-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GC9q5MnBpSARCbJ90PUZKUip4rFGoaDG59qU70/yz5bSYMwr1+yTdYqnLpQaCYr3 +HdXEnJKnxLEZvYyG4tFMQ== 0000912057-01-507094.txt : 20010410 0000912057-01-507094.hdr.sgml : 20010410 ACCESSION NUMBER: 0000912057-01-507094 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010405 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PLC SYSTEMS INC CENTRAL INDEX KEY: 0000879682 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 043153858 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-42378 FILM NUMBER: 1595978 BUSINESS ADDRESS: STREET 1: 10 FORGE PK CITY: FRANKLIN STATE: MA ZIP: 02038 BUSINESS PHONE: 5085418800 MAIL ADDRESS: STREET 1: 10 FORGE PARK CITY: FRANKLIN STATE: MA ZIP: 02038 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EDWARDS LIFESCIENCES CORP CENTRAL INDEX KEY: 0001099800 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 364316614 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 17221 RED HILL AVE CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 9492502500 MAIL ADDRESS: STREET 1: 17221 RED HILL AVE CITY: IRVINE STATE: CA ZIP: 92614 FORMER COMPANY: FORMER CONFORMED NAME: CVG CONTROLLED INC DATE OF NAME CHANGE: 19991126 SC 13D 1 a2040741zsc13d.txt SC 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) PLC SYSTEMS INC. ------------------------------------ (Name of Issuer) COMMON STOCK, NO PAR VALUE ------------------------------------ (Title of Class of Securities) 69341D 10 4 ------------------------------------ (CUSIP Number) BRUCE P. GARREN EDWARDS LIFESCIENCES CORPORATION ONE EDWARDS WAY IRVINE, CALIFORNIA 92614 TELEPHONE: (949) 250-2500 ------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JANUARY 9, 2001 ------------------------------------ (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box |_|. (Continued on following pages) (Page 1 of 9 Pages) - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 2 OF 9 PAGES - ----------------------- ----------------------- - -------- ---------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Edwards Lifesciences Corporation 36-4316614 - -------- ---------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) |_| (b) |_| - -------- ---------------------------------------------------------------------- 3 SEC USE ONLY - -------- ---------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------- ---------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------- ---------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware, U.S.A. - ---------------------------- ----- -------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY 5,333,333 OWNED BY ----- -------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 0 ----- -------------------------------------------- 9 SOLE DISPOSITIVE POWER 5,333,333 ----- -------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ---------------------------- ----- -------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,333,333 (Includes the right to acquire 3,000,000 shares of Common Stock pursuant to the exercise of the Warrants (as defined herein)) - -------- ---------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES |_| - -------- ---------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.4% (Assumes the exercise of the Warrants, which has not yet occurred) - -------- ---------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------- ---------------------------------------------------------------------- - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 3 OF 9 PAGES - ----------------------- ----------------------- ITEM 1. SECURITY AND ISSUER. This statement relates to the common stock (the "Common Stock"), no par value, of PLC Systems Inc. (the "Company"). The address of the Company's principal executive offices is 10 Forge Park, Franklin, Massachusetts 02038. ITEM 2. IDENTITY AND BACKGROUND. This statement is being filed by Edwards Lifesciences Corporation, a Delaware corporation ("Edwards"). The address of Edwards' principal office is One Edwards Way, Irvine, California 92614. The principal business of Edwards is manufacturing, marketing and selling a comprehensive line of products and services to treat late-stage cardiovascular disease. Schedule I hereto sets forth the name, business address, present principal occupation or employment (and the name, principal business and address of any corporation or other organization in which such employment is conducted) and the citizenship of the directors and executive officers of Edwards. Neither Edwards nor, to its knowledge, any of the persons identified in Schedule I, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On January 9, 2000, pursuant to the Securities Purchase Agreement, dated as of January 7, 2001 (the "Purchase Agreement"), by and among Edwards, the Company and PLC Medical Systems, Inc., a Delaware corporation ("PLC Medical"), Edwards acquired 5,333,333 shares (the "Shares") of Common Stock and a warrant that entitles it to purchase 1,000,000 shares of Common Stock at any time prior to January 9, 2004 at a purchase price of $1.50 per share, a warrant that entitles it to purchase 1,000,000 shares of Common Stock at any time prior to January 9, 2005 at a purchase price of $2.50 per share, and a warrant that entitles it to purchase 1,000,000 shares of Common Stock at any time prior to January 9, 2006 at a purchase price of $3.50 per share (the warrants are collectively referred to herein as the "Warrants"). Edwards - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 4 OF 9 PAGES - ----------------------- ----------------------- used funds from its working capital to purchase the Shares and Warrants issued by the Company. ITEM 4. PURPOSE OF TRANSACTION. The principal purpose of the transaction described under Item 3 above was the acquisition of equity in the Company. Edwards intends from time to time to review its investment in the Company on the basis of various factors, including the Company's business, financial condition, results of operations and prospects, general economic and industry conditions, the securities markets in general and those for the Company's securities in particular, as well as other developments and other investment opportunities. Based upon such review, Edwards will take such actions in the future as it may deem appropriate in light of the circumstances existing at the time. Edwards may acquire Common Stock or other securities of the Company either in the open market or in privately negotiated transactions. Similarly, Edwards may determine to dispose of some or all of the Company's securities currently owned by it or otherwise acquired by it either in the open market (subject to applicable legal restrictions) or in privately negotiated transactions. In connection with the purchase of the Shares and Warrants, Edwards also entered into a Shareholders Agreement with the Company (the "Shareholders Agreement"), dated as of January 9, 2001, that provides Edwards with the right to nominate a designee for election to the board of directors of the Company and to acquire additional shares of Common Stock under certain circumstances. For a more detailed description of the Shareholders Agreement, see Item 6 below. Also in connection with the investment by Edwards, Edwards Lifesciences LLC, a Delaware limited liability company and a wholly owned subsidiary of Edwards, entered into a distribution arrangement with PLC Medical to distribute certain products of PLC Medical. Except as described herein in Items 4 and 6, Edwards presently does not have any plans or proposals which relate to, or may result in, any of the matters listed in Items 4(a)-(j) of Schedule 13D, although it reserves the right to develop such plans. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Except as set forth herein, neither Edwards, nor, to its knowledge, any person named in Schedule I, beneficially owns any other shares of Common Stock of the Company. (a) Edwards beneficially owns an aggregate of 5,333,333 shares of Common Stock, which constitute approximately 18.2% of the total number of presently outstanding shares of - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 5 OF 9 PAGES - ----------------------- ----------------------- Common Stock. Edwards also beneficially owns the right to acquire up to 3,000,000 more shares of Common Stock pursuant to the exercise of the Warrants. Assuming the exercise of the Warrants, Edwards would beneficially own 8,333,333 shares of Common Stock, which would constitute approximately 28.4% of the total number of presently outstanding shares of Common Stock. (b) Edwards has the sole power to vote and dispose 5,333,333 shares of Common Stock, subject to certain restrictions set forth in the Shareholders Agreement described in Item 6 below. (c) Pursuant to the Purchase Agreement, Edwards acquired the Shares and Warrants on January 9, 2001. To Edwards' knowledge, there have been no transactions in the Common Stock by the persons named on Schedule I during the past 60 days. (d) To Edwards' knowledge, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any shares of Common Stock beneficially owned by it. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. In addition to the Purchase Agreement described in Item 3 above pursuant to which Edwards acquired the Shares and Warrants, Edwards also entered into the following contracts or arrangements with the Company with respect to the Company's securities: WARRANTS Pursuant to the Purchase Agreement, Edwards acquired from the Company the Warrants. The number of shares exercisable pursuant to the Warrants and the exercise price are subject to adjustment from time to time. SHAREHOLDERS AGREEMENT Edwards and the Company are parties to the Shareholders Agreement. The Shareholders Agreement grants Edwards certain rights including the right to nominate a designee for election to the board of directors of the Company, the right to participate in future issuances of Common Stock by the Company, and rights with respect to the registration under the Securities Act of 1933 of shares of Common Stock owned by Edwards. In the - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 6 OF 9 PAGES - ----------------------- ----------------------- Shareholders Agreement, Edwards also agrees to vote its shares of Common Stock in proportion to the votes cast by all other holders of Common Stock except with respect to certain matters with respect to which it can vote according to its sole discretion. The Shareholders Agreement also sets forth agreements between the parties as to certain tax matters. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit 1. Securities Purchase Agreement, dated as of January 7, 2001, by and among Edwards Lifesciences Corporation, PLC Systems Inc. and PLC Medical Systems, Inc. Exhibit 2. Shareholders Agreement, dated as of January 9, 2001, by and between Edwards Lifesciences Corporation and PLC Systems Inc. Exhibit 3. Warrant to Purchase Common Shares of PLC Systems Inc. (Warrant No. 1) dated January 9, 2001. Exhibit 4. Warrant to Purchase Common Shares of PLC Systems Inc. (Warrant No. 2) dated January 9, 2001. Exhibit 5. Warrant to Purchase Common Shares of PLC Systems Inc. (Warrant No. 3) dated January 9, 2001. - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 7 OF 9 PAGES - ----------------------- ----------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. DATED: April 4, 2001 Edwards Lifesciences Corporation By: /s/ BRUCE P. GARREN -------------------------------- Name: Bruce P. Garren Title: Corporate Vice President, General Counsel and Secretary - ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 8 OF 9 PAGES - ----------------------- ----------------------- SCHEDULE I Set forth below is the name, current business address, the present principal occupation or employment of each director and executive officer of Edwards Lifesciences Corporation. Unless otherwise indicated, each person's present principal occupation is serving in his or her respective position with Edwards Lifesciences Corporation. Each person is a citizen of the United States of America.
POSITION WITH PRINCIPAL OCCUPATION/ NAME EDWARDS LIFESCIENCES BUSINESS ADDRESS - ---- -------------------- --------------------- Michael A. Mussallem Chairman and Chief Executive One Edwards Way Officer, Director Irvine, California 92614 Michael R. Bowlin Director Executive (Retired) One Edwards Way Irvine, California 92614 Victoria R. Fash Director Executive (Retired) One Edwards Way Irvine, California 92614 Vernon R. Loucks Jr. Director Executive (Retired) One Edwards Way Irvine, California 92614 Philip M. Neal Director Chairman and Chief Executive Officer and Director Avery Dennison Corporation 150 North Orange Grove Blvd. Pasadena, California 91103 David E.I. Pyott Director President and Chief Executive Officer and Director Allergan, Inc. 2525 Dupont Avenue Irvine, California 92612 Bruce J. Bentcover Corporate Vice President, One Edwards Way Chief Financial Officer and Irvine, California 92614 Treasurer
- ----------------------- ----------------------- CUSIP NO. 69341D 10 4 13D PAGE 9 OF 9 PAGES - ----------------------- ----------------------- Bruce P. Garren Corporate Vice President, One Edwards Way General Counsel and Secretary Irvine, California 92614 John H. Kehl, Jr. Corporate Vice President, One Edwards Way Strategy and Business Development Irvine, California 92614 Robert C. Reindl Corporate Vice President, One Edwards Way Human Resources Irvine, California 92614
EXHIBIT INDEX Exhibit 1. Securities Purchase Agreement, dated as of January 7, 2001, by and among Edwards Lifesciences Corporation, PLC Systems Inc. and PLC Medical Systems, Inc. Exhibit 2. Shareholders Agreement, dated as of January 9, 2001, by and between Edwards Lifesciences Corporation and PLC Systems Inc. Exhibit 3. Warrant to Purchase Common Shares of PLC Systems Inc. (Warrant No. 1) dated January 9, 2001. Exhibit 4. Warrant to Purchase Common Shares of PLC Systems Inc. (Warrant No. 2) dated January 9, 2001. Exhibit 5. Warrant to Purchase Common Shares of PLC Systems Inc. (Warrant No. 3) dated January 9, 2001. EX-1 2 a2040741zex-1.txt EXHIBIT 1 EXHIBIT 1 - -------------------------------------------------------------------------------- SECURITIES PURCHASE AGREEMENT by and between EDWARDS LIFESCIENCES CORPORATION, PLC SYSTEMS INC. and PLC MEDICAL SYSTEMS, INC. Dated as of January 7, 2001 - -------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE I DEFINITIONS...............................................................1 ARTICLE II SALE AND PURCHASE........................................................4 SECTION 2.1 AGREEMENT TO SELL AND TO PURCHASE...............................4 SECTION 2.2 CLOSING.........................................................4 ARTICLE III REPRESENTATIONS AND WARRANTIES..........................................5 SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................5 (a) AUTHORITY..............................................................5 (b) PURCHASE FOR INVESTMENT................................................6 (c) BROKERS, FINDERS, ETC..................................................6 (d) EXPERIENCE.............................................................6 SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF PLC AND PLC SUB...............6 (a) ORGANIZATION AND STANDING..............................................6 (b) SUBSIDIARIES...........................................................7 (c) AUTHORITY..............................................................7 (d) CAPITAL STOCK..........................................................7 (e) CONSENTS; NO CONFLICT..................................................8 (f) SEC REPORTS AND FINANCIAL STATEMENTS...................................9 (g) NO UNDISCLOSED LIABILITIES.............................................9 (h) ABSENCE OF CERTAIN CHANGES OR EVENTS...................................9 (i) COMPLIANCE WITH APPLICABLE LAWS........................................9 (j) LITIGATION; DECREES...................................................10 (k) ENVIRONMENTAL MATTERS.................................................10 (l) GOVERNMENT REGULATIONS................................................10 (m) TAXES.................................................................10 (n) INTELLECTUAL PROPERTY.................................................11 (o) STOCKHOLDER APPROVAL..................................................11 (p) BROKERS, FINDERS, ETC.................................................12 (q) LABOR MATTERS.........................................................12 (r) PRIVATE OFFERING......................................................12 (s) FDA MATTERS...........................................................12 (t) EMPLOYEE BENEFITS.....................................................13 ARTICLE IV COVENANTS...............................................................13 SECTION 4.1 CONDUCT OF BUSINESS OF PLC.....................................13 SECTION 4.2 ACCESS TO INFORMATION..........................................13 SECTION 4.3 TRANSACTION AGREEMENTS; CONSENTS...............................14 SECTION 4.4 AMEX LISTING...................................................14 SECTION 4.5 FURTHER ASSURANCES.............................................14 SECTION 4.6 REQUIRED NOTICES...............................................14 SECTION 4.7 NO GENERAL SOLICITATION........................................15 SECTION 4.8 FDA CORRESPONDENCE.............................................15 SECTION 4.9 EMPLOYEE COMPENSATION..........................................15 SECTION 4.10 GOOD STANDING AND QUALIFICATION................................15 ARTICLE V CONDITIONS PRECEDENT.....................................................15 SECTION 5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PLC.....................15 (a) NO INJUNCTIONS OR RESTRAINTS..........................................15 (b) REPRESENTATIONS AND WARRANTIES........................................16 (c) PERFORMANCE OF OBLIGATIONS OF PURCHASER...............................16 (d) CERTIFICATE...........................................................16 (e) TRANSACTION AGREEMENTS................................................16
i SECTION 5.2 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION.................16 (a) NO INJUNCTIONS OR RESTRAINTS; NO PENDING OR THREATENED LITIGATION.....16 (b) CONSENTS..............................................................17 (c) REPRESENTATIONS AND WARRANTIES........................................17 (d) PERFORMANCE OF OBLIGATIONS OF PLC.....................................17 (e) CERTIFICATE...........................................................17 (f) TRANSACTION AGREEMENTS................................................17 (g) LISTING...............................................................17 ARTICLE VI TERMINATION.............................................................17 SECTION 6.1 TERMINATION....................................................17 SECTION 6.2 EFFECT OF TERMINATION..........................................18 ARTICLE VII SURVIVAL; INDEMNIFICATION..............................................18 SECTION 7.1 INDEMNIFICATION................................................18 SECTION 7.2 SURVIVAL.......................................................19 SECTION 7.3 CLAIMS.........................................................19 ARTICLE VIII MISCELLANEOUS.........................................................20 SECTION 8.1 GOVERNING LAW..................................................20 SECTION 8.2 ESCALATION.....................................................20 SECTION 8.3 JURISDICTION AND CONSENT TO SERVICE............................21 SECTION 8.4 NOTICES........................................................21 SECTION 8.5 INTERPRETATION.................................................22 SECTION 8.6 SEVERABILITY...................................................22 SECTION 8.7 COUNTERPARTS...................................................23 SECTION 8.8 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.................23 SECTION 8.9 AMENDMENTS AND MODIFICATIONS; WAIVERS AND EXTENSIONS...........23 SECTION 8.10 ASSIGNMENT.....................................................24 SECTION 8.11 REMEDIES CUMULATIVE............................................24 SECTION 8.12 EXHIBITS.......................................................24 SECTION 8.13 EXPENSES.......................................................24 SECTION 8.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS........................24 EXHIBITS Exhibit A Form of Shareholders Agreement Exhibit B Form of Distribution Agreement Exhibit C Form of Manufacturing License Agreement Exhibit D Form of Warrant Exhibit E Form of Opinion
ii SECURITIES PURCHASE AGREEMENT Securities Purchase Agreement, dated as of January 7, 2001 (this "Agreement"), by and between Edwards Lifesciences Corporation, a Delaware corporation ("Purchaser"), PLC Systems Inc., a Yukon Territory corporation ("PLC") and PLC Medical Systems, Inc., a Delaware corporation ("PLC Sub"). WHEREAS, PLC desires to sell to Purchaser 5,333,333 shares (the "Shares") of common shares without par value of PLC (the "PLC Common Shares") and Warrants (as defined below) upon the terms and subject to the conditions set forth herein; WHEREAS, Purchaser desires to purchase the Shares and the Warrants; WHEREAS, prior to Closing Purchaser and PLC shall enter into a Shareholders Agreement, substantially in the form attached hereto as EXHIBIT A (the "Shareholders Agreement"), and a Distribution Agreement, substantially in the form attached hereto as EXHIBIT B (the "Distribution Agreement"); and WHEREAS, prior to Closing PLC, PLC Sub and Edwards Lifesciences LLC shall enter into a Manufacturing License Agreement, substantially in the form attached hereto as EXHIBIT C (the "Manufacturing License 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: ARTICLE I DEFINITIONS As used in this Agreement, the following terms shall have the following meanings: "accredited investor" shall have the meaning set forth in Section 3.1(b) below. "Beneficially Owns" shall have the meaning set forth in the Shareholders Agreement. "Business Day" shall mean any day other than a Saturday, a Sunday or a day when banks in the city of New York, New York are authorized by law to be closed. "Closing" shall have the meaning set forth in Section 2.2(a) below. "Closing Date" shall have the meaning set forth in Section 2.2(a) below. 1 "Code" shall mean the Internal Revenue Code of 1986, as amended. "Confidentiality Agreement" shall have the meaning set forth in Section 4.2(b) below. "Damages" shall have the meaning set forth in Section 7.1 below. "Dispute" shall have the meaning set forth in Section 8.2 below. "Distribution Agreement" shall have the meaning set forth in the Recitals. "Environmental Claim" shall have the meaning set forth in Section 3.2(k) below. "Environmental Laws" shall have the meaning set forth in Section 3.2(k) below. "Escalation Notice" shall have the meaning set forth in Section 8.2 below. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder. "FDA" shall have the meaning set forth in Section 3.2(s) below. "GAAP" shall have the meaning set forth in Section 3.2(f) below. "Indemnified Party" shall have the meaning set forth in Section 7.1 below. "Liens" shall have the meaning set forth in Section 3.2(b) below. "Manufacturing License Agreement" shall have the meaning set forth in the Recitals. "Material Contract" shall have the meaning set forth in Section 3.2(e) below. "Person" shall mean any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity. "PLC Balance Sheet Date" shall have the meaning set forth in Section 3.2(g) below. "PLC Common Shares" shall have the meaning set forth in the Recitals. "PLC Intellectual Property" shall have the meaning set forth in Section 3.2(n) below. 2 "PLC Material Adverse Effect" shall have the meaning set forth in Section 3.2(a) below. "PLC Reports" shall have the meaning set forth in Section 3.2(f) below. "PLC Subsidiaries" shall have the meaning set forth in Section 3.2(b) below. "Purchase Price" shall mean Four Million Dollars ($4,000,000). Unless otherwise indicated, all references to "dollars" or "$" shall mean the lawful currency of the United States. "SEC" shall have the meaning set forth in Section 3.2(f) below. "Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder. "Shareholders Agreement" shall have the meaning set forth in the Recitals. "Shares" shall have the meaning set forth in the Recitals. "Taxes" shall mean all Canadian and United States federal, state, provincial, territorial, local and foreign taxes, assessments, levies, duties, imports or similar charges (whether imposed directly or through withholding), including any interest, additions to tax or penalties applicable thereto. "Tax Returns" shall mean all Canadian and United States federal, state, provincial, territorial, local and foreign tax returns, declarations, statements, reports, schedules, forms and information returns relating to Taxes, including any amendments thereof. "Transactions" shall mean the transactions contemplated by the Transaction Agreements. "Transaction Agreements" shall mean this Agreement, the Shareholders Agreement, the Distribution Agreement, the Warrants and the Manufacturing Licensing Agreement. "Voting Debt" means bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights). "Warrant Shares" means the PLC Common Shares issuable upon exercise of the Warrants. "Warrant" shall have the meaning set forth in Sections 2.1 below. 3 ARTICLE II SALE AND PURCHASE SECTION 2.1 AGREEMENT TO SELL AND TO PURCHASE. On the Closing Date, upon the terms and subject to the conditions set forth in this Agreement and in reliance on the representations and warranties contained herein and other actions being taken by Purchaser and PLC hereunder at the Closing described in Section 2.2 hereof, PLC shall issue and sell to Purchaser, and Purchaser shall purchase and accept from PLC, the Shares and a warrant exercisable for one million (1,000,000) PLC Common Shares for a period of three years with a per share exercise price of $1.50, a warrant exercisable for one million (1,000,000) PLC Common Shares for a period of four years with a per share exercise price of $2.50, and a warrant exercisable for one million (1,000,000) PLC Common Shares for a period of five years with a per share exercise price of $3.50 (each warrant shall be in the form attached hereto as EXHIBIT D and shall collectively be referred to herein as the "Warrants"), for the Purchase Price, payable in immediately available funds. The terms and provisions contained in the Warrants shall constitute, and are hereby expressly made, a part of this Agreement and, to the extent applicable, PLC and Purchaser, by their execution and delivery of this Agreement, expressly agree to such terms and provisions and to be bound thereby. SECTION 2.2 CLOSING. (a) The consummation of the transactions contemplated under this Agreement (the "Closing") shall take place at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, or such other place as the parties hereto shall mutually agree, at 10:00 a.m. (local time) on the Business Day that the conditions set forth in Article V shall have been satisfied or waived, or such other time and date upon which the parties hereto may agree (the "Closing Date"). (b) At the Closing: (i) Purchaser shall deliver: (A) against delivery of a certificate or certificates representing the Shares and the Warrants, an amount equal to the Purchase Price via wire transfer of immediately available funds to the bank account that PLC shall have designated at least three Business Days prior to the Closing Date; and (B) the other documents required by Article V hereof. (ii) PLC shall deliver or cause to be delivered to Purchaser: 4 (A) against payment of the Purchase Price therefore, a certificate or certificates representing the Shares, which shall be in definitive form and registered in the name of Purchaser or its nominee or designee and in a single certificate or in such other denominations as Purchaser has requested and the Warrants, duly executed by an authorized officer of PLC; (B) opinions of Anton Campion MacDonald Oyler, Yukon Territory external counsel to PLC, and Hale and Dorr LLP, U.S. external counsel to PLC, dated as of the Closing Date, covering, in the aggregate, the matters set forth on EXHIBIT E; (C) certificates of the Secretary of PLC and PLC Sub in form and substance reasonably satisfactory to Purchaser; (D) resolutions of the Board of Directors of PLC and PLC Sub, certified by the Secretary of PLC and PLC Sub, respectively, in full force and effect on such date, authorizing the execution, delivery and performance of the Transaction Agreements, and the other documents to which they are parties and the consummation of the transactions contemplated hereby and thereby, including the issuance of the Shares and Warrants pursuant to this Agreement; (E) a certificate of status for PLC dated the Closing Date, issued by Corporate Affairs, Department of Justice (Yukon Territory), a certificate of good standing for PLC Sub dated the Closing Date, issued by the Secretary of State of the State of Delaware and a certificate of qualification to do business in the Commonwealth of Massachusetts for PLC Sub dated the Closing Date; (F) a certified copy of the articles of PLC and the certificate of incorporation of PLC Sub; and (G) the other documents required by Article V hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents and warrants to PLC and PLC Sub as follows: 5 (a) AUTHORITY. The execution and delivery of the Transaction Agreements, and the performance by Purchaser of its obligations hereunder and thereunder, have been duly authorized by all necessary action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and, at the Closing, the other Transaction Agreements shall be duly executed and delivered by Purchaser and, assuming the due execution and delivery hereof and thereof by PLC, this Agreement constitutes and, at the Closing, the other Transaction Agreements shall constitute valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as such enforcement may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). (b) PURCHASE FOR INVESTMENT. Purchaser is acquiring the Shares and Warrants hereunder for investment (for its own account or for accounts over which it exercises investment control), and not with a view to, or for offer or sale in connection with, any distribution thereof, which would be in violation of the Securities Act of 1933, as amended (the "Securities Act"), or any applicable state securities law. Purchaser fully understands the limitations on transfer described above; and (ii) is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. (c) BROKERS, FINDERS, ETC. Purchaser is not subject to any valid claim of any broker, investment banker, finder or other intermediary in connection with the transactions contemplated by this Agreement. (d) EXPERIENCE. Purchaser has carefully reviewed the representations concerning PLC contained in this Agreement, has made detailed inquiry concerning PLC, its business and its personnel; the officers of PLC have been made available to the Purchaser and have answered to Purchaser's satisfaction all inquiries made by Purchaser; and Purchaser has sufficient knowledge and experience in finance and business that it is capable of evaluating the risks and merits of its investment in PLC and Purchaser is able financially to bear the risks thereof. SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF PLC AND PLC SUB. PLC and PLC Sub jointly and severally hereby represent and warrant to Purchaser as follows: (a) ORGANIZATION AND STANDING. Except as set forth on Schedule 3.2(a), PLC and each of the PLC Subsidiaries are corporations duly organized, validly existing and in good standing under the laws of the jurisdiction set forth opposite its name on Schedule 3.2(a), (ii) has all requisite power and authority to own, lease or operate the assets it now owns, leases or operates and (iii) is duly qualified or licensed to do business in each jurisdiction in which the ownership or use of its assets or conduct of its business requires it to be so qualified, in each case except for such failures that would not reasonably be expected, individually or in the aggregate, to result in (i) a material adverse 6 effect on the business, operations, prospects, properties, assets or condition (financial or otherwise) of PLC and the PLC Subsidiaries (as defined herein), taken as a whole or (ii) a material impairment of the ability of PLC or PLC Sub to perform their respective obligations under this Agreement or any of the other Transaction Agreements (each, a "PLC Material Adverse Effect"). (b) SUBSIDIARIES. The only direct or indirect subsidiaries of PLC are set forth on Schedule 3.2(b) (the "PLC Subsidiaries"). Except as set forth on Schedule 3.2(b), PLC does not own, directly or indirectly, any of the capital stock or other equity securities of any other Person. All of the issued and outstanding shares of capital stock of the PLC Subsidiaries have been duly authorized, are validly issued, are fully paid and non-assessable, and are owned by PLC free and clear of all liens, pledges and encumbrances (collectively, "Liens"). PLC owns directly or indirectly all of the outstanding equity interests in each PLC Subsidiary. (c) AUTHORITY. The execution and delivery of the Transaction Agreements, the performance by PLC of its obligations hereunder and thereunder and the authorization, issuance, sale and delivery of the Warrant Shares issuable upon exercise of the Warrants, have been duly authorized by all necessary action on the part of PLC. This Agreement has been duly executed and delivered by PLC and, at the Closing, the other Transaction Agreements shall be duly executed and delivered and, assuming the due execution and delivery hereof and thereof by Purchaser, this Agreement constitutes and, at the Closing, the other Transaction Agreements shall constitute valid and binding obligations of PLC, enforceable against PLC in accordance with their respective terms, except as such enforcement may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). (d) CAPITAL STOCK. (i) The capitalization of PLC is as set forth on Schedule 3.2(d) and there are no shares of PLC authorized, issued or outstanding other than as set forth on Schedule 3.2(d)(i). All the outstanding shares of capital stock of PLC have been duly authorized, are validly issued and are fully paid and non-assessable and have not been issued in violation of, and are not subject to, any preemptive rights. The Shares, when issued and delivered in accordance with the terms hereof and after payment of the Purchase Price therefor, will be duly authorized, validly issued and fully paid and non-assessable. The Warrant Shares purchasable by Purchaser under the Warrants, when issued, sold and delivered in accordance with the terms of this Agreement and the Warrants for the consideration expressed herein and therein, will be duly authorized, validly issued, fully paid and non-assessable and will be free of restrictions on transfer, other than applicable securities laws. (ii) Except as set forth in Schedule 3.2(d)(ii), there are no existing options, warrants, calls, preemptive rights, Voting Debt or subscriptions or other rights, 7 agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of PLC obligating PLC to issue, transfer or sell or cause to be issued, transferred or sold any shares or Voting Debt of, or other equity interest in, PLC or securities convertible into or exchangeable for such shares or equity interests, or obligating PLC to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment. (iii) There are no outstanding contractual obligations of PLC to repurchase, redeem or otherwise acquire any shares of capital stock of PLC, or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any other entity. (iv) Except as set forth in Section 3.2(d)(iv), there are no voting trusts or other agreements, or understandings to which PLC is a party or of which PLC has knowledge with respect to the voting of the capital stock of PLC. (e) CONSENTS; NO CONFLICT. Except as set forth on Schedule 3.2(e), the execution and delivery of the Transaction Agreements and the consummation of the Transactions will not require the consent of any party to any material contract, lease, agreement, mortgage or indenture ("Material Contract") to which PLC or any PLC Subsidiary, or any of their respective affiliates, is a party or by which any of them is bound. Except as set forth on Schedule 3.2(e), no consent, approval, order or authorization of, or the registration, declaration or filing with, any governmental authority is required with respect to the execution and delivery of the Transaction Agreements or the consummation of the Transactions, other than such consents, approvals, orders, authorizations, registrations, declarations or filings the failure of which to be obtained or made individually or in the aggregate would not reasonably be expected to result in a PLC Material Adverse Effect. Except as set forth on Schedule 3.2(e), assuming the consents, approvals, orders, authorizations, registrations, declarations and filings contemplated by the immediately preceding sentence are obtained or made, the execution, delivery and performance by PLC of this Agreement will not (i) violate any law applicable to PLC or any PLC Subsidiary or any of their respective affiliates (other than violations that individually or in the aggregate would not reasonably be expected to result in a PLC Material Adverse Effect), (ii) result in a breach or violation of any provision of, or constitute a default under, any such Material Contract or (iii) conflict with any provision of the articles or by-laws of PLC or any PLC Subsidiary. (f) SEC REPORTS AND FINANCIAL STATEMENTS. Except as set forth on Schedule 3.2(f), each form, report, schedule, registration statement, definitive proxy statement or other document filed by PLC with the Securities and Exchange Commission (the "SEC") since January 1, 1996 (as such documents have since the time of their filing been amended, the "PLC Reports"), which include all the documents (other than preliminary proxy materials) that PLC was required to file with the SEC since such date, as of their respective dates, complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such PLC Reports. None of the PLC Reports contained 8 any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except for such statements, if any, as have been modified by subsequent filings prior to the date hereof. The financial statements of PLC included in such reports comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with accounting principles generally accepted in the United States applied on a consistent basis ("GAAP") during the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by the Securities Act or the Exchange Act) and fairly present (subject in the case of the unaudited statements to normal, recurring audit adjustments) the consolidated financial position of PLC and the PLC Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended. (g) NO UNDISCLOSED LIABILITIES. As of the date hereof, neither PLC nor any PLC Subsidiary has any liabilities of a nature required by GAAP to be reflected on a balance sheet or in notes thereto, except (i) as set forth or reflected in the PLC Reports (or described in the notes thereto), (ii) as disclosed in Schedule 3.2(g), or (iii) for liabilities incurred in the ordinary course of business since the date of the last audited balance sheet filed with the SEC (the "PLC Balance Sheet Date"). (h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the PLC Balance Sheet Date, there has been no loss, occurrence or event that, after taking into account any insurance recoveries payable in respect thereof, would reasonably be expected to result in a PLC Material Adverse Effect. (i) COMPLIANCE WITH APPLICABLE LAWS. Since the PLC Balance Sheet Date, PLC and the PLC Subsidiaries have complied in all material respects with all statutes, laws, regulations and ordinances applicable to them, except where the failure to so comply would not reasonably be expected to result in a PLC Material Adverse Effect. (j) LITIGATION; DECREES. Except as set forth on Schedule 3.2(j) or in the PLC Reports, as of the date hereof (i) there is no suit, action or proceeding pending or, to the knowledge of PLC and each PLC Subsidiary, threatened against PLC or any PLC Subsidiary in any federal, state, provincial or local court or agency that seeks (A) more than $100,000 in damages, or (B) any material injunctive relief, and neither PLC nor any PLC Subsidiary has received any written notice that any such suit, action or proceeding is threatened and (ii) neither PLC nor any PLC Subsidiary is in default under any judgment, order or decree of any governmental authority applicable to it, except for any such default which would not reasonably be expected to result in a PLC Material Adverse Effect. 9 (k) ENVIRONMENTAL MATTERS. (i) Except as set forth in the PLC Reports, neither PLC nor any PLC Subsidiary is the owner of any interest in real property. (ii) PLC and the PLC Subsidiaries are in material compliance with all federal, state, provincial, territorial, local and foreign laws and regulations relating to pollution, regulation of hazardous or toxic substances, materials or wastes, or protection of human health or the environment (together, "Environmental Laws"), and there are no circumstances that may prevent or interfere with such compliance in the future. (iii) There has been no claim, action, cause of action, investigation or other notice or communication (written or oral) (together, "Environmental Claim") by any person or entity against PLC or the PLC Subsidiaries alleging potential liability under, or violations of, any Environmental Law. (iv) To the knowledge of PLC and each PLC Subsidiary, there are no past or present actions, activities, circumstances, conditions, events or incidents that could form the basis of any Environmental Claim against PLC or the PLC Subsidiaries (or any entity or person for whom they may be liable). (l) GOVERNMENT REGULATIONS. PLC is not subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce Act or any federal or state statute or regulation limiting its ability to incur or assume indebtedness for borrowed money. (m) TAXES. (i) Except as set forth on Schedule 3.2(m), each of PLC and the PLC Subsidiaries has duly filed on a timely basis all Tax Returns required to be filed by it and has paid all Taxes due and payable by it. All such Tax Returns properly reflect and do not in any material respect understate the income, taxable income or the liability for Taxes. Without limiting the generality of the foregoing, each of PLC and the PLC Subsidiaries is in compliance with all registration, timely reporting and remittance (including remittance of installments) obligations in respect of all such Taxes. Neither PLC nor any of the PLC Subsidiaries has incurred any undisclosed liability for Taxes in excess of the amounts reserved therefore in their respective books and records. Neither PLC nor any of the PLC Subsidiaries has incurred any liability for Taxes other than Taxes directly arising from the operation of its business in the ordinary course. (ii) There are no actions, suits, proceedings, investigations or claims pending or threatened against PLC or any of the PLC Subsidiaries in respect of Taxes, nor are any material matters under discussion with any governmental authority relating to Taxes asserted by any such authority, and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any 10 Tax Return by, or payment of any Taxes, governmental charge or deficiency against, PLC or any of the PLC Subsidiaries. (iii) Each of PLC and the PLC Subsidiaries has withheld from each payment made to any of its past or present employees, officers or directors, and to any non-resident of Canada, the amount of all applicable Taxes and other deductions required to be withheld therefrom and has paid the same to the proper tax or other receiving officers within the time required under any applicable legislation. (iv) Each of PLC and the PLC Subsidiaries has remitted to the appropriate tax authority when required by law to do so all amounts collected by it on account of goods and services or other sales or use taxes. (n) INTELLECTUAL PROPERTY. Schedule 3.2(n) sets forth a complete and accurate list of all of the United States and foreign patents, trademarks and/or applications therefore, and all service marks and trade names that are owned, possessed or held by PLC and used exclusively in the conduct of its business as presently conducted (the "PLC Intellectual Property"). Each of PLC and the PLC Subsidiaries owns or has valid rights to use the "PLC Intellectual Property", necessary for its business as presently conducted or as presently proposed to be conducted. Except as set forth in Section 3.2(n), there are no existing, or, to the knowledge of PLC and each PLC Subsidiary, threatened, claims (i) based on the use by each of PLC or each PLC Subsidiary of the PLC Intellectual Property material to its business, or (ii) challenging the ownership of, each of PLC and each PLC Subsidiary of the PLC Intellectual Property material to its business. Except as set forth on Schedule 3.2(n), neither PLC nor any PLC Subsidiary has any knowledge of any infringing use of any PLC Intellectual Property by any other Person. (o) STOCKHOLDER APPROVAL. No action is required to be taken by the shareholders of PLC to approve the Transactions. (p) BROKERS, FINDERS, ETC. Except as set forth on Schedule 3.2(p), PLC is not subject to any valid claim of any broker, investment banker, finder or other intermediary in connection with the transactions contemplated by this Agreement. (q) LABOR MATTERS. PLC has no knowledge of any actionable violation of any federal, state, provincial, territorial, local or foreign statutory or common law relating to employment and employment practices, discrimination in the hiring, promotion or pay of employees, nor any applicable wage or hour laws, which, individually or in the aggregate, would result in a PLC Material Adverse Effect. No employee of PLC Parent or any direct or indirect subsidiary is represented by a labor organization, nor is PLC Parent or PLC aware of any attempt or threat to organize any such employee for such purpose. (r) PRIVATE OFFERING. Assuming the correctness of the representations and warranties set forth in Section 3.1, the offer and sale of the Shares and Warrants 11 hereunder is exempt from the registration and prospectus delivery requirements of the Securities Act. In the case of each offer or sale of the Shares or Warrants, no form of general solicitation or general advertising was used by PLC and its representatives, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Purchaser is the sole purchaser of the Shares and Warrants from the Company. No securities have been issued and sold by the Company within the six-month period immediately prior to the date hereof that would be integrated with the sale of the Shares and Warrants hereunder pursuant to the Securities Act. (s) FDA MATTERS. PLC is in compliance with all statutes, rules and regulations of the U.S. Food and Drug Administration or similar domestic state authority (the "FDA") with respect to the manufacturing of all of its products and the provision of all of its services, to the extent that the same are applicable to PLC's business as it is currently conducted, other than as set forth on Schedule 3.2(s), except for such violations as would not be reasonably expected to have a PLC Material Adverse Effect. PLC adheres to "Good Manufacturing Practices" as required by the FDA, except for such deviations as would not be reasonably expected to have a Material Adverse Effect. PLC has all requisite FDA permits, approvals or the like to conduct its business as it is currently conducted and intended to be conducted. PLC has previously delivered to Purchaser an index of all information concerning all Investigational Device Applications required in connection with the conduct of PLC business as it is currently conducted and has made all such information available to Purchaser. There are no pending or threatened actions, proceedings or complaints by the FDA, which would prohibit or impede the conduct of PLC's business as it is currently conducted. (t) EMPLOYEE BENEFITS. Each employee pension and benefit plan established or maintained by PLC or any PLC Subsidiary is in compliance with all applicable laws and PLC has no knowledge or any event or action which, individually or in the aggregate, would result in a PLC Material Adverse Effect. ARTICLE IV COVENANTS SECTION 4.1 CONDUCT OF BUSINESS OF PLC. From the date of this Agreement through the Closing, PLC agrees that, except (i) as disclosed in Schedule 4.1 hereof or (ii) as approved by Purchaser in writing: (a) the business of PLC and PLC Sub shall be conducted only in the ordinary and usual course consistent with past practice, and PLC shall use its reasonable commercial efforts to preserve intact with respect to itself and PLC Sub, the present business organization, to keep available the services of their respective present officers 12 and key employees, and preserve the goodwill of those having business relationships with them; (b) PLC shall not (i) amend its articles or by-laws; (ii) split, combine or reclassify any shares of its outstanding capital stock; or (iii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property; and (c) PLC shall not authorize for issuance, issue or sell or agree to issue or sell any shares of, or rights to acquire or instruments convertible into any shares of, its capital stock, except for (i) the issuance of PLC Common Shares (x) upon the exercise of PLC stock options or other rights outstanding on the date of this Agreement and (y) upon the exercise of options or other rights described in the immediately following clause, and (ii) the issuance of options or other rights pursuant to employee benefit plans or arrangements existing on the date of this Agreement in a manner consistent with past practice. SECTION 4.2 ACCESS TO INFORMATION. (a) During the period prior to the Closing Date, PLC shall afford to the representatives of Purchaser and counsel, accountants, financial advisors and lenders, reasonable access during normal business hours during the period prior to the Closing Date to all the properties, books, Material Contracts and records of PLC and PLC Sub. (b) Each of PLC and Purchaser acknowledges that the information being provided hereunder is subject to the terms of a confidentiality agreement between Purchaser and PLC, dated June 6, 2000 (the "Confidentiality Agreement"), which terms are incorporated herein by reference. SECTION 4.3 TRANSACTION AGREEMENTS; CONSENTS. Subject to the terms and conditions hereof, each of Purchaser and PLC agree to use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement and to cooperate with each party hereto in connection with the foregoing, including, without limitation, (a) the execution of the Transaction Agreements and (b) using commercially reasonable efforts (i) to obtain all necessary waivers, consents and approvals from other parties to Material Contracts, (ii) to obtain all consents, approvals and authorizations that are required to be obtained under any federal, state, local or foreign law or regulations, (iii) to prevent the entry, enactment or promulgation of any threatened or pending injunction or order that would adversely affect the ability of the parties hereto to consummate the transactions contemplated hereby, (iv) to lift or rescind any injunction or order adversely affecting the ability of the parties hereto to consummate the transactions contemplated hereby and (v) to effect all necessary registrations and filings, and submissions of information requested by governmental authorities. 13 SECTION 4.4 AMEX LISTING. PLC shall use its best efforts to cause the Shares and Warrant Shares to be approved for listing on the American Stock Exchange, subject to official notice of issuance, as promptly as practicable after the date hereof, and in any event prior to the tenth day following the Closing Date, and to cause the Shares and Warrant Shares to continue to be listed to the American Stock Exchange and to prevent any delisting of the PLC Common Shares from such exchange after the Closing Date. SECTION 4.5 FURTHER ASSURANCES. Each party hereto shall do all such further acts and execute, acknowledge, deliver and file all such further instruments and documents as may be necessary or desirable to give effect to and carry out the Transactions, including, in the case of PLC, such acts, instruments and documents as may be necessary or desirable to convey and transfer to Purchaser the Shares and Warrants to be purchased hereunder. SECTION 4.6 REQUIRED NOTICES. Between the date of this Agreement and the Closing Date, PLC will notify Purchaser of any event of which PLC obtains knowledge (i) which would reasonably be expected to result in a PLC Material Adverse Effect (ii) which, if known as of the date hereof, would have been required under this Agreement to be disclosed to Purchaser or (iii) which constitutes notice from any third person alleging that the consent of such third person is or may be required in connection with the Transactions, other than any such third person listed on Schedule 3.2(e). SECTION 4.7 NO GENERAL SOLICITATION. Neither PLC nor any of its affiliates nor any Person acting on its or any of their behalf has engaged or will engage, in connection with the offering of the Shares and Warrants, in any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act. FDA CORRESPONDENCE. To the extent permitted by law, PLC shall provide reasonable access to copies of all communications between PLC and the FDA from January 1, 1998 through the date hereof relating to the Products (as defined in the Distribution Agreement). SECTION 4.8 EMPLOYEE COMPENSATION. PLC shall provide as promptly as possible after the date hereof and, in any event, prior to the tenth day following the Closing Date, the (i) salaries, wages, commissions, bonuses, benefits and any other compensation in the prior two years; (ii) retention programs; and (iii) hire date for the employees set forth on Schedule 3.3 of the Distribution Agreement. SECTION 4.9 GOOD STANDING AND QUALIFICATION. PLC Sub shall and PLC shall cause PLC Sub to be duly organized, validly existing and in good standing in the State of Delaware and duly qualified or licensed to business under the laws of the Commonwealth of Massachusetts prior to the Closing. 14 ARTICLE V CONDITIONS PRECEDENT SECTION 5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PLC. The obligation of PLC to issue the Shares and Warrants shall be subject to the satisfaction or waiver on the Closing Date of the following conditions precedent: (a) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order or preliminary or permanent injunction of any court or administrative agency of competent jurisdiction prohibiting the transactions contemplated by this Agreement shall be in effect. No pending or threatened litigation (i) involving any challenge to, or seeking damages or other relief with respect to the Transactions or (ii) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Transactions shall be in effect. (b) REPRESENTATIONS AND WARRANTIES. The representations and warranties of Purchaser set forth in this Agreement (i) which are qualified by materiality shall be true and correct in all respects or (ii) which are not so qualified shall be true and correct in all material respects, in each case, as of the Closing Date with the same effect as though made on and as of the Closing Date. (c) PERFORMANCE OF OBLIGATIONS OF PURCHASER. Purchaser shall have performed in all material respects its obligations under this Agreement on or prior to the Closing Date. (d) CERTIFICATE. Purchaser shall have delivered to PLC a certificate, dated the Closing Date and signed by a duly authorized executive officer, to the effect that the conditions set forth in Section 5.1(b) and (c) have been satisfied. (e) TRANSACTION AGREEMENTS. Purchaser shall have entered into each of the Transaction Agreements. SECTION 5.2 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION. The obligation of Purchaser to consummate the transactions contemplated hereunder is subject to the satisfaction or waiver on the Closing Date of each of the following conditions precedent: (a) NO INJUNCTIONS OR RESTRAINTS; NO PENDING OR THREATENED LITIGATION. No temporary restraining order or preliminary or permanent injunction of any court or administrative agency of competent jurisdiction prohibiting the consummation of the Transactions shall be in effect. No pending or threatened litigation (i) involving any challenge to, or seeking damages or other relief with respect to the Transactions or (ii) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Transactions shall be in effect. 15 (b) CONSENTS. All consents, approvals and waivers from third parties and governmental authorities and other parties set forth on Schedule 3.2(e) shall have been obtained, except where the failure to obtain any such consent, approval or waiver would not reasonably be expected to result in a PLC Material Adverse Effect. (c) REPRESENTATIONS AND WARRANTIES. The representations and warranties of PLC and PLC Sub set forth in this Agreement (i) which are qualified by materiality shall be true and correct in all respects or (ii) which are not so qualified shall be true and correct in all material respects, in each case, as of the Closing Date with the same effect as though made on and as of the Closing Date and without giving effect to notifications made pursuant to Section 4.6. (d) PERFORMANCE OF OBLIGATIONS OF PLC. PLC and PLC Sub shall have performed in all material respects its obligations under this Agreement on or prior to the Closing Date and shall have performed their respective obligations under Section 4.10. (e) CERTIFICATE. PLC shall have delivered to Purchaser a certificate, dated the Closing Date and signed by a duly authorized executive officer of PLC and PLC Sub, to the effect that the conditions set forth in Section 5.2(b), (c) and (d) have been satisfied. (f) TRANSACTION AGREEMENTS. PLC shall have entered into each of the Transaction Agreements to which it is a party and PLC Sub shall have entered into each of the Transaction Agreements to which it is a party. (g) LISTING. PLC shall have filed an application for listing the Shares and Warrant Shares on the American Stock Exchange. ARTICLE VI TERMINATION SECTION 6.1 TERMINATION. This Agreement may be terminated at any time prior to the Closing. (a) by mutual written consent of PLC and Purchaser; (b) by either PLC or Purchaser, if (i) any governmental entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their reasonable best efforts to lift), which permanently restrains, enjoins or otherwise prohibits the consummation of the Transactions and such order, decree, ruling or other action shall have become final and non-appealable; or 16 (ii) the Transactions shall not have been consummated before January 15, 2001 (unless the failure to consummate the Transactions by such date shall be due to the action or failure to act of the party seeking to terminate); or (c) by PLC or Purchaser, if the other party shall have breached any of its representations or warranties if such representation or warranty is qualified by materiality or breached in any material respect if not so qualified, or breached a covenant in any material respect contained in this Agreement, and which breach cannot be or has not been cured within thirty (30) days after the giving of written notice by PLC or Purchaser, as the case may be; SECTION 6.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement by any party hereto pursuant to the terms of this Agreement, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and the Transactions shall be deemed abandoned and this Agreement shall forthwith become void, without liability on the part of any party hereto, except as provided in this Section 6.2, Sections 8.1, 8.3, 8.13 and 8.14, and except that nothing herein shall relieve any party from liability for any breach of this Agreement. ARTICLE VII SURVIVAL; INDEMNIFICATION SECTION 7.1 INDEMNIFICATION. PLC and PLC Sub (jointly and severally) shall indemnify and hold harmless Purchaser and its employees, directors, agents, advisors and affiliates (collectively, the "Indemnified Parties"), 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 any breach or alleged breach of any representation, warranty, covenant or agreement. The remedies provided in this Section 7.1 will not be exclusive of or limit any other remedies that may be available to the Indemnified Parties. SECTION 7.2 SURVIVAL. The covenants and agreements contained herein shall survive until performed or for such shorter period as provided herein with respect thereto and the representations and warranties contained in or made pursuant to this Agreement shall survive for a period of fifteen months after the Closing Date; PROVIDED, HOWEVER that the representation and warranty set forth in Section 3.2(d) shall not expire and that the representations and warranties set forth in Section 3.2(k) and (m) shall survive until 60 days after the expiration of the statute of limitations applicable thereto. The right to indemnification, payment of Damages or other remedy based on 17 such representations and warranties, will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty will not affect the right to indemnification, payment of Damages, or other remedy based on such representations, warranties, covenants, and obligations. SECTION 7.3 CLAIMS. (a) If an Indemnified Party intends to seek indemnification pursuant to this Article VII, such Indemnified Party shall promptly notify PLC, 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 PLC 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, PLC 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) PLC is also a party to the proceeding and the Indemnified Party determines in good faith that joint representation would be inappropriate or (ii) PLC 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. PLC 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. If PLC 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 PLC (which consent shall not be unreasonably withheld, conditioned or delayed). (b) Purchaser and PLC 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 VII, including, but not limited to, by providing the other party with reasonable access to employees and officers (including as witnesses) and other information. 18 ARTICLE VIII MISCELLANEOUS SECTION 8.1 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 8.2 ESCALATION. The parties will attempt in good faith to resolve expeditiously any dispute, claim or controversy arising out of or relating to the Transaction Agreements (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 the respective Transaction 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 8.2 for a period up to 90 days from the date of delivery of the Escalation Notice before resorting to judicial process; PROVIDED, HOWEVER, nothing contained in this Section 8.2 shall prevent either party from resorting to judicial process if injunctive or other equitable relief from a court is necessary to prevent serious and irreparable injury to one party or to others. The use of the procedure set forth in this Section 8.2 will not be construed under the doctrine of laches, waiver or estoppel to affect adversely either party's right to assert any claim or defense. SECTION 8.3 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 the Transaction Agreements 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 the Transaction Agreements; (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. 19 SECTION 8.4 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 8.4 (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 8.4 (or in accordance with the latest unrevoked written direction from such party), provided the appropriate confirmation is received. To PLC or PLC Sub: PLC Systems Inc. 10 Forge Park Franklin, MA 02038 Attention: Chief Executive Officer Fax: (508) 541-7990 with a copy (which shall not constitute notice) to: Hale and Dorr LLP 60 State Street Boston, MA 02109 Attention: Steven D. Singer, Esq. Fax: (617) 526-5000 To Purchaser: Edwards Lifesciences Corporation One Edwards Way Irvine, California 92614 Attention: Associate General Counsel Fax: (949) 250-6850 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071-3144 Attention: Joseph J. Giunta, Esq. Fax: (213) 687-5600 20 SECTION 8.5 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 8.6 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 8.7 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 both parties need not sign the same counterpart. SECTION 8.8 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and the other Transaction Agreements, including all exhibits hereto and thereto, by and between Purchaser and PLC, (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 8.8. 21 SECTION 8.9 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 8.10 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 Purchaser, as the case may be, which may be withheld in its sole discretion except that Purchaser may assign all its rights and obligations to (a) the acquirer of all or substantially all of the assets of Purchaser including an acquisition through merger; (b) any subsidiary or affiliate of Purchaser and (c) the transferee of any of the Shares or Warrants who, after giving effect to the transfer Beneficially Owns at least 5% of the PLC Common Shares then outstanding on a fully diluted basis. Any attempted assignment or delegation of rights, duties or obligations hereunder in contravention hereof shall be void and of no effect. SECTION 8.11 REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any other remedies against the other party hereto. SECTION 8.12 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 8.13 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 8.14 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Purchaser and PLC agree that, prior to the Closing, no public release or announcement relating to 22 the Transactions shall be issued by any party without the prior written consent (which consent shall not be unreasonably withheld) of the other party, except as such release or announcement may be required by law. Purchaser and PLC agree that, prior to the Closing, no disclosure (other than a public release or announcement pursuant to the previous sentence) of the terms or provisions of the Transaction Agreements shall be made without the prior written consent (which consent shall not be unreasonably withheld) of the other party, except to representatives, advisors, counsel, and lenders to the parties hereto who acknowledge the confidentiality hereof, and except as required by law. All public releases or announcements relating to the Transactions after the Closing shall be made only if mutually agreed upon by PLC and Purchaser, except as such release or announcement may be required by law. 23 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. PLC SYSTEMS INC. By: /s/ MARK TAUSCHER ------------------------------------ Name: Mark Tauscher Title: CEO and President PLC MEDICAL SYSTEMS, INC. By: /s/ MARK TAUSCHER ------------------------------------ Name: Mark Tauscher Title: CEO and President EDWARDS LIFESCIENCES CORPORATION By: /s/ JOHN H. KEHL, JR. ------------------------------------ Name: John H. Kehl, Jr. Title: Corporate Vice President Business Development and Strategy EX-2 3 a2040741zex-2.txt EXHIBIT 2 EXHIBIT 2 - -------------------------------------------------------------------------------- SHAREHOLDERS AGREEMENT BY AND BETWEEN EDWARDS LIFESCIENCES CORPORATION AND PLC SYSTEMS INC. DATED AS OF JANUARY 9, 2001 TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS................................................................1 SECTION 1.1 DEFINITIONS.....................................................1 ARTICLE II CORPORATE GOVERNANCE......................................................6 SECTION 2.1 THE PLC BOARD OF DIRECTORS.....................................6 SECTION 2.2 GENERAL COVENANT TO VOTE........................................7 ARTICLE III PREEMPTIVE RIGHTS AND ADDITIONAL STOCK SALES.............................7 SECTION 3.1 PREEMPTIVE RIGHTS...............................................7 ARTICLE IV REGISTRATION RIGHTS.......................................................8 SECTION 4.1 REGISTRATION ON REQUEST.........................................8 SECTION 4.2 INCIDENTAL REGISTRATION........................................10 SECTION 4.3 REGISTRATION PROCEDURES........................................11 SECTION 4.4 INDEMNIFICATION................................................13 ARTICLE V VOTING....................................................................15 SECTION 5.1 VOTING OF SHARES BY EDWARDS....................................15 ARTICLE VI CERTAIN TAX MATTERS......................................................15 SECTION 6.1 REPRESENTATIONS AND WARRANTIES.................................15 SECTION 6.2 COVENANTS......................................................15 SECTION 6.3 INDEMNIFICATION; SURVIVAL......................................17 ARTICLE VII IMPUTED INCOME INDEMNIFICATION..........................................17 SECTION 7.1 INDEMNIFICATION................................................17 SECTION 7.2 NOTICE AND PAYMENT.............................................17 SECTION 7.3 SURVIVAL.......................................................18 ARTICLE VIII TERMINATION............................................................18 SECTION 8.1 TERMINATION....................................................18 ARTICLE IX MISCELLANEOUS............................................................18 SECTION 9.1 GOVERNING LAW..................................................18 SECTION 9.2 JURISDICTION AND CONSENT TO SERVICE............................18 SECTION 9.3 NOTICES........................................................18 SECTION 9.4 INTERPRETATION.................................................20 SECTION 9.5 SEVERABILITY...................................................20 SECTION 9.6 COUNTERPARTS...................................................20 SECTION 9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.................20 SECTION 9.8 FURTHER ASSURANCES.............................................21 SECTION 9.9 AMENDMENTS AND MODIFICATIONS; WAIVERS AND EXTENSIONS...........21 SECTION 9.10 ASSIGNMENT....................................................21 SECTION 9.11 REMEDIES CUMULATIVE...........................................22
-i- SHAREHOLDERS AGREEMENT SHAREHOLDERS AGREEMENT (the "Agreement"), dated as of January 9, 2001, by and between Edwards Lifesciences Corporation, a Delaware corporation ("Edwards"), and PLC Systems Inc., a Yukon Territory corporation ("PLC"). WHEREAS, Edwards and PLC are parties to a Securities Purchase Agreement, dated as of January 7, 2001 (the "Purchase Agreement"), and upon consummation of the transactions contemplated therein, Edwards will hold 5,333,333 shares (the "Shares") of common shares without par value of PLC (the "PLC Common Shares") and Warrants (as defined herein) exercisable for a total of 3,000,000 PLC Common Shares (as adjusted from time to time pursuant to the provisions of the Warrants, the "Warrant Shares") on the terms and conditions set forth therein; and WHEREAS, the parties hereto wish to set forth their agreement concerning certain governance matters of PLC following consummation of the Transactions (as defined herein) as well as certain matters relating to Edwards' ownership and disposition of the Shares, Warrant Shares and any other shares of PLC securities acquired by Edwards after the date of this Agreement (collectively, the "Registrable Shares"); 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 hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: "ADDITIONAL CUMULATIVE CREDITABLE TAX AMOUNT" means the aggregate of Cumulative Creditable Tax Amounts not taken into account under the CPA Imputed Income Amount. An "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 Exchange Act as in effect on the date of this Agreement. "AGREEMENT" has the meaning set forth in the Recitals. "ANNUAL INFORMATION STATEMENT" means an information statement prepared by the Tax Amounts CPA on an annual basis setting forth the deemed 1 United States federal income inclusions in respect of the earnings of each of PLC and the PLC Subsidiaries for the immediately preceding taxable year of PLC related to (i) the controlled foreign corporation provisions set forth under section 951 ET SEQ. of the Code, (ii) the foreign personal holding company provisions set forth under section 551 ET SEQ. of the Code, and (iii) the "qualified electing fund" provisions set forth under section 1295 of the Code. Without limiting the foregoing, the Annual Information Statement shall, consistent with the requirements set forth in Internal Revenue Notice 88-125 and any successor provision, also set forth (A) the first and last days of the taxable year of PLC to which the information statement applies, (B) sufficient information to enable Edwards and any of its direct or indirect beneficial owners of Equity Securities to calculate their respective pro rata share of the ordinary earnings and net capital gain of PLC, determined in accordance with United States federal income tax principles, for the immediately preceding taxable year of PLC, and (C) the amount of cash and the fair market value of other property distributed or deemed distributed on a per share basis during the immediately preceding taxable year of the PLC and shall include a statement that PLC will permit any direct or indirect United States holder of Equity Securities to inspect and copy PLC's permanent books of account, records, and such other documents as may be maintained by PLC to the extent necessary to establish that the ordinary earnings and net capital gain referred to in (B) above are computed in accordance with United States federal income tax principles. "APPLICABLE LAW" shall mean, with respect to any Person, any statute, law, regulation, ordinance, rule, judgment, rule of common law, order, decree, award, Governmental Approval, concession, grant, franchise, license, agreement, directive, guideline, policy, requirement, or other governmental restriction or any similar form of decision of, or determination by, or any interpretation or administration of any of the foregoing by, any Governmental Authority, whether in effect as of the date hereof or thereafter and in each case as amended, applicable to such Person or its subsidiaries or their respective assets. A Person shall be deemed to "BENEFICIALLY OWN," to have "BENEFICIAL OWNERSHIP" of, or to be "BENEFICIALLY OWNING" any securities (which securities shall also be deemed "BENEFICIALLY OWNED" by such Person) that such Person is deemed to "beneficially own" within the meaning of Rule 13d-3 under the Exchange Act as in effect on the date of this Agreement and, for certainty, Edwards shall be deemed to Beneficially Own the Shares and the Warrant Shares. "CLOSING" has the meaning set forth in the Purchase Agreement. "CODE" means the Internal Revenue Code of 1986, as amended. "CPA IMPUTED INCOME AMOUNT" means the Imputed Income Amount, as determined by the Tax Amounts CPA and on the basis of assuming that 100% of the shares of PLC are owned by one "United States shareholder" (as defined in section 951 of the Code). 2 "CREDITABLE TAX" means a foreign tax that may be claimed as a foreign tax credit under section 901 ET SEQ. of the Code in respect of dividends (or imputed dividends) received from PLC. "CUMULATIVE CPA IMPUTED INCOME AMOUNT" means, the aggregate amount of the CPA Imputed Income Amounts in respect of the taxable year ending on December 31, 2001, and each subsequent taxable year ending prior to the date in respect of which such Cumulative CPA Imputed Income Amount is being calculated. "CUMULATIVE CREDITABLE TAX AMOUNT" means the aggregate amount of Realized Benefit in respect of a Creditable Tax. Edwards will be considered to have achieved a "REALIZED BENEFIT" in respect of a Creditable Tax with respect to a particular taxable year only to the extent that Edwards is able to actually utilize a credit for a Creditable Tax to reduce its federal income tax liability for any taxable year. "CUMULATIVE DIVIDEND AMOUNT" means, the aggregate amount of dividends paid in cash by PLC on a pro-rata, as converted basis, with respect to all classes of shares of PLC for the period commencing with the Date of the Closing and ending on and including the day prior to date of payment of any dividend for which the Cumulative Dividend Amount is being calculated. "DISTRIBUTION AGREEMENT" means the Distribution Agreement, dated as of January _, 2001, by and between Edwards Lifesciences LLC and PLC. "EDWARDS" has the meaning set forth in the Recitals. "EDWARDS DESIGNEE" means the individual designated by Edwards who is employed by Edwards with a title of director or above. "EQUITY SECURITIES" means the Shares and any rights, warrants, options or other instruments, including the Warrants, entitling the holder thereof, whether or not on a contingency, to acquire from PLC, shares in the capital of PLC and any instrument, directly or indirectly, convertible into or exercisable or exchangeable for, whether or not on a contingency, shares in the capital of PLC. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "FINAL DETERMINATION" means a "final determination" as defined under section 1313 of the Code or a similar determination under applicable state or local laws. "FINAL DETERMINATION IMPUTED INCOME AMOUNT" means, in the case of any particular Relevant Taxable Period for any particular Imputed Income Indemnitee, the Imputed Income Amount as determined pursuant to a Final Determination. 3 "FINAL DETERMINATION SHORTFALL" means, in the case of any particular Relevant Taxable Period for any particular Imputed Income Indemnitee, an amount equal to the aggregate of (i) 50% of the excess of (A) the Final Determination Imputed Income Amount in respect of such Relevant Taxable Period over (B) the CPA Imputed Income Amount attributable to such Imputed Income Indemnitee for such Relevant Taxable Period, reduced by the Additional Cumulative Creditable Tax Amount, and (ii) interest and penalties attributable thereto. "GOVERNMENTAL APPROVAL" means any action, order, authorization, consent, approval, license, lease, ruling, permit, tariff, rate, certification, exemption, filing or registration by or with any Governmental Authority. "GOVERNMENTAL AUTHORITY" 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. "IMPUTED INCOME AMOUNT" means, in the case of any particular Relevant Taxable Period, for any particular Imputed Income Indemnitee, the aggregate amount of income that would be includible, for United States federal income tax purposes, in the gross income of such Imputed Income Indemnitee, pursuant to, and without double counting, (i) the controlled foreign corporation provisions set forth under section 951 et seq. of the Code, (ii) the foreign personal holding company provisions set forth under section 551 et seq. of the Code, and (iii) the "qualified electing fund" provisions set forth under section 1291 ET SEQ. of the Code on the basis of assuming that 100% of the shares of PLC are owned by one "United States shareholder" (as defined in section 951 of the Code). "INDEMNIFIED PERSON" has the meaning set forth in Section 4.4(a). "IMPUTED INCOME INDEMNITEE" has the meaning set forth in Section 7.1. "IMPUTED INCOME LOSSES" has the meaning set forth in Section 7.1. "LICENSE AGREEMENT" means the Manufacturing License Agreement, dated as of January _, 2001, by and among Edwards Lifesciences LLC, PLC and PLC Medical Systems, Inc. "LOSSES" has the meaning set forth in Section 4.4. "PERSON" means any individual, group, corporation, firm, partnership, limited liability company, joint venture, trust, business association, organization, governmental entity or other entity. "PLC" has the meaning set forth in the Recitals. 4 "PLC BOARD" means the board of directors of PLC. "PLC COMMON SHARES" has the meaning set forth in the Recitals. "PLC SUBSIDIARIES" has the meaning set forth in the Purchase Agreement. "PROPOSED ISSUANCE" has the meaning set forth in Section 3.1. "PUBLIC OFFERING" means any offering of PLC Common Shares registered under the Securities Act. "PURCHASE AGREEMENT" has the meaning set forth in the Recitals. "REGISTRABLE SHARES" has the meaning set forth in the Recitals. "REGISTRATION EXPENSES" has the meaning set forth in Section 4.2(d). "RELEVANT TAXABLE PERIOD" means any calendar year period for which a particular CPA Imputed Income Amount, Final Determination Imputed Income Amount, or Imputed Income Amount is calculated. "SEC" means the Securities and Exchange Commission or any successor governmental entity. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "SHARES" has the meaning set forth in the Recitals. "TAX AMOUNTS CPA" means Ernst & Young LLP or a similar accounting firm of international reputation with comparable United States federal income tax expertise. "TAX AMOUNT SHORTFALL" means, in the case of a particular Imputed Income Indemnitee, an amount equal to the excess of (i) 50% of the Cumulative CPA Imputed Income Amount attributable to such Imputed Income Indemnitee over the aggregate of (ii) the Cumulative Dividend Amount previously distributed to such Imputed Income Indemnitee and (iii) the Cumulative Creditable Tax Amount. "TAX MATTERS INDEMNITEE" has the meaning set forth in Section 6.3(a). "TRANSACTION AGREEMENTS" means this Agreement, the Purchase Agreement, the Distribution Agreement, the License Agreement, and the Warrants. 5 "TRANSACTIONS" means the transactions contemplated by the Transaction Agreements. "UNITED STATES PERSON" means a United States person for United States federal income tax purposes. "U.S. SHAREHOLDER-APPOINTED DIRECTOR" means a director (i) designated by Edwards or (ii) any other Person designated by a shareholder who is a United States Person. "U.S. TAX ADVISOR" means any of (i) United States tax counsel to the Corporation; (ii) Ernst & Young LLP; or (iii) an accounting firm of international reputation similar to (ii) above with comparable United States federal income tax expertise. "WARRANT SHARES" has the meaning set forth in the Recitals. "WARRANTS" has the meaning set forth in the Purchase Agreement. ARTICLE II CORPORATE GOVERNANCE SECTION 2.1 THE PLC BOARD OF DIRECTORS. (a) PLC hereby agrees to take, at any time and from time to time, all action necessary and within its power such that the PLC Board shall consist of not more than ten directors. So long as Edwards and its Affiliates Beneficially Own at least 5% of the PLC Common Shares outstanding on a fully diluted basis, Edwards shall be entitled to nominate the Edwards Designee for election as a director to the PLC Board. (b) Upon a written notice from Edwards to PLC naming an Edwards Designee, PLC shall use its best efforts to cause such Edwards Designee to become a director of PLC. (c) From the date of the election of an Edwards Designee until receipt of written notice by PLC from Edwards that it no longer wishes to have an Edwards Designee on the PLC Board, PLC shall use its best efforts to ensure that each slate of persons nominated by the PLC Board for election as directors of PLC includes the Edwards Designee. 6 (d) If at any time an Edwards Designee ceases to be a member of the PLC Board and Edwards continues to be entitled to an Edwards Designee pursuant to Section 2.1(a), PLC shall use its best efforts to cause the resulting vacancy on the PLC Board to be filled by a replacement Edwards Designee at the next meeting of the PLC Board. (e) So long as Edwards is entitled but declines to designate an Edwards Designee or so long as Edwards and it Affiliates Beneficially Own at least 2% but less than 5% of the PLC Common Shares outstanding on a fully diluted basis and the Distribution Agreement has not been terminated, Edwards shall be entitled to have an observer attend meetings of the PLC Board and to receive materials distributed to members of the PLC Board, subject to fiduciary and confidentiality limitations set by the PLC Board at its reasonable good faith discretion. (f) Only Edwards shall be entitled to request the removal of the Edwards Designee. If Edwards requests that the Edwards Designee be removed (with or without cause), PLC agrees to take or cause to be taken all appropriate action within its power to effect the removal of such designee from the PLC Board. (g) At Edwards' election, unless prohibited by applicable stock exchange rules or Applicable Law, any board of directors of any subsidiary of PLC and any committee of the board of directors of PLC and such subsidiary shall include the Edwards Designee, PROVIDED, HOWEVER, that the Edwards Designee shall act only in an EX OFFICIO, i.e., non-voting, capacity on such committee of the PLC Board or on such subsidiary board of directors or committee thereof. 7 SECTION 2.2 GENERAL COVENANT TO VOTE. PLC agrees to take all actions necessary at any time or from time to time to call, or to cause its subsidiaries or the appropriate officers or directors of its subsidiaries to call, one or more annual meetings of shareholders of its subsidiaries and to vote all securities Beneficially Owned or over which control or direction is exercised by PLC at any such annual meeting in favor of, or to consent by written consent in lieu of any such meeting to, the election of a board of directors consistent with, and the taking of any other action required by or to effect the intent of, this Agreement. ARTICLE III PREEMPTIVE RIGHTS AND ADDITIONAL STOCK SALES SECTION 3.1 PREEMPTIVE RIGHTS. Edwards shall be entitled to participate in all future issuances by PLC of PLC Common Shares (or rights to acquire PLC Common Shares or securities convertible into, or exchangeable for, or carrying the right to purchase PLC Common Shares) to the extent necessary for Edwards to maintain its proportionate fully diluted equity interest in PLC as that interest exists at the time of such issuance. PLC will provide Edwards with at least 20 days advance written notice of any such proposed issuance (a "Proposed Issuance"), which notice shall contain all relevant information pertaining thereto (including, without limitation, if then known, the identity of the proposed beneficial and record owners of the PLC Common Shares to be issued and sold by PLC and the issue price per security, or proposed range of issue prices per security) and an offer to Edwards to participate in the Proposed Issuance (at a price per security and upon terms and conditions no less favorable than those provided to other offerees or purchasers of PLC Common Shares in the Proposed Issuance) to the extent necessary for Edwards to maintain its proportionate fully diluted equity interest in PLC. At Edwards' sole option, it may participate in the Proposed Issuance by purchasing the full number of PLC Common Shares necessary to maintain its proportionate equity interest or any lesser number thereof. In the event the terms of the Proposed Issuance change, PLC will provide Edwards with a new 20-day advance notice period prior to consummating the transaction contemplated by the Proposed Issuance. These preemptive rights shall not apply to the following sales or issuances: (a) pursuant to the exercise, conversion or exchange of securities, exercisable, convertible or exchangeable into PLC Common Shares that are outstanding as of the date hereof; (b) the issuance of PLC Common Shares as a stock dividend to holders of PLC Common Shares or upon any subdivision or combination of PLC Common Shares; (c) the issuance of PLC Common Shares in a Public Offering; (d) pursuant to an employee stock option plan, stock purchase plan or similar benefit program, or sales or issuances to directors, employees or consultants which sales or issuances do not exceed, in any five-year period, 20%, 8 on a fully diluted basis, of the outstanding equity shares of PLC as of the date hereof, provided that in the event any employee is terminated and such employee's options are terminated, the reissuance of such options shall not be counted in the 20% threshold; or (e) as consideration for the acquisition by PLC or any of its affiliates of all or a part of another business or the merger of any business entity with or into PLC or any of its affiliates. ARTICLE IV REGISTRATION RIGHTS SECTION 4.1 REGISTRATION ON REQUEST. (a) Upon the written request of Edwards requesting that PLC effect the registration under the Securities Act of all or part of its Registrable Shares and specifying the intended method of disposition thereof, PLC will, subject to the terms of this Agreement, use its reasonable best efforts to effect the registration under the Securities Act of the Registrable Shares which PLC has been so requested to register by Edwards for disposition in accordance with the intended method of disposition stated in such request. (b) Registrations under the Securities Act under this Section 4.1 shall be on such appropriate registration form of the SEC as shall be selected by Edwards and PLC. If, in connection with any registration under the Securities Act under Section 4.1(a), which is proposed by PLC to be on Form S-3 or any similar short form registration statement which is a successor to Form S-3, the managing underwriters, if any, shall advise PLC in writing that in their opinion the use of another permitted form is of material importance to the success of the offering, then such registration shall be on such other permitted form. (c) PLC will pay all expenses associated with any registration requested pursuant to this Section 4.1 by Edwards including, without limitation, legal, accounting, registration, printing and distribution fees and expenses, except that Edwards shall pay for commissions and underwriting discounts payable with respect to the Registrable Securities ("Registration Expenses"). (d) A registration or qualification requested pursuant to this Section 4.1 shall not be deemed to have been effected (i) unless a registration statement with respect thereto has become effective, PROVIDED that a registration which does not become effective after PLC has filed a registration statement with respect thereto solely by reason of the refusal to proceed of Edwards (other than a 9 refusal to proceed based upon the advice of counsel relating to information concerning the business or financial condition of PLC which is made known to Edwards after the date on which such registration was requested) shall be deemed to have been effected by PLC at the request of Edwards unless Edwards shall have elected to pay all Registration Expenses in connection with such registration, (ii) if, after it has become effective, such registration statement or distribution of Registrable Shares becomes subject to any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason other than by reason of some act or omission by, or circumstance relating to, Edwards, or (iii) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied, other than by reason of some act or omission by, or circumstances relating to, Edwards. (e) If a requested registration pursuant to this Section 4.1 involves an underwritten offering, the managing underwriter or underwriters thereof shall be selected by Edwards and shall be reasonably acceptable to PLC. (f) PLC shall not be required to effect more than three registrations pursuant to this Section 4.1. In addition, notwithstanding any other language herein, PLC shall not be required to effect any registration (other than on Form S-3 or any successor form relating to secondary offerings) within six months after the effective date of the registration statement relating to a Public Offering. If at the time of any request to register Registrable Shares pursuant to this Section 4.1, PLC is engaged or has plans to engage in a Public Offering or is engaged in any other activity which, in the good faith determination of the PLC Board, would be adversely affected by the requested registration, then PLC may at its option direct that such request be delayed for a period not in excess of 90 days from the date of such request, such right to delay a request to be exercised by PLC not more than once in any 12-month period. 10 SECTION 4.2 INCIDENTAL REGISTRATION. If PLC proposes at any time to register PLC Common Shares under the Securities Act (other than pursuant to a registration statement on Form S-8 or Form S-4 (or a similar successor form)) with respect to an offering of PLC Common Shares for its own account or for the account of any of its security holders, it will promptly (but in no event less than 30 days before the anticipated filing date) give written notice thereof to Edwards and offer Edwards the opportunity to register or distribute such number of Registrable Shares as Edwards may request. Upon the written request of Edwards made within 30 days after the receipt of any such notice (which request shall specify the Registrable Shares intended to be disposed of by Edwards), PLC will, subject to the terms of this Agreement, use its best efforts to include the Registrable Shares which Edwards has been requested to register in such registration. (a) If the proposed registration by PLC is an underwritten Public Offering of PLC Common Shares, PLC shall so advise Edwards as a part of the written notice given pursuant to Section 4.2. In such event, the right of Edwards to include its Registrable Shares in such registration pursuant to Section 4.2 shall be conditioned upon Edwards' participation in such underwriting on the terms and conditions agreed to by PLC and the managing underwriter or underwriters. PLC will use its reasonable best efforts to cause the managing underwriter or underwriters to include such Registrable Shares among those securities to be distributed by or through such underwriters. Notwithstanding the foregoing, if in the reasonable judgment of the managing underwriter or underwriters, the success of the Public Offering would be adversely affected by inclusion of the Registrable Shares requested to be included, PLC shall include in such registration the number (if any) of Registrable Shares so requested to be included which, in the opinion of such underwriters, can be sold. (b) If, at any time after giving written notice of its intention to register a Public Offering and prior to the effective date of the registration statement, PLC shall determine for any reason either not to register, or to delay registration of, such securities, PLC may, at its election, give written notice of such determination to Edwards and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Shares in connection with such registration or (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Shares, for the same period as the delay in registering such other PLC Common Shares. (c) The selection of the underwriters for any such offering shall be at the sole discretion of PLC. 11 (d) PLC will pay all Registration Expenses associated with the registration and sale of Registrable Shares pursuant to this Section 4.2. SECTION 4.3 REGISTRATION PROCEDURES. (a) If and whenever PLC is required by the provisions of Section 4.1 or 4.2 hereof to effect the registration of Registrable Shares, PLC will as promptly as practicable: (i) furnish to Edwards such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in any such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents, as Edwards may reasonably request to facilitate the disposition of Registrable Shares; (ii) use its best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions, if applicable, as shall be reasonably appropriate for distribution of the Registrable Shares; provided, however, that PLC shall not be required, solely in order to accomplish the foregoing, to qualify to do business as a foreign corporation in any jurisdiction where it would not otherwise be required to qualify, subject itself to taxation in any such jurisdiction or consent to general service of process in any such jurisdiction; (iii) advise Edwards, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the SEC or any state securities commission or agency suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and use its reasonable best efforts to prevent the issuance of any stop order and to obtain its withdrawal if such stop order should be issued; (iv) notify Edwards upon PLC's discovery that, or upon the happening of any event as a result of which, any 12 prospectus included in any registration statement which includes Registrable Shares, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and at the request of Edwards prepare and furnish to Edwards a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and (v) use its reasonable best efforts to cause all such Registrable Shares to continue to be listed on each securities exchange or inter-dealer quotation system on which the PLC Common Shares are now listed. (b) Edwards agrees that, upon receipt of any notice from PLC of the occurrence of any event of the kind described in Section 4.3(a)(iv), it will forthwith discontinue the disposition of Registrable Shares pursuant to the registration statement relating to such Registrable Shares until its receipt of a supplemented or amended prospectus from PLC; PROVIDED that if the registration statement is for an underwritten Public Offering, Edwards will use its reasonable best efforts to cause the underwriters of such Public Offering to discontinue the disposition of Registrable Shares. (c) In the event that, in the judgment of PLC, it is advisable to suspend use of a prospectus included in a registration statement which includes Registrable Shares due to pending material developments or other events that have not yet been publicly disclosed and as to which PLC believes public disclosure would be detrimental to PLC, PLC shall notify Edwards to such effect, and, upon receipt of such notice, Edwards shall immediately discontinue any sales of Registrable Shares pursuant to such registration statement until Edwards has received copies of a supplemented or amended prospectus or until Edwards is advised in writing by PLC that the then current prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such prospectus. Notwithstanding anything to the contrary herein, PLC shall not exercise its rights under this Section 4.3(c) to suspend sales of Registrable Shares for a period or periods in excess of, in the aggregate, 90 days in any 12-month period. 13 (d) If any Registrable Shares are included in any registration pursuant to this Article IV, Edwards shall take such actions and furnish PLC with such information regarding itself and relating to the distribution of the Registrable Shares as PLC may from time to time reasonably request and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement, including, without limitation, the following: (i) enter into an appropriate underwriting agreement containing terms and provisions then customary in agreements of that nature and cause each underwriter of the Registrable Shares to be sold to agree in writing with PLC to provisions with respect to indemnification that are substantially the same as set forth in Section 4.4 hereof; (ii) enter into such custody agreements, powers of attorney and related documents at such time and on such terms and conditions as may then be customarily required in connection with such offering; and (iii) distribute the Registrable Shares in accordance with and in the manner of the distribution contemplated by the applicable registration statement and prospectus. SECTION 4.4 INDEMNIFICATION. (a) INDEMNIFICATION BY PLC. In the event of any registration of Registrable Shares pursuant to Section 4.1 or 4.2, PLC agrees to indemnify and hold harmless Edwards and its directors and officers and each other person, if any, who controls Edwards within the meaning of the Securities Act (each, an "Indemnified Person") from and against any and all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees and costs of investigation) to which such Indemnified Person becomes subject under the Securities Act or otherwise (the "Losses"), insofar as such losses, claims, damages, liabilities or expenses arise out of or are based upon (i) any untrue statement or alleged untrue statement of material fact contained in any registration statement under which such securities were registered or qualified under the Securities Act or otherwise, any preliminary prospectus, final prospectus or summary prospectus included therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that PLC shall not be liable to such Indemnified Person in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with information furnished in writing by Edwards to PLC expressly for use therein. (b) INDEMNIFICATION BY EDWARDS. In the event of any registration of Registrable Shares pursuant to Section 4.1 or 4.2, Edwards agrees 14 to indemnify and hold harmless PLC and its directors and officers and each other person, if any, who controls PLC within the meaning of the Securities Act from and against any and all Losses, insofar as such Losses arise out of or based upon (i) any untrue statement or alleged untrue statement of material fact contained in any registration statement under which such securities were registered or qualified under the Securities Act or otherwise, any preliminary prospectus, final prospectus or summary prospectus included therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such statement or omission was made solely in reliance upon and in conformity with information furnished in writing to PLC by Edwards expressly for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. (c) DEFENSE OF CLAIM. If any action or proceeding (including any governmental investigation) shall be brought or directed against any party hereto (or its officers, directors or agents), the party against whom indemnification is sought shall be permitted to assume the defense of such claim, including the employment of counsel and the payment of all expenses, unless a conflict of interest may exist with respect to such claim or differing or additional defenses may be available to the other party. If defense of a claim is assumed by an indemnifying party, the indemnified party shall not be liable for any settlement of such action or proceedings effected without its prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Any such indemnifying party shall not, without the prior written consent of the indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the indemnified party an unconditional release from all liability in respect to such claim or litigation. If defense of a claim is not assumed by an indemnifying party, the indemnifying party shall not be liable for any settlement effected without its prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Any party entitled to indemnification hereunder agrees to give prompt written notice to the other party of any written notice of the commencement of any action, suit, proceedings or investigation or threat thereof for which such party may claim indemnification or contribution pursuant to this Agreement; PROVIDED, HOWEVER, that failure to give such notice shall not limit any party's right to indemnification or contribution hereunder. Notwithstanding the foregoing, an indemnified party hereunder shall always have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party. (d) SURVIVAL. The indemnification provided for under this Agreement will (i) remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or 15 controlling Person of such indemnified party, (ii) survive the transfer of any Registrable Securities and (iii) survive the termination of this Agreement. (e) RIGHT OF CONTRIBUTION. If the indemnification provided for in this Section 4.4 is unavailable to, or insufficient to hold harmless, an indemnified party under Section 4.4(a) or Section 4.4(b) above in respect of any Losses referred to in such Sections, then each applicable indemnifying party shall have an obligation to contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of PLC, on the one hand, and of Edwards, on the other, in connection with the misstatement or omission which resulted in such Losses, taking into account any other relevant equitable considerations. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Section 4.4(c) above, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation, lawsuit or legal or administrative action or proceeding. ARTICLE V VOTING SECTION 5.1 VOTING OF SHARES BY EDWARDS. Until the third anniversary of the date hereof, in any matter submitted to holders of PLC Common Shares, Edwards shall be present for purposes of establishing a quorum and shall vote all the PLC Common Shares that it Beneficially Owns in proportion to the votes cast by all other holders of PLC Common Shares; PROVIDED, HOWEVER, that Edwards shall be free to vote all of its PLC Common Shares in its sole discretion on the following matters submitted to holders of PLC Common Shares: (a) any merger, consolidation, acquisition or other business combination involving PLC in which PLC is not the surviving corporation or as a result of which a majority of the outstanding common equity of PLC is owned by another entity; (b) any sale, lease, transfer or other disposition of the business operations or all or substantially all assets of PLC (on a consolidated basis); and (c) any dissolution or complete liquidation or similar arrangement of PLC. 16 ARTICLE VI CERTAIN TAX MATTERS SECTION 6.1 REPRESENTATIONS AND WARRANTIES. Based on the advice of PLC's U.S. Tax Advisor, PLC is not, and immediately following the sale of the Shares to Edwards under the Purchase Agreement will not be, classified as (i) a "controlled foreign corporation" or (ii) a "foreign personal holding company" for United States federal income tax purposes. SECTION 6.2 COVENANTS. (a) So long as Edwards holds any Equity Securities, none of PLC or any PLC Subsidiary shall, directly or indirectly, issue, sell (whether involuntarily, by judicial sale, or otherwise), transfer, grant a security interest in, pledge, hypothecate, assign, give, or otherwise (voluntarily or by operation of law) dispose of (any such act is hereinafter referred to as a "Transfer") any Equity Security to any person or enter into any arrangement to shift voting power away from United States holders of Equity Securities (any such arrangement hereinafter referred to as an "Arrangement") in respect of any Equity Security if such Transfer or Arrangement would, for purposes of section 951 ET SEQ. and 551 ET SEQ. of the Code, result in more than 50% of the voting power or the value of the outstanding stock of the PLC being owned, directly or indirectly (taking into account the applicable constructive ownership rules under the Code), by (i) five (5) or fewer "United States shareholders" as defined in section 951 of the Code, or (ii) five (5) or fewer individuals who are citizens or residents of the United States as described in section 552 of the Code, without the prior written consent of Edwards, so long as it holds Equity Securities. (b) PLC shall, at its own expense, furnish to Edwards by February 28 of each year, commencing February 28, 2002, an Annual Information Statement for the immediately preceding taxable year of PLC. PLC shall also provide such other information as may be required by the United States Internal Revenue Service to enable Edwards and any of its direct or indirect beneficial owners, as the case may be, to make a "qualified electing fund" election under section 1295 of the Code. (c) None of PLC or any PLC Subsidiary shall enter into any agreement, or make any amendment to any existing agreement, that would restrict or prohibit any payment made pursuant to and in accordance with the terms of this Article VI or Article VII of this Agreement, without the prior written consent of Edwards, so long as it holds Equity Securities. 17 (d) Based on the advice of the PLC's U.S. Tax Advisor, PLC shall use its best efforts to (i) avoid being classified as a "passive foreign investment company" or a "foreign personal holding company" for United States federal income tax purposes in any taxable year ending after the Closing, and (ii) cause each PLC Subsidiary to avoid being classified as a "passive foreign investment company" or a "foreign personal holding company" for United States federal income tax purposes for any taxable year ending after the Closing. (e) PLC shall not (and shall cause the PLC Subsidiaries not to) undertake any action which could result in a material risk of PLC (or any of the PLC Subsidiaries) being classified as a "controlled foreign corporation," "passive foreign investment company" or "foreign personal holding company" for United States federal income tax purposes in any taxable year ending after the Closing. (f) So long as Edwards and its Affiliates Beneficially Own at least 5% of the PLC Common Shares outstanding on a fully diluted basis as described in Section 2.1(a), PLC shall use its best efforts to ensure that a majority of the Board of Directors is comprised of directors other than U.S. Shareholder-Appointed Directors, unless previously approved in writing by Edwards so long as it holds Equity Securities. SECTION 6.3 INDEMNIFICATION; SURVIVAL. (a) PLC shall defend, indemnify, and hold harmless Edwards and its officers, directors, partners, members, direct and indirect beneficial owners, employees, representatives, successors and assigns (each, a "Tax Matters Indemnitee") from and against any and all losses, damages, taxes, additions to tax, interest, penalties, and expenses (including, without limitation, reasonable attorneys' fees, costs, and expenses incurred in investigating and defending against the assertion of such liabilities) that may be sustained, suffered, or incurred by any such Indemnitee arising from, or in connection with or relating to any breach by PLC of its representations, warranties, covenants, or agreements set forth in this Article VI after the Closing. (b) In respect of any matter for which a claim can be made under Section 6.3(a) or Section 7.1, any amount due and payable under Section 7.1 shall reduce the amount due and payable under Section 6.3(a). (c) The obligations of PLC under this Section 6.3 shall survive the termination of this Agreement and shall continue in full force and effect. 18 ARTICLE VII IMPUTED INCOME INDEMNIFICATION SECTION 7.1 INDEMNIFICATION. PLC shall defend, indemnify, and hold harmless Edwards and its respective officers, directors, partners, members, direct and indirect beneficial owners, employees, representatives, successors, and assigns (each, an "Imputed Income Indemnitee") from and against any and all losses, damages, taxes, additions to tax, interest, penalties, and expenses (including, without limitation, reasonable attorneys' fees, costs, and expenses incurred in investigating and defending against the assertion of such liabilities) (collectively, "Imputed Income Losses") that may be sustained, suffered, or incurred by reason of (i) any Imputed Income Amount attributable to such Imputed Income Indemnitee (provided, however, that the indemnification provided for in this clause (i) shall not exceed, for any Relevant Taxable Period, the Tax Amount Shortfall), and (ii) Final Determination Imputed Income Amount attributable to such Imputed Income Indemnitee (provided, however, that the indemnification provided for in this clause (ii) shall not exceed, for any Relevant Taxable Period, the Final Determination Shortfall). SECTION 7.2 NOTICE AND PAYMENT. In the event that an Imputed Income Indemnitee suffers an Imputed Income Loss such Imputed Income Indemnitee shall provide written notice thereof to PLC including a statement as to the nature and amount of such Imputed Income Loss and, not later than 10 Business Days following receipt of such written notice, PLC shall pay to such Imputed Income Indemnitee any and all amounts owed to it pursuant to Section 7.1. SECTION 7.3 SURVIVAL. The obligations of PLC under this Article VII shall survive the termination of this Agreement and shall continue to remain in full force and effect. ARTICLE VIII TERMINATION SECTION 8.1 TERMINATION. Article II of this Agreement shall automatically terminate on the date Edwards and its Affiliates no longer Beneficially Own, in the aggregate, at least 2% of the PLC Common Shares outstanding on a fully diluted basis. Articles III and IV of this Agreement shall automatically terminate on the date Edwards and its Affiliates no longer Beneficially Own, in the aggregate, at least 5% of the PLC Common Shares outstanding on a fully diluted basis. 19 ARTICLE IX MISCELLANEOUS SECTION 9.1 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 9.2 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 9.3 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 9.3 (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 9.3 (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 20 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: Associate 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 9.4 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 9.5 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 21 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 9.6 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 both parties need not sign the same counterpart. SECTION 9.7 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and the other Transaction Agreements, including all exhibits hereto and thereto, by and between Edwards and PLC, (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 9.7. SECTION 9.8 FURTHER ASSURANCES. Each party hereto shall do all such further acts and execute, acknowledge, deliver and file all such further instruments and documents as may be necessary or desirable to give effect to and carry out the transactions contemplated herein. SECTION 9.9 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 22 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 9.10 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 (1) Edwards may assign all or any portion of its rights and obligations to (a) the acquirer of all or substantially all of the assets of Edwards including an acquisition through merger; (b) any subsidiary or affiliate of Edwards and (c) the transferee of any of the Shares or Warrant Shares who, after giving effect to the transfer Beneficially Owns at least 5% of the PLC Common Shares then outstanding on a fully-diluted basis and (2) PLC may assign its rights and obligations to any acquirer of all or substantially all of the assets or business of PLC, whether by merger, sale of assets or otherwise. Any attempted assignment or delegation of rights, duties or obligations hereunder in contravention hereof shall be void and of no effect. SECTION 9.11 REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any other remedies against the other party hereto. 23 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above. EDWARD LIFESCIENCES CORPORATION By: /s/ JOHN H. KEHL, JR. ------------------------- Name: John H. Kehl, Jr. Title: Corporate Vice President Business Development and Strategy PLC SYSTEMS INC. By: /s/ JAMES G. THOMASCH -------------------------- Name: James G. Thomasch Title: Senior Vice President and Chief Financial Officer EX-3 4 a2040741zex-3.txt EXHIBIT 3 EXHIBIT 3 THE SECURITIES EVIDENCED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE (A) IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT, (II) A "NO ACTION" LETTER OF THE SECURITIES AND EXCHANGE COMMISSION AND AN EXEMPTION FROM APPLICABLE STATE AND FOREIGN SECURITIES LAWS. WITH RESPECT TO SUCH SALE OR OFFER, OR (III) AN EXEMPTION UNDER THE ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES. Warrant No. 1 Number of Shares: 1,000,000 Date of Issuance: January 9, 2001 (subject to adjustment) PLC SYSTEMS INC. WARRANT TO PURCHASE COMMON SHARES PLC Systems Inc., a Yukon Territory corporation (the "COMPANY"), for value received, hereby certifies that Edwards Lifesciences Corporation, a Delaware corporation, or its registered assigns ("EDWARDS"), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof and on or before the third anniversary of the date hereof, up to 1,000,000 (as adjusted from time to time) common shares without par value (the "COMMON SHARES"), of the Company, pursuant to the provisions of this warrant (the "WARRANT"), at a purchase price of $1.50 per share (as adjusted from time to time, the "PURCHASE PRICE"). The shares purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes referred to herein as the "WARRANT SHARES." This Warrant is issued pursuant to the Securities Purchase Agreement, dated as of January 7, 2001 (the "SECURITIES PURCHASE AGREEMENT"), by and between Edwards and the Company. 1 1. EXERCISE. (a) MANNER OF EXERCISE. This Warrant may be exercised by the holder of this Warrant (the "HOLDER"), in whole or in part, by surrendering this Warrant and the duly executed Notice of Exercise attached hereto as EXHIBIT A, at the principal office of the Company, or at such other office or agency as the Company may designate, together with payment in full of an amount equal to the Purchase Price multiplied by the number of the Warrant Shares to be purchased upon such exercise (the "AGGREGATE PURCHASE PRICE"). The Purchase Price shall be paid to the Company by certified check or wire transfer of immediately available funds. (b) EFFECTIVE TIME OF EXERCISE. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant is surrendered to the Company and the Aggregate Purchase Price paid as provided in Section 1(a). Subject to Section 4(a), at such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable, shall be deemed to have become the holder or holders of record of the Warrant Shares evidenced by such certificates. (c) NO FRACTIONAL SHARES. No fractional shares will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one Warrant Share on the date of exercise, as determined in good faith by the Board of Directors of the Company. (d) DELIVERY TO HOLDER. As soon as practicable after the exercise of this Warrant, and in any event within ten (10) business days thereafter, the Company shall cause to be issued in the name of, and delivered to, the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: (i) a certificate or certificates evidencing the number of Common Shares to which such Holder shall be entitled, and (ii) in case of a partial exercise, a new warrant of like tenor, calling in the aggregate on the face thereof for the number of Common Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares in respect of which the Warrant has been previously exercised. 2 2. COVENANTS AS TO COMMON SHARES. The Company hereby covenants and agrees as follows: (a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized, validly issued and fully paid and non-assessable. (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. (c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the Common Shares needed to provide for the exercise of the rights then represented by this Warrant. (d) The Company shall secure the listing of the Warrant Shares upon the American Stock Exchange as required by the Securities Purchase Agreement and shall maintain, so long as any other Common Shares shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (e) The Company will not, by amendment of its Articles of Continuance or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant. Without limiting the generality of the foregoing, the Company will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Common Shares upon the exercise of this Warrant. (f) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. 3. ADJUSTMENTS. The Purchase Price and the number of Common Shares issuable upon exercise of this Warrant shall be adjusted from time to time as follows: 3 (a) MERGER, SALE OF ASSETS, ETC. A recapitalization, reorganization, merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, merger or consolidation in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger or consolidation are converted into other property, whether in the form of securities, cash, or otherwise, or sale or transfer of all or substantially all of the Company's assets is referred to herein as an "ORGANIC CHANGE." In the event of an Organic Change, lawful provision shall be made so that the Holder shall be entitled to receive upon exercise of this Warrant, the number of shares of stock or other securities or property of the successor entity resulting from such Organic Change that a holder of the Common Shares deliverable upon exercise of this Warrant would have been entitled to receive in such Organic Change if this Warrant had been exercised immediately before such Organic Change, all subject to further adjustment as provided in this Section 3. The foregoing provisions of this Section 3(a) shall similarly apply to successive Organic Changes and to the stock or securities of any other entity that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the holder of Common Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors and a copy of the resolutions reflecting such determination shall be provided to the Holder. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. (b) RECLASSIFICATION, ETC. If the Company, by reclassification of securities or otherwise, changes any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Purchase Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3. (c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company changes (by any stock split, recapitalization, combination, reverse stock split or otherwise) the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Purchase Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination or reverse stock split. 4 (d) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY. If the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that the Holder would have held on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3. (e) ADJUSTMENTS FOR COMMON SHARES ISSUE. If the Company issues Common Shares for a consideration per Common Share less than the Fair Value per Common Share on the date of issuance of such additional Common Shares, the Purchase Price shall be adjusted in accordance with the following formula: C - P' = P x O + M ------- A where: P' = the adjusted Purchase Price P = the then current Purchase Price O = the number of Common Shares outstanding immediately prior to the issuance of such additional Common Shares C = the aggregate consideration received for the issuance of such additional Common Shares M = the Fair Value of one Common Share on the date of issuance of such additional Common Shares A = the number of Common Shares outstanding immediately after the issuance of such additional Common Shares 5 The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance, PROVIDED that in the event the adjustment set forth above would result in a Purchase Price less than $0.88 (as adjusted by the occurrence of any of the events set forth in subsections (a)-(d) of this Section 3 (as adjusted, the "Minimum Purchase Price")), the Purchase Price shall be adjusted to the Minimum Purchase Price. This subsection (e) does not apply to any sale or issuance of securities pursuant to (i) subsections (a)-(d) of this Section 3, (ii) the exercise of the Warrants, or the conversion or exchange of other securities convertible or exchangeable for Common Shares the issuance of which caused an adjustment to be made under Section 3(f), or (iii) an employee stock option plan, stock purchase plan or similar benefit program, or any sale or issuance to directors, employees or consultants, so long as such sales or issuances of Common Shares, in the aggregate, do not exceed, in any five-year period, 20%, on a fully diluted basis, of the outstanding equity shares of the Company as of the date hereof. (f) ADJUSTMENTS FOR CONVERTIBLE SECURITIES ISSUE. If the Company issues any securities convertible into or exchangeable for Common Shares for a consideration per Common Share initially deliverable upon conversion or exchange of such securities less than the Fair Value per Common Share on the date of issuance of such securities, the Purchase Price shall be adjusted in accordance with the following formula: C + E ------- P' = P x O + M ------- O + D where: P' = the adjusted Purchase Price P = the then current Purchase Price O = the number of Common Shares outstanding immediately prior to the issuance of such securities C = the aggregate consideration received for the issuance of such securities E = the minimum amount of consideration required to be paid to convert or exchange such securities into or for Common Shares M = the Fair Value of one Common Share on the date of issuance of such securities 6 D = the maximum number of Common Shares deliverable upon conversion or in exchange for such securities at the initial conversion or exchange rate The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance, PROVIDED that in the event the adjustment set forth above would result in a Purchase Price less than the Minimum Purchase Price, the Purchase Price shall be adjusted to the Minimum Purchase Price. If all of the Common Shares deliverable upon conversion or exchange of such securities have not been issued when such securities are no longer outstanding, then the Purchase Price shall promptly be readjusted to the Purchase Price which would then be in effect had the adjustment upon the issuance of such securities been made on the basis of the actual number of shares of Common Shares issued upon conversion or exchange of such securities. (g) CONSIDERATION RECEIVED. If the consideration received by the Company for issuances of securities pursuant to subsections (e) and (f) of this Section 3 is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the company's Board of Directors and a copy of the resolutions reflecting such determination shall be provided to the Holder. (h) ADJUSTMENT IN NUMBER OF COMMON SHARES. When an adjustment to the Purchase Price is required to be made pursuant to this Section 3, the number of Common Shares purchasable upon the exercise of this Warrant shall be adjusted to the number determined by dividing (i) an amount equal to the number of Common Shares issuable upon the exercise of this Warrant immediately prior to such adjustment multiplied by the Purchase Price in effect immediately prior to such adjustment by (ii) the Purchase Price in effect immediately after such adjustment. (i) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of the Holder, furnish or cause to be furnished to the Holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Purchase Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant. (j) NO IMPAIRMENT. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying 7 out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 4. TRANSFERS. (a) UNREGISTERED SECURITY. The Holder acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the "ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares (i) in the absence of (x) an effective registration statement for the securities under the Act, (y) a "no action" letter of the Securities and Exchange Commission and an exemption from applicable state and foreign securities laws with respect to such sale or offer, or (z) an exemption under the Act and applicable state and foreign securities laws or (ii) unless such sale is made pursuant to Rule 144 under the Act. Each certificate or other instrument for Common Shares issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing effect unless and until the Warrant Shares have been registered. (b) TRANSFERABILITY OF WARRANT. Subject to the provisions of this Warrant described herein, this Warrant and all rights hereunder may be transferred in whole or in part without the prior written consent of the Company. (c) TRANFERABILITY OF WARRANT SHARES. The Holder shall not sell, pledge, distribute, offer for sale, transfer or otherwise dispose of any Warrant Share within 33 days of its issuance by the Company to the Holder. (d) WARRANT REGISTER. The Company shall maintain at its principal offices (or such other office or agency of the Company as it may designate), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant. (e) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form attached hereto as EXHIBIT B, and subject to the provisions of this Warrant, the Company at its expense shall promptly issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof. 5. NOTICES OF CERTAIN TRANSACTIONS. If (a) the Company takes any action or enters into any transaction contemplated by Section 3(a)-(f) or (b) there is a voluntary or 8 involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Holder a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such Organic Change, reclassification of or change to securities, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of its Common Shares are to be determined. Such notice shall be sent at least fifteen (15) business days prior to the record date or effective date for the event specified in such notice. 6. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new warrant of like tenor. 7. 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 Warrant 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 7 (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 7 (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 9 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 Purchaser: Edwards Lifesciences Corporation One Edwards Way Irvine, California 92614 Attention: Associate 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 8. AMENDMENTS AND MODIFICATIONS; WAIVERS AND EXTENSIONS. (a) No amendment, modification or termination of this Warrant 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 Warrant 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 Warrant. 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. 10 9. INTERPRETATION. When a reference is made in this Warrant to a Section or Exhibit, such reference shall be to a Section or Exhibit of this Warrant unless otherwise indicated. The titles and headings contained in this Warrant are for reference purposes only and shall not affect in any way the meaning or interpretation of this Warrant. When the words "includes" or "including" are used in this Warrant, they shall be deemed to be followed by the words "without limitation." 10. GOVERNING LAW; JURISDICTION AND CONSENT TO SERVICE. This Warrant 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). In accordance with the laws of the State of New York, and without limiting the jurisdiction or venue of any other court, the Holder and the Company (a) agree that any suit, action or proceeding arising out of or relating to this Warrant 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 Warrant; (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. 11 PLC SYSTEMS INC. By: /s/ JAMES G. THOMASCH -------------------------------- Name: James G. Thomasch Title: Senior Vice President and Chief Financial Officer EXHIBIT A NOTICE OF EXERCISE To: PLC Systems Inc. The undersigned hereby irrevocably, subject to the terms and conditions contained in the attached Warrant, elects to purchase ___________ Common Shares of PLC Systems Inc., pursuant to the provisions of Section 1 of the attached Warrant, and tenders herewith payment of the Aggregate Purchase Price for such shares in full, in cash. In exercising this Warrant, the undersigned hereby confirms and acknowledges that the Common Shares are being acquired solely for the account of the undersigned and the undersigned will not offer, sell or otherwise dispose of any of the Common Shares in contravention of Section 4 of the Warrant. Please issue a certificate or certificates representing said Common Shares in the name of the undersigned or in such other name as is specified below. ------------------------------ (Name) ------------------------------ (Name) Please issue a new warrant for the unexercised portion of the attached Warrant in the name of the undersigned: ------------------------------ (Name) Dated: ---------------------------- ------------------------------ Signature A-1 EXHIBIT B ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfer unto the Assignee named below the attached Warrant, together with all of the rights of the undersigned under the Warrant, with respect to the number of Common Shares set forth below: NAME OF ASSIGNEE ADDRESS NO. OF SHARES and does hereby irrevocably constitute and appoint ____________________ Attorney to make such transfer on the books of PLC Systems Inc., maintained for the purpose, with full power of substitution in the premises. The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the securities to be issued upon exercise hereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any securities to be issued upon exercise hereof in contravention of Section 4 of the Warrant. Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the securities so purchased are being acquired for investment and not with a view toward distribution or resale. Dated: ------------------- ------------------------------------- Signature of Holder Note: The above signature should correspond exactly with the name on the face of the attached Warrant. B-1 EX-4 5 a2040741zex-4.txt EXHIBIT 4 EXHIBIT 4 THE SECURITIES EVIDENCED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE (A) IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT, (II) A "NO ACTION" LETTER OF THE SECURITIES AND EXCHANGE COMMISSION AND AN EXEMPTION FROM APPLICABLE STATE AND FOREIGN SECURITIES LAWS. WITH RESPECT TO SUCH SALE OR OFFER, OR (III) AN EXEMPTION UNDER THE ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES. Warrant No. 2 Number of Shares: 1,000,000 Date of Issuance: January 9, 2001 (subject to adjustment) PLC SYSTEMS INC. WARRANT TO PURCHASE COMMON SHARES PLC Systems Inc., a Yukon Territory corporation (the "COMPANY"), for value received, hereby certifies that Edwards Lifesciences Corporation, a Delaware corporation, or its registered assigns ("EDWARDS"), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof and on or before the fourth anniversary of the date hereof, up to 1,000,000 (as adjusted from time to time) common shares without par value (the "COMMON SHARES"), of the Company, pursuant to the provisions of this warrant (the "WARRANT"), at a purchase price of $2.50 per share (as adjusted from time to time, the "PURCHASE PRICE"). The shares purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes referred to herein as the "WARRANT SHARES." This Warrant is issued pursuant to the Securities Purchase Agreement, dated as of January 7, 2001 (the "SECURITIES PURCHASE AGREEMENT"), by and between Edwards and the Company. 1 1. EXERCISE. (a) MANNER OF EXERCISE. This Warrant may be exercised by the holder of this Warrant (the "HOLDER"), in whole or in part, by surrendering this Warrant and the duly executed Notice of Exercise attached hereto as EXHIBIT A, at the principal office of the Company, or at such other office or agency as the Company may designate, together with payment in full of an amount equal to the Purchase Price multiplied by the number of the Warrant Shares to be purchased upon such exercise (the "AGGREGATE PURCHASE PRICE"). The Purchase Price shall be paid to the Company by certified check or wire transfer of immediately available funds. (b) EFFECTIVE TIME OF EXERCISE. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant is surrendered to the Company and the Aggregate Purchase Price paid as provided in Section 1(a). Subject to Section 4(a), at such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable, shall be deemed to have become the holder or holders of record of the Warrant Shares evidenced by such certificates. (c) NO FRACTIONAL SHARES. No fractional shares will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one Warrant Share on the date of exercise, as determined in good faith by the Board of Directors of the Company. (d) DELIVERY TO HOLDER. As soon as practicable after the exercise of this Warrant, and in any event within ten (10) business days thereafter, the Company shall cause to be issued in the name of, and delivered to, the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: (i) a certificate or certificates evidencing the number of Common Shares to which such Holder shall be entitled, and (ii) in case of a partial exercise, a new warrant of like tenor, calling in the aggregate on the face thereof for the number of Common Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares in respect of which the Warrant has been previously exercised. 2 2. COVENANTS AS TO COMMON SHARES. The Company hereby covenants and agrees as follows: (a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized, validly issued and fully paid and non-assessable. (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. (c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the Common Shares needed to provide for the exercise of the rights then represented by this Warrant. (d) The Company shall secure the listing of the Warrant Shares upon the American Stock Exchange as required by the Securities Purchase Agreement and shall maintain, so long as any other Common Shares shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (e) The Company will not, by amendment of its Articles of Continuance or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant. Without limiting the generality of the foregoing, the Company will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Common Shares upon the exercise of this Warrant. (f) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. 3. ADJUSTMENTS. The Purchase Price and the number of Common Shares issuable upon exercise of this Warrant shall be adjusted from time to time as follows: 3 (a) MERGER, SALE OF ASSETS, ETC. A recapitalization, reorganization, merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, merger or consolidation in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger or consolidation are converted into other property, whether in the form of securities, cash, or otherwise, or sale or transfer of all or substantially all of the Company's assets is referred to herein as an "ORGANIC CHANGE." In the event of an Organic Change, lawful provision shall be made so that the Holder shall be entitled to receive upon exercise of this Warrant, the number of shares of stock or other securities or property of the successor entity resulting from such Organic Change that a holder of the Common Shares deliverable upon exercise of this Warrant would have been entitled to receive in such Organic Change if this Warrant had been exercised immediately before such Organic Change, all subject to further adjustment as provided in this Section 3. The foregoing provisions of this Section 3(a) shall similarly apply to successive Organic Changes and to the stock or securities of any other entity that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the holder of Common Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors and a copy of the resolutions reflecting such determination shall be provided to the Holder. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. (b) RECLASSIFICATION, ETC. If the Company, by reclassification of securities or otherwise, changes any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Purchase Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3. (c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company changes (by any stock split, recapitalization, combination, reverse stock split or otherwise) the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Purchase Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination or reverse stock split. 4 (d) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY. If the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that the Holder would have held on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3. (e) ADJUSTMENTS FOR COMMON SHARES ISSUE. If the Company issues Common Shares for a consideration per Common Share less than the Fair Value per Common Share on the date of issuance of such additional Common Shares, the Purchase Price shall be adjusted in accordance with the following formula: C - P' = P x O + M ------- A where: P' = the adjusted Purchase Price P = the then current Purchase Price O = the number of Common Shares outstanding immediately prior to the issuance of such additional Common Shares C = the aggregate consideration received for the issuance of such additional Common Shares M = the Fair Value of one Common Share on the date of issuance of such additional Common Shares A = the number of Common Shares outstanding immediately after the issuance of such additional Common Shares 5 The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance, PROVIDED that in the event the adjustment set forth above would result in a Purchase Price less than $0.88 (as adjusted by the occurrence of any of the events set forth in subsections (a)-(d) of this Section 3 (as adjusted, the "Minimum Purchase Price")), the Purchase Price shall be adjusted to the Minimum Purchase Price. This subsection (e) does not apply to any sale or issuance of securities pursuant to (i) subsections (a)-(d) of this Section 3, (ii) the exercise of the Warrants, or the conversion or exchange of other securities convertible or exchangeable for Common Shares the issuance of which caused an adjustment to be made under Section 3(f), or (iii) an employee stock option plan, stock purchase plan or similar benefit program, or any sale or issuance to directors, employees or consultants, so long as such sales or issuances of Common Shares, in the aggregate, do not exceed, in any five-year period, 20%, on a fully diluted basis, of the outstanding equity shares of the Company as of the date hereof. (f) ADJUSTMENTS FOR CONVERTIBLE SECURITIES ISSUE. If the Company issues any securities convertible into or exchangeable for Common Shares for a consideration per Common Share initially deliverable upon conversion or exchange of such securities less than the Fair Value per Common Share on the date of issuance of such securities, the Purchase Price shall be adjusted in accordance with the following formula: C + E ------- P' = P x O + M ------- O + D where: P' = the adjusted Purchase Price P = the then current Purchase Price O = the number of Common Shares outstanding immediately prior to the issuance of such securities C = the aggregate consideration received for the issuance of such securities E = the minimum amount of consideration required to be paid to convert or exchange such securities into or for Common Shares M = the Fair Value of one Common Share on the date of issuance of such securities 6 D = the maximum number of Common Shares deliverable upon conversion or in exchange for such securities at the initial conversion or exchange rate The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance, PROVIDED that in the event the adjustment set forth above would result in a Purchase Price less than the Minimum Purchase Price, the Purchase Price shall be adjusted to the Minimum Purchase Price. If all of the Common Shares deliverable upon conversion or exchange of such securities have not been issued when such securities are no longer outstanding, then the Purchase Price shall promptly be readjusted to the Purchase Price which would then be in effect had the adjustment upon the issuance of such securities been made on the basis of the actual number of shares of Common Shares issued upon conversion or exchange of such securities. (g) CONSIDERATION RECEIVED. If the consideration received by the Company for issuances of securities pursuant to subsections (e) and (f) of this Section 3 is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the company's Board of Directors and a copy of the resolutions reflecting such determination shall be provided to the Holder. (h) ADJUSTMENT IN NUMBER OF COMMON SHARES. When an adjustment to the Purchase Price is required to be made pursuant to this Section 3, the number of Common Shares purchasable upon the exercise of this Warrant shall be adjusted to the number determined by dividing (i) an amount equal to the number of Common Shares issuable upon the exercise of this Warrant immediately prior to such adjustment multiplied by the Purchase Price in effect immediately prior to such adjustment by (ii) the Purchase Price in effect immediately after such adjustment. (i) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of the Holder, furnish or cause to be furnished to the Holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Purchase Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant. (j) NO IMPAIRMENT. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying 7 out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 4. TRANSFERS. (a) UNREGISTERED SECURITY. The Holder acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the "ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares (i) in the absence of (x) an effective registration statement for the securities under the Act, (y) a "no action" letter of the Securities and Exchange Commission and an exemption from applicable state and foreign securities laws with respect to such sale or offer, or (z) an exemption under the Act and applicable state and foreign securities laws or (ii) unless such sale is made pursuant to Rule 144 under the Act. Each certificate or other instrument for Common Shares issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing effect unless and until the Warrant Shares have been registered. (b) TRANSFERABILITY OF WARRANT. Subject to the provisions of this Warrant described herein, this Warrant and all rights hereunder may be transferred in whole or in part without the prior written consent of the Company. (c) TRANFERABILITY OF WARRANT SHARES. The Holder shall not sell, pledge, distribute, offer for sale, transfer or otherwise dispose of any Warrant Share within 33 days of its issuance by the Company to the Holder. (d) WARRANT REGISTER. The Company shall maintain at its principal offices (or such other office or agency of the Company as it may designate), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant. (e) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form attached hereto as EXHIBIT B, and subject to the provisions of this Warrant, the Company at its expense shall promptly issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof. 5. NOTICES OF CERTAIN TRANSACTIONS. If (a) the Company takes any action or enters into any transaction contemplated by Section 3(a)-(f) or (b) there is a voluntary or 8 involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Holder a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such Organic Change, reclassification of or change to securities, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of its Common Shares are to be determined. Such notice shall be sent at least fifteen (15) business days prior to the record date or effective date for the event specified in such notice. 6. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new warrant of like tenor. 7. 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 Warrant 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 7 (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 7 (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 9 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 Purchaser: Edwards Lifesciences Corporation One Edwards Way Irvine, California 92614 Attention: Associate 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 8. AMENDMENTS AND MODIFICATIONS; WAIVERS AND EXTENSIONS. (a) No amendment, modification or termination of this Warrant 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 Warrant 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 Warrant. 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. 10 9. INTERPRETATION. When a reference is made in this Warrant to a Section or Exhibit, such reference shall be to a Section or Exhibit of this Warrant unless otherwise indicated. The titles and headings contained in this Warrant are for reference purposes only and shall not affect in any way the meaning or interpretation of this Warrant. When the words "includes" or "including" are used in this Warrant, they shall be deemed to be followed by the words "without limitation." 10. GOVERNING LAW; JURISDICTION AND CONSENT TO SERVICE. This Warrant 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). In accordance with the laws of the State of New York, and without limiting the jurisdiction or venue of any other court, the Holder and the Company (a) agree that any suit, action or proceeding arising out of or relating to this Warrant 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 Warrant; (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. 11 PLC SYSTEMS INC. By: /s/ JAMES G. THOMASCH -------------------------------- Name: James G. Thomasch Title: Senior Vice President and Chief Financial Officer EXHIBIT A NOTICE OF EXERCISE To: PLC Systems Inc. The undersigned hereby irrevocably, subject to the terms and conditions contained in the attached Warrant, elects to purchase ___________ Common Shares of PLC Systems Inc., pursuant to the provisions of Section 1 of the attached Warrant, and tenders herewith payment of the Aggregate Purchase Price for such shares in full, in cash. In exercising this Warrant, the undersigned hereby confirms and acknowledges that the Common Shares are being acquired solely for the account of the undersigned and the undersigned will not offer, sell or otherwise dispose of any of the Common Shares in contravention of Section 4 of the Warrant. Please issue a certificate or certificates representing said Common Shares in the name of the undersigned or in such other name as is specified below. ------------------------------ (Name) ------------------------------ (Name) Please issue a new warrant for the unexercised portion of the attached Warrant in the name of the undersigned: ------------------------------ (Name) Dated: ---------------------------- ------------------------------ Signature A-1 EXHIBIT B ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfer unto the Assignee named below the attached Warrant, together with all of the rights of the undersigned under the Warrant, with respect to the number of Common Shares set forth below: NAME OF ASSIGNEE ADDRESS NO. OF SHARES and does hereby irrevocably constitute and appoint ____________________ Attorney to make such transfer on the books of PLC Systems Inc., maintained for the purpose, with full power of substitution in the premises. The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the securities to be issued upon exercise hereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any securities to be issued upon exercise hereof in contravention of Section 4 of the Warrant. Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the securities so purchased are being acquired for investment and not with a view toward distribution or resale. Dated: ------------------- ------------------------------------- Signature of Holder Note: The above signature should correspond exactly with the name on the face of the attached Warrant. B-1 EX-5 6 a2040741zex-5.txt EXHIBIT 5 EXHIBIT 5 THE SECURITIES EVIDENCED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE (A) IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE ACT, (II) A "NO ACTION" LETTER OF THE SECURITIES AND EXCHANGE COMMISSION AND AN EXEMPTION FROM APPLICABLE STATE AND FOREIGN SECURITIES LAWS. WITH RESPECT TO SUCH SALE OR OFFER, OR (III) AN EXEMPTION UNDER THE ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES. Warrant No. 3 Number of Shares: 1,000,000 Date of Issuance: January 9, 2001 (subject to adjustment) PLC SYSTEMS INC. WARRANT TO PURCHASE COMMON SHARES PLC Systems Inc., a Yukon Territory corporation (the "COMPANY"), for value received, hereby certifies that Edwards Lifesciences Corporation, a Delaware corporation, or its registered assigns ("EDWARDS"), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof and on or before the fifth anniversary of the date hereof, up to 1,000,000 (as adjusted from time to time) common shares without par value (the "COMMON SHARES"), of the Company, pursuant to the provisions of this warrant (the "WARRANT"), at a purchase price of $3.50 per share (as adjusted from time to time, the "PURCHASE PRICE"). The shares purchasable upon exercise of this Warrant, as adjusted from time to time pursuant to the provisions of this Warrant, are sometimes referred to herein as the "WARRANT SHARES." This Warrant is issued pursuant to the Securities Purchase Agreement, dated as of January 7, 2001 (the "SECURITIES PURCHASE AGREEMENT"), by and between Edwards and the Company. 1 1. EXERCISE. (a) MANNER OF EXERCISE. This Warrant may be exercised by the holder of this Warrant (the "HOLDER"), in whole or in part, by surrendering this Warrant and the duly executed Notice of Exercise attached hereto as EXHIBIT A, at the principal office of the Company, or at such other office or agency as the Company may designate, together with payment in full of an amount equal to the Purchase Price multiplied by the number of the Warrant Shares to be purchased upon such exercise (the "AGGREGATE PURCHASE PRICE"). The Purchase Price shall be paid to the Company by certified check or wire transfer of immediately available funds. (b) EFFECTIVE TIME OF EXERCISE. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant is surrendered to the Company and the Aggregate Purchase Price paid as provided in Section 1(a). Subject to Section 4(a), at such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable, shall be deemed to have become the holder or holders of record of the Warrant Shares evidenced by such certificates. (c) NO FRACTIONAL SHARES. No fractional shares will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one Warrant Share on the date of exercise, as determined in good faith by the Board of Directors of the Company. (d) DELIVERY TO HOLDER. As soon as practicable after the exercise of this Warrant, and in any event within ten (10) business days thereafter, the Company shall cause to be issued in the name of, and delivered to, the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct: (i) a certificate or certificates evidencing the number of Common Shares to which such Holder shall be entitled, and (ii) in case of a partial exercise, a new warrant of like tenor, calling in the aggregate on the face thereof for the number of Common Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares in respect of which the Warrant has been previously exercised. 2 2. COVENANTS AS TO COMMON SHARES. The Company hereby covenants and agrees as follows: (a) This Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized, validly issued and fully paid and non-assessable. (b) All Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges with respect to the issue thereof. (c) During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved at least 100% of the Common Shares needed to provide for the exercise of the rights then represented by this Warrant. (d) The Company shall secure the listing of the Warrant Shares upon the American Stock Exchange as required by the Securities Purchase Agreement and shall maintain, so long as any other Common Shares shall be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall be listed on such national securities exchange or automated quotation system. (e) The Company will not, by amendment of its Articles of Continuance or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant. Without limiting the generality of the foregoing, the Company will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Common Shares upon the exercise of this Warrant. (f) This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. 3. ADJUSTMENTS. The Purchase Price and the number of Common Shares issuable upon exercise of this Warrant shall be adjusted from time to time as follows: 3 (a) MERGER, SALE OF ASSETS, ETC. A recapitalization, reorganization, merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, merger or consolidation in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger or consolidation are converted into other property, whether in the form of securities, cash, or otherwise, or sale or transfer of all or substantially all of the Company's assets is referred to herein as an "ORGANIC CHANGE." In the event of an Organic Change, lawful provision shall be made so that the Holder shall be entitled to receive upon exercise of this Warrant, the number of shares of stock or other securities or property of the successor entity resulting from such Organic Change that a holder of the Common Shares deliverable upon exercise of this Warrant would have been entitled to receive in such Organic Change if this Warrant had been exercised immediately before such Organic Change, all subject to further adjustment as provided in this Section 3. The foregoing provisions of this Section 3(a) shall similarly apply to successive Organic Changes and to the stock or securities of any other entity that are at the time receivable upon the exercise of this Warrant. If the per-share consideration payable to the holder of Common Shares in connection with any such transaction is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors and a copy of the resolutions reflecting such determination shall be provided to the Holder. In all events, appropriate adjustment (as determined in good faith by the Company's Board of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. (b) RECLASSIFICATION, ETC. If the Company, by reclassification of securities or otherwise, changes any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Purchase Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3. (c) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company changes (by any stock split, recapitalization, combination, reverse stock split or otherwise) the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, the Purchase Price for such securities shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination or reverse stock split. 4 (d) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY. If the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that the Holder would have held on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3. (e) ADJUSTMENTS FOR COMMON SHARES ISSUE. If the Company issues Common Shares for a consideration per Common Share less than the Fair Value per Common Share on the date of issuance of such additional Common Shares, the Purchase Price shall be adjusted in accordance with the following formula: C - P' = P x O + M ------- A where: P' = the adjusted Purchase Price P = the then current Purchase Price O = the number of Common Shares outstanding immediately prior to the issuance of such additional Common Shares C = the aggregate consideration received for the issuance of such additional Common Shares M = the Fair Value of one Common Share on the date of issuance of such additional Common Shares A = the number of Common Shares outstanding immediately after the issuance of such additional Common Shares 5 The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance, PROVIDED that in the event the adjustment set forth above would result in a Purchase Price less than $0.88 (as adjusted by the occurrence of any of the events set forth in subsections (a)-(d) of this Section 3 (as adjusted, the "Minimum Purchase Price")), the Purchase Price shall be adjusted to the Minimum Purchase Price. This subsection (e) does not apply to any sale or issuance of securities pursuant to (i) subsections (a)-(d) of this Section 3, (ii) the exercise of the Warrants, or the conversion or exchange of other securities convertible or exchangeable for Common Shares the issuance of which caused an adjustment to be made under Section 3(f), or (iii) an employee stock option plan, stock purchase plan or similar benefit program, or any sale or issuance to directors, employees or consultants, so long as such sales or issuances of Common Shares, in the aggregate, do not exceed, in any five-year period, 20%, on a fully diluted basis, of the outstanding equity shares of the Company as of the date hereof. (f) ADJUSTMENTS FOR CONVERTIBLE SECURITIES ISSUE. If the Company issues any securities convertible into or exchangeable for Common Shares for a consideration per Common Share initially deliverable upon conversion or exchange of such securities less than the Fair Value per Common Share on the date of issuance of such securities, the Purchase Price shall be adjusted in accordance with the following formula: C + E ------- P' = P x O + M ------- O + D where: P' = the adjusted Purchase Price P = the then current Purchase Price O = the number of Common Shares outstanding immediately prior to the issuance of such securities C = the aggregate consideration received for the issuance of such securities E = the minimum amount of consideration required to be paid to convert or exchange such securities into or for Common Shares M = the Fair Value of one Common Share on the date of issuance of such securities 6 D = the maximum number of Common Shares deliverable upon conversion or in exchange for such securities at the initial conversion or exchange rate The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance, PROVIDED that in the event the adjustment set forth above would result in a Purchase Price less than the Minimum Purchase Price, the Purchase Price shall be adjusted to the Minimum Purchase Price. If all of the Common Shares deliverable upon conversion or exchange of such securities have not been issued when such securities are no longer outstanding, then the Purchase Price shall promptly be readjusted to the Purchase Price which would then be in effect had the adjustment upon the issuance of such securities been made on the basis of the actual number of shares of Common Shares issued upon conversion or exchange of such securities. (g) CONSIDERATION RECEIVED. If the consideration received by the Company for issuances of securities pursuant to subsections (e) and (f) of this Section 3 is in a form other than cash or marketable securities, then the value of such consideration shall be determined in good faith by the company's Board of Directors and a copy of the resolutions reflecting such determination shall be provided to the Holder. (h) ADJUSTMENT IN NUMBER OF COMMON SHARES. When an adjustment to the Purchase Price is required to be made pursuant to this Section 3, the number of Common Shares purchasable upon the exercise of this Warrant shall be adjusted to the number determined by dividing (i) an amount equal to the number of Common Shares issuable upon the exercise of this Warrant immediately prior to such adjustment multiplied by the Purchase Price in effect immediately prior to such adjustment by (ii) the Purchase Price in effect immediately after such adjustment. (i) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each adjustment or readjustment pursuant to this Section 3, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of the Holder, furnish or cause to be furnished to the Holder a like certificate setting forth: (i) such adjustments and readjustments; (ii) the Purchase Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant. (j) NO IMPAIRMENT. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying 7 out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. 4. TRANSFERS. (a) UNREGISTERED SECURITY. The Holder acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the "ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Shares (i) in the absence of (x) an effective registration statement for the securities under the Act, (y) a "no action" letter of the Securities and Exchange Commission and an exemption from applicable state and foreign securities laws with respect to such sale or offer, or (z) an exemption under the Act and applicable state and foreign securities laws or (ii) unless such sale is made pursuant to Rule 144 under the Act. Each certificate or other instrument for Common Shares issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing effect unless and until the Warrant Shares have been registered. (b) TRANSFERABILITY OF WARRANT. Subject to the provisions of this Warrant described herein, this Warrant and all rights hereunder may be transferred in whole or in part without the prior written consent of the Company. (c) TRANFERABILITY OF WARRANT SHARES. The Holder shall not sell, pledge, distribute, offer for sale, transfer or otherwise dispose of any Warrant Share within 33 days of its issuance by the Company to the Holder. (d) WARRANT REGISTER. The Company shall maintain at its principal offices (or such other office or agency of the Company as it may designate), a register for this Warrant, in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant. (e) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant for exchange, properly endorsed on the Assignment Form attached hereto as EXHIBIT B, and subject to the provisions of this Warrant, the Company at its expense shall promptly issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof. 5. NOTICES OF CERTAIN TRANSACTIONS. If (a) the Company takes any action or enters into any transaction contemplated by Section 3(a)-(f) or (b) there is a voluntary or 8 involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Holder a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such Organic Change, reclassification of or change to securities, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of its Common Shares are to be determined. Such notice shall be sent at least fifteen (15) business days prior to the record date or effective date for the event specified in such notice. 6. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new warrant of like tenor. 7. 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 Warrant 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 7 (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 7 (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 9 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 Purchaser: Edwards Lifesciences Corporation One Edwards Way Irvine, California 92614 Attention: Associate 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 8. AMENDMENTS AND MODIFICATIONS; WAIVERS AND EXTENSIONS. (a) No amendment, modification or termination of this Warrant 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 Warrant 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 Warrant. 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. 10 9. INTERPRETATION. When a reference is made in this Warrant to a Section or Exhibit, such reference shall be to a Section or Exhibit of this Warrant unless otherwise indicated. The titles and headings contained in this Warrant are for reference purposes only and shall not affect in any way the meaning or interpretation of this Warrant. When the words "includes" or "including" are used in this Warrant, they shall be deemed to be followed by the words "without limitation." 10. GOVERNING LAW; JURISDICTION AND CONSENT TO SERVICE. This Warrant 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). In accordance with the laws of the State of New York, and without limiting the jurisdiction or venue of any other court, the Holder and the Company (a) agree that any suit, action or proceeding arising out of or relating to this Warrant 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 Warrant; (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. 11 PLC SYSTEMS INC. By: /s/ JAMES G. THOMASCH -------------------------------- Name: James G. Thomasch Title: Senior Vice President and Chief Financial Officer EXHIBIT A NOTICE OF EXERCISE To: PLC Systems Inc. The undersigned hereby irrevocably, subject to the terms and conditions contained in the attached Warrant, elects to purchase ___________ Common Shares of PLC Systems Inc., pursuant to the provisions of Section 1 of the attached Warrant, and tenders herewith payment of the Aggregate Purchase Price for such shares in full, in cash. In exercising this Warrant, the undersigned hereby confirms and acknowledges that the Common Shares are being acquired solely for the account of the undersigned and the undersigned will not offer, sell or otherwise dispose of any of the Common Shares in contravention of Section 4 of the Warrant. Please issue a certificate or certificates representing said Common Shares in the name of the undersigned or in such other name as is specified below. ------------------------------ (Name) ------------------------------ (Name) Please issue a new warrant for the unexercised portion of the attached Warrant in the name of the undersigned: ------------------------------ (Name) Dated: ---------------------------- ------------------------------ Signature A-1 EXHIBIT B ASSIGNMENT FORM FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfer unto the Assignee named below the attached Warrant, together with all of the rights of the undersigned under the Warrant, with respect to the number of Common Shares set forth below: NAME OF ASSIGNEE ADDRESS NO. OF SHARES and does hereby irrevocably constitute and appoint ____________________ Attorney to make such transfer on the books of PLC Systems Inc., maintained for the purpose, with full power of substitution in the premises. The undersigned also represents that, by assignment hereof, the Assignee acknowledges that this Warrant and the securities to be issued upon exercise hereof are being acquired for investment and that the Assignee will not offer, sell or otherwise dispose of this Warrant or any securities to be issued upon exercise hereof in contravention of Section 4 of the Warrant. Further, the Assignee has acknowledged that upon exercise of this Warrant, the Assignee shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the securities so purchased are being acquired for investment and not with a view toward distribution or resale. Dated: ------------------- ------------------------------------- Signature of Holder Note: The above signature should correspond exactly with the name on the face of the attached Warrant. B-1 -----END PRIVACY-ENHANCED MESSAGE-----