Document:

EMPLOYMENT AND
NON-COMPETE AGREEMENT 

        This
 Employment and  Non-Compete  Agreement is made as of March __, 2005,  between  HANGER
 ORTHOPEDIC  GROUP,  INC., a Delaware corporation (the "Company"); and John Rush, M.D.
("Employee"). The Company and Employee agree as follows: 

        1.
    Employment. The
Company agrees to employ Employee and Employee accepts           such employment by the
Company upon the terms and conditions set forth in this           Agreement, for the
period beginning on April 1, 2005 (“Commencement           Date”) and ending
upon termination pursuant to Section 4 (the           “Employment Period”).  

        2.
    Compensation and
Benefits. In consideration for the valuable services to           be rendered by
Employee and for Employee’s agreement not to compete against           the Company
as described in Section 5 and not to disclose or use Confidential           Information
of the Company as described in Section 6, the Company hereby agrees           to provide
the following to Employee:  

                (a)              During
the first year of the Employment Period, the Company will pay Employee a           gross
salary at the annual rate of $330,000.00, net of all applicable payroll           taxes
and other normal deductions (the “Base Salary”), payable at the
          bi-weekly gross rate of $12,692.30. Employee’s Base Salary may be adjusted
          annually in January of each year based on an annual performance salary review
as           determined in the reasonable discretion of the Company’s Board of
Directors           or a committee thereof. Employee also shall be entitled to (i) an
automobile           allowance in the amount of Seven Hundred Dollars ($700.00) per month
and one (1)           parking space in the parking garage at the Company’s
headquarters in           Bethesda, Maryland, and (ii) vacation, sick leave and medical
and other benefits           that are consistent with those received by other
similarly-situated senior           executives of the Company as determined in the sole
discretion of the           Company’s Board of Directors.  

                (b)              Within
thirty (30) days after the commencement of Employee’s employment           with the
Company, Employee shall receive a lump sum cash payment in the gross           amount of
Thirty-Five Thousand Dollars ($35,000.00), net of applicable payroll           taxes and
other normal deductions (“Payment”). The Payment shall be           evidenced
by a one (1) year forgivable promissory note (the “Note”) to           be
executed prior to or at the time of receipt of the Payment, which Note shall           be
forgiven upon the first to occur of (i) the termination of Employee’s
          employment with the Company upon Employee’s death or permanent disability
          under Section 4(a), without Cause under Section 4(d) or for Good Reason under
          Section 4(e); or (ii) if Employee remains continuously employed by the Company
          for a period of at least one (1) year following the Commencement Date, all as
          further set forth in the Note. In the event Employee’s employment is
          terminated prior to the one-year anniversary of the Commencement Date for a
          reason other than upon Employee’s death or permanent disability under
          Section 4(a), without Cause under Section 4(d) or for Good Reason under Section
          4(e), then the Note shall become immediately due and payable upon such
          termination, as further set forth in the Note.  

                (c)              Employee
shall also be eligible to receive cash bonus compensation (the           “Bonus”)
for each full calendar year during the Employment Period and           for the pro-rated
portion of 2005 during which Employee is employed by the           Company. Employee’s
target Bonus (“Target Bonus”) is fifty           percent (50%) of the Base
Salary and is contingent on the Employee meeting           certain performance criteria
and the Company achieving certain year-end           financial criteria, and, in the
event Employee exceeds certain performance           criteria and the Company exceeds
certain year-end financial criteria,           Employee’s maximum Bonus (“Maximum
Bonus”) is one hundred percent           (100%) of the Base Salary, all to be
determined in the reasonable discretion of           the Company’s Board of
Directors and its Compensation Committee. The           Employee shall be entitled to
such increases in the Target Bonus and the Maximum           Bonus during the Employment
Period as shall be determined and approved by the           Compensation Committee of the
Company’s Board of Directors, in its sole           discretion, taking into account
the performance of the Company and the Employee           and other factors generally
considered relevant to the salaries of executives           holding similar positions
with enterprises comparable to the Company.           Notwithstanding the foregoing, in
the event that the Employee or the Company           fail to attain their minimum
respective criteria in any given year, the Board of           Directors of the Company
and its Compensation Committee may, in their reasonable           discretion, decline to
award any Bonus to Employee.  

                (d)              On
the third (3rd) business day following the Commencement Date,
          Employee shall receive 10,000 restricted shares of stock of the Company. On the
          first annual anniversary of the Commencement Date, Employee will receive an
          additional 10,000 restricted shares of stock of the Company. In addition to the
          foregoing grants of restricted shares of stock, Employee may have the
          opportunity to receive options to purchase stock or restricted shares of stock
          of the Company in a manner consistent with any stock option or restricted share
          plan adopted by the Company. The determination as to the amount of additional
          stock, if any, to be purchased under such stock option or restricted share plan
          shall be subject to the sole discretion of the Board of Directors of the
Company           or a committee thereof. All grants of restricted shares of stock of the
Company           or options to purchase stock of the Company shall be governed by the
applicable           plans of the Company with respect to such stock.  

                (e)              Employee
shall receive the relocation benefits set forth in the Executive           Relocation
Program, consistent with the relocation policies and procedures of           the Company
for executives, as previously disclosed by the Company to Employee.  

        3.    Services.
During the Employment Period, Employee agrees (i) to devote           Employee’s
best efforts and substantially all of Employee’s business           time and
attention to the business affairs of the Company (except for reasonable
          vacation periods subject to the reasonable approval of the Company or
reasonable           periods of illness or other incapacity); (ii) to serve as the Company’s
          Chief Medical Officer and render such services as the Company may from time to
          time direct; provided, however, that Employee recognizes and agrees that the
          Company may change Employee’s job description as set forth in this Section
          3 as a result of a good faith restructuring of the Company’s operations;
          and (iii) that Employee will not, except with the prior written consent of the
          Company, become engaged in or render services for any business other than the
          business of the Company.  

2 

        4.    Termination.
The Employment Period will continue from the Commencement           Date until terminated
by Employee’s death or permanent disability which           renders the Employee
unable to perform Employee’s duties hereunder (as           determined by the
Company in its good faith judgment); Employee’s           resignation upon prior
written notice to the Company of sixty (60) days; the           Company for Cause; the
Company without Cause upon prior notice to Employee of           thirty (30) days; or
Employee for Good Reason upon prior written notice to the           Company of sixty (60)
days. For purposes of this Section 4, “Cause”          shall mean (i) the
repeated failure or refusal of Employee to follow the lawful           directives of the
Company or its designee (except due to sickness, injury or           disabilities), (ii)
gross inattention to duty or any other willful, reckless or           grossly negligent
act (or omission to act) by Employee, which, in the good faith           judgment of the
Company, materially injures the Company, including the repeated           failure to
follow the policies and procedures of the Company, (iii) a material           breach of
this Agreement by Employee or (iv) the commission by Employee of a           felony or
other crime involving moral turpitude or the commission by Employee of           an act
of financial dishonesty against the Company. For purposes of this Section           4,
“Good Reason” shall mean any act by the Board of Directors of the
          Company that, within six (6) months following a Change in Control, materially
          reduces (A) the scope of Employee’s position and duties with the Company
          without Employee’s consent or (B) the Base Salary set forth in Section
2(a)           or the Target Bonus set forth in Section 2(c) (as distinguished from the
Bonus           payments received thereunder), with Employee being required to give
written           notice to terminate Employee’s employment with the Company within
six (6)           months following such Change in Control in order for the termination to
be           considered for Good Reason.  

        5.    Non-Compete.  

                (a)              In
the event the Employment Period is terminated under Section 4(b) or Section
          4(c), then this Section 5 will apply to Employee. In the event the Employment
          Period is otherwise terminated, such as without Cause, then no part of this
          Section 5 will apply to Employee.  

                (b)              Employee
recognizes and acknowledges that by virtue of accepting employment as a           senior
executive of the Company hereunder, Employee will have access to and will
          acquire valuable training and highly specialized knowledge, enhance
          Employee’s professional skills and experience, and learn proprietary trade
          secrets and Confidential Information of the Company. In consideration of the
          foregoing and this employment contract, Employee agrees that during the
          Employment Period and for two (2) years thereafter (the “Non-Compete
          Period”), Employee will not directly or indirectly (whether as employee,
          director, owner, stockholder, consultant, partner (limited or general) or
          otherwise) own, manage, control, participate in, consult with, advertise on
          behalf of, render services for or in any manner engage in any Business at any
          location within the continental United States of America; nor shall Employee
          solicit any other Person to engage in any of the foregoing activities or
          knowingly request, induce or attempt to influence any Company Patient, Company
          Referral Source or Company supplier to curtail any business they are currently,
          or within the thirty-six (36) month period ending on the earlier of the
          termination of the Employment Period or the then current date have been,
          transacting with the Company (the “Non-Compete”). Nothing herein will
          prevent Employee from being a passive owner of not more than 1% of the
          outstanding stock of any class of a corporation which is engaged in the
Business           and which is publicly traded, so long as Employee has no participation
in the           business of such corporation. Furthermore, during the Non-Compete
Period,           Employee shall not, without the Company’s prior written consent,
directly           or indirectly, knowingly solicit or encourage or attempt to influence
any           Company Employee to leave the employment of the Company. Employee agrees
that           the restraint imposed under this Section 5 is reasonable and not unduly
harsh or           oppressive.  

3 

                (c)              If,
at the time of enforcement of any provision of Section 5(b), a court or
          arbitrator holds that the restrictions stated therein are unreasonable or
          unenforceable under circumstances then existing, the Company and Employee agree
          that the maximum period, scope or geographical area reasonable or permissible
          under such circumstances will be substituted for the stated period, scope or
          area.  

                (d)              Since
a material purpose of this Agreement is to protect the Company’s
          investment in the Employee and to secure the benefits of Employee’s
          background and general experience in the industry, the parties hereto agree and
          acknowledge that money damages may not be an adequate remedy for any breach of
          the provisions of this Section 5. Therefore, in the event of a breach by
          Employee of any of the provisions of this Section 5, the Company or its
          successors or assigns may, in addition to other rights and remedies existing in
          its favor, apply to any court of law or equity of competent jurisdiction for
          specific performance and/or injunctive or other relief in order to enforce or
          prevent any violations of the provisions of this Agreement.  

        6.    Confidential
Information. Employee acknowledges that the information,           product
specifications, service specifications, manufacturing procedures,           technology,
designs, know-how, research and development programs, sales methods,           sales
levels and quantities, costs, margins, customer usages and requirements,
          computer programs, data and trade secrets (collectively, “Confidential
          Information”) obtained by Employee during the course of Employee’s
          performance under this Agreement, and previously if Employee has already been
an           employee of the Company, concerning the business or affairs of the Company
are           the property of the Company. For purposes of this Agreement, “trade
          secret” means information of the Company, including any formula, pattern,
          compilation, program, device, method, technique or process, that derives
          independent economic value, actual or potential, from not being generally known
          to, and not being readily ascertainable by proper means by, other Persons who
          can obtain economic value from its disclosure or use, and that is the subject
of           efforts by the Company to maintain its secrecy that are reasonable under the
          circumstances, including but not limited to: (a) techniques, plans and
materials           used by the Company, (b) marketing methods and strategies employed by
the           Company, and (c) all lists of past, present or prospective patients,
customers,           referral sources and suppliers of the Company. Employee agrees that
Employee           will not disclose to any unauthorized Person or use for Employee’s
own           account any of such Confidential Information without the written consent of
the           Company, unless and to the extent that the aforementioned matters become
          generally known to and available for use by the public other than as a result
of           Employee’s acts or omissions to act or become known to Employee
lawfully           outside the scope of Employee’s employment under this Agreement.
Employee           agrees to deliver to the Company at the termination of Employee’s
          employment, or at any other time the Company may request, all memoranda, notes,
          plans, records, reports and other items and documents (and copies thereof)
          relating to the business of the Company which Employee may then possess or have
          under Employee’s control.  

        7.    Notices.
Any notice provided for in this Agreement shall be in writing           and shall be
either personally delivered, sent by overnight courier           (e.g., Federal
Express) or mailed by first class certified mail, return           receipt requested, to
the recipient at the address below indicated:  

	 	To the Company: 	Vice President, Human Resources

Hanger
Orthopedic Group, Inc.
Two Bethesda Metro
Center, Suite 1200
Bethesda,
Maryland 20814

4 

	 	To Employee: 	John Rush, M.D.
10260 Longview Drive
Lone Tree, Colorado 80124-9774

or such other address or to the
attention of such other Person as the recipient party shall have specified by prior
written notice to the sending party. Any notice under this Agreement will be deemed to
have been given when so delivered, sent or mailed. 

        8.    Miscellaneous. Whenever possible, each provision of this Agreement will           be interpreted in such
manner as to be effective and valid under applicable law.           The parties agree
that (i) the provisions of this Agreement shall be severable           in the event that
any of the provisions hereof are for any reason whatsoever           invalid, void or
otherwise unenforceable, (ii) such invalid, void or otherwise           unenforceable
provisions shall be automatically replaced by other provisions           which are as
similar as possible in terms to such invalid, void or otherwise           unenforceable
provisions but are valid and enforceable and (iii) the remaining           provisions
shall remain enforceable to the fullest extent permitted by law. This           Agreement
embodies the complete agreement and understanding among the parties           and
supersedes and preempts any prior understandings, agreements or           representations
by or among the parties, written or oral, which may have related           to the subject
matter hereof in any way. This Agreement is intended to bind and           inure to the
benefit of and be enforceable by Employee and the Company, and           their respective
successors and assigns. Employee may not assign Employee’s           rights or
delegate Employee’s obligations hereunder without the prior           written
consent of the Company. The Company may assign its rights and delegate           its
duties hereunder without the consent of Employee to Permitted Transferees.           All
questions concerning the construction, validity and interpretation of the
          Agreement will be governed by the internal law, and not the law of conflicts,
of           the State of Maryland. All disputes under this Agreement shall be submitted
to           and governed by binding arbitration with an arbitrator from the American
          Arbitration Association; except only that the Company may seek relief in a
court           of competent jurisdiction in the event of a claimed violation of Section
5 or           Section 6 of this Agreement. Any provision of this Agreement may be
amended or           waived only with the prior written consent of the Company and
Employee.  

        9.    Severance.  

                (a)              In
the event that Employee’s employment with the Company is terminated           under
Section 4(a), Section 4(b) or Section 4(c), Employee shall receive no           severance
payments or salary continuation whatsoever.  

                (b)              In
the event Employee’s employment with the Company is terminated under
          Section 4(d) or Section 4(e), then the Company shall provide Employee with
          salary continuation in a total aggregate amount equal to one (1) year of
          Employee’s Base Salary at the time of termination of the Employment Period
          to be paid out in equal installments over the twelve (12) month period
following           the termination of the Employment Period.  

5 

                (c)              Provided
(i) Employee remains continuously employed by the Company through the           fifth (5th)
annual anniversary of the Commencement Date (“Fifth           Anniversary”);
and (ii) Employee has not been offered the position of CEO           of the Company prior
to the Fifth Anniversary (with the parties agreeing that           any offer of the CEO
position may provide for Employee to actually become CEO on           a date following
the Fifth Anniversary), Employee shall have a one-time right,           during the six
(6) month period commencing on the Fifth Anniversary, to           voluntarily resign
from his position with the Company pursuant to Section 4(b),           in which case
Employee shall receive (A) salary continuation in a total           aggregate amount
equal to eighteen (18) months of Employee’s Base Salary at           the time of
termination of the Employment Period to be paid out in equal           installments over
the eighteen (18) month period following the termination of           the Employment
Period; and (B) an amount equal to the average of the annual           Bonus received by
Employee pursuant to Section 2(c) over the then preceding           three (3) year
period, multiplied by one and one half (1.5), with such amount           also to be paid
out in equal installments over the eighteen (18) month period           following the
termination of the Employment Period.  

                (d)              Notwithstanding
anything herein to the contrary, each of the following shall,           without limiting
any other remedies available to the Company, be considered a           breach of this
Agreement completely relieving the Company of any obligations due           or owing at
any time to Employee under this Section 9: (i) the failure of           Employee to use
his best efforts to ensure a smooth transition to           Employee’s successor;
(ii) the breach by Employee of any of the provisions           of Section 5, if
applicable, and/or Section 6; or (iii) any act of directly or           indirectly
(whether as employee, director, owner, stockholder, consultant,           partner
(limited or general) or otherwise) owning, managing, controlling,           participating
in, consulting with, advertising on behalf of, rendering services           for or in any
manner engaging in any Business, it being understood that Employee           shall be
entitled to engage in such acts in a manner that does not violate the
          provisions of Section 5, if applicable, and/or or Section 6 but shall forfeit
          his right to the payments under this Section 9 as a result thereof. Nothing in
          this Section 9 shall preclude the Company from exercising any rights or
remedies           available to it at law or in equity.  

        10.    Definitions.  

                (a)    “Business” shall
mean any competitive business of fabricating,           distributing, wholesaling or
retailing of orthotics or prosthetics, or the           operation of clinics to fit
patients for orthotics or prosthetics, or any other           related orthotic or
prosthetic businesses in which the Company is engaged during           and at the
expiration of the Employment Period, specifically including, without
          limitation, the formation and/or operation of comprehensive managed care
          organizations providing healthcare company clients with customized, national
          networks of orthotics and/or prosthetics patient-care and accountable
healthcare           services, including through dedication to clinical outcomes,
science-based           guidelines, sound medical reasoning and efficient system
solutions designed to           help reduce administrative expense.  

                (b)              A
“Change in Control” shall be deemed to exist if:  

                         (i)              a
person, as defined in Sections 13(d) and 14(d) of the Securities Exchange Act
          of 1934 (other than Employee or a group including Employee), either (1)
acquires           twenty percent (20%) or more of the combined voting power of the
outstanding           securities of the Company having the right to vote in elections of
directors and           such acquisition shall not have been approved within sixty (60)
days following           such acquisition by a majority of the Continuing Directors (as
hereinafter           defined) then in office, or (2) acquires fifty percent (50%) or
more of the           combined voting power of the outstanding securities of the Company
having a           right to vote in elections of directors; or  

6 

                          (ii)              Continuing
Directors shall for any reason cease to constitute a majority of the           Board of
Directors of the Company; or  

                          (iii)              the
Company disposes of all or substantially all of the business of the Company           to
a party or parties other than a Permitted Transferee pursuant to a partial or
          complete liquidation of the Company, sale of assets (including stock of a
          subsidiary of the Company) or otherwise; or  

                          (iv)              the
Board of Directors of the Company approves the Company’s consolidation           or
merger with or into any other Person (other than a Permitted Transferee), or
          any other Person’s consolidation or merger with or into the Company, which
          results in all or part of the outstanding shares of stock of the Company being
          changed in any way or converted into or exchanged for stock or other securities
          or cash or any other property.  

                (c)              The
“Company”shall include the Company and any other past,           present
or future direct or indirect subsidiaries of the Company (including
          subsidiaries of subsidiaries).  

                (d)    “Company
Employee”shall mean any Person who is an employee of           the Company at
any time during the twenty-four (24) month period ending on the           earlier of the
termination of the Employment Period or the then current date.  

                (e)    “Company
Patient” shall mean any Person who is a patient or           customer of the
Company at any time during the thirty-six (36) month period           ending on the
earlier of the termination of the Employment Period or the then           current date.  

                (f)    “Company
Referral Source” shall mean any Person who has been a           referral source
of the Company at any time during the thirty-six (36) month           period ending on
the earlier of the termination of the Employment Period or the           then current
date.  

                (g)    “Continuing
Director” shall mean a member of the Board of           Directors of the Company
who either was a member of the Board of Directors of           the Company on the date of
this Agreement or who subsequently became a member of           the Board of Directors of
the Company and whose election, or nomination for           election, was approved by a
vote of at least two-thirds (2/3) of the Continuing           Directors then in office.  

                (h)    “Person” shall
mean and include an individual, a partnership, a           joint venture, a corporation,
a limited liability company, a trust, an           unincorporated organization and a
governmental entity or any department or           agency thereof.  

                (i)    “Permitted
Transferee”shall mean (a) any successor by merger           or consolidation to
the Company or any Permitted Transferee; (b) any purchaser           of all or
substantially all of the Company’s or any Permitted           Transferee’s
assets; (c) any parent or subsidiary corporation of the           Company; and (d) any
lender to (i) the Company, (ii) any Permitted Transferee           and/or (iii) any
affiliate of the Company or of any Permitted Transferee.  

7 

        11.     Counterparts.
This Agreement may be executed in one or more counterparts,           and by the
different parties hereto in separate counterparts, each of which when           executed
shall be deemed to be an original but all of which taken together shall
          constitute one and the same agreement.  

[ The next page is the
signature page. ]  

8 

        IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above
written. 

		
	
WITNESS:	EMPLOYEE:
	

____________________________________	_________________________________
	 	Name: John Rush, M.D.
	

Attest (Seal):	HANGER ORTHOPEDIC GROUP, INC.
	

By: ________________________________	By: ______________________________
	       Jason P. Owen, Secretary	       Ivan R. Sabel, CEO

9Exhibit 10.12 to St. Jude Medical, Inc. Form 10-K for fiscal year ended 12-31-2005

Exhibit 10.12 

ST. JUDE MEDICAL, INC.

AMENDED AND RESTATED 1995 STOCK OPTION PLAN

(formerly known as the Quest Medical, Inc. 1995 Stock Option Plan) 

        1.    Purpose
of the Plan.   The purpose of the Plan is to attract and retain the best available personnel for positions of
substantial responsibility and to provide incentives to such personnel to promote the success of the business of St. Jude Medical,
Inc. and its subsidiaries. 

        Certain options granted under
this Plan are intended to qualify as “incentive stock options” pursuant to Section 422 of the Internal Revenue Code of
1986, as amended from time to time, while certain other options granted under the Plan will constitute nonqualified options.

        2.    Definitions.   As
used herein, the following definitions shall apply: 

                (a)    “Board” shall
mean the Board of Directors of the Corporation.  

                (b)    “Common
Stock” shall mean the Common Stock, $.10 par value per share, of the Corporation. Except as otherwise provided herein, all
Common Stock issued pursuant to the Plan shall have the same rights as all other issued and outstanding shares of Common Stock,
including but not limited to voting rights, the right to dividends, if declared and paid, and the right to pro rata distributions
of the Corporation’s assets in the event of liquidation. 

                (c)    “Code” shall
mean the Internal Revenue Code of 1986, as amended from time to time. 

                (d)    “Committee” shall
mean the committee described in Section 18 that administers the Plan 

                (e)    “Corporation” shall
mean St. Jude Medical, Inc., a Minnesota corporation. 

                (f)    “Date
of Grant” shall mean the date on which an Option is granted pursuant to this Plan or, if the Committee so determines, the
date specified by the Committee as the date the award is to be effective. 

                (g)    “Disinterested
Director” shall mean a director who is not, during the one year prior to service as an administrator of the Plan, or during
such service, granted or awarded an Option pursuant to the Plan or any other plan of the Corporation or any of its affiliates
(except as may be permitted by Rule 16b-3 promulgated under the Exchange Act). 

                (h)    “Employee” shall
mean any officer or other key employee of the Corporation or one of its Subsidiaries (including any director who is also an
officer or key employee of the Corporation or one of its Subsidiaries). 

                (i)    “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended. 

                (j)    “Fair
Market Value” shall mean the closing sale price (or average of the quoted closing bid and asked prices if there is no closing
sale price reported) of the Common Stock on the date specified as reported by the New York Stock Exchange or by the principal
national stock exchange on which the Common Stock is then listed. If there is no reported price information for the Common Stock,
the Fair Market Value will be determined by the Committee, in its sole discretion. In making such determination, the Committee
may, but shall not be obligated to, commission and rely upon an independent appraisal of the Common Stock. 

                (k)    “Nonqualified
Option” shall mean any Option that is not a Qualified Option. 

                (l)    “Option” shall
mean a stock option granted pursuant to Section 6 of this Plan. 

                (m)    “Optionee” and
“Participant” shall each mean an individual who receives an Option pursuant to this Plan. 

                (n)    “Plan” shall
mean the St. Jude Medical, Inc. Amended and Restated 1995 Stock Option Plan (which was formerly known as the Quest Medical, Inc.
1995 Stock Option Plan), as amended from time to time. 

                (o)    “Qualified
Option” shall mean any Option that is intended to qualify as an “incentive stock option” within the meaning of
Section 422 of the Code. 

                (p)    “Rule
16b-3” shall mean Rule 16b-3 of the rules and regulations under the Exchange Act as Rule 16b-3 may be amended from time to
time and any successor provisions to Rule 16b-3 under the Exchange Act. 

                (q)    “Subsidiary” shall
mean any now existing or hereinafter organized or acquired company of which more than fifty percent (50%) of the issued and
outstanding voting stock is owned or controlled directly or indirectly by the Corporation or through one or more Subsidiaries of
the Corporation. 

        3.    Term
of Plan.   The Plan was adopted by the Board of Directors of Quest Medical, Inc. effective as of March 30, 1995
and approved by the shareholders of Quest Medical, Inc. on June 22, 1995. The Plan was assumed by the Corporation pursuant to the
terms of the Agreement and Plan of Merger among the Corporation, Apollo Merger Corp., and Advanced Neuromodulation Systems, Inc.,
dated as of October 15, 2005 (the “Merger Agreement”). The Plan was amended pursuant to resolutions adopted by the Board
on October 14, 2005 in order to make changes necessary to reflect the assumption of the Plan by the Corporation. Pursuant to the
Merger Agreement, at the Effective Time (as defined in the Merger Agreement), the then outstanding Options under the Plan were
converted into Options to purchase Common Stock. After the Effective Time, no additional Options will be granted under the Plan.
The Plan shall continue in effect so long as Options granted under the Plan remain outstanding, subject to earlier termination as
provided under Section 18(a). 

        4.    Shares
Subject to the Plan.   When the Plan was adopted by the Board of Directors and shareholders of Quest Medical,
Inc. it contained the following provision: “Subject to adjustment as provided in Section 17 hereof, the aggregate number
of shares of Common Stock issuable upon the exercise of Options pursuant to this Plan shall be 250,000 shares; provided, however,
that on January 1 of each year (commencing on January 1, 1996), the aggregate number of shares of Common Stock then
issuable upon the exercise of Options shall be increased by the same percentage that the total number of issued and outstanding
shares of Common Stock increased from the preceding January 1 to the following December 31 (if such percentage is
positive). For example, if the total number of issued and outstanding shares of Common Stock on January 1, 1996 were
5,000,000, the total number of issued and outstanding shares of the Corporation on December 31, 1996 were 5,500,000, and the
aggregate number of shares of Common Stock then issuable upon the exercise of Options pursuant to this Plan were 250,000, the
aggregate number of shares of Common Stock issuable under the Plan effective January 1, 1997 would be 275,000 (a 10%
increase). Shares issuable upon the exercise of Options may either be authorized but unissued shares or treasury shares. The
Corporation shall, during the term of this Plan, reserve and keep available a number of shares of Common Stock sufficient to
satisfy the requirements of the Plan. If an Option should expire or become unexercisable for any reason without having been
exercised in full, then the shares that were subject thereto shall, unless the Plan shall have terminated, become immediately
available for the grant of additional Options under this Plan, subject to the limitations set forth above. In addition, for
purposes of calculating the aggregate number of shares that may be issued under this Plan, only the net shares issued (including
the shares, if any, withheld for tax withholding requirements) shall be counted when shares of Common Stock are used as full or
partial payment for shares issued upon exercise of a Qualified Option or a Nonqualified Stock Option. Shares tendered by a
Participant as payment for shares issued upon such exercise shall be available for reissuance under the Plan.” 

        5.    Eligibility.   Qualified
Options may be granted under Section 6 of the Plan to such Employees of the Corporation or its Subsidiaries as shall be determined
by the Committee. Nonqualified Options may be granted under Section 6 of the Plan to such Employees of the Corporation or its
Subsidiaries as shall be determined by the Committee. In connection with the granting of Qualified Options, the aggregate Fair
Market Value (determined at the Date of Grant of a Qualified Option) of the shares with respect to which Qualified Options are
exercisable for the first time by an Optionee during any calendar year (under all such plans of the Optionee’s employer
corporation and its parent and subsidiary corporations as defined in Section 424(e) and (f) of the Code, or a corporation or a
parent or subsidiary corporation of such corporation issuing or assuming an Option in a transaction to which Section 424(a) of the
Code applies (collectively, such corporations described in this sentence are hereinafter referred to as “Related
Corporations”)) shall not exceed $100,000 or such other amount as from time to time provided in Section 422(d) of the Code or
any successor provision. In connection with the granting of any Options under the Plan, the aggregate number of shares of Common
Stock issuable to any single Employee shall not exceed the number of shares subject to the Plan referred to in Section 4.

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        6.    Grant
of Options.   The Committee shall determine the number of shares of Common Stock to be offered from time to
time pursuant to Options granted hereunder and shall grant Options under the Plan. The grant of Options shall be evidenced by
Option agreements containing such terms and provisions as are approved by the Committee and executed on behalf of the Corporation
by an appropriate officer. 

        7.    Time
of Grant of Options.   The date of grant of an Option under the Plan shall be the date on which the Committee
awards the Option or, if the Committee so determines, the date specified by the Committee as the date the award is to be
effective. Notice of the grant shall be given to each Participant to whom an Option is granted promptly after the date of such
grant. 

        8.    Price.   The
Option price for each share of Common Stock subject to an Option (the “Exercise Price”) granted pursuant to Section 6 of
the Plan shall be determined by the Committee at the Date of Grant; provided, however, that (a) the Exercise Price for any
Option shall not be less than 100% of the Fair Market Value of the Common Stock at the Date of Grant, and (b) if the Optionee
owns on the Date of Grant more than 10 percent of the total combined voting power of all classes of stock of the Corporation or
its parent or any of its subsidiaries, as more fully described in Section 422(b)(6) of the Code or any successor provision (such
shareholder is referred to herein as a “10-Percent Stockholder”), the Exercise Price for any Qualified Option granted to
such Optionee shall not be less than 110% of the Fair Market Value of the Common Stock at the Date of Grant. 

        9.    Vesting.   Subject
to Section 11 of this Plan, each Option award under the Plan shall vest in accordance with the vesting provisions set forth
in the applicable Option agreement. The Committee may, but shall not be required to, permit acceleration of vesting upon any sale
of the Corporation or similar transaction. A Participant’s Option agreement may contain such additional provisions with
respect to vesting as the Committee shall specify. 

        10.    Exercise.   A
Participant may pay the Exercise Price of the shares of Common Stock as to which an Option is being exercised by the delivery of
(a) cash, (b) check, (c) at the Committee’s option, previously owned shares of Common Stock having a Fair
Market Value on the date immediately preceding the exercise date equal to the Exercise Price or (d) at the Committee’s
option, any other consideration that the Committee determines is consistent with the Plan’s purpose and applicable law. If
the shares to be purchased are covered by an effective registration statement under the Securities Act of 1933, as amended, any
Option granted under the Plan may be exercised by a broker-dealer acting on behalf of an Optionee if (a) the broker-dealer
has received from the Optionee or the Corporation a fully- and duly-endorsed agreement evidencing such Option, together with
instructions signed by the Optionee requesting the Corporation to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Optionee and specifying the account into which such shares should be deposited, (b) adequate
provision has been made with respect to the payment of any withholding taxes due upon such exercise, and (c) the
broker-dealer and the Optionee have otherwise complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220, or any successor
provision. 

        11.    When
Qualified Options May be Exercised.   No Qualified Option shall be exercisable at any time after the expiration
of ten (10) years from the Date of Grant; provided, however, that if the Optionee with respect to a Qualified Option is a
10-Percent Stockholder on the Date of Grant of such Qualified Option, then such Option shall not be exercisable after the
expiration of five (5) years from its Date of Grant. In addition, if an Optionee of a Qualified Option ceases to be an employee of
the Corporation or any Related Corporation for any reason, such Optionee’s vested Qualified Options shall not be exercisable
after (a) 90 days following the date such Optionee ceases to be an employee of the Corporation or any Related Corporation, if
such cessation of service is not due to the death or permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) of the Optionee, or (b) twelve months following the date such Optionee ceases to be an employee of the Corporation or
any Related Corporation, if such cessation of service is due to the death or permanent and total disability (as defined above) of
the Optionee. Upon the death of an Optionee, any vested Qualified Option exercisable on the date of death may be exercised by the
Optionee’s estate or by a person who acquires the right to exercise such Qualified Option by bequest or inheritance or by
reason of the death of the Optionee, provided that such exercise occurs within both the remaining option term of the Qualified
Option and twelve months after the date of the Optionee’s death. This Section 11 only provides the outer limits of allowable
exercise dates with respect to Qualified Options; the Committee may determine that the exercise period for a Qualified Option
shall have a shorter duration than as specified above. 

3 

        12.    Option
Financing.   Upon the exercise of any Option granted under the Plan, the Corporation may, but shall not be
required to, make financing available to the Participant for the purchase of shares of Common Stock pursuant to such Option on
such terms as the Committee shall specify. 

        13.    Withholding
of Taxes.   The Committee shall make such provisions and take such steps as it may deem necessary or
appropriate for the withholding of any taxes that the Corporation is required by any law or regulation of any governmental
authority to withhold in connection with any Option including, but not limited to, withholding the issuance of all or any portion
of the shares of Common Stock subject to such Option until the Participant reimburses the Corporation for the amount it is
required to withhold with respect to such taxes, cancelling any portion of such issuance in an amount sufficient to reimburse the
Corporation for the amount it is required to withhold or taking any other action reasonably required to satisfy the
Corporation’s withholding obligation. 

        14.    Conditions
Upon Issuance of Shares.   The Corporation shall not be obligated to sell or issue any shares upon the exercise
of any Option granted under the Plan unless the issuance and delivery of shares shall comply with all provisions of applicable
federal and state securities laws and the requirements of the New York Stock Exchange or any stock exchange upon which shares of
the Common Stock may then be listed. 

        As a condition to the
exercise of an Option, the Corporation may require the person exercising the Option to make such representations and warranties as
may be necessary to assure the availability of an exemption from the registration requirements of applicable federal and state
securities laws. 

        The Corporation shall not be
liable for refusing to sell or issue any shares covered by any Option if the Corporation cannot obtain authority from the
appropriate regulatory bodies deemed by the Corporation to be necessary to lawfully sell or issue such shares. In addition, the
Corporation shall have no obligation to any Participant, express or implied, to list, register or otherwise qualify the shares of
Common Stock covered by any Option. 

        No Participant will be, or
will be deemed to be, a holder of any Common Stock subject to an Option unless and until such Participant has exercised his or her
Option and paid the purchase price for the subject shares of Common Stock. Each Option under this Plan shall be transferable only
by will or the laws of descent and distribution and shall be exercisable during the Participant’s lifetime only by such
Participant. 

        Any Common Stock issued
pursuant to the exercise of an Option to a person who would be deemed an officer or director of the Corporation under Rule 16b-3
shall not be transferred until at least six months have elapsed from the Date of Grant to the date of disposition of the Common
Stock. 

        15.    Restrictions
on Transfer.   Shares of Common Stock issued pursuant to the Plan shall be subject to restrictions on transfer
under applicable federal and state securities laws. The Board may impose such additional restrictions on the ownership and
transfer of shares of Common Stock issued pursuant to the Plan as it deems desirable; any such restrictions shall be set forth in
any Option agreement entered into hereunder. 

        16.    Modification
of Options.   At any time and from time to time, the Committee may execute an instrument providing for
modification, extension or renewal of any outstanding Option, provided that no such modification, extension or renewal shall
impair the Option without the consent of the holder of the Option or conflict with the provisions of Rule 16b-3 or the New York
Stock Exchange or any stock exchange on which shares of Common Stock may then be listed. Notwithstanding the foregoing,
(a) in the event of such a modification, substitution, extension or renewal of a Qualified Option, the Committee may increase
the exercise price of such Option if necessary to retain the qualified status of such Option, and (b) the Committee may, in
its discretion and without the holder’s consent, convert any Qualified Option into a Nonqualified Option. 

4 

        17.    Effect
of Change in Stock Subject to the Plan.   In the event that each of the outstanding shares of Common Stock
(other than shares held by dissenting stockholders) shall be changed into or exchanged for a different number or kind of shares of
stock of the Corporation or of another corporation (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise), or in the event a stock split or stock dividend shall have
occurred, then the Corporation may either (a) substitute for each share of Common Stock then subject to Options or available
for Options the number and kind of shares of stock into which each outstanding share of Common Stock (other than shares held by
dissenting stockholders) shall be so changed or exchanged, or the number of shares of Common Stock as is equitably required in the
event of a stock split or stock dividend, together with an appropriate adjustment of the Exercise Price, or (b) cancel all
such Options as of the effective date of any merger, consolidation, recapitalization, reclassification, split-up or combination of
shares by giving written notice to each holder thereof or his personal representatives of its intention to do so and by permitting
the exercise of all such Options, without regard to determinations of periods or installments of exercisability during the thirty
(30) day period immediately preceding such effective date. The Committee may, but shall not be required to, provide additional
anti-dilution protection to a Participant under the terms of the Participant’s Option agreement or otherwise. 

        18.    Administration.

        (a)    Notwithstanding
anything to the contrary herein, to the extent necessary to comply with the requirements of Rule 16b-3, the Plan shall be
administered by the Board, if each member is a Disinterested Director, or by a committee of two or more Disinterested Directors
appointed by the Board (the group responsible for administering the Plan is referred to herein as the “Committee”).
Options may be granted under Sections 6 and 7, respectively, only by majority agreement of the members of the Committee. Subject
to the limitations and qualifications set forth in this Plan, the Committee shall also determine the number of Options to be
granted, the number of shares subject to each Option grant, the exercise price or prices of each Option, the vesting and exercise
period of each Option, whether an Option may be exercised as to less than all of the Common Stock subject thereto, and such other
terms and conditions of each option, if any, as are consistent with the provisions of this Plan. Except with respect to Section
18(b) of this Plan, the Committee shall have complete authority to construe, interpret and administer the provisions of this Plan
and the provisions of the Option agreements entered into hereunder; to prescribe, amend and rescind rules and regulations
pertaining to this Plan; to suspend or discontinue this Plan (subject to Section 18(d)); and to make all other determinations
necessary or deemed advisable in the administration of the Plan. The determinations, interpretations and constructions made by the
Committee shall be final and conclusive. No member of the Committee shall be liable for any action taken, or failed to be taken,
made in good faith relating to the Plan or any award thereunder, and the members of the Committee shall be entitled to
indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including attorneys’
fees) arising therefrom to the fullest extent permitted by law. 

        (b)    Members
of the Committee shall be specified by the Board, and shall consist solely of Disinterested Directors. Disinterested Directors
shall not be eligible to receive Options to purchase Common Stock pursuant to Section 6 of this Plan. 

        (c)    Notwithstanding
Section 18(a), to comply with Rule 16b-3, no amendment may be made without the approval of the shareholders of the Corporation by
the affirmative votes of the holders of a majority of the shares of Common Stock then issued and outstanding, which amendment
would materially (i) increase the benefits accruing to Participants, (ii) increase the number of securities which may be
issued under the Plan, other than in accordance with Section 17 hereof, or (iii) modify the requirements as to eligibility
for participation in the Plan. 

        (d)    Although
the Committee may suspend or discontinue the Plan at any time, all Qualified Options must be granted on or before March 29, 2005.

        19.    Continued
Employment Not Presumed.   Nothing in this Plan or any document describing it nor the grant of any Option shall
give any Participant the right to continue in the employment of the Corporation or affect the right of the Corporation to
terminate the employment of any such person with or without cause. 

        20.    Liability
of the Corporation.   Neither the Corporation, its directors, officers or employees or the Committee, nor any
Subsidiary which is in existence or hereafter comes into existence, shall be liable to any Participant or other person if it is
determined for any reason by the Internal Revenue Service or any court having jurisdiction that any Qualified Option granted
hereunder does not qualify for tax treatment as an incentive stock option under Section 422 of the Code. 

5 

        21.    Governing
Law.   THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF STATE OF MINNESOTA AND THE
UNITED STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF. 

        22.    Severability
of Provisions.   If any provision of this Plan is determined to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect the remaining provisions of the Plan, but such invalid, illegal or
unenforceable provision shall be fully severable, and the Plan shall be construed and enforced as if such provision had never been
inserted herein. 

6

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