<PAGE>

                                                                    Exhibit 10.1

  Confidential Materials omitted and filed separately with the Securities and
             Exchange Commission. Asterisks denote such omissions.

                       OEM PRODUCT DEVELOPMENT AGREEMENT

         This OEM PRODUCT DEVELOPMENT AGREEMENT is entered into as of August 7,
2002 (the "Effective Date") by and between Aspect Medical Systems, Inc., a
Delaware corporation having a principal place of business at 141 Needham Street
Newton, Massachusetts 02464 ("AMS"), and Boston Scientific Corporation, a
Delaware corporation having a principal place of business at One Boston
Scientific Place, Natick, Massachusetts 01760 ("BSC").

                                   Background

         WHEREAS, AMS develops, manufactures and sells an anesthesia-monitoring
system based on patented core technology that allows clinicians to better
assess and manage a patient's level of consciousness in the operating room and
intensive care settings and administer the precise amount of anesthesia needed
by each patient;

         WHEREAS, in connection with the execution and delivery of this
Agreement, AMS and BSC have entered into (i) a Stock Purchase Agreement dated
as of the date hereof (the "Stock Purchase Agreement") pursuant to which BSC
has agreed to purchase shares of AMS' Common Stock, (ii) a Registration Rights
Agreement pursuant to which AMS granted certain rights pertaining to the shares
of Company Common Stock acquired by BSC pursuant to the Stock Purchase
Agreement, (iii) a Loan Agreement dated as of the date hereof (the "Loan
Agreement") pursuant to which BSC has agreed to make a loan of up to $5.0
million to AMS, upon certain conditions, in each case based on the terms and
conditions set forth in such respective agreement and (vi) a Security Agreement
dated as of the date hereof, pursuant to which AMS is granting a security
interest in certain of its assets to BSC;

         WHEREAS, AMS shall develop certain products covered by the Patent
Rights (as defined herein) and other AMS Intellectual Property (as defined
herein), that BSC will commercialize for sale in the Territory (as defined
herein) for use in the Field (as defined herein);

         WHEREAS, AMS desires to grant BSC an exclusive option to become the
distributor for a period of time of Company Products as set forth herein (the
"Distribution Option"); and

         WHEREAS, BSC would be unwilling to commit to make loans under the Loan
Agreement or purchase shares of the Company's common stock pursuant to the
Stock Purchase Agreement but for the grant of the Distribution Option and the
assumption by the Company of its obligations hereunder.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of

                                       1
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which are hereby acknowledged by each of the parties hereto, AMS and BSC agree
as follows:

1.       DEFINITIONS.

         Capitalized terms used in this Agreement and not otherwise defined
herein shall have the respective meanings set forth below.

         "AMS Intellectual Property" shall mean all Intellectual Property
which, at the relevant time of reference thereto, is owned by AMS or to which
AMS through license or otherwise has or acquires sublicenseable rights, in each
case that are capable of being licensed or sublicensed to BSC or, if
applicable, BSC's successors, transferees or sublicensees; provided, however,
that (i) "AMS Intellectual Property" shall specifically exclude Intellectual
Property that is licensed by BSC to AMS, and (ii) "AMS Intellectual Property"
shall include Program Intellectual Property only if and to the extent provided
in this Agreement.

         "ASP" shall mean, with respect to any Company Product and period of
time, Net Sales of BSC during such period of time for the sale of such Company
Product divided by the number of units of such Company Products shipped by BSC
and its Affiliates during such period of time.

         "Accessory" means a replacement digital signal converter or cable for
a digital signal converter.

         "Act" means the United States Food, Drug and Cosmetic Act and similar
laws and regulations in foreign jurisdictions, all as may be amended from time
to time.

         "Affiliate" means with respect to any party, any person or entity
that, directly or indirectly, is controlled by, controls or is under common
control with such party.

         "Agreement" means this Agreement, including all Exhibits, Annexes and
Schedules hereto (which are hereby incorporated by reference herein), as the
same may be amended or supplemented from time to time in accordance herewith.

         "Associated Royalty Payments" means, with respect to any Company
Product, any third party royalty payment required to be made by AMS pursuant to
a license for Intellectual Property or other technology which improves the
manufacturing process and/or the efficiency of producing such Company Product.

         "Clinical/Outcomes Study" means, with respect to each AMS-Developed
Product, a clinical study or studies described on Annex I hereto.

         "Company Product" means (i) each Existing Product, (ii) each New
Product, and (iii) any additions, developments, improvements, enhancements,
updates and other changes in or substitutes for the foregoing, other than any
additions, developments, improvements, enhancements, updates and other changes
in or substitutes to the foregoing that is not a customization of the core
functionality such Company Product for a specific customer of AMS,

                                       2
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including without limitation any extensions of the label claims for any Company
Product and any new designs for any Company Product.

         "Completion Notice" means, with respect to each Clinical/Outcomes
Study and Specialty Study, a notice executed by an officer of AMS notifying BSC
that AMS has successfully completed such Clinical/Outcomes Study or Specialty
Study, as the case may be, and includes therewith the empirical data
accumulated and developed from such study.

         "Contract Year" means the one-year period beginning on the first day
of the first month immediately following the month in which the Effective Date
occurs and ending on the first anniversary thereof, and each successive
one-year period thereafter during the term of this Agreement.

         "Confidential Information" means all data, specifications, training
materials and other know-how related to the design, use, implementation,
performance, manufacture, distribution or sale of the Company Products, as well
as all other information and data provided by either party to the other party
hereunder in written or other tangible medium and marked as confidential, or if
disclosed orally or displayed, identified as confidential prior to or at the
time of disclosure and confirmed in writing as confidential within 10 days
after disclosure, in each case except any portion thereof which: (i) is known
to the receiving party before receipt thereof under this Agreement as evidenced
by the receiving party's written records; (ii) is properly and lawfully
disclosed to the receiving party by a third person who has the legal right to
make such disclosure; (iii) is or becomes generally known in the trade through
no fault of the receiving party; or (iv) is independently developed by the
receiving party without use of such information, as evidenced by the receiving
party's written records.

         "Cost of Goods Sold" means, with respect to any Company Product, the
(i) cost of direct labor, materials, components and factory overhead directly
associated with the manufacture of such Company Product by AMS, in each case,
as determined in accordance with GAAP consistently applied, [**].

         "Existing Products" means those products developed or manufactured by
AMS and listed on Exhibit A hereto.

         "FDA" means the United States Food and Drug Administration, or any
successor entity.

         "Field" means procedural sedation in the Specialties.

         "First Sales Date" means the first day on which BSC sells a Company
Product to an end-user customer or other distributor following the launch by
BSC of such Company Product generally for purchase by end-user customers.

         "Foreign Regulatory Authority" means a Regulatory Authority other than
the FDA.

         "Intellectual Property" shall mean intellectual property or
proprietary rights of any

                                       3
<PAGE>
description including without limitation (i) the Patent Rights, copyrights,
industrial designs, trademarks, service marks, logos, trade dress or trade
name, (ii) related registrations and applications for registration, (iii) trade
secrets, (iv) inventions, discoveries, improvements, modifications, know-how,
technique, methodologies, works of authorship, design or data, whether or not
patented, patentable, copyrightable or reduced to practice, including but not
limited to any inventions, discoveries, improvements, modifications, know-how,
technique, methodologies, works of authorship, designs or data embodied or
disclosed in any: (1) computer source code (human readable format) and object
code (machine readable format); (2) specifications; (3) manufacturing,
assembly, test, installation, service and inspection instructions and
procedures; (4) engineering, programming, service and maintenance notes and
logs; (5) technical, operating and service and maintenance manuals and data;
(6) hardware reference manuals; and (7) user documentation, help files or
training materials, and (v) good will related to any of the foregoing.

         "Minimum Transfer Price" means the applicable Minimum Monitor Transfer
Price or the Minimum Sensor/Accessory Transfer Price, as the case may be.

         "Monitor" means a [**] monitor that generates AMS's proprietary
processed EEG parameter that measures the hypnotic effects of anesthetic and
sedative agents on the brain.

         "Net Sales" means the aggregate amount of net sales recorded by BSC or
any of its Affiliates from the sales of Company Products in a country, in
accordance with generally accepted accounting principles, consistently applied
by BSC across all similar product lines, in connection with the preparation of
BSC's financial statements, as publicly-reported.

         When a Company Product is sold in connection with or as a component of
other components or products, then the computation of Net Sales shall be based
on the relative average prices charged during the applicable quarter for the
Company Product and other components or products when separately invoiced or
priced. In the event the Company Product and the other components or products
were not separately invoiced or priced during the applicable quarterly period,
the Net Sales computation shall be based on the relative fair market price
which BSC would have charged for the Company Product and other components or
products to an unrelated purchaser in an arm's length transaction.

         "New Product" means (i) each AMS-Developed Product and (ii) each Joint
Product, (iii) any additions, developments, improvements, enhancements, updates
and other changes in or substitutes for the foregoing, including without
limitation any extensions of the label claims for any New Product and any new
designs for any New Product and (iv) any additions, developments, improvements,
enhancements, updates and other changes in or substitutes for Existing Products
that may be applied in the Field, including without limitation any extensions
of the label claims for any Existing Product and any new designs for any
Existing Product.

         "Option Period" means the period, subject to Section 3.1(d) hereof,
beginning on [**] and ending on the later of [**] or the date which is [**]
following the date on which AMS makes available to BSC a saleable New Product
(which such New Product shall comply with the Product Specifications for such
New Product and with respect to which AMS has delivered to

                                       4
<PAGE>
BSC a Completion Notice and is expending commercially reasonable efforts to
assist BSC in timely obtaining reimbursement for such New Product in the United
States and, with the commercially reasonable assistance of BSC, to timely
obtain, to the extent available, the endorsement of the leading professional
organizations related to sedation and applicable leading professional
organizations associated with each Specialty).

         "Patent Rights" means all patents, patent applications and rights to
file patent applications that relate to any Company Product or its manufacture,
sale, use, design, import and are licensed to, owned or controlled by AMS now
or in the future, including without limitation those listed on Exhibit B
attached hereto, and, in each case, any reissues or extensions thereof and any
foreign counterparts, divisions, continuations or continuations-in-part of any
applications or substitutes therefor.

         "Person" means an individual, corporation, partnership, limited
partnership, limited liability company, joint venture, trust or unincorporated
organization, or a government or any agency or political subdivision thereof.

         "Product Approvals" means, for any country or other jurisdiction in
the Territory, those regulatory approvals required for importation,
exportation, promotion, pricing, marketing and sale of the Company Products in
such country or other jurisdiction for use in the Field.

         "Product Specifications" means with respect to each Company Product,
the specifications for such Company Product, as more fully described on Exhibit
C hereto (such Exhibit C to be amended from time to time as developed by AMS
and reviewed by BSC prior to the development of any AMS-Developed Products or
Joint Products), as such specifications may be developed, amended or
supplemented from time to time in accordance with such Product Approval.

         "Program" means the program for (i) the development of AMS-Developed
Products by AMS pursuant to Section 2.1 of this Agreement and the (ii) the
co-development of Joint Products by AMS and BSC pursuant to Section 2.2 of the
Agreement.

         "Program Intellectual Property" means individually and collectively
all Intellectual Property that is conceived, created, discovered, developed, or
reduced to practice or tangible medium of expression by one or more employees
or consultants of BSC and/or one or more employees or consultants of AMS at any
time after the Effective Date in connection with the development of New
Products.

         "Regulatory Authority" means any national, supra-national, regional,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity in the Territory, including without limitation, the
FDA.

         "Reimbursement Approvals" means governmental and other approvals in
any country or jurisdiction in the Territory, for a buyer to claim
reimbursement at any level for the purchase of the Company Products, from
private or public health insurance organizations in such country or
jurisdiction in the Territory.

                                       5
<PAGE>
         "Sales Region" means one of the following: (i) the United States, (ii)
the countries of the[**], (iii) [**], or (iv) all other countries in the
Territory.

         "Sensor" means a single use disposable sensor manufactured by AMS for
use with a Monitor.

         "Specialties" means gasteroenterology, including all subspecialties
thereof; urology including all subspecialties thereof; pulmonary, including
subspecialties thereof; cardiac electrophysiology, including all subspecialties
thereof; interventional cardiology, including all subspecialties thereof; and
interventional radiology, including all subspecialties thereof.

         "Starter Kit" means [**] ([**]) or fewer sensors per module or
standalone monitor shipped to customers of existing AMS distributors solely in
connection with the purchase by such AMS distributor's customers of standalone
monitors or modules.

         "Territory" means [**], and each of their respective territories and
possessions, [**].

         "Trademarks" means the trademarks owned or controlled by AMS that may
be used from time to time with respect to the Company Products.

         Other Defined Terms. Each of the following terms shall have the
respective meaning ascribed to such term in the section of this Agreement set
forth opposite such term below:

<TABLE>
<S>                                                                        <C>
"AMS"....................................................................  Introductory paragraph
"AMS-Developed Product"..................................................  Section 2.1
"AMS Development Obligations"............................................  Section 2.1
"BSC"....................................................................  Introductory paragraph
"BSC Intellectual Property"..............................................  Section 6.2(a)
"Development Plan".......................................................  Section 2.2
"Distribution Option"....................................................  Preamble
"Distribution Term"......................................................  Section 3.2
"Effective Date".........................................................  Introductory.paragraph
"Estimated ASP"..........................................................  Annex II
"GMP"....................................................................  Section 5.7
"Indemnifying Party".....................................................  Section 9.2
"Indemnitees"............................................................  Section 9.2
"Joint Development Period"...............................................  Section 2.2
"Joint Product"..........................................................  Section 2.2
"Loan Agreement".........................................................  Preamble
"Losses".................................................................  Section 9.1
"Minimum Monitor Transfer Price".........................................  Annex II
"Minimum Sensor/Accessory Transfer Price"................................  Annex II
"Product Information"....................................................  Section 7.1
"QSR"....................................................................  Section 5.7
</TABLE>

                                       6
<PAGE>
<TABLE>
<S>                                                                        <C>
"Specialty Study"                                                          Section 3.3
"Specialty Study Request"................................................  Section 3.3
"Stock Purchase Agreement"...............................................  Preamble
"Transfer Price".........................................................  Annex II
</TABLE>

2.       DEVELOPMENT.

         2.1     AMS Development Obligations; Development Costs. AMS shall use
its commercially reasonable efforts in light of the feasibility of obtaining
relevant Product Approvals, the efficacy and safety of such AMS-Developed
Product and the engineering feasibility, among other factors, to design and
develop a product for use in the Field (an "AMS-Developed Product"). Such
AMS-Developed Product shall be based on the Product Specifications set forth on
Exhibit C, which such Product Specifications may be modified from time to time
by the mutual agreement of AMS and BSC. As part of AMS' obligation to develop
the AMS-Developed Product, AMS shall have completed the Clinical/Outcomes Study
for the AMS-Developed Product, shall have used commercially reasonable efforts
to assist BSC in timely obtaining reimbursement in the United States for the
AMS-Developed Product and shall have used commercially reasonable efforts, with
the commercially reasonable assistance of BSC, to timely obtain, to the extent
available, the endorsement of the leading professional organizations associated
with sedation and each of the Specialties. In addition, in the event that AMS
and BSC determine that the AMS-Developed Product requires modification for
application in a particular Specialty, AMS shall, as part of its obligation to
develop the AMS-Developed Product, design and develop such modifications. The
development obligations described in this Section 2.1 are sometimes referred to
herein as the "AMS Development Obligations". AMS agrees to bear and pay all
costs, including, but not limited to, non-recurring engineering costs, directly
and indirectly related to the AMS Development Obligations.

         2.2     Joint Development of Joint Products; Development Plan;
License to BSC. In addition to its obligations under Section 2.1, during the
period beginning on the Effective Date and ending on [**] (the "Joint
Development Period"), AMS shall work exclusively with BSC to develop
specialized products other than AMS-Developed Products (each a "Joint
Product"), for use in the licensed Specialties in the Field. In the event that
AMS and BSC agree to develop a Joint Product, AMS and BSC shall agree to a
development plan with respect to such Joint Product (each a "Development
Plan"). Each Development Plan shall, among other things, set forth the
development schedule, the division of labor, the respective responsibility of
AMS and BSC for the payment of development costs, proposed Product
Specifications, the ownership of any Program Intellectual Property relating to
such Joint Product and the term of BSC's [**] distributorship with respect to
such Joint Product. AMS hereby grants to BSC a [**], [**], non-sublicensable,
non-transferable license under the AMS Intellectual Property, including but not
limited to the Patent Rights to make, use, copy, display, perform and prepare
derivatives of the Company Products, solely as necessary for purposes of BSC's
co-development of Joint Products pursuant to each Development Plan.

         2.3     Notice; Prototype. During the term of this Agreement, AMS
shall promptly provide written notice exclusively to BSC of the development of
any and all New Products

                                       7
<PAGE>
having application in the Field. As soon as available, AMS shall provide to
BSC a functional prototype of each such Company Product, together with, in the
case of each AMS-Developed Product the Completion Notice associated with such
AMS-Developed Product, and shall permit BSC to conduct due diligence with
respect thereto.

         2.4     Continuous Improvement.  During the term of this Agreement,
BSC and AMS shall collaborate to (i) improve and enhance the design, quality
and performance of the Company Products so as to maintain or increase the
competitive advantage of the Company Products in the Field as compared to
similar products in the marketplace for use in the Field and (ii) reduce the
Cost of Goods Sold of each New Product. In addition to the foregoing, to the
extent that AMS expends efforts on extending the shelf life of any sensors, AMS
shall expend the same efforts to extend the shelf life of the Sensors to be
marketed and sold by BSC hereunder.

3        DISTRIBUTION.

         3.1     Appointment as Distributor; Term of Appointment.

                 (a)     Appointment. Subject to the terms and conditions set
forth in this Agreement, AMS hereby grants to BSC the right, exercisable as set
forth in Section 3.1(d) hereof, to become, and hereby appoints, conditioned
only upon BSC's exercise of the Distribution Option, BSC as AMS' (i) [**]
distributor of any and all New Products that are [**] for use in the Field,
(ii) [**] distributor of any and all New Products that are [**] for use in the
Field, (iii) [**] distributor (subject to the rights of SpaceLabs Medical, Inc.
set forth in that certain Distribution and License Agreement by and between
SpaceLabs Medical, Inc. and AMS dated as of April 1, 1996, to distribute a
limited quantity of Sensors with the shipment of new modules and subject to the
rights of certain existing AMS distributors to ship Starter Kits) of New
Products that are [**] for use in the Field, (iv) [**] distributor of New
Products that are [**] for use in the Field, (v) [**] distributor of New
Products that are [**] for use in the Field and (vi) [**]distributor of [**]
for use in the Field [**] as set forth above; provided, however,
notwithstanding the foregoing, in all cases, such appointment shall include
such rights with respect to [**] to the extent that AMS' existing distribution
arrangements with respect to [**] have been modified to permit the grant of
such rights to BCS or have terminated or expired and not renewed, and BSC
hereby accepts such appointment. AMS hereby grants to BSC and its Affiliates a
fully paid-up right and license to practice the Patent Rights solely in the
Field and use any other AMS Intellectual Property solely in the Field, whether
existing as of the date hereof or in the future, solely in order to, and for
such period of time as BSC is authorized to, sell, market, develop and
distribute (but not to make or have made) Company Products hereunder. AMS
acknowledges and agrees that it shall not be entitled to any compensation for
the grant of this license or its other performances hereunder other than
payment of the purchase price for Company Products in accordance with Section
4.5. BSC acknowledges and agrees that the license granted by this Section 3.1
shall provide BSC with no additional rights with respect to the Patent Rights
and other AMS Intellectual Property than those specifically provided herein.

                 (b)     Distribution Term. Except as set forth in Section
3.1(c) hereof, in the event that BSC exercises the Distribution Option pursuant
to Section 3.1(d) below, BSC shall become

                                       8
<PAGE>
the distributor of Company Products as set forth above and the term of such
appointment shall commence on the date of such exercise and shall continue
until the [**] ([**]th) anniversary of the First Sales Date of a New Product in
the Field (the "Distribution Term", but in no event shall such Distribution
Term extend beyond [**]; provided, however, that if AMS has not made available
a saleable AMS-Developed Product that is generally applicable to the Field to
BSC prior to [**], the Distribution Term shall be extended by the number of
days after [**] that AMS delivers such a AMS-Developed Product). At least
twelve (12) months prior to the expiration of the Distribution Term BSC and AMS
shall meet to discuss extending BSC's distributor status with respect to the
Field.

                 (c)     Additional Product Term. Notwithstanding the
foregoing, the term of such appointment as distributor with respect to each
Company Product that is a Joint Product shall commence on the First Sales Date
of such Joint Product and shall continue until the date on which the
Distribution Term terminates unless AMS and BSC agree to extend the
Distribution Term as part of the Agreement to develop such Joint Product.

                 (d)     Exercise of Distribution Option; Standstill. BSC may
exercise the Distribution Option by giving notice of such exercise in writing
to AMS at anytime during the Option Period. Notwithstanding the foregoing, in
the event that AMS is able to permit BSC to exercise the Distribution Option
with respect to any New Product in a significant country or countries or
regions in the Territory at any time prior to [**], AMS shall immediately
notify BSC of such fact and notwithstanding anything to the contrary herein,
BSC may exercise the Distribution Option with respect to such country,
countries or regions at anytime during the period beginning with the date of
such notice and ending upon the expiration of the Option Period. During the
term of this Agreement, AMS shall [**] any existing agreements with respect to
the development, marketing and distribution of the Company Products for use in
the Field with any Person [**] that would be [**] from being able to distribute
Company Products as set forth herein. In addition, during the term of this
Agreement, AMS shall [**] license to the AMS Intellectual Property for any
applications, uses and purposes whatsoever in the Field including, without
limitation, using, selling, offering to sell, commercializing, importing and
exporting Company Products; provided, however, AMS shall not be prohibited from
granting to any Person a non-exclusive license to the AMS Intellectual Property
for the purpose of marketing and selling modules.

         3.2     Distribution Relationship. With respect to each Company
Product, during the term of this Agreement, (i) AMS agrees [**] Company
Products for use in the Field to any party [**] with the rights granted to BSC
hereunder; and (ii) AMS agrees [**] Company Products for or to [**] if [**]
that such Products will be provided, distributed or sold anywhere in the
Territory for use in the Field [**] with the [**] hereunder. AMS further agrees
to use all commercially reasonable best efforts to [**] to customers [**]
within the Territory for use in the Field [**] with the rights granted to BSC
hereunder [**]. Notwithstanding anything to the contrary in this Agreement, BSC
shall be permitted to sell Company Products within the Territory for
applications in the Field without regard to where the application of such
Company Product in the Field may be conducted.

                                       9
<PAGE>
         3.3     Distribution in Specialties. AMS and BSC shall jointly assess
the market opportunity for Company Products with respect to each Specialty and
will collaborate to devise a structured roll-out of New Products in the
Specialties; provided, however, notwithstanding anything implied or expressed
herein to the contrary, BSC shall not be required to make New Products
generally available for purchase in more than [**] ([**]) Specialties in any
consecutive [**] ([**]) [**] period during the term of this Agreement. In the
event that BSC reasonably determines in good faith that a [**] Company Product
in a particular Specialty (each a "Specialty [**]"), BSC shall have [**] such
Specialty [**] (each a "Specialty [**]"). AMS shall [**] of such Specialty [**]
such Specialty [**] such Specialty [**].

         3.4     Marketing. Subject to Section 7.1, all business decisions
concerning the marketing by BSC in the Territory of the Company Products for
use in the Field, including the price, other sale terms and promotion thereof,
will be within the sole discretion of BSC.

         3.5     [**]. With respect to each Company Product, [**], BSC shall
[**], in light of the state of the relevant Product Approvals and Reimbursement
Approvals, including the level of reimbursement, efficacy and safety of the
Company Product, perceived market size and potential, BSC's gross margin,
anticipated difficulty of market development, level of competition in a
particular country and availability of Company Products, among other factors),
are consistent with the usual and customary efforts (including the level of
[**]incurred prior to and after the First Sales Date of such Company Product)
exercised by BSC in connection with [**] other products having similar market
potential, [**] such Company Product [**] in the Territory for use in the Field,
including, without limitation and where appropriate, (i) maintenance and [**],
(ii) development and distribution [**], and (iii) representation of such Company
Product during appropriate [**] BSC, in each case as the same shall be
reasonably available to BSC and reasonably necessary to achieve the purposes of
this Section 3.5.

         3.6     [**]. BSC agrees, with respect to each Specialty and each
country in the Territory, that during any period in which BSC [**] BSC will
[**] in such country any device that monitors conscious sedation for use in
such Specialty and that is [**].

4.       PURCHASE OF PRODUCTS AND TERMS OF SALE.

         4.1     Supply Forecasts. During the term of this Agreement, BSC shall
provide to AMS, on a monthly basis, a six-month forecast (each, a "Supply
Forecast") of expected orders of each Company Product beginning with the month
following the month in which such Supply Forecast is delivered. With the
exception of the first [**] months of each Supply Forecast delivered to AMS,
such Supply Forecasts shall not constitute binding orders. Notwithstanding the
foregoing, following termination of this Agreement in accordance with Section
10, BSC shall be required to reimburse AMS for the Cost of Goods Sold for the
Company Products forecast for purchase in the [**] month of the then-current
Supply Forecast, to the extent such Company Products, or components thereof,
cannot be incorporated into products purchased by BSC or another party.

         4.2     Product Orders. All orders of Company Products shall be on
BSC's standard form of purchase order which BSC may employ and be in effect
from time to time generally for the purchase of products similar to the Company
Product being ordered and AMS shall deliver

                                       10
<PAGE>
the Company Products in accordance therewith. A copy of BSC's current standard
form of purchase order employed by BSC and in effect as of the date of this
Agreement is attached hereto as Appendix 4.2. BSC reserves the right to modify
its standard form of purchase order in effect from time to time generally for
the purchase of products similar to the Company Products; provided that such
modifications do not materially change the obligations and rights of AMS under
this Agreement. The provisions of this Agreement shall prevail over any
inconsistent statements or additional statements or provisions, rights and
obligations contained in any document related to this Agreement passing between
the parties hereto including, but not limited to, any purchase order,
acknowledgment, confirmation or notice. Orders shall be submitted by mail or
facsimile, or by other means agreed upon by the parties.

         4.3     Product Specifications; Packaging and Labeling. All Company
Products delivered by AMS hereunder shall be in full compliance with the
Product Specifications for such Company Product and shall be ready for end-user
sale, including all packaging, labeling, instructions-for-use and sterilization
required by the applicable Product Approval and as agreed by BSC and AMS. BSC
shall have final approval over all labeling for Company Products to be
distributed by BSC under this Agreement which approval shall not be
unreasonably withheld. AMS shall consult with BSC with respect to the package
of the Company Products to be distributed by BSC under this Agreement and any
proposed modifications thereof. AMS acknowledges and agrees that all
AMS-Developed Products shall be packaged and labeled in a manner, and shall
have a cosmetic appearance and a specifically encoded smart-chip, that
differentiates such AMS-Developed Product from (i) all comparable products,
including Company Products, sold outside the Field and, (ii) as agreed by AMS
and BSC, all comparable products, including Company Products, sold in other
Specialties within the Field. AMS shall include trademarks and tradenames of
BSC in the packaging and labeling of all Company Products as reasonably
requested by BSC. BSC shall have the right to sell the Company Products as BSC
private label products.

         4.4     Obligation to Supply.

                 (a)     AMS' Obligation. AMS shall manufacture, sell and
deliver Company Products to BSC in accordance with this Agreement and the
related purchase orders on the date specified for delivery in the purchase
order, which shall in no event to be less than [**] ([**]) [**] from the date
of receipt by AMS of a BSC purchase order or, if no such date is specified,
within [**] ([**]) [**] of receipt by AMS of BSC's purchase orders for Company
Products. AMS shall not be obligated to supply a quantity of any Company
Product that exceeds the monthly average of the binding portion of the previous
Supply Forecast relating to such Company Product plus [**] percent ([**]%) of
such average. If any specialized materials that are not anticipated to be
included in any Company Product are required to manufacture any Company
Product, AMS shall, after consultations with BSC, have the right to reasonably
increase such lead times.

         (b)     Failure to Meet Supply Obligation.

                         (i)     Price Reduction. If AMS is unable to
supply all of any of the

                                       11
<PAGE>
Company Products ordered by BSC in accordance with the terms of this Agreement
and the purchase orders therefor in any given month, AMS shall use commercially
reasonable efforts to remedy any problems resulting in any such supply failures.

                         (ii)    Failure to Supply. If AMS is unable to
supply Company Products ordered by BSC in accordance with the terms of this
Agreement and the purchase orders therefor for more than [**] in any
consecutive [**] ([**]) [**] period during the term of this Agreement for
reasons other than as provided in Section 11.14 hereof. AMS shall pay
liquidated damages to BSC in an amount equal to [**] ([**]%) of the aggregate
Transfer Price payable by BSC to AMS for the amount of undelivered products for
the [**] of such delay and an amount equal to [**] percent ([**]%) of the
aggregate Transfer Price payable by BSC to AMS for the amount of undelivered
products for each [**] of delay thereafter; provided that the total amount of
such liquidated damages for such particular undelivered product shall not
exceed [**] percent ([**]%) of the aggregate Transfer Price of such undelivered
products.

         4.5     Product Pricing and Payment. AMS shall invoice in U.S.
Dollars BSC for Company Products delivered to BSC in accordance with this
Agreement and the purchase orders therefor at the prices described on Annex II
hereof in U.S. Dollars. BSC shall pay for Company Products in U.S. Dollars
within [**] ([**]) days after the date of AMS' invoice (provided that the
invoice date is no earlier than the date that shipment is received by the
common carrier) unless BSC is in dispute of any payment.

         4.6     Samples. During each Contract Year during the term of the
agreement and upon BSC's request, AMS will provide Sensors to BSC for use in
sales demonstrations and trade shows relating to the Field. BSC shall pay to
AMS an amount equal to the product of (i) the Cost of Goods Sold for such
Sensors multiplied by [**]. In addition, BSC shall have the right to purchase
from AMS Monitors for use in sales demonstrations and trade shows relating to
the Field. BSC shall pay to AMS an amount equal to the sum of (i) the Cost of
Goods Sold for such Monitors plus (ii) the amount obtained by multiplying (a)
such Cost of Goods Sold by (b) [**]. BSC shall not sell such sample Company
Products in the Territory.

         4.7     Shipping. AMS shall ship Company Products ordered by BSC
hereunder in accordance with the purchase orders therefor via common carrier
selected by BSC at BSC's expense, FOB AMS' location or other AMS-designated
destination point. Risk of loss or damage to all Company Products shall pass to
BSC only upon delivery of the Company Products by AMS to the common carrier
selected by BSC.

         4.8     Acceptance. (a) Each shipment of Company Products from AMS to
BSC shall contain such quality control certificates as may be reasonably
requested by BSC certifying that the Company Products are in conformity with
the Product Specifications and all Product Approvals.

         (b) Without prejudice to any other right or remedy of BSC, in case any
item is defective in material or workmanship, or otherwise not in conformity
with the Product

                                       12
<PAGE>
Specifications, BSC will have the right to reject it. Any item that is
defective in material or workmanship, or otherwise not in conformity with the
Product Specifications must be replaced by and at the expense of AMS promptly
after notice. BSC will not be required to pay for any item which is defective
in material or workmanship, or otherwise not in conformity with the Product
Specifications, or its shipping costs or any other costs related thereto. BSC
will return all Company Products that are defective in material or workmanship,
or otherwise not in conformity with the Product Specifications to AMS at AMS'
expense.

         4.9     Changes. AMS shall not make (i) any changes to its
manufacturing processes for the Company Products that are to be delivered to
BSC hereunder that would require regulatory approval in the United States, (ii)
any significant changes to the form, fit or function of any Company Product to
be delivered to BSC hereunder, (iii) any change to the packaging or labeling of
any Company Product to be delivered to BSC hereunder, (iv) any change to a
Company Product to be delivered to BSC hereunder that may impact any existing
Product Approval or require regulatory approval to make such change, or (v) any
change to the Product Specifications, unless approved in writing by BSC not
less than thirty (30) days in advance of any such change.

         4.10    Audit Rights; Resale Prices.

         (a)     BSC Audit Rights. Once in each Contract Year and once during
the twelve month period immediately following any termination or expiration of
this Agreement, BSC shall have the right to engage an independent certified
public accountant to inspect, copy and audit all documentation pertaining to
the current and prior Contract Year that (i) is retained by AMS in the ordinary
course of business and (ii) is materially relevant to the determination of the
Cost of Goods Sold of Products in order to confirm that Cost of Goods Sold
represented by AMS in determining the Minimum Transfer Price of any Company
Product. AMS agrees to preserve and allow such independent certified public
accountant reasonable access to all such documentation once during the
applicable period upon reasonable prior notice from BSC. Such audit shall be at
the expense of BSC; provided, however, in the event that such audit reveals
that the actual Cost of Goods Sold associated with such Company Products is at
least 10% less than those represented by AMS in determining the Minimum
Transfer Price, AMS shall be required to reimburse BSC for all costs and
expenses reasonably incurred by BSC in connection with such audit. All royalty
payments required to be made to third parties in connection with the sale of
Company Products to BSC or by BSC pursuant to this Agreement shall be borne and
paid by AMS. Notwithstanding anything to the contrary herein, the Transfer
Price for any Company Product (including any then applicable Minimum Transfer
Price) will be adjusted to take into account any royalty payment BSC is
required to make in connection with the sale of Company Products by BSC
pursuant to this Agreement, and AMS shall reimburse BSC for such royalty
payments.

         (b)     AMS Audit Rights. All sales of Company Products invoiced in a
currency other than US Dollars shall be converted to US Dollars on a monthly
basis in accordance with BSC's standard practice prior to calculating the
actual ASP. Once during each Contract Year and once during the twelve (12)
month period immediately following any termination or expiration of this
Agreement, AMS shall have the right, upon prior written notice of at least 10
business days

                                       13
<PAGE>
delivered to BSC, to engage an independent certified public accountant to
review and audit all documentation pertaining to the current and prior Contract
Year that (i) is retained by BSC in the ordinary course of business, and (ii)
is materially relevant to the calculation of actual ASP. Such audit shall be
at the expense of AMS; provided, however, in the event that such audit reveals
that the actual ASP associated with such Company Products is at least 10% more
than those calculated by BSC in determining the Transfer Price, BSC shall be
required to reimburse AMS for all costs and expenses reasonably incurred by AMS
in connection with such audit. Nothing in this paragraph (b) shall be deemed to
require BSC to keep any books of account or records other than those which it
maintains in the ordinary course of business in its usual and customary
practice, to retain any such books of account or records for any period in
excess of the period for which BSC retains such records in the ordinary course
of business in its usual and customary practice, or to provide access to any
books and records of BSC other than that specified above.

         (c)     Resale Prices. Nothing contained in this Agreement shall be
deemed to limit in any way the right of BSC to determine the prices at which,
or the terms on which, the Company Products purchased by BSC may be resold by
BSC in the Field.

         4.11    Shelf-Life. All Sensors delivered to BSC hereunder
shall have a remaining shelf-life of no less than [**] ([**]) months.

         4.12    Service Obligation. AMS shall support and service the Company
Products distributed for BSC hereunder in a manner that is at least consistent
with the level of service given to AMS' customers. Notwithstanding the
foregoing, ASM shall provide warranty support and service directly to end-user
purchasers of Company Products distributed in the United States and Canada
pursuant to this Agreement. In all other countries in the Territory, BSC shall
facilitate the return and replacement of Monitors requiring service or
replacement by sending any Company Product in need of repair or replacement to
AMS' facility specified by AMS upon receipt of notice of the product failure.
During the term of this Agreement, AMS shall provide to BSC [**], temporary
use, replacement Monitors that may be provided to customers in the event that
such customer's Monitor requires repair or replacement. If a repair or
replacement is covered by the warranty for such Company Product, all parts and
labor costs for such repair or replacement and transportation, insurance and
handling charges of shipment of such Company Product to AMS for repair or
replacement shall be covered by AMS. Repaired or replaced Company Products
will also be returned to seder at AMS' expense. Repairs made by AMS outside of
the warranty period shall be billed at a repair charge mutually acceptable to
AMS and BSC.

5.       REGULATORY APPROVALS AND COMPLIANCE.

         5.1     General. AMS shall be responsible, at its expense, for
obtaining, maintaining and complying with all United States regulatory
requirements and approvals (including all Product Approvals) necessary or
useful to promote and sell the Company Products in the United States, including
conducting all necessary clinical and/or outcomes trials. AMS and BSC shall
exercise their respective commercially reasonable efforts to work together to
obtain Reimbursement Approvals for the Company Products in the United States.
AMS shall promptly notify BSC and provide to BSC a copy or transcription, if
available, of any communication from the FDA and

                                       14
<PAGE>
any Foreign Regulatory Authority relating to the Company Products, the
marketing thereof or any related matter (including copies of all Product
Approvals) and AMS shall keep BSC reasonably apprised of regulatory
interactions and similar activities with governmental authorities and
international bodies in connection with the Company Products. In pursuing such
approvals, AMS shall permit BSC to review and comment upon AMS' regulatory and
clinical trial plans. BSC may, in its sole discretion, seek (i) additional
Product Approvals for countries in the Territory outside of the United States
and (ii) any Reimbursement Approvals in the Territory. If BSC elects to seek
any Product Approval or Reimbursement Approval, BSC shall promptly notify AMS
and shall provide to AMS a copy of all Product Approvals received by BSC, and
shall keep AMS reasonably apprised of regulatory interactions and similar
activities with governmental authorities and international bodies in connection
with the Company Products. In pursuing such approvals, BSC shall permit AMS to
review and comment upon BSC's regulatory and clinical trial plans for the
Territory. AMS shall provide all reasonable assistance requested by BSC in
obtaining any such additional Product Approvals or any Reimbursement Approvals.
Regulatory Approvals shall be obtained in the name of AMS or BSC depending on
what is customary in such jurisdiction and the most expedient way to obtain the
relevant Regulatory Approvals for such jurisdiction.

         5.2     Data. AMS shall provide to BSC throughout the term of this
Agreement copies of its then-existing scientific, medical, technical and other
data related to the Company Products that is useful to support BSC's marketing
activities. AMS shall update the data submissions it makes under this Section
5.2 and provide BSC with all new data promptly after the same is developed,
assembled or comes to the attention of AMS. AMS shall also periodically (and in
any event, no less frequently than once per calendar quarter) provide BSC with
a written report summarizing the progress of all clinical trials conducted by
AMS with respect to the Company Product in each Specialty within the Field.

         5.3     Traceability Program. BSC shall be responsible for maintaining
medical device vigilance systems in the Territory as required of a distributor
of products such as the Company Products by local regulations, and shall
provide AMS with reasonable access to such records. AMS and BSC shall inform
the other immediately if it becomes aware of any medical complaint required to
be reported to any Regulatory Authority in the Territory. AMS shall promptly
notify BSC in writing if it becomes aware of any issue relating to the safety
or efficacy of any Company Product including, without limitation, such Company
Product's manufacture, labeling or packaging.

         5.4     Product Recalls. (a) If, in the judgement of AMS or BSC, after
consultation with the other, any defect relating to a Company Product sold by
BSC or any government action requires a recall of, or the issuance of an
advisory letter regarding, any Company Product sold by BSC, either party may
undertake such recall or issue such advisory letter after consultation with the
other party. Each party shall notify the other party in a timely manner prior
to making any recall or issuing any advisory letter. The parties shall endeavor
to reach an agreement prior to making any recall or issuing any advisory letter
regarding the manner, text and timing of any publicity to be given such matters
in time to comply with any applicable legal or regulatory requirements, but
such agreement will not be a precondition to any action that either party deems

                                       15
<PAGE>
necessary to protect users of the Company Products or to comply with any
applicable governmental orders or mandates. The parties agree to provide
reasonable assistance to one another in the event of any recall or issuance of
any advisory letter. AMS shall promptly pay or reimburse BSC for the reasonable
costs of effecting such recall or issuing such advisory letter, including
without limitation costs related to return of recalled AMS-Developed Products
(including shipping, quality control testing, notification and restocking
costs) if and to the extent such recall results from a defect in the design or
manufacture of such AMS-Developed Product recalled or from literature or other
information supplied by AMS that relates to such AMS-Developed Product. AMS
shall not be responsible for the cost and expense of any recall which results
from an act or omission of BSC with respect to such Company Product.
Notwithstanding anything in this Agreement to the contrary, BSC shall have the
right to manage any recall within the Territory.

         (b)     In the event of a recall of any Company Product, AMS shall
correct any deficiency relating to its manufacturing, packaging, testing,
labeling, storing or handling of such Company Product, if applicable, and shall
either, at BSC's election, at AMS' cost replace each unit of the Company
Product recalled (including without limitation units held in inventory by BSC
or its customers) with a corrected Company Product within a reasonable period
of time, or refund the purchase price therefor.

         5.5     Notice. Each of AMS and BSC shall notify the other immediately
if it becomes aware of any issue with a Company Product or its testing,
manufacture, labeling or packaging, occurring within the Territory, including
without limitation any issue relating to regulatory compliance, safety or
efficacy of a Company Product. Without limiting the generality of the
foregoing, AMS and BSC will notify the other promptly if it becomes aware of
any death or bodily injury caused by a Company Product (or suspected to be
caused by a Company Product) or any malfunction of a Company Product occurring
within the Territory.

         5.6     Compliance with Laws. Each of BSC and AMS will comply with all
applicable laws and regulations in the Territory pertaining to the testing,
manufacture, labeling or packaging of the Company Products and in any other
manner pertaining to performance by them of their respective obligations under
this Agreement, including the maintenance of ongoing quality assurance and
testing procedures to comply with applicable regulatory requirements. Each of
BSC and AMS will also comply with all applicable laws and regulations of the
countries and jurisdictions in the Territory pertaining to the import, export,
distribution, sales and marketing of the Company Products. Without limiting the
generality of the foregoing, AMS will (i) report to the FDA within any relevant
time periods all events that are required to be reported (including without
limitation any death or serious bodily injury caused by a Company Product); and
(ii) deliver, within the permitted time periods, all annual or other periodic
reports required to be delivered to the FDA. Without limiting the generality of
the foregoing, BSC will (i) report to the every applicable Foreign Regulatory
Authority within any relevant time periods all events that are required to be
reported (including without limitation any death or serious bodily injury
caused by a Company Product); and (ii) deliver, within the permitted time
periods, all annual or other periodic reports required to be delivered to every
applicable Foreign Regulatory Authority.

                                       16
<PAGE>
         5.7     Manufacturing Requirements. AMS will manufacture the Company
Products in accordance with (a) the Product Specifications, (b) applicable
regulations relating to Good Manufacturing Practices and similar protocols
required by the Act ("GMP"), quality system regulations of the FDA ("QSR"),
including without limitation master device and lot history records, and ISO
9001 and EN 46000 requirements and (c) other pertinent rules and regulations of
the FDA and any Foreign Regulatory Authorities in other applicable
jurisdictions. Upon the request of BSC, AMS shall provide BSC with written
evidence of compliance with the criteria set forth in the preceding sentence.
During the term of this Agreement AMS will maintain or cause to be maintained
the Company Product manufacturing facility's registration as a certified
medical device manufacturing facility and will maintain such facility
registration with all applicable Regulatory Authorities or cause such facility
to be maintained such that the facility would pass an audit for compliance with
GMP and QSR.

         5.8     BSC Inspection Rights; Regulatory Co-operation. BSC shall have
the right to have its representatives present at the plant or plants at which
the Company Products to be delivered to BSC hereunder are manufactured during
normal business hours to conduct an initial and periodic inspections of such
facilities and manufacturing procedures for compliance with GMP and QSR, the
Product Specifications and BSC's quality assurance requirements and to inspect
AMS' inventory of Company Products to be delivered to BSC hereunder,
work-in-process, raw materials to be used for the Company Products to be
delivered to BSC hereunder, production records, design history file, quality
materials, regulatory dossiers and such other matters as may be pertinent to
proper quality assurance of the Company Products to be delivered hereunder. BSC
agrees to give AMS a minimum of five business days' prior notice of any such
inspection. AMS shall immediately use its best efforts to take such action as
is required to correct any failures by AMS to comply with Section 5.7 hereof.
AMS agrees to provide reasonable assistance to BSC in arranging visits and
inspection of the plants at which AMS' vendors manufacture any component or
material incorporated into any product. AMS shall use reasonable efforts to
include in any third-party manufacturing agreement relating to any Company
Product to be delivered to BSC hereunder a provision that grants to BSC, as a
third-party beneficiary, rights to inspect the plant or plants at which the
products are manufactured on the terms set forth in this Section. AMS further
agrees to use its reasonable best efforts to provide such documentation or
conduct such analyses as BSC may reasonably request in connection with any
regulatory submission or audit.

         5.9     Regulatory Audit. AMS will permit authorized representatives
of any Regulatory Authority to inspect AMS' plant and production facilities
relating to or used in connection with the manufacture of the Company Product
to be delivered to BSC hereunder and will promptly notify BSC when AMS receives
notice of any such inspection. AMS will advise BSC of the findings of any
regulatory inspection and will take the necessary steps reasonably promptly to
correct any compliance deficiencies found by the Regulatory Authority relating
to the production of the Company Products to be delivered to BSC hereunder. AMS
further agrees to use its reasonable best efforts to provide to BSC such
documentation or conduct such analyses as BSC may reasonably request in
connection with any regulatory submission or audit concerning the Company
Products to be delivered to BSC hereunder.

         5.10    Clinical Trials. AMS shall review with BSC the selection of
clinical sites of any

                                       17
<PAGE>
clinical trial to be conducted with respect to the Company Products to be
delivered to BSC hereunder. AMS shall be responsible for conducting and
managing, at its own expense, all clinical trial programs in the United States
necessary or desirable in order to fulfill AMS' obligations under Section 5.1.
In the event that AMS intends to conduct a clinical trial with respect to any
of AMS' products that could effect the use of Company Products in the Field,
AMS shall notify BSC of such intended trial and BSC shall have (a) the right to
suggest that certain practitioners participate in such study and (b) the right
to suggest certain modifications to such trial that could be helpful in the
marketing and sale of the Company Products marketed and sold by BSC in the
Field hereunder.

6.       TRADEMARKS; INFRINGEMENT OF INTELLECTUAL PROPERTY.

         6.1     Trademark License. AMS hereby grants to BSC a fully paid up
and royalty-free right and license to use the Trademarks in connection with the
promotion, marketing, sale, distribution and delivery of the Company Products
in the Territory during the period in which BSC is authorized to distribute
Company Products hereunder. BSC shall not be obligated to use the Trademarks in
connection with the promotion and marketing of any Company Product. Without
limiting the foregoing, BSC shall be entitled to use its own trademarks in
connection with the promotion, marketing, sale, distribution and delivery of
Company Products, which trademarks shall remain at all times the exclusive
property of BSC.

         6.2     Intellectual Property.

                 (a)     Title. AMS and BSC may mutually agree, in writing,
whether any Program Intellectual Property generated as a result of the
co-development activities of AMS and BSC during the term of this Agreement
shall be considered to be AMS Intellectual Property or Intellectual Property of
BSC. In the absence of any written agreement by AMS and BSC to the contrary,
Program Intellectual Property created solely by employees or consultants of AMS
during the term of this Agreement shall be considered to be AMS Intellectual
Property; Program Intellectual Property created by employees or consultants of
BSC during the term of this Agreement shall be considered to be Intellectual
Property of BSC ("BSC Intellectual Property"); and all other Program
Intellectual Property shall be considered to be jointly owned by BSC and AMS,
subject in all cases to the other terms and conditions of this Agreement.

                 (b)     Grant of License to BSC. AMS hereby grants to BSC an
[**], [**] ([**] with respect to [**]), royalty-free license, excluding the
right to sublicense, under the AMS Intellectual Property, for all applications,
uses and purposes whatsoever in the Field including, without limitation, using,
selling, offering to sell, commercializing, importing and exporting (but not
manufacturing or having manufactured) Company Products. The license granted by
this Section 6.2(b) shall in no way include any rights to the AMS Intellectual
Property for any applications, uses or purposes outside of the Field.

                 (c)     Grant of License to AMS. BSC hereby grants to AMS
an [**], [**], royalty-free license, excluding the right to sublicense, under
the BSC Intellectual Property, for the manufacture of Company Products
delivered only to BSC pursuant to this Agreement and the development of Joint
Products in conjunction with BSC delivered only to BSC pursuant to this

                                       18
<PAGE>
Agreement for use in the Field.

                 (d)     Disclosure: Patent Prosecution.

                         (i)     Each of BSC and AMS shall promptly disclose
to the other knowledge of any Program Intellectual Property developed in the
course of the Program. Within forty-five (45) days following the date of such
disclosure regarding the existence of particular Program Intellectual Property,
the parties shall confer as to appropriate protection for such Program
Intellectual Property.

                         (ii)    AMS shall be responsible for the
preparation, filing (including foreign filing decisions), prosecution and
maintenance of such patent applications and patents for the Program
Intellectual Property other than BSC Intellectual Property. AMS shall furnish
or have furnished to BSC copies of documents relevant to the same and provide
BSC with the opportunity to review and comment on patent decisions made by
patent counsel with respect to Program Intellectual Property. AMS shall pay all
expenses associated with the preparation, filing, prosecution, issuance and
maintenance of patents or other intellectual property protection for the
Program Intellectual Property other than BSC Intellectual Property. No
disclosure of information hereunder will be required by either party if such
disclosure will be deemed a prior publication or disclosure as may jeopardize
the disclosing party's right to seek patent or other intellectual property
protection for the matter disclosed.

         6.3     Infringement.

                 (a)     Generally. Each of BSC and AMS will notify the other
party in writing of any infringement in the Territory of a Patent Right,
Trademark or other AMS Intellectual Property that relates to the Company
Products or any unauthorized disclosure or use of any Confidential Information
within thirty (30) days after it becomes aware of such infringement or
unauthorized disclosure. AMS shall have the exclusive right (after consultation
with BSC) at its own cost to take all legal action it deems necessary or
advisable to eliminate or minimize the consequences of any infringement of a
Patent Right, Trademark or any other AMS Intellectual Property.

                 (b)     Participation. AMS shall permit BSC to participate at
its own cost in any legal action brought by AMS to eliminate or minimize the
consequences of any infringement of a Patent Right, Trademark or any other AMS
Intellectual Property in the Field; provided, that AMS shall maintain the right
to control the prosecution and settlement of such action.

                 (c)     Proceeds and Expenses.

                         (i)     All proceeds realized upon any judgment or
settlement regarding an action undertaken pursuant to Section 6.3(a) above (net
of direct out-of-pocket expenses relating thereto) and in which BSC
participates as described in Section 6.3(b) above shall be shared based on the
parties' relative lost profits.

                                       19
<PAGE>
                         (ii)    Notwithstanding the foregoing, if AMS fails
to take legal action to eliminate or minimize the consequences of an
infringement of a Patent Right, Trademark or any other AMS Intellectual
Property that relates to Company Products distributed hereunder within thirty
(30) days following its notice to BSC under Section 6.3(a) hereof, or if AMS
notifies BSC in writing that it does not intend to exercise its rights to take
any such legal action, then the Company Products distributed BSC hereunder in
the Sales Regions in which such infringement or unauthorized disclosure takes
place shall not be subject to any Minimum Transfer Price; provided, however,
that the Transfer Price for such products shall not be less than the Cost of
Goods Sold for such Company Product.

7.       CERTAIN OBLIGATIONS OF SUPPLIER.

         7.1     Product Information. AMS will furnish to BSC any and all
product user manuals, sales literature, service manuals, product specifications
and other applicable information relating to the Company Products to be
delivered to BSC hereunder, including without limitation such information as is
necessary or appropriate for BSC to formulate any other manuals, promotional
materials and warning labels deemed necessary or appropriate by BSC
(collectively, the "Product Information"). AMS represents and warrants that the
Product Information shall be accurate and complete in all material respects,
and undertakes to update any such Product Information when any information
included therein becomes outdated, inaccurate or misleading. BSC shall have the
right to produce, at its expense, promotional material, Company Product
handling manuals, instructions for use, warning labels and other written
information relating to the Company Products which is based in whole or in part
on the material supplied by AMS. AMS shall have the right to review and
approve, which such review and approval shall not be unreasonably withheld or
delayed, any promotional material proposed to be used by BSC prior to such use
in the event that such promotional material deviates in any material manner
from the Product Information.

         7.2     Training Advice and Assistance. AMS will provide sufficient
clinical specialist support to assist BSC to train BSC sales representatives
and to support large-scale clinical education and market development activities
in the Field. AMS specialists will also be available to support BSC sales
representatives at specific customer sites as appropriate; however, it is
understood that customer-specific support will be limited to key accounts and
centers of excellence. AMS will provide such additional reasonable technical
assistance and training regarding the Company Products for BSC's
representatives as BSC reasonably requests. AMS shall also provide to BSC other
services or other support information to assist BSC in marketing the Company
Products as BSC reasonably requests.

8.       REPRESENTATIONS AND WARRANTIES.

         8.1     Mutual Representations and Warranties.  Each of AMS and BSC
hereby represents and warrant to the other that:

                 (a)     it is a duly and validly organized and existing
                         corporation in good standing, in the case of BSC
                         under the laws of the State of Delaware

                                       20
<PAGE>
                         and, in the case of AMS, under the laws of the State
                         of Delaware, and that it or its Affiliates that may
                         be performing its obligations under this Agreement are
                         legally qualified to do business in each jurisdiction
                         in which this Agreement may be performed and its
                         activities hereunder requires such qualification,

                 (b)     the performance of this Agreement and the
                         consummation of the transactions contemplated herein
                         will not result in any breach or violation of any
                         terms or provisions of, or constitute a default
                         under, its certificate or articles of incorporation
                         or By-Laws, or other organizational documents, or any
                         material agreement or instrument to which it is a
                         party, by which it is bound, or to which any of its
                         property is subject,

                 (c)     all requisite corporate action has been taken for the
                         due authorization, execution, delivery, and
                         performance of this Agreement by it, and this
                         Agreement constitutes a legal binding obligation,
                         enforceable against such party, in accordance with
                         its terms, except insofar as enforceability may be
                         limited by bankruptcy, insolvency, reorganization, or
                         similar laws affecting the rights of creditors
                         generally, and

                 (d)     it is not a party to any litigation relating to, or
                         that could reasonably be expected to affect, its
                         ability to perform its obligations under this
                         Agreement.

         8.2     Product Warranty; Service of Monitors. (a) AMS represents and
warrants to BSC that all Company Products supplied to BSC hereunder shall: (i)
for a period of the first to expire of the period of [**] ([**]) [**] after
delivery of such Company Product to BSC or the period of [**] ([**]) [**] after
the date of resale of such Company Product by BSC, conform to the Product
Specifications, (ii) be manufactured, labeled, packaged and tested (while in
the possession or control of AMS) in accordance with the applicable Product
Approvals therefor and the applicable laws and regulations in each country or
jurisdiction within the Territory relating to the manufacture, labeling,
packaging and testing of the Company Products, (iii) be free from defects in
design, materials and workmanship, and (iv) be free and clear of all liens and
encumbrances.

         8.3.    Non-Infringement. To its knowledge, AMS represents and
warrants to BSC that the manufacture, exportation, importation, marketing, sale
and distribution of Company Products in the Territory, do not infringe the
rights of third parties.

         8.4.    No Other Distributors.  AMS represent and warrants that,
except as set forth on Exhibit D hereto, it does not currently have any other
agents, representatives, or distributors for the promotion or sale of New
Products in the Territory for use in the Field.

                                       21
<PAGE>
         8.5.    Disclaimer of Warranties. EXCEPT AS PROVIDED IN THIS
AGREEMENT, AMS MAKES NO OTHER WARRANTIES OR REPRESENTATIONS, EXPRESS OR
IMPLIED, WITH RESPECT TO THE COMPANY PRODUCTS, INCLUDING BUT NOT LIMITED TO THE
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
NON-INFRINGEMENT.

9.       INDEMNIFICATION.

         9.1.    AMS Obligations of Indemnification.

         (a)     Infringement Indemnification. Subject to the provisions of
Section 9.3 below, AMS shall defend, indemnify and hold harmless BSC, its
subsidiaries, parent corporations, Affiliates, officers, directors, independent
contractors, partners, shareholders, employees, agents, and their respective
successors and assigns from and against any claim, suit, demand, loss, damage,
expense (including reasonable attorney's fees and those that may be asserted by
a third party) or liability (collectively, "Losses") arising from or related to
an allegation that any Company Product, or the manufacture, exportation,
importation, marketing, sale and distribution of any Company Product, infringes
or misappropriates any intellectual property right of any third party
(including without limitation any patent, copyright, trade secret or trademark)
provided that AMS shall have no liability hereunder with respect to any such
Losses based on a trademark other than a Trademark. If any Company Product is
held to constitute an infringement or misappropriation of any third party's
intellectual property rights or if in AMS' opinion, any Company Product is, or
is likely to be held to constitute, an infringement or misappropriation, AMS
will at its expense and option: (i) procure the right for BSC to continue
distributing the Company Product in accordance with this Agreement at no
additional cost to BSC; (ii) replace the Company Product with a non-infringing
and non-misappropriating equivalent product conforming to the Product
Specifications at no additional cost to BSC or (iii) modify the Company Product
to make it non-infringing and non-misappropriating while conforming to the
Product Specifications at no additional cost to BSC. Notwithstanding the
foregoing, AMS shall not be responsible for any such Losses resulting from any
allegation based on intellectual property of BSC incorporated into any such
Company Product. The obligations of AMS set forth in this Section 9.1(a) shall
not apply to any claim based on (i) any adaptation or modification of the
Company Products not made or not authorized by AMS where such infringement
would not have occurred but for such adaptation modification, (ii) any
combination by BSC of a Company Product with products not provided by AMS or
authorized or approved in writing by AMS where such infringement would not have
occurred but for such combination or (iii) intellectual property rights owned
by BSC or any of its Affiliates.

         (b)     Third-Party Distributor Indemnification. Subject to the
provisions of Section 9.3 below, AMS shall defend, indemnify and hold harmless
BSC, its subsidiaries, parent corporations, Affiliates, officers, directors,
independent contractors, partners, shareholders, employees, agents, and their
respective successors and assigns from and against any Losses arising from or
related to any termination of any distribution arrangements currently or
formerly existing between AMS and any third-party distributor.

                                       22
<PAGE>
         9.2     Other Claims. Subject to the provisions of Section 9.3 below,
each of AMS and BSC (each, in such capacity, an "Indemnifying Party") will
defend, indemnify and hold harmless the other party, its subsidiaries, parent
corporations, Affiliates, officers, directors, partners, shareholders,
employees, agents, and their respective successors and assigns (collectively,
in such capacity, the "Indemnitees") from and against any Losses, including
without limitation Losses imposed upon the Indemnitee(s) by any third party,
arising from or related to: (a) any material breach of such Indemnifying
Party's representations and warranties, covenants or obligations under this
Agreement; or (b) any negligence or intentional misconduct by such Indemnifying
Party (or its employees, agents or representatives) in performing its
obligations under this Agreement. Without limiting the foregoing, AMS shall
defend, indemnify and hold harmless the BSC Indemnitees from and against any
Losses imposed upon the BSC Indemnitees by any third party arising from or
related to any of the Company Products in connection with any injury, illness
or death unless such injury was caused by a combination or modification of the
Company Products made by BSC that was not authorized or approved by AMS in
writing, in which case BSC shall defend, indemnify and hold harmless the AMS
Indemnitees from and against any Losses imposed upon AMS Indemnitees by any
third party arising from or related to any of such Company Products in
connection with any injury, illness or death. The foregoing indemnification
shall not apply in the event and to the extent that a court of competent
jurisdiction determines that such Losses arose as a result of any Indemnitee's
negligence, intentional misconduct or breach of this Agreement. Without
limiting the foregoing, AMS shall defend, indemnify and hold harmless the BSC
Indemnitees from and against any Losses imposed upon the BSC Indemnitees by any
third party arising from or related to any of the Company Products in
connection with any injury, illness and/or death to the extent that such
injury, illness and/or death resulted from the negligent, reckless or willful
act or omission, whether direct or indirect, of AMS (or any person or entity,
other than BSC, acting on AMS' behalf) or from a product defect for which AMS
(or any person or entity, other than BSC, acting on AMS' behalf) was directly
or indirectly responsible or from any product description or claim made by or
on behalf of AMS in writing or through electronic transmission and upon which
BSC or any third party has relied. Also, without limiting the foregoing, BSC
shall defend, indemnify and hold harmless AMS Indemnitees from and against any
Losses imposed upon AMS Indemnitees by any third party arising from or related
to any of the Company Products in connection with any injury, illness and/or
death to the extent that such injury, illness and/or death resulted from the
negligent, reckless or willful act or omission, whether direct or indirect, of
BSC (or any person or entity, other than AMS, acting on BSC's behalf) or from
any product description or claim made by or on behalf of BSC that is
inconsistent with the Product Specifications or any relevant Product Approval
in writing or through electronic transmission and upon which any third party
has relied.

         9.3     Procedure. A party seeking indemnification shall promptly
notify the other party in writing of a claim or suit; provided, that a party's
failure to give such notice or delay in giving such notice shall not effect
such party's right to indemnification under this Section 8 except to the extent
that the other party has been prejudiced by such failure or delay. Neither
party has any obligation to indemnify the other party in connection with any
settlement made without the Indemnifying Party's written consent. The
Indemnitee has the right to participate at its own expense in the claim or suit
and in selecting counsel therefor. The Indemnitee shall cooperate with the
Indemnifying Party as reasonably requested, at the Indemnifying Party's sole
cost and

                                       23
<PAGE>
expense. The Indemnifying Party shall not settle any claim or suit
without the Indemnitee's prior written consent unless such settlement is
limited to the payment of cash by the Indemnifying Party and contains a full
release of the Indemnitee.

         9.4     Insurance. At all times during which any Company Product is
being clinically tested with human subjects or commercially distributed or sold
by BSC hereunder, as well as for a period of seven years thereafter, AMS shall
procure and maintain insurance, including without limitation product liability
insurance, adequate to cover its obligations hereunder and which is consistent
with normal business practices of prudent companies similarly situated. Any
such insurance policy shall at all times name BSC as an additional insured
thereunder. It is understood that such insurance shall not be construed to
create a limit of AMS' liability with respect to its indemnification
obligations under this Section 9. AMS shall provide BSC with written evidence
of such insurance upon request. AMS shall provide BSC with written notice at
least 15 days prior to the cancellation, non-renewal or material change in such
insurance.

10.      TERM AND TERMINATION.

         10.1    Term. This Agreement shall take effect as of the Effective
Date and shall remain in effect until BSC is no longer distributing any Company
Products, pursuant to the terms of this Agreement, but in no event, unless
otherwise agreed in Section 3.1 hereof, shall the term of this Agreement extend
beyond December 31, 2012.

         10.2    Termination. (a) Either party may terminate this Agreement at
any time upon 60 days written notice to the other party in the event that the
other party shall have materially breached any of its obligations,
representations or warranties hereunder and shall not have cured such breach
prior to the expiration of such 60-day period. Without limiting the foregoing,
failure by AMS to meet [**]% of BSC's Product orders with respect to any
Company Product for [**] or for an aggregate of [**] shall be deemed to be a
material breach of an obligation by AMS hereunder.

         (b)     Without limiting the foregoing, the following shall be deemed
to be a material breach of BSC hereunder:

                 (i)     the failure of BSC to make at least one New Product
(which such New Product delivered to BSC from AMS shall comply with the Product
Specifications for such New Product and with respect to which AMS has (a)
delivered to BSC a Completion Notice and (b) is expending commercially
reasonable efforts to assist BSC in timely obtaining reimbursement for such New
Product in the United States and, with the commercially reasonable assistance
of BSC, to timely obtain, to the extent available, the endorsement of the
leading professional organizations related to sedation and associated with a
Specialty) generally available for purchase within the Field prior to the date
that is [**] ([**]) months after the date [**]; or

                 (ii)    the failure of BSC to comply with its obligations set
forth in Section 3.5 hereof for [**]; but only if, AMS has given a termination
notice pursuant to the first sentence of this Section 10.2(a) within sixty (60)
days following the last day of such [**].

                                       24
<PAGE>
         (c)     (i)     Subject to the proviso set forth in the first
sentence of Section 3.3 and the provisions of Section 3.5 hereof, in the event
that (A) BSC and AMS agree that BSC will market and sell a New Product in a
particular Specialty, and (B) AMS timely and fully completes the Specialty
Study requested by BSC pursuant to Section 3.3 hereof and delivers to BSC a
Completion Notice in connection therewith, and (C) AMS shall have delivered to
BSC a New Product that complies with the Product Specifications for such New
Product and with respect to which AMS is expending commercially reasonable
efforts to assist BSC in timely obtaining reimbursement for such New Product in
the United States and, with the commercially reasonable assistance of BSC, to
timely obtain, to the extent available, the endorsement of the leading
professional organizations related to sedation and the applicable leading
professional organization associated with the Specialty in which such product
will be marketed and sold and (D) BSC has failed to make such New Product
generally available for purchase within such Specialty at a time prior to the
later of (i) the date that is [**] and (ii) the date that is [**] to BSC for
distribution in such Specialty, AMS shall have the right to terminate BSC's
rights under this Agreement with respect to such Specialty.

                 (ii)    Subject to the proviso set forth in the first sentence
of Section 3.3 and the provisions of Section 3.5 hereof, in the event that (A)
BSC and AMS agree that BSC will market and sell a New Product in a particular
Specialty, and (B) AMS elects not to conduct the Specialty Study requested by
BSC pursuant to Section 3.3 hereof, and (C) AMS shall have delivered to BSC a
New Product that complies with the Product Specifications for such New Product
and with respect to which AMS is expending commercially reasonable efforts to
assist BSC in timely obtaining reimbursement for such New Product in the United
States and, with the commercially reasonable assistance of BSC, to timely
obtain, to the extent available, the endorsement of the leading professional
organizations related to sedation and the applicable leading professional
organization associated with the Specialty in which such product will be
marketed and sold and (D) BSC has failed to make such new Product generally
available for purchase within such Specialty at a time prior to the later of
(i) the date that is [**] and (ii) the date that is [**] to BSC for
distribution in such Specialty, AMS shall have the right to terminate BSC's
rights under this Agreement with respect to such Specialty.

         (d)     BSC may terminate this Agreement without cause with respect to
any or all Company Products upon sixty (60) days written notice. The parties
may also terminate this Agreement at any time upon mutual written agreement.

         10.3    Effect of Termination. Termination of this Agreement shall not
affect rights and obligations of either party that may have accrued prior to
the effective date of termination or any obligation that by its nature or
express terms survives termination. Without limiting the foregoing, the
provisions of Sections 1, 4.10, 5.4, 8, 9, 10, 11 and Annex II hereof shall
survive any expiration or termination of this Agreement. Notwithstanding any
expiration or termination of this Agreement, (i) AMS shall make such further
deliveries of Company Products to BSC as are required to comply with BSC's
delivery obligations to customers existing on the date of termination, and (ii)
BSC shall continue to have all rights necessary or appropriate to sell out its
inventory pursuant to this Section 10.3 for a period of one (1) year after
termination and during

                                       25
<PAGE>
such period AMS shall continue to comply with all of its duties and obligations
hereunder necessary or appropriate to facilitate BSC's sell out of inventory,
including without limitation those set forth in Sections 3.4, 4.3, 4.10,
5.1-5.6, 5.8, 6.1 and Annex II hereof.

11.      General Provisions.

         11.1    Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Massachusetts
without giving effect to its rules regarding conflicts of laws.

         11.2    Confidentiality. It is contemplated that in the course of the
performance of this Agreement each party may, from time to time, disclose
Confidential Information to the other. Each party agrees to keep the other's
Confidential Information in confidence and use it only as specifically
permitted under the Agreement, maintaining the same procedures and policies
with respect to the other's Confidential Information as it does with its own
Confidential Information, provided, that in all cases reasonable care shall be
used to protect such Confidential Information; and provided, further, that no
provision of this Agreement shall be construed to preclude such disclosure of
Confidential Information as may be required by law, the rules and regulations
of any stock exchange or The Nasdaq Stock Market, or by court order, or to the
extent necessary and appropriate to divulge such Confidential Information to
obtain governmental approval for the investigation or marketing of the Company
Products; provided further, that notice of such disclosure is provided to the
other party prior to such disclosure.

         11.3    Waiver. Except as otherwise expressly set forth herein, no
provision of or right under this Agreement shall be deemed to have been waived
by any act or acquiescence on the part of either party, its agents or
employees, except by an instrument in writing signed by an authorized officer
of each party. No waiver by either party of any breach of this Agreement by the
other party shall be effective as to any other breach, whether of the same or
any other term or condition and whether occurring before or after the date of
such waiver.

         11.4    Independent Contractors. Each party represents that it is
acting on its own behalf as an independent contractor and is not acting as an
agent for or on behalf of any third party. This Agreement and the relations
hereby established by and between AMS and BSC do not constitute a partnership,
joint venture, franchise, agency or contract of employment.

         11.5    Assignment. Neither party may assign its rights or delegate
its obligations hereunder without the prior written consent of the other;
provided, that notwithstanding the foregoing, either party may assign, without
the other party's consent, its rights and obligations hereunder to (a) an
Affiliate or to a purchaser of all or substantially all of the assets or
business of such or the division of such party responsible for distributing or
providing the Company Products and (b), in the case of BSC only,
sub-distributors designated by BSC in its sole discretion, in all cases to an
Affiliate, purchaser or sub-distributor that has the experience and financial
resources to comply with the obligations of the assigning party hereunder. No
such assignment or delegation shall relieve the assigning or delegating party
from its obligations hereunder. It is understood that either party may from
time to time perform some or all of its obligations

                                       26
<PAGE>
hereunder through one or more of its Affiliates.

         11.6    Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties hereto and their respective permitted assigns and
successors, including but not limited to in the case of AMS any Person that is
AMS' successor by merger, or by acquiring a majority of the outstanding voting
stock of AMS or substantially all of the AMS Intellectual Property and Patent
Rights relating to the Company Products distributed or to be distributed by BSC
under this Agreement.

         11.7    Publicity. AMS and BSC agree that no public release or
announcement concerning the this Agreement in any manner shall be issued during
the term of the Agreement by either party without the prior consent of the
other party (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by law or the rules or regulations of
any securities exchange or the National Association of Securities Dealers, in
which case the party required to make the release or announcement shall use its
reasonable best efforts to allow the other party reasonable time to comment on
such release or announcement, and, if applicable, any associated request for
confidential treatment, in advance of such issuance.

         11.8    Notices. Unless otherwise provided herein, any notice, report,
payment or document to be given by one party to the other shall be in writing
and shall be deemed given when delivered personally or mailed by certified or
registered mail, postage prepaid (such mailed notice to be effective on the
date which is three business days after the date of mailing), or sent by
reputable overnight courier (such notice sent by courier to be effective one
business day after it is deposited with such courier), and in the case of BSC,
addressed to the attention of the Director of OEM Finished Products, with a
copy to the attention of the General Counsel at One Boston Scientific Place,
Natick, Massachusetts, 01760, and in the case of AMS, addressed to the
attention of Chief Financial Officer or to such other place as any party may
designate as to itself by written notice to the other party, with a copy to
Susan Murley, Esq., Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
02109.

         11.9    Severability. In the event any provision of this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other term or provision hereof. The parties agree that they will negotiate in
good faith or will permit a court to replace any provision hereof so held
invalid, illegal or unenforceable with a valid provision which is as similar as
possible in substance to the invalid, illegal or unenforceable provision.

         11.10   Headings. Headings of the sections and subsections of this
Agreement are for reference purposes only and shall not limit or affect the
meaning or construction of the terms and conditions hereof.

         11.11   Interpretation. Words such as "herein", "hereinafter",
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
section or paragraph in which such words appear, unless the context otherwise
requires. The singular shall include the plural, unless the

                                       27
<PAGE>
context otherwise requires. Whenever the word "include", "includes" or
"including" appears in this Agreement, it shall be deemed in each instance to
be followed by the words "without limitation."

         11.12   Entire Agreement; Amendment. The terms and provisions
contained in this Agreement constitute the entire understanding of the parties
with respect to the transactions and matters contemplated hereby and supersede
all previous communications, representations, agreements and understandings
relating to the subject matter hereof. No agreement or understanding amending,
supplementing or extending this Agreement shall be binding upon either party
unless it is in a writing and signed by the applicable party. Without limiting
the foregoing, the parties anticipate that the Exhibits, Annexes and Schedules
hereto may be amended or supplemented from time to time by mutual written
agreement.

         11.13   Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         11.14   Further Assurances; Force Majeure. Each party covenants and
agrees that, subsequent to the execution and delivery of this Agreement and
without any additional consideration, it will execute and deliver any further
legal instruments and perform any acts which are or may become reasonably
necessary to effectuate the purposes of this Agreement. Any delay in the
performance of any of the duties or obligations of either party hereto shall
not be considered a breach of this Agreement and the time required for
performance (and if relevant, the measurement period for a Contract Year) shall
be extended for a period equal to the period of such delay; provided, that such
delay has been caused by or is the result of any act of God, embargo, strike,
fire, flood or other unforeseeable cause beyond the control and without the
fault or negligence of the party so affected. The party so affected shall give
prompt notice to the other party of such cause, and shall take whatever
reasonable steps are necessary to relieve the effect of such cause as rapidly
as possible. Nothing in this Section 11.14 shall in any way limit BSC's rights
pursuant to Section 9.2 hereof.

         11.15   Limitation of Liability. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL AMS OR BSC HAVE ANY LIABILITY TO
THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR OTHER INDIRECT DAMAGES;
PROVIDED, HOWEVER, IN THE EVENT THAT ANY SUCH DAMAGES CONSTITUTE LOSSES (AS
DEFINED IN SECTION 9.1 HEREOF) AGAINST WHICH A PARTY HAS INDEMNIFIED THE OTHER
PARTY, SUCH INDEMNIFYING PARTY SHALL BE REQUIRED TO INDEMNIFY THE OTHER PARTY
FOR SUCH DAMAGES.

                 [Remainder of Page Intentionally Left Blank.]

                                       28
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers, and have duly
delivered and executed this Agreement under seal as of the date first set forth
above.

ASPECT MEDICAL SYSTEMS, INC.                BOSTON SCIENTIFIC CORPORATION

By: /s/ J. Neal Armstrong                   By: /s/ Lawrence Best
   ------------------------------              -----------------------------
Name: J. Neal Armstrong                     Name: Lawrence Best
Title: Vice President and Chief             Title: CFO
       Financial Officer
                                       29
<PAGE>
                                                                      EXHIBIT A

                               EXISTING PRODUCTS

MONITORS

         A-2000

SENSORS

         Standard Platform Sensors:
         -       BIS Sensor

         XP Platform:
         -       Quatro Sensor (OR market)

ACCESSORIES

         Patient Interface Cables (PIC):
         -       PIC (Standard Platform)
         -       PIC Plus (XP Platform)

         Digital Signal Converters (DSC):
         -       DSC-2 (Standard Platform)
         -       DSC-XP (XP Platform)

         A-2000 Printer

         Misc. Accessories:
         -       Mounting Brackets
         -       Stand
         -       Sensor Dispenser

BIS MODULES

         BIS Engine (PCB)

         BIS Module (PCB with Plastic Enclosure)

                                       30
<PAGE>
                                                                     EXHIBIT B

                                    PATENTS
                                    -------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                   PATENT             ISSUE              COUNTRY
                                                        NUMBER              DATE               NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>           <C>
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              4907597           3/13/1990    United States of America
METHOD
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        4924875           5/15/1990    United States of America
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        2051683          10/31/2000    Canada
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              5010891           4/30/1991    United States of America
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              638708            3/13/1990    Australia
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              2064791           9/14/1999    Canada
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              3136408           12/8/2000    Japan
METHOD
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        5020540           6/4/1991     United States of America
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        489010           11/18/1998    Austria
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        653318            1/31/1995    Australia
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        489010           11/18/1998    Switzerland
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        489010            7/29/1999    Germany
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        489010           11/18/1998    European Patent Office
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        489010           11/18/1998    United Kingdom
--------------------------------------------------------------------------------------------------------------------
CARDIAC BIOPOTENTIAL ANALYSIS SYSTEM AND METHOD        3138752          12/15/2000    Japan
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              5458117          10/17/1995    United States of America
METHOD
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        618781            9/5/2001     Austria
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        618781            9/5/2001     Belgium
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        618781            9/5/2001     European Patent Office
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        618781            9/5/2001     France
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE       69330710           9/5/2001     Germany
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       31
<PAGE>
                                                             EXHIBIT B (CONT.)

                                PATENTS (CONT.)
                                --------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                   PATENT             ISSUE              COUNTRY
                                                        NUMBER              DATE               NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>              <C>           <C>
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        618781            9/5/2001     Switzerland
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        618781            9/5/2001     United Kingdom
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        678176            9/23/1993    Australia
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        3309122           5/24/2002    Japan
--------------------------------------------------------------------------------------------------------------------
DISPOSABLE, PRE-GELLED, SELF-PREPPING ELECTRODE        5305746           4/26/1994    United States of America
--------------------------------------------------------------------------------------------------------------------
MONITOR AND METHOD FOR ACQUIRING AND                   5368041          11/29/1994    United States of America
PROCESSING ELECTRICAL SIGNALS RELATING TO
BODILY FUNCTIONS
--------------------------------------------------------------------------------------------------------------------
MONITOR AND METHOD FOR ACQUIRING AND                   5381804           1/17/1995    United States of America
PROCESSING ELECTRICAL SIGNALS RELATING TO
BODILY FUNCTIONS
--------------------------------------------------------------------------------------------------------------------
ELECTRODE CONNECTOR SYSTEM                             708245           11/11/1999    Australia
--------------------------------------------------------------------------------------------------------------------
ELECTRODE CONNECTOR SYSTEM                             6236874           5/22/2001    United States of America
--------------------------------------------------------------------------------------------------------------------
ELECTRODE CONNECTOR SYSTEM                             5813404           9/29/1998    United States of America
--------------------------------------------------------------------------------------------------------------------
ELECTRODE ARRAY SYSTEM FOR MEASURING                   6394953           5/28/2002    United States of America
ELECTROPHYSIOLOGICAL SIGNALS
--------------------------------------------------------------------------------------------------------------------
ELECTRODE ARRAY SYSTEM FOR MEASURING                   741021            3/7/2002     Australia
ELECTROPHYSIOLOGICAL SIGNALS
--------------------------------------------------------------------------------------------------------------------
ELECTRODE ARRAY SYSTEM FOR MEASURING                   6032064           2/29/2000    United States of America
ELECTROPHYSIOLOGICAL SIGNALS
--------------------------------------------------------------------------------------------------------------------
SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS         732539            4/26/2001    Australia
FROM EEG SIGNALS
--------------------------------------------------------------------------------------------------------------------
SYSTEM FOR THE EXTRACTION OF CARDIAC ARTIFACTS         5792069           8/11/1998    United States of America
FROM EEG SIGNALS
--------------------------------------------------------------------------------------------------------------------
SYSTEM AND METHOD FOR ENHANCING AND SEPARATING         6032072           2/29/2000    United States of America
BIOPOTENTIAL SIGNALS
--------------------------------------------------------------------------------------------------------------------
SYSTEM AND METHOD FOR FACILITATING CLINICAL            6338713           1/15/2002    United States of America
DECISION MAKING
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              5320109           6/14/1994    United States of America
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              E178198           3/31/1999    Austria
METHOD
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       32
<PAGE>
                                                             EXHIBIT B (CONT.)

                                PATENTS (CONT.)
                                --------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                   PATENT             ISSUE              COUNTRY
                                                        NUMBER              DATE               NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                 <C>          <C>
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              610365            3/31/1999    Belgium
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              610365            3/31/1999    Switzerland
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND            69228823.6          3/31/1999    Germany
METHOD
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CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              610365            3/31/1999    European Patent Office
METHOD
--------------------------------------------------------------------------------------------------------------------
CEREBRAL BIOPOTENTIAL ANALYSIS SYSTEM AND              610365            3/31/1999    United Kingdom
METHOD
--------------------------------------------------------------------------------------------------------------------
</TABLE>

                              PATENT APPLICATIONS
                              -------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                APPLICATION           FILE                  COUNTRY
                                                       NUMBER              DATE                   NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>        <C>
[**]                                                    [**]               [**]       [**]
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</TABLE>

                                       33
<PAGE>
                                                             EXHIBIT B (CONT.)
                       PATENT APPLICATIONS (CONT.)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                APPLICATION           FILE                  COUNTRY
                                                       NUMBER              DATE                   NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>        <C>
[**]                                                    [**]               [**]       [**]
--------------------------------------------------------------------------------------------------------------------
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                                                                                                                [**]
</TABLE>

                                       34
<PAGE>
                                                             EXHIBIT B (CONT.)
                           PATENT APPLICATIONS (CONT.)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                APPLICATION           FILE                  COUNTRY
                                                       NUMBER              DATE                   NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>        <C>
[**]                                                    [**]               [**]       [**]
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</TABLE>

                                       35
<PAGE>
                                                             EXHIBIT B (CONT.)
                          PATENT APPLICATIONS (CONT.)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                APPLICATION           FILE                  COUNTRY
                                                       NUMBER              DATE                   NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>        <C>
[**]                                                    [**]               [**]       [**]
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</TABLE>

                                       36
<PAGE>
                                                             EXHIBIT B (CONT.)
                          PATENT APPLICATIONS (CONT.)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
TITLE                                                APPLICATION           FILE                  COUNTRY
                                                       NUMBER              DATE                   NAME
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>        <C>
[**]                                                    [**]               [**]       [**]
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</TABLE>

                                       37
<PAGE>
                                                                     EXHIBIT C

                             PRODUCT SPECIFICATIONS

PROCEDURAL SEDATION MONITOR

The Procedural Sedation (PS) Monitor design will incorporate a [**] and display
which will be optimized to meet the needs of the PS market, where patients are
maintained at lighter levels of sedation. The user interface will also be
optimized for the Procedural Sedation market, based on customer requirements.
If required, the PS Monitor will be cleared for marketing by the FDA and other
regulatory agencies. Initial product releases may utilize[**]of the[**]. PS
monitors may be equipped with the capability of [**], based on the type of [**]
that is utilized.

PS Monitor Software

The PS Monitor software will include the [**] (see below) so that the [**] will
be enabled. The user interface will be optimized for the procedural sedation
market. The [**] will be displayed in the [**] and set [**] for the [**]. The
look and feel of the display will also be tailored for the needs of this
market.

The [**] will be integrated into the [**]. The user interface will
be integrated into the [**]. Software of each [**] will be verified. The system
software will be validated by the Quality Assurance department using release
validation procedures.

[**]

The [**] will be optimized for procedural sedation. AMS will perform the
necessary clinical validation to ensure performance that meets customer needs.
This will entail identifying a[**].

AMS will perform a retrospective evaluation of the [**] followed by formal
in-house verification and validation testing. Additionally, clinical testing
will be performed of the entire system prior to commercial release of the
product.

PS-MONITOR SPECIFICATIONS

Description:  PS Monitor for display of the PS Index and real time waveforms
includes a Monitor and a Digital Signal converter.
Monitor Weight:  [**]lb.
Monitor Dimensions:  [**]" x[**]." x[**]"
Display Size:  [**]" x[**]"
Digital Output:  [**]serial port
Electrical Safety:  Conforms to[**], and[**]
Power Requirements:  [**]VAC, [**]Hz.[**]A Maximum
Battery Back-up:  [**]minutes.  Recharge time [**] hours

Digital Signal Converter

DSC Weight:[**]oz
DSC Dimensions[**]" x[**]"x[**]"
Cable Length: [**]feet

                PROCEDURAL SEDATION MODULE (PS MODULE) FOR OEM'S

AMS will develop a PS module integrating the [**] in a single package. The PS
Module will support the [**]. The PS Module will be sold by AMS to other
Original Equipment Manufacturers

                                       38
<PAGE>
of patient monitoring equipment who specialize in sales to the procedural
sedation market place. AMS will specify the user interface for each OEM system.

The PS Module integrates the functions of the[**] and the [**] into a single
enclosure. The new device will have [**] and will [**]. Optionally it may
connect to a [**]. The PS module will be [**] will[**] into the PS Module
enclosure.

DESIGN PARAMETERS FOR THE PS MODULE

Size less than or equal to[**]
Power requirement[**]V
Power consumption[**]W maximum
[**]data rate[**]Kbaud
Optional [**]interface
DSP horsepower sufficient to support[**]
[**]
[**]
[**]

                                       39
<PAGE>
         PROCEDURAL SEDATION SENSOR

Overview:

The Procedural Sedation Sensor (PS Sensor) will activate the procedural
sedation algorithm and will configure the display mode for the PS Monitor. The
PS Sensor specifications will be tailored to meet the needs of the Sedation
market and will be labeled differently from other AMS sensor products.

PS Sensor will be a single patient use disposable pre-gelled electrode array
that is applied directly to the patient's forehead and temple to be used in
conjunction with PS monitors. The PS Sensor is designed to provide ease of use
and electrode placement accuracy. It collects EEG signals from the forehead and
the temple areas.

The PS Sensor contains AMS's ZipPrep(TM) technology, a [**] in the[**] and
allows the [**]. This patented technology [**] the [**] at the [**]

The PS Sensor connects to the monitor via a single connector that is low profile
and easy to insert and remove. The PS Sensor contains an electronic Smart
Card memory device (module) that stores information concerning sensor:

[ ]      LOT #
[ ]      Expiration Date
[ ]      BIS Configuration (Sensor Type)
[ ]      Sensor Integrity/Validation

Intended Use:   To be used in conjunction with the PS Monitoring System[**]
                Single patient use device: Disposable[**]     Adult patient use
                Rx Only

Length of Use (Duration):  Up to[**] hours from initial application

Smart Card Module:
The Smart Card module is a self-contained integrated circuit that contains
digital information about the sensor. It utilizes smart card technology that
helps prevent tampering.

Shelf life            [**] months @ [**] C storage from date of
                      manufacture

Shipping Temperature  -[**] to [**] C max.
Operating Temperature  [**] to [**] C max.
Storage Temperature    [**] to [**] C max.

                                       40
<PAGE>
                                                                     EXHIBIT D

                    AGENTS, REPRESENTATIVES AND DISTRIBUTORS

                                [To be provided]

                                       41
<PAGE>
                                                                  APPENDIX 4.2

                      BSC STANDARD FORM OF PURCHASE ORDER

                                [To be provided]

                                       42
<PAGE>
                                                                       ANNEX I
                            CLINICAL/OUTCOMES STUDY

The purpose of each such controlled clinical trial(s) will be to demonstrate
the safety and effectiveness of the product as a monitor of sedation within the
Field for which such Company Product is designed and for which such
Clinical/Outcomes study is performed. These studies will characterize the
impact of objective monitoring of patient response following administration of
commonly used sedative drugs (propofol, midazolam, and opioid analgesics).
Potential endpoints will include the amount of drug administered, speed of
patient recovery, patient recall of the procedure, patient satisfaction and
cost per procedure. Data from these studies will be sufficiently robust to
adequately support regulatory clearance and initial market introduction.

The study will be performed at a minimum of [**] centers and include a minimum
of [**]procedures or the number required to assess the potential endpoints
described above.

The study will be designed to show statistically significant improvements
compared to current practice.

AMS and BSC will mutually agree to the study design/s to achieve these
objectives.

                                       43
<PAGE>
                                                                      ANNEX II

                         CALCULATION OF TRANSFER PRICE

         1.      Calculation of Transfer Price. Subject to the minimum transfer
     prices and exceptions thereto set forth in paragraph 2 below, BSC shall
     pay AMS a transfer price (the "Transfer Price") for any Company Product
     delivered to and not rejected by BSC equal to [**]% of [**] as determined
     pursuant to this Agreement. The Transfer Price shall be calculated by
     [**] and paid initially based on an [**] mutually agreed upon by BSC and
     AMS prior to the first order made by BSC pursuant to this Agreement. Such
     [**] shall be adjusted on the [**] of the [**]on the[**] for the prior
     [**] period, and thereafter the [**] shall be adjusted on each succeeding
     [**] anniversary of such date based on the [**] for the [**] ending [**]
     prior to such date.

         2.      Minimum Transfer Prices. Notwithstanding any of the foregoing
     and unless reduced pursuant to this paragraph 2 or Section 4.10(a), the
     Transfer Price in effect for a Company Product that is a [**] during
     any quarter of any Contact Year shall not be lower than an amount equal
     to [**] such Company Product [**] such Company Product [**] (the "Minimum
     [**] Transfer Price") and (ii) the Transfer Price in effect for a
     Company Product [**] during any quarter of any Contact Year shall not be
     lower than [**] such Company Product [**] Company Product [**] (the
     "Minimum [**] Transfer Price"). Notwithstanding any of the
     foregoing or anything to the contrary herein, in the event that [**] any
     Company Product distributed hereunder [**] during which the Transfer
     Price is determined, [**] the Transfer Price for such Company Product [**].

                                       44