECTION 11.11 
Amendments and Modifications; Waivers
and Extensions.

 

(a)                                  No
amendment, modification or termination of this Agreement shall be binding upon
any other party unless executed in writing by the parties hereto intending to
be bound thereby.

 

(b)                                 Any
party to this Agreement may waive any right, breach or default which such
party has the right to waive; provided that such waiver will not be effective
against the waiving party unless it is in writing, is signed by such party, and
specifically refers to this Agreement. Waivers may be made in advance or
after the right waived has arisen or the breach or default waived has occurred.
Any waiver may be conditional. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof nor of any other agreement or provision herein
contained. No failure or delay in exercising any right, power or privilege
hereunder shall be deemed a waiver or extension of the time for performance of
any other obligations or acts nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.

 

SECTION 11.12 
Assignment. Neither this
Agreement nor any of the rights, duties or obligations hereunder may be
assigned or delegated by any of the parties hereto without the prior written
consent of PLC or Edwards, as the case may be, which may be withheld
in its sole discretion except that Edwards may assign all its rights and
obligations to any subsidiary of Edwards Lifesciences Corporation. Any
attempted assignment or delegation of rights, duties or obligations hereunder
in contravention hereof shall be void and of no effect.

 

SECTION 11.13 
Exhibits. Each of the
exhibits referred to herein and attached hereto is an integral part of
this Agreement and is incorporated herein by reference.

 

SECTION 11.14 
Expenses. Except as
otherwise provided in this Agreement, each party to this Agreement shall bear
its respective expenses incurred in connection with the preparation, execution,
and performance of this Agreement and the transactions contemplated hereby,
including all fees and expenses of agents, representations, counsel and
accountants.

 

SECTION 11.15 
No Consequential or Punitive Damages.
If any party claims any breach of this Agreement by the other party
or otherwise becomes dissatisfied with any matter relating hereto or arising
herefrom, it shall have no right to seek consequential or punitive damages and
each party hereby waives any right it may have to seek such punitive or
consequential damages.

 

16

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.

 

	
   

  	
  PLC
  SYSTEMS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  G. Thomasch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James
  G. Thomasch

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  
	
   

  	
  PLC
  MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  G. Thomasch

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James
  G. Thomasch

  
	
   

  	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  
	
   

  	
  EDWARDS
  LIFESCIENCES LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  H. Kehl, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  H. Kehl, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Corporate
  Vice President

  
					

 

 

Exhibit A

 

Description of Products

 

1.                                      HL-2 Laser
System including:

 

[**]

 

2.                                      TMR
Disposable Kit including:

 

[**]

 

Products shall also include [**] and or [**] the
products, [**] and [**] products [**] in the field [**].

 

Products do not include the HL-1 Laser System.

 

 

Schedule 2.1

 

Distributors

 

1.                                       Criticor
(West Coast)

 

2.                                       Central
Medical (Wisconsin, Minnesota)

 

 

Schedule 3.3

 

Sales Personnel

 

Capital Sales
Representatives

[**]

 

Manager of
Clinical Training

 

[**]

 

Clinical
Specialists

 

[**]

 

(i)                                     $[**]

 

(ii)                                  A
ranking of no less than “satisfactory” (or PLC’s equivalent) on the most recent
performance review immediately prior to Edwards’ exercise of the Sales and
Marketing Option.

 

 

Schedule 4.1

 

Transition Services

 

1.                                       Customer
service:  Provide seamless support to
customers during transition to include order placement, returns, problem
resolution, questions, etc. In addition, provide support and data to Edwards
Customer Service relative to customers, products and the sales force.

 

2.                                       Invoicing:  Provide accounts receivable support to
customers during transition to include invoicing, collections, problem
resolution, questions, etc. In addition, provide support and data to Edwards
Accounts Receivable relative to customers, aging and other information.

 

 

Schedule 4.5

 

Installation Services and Services Relating to Extended
Service Agreements

 

Installation Support Service includes:

 

(i)                                     installation
of HL-2 Laser System at hospital

 

(ii)                                  laser
operator in-service training at hospital

 

Extended Service Agreements can include:

 

all or part of the services defined in Schedule 4.6.
The exact services are detailed in extended service contract agreements with
the customer and are tailored to the customer requirements.

 

PLC is not responsible for the re-installation or
transportation of the Product among multiple facilities.

 

 

Schedule 4.6

 

Warranty and Preventive Maintenance Services

 

Preventive Maintenance are planned services which
include:

 

(i)                                     Cleaning
of optics

(ii)                                  In-service
for any new operating room personnel

(iii)                               Calibration of energy
readings

(iv)                              Safety
checks

(v)                                 Replacement
of air purge filter

(vi)                              any
adjustments to make the product meet performance specifications

 

Warranty Service is unplanned services which include:

 

(i)                                     any
necessary travel, labor and material expense to repair or replace a defective
product or product component that is not meeting published PLC performance
specifications.

 

“costs” shall include all material costs at PLC’s
fully absorbed standard manufacturing cost and labor and travel-related costs
for PLC personnel calculated at the rate of $[**] per day, billed in whole day
increments

 

 

Schedule 4.8

 

Product Liability Insurance

 

To be provided.

 

 

Schedule 5.1

 

Marketing Plan

 

To be provided.

 

 

Schedule 5.2

 

Sales Plan

 

PLC and Edwards have developed a joint sales strategy
to drive utilization during the first year of the agreement. Edwards and PLC
anticipate a transition of the sales and marketing functions from PLC to
Edwards at the end of the first twelve months based on the success of the
partnership in 2001. Specific objectives, actions and activities to accomplish
the goals are highlighted below and the details are supported by the jointly
developed master Sales Plan.

 

	
  Objective:

  	
   

  	
  Drive procedural growth
  in assigned territory.

  
	
   

  	
   

  	
   

  
	
  Expectation:

  	
   

  	
  Edwards sales
  organization will develop skill sets that allow them to successfully manage
  the process of increasing kit sales by gaining necessary knowledge &
  devoting time needed to drive procedural increases in assigned territory.

  
	
   

  	
   

  	
   

  
	
  Action:

  	
   

  	
  A training curriculum
  will be established for the Edwards Sales Representatives that develops core
  competencies in the key areas of clinical knowledge, concept selling and
  capital acquisition.

  
	
   

  	
   

  	
   

  
	
  Activities:

  	
   

  	
  The following
  activities have been schedules to ensure core competencies are attained:

  

 

	
  Activity

  	
   

  	
  Location

  	
   

  	
  Date

  	
   

  	
  Attendees

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.
  Implementation/Launch

  	
   

  	
  Chicago

  	
   

  	
  January 8-11

  	
   

  	
  PLC/EW

  
	
  B. Training-Patient Selection

  	
   

  	
  STS

  	
   

  	
  January 29

  	
   

  	
  EW/PLC

  
	
  C. Edwards National Meeting

  	
   

  	
  Irvine,
  CA

  	
   

  	
  Feb. 7

  	
   

  	
  EW/PLC
  mgmt

  
	
  D. Combine Training Event

  	
   

  	
  not
  determined

  	
   

  	
  April 2

  	
   

  	
  EW/PLC

  
	
  E. Combine Training Event

  	
   

  	
  not
  determined

  	
   

  	
  September 2

  	
   

  	
  EW/PLC

  
	
  F. PLC representative will spend approximately
  20% of selling time supporting Edwards activity to assist in the attainment
  of sales objectives.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*Measurements will be established
to monitor progress in key areas.

 

 

Schedule 7.3

 

HL-2 Laser System Customers

 

	
  EST. COMMISSION

  ACCOUNT

  	
   

  	
  CITY

  	
   

  	
  REP

  	
   

  	
  DEAL

  	
   

  	
  CLOSE

  	
   

  	
  PROTECTION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  

 

 

Schedule 7.4

 

Product Accessories

 

	
  Part

  Number

  	
   

  	
  Description

  	
   

  	
  Model

  used

  on

  	
   

  	
  Qty

  	
   

  	
  Unit

  	
   

  	
  Shelf

  life

  	
   

  	
  PLC

  Sale

  Price

  	
   

  	
  Edwards

  Transfer

  Price

  	
   

  	
  Shipping

  Weight

  (lbs)

  	
   

  	
  Shipping

  Dimensions

  (inches)

  	
   

  	
  Notes:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P00100

  	
   

  	
  Footswitch

  	
   

  	
  both

  	
   

  	
  1

  	
   

  	
  ea

  	
   

  	
  n/a

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  8

  	
   

  	
  12x6.5x5.5

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L00002

  	
   

  	
  Safety Goggles

  	
   

  	
  both

  	
   

  	
  1

  	
   

  	
  ea

  	
   

  	
  n/a

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  1

  	
   

  	
  7.5x6.5x5.5

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B00056

  	
   

  	
  Remote Enable Cable

  	
   

  	
  both

  	
   

  	
  1

  	
   

  	
  ea

  	
   

  	
  n/a

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  1

  	
   

  	
  11x13x1.5

  	
   

  	
  Fedex small box

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B00076

  	
   

  	
  Lens Cell

  	
   

  	
  both

  	
   

  	
  1

  	
   

  	
  ea

  	
   

  	
  n/a

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  1

  	
   

  	
  11x13x1.5

  	
   

  	
  Fedex small box

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A00097 

  	
   

  	
  ECG Trunk Cable 

  	
   

  	
  HL-2 

  	
   

  	
  1 

  	
   

  	
  ea 

  	
   

  	
  n/a 

  	
   

  	
  [**] 

  	
   

  	
  [**] 

  	
   

  	
  1 

  	
   

  	
  11x13x1.5 

  	
   

  	
  Fedex small box 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A00098 

  	
   

  	
  ECG 5 Lead Set 

  	
   

  	
  HL-2 

  	
   

  	
  1 

  	
   

  	
  ea 

  	
   

  	
  n/a 

  	
   

  	
  [**] 

  	
   

  	
  [**] 

  	
   

  	
  1 

  	
   

  	
  11x13x1.5 

  	
   

  	
  Fedex small box 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L00004 

  	
   

  	
  Filter, Hepa, 0.3 micron 

  	
   

  	
  HL-2 

  	
   

  	
  1 

  	
   

  	
  ea 

  	
   

  	
  n/a 

  	
   

  	
  [**] 

  	
   

  	
  [**] 

  	
   

  	
  1 

  	
   

  	
  11x13x1.5 

  	
   

  	
  Fedex small box 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A00181 

  	
   

  	
  HL-2 Operators Manual 

  	
   

  	
  HL-2 

  	
   

  	
  1 

  	
   

  	
  ea 

  	
   

  	
  n/a 

  	
   

  	
  [**] 

  	
   

  	
  [**] 

  	
   

  	
  3 

  	
   

  	
  13.5x11.5x2.5 

  	
   

  	
  Fedex medium box 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A00202

  	
   

  	
  Warning Sign HL-2

  	
   

  	
  HL-2

  	
   

  	
  1

  	
   

  	
  ea

  	
   

  	
  n/a

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  1

  	
   

  	
  11x13x1.5

  	
   

  	
  Fedex small boxEXHIBIT
10.23

 

Compensatory Arrangements with Executive Officers

 

Base Salary

 

The current annual base salaries of each of
the executive officers of PLC Systems Inc. (the “Company”) are as follows:

 

	
  Mark R.
  Tauscher, President, Chief Executive Officer and Director

  	
   

  	
  $

  	
  286,841

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  James G.
  Thomasch, Senior Vice President of Finance and Administration,

  Chief Financial Officer and Treasurer

  	
   

  	
  $

  	
  180,081

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dr. Robert I.
  Rudko, Chief Scientist

  	
   

  	
  $

  	
  198,275

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Michael F.
  Adams, Vice President of New Ventures

  	
   

  	
  $

  	
  169,744

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Kenneth J.
  Luppi, Vice President of Operations

  	
   

  	
  $

  	
  147,583

  	
   

  

 

Cash
Bonus Compensation

 

On February 1, 2006, the Compensation Committee of the Board of
Directors (the “Compensation Committee”) of the Company adopted bonus
arrangements for its executive officers for 2006. Messrs. Tauscher, Thomasch,
Adams,  Luppi  and Rudko will receive a bonus based 25% on
the financial performance of the Company’s business and 75% on the attainment
of defined program milestones during the fiscal year ending December 31, 2006. The
target bonus payment for Mr. Tauscher is 50% of his base salary, for Mr.
Thomasch 40% of his base salary, and for Messrs. Adams, Luppi and Rudko is 30%
of each of their respective base salaries. The target bonus payments may be
adjusted downwards if the financial performance of the Company’s business does
not meet the targets or the Company does not attain the defined program
milestones.

 

Other Compensation

 

Mr. Tauscher and Mr. Thomasch each currently
receive an annual car allowance of $12,000. Mr. Adams, Mr. Luppi and Dr. Rudko
each currently receive an annual car allowance of $6,000.

 

The Compensation Committee may also, from
time to time, award each of the executive officers compensation in the form of
stock options granted under the Company’s 2005 Stock Incentive Plan.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00100-of-00352.parquet"}]]