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WWW.EXFILE.COM -- BOSTON SCIENTIFIC -- FORM 8-K -- 15366 -- EXHIBIT 10.3

    EXHIBIT
      10.3

     

    
 

     

     

     

     

     

     

    ——————————

     

    FORM
      OF

     

    COCHLEAR
      IMPLANT BUSINESS

     

    PURCHASE
      AND SALE AGREEMENT

     

    ——————————

     

     

    among

     

     

     

    BOSTON
      SCIENTIFIC CORPORATION,

     

     

    BOSTON
      SCIENTIFIC SCIMED, INC.,

     

     

    ADVANCED
      BIONICS CORPORATION

     

     

    and

     

     

    ADVANCED
      BIONICS HOLDING CORPORATION

     

     

     

     

     

    Dated
      as
      of August 9, 2007

     

     

     

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

     

     

    
      
        	 	 	Page
	 	 	 
	
                ARTICLE
                  I.

              	
                DEFINITIONS

              	
                2

              
	 	 	 
	
                SECTION
                  1.01

              	
                Certain
                  Defined Terms

              	
                2

              
	
                SECTION
                  1.02

              	
                Definitions

              	
                10

              
	
                SECTION
                  1.03

              	
                Other
                  Interpretive Provisions

              	
                10

              
	 	 	 
	 	 	 
	
                ARTICLE
                  II.

              	
                TRANSFER
                  OF THE TRANSFERRED BUSINESS FROM THE SELLER TO THE COMPANY

              	
                12

              
	 	 	 
	
                SECTION
                  2.01

              	
                Formation
                  of the Company

              	
                12

              
	
                SECTION
                  2.02

              	
                Transferred
                  Assets and Excluded Assets

              	
                12

              
	
                SECTION
                  2.03

              	
                Assumed
                  Liabilities and Excluded Liabilities

              	
                14

              
	
                SECTION
                  2.04

              	
                Transferred
                  Employees

              	
                16

              
	
                SECTION
                  2.05

              	
                Third
                  Party Consents

              	
                16

              
	
                SECTION
                  2.06

              	
                Disputed
                  Assets and Liabilities

              	
                17

              
	
                SECTION
                  2.07

              	
                Company’s
                  Right to Enforce Transfer of Transferred Assets

              	
                18

              
	 	 	 
	 	 	 
	
                ARTICLE
                  III.

              	
                THE
                  PURCHASE AND SALE OF THE CLASS A UNITS

              	
                18

              
	 	 	 
	
                SECTION
                  3.01

              	
                Purchase
                  and Sale

              	
                18

              
	
                SECTION
                  3.02

              	
                Operating
                  Income and Working Capital Amounts and Other Amounts

              	
                18

              
	
                SECTION
                  3.03

              	
                Tax
                  Treatment; Purchase Price Allocation

              	
                20

              
	
                SECTION
                  3.04

              	
                Closing

              	
                21

              
	
                SECTION
                  3.05

              	
                Closing
                  Deliveries

              	
                21

              
	 	 	 
	 	 	 
	
                ARTICLE
                  IV.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE SELLER PARTIES

              	
                23

              
	 	 	 
	
                SECTION
                  4.01

              	
                Organization
                  and Authority

              	
                23

              
	
                SECTION
                  4.02

              	
                Organization
                  and Authority of the Company

              	
                23

              
	
                SECTION
                  4.03

              	
                No
                  Conflict

              	
                23

              
	
                SECTION
                  4.04

              	
                Capitalization;
                  Ownership of Membership Units

              	
                24

              
	
                SECTION
                  4.05

              	
                Assets
                  and Liabilities of the Company

              	
                24

              
	
                SECTION
                  4.06

              	
                Brokers

              	
                24

              
	
                SECTION
                  4.07

              	
                Intellectual
                  Property

              	
                24

              
	
                SECTION
                  4.08

              	
                Actions
                  of the Seller Parties

              	
                25

              
	
                SECTION
                  4.09

              	
                No
                  Distributions of Assets

              	
                25

              
	 	 	 
	 	 	 
	
                ARTICLE
                  V.

              	
                REPRESENTATIONS
                  AND WARRANTIES OF THE PURCHASER

              	
                25

              
	 	 	 
	
                SECTION
                  5.01

              	
                Organization
                  and Authority of the Purchaser

              	
                25

              
	
                SECTION
                  5.02

              	
                No
                  Conflict

              	
                25

              
	
                SECTION
                  5.03

              	
                Brokers

              	
                26

              

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

      
        TABLE
          OF CONTENTS (continued)

      

       

       

    

    
      
        	
                ARTICLE
                  VI.

              	
                [INTENTIONALLY
                  OMITTED]

              	
                26

              
	 	 	 
	 	 	 
	
                ARTICLE
                  VII.

              	
                COVENANTS
                  AND ADDITIONAL AGREEMENTS

              	
                26

              
	 	 	 
	
                SECTION
                  7.01

              	
                Limitations
                  on Activity of the Purchaser

              	
                26

              
	
                SECTION
                  7.02

              	
                Notification
                  of Certain Matters

              	
                27

              
	
                SECTION
                  7.03

              	
                Access
                  to Information

              	
                27

              
	
                SECTION
                  7.04

              	
                Public
                  Announcements

              	
                29

              
	
                SECTION
                  7.05

              	
                Further
                  Action; HSR Notification

              	
                30

              
	
                SECTION
                  7.06

              	
                Non-Competition/Non-Solicitation

              	
                31

              
	
                SECTION
                  7.07

              	
                Change
                  of Names

              	
                33

              
	
                SECTION
                  7.08

              	
                Insurance

              	
                34

              
	
                SECTION
                  7.09

              	
                Tax
                  Cooperation and Exchange of Information

              	
                34

              
	
                SECTION
                  7.10

              	
                Conveyance
                  Taxes

              	
                34

              
	
                SECTION
                  7.11

              	
                Bulk
                  Transfer Laws

              	
                34

              
	
                SECTION
                  7.12

              	
                Use
                  of Information

              	
                34

              
	
                SECTION
                  7.13

              	
                IP
                  Further Assurance

              	
                35

              
	
                SECTION
                  7.14

              	
                Transition
                  of Drug Eluting Electrode Contracts

              	
                35

              
	 	 	 
	 	 	 
	
                ARTICLE
                  VIII.

              	
                EMPLOYEE
                  MATTERS

              	
                35

              
	 	 	 
	
                SECTION
                  8.01

              	
                Severance
                  Costs

              	
                35

              
	
                SECTION
                  8.02

              	
                Phantom
                  Earn Out Recipients

              	
                35

              
	
                SECTION
                  8.03

              	
                Treatment
                  of Options

              	
                36

              
	
                SECTION
                  8.04

              	
                2007
                  Performance Incentive Plan Payments

              	
                36

              
	
                SECTION
                  8.05

              	
                Employee
                  Plans

              	
                36

              
	 	 	 
	 	 	 
	
                ARTICLE
                  IX.

              	
                CONDITIONS
                  TO CLOSING

              	
                37

              
	 	 	 
	
                SECTION
                  9.01

              	
                Conditions
                  to Obligations of the Parties

              	
                37

              
	
                SECTION
                  9.02

              	
                Conditions
                  to Obligations of the Seller Parties

              	
                37

              
	
                SECTION
                  9.03

              	
                Conditions
                  to Obligations of the Purchaser

              	
                38

              
	 	 	 
	 	 	 
	
                ARTICLE
                  X.

              	
                INDEMNIFICATION

              	
                38

              
	 	 	 
	
                SECTION
                  10.01

              	
                Indemnification
                  by Parent and Scimed

              	
                38

              
	
                SECTION
                  10.02

              	
                Indemnification
                  by the Purchaser or the Company

              	
                39

              
	
                SECTION
                  10.03

              	
                Limits
                  on Indemnification

              	
                40

              
	
                SECTION
                  10.04

              	
                Notice
                  of Loss; Third Party Claims

              	
                40

              
	
                SECTION
                  10.05

              	
                Remedies

              	
                42

              
	
                SECTION
                  10.06

              	
                Tax
                  Treatment

              	
                42

              
	
                SECTION
                  10.07

              	
                Survival
                  of Representations and Warranties

              	
                42

              
	
                SECTION
                  10.08

              	
                No
                  Loss of Remedies

              	
                43

              
	 	 	 
	 	 	 
	
                ARTICLE
                  XI.

              	
                TERMINATION

              	
                43

              
	 	 	 
	
                SECTION
                  11.01

              	
                Termination

              	
                43

              
	
                SECTION
                  11.02

              	
                Effect
                  of Termination

              	
                43

              

      

       

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      
        TABLE
          OF
          CONTENTS (continued)

      
        	 	 	 
	 	 	 
	
                ARTICLE
                  XII.

              	
                GENERAL
                  PROVISIONS

              	
                44

              
	 	 	 
	
                SECTION
                  12.01

              	
                Fees
                  and Expenses

              	
                44

              
	
                SECTION
                  12.02

              	
                Amendment

              	
                44

              
	
                SECTION
                  12.03

              	
                Waiver

              	
                44

              
	
                SECTION
                  12.04

              	
                Notices

              	
                44

              
	
                SECTION
                  12.05

              	
                Severability

              	
                45

              
	
                SECTION
                  12.06

              	
                Entire
                  Agreement; Assignment

              	
                45

              
	
                SECTION
                  12.07

              	
                Parties
                  in Interest

              	
                46

              
	
                SECTION
                  12.08

              	
                Specific
                  Performance

              	
                46

              
	
                SECTION
                  12.09

              	
                Governing
                  Law

              	
                46

              
	
                SECTION
                  12.10

              	
                Waiver
                  of Jury Trial

              	
                46

              
	
                SECTION
                  12.11

              	
                Arbitration

              	
                46

              
	
                SECTION
                  12.12

              	
                Counterparts

              	
                47

              

      

    

     

     

     

     

     

    EXHIBITS

     

     

    
      	
              A

            	
              Assignment
                of Leases

            
	
              B

            	
              Assumption
                Agreement

            
	
              C

            	
              Bill
                of Sale and Assignment Agreement

            
	
              D

            	
              Cochlear
                Patent Assignment

            
	
              E

            	
              Cochlear
                Trademark Assignment

            
	
              F

            	
              Company-Seller
                Auditory IP Cross License Agreement

            
	
              G

            	
              LLC
                Agreement

            
	
              H

            	
              Calculation
                of Operating Income Amount

            
	
              I

            	
              Scimed
                IP License Agreement

            
	
              J

            	
              Press
                Release

            
	
              K

            	
              Answers
                to Frequently Asked Questions

            

    

    

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    
      TABLE
        OF CONTENTS (continued)

     

     

    SCHEDULES

     

    
      	
              1.01(a)

            	
              Assigned
                Names and Marks

            
	
              1.01(b)

            	
              Excluded
                Mann Affiliates

            
	
              1.01(c)

            	
              Leased
                Real Property

            
	
              1.01(d)

            	
              Parent
                Designated Affiliates

            
	
              1.01(e)(i)

            	
              Invention
                Disclosures

            
	
              1.01(e)(ii)

            	
              Patents

            
	
              1.01(f)

            	
              Permits

            
	
              1.01(g)

            	
              Personal
                Property

            
	
              1.01(h)

            	
              Transferred
                Contracts

            
	
              1.01(i)

            	
              Transferred
                IP Agreements

            
	
              1.01(j)

            	
              Transferred
                Subsidiaries

            
	
              2.02(a)(xi)

            	
              Insurance
                Policy

            
	
              2.02(a)(xviii)

            	
              Other
                Assets

            
	
              2.04

            	
              Transferred
                Employees

            
	
              4.06

            	
              Brokers—Parent,
                Scimed or Affiliates

            
	
              4.07

            	
              Intellectual
                Property – Actions by Parent, Scimed or Certain
                Affiliates

            
	
              5.03

            	
              Brokers—Purchaser

            
	
              7.06(b)

            	
              Parent
                Neurostimulation Indications

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    This
      COCHLEAR IMPLANT BUSINESS PURCHASE AND SALE AGREEMENT (this
“Agreement”), dated as of August 9, 2007, is entered into
      by and among BOSTON SCIENTIFIC CORPORATION, a Delaware corporation
      (“Parent”), BOSTON SCIENTIFIC SCIMED, INC. (formerly known as
      Scimed Life Systems, Inc.), a Minnesota corporation and a wholly owned
      subsidiary of Parent (“Scimed”), ADVANCED BIONICS CORPORATION,
      a Delaware corporation and a wholly owned subsidiary of Scimed (the
“Seller”), and ADVANCED BIONICS HOLDING CORPORATION, a
      California corporation (the “Purchaser”).

     

    WHEREAS,
      Scimed owns all the issued and outstanding shares of common stock, par value
      $0.01 per share, of the Seller as a result of the consummation of the
      transactions contemplated by the Agreement and Plan of Merger, dated as of
      May 28, 2004 (the “Merger Agreement”; capitalized terms
      used herein but not defined herein have the meaning ascribed to such terms
      in
      the Merger Agreement), among Parent, Scimed, Claude Acquisition Corp., a
      Delaware corporation and a formerly wholly owned subsidiary of Scimed, the
      Seller, Bionics Trust (the “Trust”) and the Stockholders’
Representative as of the date thereof (the “Stockholders’
Representative”);

     

    WHEREAS,
      as promptly as reasonably practicable upon request of the Purchaser after the
      date hereof, the Seller will form a wholly owned Delaware limited liability
      company with the name “Auditory Systems, LLC” (the “Company”)
      in the manner described herein, which will be operated pursuant to the terms
      of
      the LLC Agreement (as defined herein) and the Delaware Limited Liability Company
      Act;

     

    WHEREAS,
      the Parties must undertake a substantial effort to separate the Transferred
      Assets (as defined herein) and prepare them to be transferred to the Company
      pursuant to this Agreement (including preparing for the transfer of the Seller’s
      manufacturing operations for IPG Products from the Seller’s Sylmar facility to
      the Seller’s new manufacturing facility in Valencia, California);

     

    WHEREAS,
      at or prior to the Closing, in the manner described herein, the Seller will
      transfer the Transferred Assets to the Company and the Company will assume
      the
      Assumed Liabilities (as defined herein);

     

    WHEREAS,
      at the Closing, the Seller will sell to the Purchaser a number of Membership
      Units in the Company representing 88% of the outstanding Membership Units of
      the
      Company (which 88% will represent 100% of the Class A Units, and the Purchaser
      will become the sole managing member of the Company (as of the Closing Date))
      in
      exchange for $130,000,000 in cash.  The Purchaser will have sole
      authority to manage the business and affairs of the Company;

     

    WHEREAS,
      immediately after giving effect to the transactions contemplated by this
      Agreement, the Purchaser will own 100% of the Class A Units, constituting 88%
      of
      the Membership Units of the Company, and the Seller will own 100% of the Class
      B
      Units, constituting 12% of the Membership Units of the Company; and

     

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    WHEREAS,
      the Parties agree that no approval of the Executive Board is required to effect
      the transactions contemplated hereby because, among other things, the Persons
      who have the power to appoint the members of the Executive Board have approved
      the execution, delivery and performance of this Agreement.

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual agreements
      and covenants hereinafter set forth, and intending to be legally bound, the
      Parties hereby agree as follows:

     

     

     

    ARTICLE
      I.

    DEFINITIONS

     

    SECTION
      1.01  Certain
      Defined Terms.  For
      purposes of this Agreement:

     

    “Accounts
      Payable Amount” means the accounts payable relating to the Transferred
      Businesses as of December 31, 2007 (calculated in a manner consistent with
      the
      calculation of accounts payable relating to the Transferred Businesses as
      reflected on the June 30, 2007, balance sheet of the Seller in respect of the
      Transferred Businesses), disregarding for purposes of this definition any
      accounts payable relating to Separation Costs (as defined in the Separation
      Agreement).

     

    “Accounts
      Payable Target” means (a) $8,000,000 multiplied by (b) a quotient
      (i)  the numerator of which is the amount of accounts payable of the
      Transferred Businesses on December 31, 2007 as calculated by the Seller in
      a
      manner consistent with the calculation of accounts payable as reflected on
      the
      June 30, 2007, balance sheet of the Seller and (ii) the denominator of which
      is
      the amount of accounts payable of the Seller on December 31, 2007, (calculated
      in the same manner).

     

    “Action”
      means any claim, action, suit, arbitration, inquiry, proceeding or investigation
      by or before any Governmental Authority.

     

    “Affiliate”
      means, with respect to any specified Person, any other Person that, directly
      or
      indirectly through one or more intermediaries, controls, is controlled by,
      or is
      under common control with, such specified Person.  Any reference to
      the Affiliates of any of the Seller Parties will not include the
      Company.  Any reference to an Affiliate of the Purchaser or the
      Company will not include the Excluded Mann Affiliates.

     

    “Amendment
      Agreement” means that certain Amendment Agreement among the Seller
      Parties, the Trust and the Stockholders’ Representative, dated as of the date
      hereof.

     

    “Ancillary
      Agreements” means the LLC Agreement, the Bill of Sale and Assignment
      Agreement, the Assignment of Leases, the Cochlear Patent Assignment, the
      Cochlear Trademark Assignment, the Assumption Agreement, the IP License
      Agreements and the Separation Agreement.

     

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Assigned
      Names and Marks” means all right, title and interest in and to the
      names set forth on Schedule 1.01(a) hereto, and all trademarks and
      similar marks owned by the Seller incorporating or associated with any of the
      foregoing also as set forth on Schedule 1.01(a).

     

    “Assignment
      of Leases” means an Assignment of Leases to be executed by the Seller
      and the Company at the Closing with respect to the Leased Real Property,
      substantially in the form of Exhibit A.

     

    “Assumption
      Agreement” means the Assumption Agreement to be executed by the Seller
      and the Company at the Closing, substantially in the form of Exhibit
      B.

     

    “Bill
      of Sale and Assignment Agreement” means the Bill of Sale and Assignment
      Agreement to be executed by the Seller, the Parent Designated Affiliates and
      the
      Company at the Closing, substantially in the form of
Exhibit C.

     

    “Books
      and Records” means books, records, ledgers, files, documents, or other
      similar information (in any form or medium) including minute books, books of
      account and general financial and personnel records, including all customer
      lists, vendor lists, mailing lists, revenue records, advertising materials,
      brochures, records of operation, standard forms of documents, manuals of
      operations or business procedures, photographs, blueprints, research files
      and
      materials and plates, accounting records, books of account, general, financial
      and personnel records, invoices, shipping records, supplier lists,
      correspondence and other documents, records and files of any type whatsoever
      (including those stored on computer disks or tapes or any other storage medium
      to the extent in the applicable Person’s possession); provided that this
      term shall not include any Tax records of the Seller (including any Tax Returns
      of the Seller Parties or their Affiliates).

     

    “Business
      Day” means any weekday (i.e., Monday, Tuesday, Wednesday, Thursday or
      Friday) on which banks in The City of New York, Boston or Los Angeles are not
      required or authorized by Law to be closed.

     

    “Claims”
      means demands, causes of action, Actions, rights of recovery, and rights of
      set-off, in each case, whether in law or equity based on any Law, private right
      of action or otherwise, foreseen or unforeseen, matured or unmatured, known
      or
      unknown, accrued or not accrued.

     

    “Class
      A Units” means the Class A Membership Units of the Company, as defined
      in the LLC Agreement.

     

    “Class
      B Units” means the Class B Membership Units of the Company, as defined
      in the LLC Agreement.

     

    “Closing
      Statements” means the Operating Income Amount Statement and the Working
      Capital Amounts Statement.

     

    “Cochlear
      Patent Assignment” means the Cochlear Patent Assignment to be executed
      by the Seller and the Company at the Closing, substantially in the form of
      Exhibit D.

     

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Cochlear
      Trademark Assignment” means the Cochlear Trademark Assignment to be
      executed by the Seller and the Company at the Closing, substantially in the
      form
      of Exhibit E.

     

    “Code”
      means the Internal Revenue Code of 1986, as amended through the date
      hereof.

     

    “Company-Seller
      Auditory IP Cross License Agreement” means the license to be executed
      between the Company and the Seller at the Closing, substantially in the form
      of
Exhibit F.

     

    “Company-Seller
      Drug Pump IP Cross License” has the meaning given such term in the Drug
      Pump Purchase Agreement.

     

    “Contract”
      means any binding written or oral contract, agreement, arrangement, commitment
      or understanding.

     

    “control”
      (including the terms “controlled by” and “under common
      control with”), with respect to the relationship between or among two
      or more Persons, means the possession, directly or indirectly, of the power
      to
      direct or cause the direction of the affairs or management of a Person, whether
      through the ownership of voting securities, as trustee, personal representative
      or executor, by contract, credit arrangement or otherwise; provided that
      any reference to a Person controlled by any of the Seller Parties will not
      include the Company after the Closing Date. Any reference to a Person that
      controls the Purchaser or the Company will not include the Excluded Mann
      Affiliates.

     

    “Conveyance
      Taxes” means sales, use, value added, transfer, stamp, stock transfer,
      real property transfer and similar Taxes (excluding any corporate income Taxes
      imposed on the Seller in respect of the sale of the Transferred Assets pursuant
      to this Agreement).

     

    “Copyrights”
      means the registered and unregistered copyrights in copyrightable works, and
      all
      other rights of authorship, renewal and revival, and all applications,
      registrations and renewals in connection therewith owned by the Seller or the
      Parent Designated Affiliates and Primarily used or held for use in the
      Transferred Business.

     

    “Days
      of Sales Outstanding” means with respect to Trade Receivables the
      following:  (Trade Receivables divided by (2H 2007 Net Revenues
      multiplied by 2)) multiplied by 365, where “2H 2007 Net Revenues” means net
      revenues of the Transferred Businesses for the six month period ended on
      December 31, 2007 (calculated in a manner consistent with past practice of
      the
      Seller in respect of the Transferred Businesses).

     

    “Drug
      Eluting Electrode Contracts” means (a) Research Development Agreement,
      dated as of June 26, 2007, by and among Parent and The Washington University
      on
      behalf of Alex N. Salt, Ph.D., (b) Consulting Agreement, dated June 13, 2007,
      between Alec N. Salt, Ph.D. and Parent, (c) Preclinical Laboratory Study
      Agreement, dated as of June 29, 2007, by and between Parent, University of
      Miami
      Ear Institute and Thomas Van De Water, Ph.D. and 

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (d)
      Laboratory Services Agreement, dated as of April 10, 2007, by and among Parent
      and Microbiology Research Associates, Inc.

     

    “Drug
      Pump Purchase Agreement” means the Drug Pump Purchase and Sale
      Agreement dated as of the date hereof among Parent, Scimed, the Seller and
      the
      Purchaser.

     

    “Employee
      Plan” means any “employee benefit plan” (as defined in
      Section 3(3) of ERISA), whether or not subject to ERISA, and each other
      employment, bonus, stock option, stock purchase or other equity-based, benefit,
      incentive compensation, profit sharing, savings, retirement (including early
      retirement and supplemental retirement), disability, insurance, vacation pay,
      sick pay, incentive, deferred compensation, severance, termination, retention,
      change of control and other fringe, welfare or other employee benefit plans,
      programs, policies, agreements or arrangements (whether or not in writing)
      sponsored, maintained or contributed to by the Seller Parties for the benefit
      of
      or relating to any current or former employee, director or independent
      contractor of the Seller Parties.

     

    “Encumbrance”
      means any security interest, pledge, hypothecation, mortgage, lien or
      encumbrance created by Parent, any of its Affiliates (other than the Seller
      or
      any of its Subsidiaries), or any employee of Parent or any of its Affiliates
      (other than the Seller or any of its Subsidiaries) in such Person’s capacity as
      an officer of the Seller, in each case, without the knowledge and approval
      of
      any officer of the Seller who was not appointed by Parent or any of its
      Affiliates other than the Seller.

     

    “ERISA”
      means the Employee Retirement Income Security Act of 1974, as
      amended.

     

    “Excluded
      Mann Affiliates” means the Persons listed on
Schedule 1.01(b).

     

    “Excluded
      Taxes” means (a) net income or similar Taxes of the Seller and
      (b) Taxes relating to the Excluded Assets or Excluded
      Liabilities.

     

    “FDA”
      means U.S. Food and Drug Administration.

     

    “Goldberg”
      means Jeffrey D. Goldberg.

     

    “Governmental
      Authority” means (a) any federal, national, supranational (for
      example, the European Community), state, provincial, local or other
      governmental, regulatory or administrative authority, (b) any court,
      tribunal or judicial body, or (c) any arbitral body whose decisions have similar
      force as decisions of any of the foregoing.

     

    “Governmental
      Order” means any order, writ, judgment, injunction, decree,
      stipulation, determination or award (whether temporary, preliminary or
      permanent) entered by or with any Governmental Authority.

     

    “Greiner”
      means Jeffrey H. Greiner.

     

    “HSR
      Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
      amended, and the rules and regulations promulgated thereunder.

     

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Indemnified
      Party” means a Purchaser Indemnified Party, a Company Indemnified Party
      or a Seller Indemnified Party, as the case may be.

     

    “Indemnifying
      Party” means a party obligated to provide indemnification pursuant to
Article X.

     

    “Inventory”
      means all inventory, including raw and packing materials, work-in-progress,
      finished goods, supplies, parts and similar items to the extent related to,
      used
      or held for use in connection with the Transferred Business.

     

    “Inventory
      Amount” means the value of the gross Inventory and the gross Inventory
      of the Drug Pump Business (as such terms are defined in the Drug Pump Purchase
      Agreement) as of December 31, 2007 (calculated in a manner consistent with
      the
      calculation of gross inventory as reflected on the June 30, 2007, balance sheet
      of the Seller in respect of the Transferred Businesses).

     

    “IP
      License Agreements” means the Company-Seller Auditory IP Cross License
      Agreement and the Scimed IP License Agreement.

     

    “Law”
      means any statute, law, ordinance, regulation, rule, code, order or requirement
      (including judicial requirements) of any Governmental Authority.

     

    “Leased
      Real Property” means the real property leased to the Seller pursuant to
      the leases set forth on Schedule 1.01(c), together with all
      buildings and other structures, facilities or improvements currently or
      hereafter located thereon, all fixtures, attached thereto, and all easements,
      licenses, rights and appurtenances relating to the foregoing.

     

    “Liabilities”
      means all debts, liabilities and obligations, whether accrued or fixed, absolute
      or contingent, matured or unmatured or determined or determinable, including
      those arising under any Law, Action or Governmental Order and those arising
      under any Contract.

     

    “LLC
      Agreement” means the Limited Liability Company Agreement of the Company
      between the Seller and the Purchaser, substantially in the form attached hereto
      as Exhibit G.

     

    “Losses”
      means losses, damages, claims, costs and expenses, interest, awards, judgments
      and penalties (including reasonable attorneys’ and consultants’ fees and
      expenses and other reasonable out-of-pocket expenses (including travel, meals,
      and lodging of employees, stockholders, or directors) incurred in investigating,
      preparing for, or defending the foregoing).

     

    “Mann”
      means Alfred E. Mann.

     

    “Mann-Controlled
      Earn Out Recipients” means each Earn Out Recipient that is either
      (a) a sibling of Mann, any child of Mann, or any spouse or child of any of
      the foregoing or (b) Mann’s spouse, (c) a Person that is controlled by
      Mann or (d) a Person controlled by anyone described in
clause (a) or (b).

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Member”
      means a Person that has been admitted as a member of the Company.

     

    “Membership
      Unit” shall have the meaning ascribed to such term in the LLC
      Agreement.

     

    “Operating
      Income Amount” means the amount of operating income of the Transferred
      Businesses for the six month period ended December 31, 2007 (calculated in
      a
      manner consistent with the calculation of operating income of the Transferred
      Businesses as set forth on Exhibit H); provided that any expenses
      of the Transferred Businesses that are Separation Costs (as defined in the
      Separation Agreement) allocated to the Company pursuant to the Separation
      Agreement will be disregarded for purposes of calculating the Operating Income
      Amount.

     

    “Parent
      Designated Affiliates” means the Affiliates of Parent listed on
Schedule 1.01(d).

     

    “Party”
      or “Parties” means the parties to this Agreement, which are
      Parent, Scimed, the Seller and the Purchaser.

     

    “Patents”
      means the invention disclosures listed on Schedule 1.01(e)(i) and
      the  patents and patent applications listed on
Schedule 1.01(e)(ii), including continuations,
      continuations-in-part, divisionals, re-examinations, corrections, extensions,
      reissues and supplementary protection certificates thereof or issuing therefrom
      and any foreign counterparts thereto.

     

    “Per
      Claim Threshold” means (a) $200,000 for Claims made before the
      Aggregate Threshold has been satisfied and (b) $100,000 for Claims made
      after the Aggregate Threshold has been satisfied.

     

    “Permits”
      means all permits, licenses, franchises, approvals, certificates, consents,
      waivers, concessions, exemptions, orders, registrations, notices or other
      authorizations issued to, or required to be obtained or maintained by, the
      Seller Parties or their Affiliates by a Governmental Authority solely with
      respect to the conduct or operation of the Transferred Business as currently
      conducted or the ownership or use of the Transferred Assets, and all pending
      applications therefor and amendments, modifications and renewals thereof,
      including the permits set forth on Schedule 1.01(f).

     

    “Person”
      means any individual, partnership, firm, corporation, limited liability company,
      association, trust, unincorporated organization or other entity, as well as
      any
      syndicate or group that would be deemed to be a person under
      Section 13(d)(3) of the Securities Exchange Act of 1934.

     

    “Personal
      Property” means all tangible personal property owned or leased by the
      Seller Parties or their Affiliates and Primarily related to, used or held for
      use in connection with the Transferred Business, including all machinery,
      equipment, furniture, furnishings, rolling stock, tools, office supplies,
      vehicles and computer hardware on Schedule 1.01(g).

     

     

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Prepaid
      Items” means all credits, cash reserves, prepaid expenses, advance
      payments, security deposits, escrows and other prepaid items of the Seller
      Parties or their Affiliates Primarily arising from or related to the Transferred
      Business.

     

    “Primarily”
      means, with respect to an asset, property or right of any kind or of any nature,
      deriving more than 50% of its use or providing more than 50% of its value to
      the
      Transferred Business; provided that, to the extent separable, only the
      portion of such asset, property or right that relates to the Transferred
      Business will be transferred or assigned hereunder, with the portion that does
      not relate to the Transferred Businesses being retained by the
      Seller.

     

    “Receivables”
      means all receivables (including accounts receivable, loans receivable, notes
      and advances) and other amounts receivable from third parties, including
      customers, to the extent arising from the conduct of the Transferred Business,
      whether or not in the ordinary course, together with any unpaid financing
      charges accrued thereon in respect of the collection of accounts receivables
      as
      of the date hereof.

     

    “Representatives”
      means, when used with respect to any Person, its directors, officers, employees,
      advisors, auditors, consultants, accountants, legal counsel, investment bankers
      and agents.

     

    “Retained
      Business” means the business of the Seller, other than the Transferred
      Business.

     

    “Scimed
      IP License Agreement” means the license to be executed between Scimed
      (as licensor) and the Company (as licensee) at the Closing, substantially in
      the
      form of Exhibit I.

     

    “Seller
      Parties” means Parent, Scimed and the Seller.

     

    “Separation
      Agreement” means the Separation and Transition Services Agreement among
      Parent, Scimed, the Seller, the Purchaser, the Stockholders’ Representative, the
      Trust, and once formed, the Company dated as of the date hereof.

     

    “Software”
      means all computer applications, operating programs, software, and databases
      in
      any form (including source and object code), including, Internet websites,
      web
      content and links, all versions, updates, corrections, enhancements, and
      modifications thereof, in each case, together with all related documentation,
      including, flow charts, diagrams, descriptive texts and programs, computer
      print-outs, underlying tapes, and similar items that are owned by the Seller
      or
      a Parent Designated Affiliate and Primarily used in the Transferred
      Business.

     

    “Subsidiaries”
      means, with respect to a Person, all corporations, partnerships, limited
      liability companies, joint ventures, associations and other entities controlled
      by such Person directly or indirectly through one or more
      intermediaries.

     

    “Tax”
      or “Taxes” means all taxes of any kind (together with all
      interest, penalties, additions to tax and additional amounts imposed with
      respect thereto) imposed by any Governmental Authority.

     

     

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “Tax
      Returns” means all returns, reports and forms (including elections,
      declarations, amendments, schedules, information returns or attachments thereto)
      required to be filed with a Governmental Authority with respect to
      Taxes.

     

    “Third
      Party Claim” means any Claim by any Person other than a Party or a
      Subsidiary of a Party.

     

    “Trade
      Receivables” means gross trade receivables (without reduction for bad
      debt or return allowances) on December 31, 2007, to the extent arising from
      the
      conduct of the Transferred Businesses (calculated in a manner consistent with
      the calculation of such trade receivables as reflected on the June 30, 2007,
      balance sheet of the Seller in respect of the Transferred
      Business).

     

    “Trade
      Secrets” mean all confidential business and technical information that
      has economic value by not being generally known, worldwide, including ideas,
      research and development, know-how, show-how, formulas, technology,
      compositions, manufacturing and production processes and techniques, technical
      data, engineering, production and other designs, plans, drawings, engineering
      and laboratory notebooks, industrial models, software, specifications,
      financial, marketing and business data, pricing and cost information, business
      and marketing plans and customer and supplier lists and information, in all
      cases that are owned by the Seller or the Parent Designated Affiliates and
      Primarily related to, used or held for use in connection with the Transferred
      Business.

     

    “Transferred
      Business” means the worldwide business of the Seller and the Parent
      Designated Affiliates consisting of researching, developing, manufacturing,
      distributing, marketing, selling, otherwise disposing of, importing and
      exporting neuromodulation products that are used or
      intended for use in auditory applications and all related product hardware,
      software, tools, accessories and services.

     

    “Transferred
      Businesses” means the Transferred Business and the Transferred Business
      as defined in the Drug Pump Purchase Agreement.

     

    “Transferred
      Contracts” means (a) all Contracts that relate solely to the
      Transferred Business, including the Contracts listed on
Schedule 1.01(h), (b) for all Contracts that do not relate
      solely to the Transferred Business, that portion of those Contracts that relate
      to the operation or conduct of the Transferred Business and (c) all bids,
      quotations and proposals for Contracts referred to in clauses (a) and
      (b).

     

    “Transferred
      Intellectual Property” means (a) Patents, (b) Copyrights, (c) Assigned
      Names and Marks, (d) Transferred IP Agreements, (e) Trade Secrets and (f)
      Software.

     

    “Transferred
      IP Agreements” means the licenses set forth on
Schedule 1.01(i).

     

    “Transferred
      Subsidiaries” means the Subsidiaries of Seller set forth on Schedule
      1.01(j).

     

    “Working
      Capital Amounts” means (a) the Accounts Payable Amount, (b) the
      Inventory Amount, and (c) the Trade Receivables.

     

     

     

     

     

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    SECTION
      1.02  Definitions.  The
      following terms have the meanings set forth in the Sections set forth
      below:

     

    
      	
              Definition

            	
              Location

            
	 	 
	
              “Accounting
                Firm”

            	
              3.03(a)

            
	
              “Aggregate
                Threshold”

            	
              10.03(a)

            
	
              “Agreement”

            	
              Preamble

            
	
              “Allocation
                Statement”

            	
              3.03(b)

            
	
              “Assumed
                Liabilities”

            	
              2.03(a)

            
	
              “Auditory
                Products”

            	
              7.06(a)

            
	
              “BSC
                401(k) Plan”

            	
              8.05(a)

            
	
              “Cash
                Bonus Plan”

            	
              8.02(a)

            
	
              “Cash
                Bonus Plan Recipients”

            	
              8.02(a)

            
	
              “Closing”

            	
              3.04

            
	
              “Closing
                Date”

            	
              3.04

            
	
              “Company”

            	
              Recitals

            
	
              “Company
                Indemnified Party”

            	
              10.01(b)

            
	
              “Excluded
                Assets”

            	
              2.02(b)

            
	
              “Excluded
                Liabilities”

            	
              2.03(b)

            
	
              “FAQs”

            	
              7.04(a)

            
	
              “Final
                Operating Income Amount”

            	
              3.02(a)

            
	
              “Final
                Working Capital Amounts”

            	
              3.02(a)

            
	
              “Inactive
                Transferred Employee

            	
              2.04

            
	
              “JAMS”

            	
              12.11(a)

            
	
              “Merger
                Agreement”

            	
              Recitals

            
	
              “Operating
                Income Amount Statement”

            	
              3.02(a)

            
	
              “Parent”

            	
              Preamble

            
	
              “Parent
                Neurostimulation Indications”

            	
              7.06(b)

            
	
              “Press
                Release”

            	
              7.04(a)

            
	
              “Purchase
                Price”

            	
              3.01

            
	
              “Purchaser”

            	
              Preamble

            
	
              “Purchaser
                Indemnified Party”

            	
              10.01(a)

            
	
              “Scimed”

            	
              Preamble

            
	
              “Seller”

            	
              Preamble

            
	
              “Seller
                Indemnified Party”

            	
              10.02(a)

            
	
              “Stockholders
                Representative”

            	
              Recitals

            
	
              “Transferred
                Assets”

            	
              2.02(a)

            
	
              “Transferred
                Employees”

            	
              2.04

            
	
              “Trust”

            	
              Recitals

            
	
              “Working
                Capital Amounts Statement”

            	
              3.02(a)

            
	 	 

    

     

     

     

    SECTION
      1.03  Other
      Interpretive Provisions.  Unless
      the express context otherwise requires:

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (a)  the
      words
“hereof,” “herein,” and “hereunder” and words of similar import, when used in
      this Agreement, will refer to this Agreement as a whole and not to any
      particular provision of this Agreement;

     

    (b)  the
      terms
      defined in the singular have a comparable meaning when used in the plural,
      and
      vice versa;

     

    (c)  the
      terms
“Dollars” and “$” mean United States Dollars;

     

    (d)  references
      herein to a specific Article, Section, Recital, Schedule or Exhibit will refer,
      respectively, to Articles, Sections, Recitals, Schedules or Exhibits of this
      Agreement;

     

    (e)  whenever
      the word “include,” “includes,” or “including” is used in this Agreement, it
      will be deemed to be followed by the words “without limitation”;

     

    (f)  references
      herein to any gender include each other gender;

     

    (g)  references
      herein to a Person in a particular capacity or capacities exclude such Person
      in
      any other capacity;

     

    (h)  references
      herein to any Contract (including this Agreement) mean such contract or
      agreement as amended, supplemented or modified from time to time in accordance
      with the terms thereof;

     

    (i)  with
      respect to the determination of any period of time, the word “from” means “from
      and including” and the words “to” and “until” each means “to but
      excluding”;

     

    (j)  references
      herein to any Law or Permit mean such Law or Permit as amended, modified,
      codified, reenacted, supplemented or superseded in whole or in part, and in
      effect from time to time;

     

    (k)  references
      herein to any Law will be deemed also to refer to all rules and regulations
      promulgated thereunder;

     

    (l)  whenever
      the words “transactions contemplated” are used in this Agreement, the word
“contemplated” will be deemed to be preceded by the word “expressly”;
      and

     

    (m)  all
      references to days or months will be deemed references to calendar days or
      months.

     

     

     

     

     

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    ARTICLE
      II.

    TRANSFER
      OF THE TRANSFERRED BUSINESS FROM THE SELLER TO THE COMPANY

     

     

    In
      connection with the Closing and as set forth below, the Seller will effect
      the
      following transactions:

     

    SECTION
      2.01  Formation
      of the Company.  As
      promptly as reasonably practicable upon the request of the Purchaser, the Seller
      will form the Company and will appoint Mann, Greiner and Goldberg as executive
      officers of the Company subject to the condition that such Persons agree to
      restrictions regarding the Company similar to those contained in Section
      7.01 regarding the Purchaser.  Upon formation of the Company, the
      authorized securities of the Company will consist of 1,000 Membership Units,
      880
      of which will be Class A Units and 120 of which will be Class B Units, and
      until
      the Closing and at the Closing, the Company will not have any other class or
      series of security authorized, issued or outstanding or reserved for
      issuance.  Upon formation of the Company and until the Closing,
      (a) the Seller will be the sole record and beneficial owner of all the
      Membership Units, (b) Parent and Parent’s Affiliates will cause the Company
      not to incur or assume any Liabilities or conduct any operations unless
      specifically requested by the Purchaser, and (c) there will be no options,
      warrants, convertible securities or other rights or, except as specifically
      requested by the Purchaser, Contracts to issue or sell to any Person other
      than
      the Purchaser any Membership Units, or to issue or sell to any Person other
      than
      the Purchaser any other interest in or to the Company (with the issuance of
      any
      such rights or interests being conditioned on the occurrence of the
      Closing).  Notwithstanding anything to the contrary in this Agreement,
      none of the Seller Parties will have any liability in respect of actions taken,
      or not taken by Mann, Greiner or Goldberg as officers of the
      Company.

     

    SECTION
      2.02  Transferred
      Assets and Excluded Assets.

     

    (a)  Immediately
      prior to the Closing, the Seller and the Company will, and Parent will cause
      the
      Parent Designated Affiliates to, execute and deliver the Bill of Sale and
      Assignment Agreement, the Assumption Agreement, the Assignment of Leases, the
      Cochlear Patent Assignment and the Cochlear Trademark Assignment, pursuant
      to
      which the Seller will assign, convey, transfer and deliver, or cause to be
      assigned, conveyed, transferred and delivered, to the Company, and the Company
      will acquire and assume, all of the Seller’s and the Parent Designated
      Affiliates’ right, title and interest, direct or indirect, in, to and under all
      the Transferred Assets, in each case free and clear of any
      Encumbrances.  The “Transferred Assets” means (x)
      whether or not listed in clause (y) of this Section 2.02(a), except for
      Patents, Assigned Names and Marks and Transferred IP Agreements, any and all
      assets, properties and rights of the Seller and the Parent Designated Affiliates
      of every nature, kind and description, whether tangible or intangible, real,
      personal or mixed, accrued or contingent (including goodwill), wherever located
      and whether now existing or hereafter acquired prior to the Closing Date,
      Primarily related to, or Primarily used or held for use in connection with
      the
      Transferred Business, whether or not carried or reflected on or specifically
      referred to in the Seller’s books or financial statements, other than the
      Excluded Assets plus (y) all of the Seller’s and the Parent Designated
      Affiliates’ right, title and interest in, to and under the following, other than
      the Excluded Assets:

     

     

     

     

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (i)  all
      the
      Transferred Contracts;

     

    (ii)  all
      the
      Transferred Intellectual Property;

     

    (iii)  all
      the
      Receivables;

     

    (iv)  originals
      of all Books and Records that are associated with or employed by the Seller
      or
      the Parent Designated Affiliates solely in the conduct of the Transferred
      Business and copies of all Books and Records of the Seller that are associated
      with or employed by the Seller or the Parent Designated Affiliates in the
      conduct of the Transferred Business, but not solely so;

     

    (v)  all
      Personal Property;

     

    (vi)  all
      rights in respect of the Leased Real Property;

     

    (vii)  all
      sales
      and promotional literature and other sales-related materials, in each case,
      Primarily related to, used or held for use in the Transferred
      Business;

     

    (viii)  to
      the
      extent transferable in accordance with applicable Law, all Permits;

     

    (ix)  all
      goodwill, going concern value and other intangible assets of the Seller or
      the
      Parent Designated Affiliates to the extent related to the Transferred Business,
      including any goodwill associated with any of the Assigned Names and
      Marks;

     

    (x)  all
      Claims against any Person to the extent related to the Transferred Business,
      the
      Transferred Assets or the Assumed Liabilities, pertaining to, arising out of
      or
      inuring to the benefit of any of the Seller or the Parent Designated Affiliates
      including (A) all rights under any Transferred Contract, including all
      rights to receive payment for products sold and services rendered thereunder,
      to
      receive goods and services thereunder, to assert Claims and to take other
      rightful actions in respect of breaches, defaults and other violations thereof,
      (B) all rights under the Transferred IP Agreements, including all rights to
      sue and recover damages for past, present and future infringement, dilution,
      misappropriation, violation, unlawful imitation or breach thereof, and all
      rights of priority and protection of interests therein under the laws of any
      jurisdiction and (C) all rights under guarantees, warranties, indemnities
      to the extent arising from or related to the Transferred Business, the
      Transferred Assets or the Assumed Liabilities;

     

    (xi)  the
      insurance policy of the Seller its Affiliates set forth on
Schedule 2.02(a)(xi) and all rights related to the Transferred
      Business with respect thereto, including all insurance recoveries thereunder
      and
      rights to assert Claims with respect to any such insurance
      recoveries;

     

    (xii)  all
      Inventory;

     

    (xiii)  all
      Prepaid Items;

     

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (xiv)  all
      assets for personal use (e.g., cell phones, personal computers and Blackberrys)
      Primarily used by the Transferred Employees;

     

    (xv)  all
      equity interests in and to the Transferred Subsidiaries;

     

    (xvi)  all
      assets, properties and rights that are acquired by the Seller between the date
      hereof and the Closing for the Transferred Business in accordance with Section
      1
      of the Separation Agreement;

     

    (xvii)  the
      Drug
      Eluting Electrode Contracts; and

     

    (xviii)  all
      assets, properties and rights listed on
Schedule 2.02(a)(xviii).

     

    (b)  Notwithstanding
      anything set forth in Section 2.02(a) to the contrary, the
      Transferred Assets will not include any of the following (the “Excluded
      Assets”):

     

    (i)  cash
      and
      cash equivalents, securities, and negotiable instruments of the Seller on hand,
      in lock boxes, in financial institutions or elsewhere, including all cash
      residing in any collateral cash account securing any obligation or contingent
      obligation of the Seller or any Affiliate; provided, that the Prepaid
      Items will not be Excluded Assets;

     

    (ii)  any
      rights to Tax refunds, credits or similar benefits (other than any Tax Refunds,
      credits or similar benefits with respect to Taxes described in Section
      2.03(a)(v);

     

    (iii)  the
      original organizational documents, minute and stock record books, books of
      account, general, financial, Tax and personnel records (including any Tax
      Returns of the Seller or otherwise related to the Transferred Assets), invoices
      and the corporate seals of the Seller; provided, that this clause will
      not be interpreted to limit the Company’s right to copies of Books and Records
      as provided in Section 2.02(a)(iv);

     

    (iv)  the
      rights of the Seller or any of its Affiliates that is a Party under this
      Agreement, any Ancillary Agreement, the Merger Agreement, the Amendment
      Agreement, the Drug Pump Purchase Agreement, or any other agreement executed
      in
      connection with the transactions contemplated hereby and thereby;
provided, that all rights of the Company under the foregoing Contracts
      will be enforceable by the Company or the Purchaser; and

     

    (v)  the
      product warranty reserve attributable to the Transferred Business.

     

    SECTION
      2.03  Assumed
      Liabilities and Excluded Liabilities.  (a) At
      the Closing, the Company will assume and agree to pay, perform and discharge
      when due, all Liabilities whether arising prior to or after the Closing, of
      the
      Seller and the Parent Designated Affiliates to the extent relating to the
      Transferred Business or the Transferred Assets, other than the Excluded
      Liabilities set forth in Section 2.03(b) below (the “Assumed
      Liabilities”), including the following:

     

    (i)  except
      as
      otherwise provided herein or as provided in the Separation Agreement, all
      Liabilities in respect of the Transferred Employees including accrued vacation,
      sick leave and worker’s compensation Claims (other than any Liabilities owed to
      Mann, Greiner or any other employee of the Seller created by Parent without
      the
      knowledge and acquiescence of Mann, Greiner or Goldberg);

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    (ii)  all
      Liabilities arising from any Actions of the Seller or the Parent Designated
      Affiliates to the extent such Actions arise from the conduct of the Transferred
      Business;

     

    (iii)  all
      Liabilities to the extent relating to the manufacturing, design and distribution
      of products of the Transferred Business, including in respect of HiRes 90K
      cochlear implants that contain the feedthrus made by Astro Seal;

     

    (iv)  all
      accounts payable to the extent relating to the Transferred Business or the
      Transferred Assets;

     

    (v)  all
      Liabilities arising from any non-compliance with Law, including any Law
      promulgated or enforced by the FDA or any equivalent non-US Governmental
      Authority or notified body, to the extent such Liabilities arise from the
      conduct of the Transferred Business, and any fines, penalties, or similar
      consequences of enforcement by the FDA or such other equivalent Person to the
      extent arising from the conduct of the Transferred Business; and

     

    (vi)  subject
      to Section 7.10, all Taxes related to the Transferred Assets other
      than Excluded Taxes.

     

    (b)  Notwithstanding
      anything set forth in Section 2.03(a) or any other provision of this
      Agreement or the Ancillary Agreements to the contrary, and regardless of any
      disclosure to the Company or the Purchaser, the Seller will retain, and will
      be
      responsible for paying, performing and discharging when due, and the Company
      will not assume, be obligated to pay, perform or otherwise discharge or have
      any
      responsibility for, the following Liabilities, whether arising prior to, at
      or
      after the Closing (the “Excluded Liabilities”):

     

    (i)  all
      Excluded Taxes;

     

    (ii)  all
      Liabilities to the extent relating to the Excluded Assets, the Retained Business
      or any business of Parent or its Affiliates other than the Transferred
      Business;

     

    (iii)  obligations
      of the Seller or any of its Affiliates under this Agreement, any Ancillary
      Agreement, the Merger Agreement, the Amendment Agreement, the Drug Pump Purchase
      Agreement or any other agreement executed in connection with the transactions
      contemplated hereby and thereby;

     

    (iv)  except
      as
      otherwise provided herein or as provided in the Separation Agreement,
      Liabilities relating to Employee Plans, including (A) Liabilities for bonuses
      to
      Transferred Employees and other employees of the Seller Parties under the
      Seller’s 2007 Performance Incentive Plan and (B) Liabilities owed to Mann,
      Greiner or any other employee of the Seller by Parent or any of its Affiliates
      other than the Seller and its Subsidiaries;

     

    
      
        
        

      

      
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    (v)  any
      Liability incurred by the Seller or any of its Affiliates arising out of or
      relating to the negotiation and preparation of this Agreement and the Ancillary
      Agreements and other agreements executed in connection with the transactions
      contemplated hereby and thereby;

     

    (vi)  any
      Liability arising out of any Contract entered into by Parent or its Affiliates
      (other than the Seller or the Parent Designated Affiliates) in respect of the
      Transferred Business and without the knowledge and approval of any officer
      of
      the Seller who was not appointed by Parent or any of its Affiliates (other
      than
      the Seller) except to the extent set forth on Schedule 4.08 or to
      the extent that the Purchaser elects in writing to assume such Liability and
      receive the benefit of the corresponding Contract; and

     

    (vii)  all
      Liabilities described in Section 7.11.

     

    SECTION
      2.04  Transferred
      Employees.  At
      or prior to the Closing, the Company will make offers to employ the
      employees of the Seller Parties set forth on Schedule 2.04 (the
“Transferred Employees”) if they are active employees of the
      Seller on the Closing Date, at the same base salary that they received from
      the
      Seller as of the Closing Date, and at the Closing, the Parties will cause the
      employment of such Transferred Employees who accept such offer to be transferred
      to the Company and the employment of such Transferred Employees with any Seller
      Party will terminate at such time; provided that Schedule 2.04 will be
      updated prior to the Closing to reflect any terminations of Transferred
      Employees or hires of new employees for the Transferred Business following
      the
      date hereof.  If a Transferred Employee who is not actively employed
      with the Seller as of the Closing (each an “Inactive Transferred
      Employee”) returns to active employment, the Company will have the
      option to make an offer of employment to such individual.  If the
      Company exercises such option, the Parties will cause the employment of such
      Inactive Transferred Employee to be transferred to the Company upon such
      Inactive Transferred Employee’s return to active employment.  If the
      Company elects not to make an offer of employment to any Inactive Transferred
      Employee upon his or her return, the Seller will cause the employment of such
      Inactive Transferred Employee to be terminated, and the Company will reimburse
      the Seller for the actual severance costs incurred by the Seller in terminating
      such Inactive Transferred Employee, but only to the extent such costs are no
      greater than the costs pursuant to the Seller’s severance plan in effect as of
      the date hereof; if any such Inactive Transferred Employee commences an Action
      such Action will be treated as a Third Party Claim indemnifiable under Section
      10.02(b)(i) as an Assumed Liability under Section
      2.03(b)(i).  Transferred Employees who are not “actively employed with
      the Seller” include Transferred Employees who are receiving payments under
      Parent’s or the Seller’s short-term or long-term disability plans, as well as
      Transferred Employees whose employment with the Seller has been terminated
      between the date hereof and the Closing Date.  This
Section 2.04 does not provide any rights whatsoever to any
      Transferred Employee.

     

    SECTION
      2.05  Third
      Party Consents.  Nothing
      in this Agreement or the Ancillary Agreements will be construed as an agreement
      to assign any Transferred Contract or other Transferred Asset that by its terms
      or pursuant to applicable Law is not capable of being sold, assigned or
      transferred without the consent or waiver of a third party or Governmental
      Authority or without the expiration or termination of any waiting period under
      any non-U.S. Law applicable to the transactions contemplated by this Agreement
      unless and until such consent or 

     

     

    
      
        
        

      

      
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    waiver
      is
      given or such waiting period has expired or terminated.  The Parties
      will use their commercially reasonable efforts, and will cooperate reasonably
      with each other, to obtain such consents and waivers, to cause such expiration
      or termination of any such waiting period, if any, and to resolve the
      impediments to the assignment or transfer contemplated by this Agreement or
      the
      Ancillary Agreements and to obtain any other consents and waivers or to cause
      the expiration or termination of any other waiting periods, if any, that are
      necessary to convey to the Company all of the Transferred Assets.  In
      the event such consents or waivers are not obtained or such waiting periods,
      if
      any, have not expired or terminated prior to the Closing Date, the Parties
      will
      continue to use their commercially reasonable efforts to obtain the relevant
      consents or waivers or cause the expiration or termination of such waiting
      periods until such consents or waivers are obtained or such waiting periods
      have
      expired or terminated.  The Seller will cooperate with the Company in
      any lawful, contractually permitted and economically feasible arrangement to
      provide that the Company will receive the interest of the Seller in the benefits
      under any such Transferred Contract or other Transferred Asset, including
      performance by the Seller, if economically feasible, as agent; provided
      that the Company will undertake to pay or satisfy the corresponding Liabilities
      for the enjoyment of such benefit to the extent the Company would have been
      responsible therefor if such consents or waivers had been obtained or such
      waiting periods had expired or had been terminated.

     

    SECTION
      2.06  Disputed
      Assets and Liabilities.

     

    (a)  Notwithstanding
      anything contained in this Agreement or any Ancillary Agreement to the contrary,
      to the extent the Parties discover prior to the first anniversary of the Closing
      Date that any asset, property, interest or right was intended to be acquired
      by
      the Company pursuant to this Agreement, but was not transferred to the Company
      immediately prior to the Closing, the Seller Parties will, or will cause their
      Affiliates to, promptly assign and transfer to the Company all right, title
      and
      interest in, to and under such asset, property, interest or right, free and
      clear of all Encumbrances for no additional consideration, and such asset,
      property, interest or right will be deemed a Transferred Asset for all purposes
      of this Agreement and the Ancillary Agreements.  Notwithstanding
      anything contained in this Agreement or the Ancillary Agreements to the
      contrary, to the extent the Parties discover prior to the first anniversary
      of
      the Closing Date that any asset, property, interest or right was intended to
      be
      retained by the Seller pursuant to this Agreement, but was transferred to the
      Company immediately prior to the Closing, the Purchaser and the Company will,
      or
      will cause their Affiliates to, promptly assign and transfer to the Seller
      all
      right, title and interest in such asset, free and clear of all encumbrances
      (other than encumbrances that existed at the time such asset, property, interest
      or right was transferred to the Company), and such asset, property, interest
      or
      right will not be deemed a Transferred Asset for any purpose of this Agreement
      or the Ancillary Agreements.

     

    (b)  If,
      based
      on Section 2.06(a), the Seller believes that it is entitled to have
      an  asset, property, interest or right returned to it, or the
      Purchaser believes that it is entitled to have an asset, property, or right
      transferred to the Company, then the applicable Party will notify the other
      Parties of that belief.  If the Parties are unable to resolve the
      matter within three Business Days of the date of that notice, then the matter
      will be referred to Peter Nicholas (or any other individual designated by
      Parent) and Mann (or any other individual designated by
      Purchaser).  If Nicholas and Mann (or the Parties’ alternative
      designees) do not resolve the matter within ten 

     

     

     

     

    
      
        
        

      

      
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    Business
      Days of the date of the original notice raising the matter, then any Party
      may
      immediately refer the matter to arbitration pursuant to Section
      12.11.

     

    SECTION
      2.07  Company’s
      Right to Enforce Transfer of Transferred Assets.  The
      Parties acknowledge and agree that the transfer of the Transferred Assets to
      the
      Company by the Seller and the Parent Designated Affiliates occurring immediately
      prior to the Closing is being made in exchange for the Class A Units and Class
      B
      Units and that the Class A Units are being sold to the Purchaser at the Closing
      in accordance with the terms of this Agreement.  The Parties
      acknowledge and agree that the Company has the right to enforce the Bill of
      Sale
      and Assignment Agreement against Scimed and Parent pursuant to Section
      10.01(a)(ii) and as otherwise in accordance with the terms of this Agreement
      and the Seller Parties irrevocably waive any right to contest the Company’s
      enforcement of the Bill of Sale and Assignment on the grounds of a failure
      of
      consideration, on the grounds that the Company may not bring an Action against
      the Person who formed it, on the grounds that the Company may not bring an
      Action against its Member, or on other similar grounds.  For the
      avoidance of doubt, nothing in this Section 2.07 will prevent the
      Seller Parties from asserting that a particular asset, property, or right should
      not have been transferred to the Company because that particular asset,
      property, or right was not intended to be transferred under this
      Agreement.

     

     

    ARTICLE
      III.

    THE
      PURCHASE AND SALE OF THE CLASS A UNITS

     

    SECTION
      3.01  Purchase
      and Sale.  At
      the Closing, the Seller will sell, assign, transfer, convey and deliver to
      the
      Purchaser the Class A Units and the Purchaser will purchase and accept the
      Class
      A Units for cash in the amount of $130,000,000 (the “Purchase
      Price”).

     

    SECTION
      3.02  Operating
      Income and Working Capital Amounts and Other
      Amounts.

     

    (a)  Within
      30
      Business Days after the Closing, the Seller will calculate and prepare a
      statement of the Operating Income Amount (the “Operating
      IncomeAmount Statement”) and a statement of the
      Working Capital Amounts (the “Working Capital Amounts
      Statement”) and deliver such Closing Statements to the
      Purchaser.  During the 30 Business Days immediately following the
      Closing, the Seller will be permitted to review the Books and Records of the
      Company relating to the Operating Income Amount and the Working Capital Amounts
      with respect to the period up to and including the Closing Date, and the Company
      shall make reasonably available the individuals in its employ who are
      responsible for and knowledgeable about the information relating to the
      Operating Income Amount and the Working Capital Amounts.  Following
      completion of the Closing Statements, the Purchaser will have the right to
      review the Closing Statements and the work papers pertaining
      thereto.  The calculation of the Operating Income Amount set forth in
      the Operating Income Amount Statement and the calculation of the Working Capital
      Amount set forth in the Working Capital Amount Statement will be final and
      binding for purposes of determining the Operating Income Amount and the Working
      Capital Amounts, respectively, unless the Purchaser provides written notice
      of a
      disagreement therewith to the Seller within 45 days after the delivery to the
      Purchaser of the 

     

     

     

     

     

    
      
        
        

      

      
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    Closing
      Statements.  Any disagreement with respect to the Closing Statements
      will be resolved in accordance with Section 3.02(c).  The
      Operating Income Amount as finally resolved pursuant to this
Section 3.02 is referred to herein as the “Final Operating
      IncomeAmount,” and the Working Capital Amounts as
      finally resolved pursuant to this Section 3.02 are referred to
      herein as the “Final Working Capital Amounts.”

     

    (b)  
       (i)
      If
      the Final Operating Income Amount reflects a loss of more than $5,339,000,
      the
      Company will pay to the Seller the amount by which such loss exceeds $5,339,000,
      and if the Final Operating Income Amount reflects a loss of less than
      $5,339,000, the Seller will pay to the Purchaser the difference between
      $5,339,000 and the amount of such loss.  If the Final Operating Income
      Amount reflects income, the Seller will pay to the Company $5,339,000 plus
      the
      amount of such income.

     

    (ii)  If
      the
      Accounts Payable Amount is less than 95% of the Accounts Payable Target, the
      Company will pay the amount of such difference to the Seller, and if the
      Accounts Payable Amount is greater than 105% of the Accounts Payable Target,
      the
      Seller will pay the amount of such excess to the Purchaser.

     

    (iii)  If
      the
      Inventory Amount is greater than $27,804,000, the Company will pay the amount
      of
      such excess to the Seller, and if the Inventory Amount is less than $25,156,000,
      the Seller will pay the amount of such shortfall to the Company.

     

    (iv)  If
      the
      Trade Receivables are greater than the Trade Receivables that would exist as
      of
      December 31, 2007, if the Days of Sales Outstanding was 90, the Company will
      pay
      the amount of such difference to the Seller, and if the Trade Receivables are
      less than the Trade Receivables that would exist as of December 31, 2007 if
      the
      Days of Sales Outstanding was 110, the Seller will pay the amount of such
      difference to the Purchaser.

     

    Payments
      to be made pursuant to this Section 3.02(b) will be made within two
      Business Days of the date of the determination of the Final Operating Income
      Amount or the Final Working Capital Amounts, as applicable, by wire transfer
      of
      immediately available funds to an account designated by the Seller or the
      Purchaser as applicable.  The Parties will cooperate and assist each
      other, in all reasonable respects, in the calculations and procedures described
      in this Section 3.02(b).

     

    (c)  Any
      notice of disagreement provided pursuant to Section 3.02(a) will
      specify, in reasonable detail, the nature and extent of such disagreement,
      and
      the basis for such disagreement.  If the Purchaser and the Seller are
      unable to resolve any such disagreement within 30 calendar days after receipt
      by
      the Seller of the notice provided for in Section 3.02(a), then
      either the Purchaser or the Seller may immediately refer the matter to
      arbitration pursuant to Section 12.11.

     

    (d)  (i)
      The
      Company will promptly after (but in any event within two Business Days of)
      the
      Closing Date pay to the Seller the aggregate amount of any payments made by
      Parent or any of its Affiliates in respect of Claims by third parties relating
      to the manufacture, design and/or distribution of HiRes 90K cochlear implants
      that contain the 

     

     

     

    
      
        
        

      

      
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    feedthrus
      made by Astro Seal to the extent that such aggregate amount exceeds the product
      of the total number of such Claims paid by Parent or any of its Affiliates
      multiplied by $45,000.

     

    (ii)           If,
      prior to the Closing Date, Mann or Greiner approves the Seller’s payment of any
      fines, monetary penalties or similar consequences of enforcement to the FDA
      or
      any equivalent non-U.S. Governmental Authority or notified body, the total
      amount of such payment will be reflected as an operating expense in the Final
      Operating Income Amount.  Parent, the Seller and the Purchaser will
      cooperate with each other in promptly resolving any Claim by the FDA (or such
      equivalent Person), and will keep each other informed as to the status of
      discussions between the FDA (or such equivalent Person) and such
      Party.

     

    (e)           On
      March 6, 2009, the Seller will pay to the Company $7.1 million by wire transfer
      of immediately available funds to a bank account designated by the
      Company.

     

    SECTION
      3.03  Tax
      Treatment; Purchase Price Allocation.

     

    (a)  The
      Parties acknowledge and agree that, for U.S. federal income Tax purposes, they
      will treat and report the transactions contemplated under this Agreement as
      (i) a sale of a proportionate interest in each of the Transferred Assets to
      the Purchaser, followed by a contribution of such proportionate interests in
      the
      Transferred Assets to the Company in exchange for the Class A Units, and
      (ii) a contribution by the Seller of a proportionate interest in each of
      the Transferred Assets to the Company in exchange for the Class B Units, in
      each
      case, in accordance with Revenue Ruling 99-5, 1999-1 C.B. 434 (and, to the
      extent applicable, such treatment will govern for U.S. state and local and
      non-U.S. Tax purposes).

     

    (b)  The
      Parties will negotiate and cooperate in good faith after the Closing Date to
      prepare an allocation statement (the “Allocation Statement”)
      setting forth the allocation of the Purchase Price and the Assumed Liabilities
      among the Transferred Assets in accordance with section 1060 of the
      Code.  Within 30 days after the Closing, the Purchaser will deliver to
      the Seller a draft Allocation Statement, but such draft Allocation Statement
      provided by the Purchaser will not be presumed to be correct.  If the
      Parties do not resolve any disputes with respect to the Allocation Statement
      within 60 days after the Closing Date, then any Party may immediately refer
      the
      disputed items to arbitration pursuant to Section 12.11.  Any
      subsequent adjustments to the sum of the Purchase Price and the Assumed
      Liabilities will be allocated among the Transferred Assets in a manner
      consistent with the Allocation Statement.  For all Tax purposes, the
      Purchaser and the Seller agree that the transactions contemplated by this
      Agreement will be reported in a manner consistent with the Allocation Statement
      and the Purchase Price (as set forth in Section 3.01), and that
      neither of them (nor any Affiliate thereof) will take any position inconsistent
      therewith in any Tax Return, in any refund request, in any litigation, or
      otherwise, except as otherwise required by a final determination (as defined
      in
      section 1313 of the Code or any comparable provision of state or local
      law).  Each of the Seller and the Purchaser agrees to cooperate with
      the other in preparing IRS Form 8594 (or other forms required to be filed with
      a
      Governmental Authority), and to furnish the other with a copy of such form
      prepared in draft form within a reasonable period before the relevant filing
      due
      date.  The Purchaser and the Seller will promptly inform one another
      in writing of any challenge by any Governmental Authority to any allocation
      made
      pursuant to this Section 3.03(b) or to the Purchase Price (as set
      forth in Section 3.01) and agree to consult with and keep one
      another

     

     

     

     

     

    
      
        
        

      

      
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    informed
      with respect to the status of, and any discussion, proposal or submission with
      respect to, such challenge; provided, that each Party will have the sole
      right  to control the conduct of a challenge to
      any  allocation made pursuant to this Section 3.03(b),
      including the settlement or compromise thereof; provided, further,
      that each Party shall have the right to control the conduct of a challenge
      to
      the Purchase Price but shall not settle or compromise such challenge without
      the
      consent of the other Party (such consent not to be unreasonably
      withheld).

     

    SECTION
      3.04  Closing.  Consummation
      of the sale of the Class A Units to the Purchaser contemplated by this Agreement
      will take place at a closing (the “Closing”) to be held at the
      offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York
      and will be effective at 12:01 a.m. New York time on either
      (a) January 3, 2008 or (b) the third Business Day following the
      satisfaction or waiver of the conditions to the obligations of the Parties
      set
      forth in Article IX, whichever is later (the “Closing
      Date”).

     

    SECTION
      3.05  Closing
      Deliveries.

     

    (a)  The
      Seller Parties.  At the Closing, the Seller Parties will deliver,
      or cause to be delivered, to the Purchaser the following:

     

    (i)  a
      certificate evidencing the Class A Units, duly endorsed for transfer to the
      Purchaser;

     

    (ii)  a
      receipt
      for the cash Purchase Price;

     

    (iii)  executed
      counterparts of each Ancillary Agreement to which the Company or a Seller Party
      is a party;

     

    (iv)  a
      certificate as to the non-foreign status of the Seller pursuant to
      Section 1.1445-2(b)(2) of the U.S. Treasury Regulations;

     

    (v)  certified
      resolutions of the Board of Directors of each of the Seller Parties authorizing
      the transactions contemplated by this Agreement and the Ancillary
      Agreements;

     

    (vi)  a
      duly
      executed certificate of the secretary or assistant secretary of each of the
      Seller Parties as to incumbency and specimen signatures of officers of the
      Seller Parties executing this Agreement and to the Ancillary
      Agreements;

     

    (vii)  all
      original Books and Records (including organizational documents) of the
      Company;

     

    (viii)  the
      certificate required by Section 9.03;

     

    (ix)  certificates
      of good standing of the Company and the Seller from the Secretary of State
      of
      the State of Delaware, and comparable certificates, if available in the relevant
      jurisdiction, of good standing from the jurisdictions applicable to the Parent
      Designated Affiliates;

     

     

     

     

    
      
        
        

      

      
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    (x)  certificates
      representing the shares or other applicable securities of the Transferred
      Subsidiaries duly endorsed in blank, or accompanied by stock powers duly
      executed in blank;

     

    (xi)  certified
      resolutions of the managing member of the Company authorizing the transactions
      contemplated by this Agreement and the Ancillary Agreements, as applicable;
      and

     

    (xii)  such
      other bills of sale, assignments and other instruments of assignment, transfer
      or conveyance, in form and substance reasonably satisfactory to the Purchaser
      and the Seller Parties, as the Purchaser may reasonably request or as may be
      otherwise necessary (A) to evidence and effect the sale, assignment,
      transfer, conveyance and delivery of the Transferred Assets to the Company
      and
      the Class A Units to the Purchaser and (B) to put the Company in actual
      ownership, possession or control of the Transferred Assets, in each case duly
      executed by the Seller.

     

    (b)  The
      Purchaser.  At the Closing, the  Purchaser will deliver
      or will cause to be delivered to the Seller the following:

     

    (i)  cash,
      payable in immediately available funds by wire transfer to an account designated
      by the Seller (such account to be designated not fewer than two Business Days
      prior to the anticipated Closing Date) equal to the amount of the Purchase
      Price;

     

    (ii)  counterparts
      of each Ancillary Agreement executed by the Purchaser;

     

    (iii)  certified
      resolutions of the Board of Directors of the Purchaser authorizing the
      transactions contemplated by this Agreement and the Ancillary
      Agreements;

     

    (iv)  a
      duly
      executed certificate of the secretary of the Purchaser as to incumbency and
      specimen signatures of officers or authorized Persons of the Purchaser executing
      this Agreement and the Ancillary Agreements;

     

    (v)  the
      certificate required by Section 9.02;

     

    (vi)  a
      certificate of good standing of the Purchaser from the Secretary of State of
      the
      State of California; and

     

    (vii)  such
      other documents, in form and substance reasonably satisfactory to the Purchaser
      and the Seller Parties, as the Seller may reasonably request or as may be
      otherwise necessary to evidence and effect the assignment and assumption by
      the
      Company of the Assumed Liabilities.

     

     

     

    
      
        
        

      

      
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    ARTICLE
      IV.

    REPRESENTATIONS
      AND WARRANTIES OF
      THE SELLER PARTIES

     

     

    Each
      of
      the Seller Parties hereby represents and warrants, jointly and severally, to
      the
      Purchaser, as follows:

     

    SECTION
      4.01  Organization
      and Authority.  Each
      of the Seller Parties is a corporation duly organized, validly existing and
      in
      good standing under the laws of its jurisdiction of incorporation and has all
      necessary corporate power and authority to execute and deliver this Agreement
      and the Ancillary Agreements to which it is a party, to carry out its
      obligations hereunder and thereunder, to consummate the transactions
      contemplated hereby and thereby.  The execution and delivery of this
      Agreement and, as applicable, the Ancillary Agreements by each of the Seller
      Parties, the performance by the Seller Parties of each of their obligations
      hereunder and, as applicable, thereunder and the consummation by the Seller
      Parties and their Affiliates of the transactions contemplated hereby and, as
      applicable, thereby have been duly and validly authorized by all requisite
      corporate action on the part of each of the Seller Parties and their Affiliates,
      and no other corporate proceedings on the part of any of the Seller Parties
      or
      their Affiliates are necessary to authorize this Agreement, the Ancillary
      Agreements or to consummate the transactions contemplated hereby and
      thereby.  This Agreement has been, and, upon their execution the
      Ancillary Agreements will have been, duly and validly executed and delivered
      by
      each of the Seller Parties, as applicable, and (assuming due authorization,
      execution and delivery by the Purchaser) this Agreement constitutes, and, upon
      their (and, as applicable, the Company’s) execution the Ancillary Agreements
      will constitute, legal, valid and binding obligations of the Seller Parties,
      enforceable against each of the Seller Parties in accordance with their
      respective terms.

     

    SECTION
      4.02  Organization
      and Authority of the Company.  At
      the Closing, the Company will be a limited liability company duly organized,
      validly existing and in good standing under the laws of Delaware and will have
      all necessary power and authority to execute and deliver the Ancillary
      Agreements to which it is a party, to carry out its obligations thereunder
      and
      to consummate the transactions contemplated hereby and thereby.  The
      execution and delivery by the Company of the Ancillary Agreements to which
      it is
      a party, the performance by the Company of its obligations thereunder and the
      consummation by the Company of the transactions contemplated thereby will,
      at
      the Closing, have been duly authorized by all requisite action on the part
      of
      the Company and its Member, and no other proceedings on the part of the Company
      and its Member will be necessary to authorize the Ancillary Agreements to which
      it is a party or to consummate the transactions contemplated
      thereby.  Upon their execution the Ancillary Agreements to which it is
      a party will have been duly and validly executed and delivered by the Company
      and upon their execution the Ancillary Agreements will constitute legal, valid
      and binding obligations of the Company, enforceable against the Company in
      accordance with their respective terms.

     

    SECTION
      4.03  No
      Conflict.  Other
      than all pre-merger filings and notifications required under the HSR Act or
      any
      other similar non-U.S. Law, and the expiration or termination of any applicable
      waiting period thereunder and except as may result from any 

     

     

     

    
      
        
        

      

      
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    facts
      or
      circumstances relating solely to the Purchaser, the execution, delivery and
      performance by the Seller Parties or their Affiliates of this Agreement and,
      as
      applicable, the Ancillary Agreements to which it is a party and the execution,
      delivery and performance by the Company of the Ancillary Agreements to which
      it
      is a party do not and will not (a) violate, conflict with or result in the
      breach of any provision of the certificate of incorporation or bylaws of any
      of
      the Seller Parties or (b) conflict with or violate any Law applicable to
      the Seller Parties or by which any property or asset of Parent or Scimed is
      bound or affected, (c) result in any breach of, or constitute a default (or
      an event which, with notice or lapse of time or both, would become a default)
      under, or give to others any rights of termination, modification, amendment,
      acceleration or cancellation of, give rise to any increased, guaranteed,
      accelerated or additional rights or entitlements of any Person, or result in
      the
      creation of a lien or other encumbrance on any property or asset of Parent
      or
      Scimed pursuant to, any Contract to which Parent or Scimed is a party or by
      which Parent or Scimed or any property or asset of any of them is bound or
      affected, or (d) require any consent, approval, authorization or permit of,
      or filing with or notification to, any Governmental Authority, except, in the
      case of clause (b), (c) or (d), for any such
      conflicts, violations, breaches, defaults or other occurrences that would not,
      individually or in the aggregate, prevent or materially delay consummation
      of
      any of the transactions contemplated by this Agreement, and as applicable,
      the
      Ancillary Agreements, or otherwise prevent any of the Seller Parties or their
      Affiliates from performing its obligations hereunder and
      thereunder.

     

    SECTION
      4.04  Capitalization;
      Ownership of Membership Units.  Upon
      formation of the Company and until the Closing occurs, the authorized Membership
      Units of the Company will consist of 1,000 Membership
      Units.  Immediately after giving effect to the Closing (a) 1,000
      Membership Units will be issued and outstanding, all of which will be validly
      issued, (b) 880 Class A Units will be owned of record and beneficially by
      the Purchaser, free and clear of all encumbrances and (c) 120 Class B Units
      will be owned of record and beneficially by the Seller.  There are no
      options, warrants, convertible securities or other Contracts relating to the
      Membership Units or obligating either the Seller or the Company to issue or
      sell
      any Membership Units, or any other interest, in the Company.

     

    SECTION
      4.05  Assets
      and Liabilities of the Company.  As
      of the Closing Date, except as otherwise specifically requested by the Purchaser
      or its Representatives or directed by Mann, Greiner or Goldberg, the Company
      (a) will not have conducted any business activities or operations
      whatsoever other than to receive the Transferred Assets and assume the Assumed
      Liabilities pursuant to the terms of this Agreement and (b) will have no
      assets, liabilities or obligations whatsoever other than the Transferred Assets
      and the Assumed Liabilities.

     

    SECTION
      4.06  Brokers.  Except
      as set forth in Schedule 4.06, no broker, finder or investment banker is
      entitled to any brokerage, finder’s or other fee or commission in connection
      with the transactions contemplated hereby based upon arrangements made by or
      on
      behalf of Parent, Scimed or any of their Affiliates other than the Seller and
      the Company.

     

    SECTION
      4.07  Intellectual
      Property.  Except
      as set forth on Schedule 4.07, since the Effective Time (as defined
      in the Merger Agreement), none of Parent, Scimed or any of their respective
      Affiliates (other than the Seller or its Subsidiaries) has sold, transferred
      or
      licensed to a third party or encumbered any intellectual property that is or,
      if
      it had 

     

     

     

     

    
      
        
        

      

      
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    not
      been
      so sold or transferred, would have been Transferred Intellectual Property that
      substantively involves any Auditory Products (as defined in the Merger
      Agreement) or agreed to do any of the foregoing.

     

    SECTION
      4.08  Actions
      of the Seller Parties.  Other
      than the Drug Eluting Electrode Contracts, none of Parent or its Affiliates
      (other than the Seller or the Parent Designated Affiliates) has entered into
      any
      Contract that is a Transferred Contract or incurred any Liability that is an
      Assumed Liability (other than Liabilities under Transferred Contracts, if any)
      on behalf of or in the name of the Seller or any Subsidiary of the Seller,
      in
      each case, without the knowledge and approval of any officer of the Seller
      who
      was not appointed by Parent or any of its Affiliates (other than the
      Seller).

     

    SECTION
      4.09  No
      Distributions of Assets.  Since
      the Effective Time (as defined in the Merger Agreement) none of Parent or any
      of
      its Affiliates (other than the Seller with the knowledge and approval of any
      officer of the Seller who was not appointed by Parent or any of its Affiliates
      (other than the Seller)) has caused the Seller to dividend or distribute any
      asset (other than cash) that would be a Transferred Asset if owned by the Seller
      on the date hereof.

     

     

    ARTICLE
      V.

    REPRESENTATIONS
      AND WARRANTIES OF
      THE PURCHASER

     

    The
      Purchaser hereby represents and warrants to the Seller Parties, as of the date
      hereof, as follows:

     

    SECTION
      5.01  Organization
      and Authority of the Purchaser.  The
      Purchaser is duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its incorporation and has all necessary corporate
      power and authority to execute and deliver this Agreement and the Ancillary
      Agreements to which it is a party and to consummate the transactions
      contemplated hereby and thereby.  The execution and delivery of this
      Agreement and the Ancillary Agreements to which it is a party by the Purchaser,
      the performance by the Purchaser of its obligations hereunder and thereunder
      and
      the consummation by the Purchaser of the transactions contemplated hereby and
      thereby have been duly and validly authorized by all requisite corporate
      action.  No other corporate proceedings on the part of the Purchaser
      are necessary to authorize this Agreement and the Ancillary Agreements to which
      it is a party or to consummate the transactions contemplated hereby or
      thereby.  This Agreement has been, and, as applicable, upon their
      execution the Ancillary Agreements will have been, duly and validly executed
      and
      delivered by the Purchaser, and (assuming due authorization, execution and
      delivery by the other Parties) this Agreement constitutes, and, as applicable,
      upon their execution the Ancillary Agreements will constitute, legal, valid
      and
      binding obligations of the  Purchaser enforceable against it in
      accordance with their respective terms.

     

    SECTION
      5.02  No
      Conflict.  Other
      than all pre-merger filings and notifications required under the HSR Act or
      any
      other similar non-U.S. Law and the expiration or termination of any applicable
      waiting period, and except as may result from any facts or 

     

     

     

     

     

    
      
        
        

      

      
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    circumstances
      relating solely to the Seller Parties or the Company, the execution, delivery
      and performance by the Purchaser of this Agreement and the Ancillary Agreements
      to which it is a party do not and will not (a) conflict with or violate any
      Law
      or Governmental Order applicable to the Purchaser or by which any property
      or
      assets of the Purchaser are bound or affected, (b) result in any breach of
      or constitute a default (or an event which, with notice or lapse of time or
      both, would become a default) under, or give to others any right of termination,
      amendment, acceleration or cancellation of, or result in the creation of a
      lien
      or other encumbrance on any property or asset of the Purchaser pursuant to,
      any
      Contract to which the Purchaser is a party or by which the Purchaser or any
      property or asset of the Purchaser is bound or affected, or (c) require any
      consent, approval, authorization or permit of, or filing with or notification
      to, any Governmental Authority, except, in the case of clause (b) or
(c), for any such conflicts, violations, breaches, defaults or
      other
      occurrences which would not, individually or in the aggregate, prevent or
      materially delay consummation of any of the transactions contemplated by this
      Agreement, and as applicable, the Ancillary Agreements, or otherwise prevent
      the
      Purchaser from performing its obligations hereunder.

     

    SECTION
      5.03  Brokers.  Except
      as set forth on Schedule 5.03, no broker, finder or investment banker is
      entitled to any brokerage, finder’s or other fee or commission in connection
      with the transactions contemplated expressly hereby based upon arrangements
      made
      by or on behalf of the Purchaser.

     

     

    ARTICLE
      VI.

    [INTENTIONALLY
      OMITTED]

     

     

     

     

    ARTICLE
      VII.

    COVENANTS
      AND ADDITIONAL AGREEMENTS

     

    SECTION
      7.01  Limitations
      on Activity of the Purchaser.  (a)  From
      the date hereof until the Closing, the Purchaser (i) will not take any action
      or
      engage in any activity except to cause the Company to prepare to accept the
      Transferred Assets and assume the Assumed Liabilities, including applying for
      Permits, soliciting the consent of any Person for the transfer of any
      Transferred Asset, and securing financing, (ii) will otherwise not take any
      other action or engage in any activity without the prior written consent of
      Parent, and if such activity is reasonably contemplated by this Agreement and
      the transactions contemplated hereby, then such consent will not be unreasonably
      withheld, conditioned or delayed and (iii) will use commercially reasonable
      efforts to avoid confusion on the part of any Person with respect to the
      identity of the Seller and the Purchaser.

     

    (b)           If
      the Purchaser or any of its Affiliates prepares and distributes an offering
      memorandum or similar document in connection with any financing of the
      transactions contemplated by this Agreement, such offering memorandum or similar
      document will not contain any information regarding the Transferred Business,
      any of the Seller Parties or their Affiliates or the Retained Business that
      is
      materially inconsistent with the information contained in the Information
      Statement (as defined in the Amendment Agreement) (other than inconsistencies
      attributable to changed circumstances from the date hereof to the date of
      such

     

     

     

    
      
        
        

      

      
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    offering
      memorandum or other document).  Prior to the distribution of any
      offering memorandum or similar document by the Purchaser, the Purchaser will
      provide a draft of such document to Parent a reasonable time in advance of
      such
      distribution and will consider the reasonable comments of Parent to such
      document with respect to information relating to Parent, any of its Affiliates
      or the Transferred Business.

     

    SECTION
      7.02  Notification
      of Certain Matters.  (a)
      The Seller will give prompt written notice to the Purchaser of (i) the
      occurrence or non-occurrence of any change, condition or event the occurrence
      or
      non-occurrence of which would render any representation or warranty of a Seller
      Party contained in this Agreement or any Ancillary Agreement, if made on or
      immediately following the date of such event, untrue or inaccurate,
      (ii) any failure of a Seller Party, or any Affiliate of a Seller Party to
      comply with or satisfy any covenant or agreement to be complied with or
      satisfied by it hereunder or any event or condition that would otherwise
      reasonably be expected to result in the nonfulfillment of any of the conditions
      to the Purchaser’s obligations hereunder, (iii) any notice or other
      communication from any Person to Parent or any of its Affiliates (other than
      the
      Seller) alleging that the consent of such Person is or may be required in
      connection with the consummation of the transactions contemplated by this
      Agreement or the Ancillary Agreements or (iv) any Action pending or, to
      Parent, Scimed or the Seller’s knowledge, threatened against a Party or the
      Parties relating to the transactions contemplated by this Agreement or the
      Ancillary Agreements.

     

    (b)           The
      Purchaser will give prompt written notice to the Seller of (i) the
      occurrence or non-occurrence of any change, condition or event the occurrence
      or
      non-occurrence of which would render any representation or warranty of the
      Purchaser contained in this Agreement or any Ancillary Agreement, if made on
      or
      immediately following the date of such event, untrue or inaccurate,
      (ii) any failure of the Purchaser to comply with or satisfy any covenant or
      agreement to be complied with or satisfied by it hereunder or any event or
      condition that would otherwise reasonably be expected to result in the
      nonfulfillment of any of the conditions to the Seller Parties’ obligations
      hereunder, (iii) any notice or other communication from any Person to the
      Purchaser or any of its Affiliates alleging that the consent of such Person
      is
      or may be required in connection with the consummation of the transactions
      contemplated by this Agreement or the Ancillary Agreements or (iv) any
      Action pending or, to the Purchaser’s knowledge, threatened against a Party or
      the Parties relating to the transactions contemplated by this Agreement or
      the
      Ancillary Agreements.

     

    SECTION
      7.03  Access
      to Information.

     

    (a)  From
      the
      date hereof until the Closing Date, the Seller Parties will (a) afford the
      Purchaser and each of its Representatives, all cooperation reasonably necessary
      or customary in connection with any financing relating to the transactions
      contemplated hereby, (b) furnish to the Purchaser and its Representatives
      such financial, operational and other data and information related to the
      Transferred Business and the Transferred Assets, as the Purchaser shall
      reasonably request and (c) furnish to any prospective lenders or investors
      in the Purchaser, such financial, operational and other data and information
      related to the Transferred Business and the Transferred Assets, as shall be
      reasonably requested, subject to the execution by any such prospective lender
      or
      investor of a confidentiality agreement that is reasonably satisfactory to
      Parent.

     

     

     

     

    
      
        
        

      

      
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    (b)  In
      order
      (i) to facilitate the resolution of any Claims made against or incurred by
      the Seller Parties relating to the Transferred Assets or the Assumed
      Liabilities, (ii) to respond to any inquiry, request or demand from any
      Governmental Authority relating to the Transferred Assets or the Assumed
      Liabilities or (iii) to comply with any reporting or filing requirement
      imposed by any Governmental Authority or by Law relating to the Transferred
      Assets or the Assumed Liabilities, for a period of seven years after the
      Closing, the Purchaser will cause the Company to (x) retain the Books and
      Records relating to the Transferred Assets or the Assumed Liabilities relating
      to periods prior to the Closing, (y) upon reasonable notice, afford the
      officers, employees, agents and representatives of the
      Seller  reasonable access (including the right to make, at the
      Seller’s expense, photocopies of information not reasonably considered by the
      Company or the Purchaser to be confidential), during normal business hours,
      to
      such Books and Records and (z) furnish the Seller and its Representatives
      reasonable assistance in connection with any Claim (at the Purchaser’s expense);
provided that the Company will notify the Seller at least 60 days in
      advance of destroying any such Books and Records in order to provide the Seller
      the opportunity to access such Books and Records in accordance with this
Section 7.03(b).  The Seller may retain copies of any
      Books and Records relating to the Transferred Assets or the Assumed Liabilities
      relating to periods prior to the Closing, but only to the extent required by
      applicable Law.

     

    (c)  In
      order
      to (i) facilitate the resolution of any Claims made against or incurred by
      the Purchaser or the Company relating to the Transferred Assets or the Assumed
      Liabilities, (ii) to respond to any inquiry, request or demand from any
      Governmental Authority or (iii) to comply with any reporting or filing
      requirement imposed by any Governmental Authority or by Law relating to the
      Transferred Assets or the Assumed Liabilities (including with respect to a
      public offering of securities by the Company or any of its Affiliates), for
      a
      period of seven years after the Closing the Seller Parties will (x) retain
      the Books and Records relating to the Transferred Assets or the Assumed
      Liabilities and the Company relating to periods prior to the Closing that have
      not otherwise been delivered to the Purchaser or the Company, (y) upon
      reasonable notice, afford the officers, employees, agents and representatives
      of
      the Purchaser and the Company reasonable access (including the right to make,
      at
      the Purchaser’s or the Company’s expense, photocopies of information not
      reasonably considered by Parent to be confidential), during normal business
      hours, to such Books and Records and (z) furnish the Purchaser and the
      Company reasonable assistance in connection with any Claim (at the Seller’s
      expense); provided that Parent, Scimed or the Seller will notify the
      Purchaser and the Company at least 60 days in advance of destroying any such
      Books and Records in order to provide the Purchaser and the Company the
      opportunity to access such Books and Records in accordance with this
Section 7.03(c).  The Purchaser and the Company may retain
      copies of any Books and Records relating to the Transferred Assets or the
      Assumed Liabilities relating to periods prior to the Closing as required by
      any
      Law or by the Company’s document retention or regulatory compliance
      policies. 

     

    (d)  Notwithstanding
      the foregoing, Sections 7.02(a), (b) and (c) shall not
      apply with respect to Tax matters and the provisions of Section 7.09
      shall apply.

     

     

     

     

     

     

    
      
        
        

      

      
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    SECTION
      7.04  Public
      Announcements.

     

    (a)  The
      initial press release with respect to this Agreement or the transactions
      contemplated hereby will be substantially in the form of Exhibit J
      (the “Press Release”) and will be issued on the date
      hereof.  The Parties acknowledge and agree that they will answer any
      questions asked regarding this Agreement and the transactions contemplated
      hereby (e.g., during an analyst call or to investors in private) using the
      attached answers to frequently asked questions (the “FAQs”) set
      forth on Exhibit K to the extent reasonably practicable to do
      so.

     

    (b)  Other
      than the Press Release and the FAQs, so long as this Agreement is in effect,
      the
      Parent will, and will cause its Affiliates to, consult with the Purchaser before
      issuing any other press releases or otherwise making public announcements with
      respect to this Agreement, the transactions contemplated by this Agreement,
      Mann, Greiner, any of the Purchaser, the Trust or any of their Affiliates,
      and,
      except for any press release or public statement required by Law or any listing
      agreement with any U.S. or international securities exchange, including the
      New
      York Stock Exchange, will not issue any press release or make any public
      statement with respect to any of the foregoing matters without the consent
      of
      the Purchaser, which consent will not be unreasonably withheld, delayed or
      conditioned.

     

    (c)  Other
      than the Press Release and the FAQs, so long as this Agreement is in effect,
      the
      Purchaser will, and will cause its Affiliates to, consult with Parent before
      issuing any other press releases or otherwise making public announcements with
      respect to this Agreement, the transactions contemplated by this Agreement,
      or
      any of Parent or its Affiliates, and, except for any press release or public
      statement required by Law or any listing agreement with any U.S. or
      international securities exchange, including the New York Stock Exchange, the
      American Stock Exchange or NASDAQ, will not issue any press release or make
      any
      public statement with respect to any of the foregoing matters without the
      consent of Parent, which consent will not be unreasonably withheld, delayed
      or
      conditioned.

     

    (d)  Notwithstanding
      Section 7.04(b) or (c), if a release, announcement or
      statement described in Section 7.04(b) or (c) is required by
      Law or the rules or regulations of any applicable United States or international
      securities exchange or Governmental Authority to which the relevant Party is
      subject, and any portion of the subject matter of such release, announcement
      or
      statement is contained in the Press Release or the FAQs, the Party required
      to
      make the release, announcement or statement will conform in all material
      respects that portion of such release, announcement or statement to the Press
      Release or the FAQs and will notify the Parent or the Stockholders
      Representative, as applicable, by telephone, email or fax within two hours
      of
      any officers in the legal department, corporate communications department or
      similar department of such Party that

     

     

     

    
      
        
        

      

      
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    routinely
      performs such functions concluding that it is reasonably likely that such Party
      will issue a release, announcement or statement.  If a release,
      announcement or statement described in Section 7.04(b) or (c)
      is required by Law or the rules or regulations of any applicable United States
      or international securities exchange or Governmental Authority to which the
      relevant Party is subject, and any portion of the subject matter of such
      release, announcement or statement is not contained in the Press Release or
      the
      FAQs, the Party required to make the release, announcement or statement will
      notify Parent or the Stockholders Representative, as applicable, by telephone,
      email or fax within two hours of any officers in the legal department, corporate
      communications department or similar department of such Party that routinely
      performs such functions concluding that it is reasonably likely that such Party
      will issue a release, announcement or statement and will use its reasonable
      best
      efforts to allow such other Party a reasonable time to comment on such release,
      announcement or statement in advance of such issuance and will accept the
      reasonable comments of such other Party to such
      release.  Notwithstanding anything contained in this
Section 7.04(d), language in a release, announcement or statement
      regarding the transactions contemplated by this Agreement and the Ancillary
      Agreements that is substantially similar to language regarding such matters
      that
      has been previously reviewed by Parent or the Purchaser in compliance with
      the
      procedures set forth in this Section 7.04(d) will not require
      notification to Parent or the Purchaser, as applicable, pursuant to this
Section 7.04(d).  The notices provided for in this
Section 7.04(d) will describe the time frame of the release, announcement
      or statement.  Any reference to a “Party” referenced in a release,
      announcement or statement in this Section 7.04 shall include such
      Party and, to the extent applicable, its Affiliates.

     

    SECTION
      7.05  Further
      Action; HSR Notification.

     

    (a)  The
      Parties will use all commercially reasonable efforts to take, or cause to be
      taken, all appropriate action to do, or cause to be done, all things necessary,
      proper or advisable under applicable Law, and to execute and deliver such
      documents and other papers, as may be required to carry out the provisions
      of
      this Agreement or otherwise to consummate and make effective the transactions
      contemplated by this Agreement or the Ancillary Agreements as promptly as
      practicable, including (i) to obtain from Governmental Authorities all
      consents, approvals, authorizations, qualifications and orders as are necessary
      for the consummation of the transactions contemplated hereby, (ii) promptly
      making all necessary filings, and thereafter making any other required
      submissions, with respect to this Agreement required under applicable Law and
      (iii) taking action to attempt to vacate, lift, reverse or overturn any
      Governmental Order that is then in effect and that enjoins, restrains,
      conditions, makes illegal or otherwise restricts or prohibits the consummation
      of the transactions contemplated by this Agreement.  Notwithstanding
      anything to the contrary contained in this Agreement, the Purchaser shall have
      the sole and exclusive right to determine, at its option but without any
      obligation whatsoever, whether it, any of its Affiliates or Mann or any of
      his
      Affiliates shall have any obligation to take any actions in connection with,
      or
      agree to, any demands for sale, divestiture or disposition of assets of the
      Purchaser or any of its Affiliates (including Mann and his Affiliates), asserted
      by the United States Federal Trade Commission, the Antitrust Division of the
      United States Department of Justice or any other Governmental Authority in
      connection with antitrust matters or international competition laws, or to
      defend through litigation any proceeding commenced by the Federal Trade
      Commission, the Antitrust Division of the United States Department of Justice
      or
      other Governmental Authority in connection with the foregoing
      matters.

     

    (b)  Parent
      will, and the Purchaser will or will cause its ultimate parent to, make as
      promptly as reasonably practicable its respective filing pursuant to the HSR
      Act
      with respect to the transactions contemplated by this Agreement, but in no
      event
      later than 10 Business Days after the date hereof, and to supply as promptly
      as
      reasonably practicable to the appropriate Governmental Authorities any
      additional information and documentary material that may be requested pursuant
      to the HSR Act.  Any filing fee payable in connection with any filing
      pursuant to this Section 7.05(b) will be shared equally by Parent and the
      Purchaser.

     

     

     

     

    
      
        
        

      

      
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    (c)  Parent
      will, and the Purchaser will or will cause its ultimate parent to, make as
      promptly as reasonably practicable but in no event later than 20 Business Days
      after the date hereof, any required filing pursuant to any non-U.S. Law with
      respect to the transactions contemplated by this Agreement, and to supply as
      promptly as reasonably practicable to the appropriate Governmental Authorities
      any additional information and documentary material that may be requested
      pursuant to such non-U.S. Law.

     

    SECTION
      7.06  Non-Competition/Non-Solicitation.

     

    (a)  For
      a
      period of five years after the Closing Date, Parent will not, and will cause
      its
      Affiliates not to, research, develop, manufacture, distribute or sell, directly
      or indirectly, anywhere in the world, any products that compete with the
      products (including any products in development) developed, manufactured,
      distributed or sold by the Transferred Business as of the Closing Date or any
      direct evolutions of such products (excluding tinnitus) (such products of the
      Transferred Business, the “Auditory
      Products”).  Parent also will not, and will cause its
      Affiliates not to, for a period of five years after the Closing Date, directly
      or indirectly, manage, operate, join, control, advise or participate in, be
      connected with, render financial assistance to, receive any economic benefit
      from, exert any influence upon, or give advice to, as an officer, employee,
      partner, stockholder, consultant or other similar position, any Person that
      researches, develops, manufactures, distributes or sells products that compete
      with the Auditory Products (excluding tinnitus); provided that, for the
      purposes of this Section 7.06(a), ownership of securities having no
      more than five percent of the publicly listed securities, beneficial ownership,
      financial or economic interests outstanding voting power of any Person whose
      securities are listed on any U.S. or international securities exchange, that
      researches, develops, manufactures, distributes or sells any products that
      compete with the Auditory Products will not be deemed to be in violation of
      this
Section 7.06(a) as long as the Person owning such securities has no
      other connection or relationship with such publicly listed Person.

     

    (b)  For
      a
      period of five years after the Closing Date, the Purchaser will not, and will
      cause its Affiliates not to, research, develop, manufacture, distribute or
      sell,
      directly or indirectly, anywhere in the world, any products used or intended
      for
      use in any of the indications set forth on Schedule 7.06(b) (the
“Parent Neurostimulation Indications”).  The
      Purchaser also will not, and will cause its Affiliates not to, for a period
      of
      five years after the Closing Date directly or indirectly manage, operate, join,
      control, advise or participate in or be connected with, render financial
      assistance to, receive any economic benefit from, exert any influence upon,
      or
      advice to, as an officer, employee, partner, stockholder, consultant or other
      similar position, any Person that researches, develops, manufactures,
      distributes or sells products used or intended for use in the Parent
      Neurostimulation Indications; provided that, for the purpose of this
Section 7.06(b), ownership of securities having no more than five
      percent of the publicly listed securities, beneficial ownership, financial
      or
      economic interests or outstanding voting power of any Person whose securities
      are listed on any U.S. or international securities exchange, that researches,
      develops, manufactures, distributes or sells any products used or intended
      for
      use in the Parent Neurostimulation Indications will not be deemed to be in
      violation of this Section 7.06(b) as long as the Person owning such
      securities has no other connection or relationship with such publicly listed
      Person;).  Mann and all Persons controlled by him (except the Excluded
      Mann Affiliates) will be bound by this Section 7.06(b) to the same
      extent as the Purchaser.  Notwithstanding the foregoing, the
      provisions of this Section 7.06(b) will not apply 

     

     

    
      
        
        

      

      
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    to
      Greiner and will apply to the Excluded Mann Affiliates only if Mann is actively
      involved in the decision-making process of any of the Excluded Mann Affiliates
      to take any action that would constitute a breach of this Section 7.06(b)
      if such actions were taken by the Purchaser.

     

    (c)  Non-Solicitation.

     

    (i)  For
      a
      period of two years after the date hereof, the Purchaser will not, and will
      cause its Affiliates not to, directly or indirectly (including by way of
      recommendations from Mann), solicit any employee of the Seller or any of its
      Affiliates for employment or in any other capacity (including as an independent
      contractor or consultant) with the Purchaser or the Company; provided
      that nothing in this Section 7.06(c)(i) will prohibit the Purchaser
      or any of its Affiliates from:  (A) publishing or posting a
      general posting of open positions in the course of normal hiring practices
      that
      are not specifically sent to, or do not specifically target, the employees
      of
      the Seller Parties or their Affiliates; (B) placing a general advertisement
      with
      respect to open positions that is not specifically sent to, and does not
      specifically target, the employees of the Seller Parties or their Affiliates;
      (C) engaging an employee recruiter to fill open positions, so long as such
      recruiter is not specifically asked or engaged by the Purchaser or any of its
      Affiliates to target the employees of the Seller Parties or any of their
      Affiliates and so long as such recruiter has been advised of the restrictions
      contained in this Section 7.06(c).  Mann and all Persons
      controlled by him (other than the Excluded Mann Affiliates) will be bound by
      this Section 7.06(c) to the same extent as the
      Purchaser.  Notwithstanding the foregoing, the provisions of this
Section 7.06(c) will not apply to Greiner and will apply to the Excluded
      Mann Affiliates only if Mann is actively involved in the decision-making process
      of any of the Excluded Mann Affiliates to take any action that would constitute
      a breach of this Section 7.06(c) if such actions were taken by the
      Purchaser.

     

    (ii)  For
      a
      period of two years after the date hereof, the Seller or any of its Affiliates
      will not directly or indirectly solicit any employee of the Company or any
      of
      its Affiliates for employment or in any other capacity (including as an
      independent contractor or consultant) with the Seller; provided that
      nothing in this Section 7.06(c)(ii) will prohibit the Seller from:
      (A) publishing or posting a general posting of open positions in the course
      of normal hiring practices that are not specifically sent to, or do not
      specifically target, the employees of the Company or its Affiliates;
      (B) placing a general advertisement with respect to open positions that is
      not specifically sent to, and does not specifically target, the employees of
      the
      Company or its Affiliates; (C) engaging an employee recruiter to fill open
      positions, so long as such recruiter is not specifically asked or engaged by
      the
      Seller Parties or any of their Affiliates to target the employees of the Company
      or any of its Affiliates and so long as such recruiter has been advised of
      the
      restrictions contained in this Section 7.06(c)(ii).

     

    (d)  If
      any
      covenant in this Section 7.06 is found to be invalid, void or
      unenforceable in any situation in any jurisdiction by a final determination
      of a
      court or any other Governmental Authority of competent jurisdiction, the Parties
      agree that: (i) such determination will not affect the validity or
      enforceability of (A) the offending term or provision in any other
      situation or in any other jurisdiction or (B) the remaining terms and
      provisions of this 

     

     

    
      
        
        

      

      
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    Section 7.06
      in any situation in any jurisdiction; (ii) the offending term or provision
      will be reformed rather than voided and the court or Governmental Authority
      making such determination will have the power to reduce the scope, duration
      or
      geographical area of any invalid or unenforceable term or provision, to delete
      specific words or phrases, or to replace any invalid or unenforceable term
      or
      provision with a term or provision that is valid and enforceable and that comes
      closest to expressing the intention of the invalid or unenforceable provision,
      in order to render the restrictive covenants set forth in this
Section 7.06 enforceable to the fullest extent permitted by
      applicable Law; and (iii) the restrictive covenants set forth in this
Section 7.06 will be enforceable as so modified.

     

    (e)  For
      the
      avoidance of doubt, none of the obligations contained in this
Section 7.06 apply to Greiner, Carla Woods, Goldberg or any other
      employee or stockholder of Purchaser (other than Mann) in their individual
      capacities.  The Parties acknowledge and agree that Greiner, Goldberg,
      Carla Woods and any other employee or stockholder of Purchaser (other than
      Mann)
      may, at any time, outside of their work for Company, participate in any way
      they
      choose in any business regardless of whether that business competes with Seller
      or any of the Seller Parties.

     

    SECTION
      7.07  Change
      of Names.  (a)  The
      Seller will change its name within 10 Business Days after the Closing Date,
      and
      within three months after the date on which such name change occurs, the Seller
      will cease to use the name “Advanced Bionics,” “Bionics”  and “Bionic”
in any public communications; provided, that for a period of up to two
      years after the Closing (or such longer period to the extent the FDA has not
      provided all necessary approvals described in this proviso), Parent and its
      Affiliates will have the right to use the names “Advanced Bionics,” “Bionics”
and “Bionic” to the extent reasonably necessary to allow the Seller and its
      Affiliates to obtain in an orderly manner all necessary regulatory approvals
      to
      reflect the foregoing change of name and to relabel its products and promotional
      materials with a name that does not include the words “Advanced Bionics,”
“Bionics” or “Bionic;” provided, further, that the Seller will use
      commercially reasonable efforts to discontinue the use of such names by the
      Seller and its Affiliates as soon as reasonably practicable after the date
      hereof.   Notwithstanding anything to the contrary in this
      Agreement, the Seller shall have the right, at all times after the Closing
      Date,
      to (i) keep records and other historical or archived documents containing
      or referencing the Assigned Names and Marks, (ii) refer to the historical
      fact that the Seller previously conducted business under the Assigned Names
      and
      Marks, and (iii) use the Assigned Names and Marks to the extent required by
      or
      permitted as fair use under applicable Law.  Notwithstanding the
      foregoing and solely for the avoidance of doubt, nothing in this Section
      7.07(a) will in any way limit the right of Parent or any of its Affiliates
      to use the name “Advanced” for any purpose.

     

    (b)  For
      a
      period not to exceed two years after the Closing (or such longer period to
      the
      extent the FDA has not provided all necessary approvals described in this
      proviso), the Company will have the right to use the names “Boston Scientific
      Corporation,” “Boston Scientific,” and “Scimed” to the extent reasonably
      necessary to allow the Company time to relabel its existing stock of products
      and promotional materials; provided, that the Purchaser will be required
      to refrain from using all products and promotional materials using the names
      “Boston Scientific,” “Boston Scientific Corporation” or “Scimed” thereafter;
provided, further, that the

     

     

    
      
        
        

      

      
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    Company
      will use commercially reasonable efforts to discontinue the use of such names
      by
      the Company as soon as reasonably practicable after the date
      hereof.

     

    SECTION
      7.08  Insurance.  The
      Seller will use its commercially reasonable efforts to continuously maintain
      in
      effect or renew, without any lapse in coverage, through the Closing Date the
      insurance policy set forth on Schedule 2.02(a)(xi).

     

    SECTION
      7.09  Tax
      Cooperation and Exchange of Information.  The
      Seller and the Purchaser will provide each other with such cooperation and
      information as any of them reasonably may request of the other (and the
      Purchaser will cause the Company to provide such cooperation and information)
      in
      filing any Tax Return, amended Tax Return or request for refund, determining
      a
      liability for Taxes or a right to a refund of Taxes or participating in or
      conducting any audit or other proceeding in respect of Taxes; provided
      that (a) the Seller shall not be required to provide any income or similar
      Tax Returns, or Tax returns or other documents that contain confidential
      information relating to Persons other than the Seller, but the Seller shall
      provide information that is reasonably necessary, as mutually determined by
      the
      Parties acting in good faith, for filing any Tax Return, amended Tax Return
      or
      request for refund, determining a liability for Taxes or a right to a refund
      of
      Taxes or participating in or conducting any audit or other proceeding in respect
      of Taxes and (b) the Purchaser shall not be required to provide any income
      or similar Tax Returns, or Tax returns or other documents that contain
      confidential information relating to Persons other than the Purchaser, but
      the
      Purchaser shall provide information that is reasonably necessary, as mutually
      determined by the Parties acting in good faith, for filing any Tax Return,
      amended Tax Return or request for refund, determining a liability for Taxes
      or a
      right to a refund of Taxes or participating in or conducting any audit or other
      proceeding in respect of Taxes.  Any information or documents obtained
      under this Section 7.09 shall be kept confidential, except as may be
      otherwise necessary in connection with filing any Tax Return, amended Tax Return
      or request for refund, determining a liability for Taxes or a right to a refund
      of Taxes or participating in or conducting any audit or other proceeding in
      respect of Taxes.

     

    SECTION
      7.10  Conveyance
      Taxes.  The
      Purchaser and the Seller will each pay 50% of any Conveyance Taxes that may
      be
      imposed upon, or payable or collectible or incurred in connection with this
      Agreement and the transactions contemplated hereby.  The Purchaser and
      the Seller agree to cooperate in the execution and delivery of all instruments
      and certificates necessary to enable the Purchaser to comply with any pre
      Closing filing requirements.

     

    SECTION
      7.11  Bulk
      Transfer Laws.  The
      Purchaser hereby waives compliance by the Seller with any applicable bulk sale
      or bulk transfer laws of any jurisdiction in connection with the sale of the
      Transferred Assets (other than any obligations with respect to the application
      of the proceeds therefrom).  Pursuant to Article X, the
      Seller Parties will indemnify  the Purchaser and the Company against
      all Liabilities (other than Tax Liabilities) that may be asserted by third
      parties against the Purchaser or the Company as a result of the Seller’s
      noncompliance with such law.

     

     

    SECTION
      7.12  Use
      of Information.  (a)  From
      and after the Closing Date, the Seller Parties will not, and will cause their
      respective Affiliates and their respective

     

     

     

    
      
        
        

      

      
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    Representatives
      not to, disclose to any other Person any confidential information relating
      to
      the Purchaser or the Transferred Business (other than information or data that
      becomes available to the public other than as a result of a breach of this
      Section 7.12(a)), unless such disclosure of confidential information
      is required by applicable Law.

     

    (b)  From
      and
      after the Closing Date, the Purchaser will not, and will cause its Affiliates
      and its Representatives not to, disclose to any other Person any confidential
      information relating to the Seller Parties (other than the Company or the
      Transferred Business) or the Retained Business (other than information or data
      that becomes available to the public other than as a result of a breach of
      this
Section 7.12(b)), unless such disclosure of confidential information
      is required by applicable Law.

     

    SECTION
      7.13  IP
      Further Assurance.  From
      the date hereof until the Closing, the Seller and the Purchaser shall cooperate
      in good faith to identify those invention disclosures (if any) owned by the
      Seller that if known or existing on the date hereof would be included in
      Transferred Intellectual Property and prior to the Closing shall update
Schedule 1.01(e)(i) accordingly.  From the date hereof until
      the Closing, the Seller and Purchaser shall cooperate in good faith to identify
      those registered Copyrights (if any) that are Transferred Intellectual Property,
      and to the extent any such registered Copyrights are identified, the Seller
      and
      the Purchaser shall execute at Closing those documents reasonably necessary
      to
      record the assignment of such registered Copyright with the appropriate
      Governmental Authority.

     

    SECTION
      7.14  Transition
      of Drug Eluting Electrode Contracts.  The
      Parties agree that, as of the date hereof, the Drug Eluting Electrode Contracts
      will be, for all purposes, part of the Transferred Business.  As
      promptly as practicable, Representatives of Parent, the EOR Designee (as defined
      in the Amendment Agreement) and any relevant Transferred Employees shall meet
      to
      transition any activities historically performed by the Parent pursuant to
      the
      Drug Eluting Electrode Contracts.  Parent shall not be entitled to
      recover any amounts paid as of the date hereof under the Drug Eluting Electrode
      Contracts, and upon the two week anniversary of the date hereof shall
      discontinue all material efforts associated with the drug eluting electrode
      projects.

     

    ARTICLE
      VIII.

    EMPLOYEE
      MATTERS

     

    SECTION
      8.01  Severance
      Costs.  To
      the extent the employment of any employee of the Seller Parties who would have
      been a Transferred Employee if his or her employment was transferred to the
      Company pursuant to Section 2.04 is terminated between the date hereof
      and the Closing, any cost in connection with such termination will be allocated
      to the Company pursuant to the Separation Agreement.  To the extent
      that the Company terminates any Transferred Employee on or after the Closing,
      the Company will pay all severance and benefits costs incurred in connection
      with the termination of such Transferred Employee.

     

    SECTION
      8.02  Phantom
      Earn Out Recipients.  (a)  In
      connection with the transactions contemplated hereby, the Seller’s “Special Cash
      Bonus Plan” (commonly referred to as the “Phantom Earn Out Plan”) (the
“Cash Bonus Plan”) will be terminated at
      Closing.  Promptly following the Closing, the Seller will pay to
      the recipients under the Cash 

     

     

    
      
        
        

      

      
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    Bonus
      Plan (the “Cash Bonus Plan Recipients”) an
      aggregate amount equal to $2,149,645.00 (which represents $5.38 per Cash Bonus
      Plan unit).  Each of the Seller and the Company shall establish a
      replacement plan that provides that under certain conditions (i) within 15
      days
      of the end of each of the 2008 and 2009 fiscal years, the Purchaser will cause
      the Company to pay to the Transferred Employees who are Cash Bonus Plan
      Recipients, and the Seller will pay to its employees who are Cash Bonus Plan
      Recipients, in each case if such employees are employed by the Company or the
      Seller, as applicable, on January 1, 2009 and 2010 (as applicable), $5 per
      Cash
      Bonus Plan unit and (ii) in the case of “uncapped” Cash Bonus Plan
      Recipients, within 15 days of the end of the 2010 fiscal year, the Purchaser
      will cause the Company to pay to the Transferred Employees who are Cash Bonus
      Plan Recipients and the Seller will pay to its employees who are Cash Bonus
      Plan
      Recipients, in each case, if such employees are employed by the Company or
      the
      Seller, as applicable, on January 1, 2011, $7.50 per Cash Bonus Plan
      unit.  In respect of the Transferred Employees, the Company will cause
      such arrangements to comply with the requirements of Section 409A of the Code,
      and in respect of the employees of the Retained Business, the Seller will cause
      such arrangements to comply with the requirements of Section 409A of the
      Code.

     

    (b)  Effective
      as of the Closing, the Seller will release each employee of the Seller as of
      the
      Closing who entered into a retention letter agreement with the Seller in
      connection with the consummation of the transactions contemplated by the Merger
      Agreement from all of his or her obligations under such retention letter
      agreement.

     

    SECTION
      8.03  Treatment
      of Options.  Effective
      as of the Closing, Parent shall accelerate to the Closing Date the vesting
      of
      the tranche of employee stock options held by the Transferred Employees that
      would have otherwise vested on February 13, 2008, which options shall otherwise
      remain governed by their existing terms.

     

    SECTION
      8.04  2007
      Performance Incentive Plan Payments.  The
      Seller will pay, directly to each Transferred Employee who is employed by the
      Seller immediately prior to the Closing, the amount determined by the EOR
      Designee to be payable under Parent’s 2007 Performance Incentive Plan to such
      Transferred Employee in recognition of such Transferred Employee’s performance
      during the 2007 fiscal year after consultation with Paul LaViolette consistent
      with past practice; provided, however, that the aggregate amount
      payable to all Transferred Employees will not exceed the total funding amount
      allocated by Parent with respect to the Transferred Employees under Parent’s
      2007 Performance Incentive Plan (based on the achievement of the plan funding
      conditions and individual performance).  The Seller will make such
      payments to the Transferred Employees at substantially the same time as payments
      are made to employees of Parent under Parent’s 2007 Performance Incentive
      Plan.

     

    SECTION
      8.05  Employee
      Plans.

     

    (a)  The
      Transferred Employees shall cease to participate in the Employee Plans on the
      Closing Date (except to the extent otherwise provided under any applicable
      transition services agreement).  The Seller Parties shall take any
      action that may be necessary or appropriate to ensure that each Transferred
      Employee is 100% vested in his or her account balance under Parent’s
      tax-qualified defined contribution plan (the “BSC 401(k) Plan”)
      as of the Closing Date.  The Seller Parties shall cause the trustee(s)
      of the BSC 401(k) Plan to permit 

     

     

     

    
      
        
        

      

      
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    distribution
      of the account balances thereunder to the Transferred Employees in accordance
      with the terms of such plan, to roll over such account balances to individual
      retirement accounts of the Transferred Employees or to roll over account
      balances (including, to the extent practicable, any notice evidencing a
      participant loan) to a new tax-qualified defined contribution plan established
      by the Company.  Parent will cooperate with the Purchaser in the
      distribution and rollover of the Transferred Employee’s account balances to the
      Company’s new tax-qualified defined contribution plan in compliance with
      applicable requirements of the Code.

     

    (b)  Neither
      the Purchaser nor the Company shall have any Liability or obligation with
      respect to any Employee Plan and, except as otherwise expressly provided herein,
      neither the assets or Liabilities of any Employee Plan nor the sponsorship
      of
      the Plans themselves shall be transferred to the Company or the Purchaser
      pursuant to or in connection with the transactions contemplated by this
      Agreement.  Without limiting the foregoing, the Seller Parties shall
      retain all Liability with respect to (i) all claims made or incurred under
      the Employee Plans, and (ii) COBRA coverage (and applicable state law
      continuation coverage) on account of “qualifying events” occurring prior to the
      Closing.  For purposes of this Section 8.05(b), a claim
      shall be considered incurred under a health, dental or vision plan when the
      services giving rise to the claim are rendered, under workers’ compensation and
      disability policies when the event giving rise to the claim occurs and in other
      cases when the expense giving rise to the claim is otherwise
      incurred.

     

     

    ARTICLE
      IX.

    CONDITIONS
      TO CLOSING

     

    SECTION
      9.01  Conditions
      to Obligations of the Parties.  The
      respective obligations of the Seller Parties, on the one hand, and of the
      Purchaser, on the other hand, to consummate the transactions contemplated by
      this Agreement will be subject to the fulfillment, at or prior to the Closing,
      of each of the following conditions, any of which may, to the extent permitted
      by applicable Law, be waived in writing by any applicable party in its sole
      discretion; provided that such waiver shall only be effective as to the
      obligations of such party:

     

    (a)  Antitrust
      Waiting Period.  The waiting period (and any extension thereof)
      applicable to the consummation of the transactions contemplated hereby under
      the
      HSR Act shall have expired or been terminated.

     

    (b)  No
      Order.  No Governmental Authority shall have enacted, issued,
      promulgated, enforced or entered any Law or Governmental Order (whether
      temporary, preliminary or permanent) that has the effect of making the
      transactions contemplated by this Agreement or the Ancillary Agreements illegal
      or that otherwise restrains or otherwise prohibits the consummation of such
      transactions.

     

    (c)  Amendment
      Agreement.  The Closing (as defined in the Amendment Agreement)
      shall have occurred.

     

    SECTION
      9.02  Conditions
      to Obligations of the Seller Parties.  The
      obligations of the Seller Parties to consummate the transactions contemplated
      by
      this Agreement

     

     

     

     

    
      
        
        

      

      
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    shall
      be
      subject to the fulfillment, at or prior to the Closing, of the following
      condition, which may be waived in writing by the Seller in its sole
      discretion:

     

    Representations,
      Warranties and Covenants.  (a) The representations and
      warranties of the Purchaser in this Agreement shall be true and correct (without
      regard to any qualifications as to materiality) as of the Closing Date (or,
      in
      the case of representations and warranties that are made as of a specified
      date,
      as of such specified date); (b) the Purchaser shall have performed all
      obligations and agreements and complied with all covenants required by this
      Agreement to be performed or complied with by it prior to or at the Closing,
      except where the failure of such representations and warranties to be true
      and
      correct or the failure of the Purchaser to so perform or comply does not prevent
      the Purchaser from consummating the transactions contemplated hereby; and
      (c) the Seller shall have received from the Purchaser a certificate by the
      Purchaser to the effect set forth in the foregoing clauses (a) and (b), signed
      by a duly authorized officer or person thereof.

     

    SECTION
      9.03  Conditions
      to Obligations of the Purchaser.  The
      obligations of the Purchaser to consummate the transactions contemplated by
      this
      Agreement shall be subject to the fulfillment, at or prior to the Closing,
      of
      the following condition, which may be waived in writing by the Purchaser in
      its
      sole discretion:

     

    Representations,
      Warranties and Covenants.  (a) (i) the representation and
      warranty contained in Section 4.04 shall be true and correct in all
      material respects as of the Closing Date and (ii) the representations and
      warranties of the Seller Parties contained in the other Sections of Article
      IV shall be true and correct (without regard to any qualification as to
      materiality) as of the Closing Date (or, in the case of any representations
      and
      warranties that are made as of a specified date, as of such specified date);
      (b) the Seller Parties shall have performed all obligations and agreements
      and complied with all covenants required by this Agreement or any Ancillary
      Agreement to be performed or complied with by it prior to or at the Closing,
      except where the failure of such representations and warranties described in
      clause (a)(ii) to be true and correct or the failure of the Seller Parties
      to so
      perform or comply does not materially and adversely affect the Transferred
      Business taken as a whole; provided, that the representations and warranties
      contained in Sections 4.02, 4.04 and 4.05 shall be disregarded for
      purposes of this Section 9.03 to the extent the failure of such
      representation and warranty to be true and correct is a result of any action
      or
      failure to act by any of Mann, Greiner and Goldberg in their capacity as
      officers of the Company and (c) the Purchaser shall have received from the
      Seller Parties a certificate by each of the Seller Parties to the effect set
      forth in the foregoing clauses (a) and (b), signed by a duly authorized officer
      thereof.

     

     

    ARTICLE
      X.

    INDEMNIFICATION

     

    SECTION
      10.01  Indemnification
      by Parent and Scimed.

     

    (a)  The
      Purchaser and its Affiliates (including, after the Closing, the Company), and
      each of their respective officers, directors, employees, agents, successors
      and
      assigns (each, a “Purchaser Indemnified Party”) will be jointly
      and severally saved,

     

     

    
      
        
        

      

      
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    indemnified
      and held harmless by Parent and Scimed from and against all Losses actually
      suffered or incurred by the Purchaser Indemnified Parties arising out of or
      resulting from:

     

    (i)  any
      breach of any representation or warranty made by a Seller Party contained in
      this Agreement; or

     

    (ii)  any
      breach of any covenant or agreement by a Seller Party contained in this
      Agreement, including the covenants in 2.02(a) that contain Seller’s obligations
      under the Bill of Sale and Assignment.

     

    (b)  The
      Company and its Affiliates and each of their respective officers, directors,
      employees, agents, successors and assigns (each, a “Company Indemnified
      Party”) will be saved, indemnified and held harmless by Parent and
      Scimed from and against all Losses arising out of or resulting
      from:

     

    (i)  any
      of
      the Excluded Assets; or

     

    (ii)  any
      of
      the Excluded Liabilities.

     

    SECTION
      10.02  Indemnification
      by the Purchaser or the Company.  (a)  The
      Seller Parties and their respective Affiliates (excluding the Company),
      officers, directors, employees, agents, successors and assigns (each, a
“Seller Indemnified Party”) will be saved, indemnified and held
      harmless by the Purchaser from and against all Losses, arising out of or
      resulting from:

     

    (i)  any
      breach of any representation or warranty made by the Purchaser contained in
      this
      Agreement; or

     

    (ii)  any
      breach of any covenant or agreement to be performed prior to the Closing by
      the
      Purchaser contained in this Agreement.

     

    (b)  The
      Seller Indemnified Parties will be saved, indemnified and held harmless by
      the
      Company and the Purchaser from and against all Losses, arising out of or
      resulting from:

     

    (i)  any
      of
      the Assumed Liabilities;

     

    (ii)  any
      of
      the Transferred Assets; or

     

    (iii)  any
      breach of any covenant or agreement to be performed after the Closing by the
      Purchaser or the Company contained in this Agreement;

     

    provided
      that the Seller Parties, on behalf of themselves and the other Seller
      Indemnified Parties, hereby agree that their first recourse for any Losses
      described in this Section 10.02(b) will be against the Company and the
      Seller Indemnified Parties may request indemnification from the Purchaser
      pursuant to this Section 10.02(b) only if the Company fails to satisfy,
      or Parent reasonably determines that the Company is unlikely to satisfy within
      a
      reasonable period of time 

     

     

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    following
      request therefor (such period of time not to be less than 30 days), its
      obligations under this Article X.

     

    SECTION
      10.03  Limits
      on Indemnification.

     

    (a)  Parent
      and Scimed will not have any liability pursuant to
Section 10.01(a)(i) and Purchaser will not have any liability
      pursuant to Section 10.02(a)(i), unless and until the aggregate
      amount of indemnifiable Losses that may be recovered from the applicable
      Indemnifying Party equals or exceeds $1,000,000 (the “Aggregate
      Threshold”) in which case such Indemnifying Party shall be liable for
      all such Losses.

     

    (b)  Parent
      and Scimed will not have any liability pursuant to
Section 10.01(a)(i) and Purchaser will not have any liability
      pursuant to Section 10.02(a)(i) for any Losses resulting from a
      single Claim or a series of related Claims arising out of an individual breach
      of any representation or warranty that totals less than the Per Claim
      Threshold.  The Indemnified Party shall have no recourse for such
      Losses and these Losses shall be excluded in their entirety from indemnification
      pursuant to Section 10.01 and 10.02.

     

    (c)  With
      respect to (i) the representations and warranties in Section 4.07,
Section 4.08 and Section 4.09, Parent and Scimed will not have any
      liability pursuant to Section 10.01(a)(i) in excess of $75 million
      and (ii) the other representations and warranties in Articles IV and
V, none of Parent and Scimed or the Purchaser and the Company
      will have
      any liability pursuant to Section 10.01(a)(i) or Section
      10.02(a)(i) respectively, in excess of the Purchase Price.

     

    (d)  Notwithstanding
      anything to the contrary contained in this Agreement, no party hereto will
      have
      any liability under any provision of this Agreement for any punitive,
      incidental, consequential, special or indirect damages, including loss of future
      revenue or income, or loss of business reputation or opportunity.

     

    (e)  For
      all
      purposes of this Article X, “Losses” will be net of
      any insurance or other recoveries payable to the Indemnified Party or its
      Affiliates in connection with the facts giving rise to the right of
      indemnification.

     

    SECTION
      10.04  Notice
      of Loss; Third Party Claims.

     

    (a)  An
      Indemnified Party will give the Indemnifying Party notice of any matter other
      than a Third Party Claim which an Indemnified Party has determined has given
      or
      could give rise to a right of indemnification under this Agreement within 60
      days of such determination, stating the amount of the Loss, if known, and method
      of computation thereof, and containing a reference to the provisions of this
      Agreement in respect of which such right of indemnification is claimed or
      arises; provided, that the failure to provide such notice will not
      release the Indemnifying Party from any of its obligations under this
Article X except to the extent the Indemnifying Party is actually
      prejudiced by such failure.

     

    (b)  (i)   If
      an Indemnified Party receives notice of a Third Party Claim against it that
      may
      give rise to a right of indemnification under this Article X, then,
      within 30 days of the receipt of such notice, the Indemnified Party will give
      the 

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    Indemnifying
      Party notice of such Third Party Claim; provided, that the failure to
      provide such notice will not release the Indemnifying Party from any of its
      obligations under this Article X except to the extent that the
      Indemnifying Party is actually prejudiced by such failure. If the Indemnifying
      Party acknowledges in writing its obligation to indemnify the Indemnified Party
      hereunder against any Losses that may result from such Third Party Claim, then
      the Indemnifying Party will be entitled to assume and control the defense of
      such Third Party Claim at its expense and through counsel of its choice if
      it
      gives notice of its intention to do so to the Indemnified Party within five
      days
      of the receipt of such notice from the Indemnified Party; provided, that
      if there exists a conflict of interest that would make it inappropriate for
      the
      same counsel to represent both the Indemnified Party and the Indemnifying Party,
      then the Indemnified Party will be entitled to retain its own counsel in each
      jurisdiction for which the Indemnified Party determines counsel is required
      at
      the expense of the Indemnifying Party and such counsel will be entitled to
      full
      participation in the defense of or prosecution of counterclaims related to
      any
      such claim and the Indemnifying Party will direct its counsel to reasonably
      cooperate in connection therewith.  In the event that the Indemnifying
      Party exercises the right to undertake any such defense against any such Third
      Party Claim as provided above, the Indemnified Party will cooperate with the
      Indemnifying Party in such defense and make available to the Indemnifying Party,
      at the Indemnifying Party’s expense, all witnesses, pertinent records, materials
      and information in the Indemnified Party’s possession or under the Indemnified
      Party’s control relating thereto as is reasonably required by the Indemnifying
      Party.  No such Third Party Claim may be settled by the Indemnifying
      Party without the prior written consent of the Indemnified Party, which will
      not
      be unreasonably withheld.  However, the Indemnifying Party may settle
      any Third Party Claim without the Indemnified Party’s prior written consent as
      long as such settlement (x) does not involve an admission of wrongdoing by
      such Indemnified Party, (y) includes an unconditional written release by
      the claimant or the plaintiff of the Indemnified Party from all Liability in
      respect of such Third Party Claim and (z) does not impose any obligation on
      the Indemnified Party.  If the Indemnifying Party elects to direct the
      defense of any such Claim, the Indemnified Party will not pay, or permit to
      be
      paid, any part of such Third Party Claim unless the Indemnifying Party consents
      in writing to such payment or unless the Indemnifying Party withdraws from
      the
      defense of such Third Party Claim or unless a final judgment from which no
      appeal may be taken by or on behalf of the Indemnifying Party is entered against
      the Indemnified Party for such Third Party Claim.

     

    (ii)  If
      the
      Indemnified Party is controlling the defense of any such Third Party Claims
      pursuant to this Section 10.04 (either because the Indemnifying
      Party does not acknowledge in writing its obligation to indemnify the
      Indemnified Party or because it does acknowledge in writing its obligation
      to
      indemnify the Indemnified Party, but elects not to assume and control the
      defense, or because there is a conflict that allows the Indemnified Party to
      hire its own counsel) and proposes to settle such claims or proceeding prior
      to
      a final judgment thereon or to forgo any appeal with respect thereto, then
      the
      Indemnified Party will give the Indemnifying Party prompt written notice thereof
      and the Indemnifying Party will have the right to participate in the settlement
      or, if the Indemnifying Party acknowledges in writing its obligation to
      indemnify the Indemnified Party with respect to such Third Party Claim (if
      not
      previously acknowledged) or assume or reassume the defense of such Third Party
      Claims.  In the event the Indemnified Party 

     

     

     

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    is,
      directly or indirectly, conducting the defense against any such Third Party
      Claim, the Indemnifying Party will cooperate with the Indemnified Party in
      such
      defense and make available to the Indemnified Party, at the Indemnifying Party’s
      expense, all such witnesses, records, materials and information in the
      Indemnifying Party’s possession or under the Indemnifying Party’s control
      relating thereto as is reasonably required by the Indemnified
      Party.

     

    (iii)  Notwithstanding
      the foregoing, with respect to any Third Party Claim relating to Taxes for
      which
      the Seller, on the one hand, and the Purchaser, on the other hand, may be liable
      under this Agreement or otherwise, the proceeding will be controlled by the
      party which would bear the burden of the greater portion of the adjustment;
      provided, that the non-controlling party will be entitled to participate in
      the
      proceeding at its own expense and the controlling party will not settle or
      compromise the proceeding without the prior written consent of the
      non-controlling party (such consent not to be unreasonably
      withheld).

     

    SECTION
      10.05  Remedies.  Except
      in respect of remedies for fraud by a Party and except for the remedy of
      specific performance provided for in Section 12.08, the
      indemnification provided for in this Article X will be the exclusive
      remedy of any Party with respect to any Losses incurred by such Party as a
      result of any breach of a representation or warranty contained in this
      Agreement, and each Party waives any other statutory  or common law
      remedy that such party would otherwise have for any Claim related to such
      matters.

     

    SECTION
      10.06  Tax
      Treatment.  For
      Tax purposes, the Parties agree to treat all payments made under this
Article X and for any breaches of representations, warranties,
      covenants or agreements, as adjustments to the Purchase Price or as capital
      contributions.

     

    SECTION
      10.07  Survival
      of Representations and Warranties.

     

    (a)  The
      representations and warranties of the Parties contained in this Agreement will
      survive the Closing until the date that is 18 months from the Closing Date;
      provided that in the case of fraud, a representation or warranty will survive
      indefinitely.

     

    (b)  None
      of
      the Parties will have any Liability whatsoever with respect to any such
      representations and warranties unless a Claim for indemnification is made
      hereunder prior to the expiration of the survival period for such representation
      and warranty, in which case such representation and warranty will survive as
      to
      such Claim until such Claim has been finally resolved.

     

     

     

     

     

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    SECTION
      10.08  No
      Loss of Remedies.  No
      Party will be foreclosed from asserting any right under this Article X as
      a result of consummating the transactions contemplated by this
      Agreement.

     

     

    ARTICLE
      XI.

    TERMINATION

     

    SECTION
      11.01  Termination.  This
      Agreement may be terminated at any time prior to the Closing only:

     

    (a)  by
      either
      Parent or the Purchaser if the Closing has not occurred by January 10,
      2008; provided that the right to terminate this Agreement under this
Section 11.01(a) will not be available to any Party whose failure to
      fulfill any obligation under this Agreement has caused the failure of the
      Closing to occur on or prior to such date;

     

    (b)  by
      either
      Parent or the Purchaser in the event that any Governmental Order restraining,
      enjoining or otherwise prohibiting the transactions contemplated by this
      Agreement has become final and nonappealable; provided, that the Party so
      requesting termination will have used its commercially reasonable efforts,
      in
      accordance with Section 7.05(a);

     

    (c)  (i) by
      Parent, if the Purchaser breaches in any material respect any of its
      representations or warranties or fails to perform in any material respect any
      of
      its covenants or agreements contained in this Agreement and such breach or
      failure to perform (A) would give rise to the failure of a condition set
      forth in Section 9.02, (B) cannot or has not been cured within 15
      days following delivery by the Seller of written notice to the Purchaser of
      such
      breach or failure to perform and (C) has not been waived by the Seller; or
      (ii) by the Purchaser, if any of the Seller Parties or the Company breaches
      in any material respect any of its representations or warranties or fails to
      perform in any material respect any of its covenants or agreements contained
      in
      this Agreement and such breach or failure to perform (x) would give rise to
      the failure of a condition set forth in Section 9.03,
      (y) cannot be or has not been cured within 15 days following delivery by
      the Purchaser of written notice to the Seller of such breach or failure to
      perform and (z) has not been waived by the Purchaser;

     

    (d)  by
      either
      Parent or the Purchaser if the Amendment Agreement is terminated;
      or

     

    (e)  upon
      the
      mutual written consent of Parent and the Purchaser.

     

    SECTION
      11.02  Effect
      of Termination.  In
      the event of termination of this Agreement as provided in
Section 11.01, this Agreement will immediately become void and of no
      further force or effect except for the provisions of Sections 4.06
      and 5.03 relating to broker’s fees and finder’s fees,
Section 7.04 relating to public announcements, this
Section 11.02 and
Article XII.  Notwithstanding the foregoing, nothing in
      this Section 11.02 or any other part of this Agreement will relieve
      any Party from Liability for any breach or failure to perform under this
      Agreement occurring prior to the termination of this Agreement, and any Party
      may sue the other Party in respect of any such breach or failure to perform
      under this Agreement.

     

     

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

    ARTICLE
      XII.

    GENERAL
      PROVISIONS

     

    SECTION
      12.01  Fees
      and Expenses.  Except
      as otherwise specified in this Agreement, all costs and expenses, including
      legal fees and the fees and expenses of any financial advisors, incurred in
      connection with this Agreement and the transactions contemplated hereby will
      be
      paid, to the extent incurred by the Purchaser or any of its Affiliates, by
      the
      Purchaser, and to the extent incurred by any of Seller Parties or any of their
      Affiliates, by Parent, whether or not the Closing shall have
      occurred.

     

    SECTION
      12.02  Amendment.  This
      Agreement may only be amended by the Parties at any time prior to the Closing
      by
      an instrument in writing signed by each of the Parties..

     

    SECTION
      12.03  Waiver.  Any
      (a) extension of the time for the performance of any obligation or other
      act of any Party, (b) waiver of any inaccuracy in the representations and
      warranties of any Party contained herein or in any document delivered pursuant
      hereto or (c) waiver of compliance with any agreement of any Party or any
      condition to its own obligations contained herein will be valid only if set
      forth in an instrument in writing signed by the Party or parties to be bound
      thereby.  No failure or delay of any Party in exercising any right or
      remedy hereunder will operate as a waiver thereof, nor will any single or
      partial exercise of any such right or power, or any abandonment or
      discontinuance of steps to enforce such right or power, or any course of
      conduct, preclude any other or further exercise thereof or the exercise of
      any
      other right or power.  The rights and remedies of the Parties are
      cumulative and are not exclusive of any rights or remedies which they would
      otherwise have hereunder.

     

    SECTION
      12.04  Notices.  All
      notices, requests, Claims and other communications hereunder will be in writing
      and will be given (and will be deemed to have been duly given upon receipt
      as
      conclusively determined by the date shown on a signed receipt for such notice)
      by delivery in person, by overnight courier, by registered or certified mail
      (postage prepaid, return receipt requested) or e-mail pursuant to
Section 7.04 to the Parties at the following addresses (or at such
      other address for a Party as will be specified in a notice given in accordance
      with this Section 12.04):

     

    if
      to any
      of the Seller Parties:

     

    One
      Boston Scientific Place

    Natick,
      Massachusetts  01760-1537

    Facsimile
      No:  (508) 650-8951

    Attention:  General
      Counsel

    E-mail:   paul.sandman@bsci.com

     

     

     

     

     

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    with
      a
      copy to:

     

    Shearman
      & Sterling LLP

    599
      Lexington Avenue

    New
      York,
      NY  10022-6069

    Facsimile
      No:  (212) 848-7179

    Attention:  Clare
      O’Brien

     

    if
      to the
      Purchaser:

     

    Advanced
      Bionics Holding Corporation

    Mann
      Biomedical Park

    25129
      Rye
      Canyon Loop

    Valencia,
      CA  91355

    Facsimile
      No:   (661) 362-1700

    Attention:  President

    E-mail:  jeff.greiner@advancedbionics.com

     

    with
      a
      copy to :

     

    McDermott
      Will & Emery LLP

    3150
      Porter Drive

    Palo
      Alto, California  94304

    Fax:
      (650) 813-5100

    Attention:  Mark
      J. Mihanovic

    

    SECTION
      12.05  Severability.  If
      any term or other provision of this Agreement is invalid, illegal or incapable
      of being enforced by any rule of Law or public policy, all other conditions
      and
      provisions of this Agreement will nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      by
      this Agreement is not affected in any manner materially adverse to any
      party.  Upon such determination that any term or other provision is
      invalid, illegal or incapable of being enforced, the Parties will negotiate
      in
      good faith to modify this Agreement so as to effect the original intent of
      the
      Parties as closely as possible in a mutually acceptable manner in order that
      the
      transactions contemplated by this Agreement are consummated as originally
      contemplated to the fullest extent possible.

     

    SECTION
      12.06  Entire
      Agreement; Assignment.  This
      Agreement constitutes the entire agreement among the Parties with respect to
      the
      subject matter hereof and supersedes all prior agreements (including the letter
      of intent and term sheet, dated May 30, 2007, by and between Parent and
      Mann, but excluding the Merger Agreement as amended as contemplated in the
      Amendment Agreement and the Amendment Agreement) and undertakings, both written
      and oral, among the Parties, or any of them, with respect to the subject matter
      hereof.  This Agreement may not be assigned by any Party, except that
      the Seller Parties may assign all or any of their rights and obligations
      hereunder to any Affiliate of Parent, provided that 

     

     

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    no
      such
      assignment will relieve the assigning Party of its obligations hereunder if
      such
      assignee does not perform such obligations.

     

    SECTION
      12.07  Parties
      in Interest.  This
      Agreement will be binding upon and inure solely to the benefit of each Party,
      and nothing in this Agreement, express or implied, is intended to or will confer
      upon any other Person any right, benefit or remedy of any nature whatsoever
      under or by reason of this Agreement.

     

    SECTION
      12.08  Specific
      Performance.  The
      Parties agree that irreparable damage would occur in the event any provision
      of
      this Agreement were not performed in accordance with the terms hereof and that
      the Parties will be entitled to specific performance of the terms hereof, in
      addition to any other remedy at Law or equity.

     

    SECTION
      12.09  Governing
      Law.  This
      Agreement and all disputes or controversies arising out of or relating to this
      Agreement or the transactions contemplated hereby will be governed by, and
      construed in accordance with, the laws of the State of New
      York.  Except as provided in Sections 2.06(b), 3.02(c) and 3.03(b),
      all actions and proceedings arising out of or relating to this Agreement will
      be
      heard and determined exclusively in any New York federal court sitting in the
      Borough of Manhattan of The City of New York.  In the event that
      jurisdiction is not available in any federal court sitting in the Borough of
      Manhattan of The City of New York, the Parties agree that all such actions
      and
      proceedings will be heard in the state courts of Delaware located in the City
      of
      Wilmington.  The Parties  hereby (a) submit to the
      exclusive jurisdiction of any federal court sitting in the Borough of Manhattan
      of The City of New York for the purpose of any Action arising out of or relating
      to this Agreement brought by any Party (subject to the preceding sentence),
      and
      (b) irrevocably waive, and agree not to assert by way of motion, defense,
      or otherwise, in any such Action, any Claim that it is not subject personally
      to
      the jurisdiction of the above-named courts, that its property is exempt or
      immune from attachment or execution, that the Action is brought in an
      inconvenient forum, that the venue of the Action is improper, or that this
      Agreement or the transactions contemplated by this Agreement may not be enforced
      in or by any of the above-named courts.

     

    SECTION
      12.10  Waiver
      of Jury Trial.  Each
      of the Parties hereby waives to the fullest extent permitted by applicable
      Law
      any right it may have to a trial by jury with respect to any litigation directly
      or indirectly arising out of, under or in connection with this Agreement or
      the
      transactions contemplated by this Agreement.  Each of the Parties
      (a) certifies that no representative, agent or attorney of any other party
      has represented, expressly or otherwise, that such other party would not, in
      the
      event of litigation, seek to enforce that foregoing waiver and
      (b) acknowledges that it has been induced to enter into this Agreement by,
      among other things, the mutual waivers and certifications in this
Section 12.10.

     

    SECTION
      12.11  Arbitration.

     

    (a)  Binding
      Arbitration.  Any controversy arising under Sections
      2.06(b), 3.02(c), or 3.03(b) that the Parties are unable to
      resolve on their own shall be resolved by binding arbitration administered
      by
      JAMS, The Resolution Experts (“JAMS”).  The
      arbitration shall be conducted before JAMS at one of its New York Resolution
      Centers in accordance with the JAMS Streamlined Arbitration Rules and Procedures
      (or such additional or different procedures 

     

     

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    as
      the
      Parties may agree upon or the arbitrator shall require), before a single neutral
      arbitrator, selected as provided in paragraph (b) below, who shall provide
      an oath or undertaking of impartiality.  The arbitrator shall have no
      authority to award any type of relief (e.g., compensatory,
      consequential, incidental, or punitive damages) other than what is specifically
      contemplated under Sections 2.06(b), 3.02(c), or 3.03(b),
      except with respect to reasonable attorneys’ fees and costs as set forth in this
Section 12.11.  Each Party will cooperate with the
      arbitrator and will promptly provide whatever Books and Records and other
      information the arbitrator requests.  The arbitrator’s resolution
      shall be rendered in writing within 30 days from the date he or she has accepted
      his or her appointment (as set forth in subparagraph (b) below) and will include
      a determination by the arbitrator of which side was the prevailing
      Party.  The non-prevailing Party will pay all JAMS fees and costs
      related to resolving the matter and will pay to the prevailing Party all of
      its
      reasonable attorneys’ fees and costs incurred in connection with the
      arbitration.  The arbitrator will resolve any dispute regarding the
      reasonableness of the prevailing Party’s attorneys’ fees and other
      costs.  Any matter resolved by the arbitrator pursuant to these
      procedures described in this Section 12.11 shall be final and
      binding upon the Parties.

     

    (b)  Selection
      of Arbitrator.  Promptly following the referral of the Parties’
dispute to JAMS, the referring Party shall request from JAMS a list of
      six
      neutral arbitrators from the JAMS New York Resolution Centers with general
      business and commercial expertise, which list will be sent by JAMS to the
      referring Party and the second Party to the arbitration.  Within one
      Business Day following its receipt of that list, the referring Party shall
      strike one name from the list and provide notice to the second Party of which
      name has been stricken.  Within one Business Day of receipt of that
      notice, the second Party shall strike one name from the list and provide notice
      to the referring Party of which name has been stricken.  The Parties
      shall continue alternately to strike names from the original list in this
      fashion until one name remains.  If that individual thereafter accepts
      the appointment, he or she shall be the arbitrator for purposes of this
Section 12.11.  If for any reason he or she is unable or
      unwilling to accept the appointment, then the last individual stricken will
      be
      asked to serve as the arbitrator, and this process will be repeated until an
      arbitrator is selected.

     

    SECTION
      12.12  Counterparts.  This
      Agreement may be executed and delivered (including by facsimile transmission)
      in
      one or more counterparts, and by the different Parties in separate counterparts,
      each of which when executed will be deemed to be an original but all of which
      taken together will constitute one and the same agreement.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

     

     

     

     

    
 

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, each of the Parties has executed or caused this Agreement
      to be
      duly executed as of the date first written above by their respective officers
      thereunto duly authorized.

     

     

     

    
      	 	
              BOSTON
                SCIENTIFIC CORPORATION

            
	 	 
	 	
              By:  _______________________________________

            
	 	
              Name:  ________________________________

              Title:    ________________________________

            
	 	 
	 	 
	 	 
	 	
              BOSTON
                SCIENTIFIC SCIMED, INC.

            
	 	 
	 	
              
                By:  _______________________________________

              

            
	 	
              
                Name:  ________________________________
                  
                  Title:    ________________________________

                

              

            
	 	 
	 	 
	 	 
	 	
              ADVANCED
                BIONICS CORPORATION

            
	 	 
	 	
              
                By:  _______________________________________

              

            
	 	
              
                Name:  ________________________________
                  
                  Title:    ________________________________

                

              

            
	 	 
	 	 
	 	 
	 	
              ADVANCED
                BIONICS HOLDING CORPORATION

            
	 	 
	 	
              
                By:  _______________________________________

              

            
	 	
              
                Name:  ________________________________
                  
                  Title:    ________________________________Exhibit 10.1

AMENDED
AND RESTATED

CHANGE IN CONTROL SEVERANCE AGREEMENT

This Change in Control
Severance Agreement (this “Agreement”), effective as of August         ,
2007, is between Marten Transport, Ltd., a Delaware corporation, located at 129
Marten Street, Mondovi, Wisconsin 54755 (the “Company”) and                               ,
an individual residing at                                                                                           (the ”Executive”).

A.            The
Company and the Executive entered into a Change in Control Severance Agreement,
dated as of March 29, 2006 (the ”Original CIC Severance Agreement”).

B.            The
Company and the Executive desire to amend and restate the Original CIC
Severance Agreement to make changes that are necessary or desirable to reflect
the requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) or an appropriate exception to the requirement of
Section 409A, as set forth herein.

C.            The Company and the Executive intend that the benefits
provided under this Agreement will comply, in form and operation, with the
requirements of Section 409A of the Code or an appropriate exception to the
requirements of Section 409A and this Agreement will be construed and
administered in a manner that is consistent with and give effect to such
intention.

D.            Certain
capitalized terms that are used in this Agreement are defined in Exhibit A,
which is an integral part of this Agreement.

Accordingly, the Company and
Employee each intending to be legally bound, agree as follows:

1.             Term of Agreement.  This Agreement is effective immediately and
will continue in effect until terminated as provided herein.  This Agreement will automatically terminate
upon termination of the Executive’s employment with the Company, except for a
termination contemplated by Section 2, in which case this Agreement will remain
in effect until the date on which the Company’s obligations to the Executive
arising under or in connection with this Agreement have been satisfied in
full.  The Company terminates this
Agreement upon fifteen (15) months prior written notice to the Executive.  Notwithstanding anything in the foregoing to
the contrary, if a Change in Control has occurred during the term of this
Agreement, this Agreement will continue in effect beyond the termination date
then in effect for a period of [CEO - 24 months; other officers - 12 months]
following the month during which the Change in Control occurs or, if later,
until the date on which the Company’s obligations to the Executive arising
under or in connection with this Agreement have been satisfied in full.

2.             Benefits upon a Change in
Control Termination.  The Executive
will become entitled to the benefits described in this Section 2 on account of
a Termination of Employment if and only if (i) the Company terminates the
Executive’s employment for any reason other than the Executive’s death or
Cause, or the Executive terminates the Executive’s employment with the Company
for Good Reason, and (ii) the Termination of Employment occurs either
within the period beginning on the date of a Change in Control and ending on
the last day of the 24th month that begins after the month during which the
Change in Control occurs or prior to a Change in Control if the Executive’s 

termination
was either a condition of the Change in Control or was at the request or
insistence of a Person related to the Change in Control.

(a)          Cash Payment. 
Not more than 10 days following the Date of Termination, or, if later,
not more than 10 days following the date of the Change in Control, the Company
will make a lump-sum cash payment to the Executive in an amount equal to the
sum of (i) [CEO - two times; other officers - one times] the Executive’s
Base Pay, plus (ii) [CEO - two times; other officers - one times] the
Executive’s highest bonus in the three calendar years preceding the year in
which the Change in Control occurs.

(b)          Definitions. 
For purposes of this section, the Continuation Period is the period
beginning on the Executive’s Date of Termination and ending on (i) the
last day of the [CEO — 24th month; other officers — 12th month] month that
begins after the Executive’s Date of Termination or, if earlier, (ii) in
the case of the group health and dental plans referred to in Section 2(c), the
date after the Executive’s Date of Termination on which the Executive first
becomes eligible to participate as an employee in a plan of another employer
providing group health and dental benefits to the Executive and the Executive’s
eligible family members and dependents which plan does not contain any
exclusion or limitation with respect to any pre-existing condition of the
Executive or any eligible family member or dependent who would otherwise be
covered under the Company’s plan but for this clause (ii) or (iii) in the case
of the other welfare benefits referred to in Section 2(d), the date after the
Executive’s Date of Termination on which the Executive first becomes eligible
to participate as an employee in a plan of another employer providing
substantially similar welfare benefits to the Executive and the Executive’s
eligible family members and dependents.

(c)          Group Health Plans. 
If the Executive elects continuation coverage, then, during the
Continuation Period, the Company shall be responsible for a portion of the
Executive’s monthly cost of continuation coverage under the Company’s group
medical and dental plan(s), which by their terms cover the Executive (and the
Executive’s family members and dependents who were eligible to be covered at
any time during the 90-day period immediately prior to the date of the
Change in Control for the period after the Change in Control in which such
family members and dependents would otherwise continue to be covered under the
terms of the plan in effect immediately prior to the Change in Control). The
Executive’s coverage will be deemed to include any Company contribution to a “health
savings account” (or similar arrangement) for the Executive. The portion of the
cost of continuation coverage for which the Company shall be responsible is the
portion in excess of that portion which the Executive would have been
responsible had the Executive’s termination of employment not occurred. If the
level of the Executive’s coverage changes during the Continuation Period, as,
for example, from single to family coverage or to no coverage, the amount for
which the Company is responsible will be determined as if the new coverage
level had been the level of coverage in effect immediately prior to the
Termination of Employment or Change in Control, as the case may be. During this
period, the Executive shall be responsible for the portion of the cost of
continuation coverage for which he would have been responsible had his
termination of employment not occurred. 
The Company’s obligation is contingent upon the Executive electing
continuation coverage in accordance with applicable state and/or federal law
and paying all or a portion of the cost of continuation coverage (as determined
in this Section 2(c)) in a timely manner in accordance with applicable state
and/or federal law.  If the Executive’s
applicable continuation coverage under the Medical Plan or Dental Plan is an
insured option, then the Executive shall pay only 

 2
 

that portion of the cost of
such continuation coverage for which he is responsible and the Company shall
pay the portion of the cost of such continuation coverage for which the
Employer is responsible. In all other cases, the Executive shall pay the full
amount of the cost of continuation coverage and the Company shall reimburse the
Executive for that portion of the cost of continuation for which the Company is
responsible.  The Executive shall be
entitled to elect health care continuation coverage under the Company’s group
health and/or dental plans for that portion of the Continuation Period that
extends beyond the end of the 18-month COBRA continuation period. If COBRA
continuation coverage is not available to the Executive during any portion of
the Continuation Period (other than by reason of his or her failure to elect
COBRA continuation coverage or to pay the required premiums for such coverage),
the Company will provide comparable medical benefits pursuant to an alternative
arrangement, such as an individual medical insurance contract, and such
alternative benefits will be treated as part of the Company’s health and/or
dental plan.

(d)          Additional Welfare Benefits.  At the time the payment is made under
Section 2(a), the Company will make a lump-sum cash payment to the
Executive equal to the aggregate amount of premiums the Company would have paid
during the Continuation Period on behalf of Executive for accidental death and
dismemberment, short and long-term disability, group life insurance and other
life insurance coverages, which by their terms covered the Executive (and the Executive’s
family members and dependents who were eligible to be covered at any time
during the 90-day period immediately prior to the date of the Change in
Control for the period after the Change in Control in which such family members
and dependents would otherwise continue to be covered under the terms of the
plan in effect immediately prior to the Change in Control) under the same terms
and at the same cost to the Company had the Executive continued to be employed
by the Company.  The amount of the premiums
will be based on the premiums in effect at the time of payment and any known,
scheduled increases in such premiums during the Continuation Period.

(e)          Tax Gross-up. 
To the extent the Executive incurs a tax liability (including Federal,
state and local taxes) in connection with a benefit provided pursuant to
Section 2(c) which the Executive would not have incurred had the Executive been
an active employee of the Company participating in the Company’s group health
and dental plans, the Company will make a payment to the Executive in an amount
equal to such tax liability plus an additional amount sufficient to permit the
Executive to retain a net amount, after all taxes, equal to the initial tax
liability in connection with the benefit. 
The payment pursuant to this Section 2(e) will be made within 10 days
after the Executive’s remittal of a written request for payment accompanied by
a statement indicating the basis for and amount of the Executive’s tax
liability, but in no event later than December 31 of the calendar year next
following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.

3.             Gross-Up Payments.

(a)          If the Executive becomes entitled to payments and benefits
following a Change in Control under Section 2, the Company will cause its
independent auditors (the ”Accounting Firm”) promptly to review, at the
Company’s sole expense, the applicability of Code Section 4999 to any payment
or distribution of any type by the Company to or for the Executive’s benefit,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement, any stock option agreement or 

 3
 

certificate or otherwise,
but determined without regard to any payments required under this Section 3
(the “Payments”).  If the Accounting Firm
determines that the Total Payments result in an excise tax imposed on the
Executive by Code Section 4999 or any comparable state or local law (such
excise tax referred to as the “Excise Tax”), the Company will make an
additional cash payment (a “Gross-Up Payment”) to the Executive equal to an
amount such that after payment by the Executive of all the taxes imposed on the
Executive, including any Excise Tax, as a result of the Gross-Up Payment, the
Executive would retain an amount of the Gross-Up Payment equal to the Excise
Tax as a result of the Payments.

(b)          Subject to the provisions of Section 3(d), all
determinations required to be made under this Section 3, including whether and
when a Gross-Up Payment is required and the amount such Gross-Up Payment and
the assumptions to be used in arriving at such determination, must be made by
the Accounting Firm, which must provide detailed supporting calculations both
to the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company.  In the event
that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change of Control, the Executive must
appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm will then be referred
to as the “Accounting Firm” hereunder). 
All fees and expenses of the Accounting Firm will be borne solely by the
Company.

(c)          If no determination of the Excise Tax is made by the
Accounting Firm prior to the time the Executive is required to file a tax
return reflecting the Payments, the Executive will be entitled to receive from
the Company a Gross-Up Payment calculated on the basis of the Excise Tax the
Executive reported in such tax return.

(d)          If any taxing authority determines that a greater Excise
Tax should be imposed upon the Payments than is determined by the Company’s
independent auditors or reflected in the Executive’s tax return pursuant to
this Section 3, the Executive will be entitled to receive from the Company the
full Gross-Up Payment calculated on the basis of the amount of Excise Tax
determined to be payable by such taxing authority.  The Executive must notify the Company in
writing of any claim by the Internal Revenue Service or any other taxing
authority that, if successful, would require the payment by the Company of any
Gross-Up Payment.  Such notification must
be given as soon as practicable but no later than 10 business days after the
Executive knows of such claim and must apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid.  The Executive must not pay such claim prior
to the expiration of the 30-day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive must:

(i)           give the Company any information reasonably requested by
the Company relating to such claim;

(ii)          take such action in connection with contesting such claim
as the Company will reasonably request in writing from time to time, including
accepting 

 4
 

legal representation with
respect to such claim by an attorney reasonably selected by the Company;

(iii)         cooperate with the Company in good faith in order to
effectively contest such claim; and

(iv)         permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company will bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and will indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) or expense imposed or
incurred as a result of such representation and payment of costs and
expenses.  Without limitation on the
foregoing provisions of this Section 3(d), the Company will control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company will determine; provided further, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company will advance the amount of such payment to the Executive on an
interest-free basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and provided
further that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested
amount.  Furthermore, the Company’s
control of the contest will be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive will be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.

(e)          If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 3(d), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive must (subject to
the Company’s complying with the requirements of Section 3(d)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).  If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 3(d), a determination is
made that the Executive will not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty days after such
determination, then such advance will be forgiven and will not be required to
be repaid and the amount of such advance will offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

(f)           The payment(s) pursuant to this Section 3 will be made
within 10 days after the Executive’s remittal of a written request for payment
accompanied by a statement indicating the basis for and the amount of the
Executive’s actual tax liability. Reimbursement 

 5
 

of the Gross-Up Payment, and
any expenses incurred by the Executive under Section 3(d), will be made not
later than the end of the calendar year next following the calendar year in
which the Executive remits the related taxes to the appropriate taxing
authority (either directly or through tax withholdings), provided if an
additional Gross-Up Payment is payable following an audit or litigation and no
additional taxes are remitted by the Executive, reimbursement by the Company
shall be made by the end of the calendar year next following the calendar year
in which the audit is completed or there is a final nonappealable settlement or
other resolution of the litigation. 
Notwithstanding any other provision of this Section 3, the Company may,
in its sole discretion, withhold and pay over to the Internal Revenue Service
or any other applicable taxing authority, for the benefit of the Executive, all
or any portion of the Gross-Up Payment and the Executive hereby consents to
such withholding.

4.             Indemnification.  Following a Change in Control, the Company
will indemnify and advance expenses to the Executive for damages, costs and
expenses (including, without limitation, judgments, fines, penalties,
settlements and reasonable fees and expenses of the Executive’s counsel)
incurred in connection with all matters, events and transactions relating to
the Executive’s service to or status with the Company or any other corporation,
employee benefit plan or other Person for which the Executive served at the
request of the Company to the extent that the Company would have been required
to do so under applicable law, corporate articles, bylaws or agreements or
instruments of any nature with or covering the Executive, as in effect
immediately prior to the Change in Control and to any further extent as may be
determined or agreed upon following the Change in Control.

5.             Miscellaneous.

(a)          Binding Agreement. 
This Agreement inures to the benefit of, and is enforceable by, the
Executive, the Executive’s personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.  If the Executive dies while any amount would
still be payable to the Executive under this Agreement if the Executive had
continued to live, all such amounts, unless otherwise provided in this
Agreement, will be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee or other designee or, if there be no such
designee, to the Executive’s estate.

(b)          No Mitigation. 
The Executive will not be required to mitigate the amount of any
benefits the Company becomes obligated to provide to the Executive in
connection with this Agreement by seeking other employment or otherwise.  The benefits to be provided to the Executive
in connection with this Agreement may not be reduced, offset or subject to
recovery by the Company by any benefits the Executive may receive from other
employment or otherwise.

(c)          No Setoff. 
The Company has no right to setoff benefits owed to the Executive under
this Agreement against amounts owed or claimed to be owed by the Executive to
the Company under this Agreement or otherwise.

(d)          Taxes.  All
benefits to be provided to the Executive in connection with this Agreement will
be subject to required withholding of federal, state and local income, excise
and employment-related taxes.  The
Company’s good faith determination with respect to its obligation to withhold
such taxes relieves it of any obligation that such amounts should have been
paid to the Executive.

 6
 

(e)          Notices.  For
the purposes of this Agreement, notices and all other communications provided
for in, or required under, this Agreement must be in writing and will be deemed
to have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage prepaid
and addressed to each party’s respective address set forth on the first page of
this Agreement (provided that all notices to the Company must be directed to
the attention of the President), or to such other address as either party may
have furnished to the other in writing in accordance with these provisions,
except that notice of change of address will be effective only upon receipt.

(f)           Disputes.  If
the Executive so elects, any dispute, controversy or claim arising under or in
connection with this Agreement will be settled exclusively by binding
arbitration administered by the American Arbitration Association in
Minneapolis, Minnesota in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then in effect; provided that the
Executive may seek specific performance of the Executive’s right to receive
benefits until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. 
If any dispute, controversy or claim for damages arising under or in
connection with this Agreement is settled by arbitration, the Company will pay,
or if elected by the Executive, reimburse, all fees, costs and expenses
incurred by the Executive related to such arbitration unless the arbitrators
decide that the Executive’s claim was frivolous or advanced by the Executive in
bad faith.  If the Executive does not
elect arbitration, the Executive may pursue all available legal remedies.  The Company will pay, or if elected by the
Executive, reimburse the Executive for, all fees, costs and expenses incurred
by the Executive in connection with any actual, threatened or contemplated
litigation relating to this Agreement to which the Executive is or reasonably
expects to become a party, whether or not initiated by the Executive, if the
Executive is successful in recovering any benefit under this Agreement as a
result of such action.  The Company will
not assert in any dispute or controversy with the Executive arising under or in
connection with this Agreement the Executive’s failure to exhaust
administrative remedies.

(g)          Effect of Plan Benefits on Other Severance Plans.  In the event the Executive receives any
payment under the terms of this Agreement, the Executive will not be eligible
to receive benefits under any other severance pay plan sponsored or maintained
by the Company.

(h)          Related Agreements and Other Arrangements.  This Agreement, including Exhibit A attached
hereto and incorporated as an integral part of this Agreement, constitutes the
entire agreement of the parties with respect to the subject matter hereof, and
no agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter to this Agreement have been made by any party
which are not expressly set forth in this Agreement.  This Agreement supersedes and replaces the
Original CIC Severance Agreement in its entirety.  To the extent that any provision of any Other
Arrangement limits, qualifies or is inconsistent with any provision of this
Agreement, then for purposes of this Agreement, while such Other Arrangement
remains in force, the provision of this Agreement will control and such
provision of such Other Arrangement will be deemed to have been superseded, and
to be of no force or effect, as if such Other Arrangement had been formally
amended to the extent necessary to accomplish such purpose.  Nothing in this Agreement prevents or limits
the Executive’s continuing or future 

 7
 

participation in any Other
Arrangement for which the Executive may qualify, and nothing in this Agreement
limits or otherwise affects the rights the Executive may have under any Other
Arrangement.  Amounts that are vested
benefits or which the Executive is otherwise entitled to receive under any
Other Arrangement at or subsequent to the Date of Termination will be payable
in accordance with such Other Arrangement.

(i)           No Employment or Service Contract.  Nothing in this Agreement is intended to
provide the Executive with any right to continue in the employ of the Company
for any period of specific duration or interfere with or otherwise restrict in
any way the Executive’s rights or the rights of the Company.

(j)           Payment; Assignment.  Benefits payable under this Agreement will be
paid only from the general assets of the Company.  No person has any right to or interest in any
specific assets of the Company by reason of this Agreement.  To the extent benefits under this Agreement
are not paid when due to any individual, he or she is a general unsecured
creditor of the Company with respect to any amounts due.  Benefits payable pursuant to this Agreement
and the right to receive future benefits may not be anticipated, alienated,
sold, transferred, assigned, pledged, encumbered or subject to any charge.

(k)          Late Payments. 
Benefits not paid under this Agreement when due will accrue interest at
the rate of 10% per year or the maximum rate permitted under applicable law.

(l)           Survival. 
The respective obligations of, and benefits afforded to, the Company and
the Executive which by their express terms or clear intent survive termination
of the Executive’s employment with the Company or termination of this
Agreement, as the case may be, will survive termination of the Executive’s
employment with the Company or termination of this Agreement, as the case may
be, and will remain in full force and effect according to their terms.

(m)         Amendments; Waivers. 
No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in a writing signed
by the Executive and a duly authorized officer of the Parent Corporation.  No waiver by any party to this Agreement at
any time of any breach by another party to this Agreement of, or of compliance
with any condition or provision of this Agreement to be performed by such party
will be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.

(n)          Governing Law. 
This Agreement and the legal relations among the parties as to all
matters, including, without limitation, matters of validity, interpretation,
construction, performance and remedies, will be governed by and construed
exclusively in accordance with the internal laws of the State of Wisconsin
(without regard to the conflict of laws principles of any jurisdiction).

(o)          Further Assurances. 
The parties to this Agreement agree to perform, or cause to be
performed, such further acts and deeds and to execute and deliver or cause to
be executed and delivered, such additional or supplemental documents or
instruments as may be reasonably required by the other party to carry into
effect the intent and purpose of this Agreement.

 8
 

(p)          Interpretation. 
The invalidity or unenforceability of all or any part of any provision
of this Agreement will not affect the validity or enforceability of the
remainder of such provision or of any other provision of this Agreement, which
will remain in full force and effect.

(q)          Counterparts. 
This Agreement may be executed in several counterparts, each of which
will be deemed to be an original, but all of which together will constitute one
and the same instrument.

IN WITNESS WHEREOF, the
Company and the Executive have executed this Agreement as of the date first
above written.

	
  MARTEN TRANSPORT, LTD.

  	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Randolph L.
  Marten 

  President and Chief Executive Officer

  	
   

  	
  [Name of Executive]

  	
   

  

 

 9

Exhibit A

DEFINITIONS

For
purposes of the Agreement, the following terms will have the meaning set forth
below in this Exhibit A unless the context clearly requires otherwise.  Terms defined elsewhere in the Agreement will
have the same meaning throughout the Agreement.

1.             “Affiliate” means any person
with whom the Company would be considered a single employer under Sections
414(b) and 414(c) of the Code, namely (i) any corporation at least eighty
percent (80%) of whose outstanding securities ordinarily having the right to
vote at elections of directors is owned directly or indirectly by the Parent
Corporation or (ii) any other form of business entity in which the Parent
Corporation, directly or indirectly, owns eighty percent (80%) or more of the
controlling interests in such entity. Solely for purposes of determining
whether a Termination of Employment has occurred, the term Affiliate will be
determined by applying Code section 1563(a)((1), (2) and (3) for purposes of
determining a controlled group of corporations under Code section 414(b) and in
applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or
businesses that are under common control for purposes of Code section 414(c),
the phrase “at least 50 percent” will be used instead of “at least 80 percent”
each place it appears.

2.             “Base Pay” means the
Executive’s annual base salary from the Company at the rate in effect
immediately prior to a Change in Control or at the time Notice of Termination
is given, whichever is greater.  Base Pay
includes only regular cash salary and is determined before any reduction for
deferrals pursuant to any nonqualified deferred compensation plan or
arrangement, qualified cash or deferred arrangement or cafeteria plan.

3.             “Benefit Plan” means any

(a)          employee benefit plan as defined in Section 3(3) of ERISA;

(b)         cafeteria plan described in Code Section 125;

(c)          plan, policy or practice providing for paid vacation, other
paid time off or short-or long-term profit sharing, bonus or incentive payments
or perquisites; or

(d)         stock option, stock purchase, restricted stock, phantom
stock, stock appreciation right or other equity-based compensation plan with
respect to the securities of any Affiliate that is sponsored, maintained or
contributed to by the Company for the benefit of employees (and/or their
families and dependents) generally or the Executive in particular (and/or the
Executive’s family and dependents).

4.             “Board” means the board of
directors of the Parent Corporation duly qualified and acting at the time in
question.  On and after the date of a
Change in Control, any duty of the Board in connection with this Agreement is
nondelegable and any attempt by the Board to delegate any such duty is
ineffective.

5.             “Cause” means:

(a)          the Executive’s gross misconduct that is materially and
demonstrably injurious to the Company;

 A-1
 

(b)         the Executive’s willful and continued failure to perform
substantially the Executive’s duties with the Company (other than any such
failure (1) resulting from the Executive’s incapacity due to bodily injury or
physical or mental illness or (2) relating to changes in the Executive’s duties
after a Change in Control that constitute Good Reason) after a demand for
substantial performance is delivered to the Executive by the chair of the Board
which specifically identifies the manner in which the Executive has not
substantially performed the Executive’s duties and provides for a reasonable
period of time within which the Executive may take corrective actions; or

(c)          the Executive’s conviction (including a plea of nolo
contendere) of willfully engaging in illegal conduct constituting a felony or
gross misdemeanor under federal or state law which is materially and
demonstrably injurious to the Company or which impairs the Executive’s ability
to perform substantially the Executive’s duties for the Company.

An
act or failure to act will be considered “gross or willful” for this purpose
only if done, or omitted to be done, by the Executive in bad faith and without
reasonable belief that it was in, or not opposed to, the best interests of the
Company.  Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board
(or a committee thereof) or based upon the advice of counsel for the Company
will be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.  It is also expressly understood that the
Executive’s attention to matters not directly related to the business of the
Company will not provide a basis for termination for Cause so long as the Board
did not expressly disapprove in writing of the Executive’s engagement in such
activities either before or within a reasonable period of time after the Board
knew or could reasonably have known that the Executive engaged in those
activities.  Notwithstanding the
foregoing, the Executive may not be terminated for Cause unless and until there
has been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive’s counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Executive were guilty of the
conduct set forth above in clauses (a), (b) or (c) of this definition and
specifying the particulars thereof in detail.

6.             “Change in Control” means
the occurrence of any of the following on or after March 29, 2006:

(a)          the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person or entity that
is not controlled by the Company; or

(b)         the approval of stockholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company; or

(c)          a merger or consolidation to which the Company is a party
if the stockholders of the Company immediately prior to the effective date of
such merger or consolidation have “beneficial ownership” (as defined in Rule
13d-3 under the Exchange Act), immediately following the effective date of such
merger or consolidation, of securities of the surviving corporation
representing less than 50% of the combined voting power of the surviving
corporation’s then outstanding securities ordinarily having the right to vote
at elections of directors; or

 A-2
 

(d)         any person, other than (i) the Company, (ii) any trustee or
other fiduciary holding securities under any employee benefit plan of the
Company, (iii) Randolph L. Marten or any of his affiliates, or (iv) Christine
K. Marten or any of her affiliates, becomes after the effective date of the
Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% or more of the combined voting power of the
Company’s outstanding securities ordinarily having the right to vote at
elections of directors.

7.             “Code” means the Internal
Revenue Code of 1986, as amended.  Any
reference to a specific provision of the Code includes a reference to such
provision as it may be amended from time to time and to any successor
provision.

8.             “Company” means the Parent
Corporation, any Successor and any Affiliate.

9.             “Date of Termination”
following a Change in Control (or prior to a Change in Control if the Executive’s
termination was either a condition of the Change in Control or was at the
request or insistence of any Person related to the Change in Control) means:

(a)          if the Executive’s employment is to be terminated by the
Executive, the date specified in the Notice of Termination which in no event
may be a date more than 15 days after the date on which Notice of Termination
is given unless the Company agrees in writing to a later date;

(b)         if the Executive’s employment is to be terminated by the
Company for Cause, the date specified in the Notice of Termination;

(c)          if the Executive’s employment is terminated by reason of
the Executive’s death, the date of the Executive’s death; or

(d)         if the Executive’s employment is to be terminated by the
Company for any reason other than Cause or the Executive’s death, the date
specified in the Notice of Termination, which in no event may be a date earlier
than 15 days after the date on which a Notice of Termination is given, unless
the Executive expressly agrees in writing to an earlier date.

In
the case of termination by the Company of the Executive’s employment for Cause,
if the Executive has not previously expressly agreed in writing to the
termination, then within the 30-day period after the Executive’s receipt of the
Notice of Termination, the Executive may notify the Company that a dispute
exists concerning the termination, in which event the Date of Termination will
be the date set either by mutual written agreement of the parties or by the
judge or arbitrators in a proceeding as provided in Section 5(g) of the
Agreement.  During the pendency of any
such dispute, the Executive will continue to make the Executive available to
provide services to the Company and the Company will continue to pay the
Executive the Executive’s full compensation and benefits in effect immediately
prior to the date on which the Notice of Termination is given (without regard to
any changes to such compensation or benefits that constitute Good Reason) and
until the dispute is resolved in accordance with Section 5(g) of the
Agreement.  The Executive will be
entitled to retain the full amount of any such compensation and benefits without
regard to the resolution of the dispute unless the judge or arbitrators
decide(s) that the Executive’s claim of a dispute was frivolous or advanced by
the Executive in bad faith. Notwithstanding the foregoing, the 

 A-3
 

Executive’s
Date of Termination must be consistent with the date of the Executive’s
Termination of Employment.

10.           “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.  Any reference to a specific provision of
ERISA includes a reference to such provision as it may be amended from time to
time and to any successor provision.

11.           “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
Any reference to a specific provision of the Exchange Act or to any rule
or regulation thereunder includes a reference to such provision as it may be
amended from time to time and to any successor provision.

12.           “Good Reason” means:

(a)          a material diminution in the Executive’s authority, duties
or responsibilities as an executive of the Company as in effect immediately prior
to the Change in Control (other than, if applicable, any such change directly
attributable to the fact that the Parent Corporation is no longer publicly
owned);

(b)         a material diminution in the Executive’s base compensation;

(c)          a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive reports as in effect
immediately prior to the Change in Control, including any requirement that the
Executive report to a corporate officer or employee instead of reporting
directly to the Board if the Executive reported directly to the Board
immediately prior to the Change in Control;

(d)         a material diminution in the budget over which the Executive
retains authority;

(e)          a material change in the geographic location at which the
Company requires the Executive to be based as compared to the location where
the Executive was based immediately prior to the Change in Control; or

(f)          any other action or inaction by the Company that
constitutes a material breach of any employment agreement between the Company
and the Executive.

(g)         An act or omission will not constitute a “good reason”
unless the Executive gives written notice to the Company of the existence of
such act or omission within 90 days of its initial existence and the Company
fails to cure the act or omission within 30 days after the notification.

13.           “Notice of Termination” means
a written notice given on or after the date of a Change in Control (unless the
Executive’s termination before the date of the Change in Control was either a
condition of the Change in Control or was at the request or insistence of any
Person related to the Change in Control in which case the written notice may be
given before the date of the Change in Control) which indicates the specific
termination provision in the Agreement pursuant to which the notice is
given.  Any purported termination by the
Company or by the Executive on or after the date of a Change in Control (or
before the date of a Change in Control if the Executive’s termination was either
a condition of the Change in Control or was at the request or insistence of any
Person related to the Change in Control) must be communicated by written Notice
of Termination to be effective;

 A-4
 

provided,
that the Executive’s failure to provide Notice of Termination will not limit
any of the Executive’s rights under the Agreement except to the extent the
Company demonstrates that it suffered material actual damages by reason of such
failure.

14.           “Other Arrangement” is any
Benefit Plan or other plan, policy or practice of the Company or any other
agreement between the Executive and the Company, other than this Agreement.

15.           “Parent Corporation” means
Marten Transport, Ltd. and any Successor.

16.           “Person” means any individual,
corporation partnership, group, association or other person,” as such term is
used in Section 13(d) or Section 14(d) of the Exchange Act, other than the
Parent Corporation, any Affiliate or any benefit plan(s) sponsored by the
Parent Corporation or an Affiliate.

17.           “Successor” means any Person
that succeeds to, or has the practical ability to control (either immediately
or solely with the passage of time), the Parent Corporation’s business
directly, by merger, consolidation or other form of business combination, or
indirectly, by purchase of the Parent Corporation’s outstanding securities
ordinarily having the right to vote at the election of directors or all or
substantially all of its assets or otherwise.

18.           “Termination of Employment”
means a termination of Executive’s employment relationship (both as an employee
and independent contractor) with the Company and all Affiliates or such other
change in the Executive’s employment relationship with the Company and all
Affiliates that would be considered a “separation from service” under Section
409A of the Code.  The Executive’s
employment relationship will be treated as remaining intact while the Executive
is on a military leave, a sick leave or other bona fide leave of absence
(pursuant to which there is a reasonable expectation that the Executive will
return to perform services for the Company or an Affiliate) but only if the
period of such leave does not exceed six (6) months, or if longer, so long as
the Executive retains a right to reemployment by the Company or an Affiliate
under applicable statute or by contract, provided, however, where the Executive’s
leave is due to any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous
period of not less than six (6) months and such impairment causes the Executive
to be unable to perform the duties of his or her position of employment or any
substantially similar position of employment, a twenty-nine (29) month period
of absence may be substituted for such six (6) month period of absence.  In all cases, the Executive’s Termination of
Employment must constitute a “separation from service” under Section 409A of
the Code and any “separation from service” under Section 409A of the Code shall
be treated as a Termination of Employment.

 A-5

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