8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):     August 9, 2007

BOSTON SCIENTIFIC CORPORATION

(Exact name of registrant as specified in charter)

DELAWARE	1-11083	04-2695240
(State or other	(Commission	(IRS employer
jurisdiction of	file number)	identification no.)
incorporation)

One Boston Scientific Place, Natick, Massachusetts	01760-1537
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code:(508) 650-8000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On August 9, 2007, we entered into an agreement to amend our merger agreement with Advanced Bionics, which we acquired in 2004, primarily to eliminate shared management provisions and modify the schedule of earn out payments.  The agreement grants us sole management and control of the pain management business, including the emerging indications program.  The transaction provides a new schedule of consolidated, fixed earn out payments to be made by us to former Advanced Bionics shareholders entitled to participate in earn out payments, consisting of $650 million payable upon closing in January 2008 and $500 million payable in March 2009.

We also entered into definitive agreements to sell a controlling interest in the auditory business and drug pump development program to entities affiliated with the principals of Advanced Bionics for an aggregate payment of $150 million at closing.

The transactions are expected to close in January 2008, subject to the approval of former Advanced Bionics shareholders who are entitled to earn out payments under the original merger agreement, and customary regulatory approvals.

Following the closing of the transactions, the parties will dismiss currently pending litigation between us and former Advanced Bionics shareholders.

The press release issued on August 9, 2007 is attached as Exhibit 99.1 hereto.  In addition, the amendment agreement, amendment no. 1 to the original merger agreement under which we acquired Advanced Bionics, and the definitive agreement relating to the sale of the auditory business are attached as Exhibits 10.1 through 10.3 hereto.

ITEM 2.05. COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES.

In connection with the execution of the amendment agreement and the definitive agreements described in Item 1.01 above, we expect to record an estimated after-tax charge of $360 million in the third quarter of 2007, primarily associated with the impairment of goodwill and intangible assets.  In addition, we will incur costs to separate the auditory business and drug pump development program; these costs are not expected to be material to our operating results, cash flows or financial position.

ITEM 2.06. MATERIAL IMPAIRMENTS.

See the discussion described in Item 1.01 and Item 2.05 above with respect to the after-tax impairment charge we expect to record as a result of the transactions described in Item 1.01 above.

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ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No. Description

10.1 Form of Amendment Agreement

10.2 Form of Amendment No. 1 to Agreement and Plan of Merger

10.3 Form of Cochlear Implant Business Purchase and Sale Agreement

99.1 Press Release issued by Boston Scientific Corporation dated August 9, 2007

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SIGNATURE

Pursuantto the requirements of the Securities and Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BOSTON SCIENTIFIC CORPORATION
Date:       August 14, 2007	By:	/s/ Lawrence J. Knopf
		Lawrence J. Knopf
		Vice President and Assistant General Counsel

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EXHIBIT INDEX

Exhibit No. Description

10.1 Form of Amendment Agreement

10.2 Form of Amendment No. 1 to Agreement and Plan of Merger

10.3 Form of Cochlear Implant Business Purchase and Sale Agreement

99.1 Press Release issued by Boston Scientific Corporation dated August 9, 2007

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EX-10.1

EXHIBIT 10.1

——————————

FORM OF

AMENDMENT AGREEMENT

——————————

among

BOSTON SCIENTIFIC CORPORATION,

BOSTON SCIENTIFIC SCIMED, INC.,

ADVANCED BIONICS CORPORATION,

THE BIONICS TRUST

and

JEFFREY D. GOLDBERG AND CARLA WOODS (COLLECTIVELY IN THEIR CAPACITY AS THE STOCKHOLDERS' REPRESENTATIVE)

Dated as of August 9, 2007

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TABLE OF CONTENTS

		Page
ARTICLE I.   DEFINITIONS		2
SECTION 1.01	Certain Defined Terms	2
SECTION 1.02	Definitions	4
SECTION 1.03	Other Interpretive Provisions	4
ARTICLE II.  TRANSACTION		5
SECTION 2.01	Amendments to Merger Agreement	5
SECTION 2.02	Closing	6
SECTION 2.03	Deliveries by the Parties	6
SECTION 2.04	Withholding Rights	7
SECTION 2.05	Amendment and Restatement of the Trust Agreement; Distributions by the Trust	8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE BSC PARTIES		8
SECTION 3.01	Organization and Authority	8
SECTION 3.02	No Conflict	9
SECTION 3.03	Financing	9
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE TRUST		10
SECTION 4.01	Organization and Authority	10
SECTION 4.02	No Conflict	11
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS' REPRESENTATIVE		11
SECTION 5.01	Authority of the Stockholders' Representative	11
SECTION 5.02	No Conflict	11
SECTION 5.03	Proxy of Mann and Certain Mann-Controlled Earn Out Recipients	12
ARTICLE VI. JOINT REPRESENTATIONS AND WARRANTIES OF PARENT AND STOCKHOLDERS REPRESENTATIVE		12
SECTION 6.01	Authority of Parent and the Stockholders' Representative	12
SECTION 6.02	No Conflict	13

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TABLE OF CONTENTS (continued)

		Page
ARTICLE VII. ADDITIONAL AGREEMENTS		13
SECTION 7.01	Public Announcements	13
SECTION 7.02	Further Action	14
SECTION 7.03	Approval by Earn Out Recipients	15
SECTION 7.04	Earn Out Recipient and Trustee Liability	16
SECTION 7.05	Notification of Certain Matters	16
SECTION 7.06	Waiver of Time Period	16
ARTICLE VIII. CONDITIONS TO CLOSING		17
SECTION 8.01	Conditions to Obligations of the Parties	17
SECTION 8.02	Conditions to Obligations of the BSC Parties	17
SECTION 8.03	Conditions to Obligations of the Trust and the Stockholders' Representative	17
ARTICLE IX.   TERMINATION		18
SECTION 9.01	Termination	18
SECTION 9.02	Effect of Termination	18
ARTICLE X.    GENERAL PROVISIONS		19
SECTION 10.01	Fees and Expenses	19
SECTION 10.02	Amendment	19
SECTION 10.03	Waiver	19
SECTION 10.04	Notices	20
SECTION 10.05	Severability	20
SECTION 10.06	Entire Agreement; Assignment	21
SECTION 10.07	Parties in Interest	21
SECTION 10.08	Specific Performance	21
SECTION 10.09	Governing Law	21
SECTION 10.10	Waiver of Jury Trial	22
SECTION 10.11	Counterparts	22

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EXHIBITS

1.01(a)	Earn Out Obligation
1.01(b)	Guaranty
1.01(c)	Reaffirmation
1.01(d)	Settlement and Release Agreement
2.01(a)	Amendment 1
2.01(b)	Amendment 2
4.01	Trustee Certificate
5.03(a)(i)	Mann-Controlled Earn Out Recipients
5.03(a)(ii)	Mann Proxy
7.01(a)(i)	Initial Press Release
7.01(a)(ii)	Frequently Asked Questions
7.03(a)(ii)	Form of Earn Out Recipient Release
8.02(b)	Form of Limited Mutual Release

SCHEDULES

2.05 Earn Out Withholding

This AMENDMENT 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 "Company"), the BIONICS TRUST (the "Trust") and CARLA WOODS and JEFFREY D. GOLDBERG (such persons acting together by majority vote, and any successor persons acting together by majority vote, solely in their capacity as Stockholders' Representative under the Merger Agreement, being the "Stockholders' Representative").

WHEREAS, Scimed owns all the issued and outstanding shares of common stock (the "Common Stock"), par value $0.01 per share, of the Company 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 wholly owned subsidiary of Scimed, the Company, the Trust and the Stockholders' Representative;

WHEREAS, the parties to the Merger Agreement (other than Claude Acquisition Corp., the existence of which ceased after it merged into the Company) wish to amend the Merger Agreement to (a) modify the corporate governance provisions of Section 5.04 of the Merger Agreement in anticipation of the Closing, (b) require Scimed to pay to the Trust the First Earn Out Payment (as defined herein) on the Closing Date and the amount of the Earn Out Obligation (as defined herein) on March 6, 2009 and (c) provide that, at the Closing, the executory obligations of the Parties under the Merger Agreement will be terminated and cease to have any further force or effect to the extent but only the extent set forth in this Agreement and the Amendments (as defined herein);

WHEREAS, concurrently with the execution hereof, Parent is executing and delivering a Guaranty in the form attached hereto as Exhibit 1.01(b) pursuant to which Parent guarantees the obligations of Scimed hereunder, including the payment of the amounts due under the Earn Out Obligation (the "Guaranty");

WHEREAS, the Parties agree that no approval of the Executive Board is required to effect the transactions contemplated hereby because, among other things, the Parties who have the power to appoint the Members have agreed to enter into this Agreement; and

WHEREAS, if this Agreement terminates and the Closing does not occur, Amendment 1, if it has been effected, will terminate and be of no further force or effect as of the date this Agreement terminates, any amendment to the Merger Agreement effected by Amendment 1 will be null and void other than in respect of the period during which Amendment 1 was effective, if any, the Merger Agreement will not be deemed amended by Amendment 1 in any respect whatsoever, and Amendment 2 will not become effective.

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

ARTICLE I.

DEFINITIONS

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

"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 BSC Parties will not include the Companies after the Closing Date.

"BSC Parties" means Parent and Scimed.

"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 claims, 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.

"Companies" mean the Delaware limited liability companies to be newly formed by the Company pursuant to the Purchase Agreements.

"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, however, that any reference to a Person controlled by any of the BSC Parties will not include the Companies after the Closing Date.

"Earn Out Obligation" means an obligation, substantially in the form of Exhibit 1.01(a), due and payable in full on March 6, 2009 issued by Scimed to the Trust in the principal amount of $500,000,000.00.

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

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

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

"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,(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).

"Minority Earn Out Recipients" means the Earn Out Recipients other than Mann, the Mann-Controlled Earn Out Recipients and Jeffrey H. Greiner.

"Party" or "Parties" means the parties to this Agreement, which are Parent, Scimed, the Company, the Trust and the Stockholders' Representative.

"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.

"Reaffirmation" means a reaffirmation of the Guaranty in respect of the Earn Out Obligation in the form attached hereto as Exhibit 1.01(c).

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

"Requisite Earn Out Recipient Approval" means the written approval of this Agreement, the Purchase Agreements and the consummation of the transactions contemplated hereby and thereby, including the Amendments, by (a) Minority Earn Out Recipients holding more than 50% of the Earn Out Rights held by all the Minority Earn Out Recipients and (b) Earn Out Recipients holding more than 50% of all Earn Out Rights.

"Settlement and Release Agreement" means the Settlement and Limited Mutual Release Agreement among Parent, Scimed, the Trust, the Trustees and Stockholders' Representative substantially in the form attached hereto as Exhibit 1.01(d).

"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.

"Trust Agreement" means the Trust Agreement of the Trust, dated May 28, 2004, among Scimed, Mann, Jeffrey H. Greiner and David MacCallum, as Stockholders'

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Representative as of the date thereof and Mann, Jeffrey H. Greiner and David MacCallum, as Trustees as of the date thereof.

"Trustees" means Carla Woods and Jeffrey D. Goldberg, as trustees of the Trust.

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

Definition	Location
"Company"	Preamble
"Agreement"	Preamble
"Amended and Restated Trust Agreement"	2.05
"Amendment 1"	2.01(a)
"Amendment 2"	2.01(b)
"Amendments"	2.01(b)
"Closing"	2.02
"Closing Date"	2.02
"Common Stock"	Recitals
"Draft Information Statement"	7.03(a)
"FAQs"	7.01(a)
"First Earn Out Payment"	2.03(a)(i)
"Guaranty"	Recitals
"Information Statement"	7.03(a)
"Mann Proxy"	5.03
"Merger Agreement"	Recitals
"Parent"	Preamble
"Press Release"	7.01(a)
"Purchase Agreements"	9.01(b)
"Scimed"	Preamble
"Stockholders' Representative"	Preamble
"Trust"	Preamble

SECTION 1.03Other Interpretive Provisions.  

Unless the express context otherwise requires:

(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;

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(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 or agreement (including this Agreement) mean such contract or agreement as amended, supplemented or modified  from time to time with notice to the BSC Parties, the Stockholders' Representative or the Trust, to the extent required, and otherwise 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 any license mean such Law or license 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" or "agreements 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 unless otherwise specified.

ARTICLE II.

TRANSACTION

SECTION 2.01Amendments to Merger Agreement.  The BSC Parties, the Trust, the Company and the Stockholders' Representative hereby agree that the Merger Agreement will be amended in the manner and at the times set forth below:

(a)First Amendment.  Within 18 Business Days of the date of mailing of the Information Statement to the Earn Out Recipients in accordance with Section 7.03, the Stockholders' Representative will notify Parent as to whether the Requisite Earn Out Recipient Approval has been obtained.  If the Requisite Earn Out Recipient Approval has not been obtained, the Stockholders' Representative will also provide to Parent's outside counsel copies of all written ballots received from the Earn Out Recipients with the names of the Earn Out

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Recipients who are at such time employees of the Company redacted from such written ballots.  If the Requisite Earn Out Recipient Approval has been obtained, Amendment No. 1 to the Merger Agreement set forth on Exhibit 2.01(a) ("Amendment 1") will become effective as of 9:00 a.m. California time on the first Business Day after such notification has been delivered to Parent.

(b)Second Amendment.  At the Closing, Amendment No. 2 to the Merger Agreement set forth on Exhibit 2.01(b) ("Amendment 2" and together with Amendment 1, the "Amendments") will become effective.  The effectiveness of Amendment 2 will not occur until the First Earn Out Payment is paid to the Trust.

(c)Effectiveness of Amendments.  Until the Requisite Earn Out Recipient Approval is obtained, if at all, neither of the Amendments will become effective and the Merger Agreement, unamended, will continue to govern the relationship between the Parties.  If the Requisite Earn Out Recipient Approval is obtained, and then this Agreement terminates so that  the Closing does not occur, then Amendment 2 will not become effective and Amendment 1 will be terminated and of no further force or effect as of the date that this Agreement is terminated.  Notwithstanding the foregoing, any action or failure to act effected by any Party during the period of time beginning upon the effectiveness of Amendment 1 but prior to the termination of this Agreement, to the extent such action or failure to act is expressly permitted by the Merger Agreement as amended by Amendment 1, will not be deemed a breach or failure to comply with the Merger Agreement.

SECTION 2.02Closing.  The payment of the First Earn Out Payment and the delivery of the Earn Out Obligation to the Trust, and the delivery of the other documents set forth in Section 2.03 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 at 10:00 a.m. New York time on either (a) January 3, 2008 or (b) the third Business Day to occur following the satisfaction or waiver of the conditions to the obligations of the Parties set forth in Article VIII (other than those to be satisfied or waived at the Closing, but subject to the satisfaction or waiver thereof at the Closing), whichever is later, or at such other place or at such other time or on such other date as the Parties may agree upon in writing (the "Closing Date").

SECTION 2.03Deliveries by the Parties.

(a)BSC Parties.  At the Closing, the BSC Parties will deliver to the Trust the following:

(i)$650,000,000.00 in cash less the amount of any Earn Out Payment paid by Scimed to the Trust after the date hereof and before the Closing, payable by Scimed in immediately available funds by wire transfer to an account designated by the Trust (such account to be designated not fewer than two Business Days prior to the anticipated Closing Date) (the "First Earn Out Payment");

(ii)the Reaffirmation, duly executed by Parent;

(iii)the Earn Out Obligation, duly executed by Scimed;

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(iv)a counterpart to the Settlement and Release Agreement executed by Parent and Scimed;

(v)a counterpart to the Amended and Restated Trust Agreement;

(vi)certified resolutions of the Board of Directors of each of the BSC Parties, authorizing the transactions contemplated by this Agreement;

(vii)such other documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement; and

(viii)a duly executed certificate of the secretary or assistant secretary of each of the BSC Parties as to incumbency and specimen signatures of officers of the BSC Parties executing this Agreement.

(b)Trust/Stockholders' Representative.  At the Closing, the Trust or the Stockholders' Representative, as applicable, will deliver to Scimed, as applicable, the following:

(i)a duly executed certificate of each of the Trustees and the individuals comprising the Stockholders' Representative as to the incumbency and specimen signatures of the other Trustee or individual, as applicable;

(ii)an acknowledgement of the Reaffirmation;

(iii)a receipt to Scimed for the First Earn Out Payment and the Earn Out Obligation;

(iv)a counterpart to the Settlement and Release Agreement executed by each of the Trust, the Trustees and the Stockholders' Representative;

(v)a counterpart to the Amended and Restated Trust Agreement; and

(vi)such other documents and instruments as may be reasonably necessary to consummate the transactions contemplated by this Agreement.

SECTION 2.04Withholding Rights.  Each of the BSC Parties will be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement (including payments on or with respect to the Earn Out Obligation) such amount as they are required to deduct and withhold with respect to the making of such payment under applicable Tax Law.  To the extent that amounts are so withheld and properly paid to the appropriate Tax authority, such amounts will be treated for purposes of this Agreement as having been paid to the holder of the securities or rights in respect of which such deduction and withholding was made.  The Stockholders' Representative and the Trust will provide reasonable assistance to the BSC Parties in connection with the determination of amounts required to be deducted and withheld and compliance with related information reporting requirements.  If the BSC Parties intend to deduct and withhold from an amount payable pursuant to this Agreement (including payments on or with respect to the Earn Out Obligation) in a manner that materially differs from the manner in which the BSC Parties deducted and withheld amounts from the Earn Out Payment made on or

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about March 9, 2007, the BSC Parties will promptly provide the Trust with a letter from counsel to the BSC Parties (i) describing in reasonable detail any change in facts or circumstances necessitating such change in the manner of such deduction and withholding or (ii) providing a reasoned analysis of the change in applicable Law or change in understanding or interpretation of applicable Law necessitating such change in the manner of deduction and withholding.

SECTION 2.05Amendment and Restatement of the Trust Agreement; Distributions by the Trust. The Parties agree that, effective as of the Closing Date, the Trust Agreement will be amended so as (a) to remove Scimed as a party therefrom and (b) as otherwise agreed by the parties thereto (other than Scimed) (as so amended, the "Amended and Restated Trust Agreement").  Notwithstanding any amendment to the Trust Agreement, the Trust agrees that the amount of the First Earn Out Payment and the Earn Out Obligation, when paid, will be distributed to the Beneficiaries of the Trust (as defined in the Trust Agreement) as promptly as practical, but in no event later than 45 days after the receipt of such amounts by the Trust; provided that the Trust will be entitled to withhold from the amounts to be so distributed to the Beneficiaries such amounts as it determines in accordance with its fiduciary duties as are necessary to allow it to discharge its obligations to the Beneficiaries, including to (i) enforce any rights of the Trust or the Beneficiaries of the Trust and (ii) reserve sufficient funds for the resolution of any claims against or expenses of the Trust (including claims for indemnification); provided,further that nothing in this Section 2.05 will obligate the Trust to distribute any amounts to the Beneficiaries unless such distribution is permitted by applicable Law.  The Parties acknowledge that the Trust has disclosed its intention to withhold at least the amount set forth on Schedule 2.05 during 2008.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

OF THE BSC PARTIES

Each of the BSC Parties hereby represents and warrants, jointly and severally, to the Trust and the Stockholders' Representative as follows:

SECTION 3.01Organization and Authority.  Each of the BSC 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, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.  The execution and delivery of this Agreement and the agreements contemplated hereby (other than the Purchase Agreements) by the BSC Parties, the performance by the BSC Parties of each of their obligations hereunder and thereunder and the consummation by the BSC Parties of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite action on the part of each of the BSC Parties, and no other corporate proceedings on the part of the BSC Parties are necessary to authorize this Agreement or the agreements contemplated hereby (other than the Purchase Agreements) or to consummate the transactions contemplated hereby and thereby.  This Agreement and the agreements contemplated hereby (other than the Settlement and Release Agreement and the Purchase Agreements) have been, and the Settlement and Release Agreement will be, duly and validly

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executed and delivered by the BSC Parties, and (assuming due authorization, execution and delivery by the Trust and the Stockholders' Representative) this Agreement and the agreements contemplated hereby (other than the Purchase Agreements) constitute, and the Settlement and Release Agreement will constitute, the legal, valid and binding obligations of the BSC Parties, enforceable against each of the BSC Parties in accordance with their respective terms.

SECTION 3.02No Conflict.  Except as may result from any facts or circumstances relating solely to the Trust or the Stockholders' Representative, the execution, delivery and performance by the BSC Parties of this Agreement and the agreements contemplated hereby (other than the Purchase Agreements) 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 BSC Parties, (b) conflict with or violate any Law or Governmental Order applicable to the BSC 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, require any consent of any Person pursuant to, or give to others any right 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 note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or Scimed is a party or by which Parent or Scimed or any property, asset or right of Parent or Scimed 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 which would not, individually or in the aggregate, prevent or materially delay consummation of any of the transactions contemplated by this Agreement or otherwise prevent any of the BSC Parties from performing its obligations hereunder or under the agreements contemplated hereby.

SECTION 3.03Financing.

(a)The execution and delivery of the Earn Out Obligation by Scimed and the performance by Scimed of its obligations thereunder have been duly and validly authorized by all requisite action on the part of Scimed, and no other corporate proceedings on the part of Scimed are necessary to authorize the Earn Out Obligation.  When delivered at the Closing, the Earn Out Obligation will be duly and validly executed and delivered by Scimed, and will constitute the legal, valid and binding obligations of Scimed, enforceable against it in accordance with its terms.  The execution and delivery of the Guaranty by Parent and the performance by Parent of its obligations thereunder have been duly and validly authorized by all requisite action on the part of Parent, and no other corporate proceedings on the part of Parent are necessary to authorize the Guaranty.  When delivered at the Closing, the Earn Out Obligation will be duly and validly executed and delivered by Parent, and will constitute the legal, valid and binding obligations of Parent, enforceable against it in accordance with its terms.

(b)The execution, delivery and performance by Scimed of the Earn Out Obligation and by Parent of the Guaranty do not and will not (i) violate, conflict with or result in the breach of any provision of the certificate of incorporation or bylaws of Scimed or Parent, (ii)

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conflict with or violate any Law or Governmental Order applicable to Scimed or Parent or by which any property or asset of  Scimed or Parent is bound or affected, (iii) 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, require any consent of any Person pursuant to, or give to others any right 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 Scimed or Parent pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Scimed or Parent is a party or by which it or any its properties, assets or rights is bound or affected, or (iv) require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except, in the case of clause (ii), (iii) or (iv), for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, prevent Scimed or Parent from performing its obligations under the Earn Out Obligation or the Guaranty.

(c)Either Parent or Scimed has, and will have at the Closing and on March 6, 2009, sufficient funds available to pay the First Earn Out Payment and all amounts due and owing under the Earn Out Obligation on such date.  Each of Parent and Scimed covenants not to incur any obligation, commitment, restriction or liability of any kind which would preclude its ability to perform the obligations required to be performed under the Earn Out Obligation or the Guaranty.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE TRUST

The Trust hereby represents and warrants to the BSC Parties  as follows:

SECTION 4.01Organization and Authority.  The Trust is a trust duly organized and validly existing under the laws of the State of Delaware and has all necessary trust power and authority to execute and deliver this Agreement and the Settlement and Release Agreement, to carry out its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Settlement and Release Agreement by the Trust or the Trustees, as applicable, the performance by the Trust or the Trustees, as applicable, of its obligations hereunder and thereunder and the consummation by the Trust or the Trustees, as applicable, of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite trust action on the part of the Trust.  Subject to obtaining the approval of the Earn Out Recipients described in clause (b) of the definition of the Requisite Earn Out Recipient Approval, no other trust proceedings on the part of the Trust are necessary to authorize this Agreement or the Settlement and Release Agreement or to consummate the transactions contemplated hereby and thereby.  This Agreement has been, and the Settlement and Release Agreement will be, duly and validly executed and delivered by the Trust or the Trustees, as applicable, and (assuming due authorization, execution and delivery by the BSC Parties) this Agreement constitutes, and the Settlement and Release Agreement will constitute, the legal, valid and binding obligation of the Trust or the Trustees, as applicable, enforceable against the Trust in accordance with their

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respective terms.  Pursuant to Section 7.2 of the Trust Agreement, the Trustees have delivered to Parent a duly executed certificate in the form set forth on Exhibit 4.01 hereto.

SECTION 4.02No Conflict.  Except as may result from any facts or circumstances relating solely to the BSC Parties, the execution, delivery and performance by the Trust of this Agreement and the Settlement and Release Agreement do not and will not (a) violate, conflict with or result in the breach of any provision of the Trust Agreement or the Merger Agreement assuming, in the case of this Agreement, receipt of the approval described in clause (b) of the definition of Requisite Earn Out Recipient Approval, (b) conflict with or violate any Law or Governmental Order applicable to the Trust or by which any property or assets of the Trust are 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, require any consent of any Person pursuant to, or give to others any right 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 the Trust pursuant to, any note, bond, mortgage, indenture, contract, trust or the agreement, lease, license, permit, franchise or other instrument or obligation to which the Trust is a party or by which the Trust or any property, asset or right of the Trust 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 which would not, individually or in the aggregate, prevent or materially delay consummation of any of the transactions contemplated by this Agreement or otherwise prevent the Trust from performing its obligations hereunder or under the Settlement and Release Agreement.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS' REPRESENTATIVE

Each of the Persons constituting the Stockholders' Representative hereby represents and warrants, jointly and severally, to the BSC Parties, as follows:

SECTION 5.01Authority of the Stockholders' Representative.  Each of the Persons constituting the Stockholders' Representative has all necessary power and authority to execute and deliver this Agreement and the Settlement and Release Agreement and to consummate the transactions contemplated hereby and thereby.  Assuming due authorization, execution and delivery of this Agreement and the Settlement and Release Agreement by the BSC Parties, this Agreement has been, and the Settlement and Release Agreement will be, duly executed and delivered by the Stockholders' Representative and constitute or will constitute, as applicable, the legal, valid and binding obligation of the Stockholders' Representative, enforceable against the Stockholders' Representative in accordance with their respective terms; provided that the approval of the Earn Out Recipients described in clause (b) of the definition of Requisite Earn Out Recipient Approval shall have been obtained.

SECTION 5.02No Conflict.  Except as may result from any facts or circumstances relating solely to one or more of the BSC Parties, the execution, delivery and performance by

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the Stockholders' Representative of this Agreement and the Settlement and Release Agreement do not and will not (a) violate, conflict with or result in the breach of any provision of the Trust Agreement or the Merger Agreement assuming, in the case of this Agreement, receipt of the approval described in clause (b) of the definition of Requisite Earn Out Recipient Approval, (b) conflict with or violate any Law or Governmental Order applicable to the Stockholders' Representative or by which any property or asset of each of the Persons constituting the Stockholders' Representative 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, require any consent of any Person pursuant to, or give to others any right 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 the Stockholders' Representative pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Stockholders' Representative is a party or by which the Stockholders' Representative or any property, asset or right of the Stockholders' Representative 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 which would not, individually or in the aggregate, prevent or materially delay consummation of any of the transactions contemplated by, this Agreement or otherwise prevent the Stockholders' Representative from performing its obligations hereunder or under the Settlement and Release Agreement.

SECTION 5.03Proxy of Mann and Certain Mann-Controlled Earn Out Recipients.  Mann and the Mann-Controlled Earn Out Recipients listed on Exhibit 5.03(a)(i) have duly and validly executed a joint proxy in the form of Exhibit 5.03(a)(ii) and delivered to the Stockholders' Representative such proxy (collectively, the "Mann Proxy").  The Earn Out Rights covered by the Mann Proxy constitute more than fifty percent of all of the outstanding Earn Out Rights.  If the Earn Out Recipient approvals described in clause (a) of the definition of Requisite Earn Out Recipient Approval have been obtained, the Earn Out Rights covered by the Mann Proxy will be voted in favor of this Agreement, the Purchase Agreements and the consummation of the transactions contemplated hereby and thereby.

ARTICLE VI.

JOINT REPRESENTATIONS AND WARRANTIES OF PARENT AND STOCKHOLDERS REPRESENTATIVE

Parent and the Stockholders' Representative hereby represent and warrant, jointly and severally, to each other as follows:

SECTION 6.01Authority of Parent and the Stockholders' Representative.  The Company has all necessary power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and thereby.  Assuming due authorization, execution and delivery of this Agreement by the other Parties, this Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

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SECTION 6.02No Conflict.  Except as may result from any facts or circumstances relating to the other Parties, the execution, delivery and performance by the Company of this Agreement does not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or bylaws of the Company, (b) conflict with or violate any Law or Governmental Order applicable to the Company or by which any property or asset of the Company 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 or otherwise prevent the Company from performing its obligations hereunder.

ARTICLE VII.

ADDITIONAL AGREEMENTS

SECTION 7.01Public Announcements.

(a)The initial press release with respect to this Agreement or the transactions contemplated hereby will be substantially in the form of Exhibit 7.01(a)(i) (the "Press Release") and will be issued on the date hereof.  The Parties acknowledge and agree that, to the extent practical, 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 7.01(a)(ii).

(b)Other than the Press Release and the FAQs, so long as this Agreement is in effect, the BSC Parties will, and will cause their Affiliates to, consult with the Stockholders' Representative before issuing any other press releases or otherwise making public announcements with respect to this Agreement, the transactions contemplated by this Agreement, Mann, Jeffrey H. Greiner, any of the Persons constituting the Stockholders' Representative, 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 Stockholders' Representative, 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 Trust and the Stockholders' Representative will, and will cause their Affiliates (other than Excluded Mann Affiliates (as defined in the Purchase Agreements))  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 the BSC Parties or 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, 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.

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(d)Notwithstanding Section 7.01(b) or (c), if a release, announcement or statement described in Section 7.01(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 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 7.01(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 7.01(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 Stockholders' Representative in compliance with the procedures set forth in this Section 7.01(d) will not require notification to the Stockholders' Representative or Parent, as applicable, pursuant to this Section 7.01(d).  The notices provided for in this Section 7.01(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 7.01 will include such Party and, to the extent applicable, its Affiliates.

SECTION 7.02Further Action.

(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 or otherwise to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable, including: (i) to cause to be satisfied the conditions contained herein, (ii) to obtain from Governmental Authorities and other Persons all consents, approvals, authorizations, qualifications and order as are necessary for the consummation of the transactions contemplated by this Agreement, (iii) promptly making all necessary filings, and thereafter making any other required submissions, with respect to this Agreement required under any applicable Law and (iv) having vacated, lifted, reversed or overturned any Governmental Order or other Action 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 the foregoing and solely for the avoidance of doubt, other than to the extent expressly set forth in Section 5.03, neither Mann nor

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any of his Affiliates shall have any obligation whatsoever to vote the Earn Out Rights owned by them or solicit the other Earn Out Recipients to vote the Earn Out Rights held by any of them with respect to this Agreement, the Purchase Agreements or the transactions contemplated hereby or thereby; provided that the Information Statement will contain a statement to the effect that the Mann Proxy will be voted in favor of this Agreement, the Purchase Agreements and the transactions contemplated hereby and thereby if the Earn Out Recipient approvals described in clause (a) of the definition of Requisite Earn Out Recipient Approval have been obtained.

(b)Notwithstanding anything in Section 7.02(a) to the contrary, with respect to the solicitation described in Section 7.03, the sole obligations of the Trust and the Stockholders' Representative will be limited to those explicitly set forth in Section 7.03 and the Trust and the Stockholders' Representative will have no obligation to endorse, or recommend that the Earn Out Recipients approve this Agreement, the Purchase Agreements or the consummation of the transactions contemplated hereby or thereby.

SECTION 7.03Approval by Earn Out Recipients.

(a)The Parties will use their commercially reasonable efforts to mail the Information Statement and the ballot to the Minority Earn Out Recipients as promptly as reasonably practicable, but in any event no later than August 29, 2007.  Within eight Business Days after the date hereof, the Stockholders' Representative will distribute to the BSC Parties (i) a draft information statement in respect of the transactions contemplated hereby and by the Purchase Agreements (the "DraftInformation Statement"), and (ii) a draft written ballot pursuant to which a Minority Earn Out Recipient may indicate his/her/its approval/disapproval of this Agreement, the Purchase Agreements and the transactions contemplated hereby and thereby and, if approved, his/her/its agreement to the releases to be contained in the Information Statement in the form attached hereto as Exhibit 7.03(a)(ii).  Within three Business Days after the receipt by the BSC Parties of the Draft Information Statement and the draft ballot described in the preceding sentence, Parent will deliver to the Stockholders' Representative the reasonable comments of the BSC Parties, if any, to both the Draft Information Statement and such draft ballot.  If any such comments are delivered by Parent to the Stockholders' Representative, within three Business Days after the receipt of such reasonable comments by the Stockholders' Representative, the Stockholders' Representative will incorporate such reasonable comments into the Draft Information Statement (such revised document, the "Information Statement") and the draft ballot, and will mail the Information Statement and such revised ballot to the Minority Earn Out Recipients.  The revised ballots described in the preceding sentence, duly completed by the Minority Earn Out Recipients, will be accepted by the Stockholders' Representative only until the date that is 15 Business Days after the commencement of such mailing.  None of the date hereof, the date on which the Draft Information Statement and the ballot is delivered to the BSC Parties, and the date on which the reasonable comments to the Draft Information Statement and the ballot are received, as the case may be, will  count as the first Business Day of such respective counting period.

(b)Each of the BSC Parties, on the one hand, and the Trust and the Stockholders' Representative, on the other hand, represents and warrants to the other Parties that the information supplied in writing by such Party or any of its Affiliates or Representatives expressly for inclusion in the Information Statement will not contain any untrue statement of a

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material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading.

SECTION 7.04Earn Out Recipient and Trustee Liability.

Each of the BSC Parties acknowledges that pursuant to the Trust Agreement and the Amended and Restated Trust Agreement (a) neither the Earn Out Recipients, the Trustees nor their agents will be liable for a breach or failure to comply with this Agreement or to consummate the transactions contemplated hereby and (b) the BSC Parties will look solely to assets of the Trust for the payment of any claim hereunder or performance hereunder.

SECTION 7.05Notification of Certain Matters.  

(a)The BSC Parties will give prompt written notice to the Stockholders' Representative and the Trust 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 BSC Party contained in this Agreement, if made on or immediately following the date of such event, untrue or inaccurate, (ii) any failure of a BSC Party, or any Affiliate of a BSC 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 obligations of the Stockholders' Representative or the Trust hereunder or (iii) any Action pending or, to Parent, Scimed or the Company's knowledge, threatened against a Party or the Parties, relating to this Agreement or the transactions contemplated hereby.

(b)The Trust and the Stockholders' Representative will give prompt written notice to Parent 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 Stockholders' Representative or the Trust contained in this Agreement, if made on or immediately following the date of such event, untrue or inaccurate, (ii) any failure of the Stockholders' Representative or the Trust 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 obligations of the BSC Parties hereunder or (iii) any Action pending or, to Parent, Scimed or the Company's knowledge, threatened against a Party or the Parties, relating to this Agreement or the transactions contemplated hereby.

SECTION 7.06Waiver of Time Period.  Notwithstanding the provisions of Section 2.12(a) of the Merger Agreement, the Stockholders' Representative hereby agrees that the failure to obtain the Requisite Earn Out Recipient Approval within 30 Business Days of the date hereof will not constitute a failure to obtain such approval.

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ARTICLE VIII.

CONDITIONS TO CLOSING

SECTION 8.01Conditions to Obligations of the Parties. The obligations of the BSC Parties, the Trust and the Stockholders' Representative 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, either 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 will only be effective as to the obligations of such Party:

(a)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 illegal or that otherwise restrains, conditions or otherwise prohibits the consummation of such transactions;

(b)Approval by Earn Out Recipients.  The Requisite Earn Out Recipient Approval shall have been obtained; and

(c)Purchase Agreements.  The Closing (as that term is defined in each of the Purchase Agreements) for each of the Purchase Agreements shall have occurred.

SECTION 8.02Conditions to Obligations of the BSC Parties.  The obligations of the BSC Parties to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, which may be waived in writing by the BSC Parties in their sole discretion:

(a)Settlement and Release Agreement.  Each of the Trust and the Stockholders' Representative shall have duly executed and delivered its counterpart to the Settlement and Release Agreement; and

(b)Mutual Releases of Mann, Jeffrey H. Greiner, Jeffrey D. Goldberg and Carla Woods.  Parent shall have received duly executed limited mutual releases in the form set forth in Exhibit 8.02(b) from each of Mann, Jeffrey H. Greiner, Jeffrey D. Goldberg and Carla Woods; provided that the condition contained in this Section 8.02(b) will be deemed to have been satisfied with respect to any one of the foregoing individuals if Parent does not deliver to such individual a limited mutual release duly executed by Parent in the form set forth in Exhibit 8.02(b).

SECTION 8.03Conditions to Obligations of the Trust and the Stockholders' Representative.  The obligations of the Trust and the Stockholders' Representative to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of the following conditions, which may be waived in writing by the Trust and the Stockholders' Representative in their sole discretion:

(a)Settlement and Release Agreement.  Each of the BSC Parties shall have duly executed and delivered its counterpart to the Settlement and Release Agreement;

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(b)Earn Out Obligation.  Scimed shall have duly executed and delivered to the Trust the Earn Out Obligation;

(c)Reaffirmation.  Parent shall have duly executed and delivered to the Trust the Reaffirmation; and

(d)Trust Agreement Amendment.  Scimed shall have duly executed and delivered to the Trust a counterpart to the Amended and Restated Trust Agreement providing only that Scimed will no longer be a party to the Trust Agreement.

ARTICLE IX.

TERMINATION

SECTION 9.01Termination. This Agreement may be terminated at any time prior to the Closing:

(a)by either Parent or the Trust, if the Closing shall not have occurred by January 10, 2008; provided, that the right to terminate this Agreement under this Section 9.01(a) will not be available to (i) Parent if any of the BSC Parties' failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date or (ii) the Trust if any of the Stockholders' Representative's or the Trust's failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

(b)by either Parent or the Trust, if either or both of the Purchase and Sale Agreements (the "Purchase Agreements"), dated as of August 9, 2007, among the BSC Parties, the Company and Advanced Bionics Holding Corporation, a California corporation or Infusion Systems Holding Corporation, a California corporation, shall have been terminated;

(c)by either Parent or the Trust, in the event that any Governmental Order restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement shall have become final and nonappealable; provided that the Party so requesting termination shall have used all reasonable efforts, in accordance with Section 7.02(a), to have such Governmental Order vacated;

(d)by either Parent or the Trust, if the Requisite Earn Out Recipient Approval has not been obtained on or before the date that is 45 Business Days following the date hereof; or

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

SECTION 9.02Effect of Termination.  In the event of termination of this Agreement as provided in Section 9.01:

(a)Termination.  Subject to Section 9.02(b), this Agreement will forthwith become null, void and of no further force or effect, it being understood and agreed that the Merger Agreement as it existed before the date of this Agreement will continue in full force and

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effect without giving effect to either Amendment. In furtherance of the foregoing, if this Agreement is terminated after the effectiveness of Amendment 1, and after the date on which the Earn Out Payment would have been payable upon the Company's achieving Aggregate Net Sales for the immediately preceding twelve-month period of more than $300,000,000 in accordance with clause (i)(B) of the definition of Additional Earn Out Payment in the Merger Agreement, then Scimed will promptly, and in no event later than two Business Days after such termination, deliver to the Trust such previously foregone Earn Out Payment in cash, in immediately available funds by wire transfer to an account designated by the Trust.  Notwithstanding the first sentence of this Section 9.02(a), to the extent any Party takes any actions (or does not take actions) expressly in accordance with the Merger Agreement as amended by Amendment 1 during the period, if any, between the date on which the Requisite Earn Out Recipient Approval shall have been obtained and the date on which this Agreement shall have been terminated in accordance with this Article IX, such Person shall not have any Liability to any other Party for such action.

(b)Survival.  The provisions of this Section 9.02 and Article X will survive the termination of this Agreement.  Notwithstanding the foregoing, nothing in this Section 9.02 or any other part of this Agreement will relieve any Party from liability for any breach of this Agreement occurring prior to such termination.

ARTICLE X.

GENERAL PROVISIONS

SECTION 10.01Fees 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 any of the BSC Parties or any of their respective Affiliates, by Parent, and to the extent incurred by the Trust, the Stockholders' Representative or any of their respective Affiliates, by the Trust whether or not the Closing shall have occurred.

SECTION 10.02Amendment.  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 10.03Waiver.  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.

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SECTION 10.04Notices.  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), fax or e-mail 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 10.04):

if to any of the BSC Parties or the Company:

One Boston Scientific Place

Natick, Massachusetts  01760-1537

Facsimile No:  (508) 650-8951

Attention:  General Counsel

Email:  paul.sandman@bsci.com

with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York  10022-6069

Facsimile No:  (212) 848-7179

Attention:  Clare O'Brien

Email:  cobrien@shearman.com

if to the Trust or the Stockholders' Representative:

Trustees of the Bionics Trust or Stockholders' Representative, as applicable

c/o Advanced Bionics Corporation

Mann Biomedical Park

25129 Rye Canyon Loop

Valencia, CA  91355

Facsimile No:  (661) 362-1700

Attention:   Trustee or Stockholders' Representative

with a copy to:

Gibson, Dunn & Crutcher LLP

2029 Century Park East, Suite 4000

Los Angeles, California 90071

Facsimile No:  (310) 552-7053

Attention:  Jonathan K. Layne

Email:  JLayne@gibsondunn.com

SECTION 10.05Severability.  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

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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 10.06 Entire Agreement; Assignment.  This Agreement, the Settlement and Release Agreement and the Earn Out Obligation constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede 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 which will be amended as contemplated herein) 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 each of the BSC Parties and the Company may assign all or any of their rights and obligations hereunder to any Affiliate of Parent, provided that no such assignment will relieve the assigning Party of its obligations hereunder if such assignee does not perform such obligations.

SECTION 10.07Parties 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 10.08Specific 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 10.09Governing 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.  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.

21

SECTION 10.10Waiver 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 10.10.

SECTION 10.11Counterparts.  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]

22

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 such party or by any officer of such party thereunto duly authorized, as applicable.

BOSTON SCIENTIFIC CORPORATION

By:  _______________________________________

Name:  ________________________________

Title:    ________________________________

BOSTON SCIENTIFIC SCIMED, INC.

By:  _______________________________________

Name:  ________________________________

Title:    ________________________________

ADVANCED BIONICS CORPORATION

By:  _______________________________________

Name:  ________________________________

Title:    ________________________________

THE STOCKHOLDERS' REPRESENTATIVE

By:  _______________________________________

Name:  Carla Woods

By:  _______________________________________

Name:  Jeffrey D. Goldberg

BIONICS TRUST

By:  _______________________________________

Name:  Carla Woods, Trustee

By:  _______________________________________

Name:  Jeffrey D. Goldberg, Trustee

EX-10.2

EXHIBIT 10.2

——————————

FORM OF

AMENDMENT NO. 1

TO

AGREEMENT AND PLAN OF MERGER

——————————

among

BOSTON SCIENTIFIC CORPORATION,

BOSTON SCIENTIFIC SCIMED, INC.,

ADVANCED BIONICS CORPORATION,

THE BIONICS TRUST

and

JEFFREY D. GOLDBERG AND CARLA WOODS (COLLECTIVELY IN THEIR CAPACITY AS THE STOCKHOLDERS’ REPRESENTATIVE)

Dated as of August 9, 2007

TABLE OF CONTENTS

		Page
ARTICLE I. AMENDMENT		1
SECTION 1.01	Amendment to Article I	1
SECTION 1.02	Amendment to Section 2.11(e)	3
SECTION 1.03	Amendment to Section 2.11(f)	3
SECTION 1.04	Amendment to Section 5.03	3
SECTION 1.05	Amendment to Section 5.04	4
SECTION 1.06	Amendment to Section 8.04	7
ARTICLE II. IMPLEMENTATION		8
SECTION 2.01	Termination of Amendment Agreement	8
ARTICLE III. GENERAL PROVISIONS		9
SECTION 3.01	No Further Amendment	9
SECTION 3.02	Counterparts	9

i

This AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER (this “Amendment 1”), dated as of August 9, 2007 and effective as of the Amendment 1 Effective Time, 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 (“Advanced Bionics”), the BIONICS TRUST (the “Trust”) and CARLA WOODS and JEFFREY D. GOLDBERG (such persons acting together by majority vote, and any predecessor or successor persons acting together by majority vote, solely in their capacity as Stockholders’ Representative under the Merger Agreement being the “Stockholders’ Representative”).

WHEREAS, Parent, Scimed, Claude Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Scimed, Advanced Bionics, the Trust and the Stockholders’ Representative entered into that certain 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.  References herein to a specific Article, Section, Schedule or Exhibit will refer, respectively, to Articles, Sections, Schedules or Exhibits of the Merger Agreement unless otherwise specified.

WHEREAS, this Amendment 1 is being executed and delivered pursuant to Section 2.01(a) of that certain Amendment Agreement dated as of the date hereof (the “Amendment Agreement”) among Parent, Scimed, Advanced Bionics, the Trust and the Stockholders’ Representative to amend the Merger Agreement.

WHEREAS, if the Amendment Agreement terminates, and therefore the Closing  (as defined in the Amendment Agreement) does not occur, this Amendment 1 will terminate and be of no further force or effect as of the date the Amendment Agreement terminates, any amendment to the Merger Agreement effected by this Amendment 1 will be null and void other than in respect of the period during which Amendment 1 was effective, if any, and the Merger Agreement will not be deemed amended by this Amendment 1 in any respect whatsoever.

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

ARTICLE I.

AMENDMENT

SECTION 1.01Amendment to Article I.  Article I will be amended to add the following definitions, which will be placed in Article I in alphabetical order:

“Amendment 1” means Amendment No. 1 to this Agreement dated as of August 9, 2007 among the parties hereto (other than the Purchaser).

“Amendment 1 Effective Time” means 9:00 a.m. California time on the first Business Day following the day that the Requisite Earn Out Recipient Approval (as defined in the Amendment Agreement) has been obtained as described in Section 2.01(a) of the Amendment Agreement.

“Amendment 2 Effective Time” means the Closing (as defined in the Amendment Agreement) and the receipt by the Trust of the First Earn Out Payment,  Earn Out Obligation and Reaffirmation (as each such term is defined in the Amendment Agreement).

“Amendment Agreement” means that certain Amendment Agreement dated as of August 9, 2007 among the parties hereto (other than the Purchaser).

“Auditory Budget” means the Budget set forth on Exhibit 1 hereto.

“Auditory Purchase Agreement” means the Cochlear Implant Purchase and Sale Agreement dated as of August 9, 2007 among Parent, Scimed, the Company and Advanced Bionics Holding Corporation.

“Cause” means any of the following: (i) conviction of a felony involving moral turpitude; (ii) commission of fraud or theft against, or embezzlement from, Parent or any of its Affiliates; (iii) material misconduct involving insider trading, sexual harassment, breach of confidentiality or material injury to the reputation of the Company; or (iv) the failure to perform and discharge an employee’s duties and responsibilities as an employee of Parent or its Affiliates after such employee has been provided with written notice of the intent to terminate such employee’s employment for the failure described in the notice and a period of two weeks to cure such failure to perform, if such failure to perform is curable.

“Drug Pump Purchase Agreement” means the Drug Pump Purchase and Sale Agreement dated as of August 9, 2007 among Parent, Scimed, the Company and Infusion Systems Holding Corporation, a California corporation.

“EOR Designee” initially means Jeffrey H. Greiner, and, if Jeffrey H. Greiner is no longer serving as the President & Co-CEO of the Surviving Corporation for one of the reasons described in Section 5.04(e)(iv) or (v), then a successor individual designated by the Stockholders’ Representative in accordance with Section 5.04(e)(iv).

“Parent Designee” initially means Michael Onuscheck, and, if Michael Onuscheck is no longer serving as the President of the Retained Businesses for one of the reasons described in Section 5.04(e)(iv) or (v), then a successor individual designated by Parent in accordance with Section 5.04(e)(iv).

“Purchase Agreements” means the Auditory Purchase Agreement and the Drug Pump Purchase Agreement.

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

“Retained Businesses” means the businesses of the Company, other than the Transferred Businesses.

“Retained Businesses Budget” means the budget attached as Exhibit 2.1

SECTION 1.02Amendment to Section 2.11(e).  Section 2.11(e) will be amended to add the following sentence:

“Notwithstanding the foregoing and Section 2.11(f), if at any time after the Amendment 1 Effective Time, Amendment 1 to this Agreement becomes of no further force and effect following the termination of the Amendment Agreement, Scimed will reduce the next Earn Out Payment to be paid to the Trust by the sum of (i) the amount by which the expenses of the Transferred Business during the period between the Amendment 1 Effective Time and the termination of the Amendment Agreement in respect of the line items relating to selling, marketing, distribution, development, clinical and regulatory matters have exceeded the Auditory Budget for such items (calculated on a pro rata basis for such period) , and (ii) the amount of the Separation Costs (as defined in the Separation Agreement (as defined in the Auditory Purchase Agreement)) paid to third parties between the Amendment 1 Effective Time and the termination of the Amendment Agreement in respect of services to the Transferred Business and allocated to Auditory Products LLC pursuant to the Separation Agreement.  Any disagreement with respect to the amount of such reduction shall be resolved in accordance with the procedures set forth in Sections 3.02 and 12.11 of the Auditory Purchase Agreement.

SECTION 1.03Amendment to Section 2.11(f).  Section 2.11(f) will be amended to add the following sentence:

“Notwithstanding the foregoing, the Earn Out Payment in respect of the Additional Earn Out Payment described in clause (i)(B) of the definition of Additional Earn Out Payment will not be paid if and when due.”

SECTION 1.04Amendment to Section 5.03.  Section 5.03 will be amended as follows:

(a)Section 5.03.  Section 5.03 will be amended to read in its entirety as follows:

Section 5.03.          Public Announcements.

 

¹ BSC proposes that this will be based on page 2 of the Financial Impact of Separation document dated August 3, 2007.

3

(a)           So long as this Agreement is in effect, the Trust and the Stockholders’ Representative on the one hand, and Parent on the other hand, will (and each will cause their respective Affiliates to (other than the Excluded Mann Affiliates, as defined in the Purchase Agreements, with respect to the Stockholders' Representative or the Trust) consult with the other before issuing any press releases or otherwise making public announcements with respect to this Agreement or the Amendment Agreement or any of the other, 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 the other, which consent will not be unreasonably withheld, delayed or conditioned.

(b)           If a release, announcement or statement described in Section 5.03(a) 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, 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 5.03(b), language in a release, announcement or statement regarding this Amendment or the transactions contemplated by the Amendment Agreement that is substantially similar to language that has been previously reviewed in accordance with procedures set forth in this Section 5.03(b) will not require  notification to the Stockholders’ Representative or Parent, as applicable, pursuant to this Section 5.03(b).  The notices provided for in this Section 5.03(b) 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 5.03 shall include such Party and, to the extent applicable, its Affiliates.

SECTION 1.05Amendment to Section 5.04.  Section 5.04 will be amended as follows:

(a)Section 5.04(a).  Section 5.04(a) will be amended to read in its entirety as follows:

(a)           The parties hereto acknowledge and agree that from and after the Amendment 1 Effective Time, the day-to-day management of the Retained Businesses will be conducted by the Parent Designee and the day-to-day management of the Transferred Businesses will be conducted by the EOR

4

Designee; provided, that (i) the Retained Businesses and the Transferred Businesses will at all times be subject to the corporate practices, policies and procedures of Parent solely in respect of internal financial controls, internal financial reporting and compliance with the rules and regulations of the Securities and Exchange Commission and the New York Stock Exchange, (ii) Parent will use its commercially reasonable efforts to conduct the Retained Businesses in a  manner that causes the Retained Businesses to achieve the Retained Businesses Budget and the Trust will use its commercially reasonable efforts to conduct the Transferred Businesses in a  manner that causes the Transferred Businesses to achieve the Auditory Budget, provided that the Auditory Budget may be exceeded only by an aggregate amount up to the Maximum Excess Amount in respect of the expenses for the line items relating to selling, marketing, distribution, development, clinical and regulatory matters, and the Retained Business Budget may be exceeded without limitation, (iii) the Transferred Businesses will not be permitted to take any of the actions set forth on Exhibit 5.04(a)(1) without Executive Board approval and the Retained Businesses will not be permitted to take any of the actions set forth on Exhibit 5.04(a)(2) without Executive Board approval.  The parties hereto acknowledge and agree that the standard “commercially reasonable efforts” in clause (ii) of the previous sentence will be determined in respect of the Retained Businesses without any regard to the financial condition of Parent and in respect of the Transferred Businesses without any regard to the financial condition of Advanced Bionics Holding Corporation or any financing efforts it may undertake in connection with the transactions contemplated by the Purchase Agreements.  In addition to the Parent Designee, Parent may appoint an employee of Parent with an appropriate level of seniority and expertise to liaise with the EOR Designee for purposes of identifying whether any particular resources should be made available to the Transferred Businesses or the Retained Businesses, and assisting in the management of the separation activities.  The Parent Designee and the EOR Designee will meet no less frequently than weekly to discuss the activities of the Retained Businesses and the Transferred Businesses, respectively, and update each other on any material developments relating thereto.

(b)Section 5.04(c).  Section 5.04(c) will be amended to read in its entirety as follows:

(c)           Meetings of the Executive Board may be held at any time, by written notice given by any Member to Parent, the Stockholders’ Representative and each other Member at least five days prior to the meeting; provided that a Member will provide that written notice only if the Parent Designee or the EOR Designee wishes to discuss taking an action set forth in Exhibit 5.04(a)(1) or Exhibit 5.04(a)(2).  Subject to appropriate confidentiality provisions, the Members designated by the Stockholders’ Representative may consult with and inform the Stockholders’ Representative regarding the matters discussed at meetings of, and actions taken by, the Executive Board.  No action will be taken by the Executive Board without a Quorum.  A “Quorum” will consist of at least four Members, two of whom have been

5

designated by Parent and two of whom have been designated by the Stockholders’ Representative.  All decisions of the Executive Board will require the affirmative vote of all Members in attendance at the meeting at which a Quorum is present.  The Executive Board may establish subcommittees or working groups that include non-Members; provided, that such subcommittees and working groups will not be empowered to make any binding decisions and will be limited to making recommendations to the Executive Board.

(c)Section 5.04(d). will be amended to read in its entirety as follows:

(d)           Subject to the provisions of Section 5.04(g), the Executive Board will consider in good faith whether to approve a request by a party to take any of the actions set forth in Exhibit 5.04(a)(1) and Exhibit 5.04(a)(2).

(d)Section 5.04(e).Section 5.04(e) will be amended as follows:

(i)The preamble to Section 5.04(e) will be amended as follows: “(e) The parties hereto agree that, without the approval of Pete Nicholas and Alfred E. Mann, neither Parent, including any of its Affiliates in respect of the Retained Businesses, nor the Trust nor the EOR Designee with respect to the Transferred Businesses, shall during the period between the Amendment 1 Effective Time and the earlier of the (i) Amendment 2 Effective Time and (ii) the termination of the Amendment Agreement:”

(ii)The following will be added to the end of Section 5.04(e)(iv): “; provided, that the parties hereto acknowledge and agree that from and after the Amendment 1 Effective Time, (A) if Michael Onuscheck is terminated, voluntarily resigns as the Parent Designee, dies, or becomes disabled so that he cannot fulfill his obligations as the Parent Designee, Parent will appoint a successor Parent Designee to conduct the Retained Businesses that is (x) an employee of the Company as of the date of the Amendment Agreement or (y) not an employee of the Company at such time, but is reasonably acceptable to the Stockholders’ Representative, and (B) if Jeffrey H. Greiner is terminated, voluntarily resigns as the EOR Designee, dies, or becomes disabled so that he cannot fulfill his obligations as the EOR Designee, the Stockholders’ Representative will be permitted to appoint a successor EOR Designee to conduct the Transferred Businesses that is (x) an employee of the Company as of the date of the Amendment Agreement or (y) not an employee of the Company at such time, but is reasonably acceptable to Parent.”

(iii)The following will be added to the end of Section 5.04(e)(v):  “(provided that Parent will have the right to terminate the employment of Michael Onuscheck and the Stockholders’ Representative will have the right to terminate the employment of Jeffrey H. Greiner, in each case without the approval of Messrs. Nicholas and Mann.)”

(iv)Section 5.04(e)(ix) will be deleted in its entirety.

6

(e)Section 5.04(f).  Section 5.04(f)(ii) will be amended to read in its entirety as follows:

(ii)           from and after the Amendment 1 Effective Time, Parent will (A) fund the Retained Businesses in accordance with the Retained Businesses Budget and (B) fund the Transferred Businesses in accordance with the Auditory Budget, and in excess of the expenses in that budget in respect of the line items relating to selling, marketing, distribution, development, clinical and regulatory matters up to a maximum excess amount in the aggregate equal to $5 million (the “Maximum Excess Amount”).

(f)Section 5.04(g).  Section 5.04(g) will be amended to read in its entirety as follows:

(g)           In the event the Executive Board cannot reach agreement on a request related to Exhibit 5.04(a)(1) or Exhibit 5.04(a)(2), the matter will be referred to Peter Nicholas and Alfred E. Mann.  Parent will cause Peter Nicholas (or his successor, to be designated by Parent) and the Stockholders’ Representative will cause Alfred E. Mann (or his successor, to be designated by the Stockholders’ Representative), promptly, but in any event within five Business Days following referral to them, to meet to resolve any such issue directly.  In the event Mr. Nicholas (or his successor) and Mr. Mann (or his successor) are unable despite use of diligent efforts to resolve the matter within five Business Days of it being submitted to them for resolution, the request will be deemed to have been denied.

SECTION 1.06Amendment to Section 8.04.  Section 8.04 will be amended as follows:

All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall 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), fax or e mail to the respective 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 8.04):

if to any of Parent, Scimed or the Company:

One Boston Scientific Place

Natick, Massachusetts  01760-1537

Facsimile No:  (508) 650-8951

Attention:  General Counsel

Email:  paul.sandman@bsci.com

with a copy to:

Shearman & Sterling LLP

599 Lexington Avenue

7

New York, NY  10022-6069

Facsimile No:  (212) 848-7179

Attention:  Clare O’Brien

Email:  cobrien@shearman.com

if to the Trust or the Stockholders’ Representative:

Trustees of the Bionics Trust or the Stockholders’ Representative, as applicable

c/o Advanced Bionics Corporation

Mann Biomedical Park

25129 Rye Canyon Loop

Valencia, CA  91355

Facsimile No:  (661) 362-1700

Attention:  Trustee or the Stockholders’ Representative, as applicable

with a copy to:

Gibson, Dunn & Crutcher LLP

2029 Century Park East, Suite 4000

Los Angeles, California  90071

Facsimile No:  (310) 552-7053

Attention:  Jonathan K. Layne

Email:  JLayne@gibsondunn.com

ARTICLE II.

IMPLEMENTATION

SECTION 2.01Termination of Amendment Agreement.  The parties hereto acknowledge and agree that in event the Amendment Agreement is terminated, this Amendment 1 will also terminate and be of no force or effect, any amendment to the Merger Agreement effected by this Amendment 1 will be null and void and the Merger Agreement will not be deemed amended by this Amendment 1 in any respect whatsoever; and

(a)Notwithstanding Section 2.01(a) of this Amendment 1, any action or failure to act effected by any party hereto (including the Parent Designee and the EOR Designee), after the date hereof but prior to the termination of the Amendment Agreement, to the extent such action or failure to act is expressly permitted by the Merger Agreement as amended by this Amendment 1, will not be deemed a breach or failure to comply with the Merger Agreement.

(b)Scimed will reduce the next Earn Out Payment to be paid to the Trust  by (i) the amount by which the expenses of the Transferred Business during the period between the Amendment 1 Effective Time and the termination of the Amendment Agreement in respect of the line items relating to selling, marketing, distribution, development, clinical and regulatory matters have exceeded the Auditory Budget for such

8

items (calculated on a pro rata basis for such period) , and (ii) the amount of the Separation Costs (as defined in the Separation Agreement (as defined in the Auditory Purchase Agreement)) paid to third parties between the Amendment 1 Effective Time and the termination of this Amendment 1 in respect of services to the Transferred Business and allocated to the Auditory Products LLC pursuant to the Separation Agreement.  Any disagreement with respect to the amount of such reduction shall be resolved in accordance with the procedures set forth in Sections 3.02(c) and 12.11 of the Auditory Purchase Agreement.

(c)Notwithstanding Section 1.03 of this Amendment 1, if the Amendment Agreement is terminated after the Amendment 1 Effective Time, and after the date on which the Earn Out Payment would have been payable upon the Company's achieving Aggregate Net Sales for the immediately preceding twelve-month period of more than $300,000,000 in accordance with clause (i)(B) of the definition of Additional Earn Out Payment in the Merger Agreement, then, subject to Section 2.01(b) of this Amendment 1, Scimed will promptly, and in no event later than two Business Days after such termination, deliver to the Trust such previously foregone Earn Out Payment in cash, in immediately available funds by wire transfer to an account designated by the Trust.

ARTICLE III.

GENERAL PROVISIONS

SECTION 3.01No Further Amendment . Except as expressly amended hereby, all other provisions of the Merger Agreement will be and remain in full force and effect.

SECTION 3.02Counterparts.  This Amendment 1 may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto 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]

9

IN WITNESS WHEREOF, each of the parties hereto has executed or caused this Amendment 1 to be duly executed as of the date first written above by such party or by any officer of such party thereunto duly authorized, as applicable.

BOSTON SCIENTIFIC CORPORATION 

By:

Name: 

Title: 

BOSTON SCIENTIFIC SCIMED, INC.

By:

Name: 

Title: 

ADVANCED BIONICS CORPORATION

By:

Name: 

Title: 

THE STOCKHOLDERS’ REPRESENTATIVE

By:

Name: Jeffrey D. Goldberg

By:

Name: Carla Woods

[AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER]

10

BIONICS TRUST

By:

Name: Jeffrey D. Goldberg, Trustee

By:

Name: Carla Woods, Trustee

[AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER]

11

EXHIBIT 5.04(a)(1)

ACTIONS THAT THE TRUST WILL ENSURE THE TRANSFERRED BUSINESSES DO NOT TAKE

Unless otherwise approved by Parent's Chief Operating Officer and the EOR Designee:

1. Assert Intellectual Property against any person.

2. Respond to or settle any Third Party Claim of infringement or misappropriation of Intellectual Property, it being agreed that the parties will cooperate in good faith in determining how to respond to such Third Party Claim.

3. Disclose to any person any confidential or proprietary information of Parent or any of its Affiliates, including with respect to the drug eluting electrode project.

4. Enter into, or amend the terms of, any transaction or arrangement in respect of the Transferred Business with any Affiliate of the Purchaser, including any person controlled by Alfred E. Mann.

5. Enter into any consent order or decree that either (i) affects the Retained Business or Parent or any of its Affiliates other than the Seller solely in respect of the Transferred Business or (ii) involves the payment of any money.

6. Settle any product liability claim in a manner that is inconsistent in any material respect with past practice, including the settlement of any single claim in respect of HiRes 90K cochlear implants that contain the feedthrus made by Astro Seal for more than $45,000.

12

EXHIBIT 5.04(a)(2)

ACTIONS THAT PARENT WILL ENSURE THAT THE RETAINED BUSINESSES DO NOT TAKE

1. Unless otherwise approved by the EOR Designee and the Parent Designee, Parent will not terminate the employment of any employee with the Surviving Corporation with the title of Director or higher (including a Regional Director in the Sales Department) who works for the Retained Businesses in the Research & Development Department or the Sales Department, or give such employee Good Reason to leave the Surviving Corporation, in each case other than for Cause.

2. Unless otherwise approved by the EOR Designee and the Parent Designee, Parent will not terminate the employment of more than three employees of the Surviving Corporation with a title below Director who work for the Retained Businesses in the Research & Development Department, or give such employees Good Reason to leave the Surviving Corporation, in each case other than for Cause.

3. Unless otherwise approved by the EOR Designee and the Parent Designee, Parent will not terminate the employment of more than 15 employees with the Surviving Corporation with a title below Director who work for the Retained Businesses in the Sales Department, or give such employees Good Reason to leave the Surviving Corporation, in each case other than for Cause.

4. Unless otherwise approved by the EOR Designee and the Parent Designee, Parent will not terminate any research and development program for which funding is provided in the Retained Business Budget.

13

EX-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

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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

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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

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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

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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

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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 1.01Certain 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.

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“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.

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“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

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(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.

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“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).

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“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).

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“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.

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“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.

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SECTION 1.02Definitions.  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 1.03Other Interpretive Provisions.  Unless the express context otherwise requires:

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(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.

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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 2.01Formation 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 2.02Transferred 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:

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(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;

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(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 2.03Assumed 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);

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(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 2.04Transferred 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 2.05Third 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 2.06Disputed 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 2.07Company’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 3.01Purchase 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 3.02Operating 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 3.03Tax 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 3.04Closing.  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 3.05Closing 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 4.01Organization 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 4.02Organization 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 4.03No 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 4.04Capitalization; 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 4.05Assets 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 4.06Brokers.  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 4.07Intellectual 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 4.08Actions 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 4.09No 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 5.01Organization 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 5.02No 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 5.03Brokers.  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 7.01Limitations 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 7.02Notification 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 7.03Access 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 7.04Public 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 7.05Further 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 7.06Non-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 7.07Change 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 7.08Insurance.  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 7.09Tax 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 7.10Conveyance 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 7.11Bulk 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 7.12Use 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 7.13IP 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 7.14Transition 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 8.01Severance 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 8.02Phantom 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 8.03Treatment 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 8.042007 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 8.05Employee 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 9.01Conditions 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 9.02Conditions 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 9.03Conditions 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 10.01Indemnification 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 10.02Indemnification 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

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

SECTION 10.03Limits 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 10.04Notice 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

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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

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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 10.05Remedies.  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 10.06Tax 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 10.07Survival 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.

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SECTION 10.08No 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 11.01Termination.  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 11.02Effect 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.

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ARTICLE XII.

GENERAL PROVISIONS

SECTION 12.01Fees 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 12.02Amendment.  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 12.03Waiver.  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 12.04Notices.  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

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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 12.05Severability.  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 12.06Entire 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

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

SECTION 12.07Parties 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 12.08Specific 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 12.09Governing 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 12.10Waiver 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 12.11Arbitration.

(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

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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 12.12Counterparts.  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]

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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:    ________________________________

EX-99.1

EXHIBIT 99.1

BOSTON SCIENTIFIC, ADVANCED BIONICS PRINCIPALS

ANNOUNCE STRATEGIC ACCORD

BSC to assume sole control of Pain Management business and emerging indications program, Advanced Bionics principals to purchase Auditory business and drug pump program

Natick, MA (August 9, 2007) -- Boston Scientific Corporation (NYSE: BSX) today announced that it has entered into an agreement to amend its merger agreement with Advanced Bionics, which it acquired in 2004, eliminating shared management provisions and modifying the schedule of earnout payments.  The amendment grants Boston Scientific sole management and control of the Pain Management business, including the emerging indications program.  The Company also announced it has entered into definitive agreements to sell the Auditory business and drug pump development program to principals of Advanced Bionics.  The transactions must be approved by former Advanced Bionics shareholders who are entitled to earnout payments under the original merger agreement, and are subject to customary regulatory approvals.  The transactions are expected to close in January 2008.

Following the closing of the transactions, the parties have agreed to dismiss currently pending litigation between Boston Scientific and former Advanced Bionics shareholders.

The Pain Management business Boston Scientific will retain includes spinal cord stimulation technologies, as well as emerging technologies such as the bion^® microstimulator, that will position the Company well in the broader neuromodulation field.  Boston Scientific currently has the number two overall market position in pain management.  The transaction provides a new schedule of consolidated, fixed earnout payments by Boston Scientific to former Advanced Bionics shareholders, consisting of $650 million payable upon closing in January 2008 and $500 million payable in March 2009.  The Advanced Bionics principals will acquire a controlling interest in the auditory

and drug pump businesses for an aggregate payment of $150 million at closing.  The Company expects to record an estimated after-tax charge, primarily non-cash, of $360 million related to the transactions.

“We are excited about the immediate and long-term growth opportunities presented by neuromodulation as an integral part of the Company,” said Jim Tobin, President and Chief Executive Officer of Boston Scientific.  “We hope to replicate the success of the pain management technologies across a wide spectrum of indications, expanding our microelectronic capabilities and strengthening our leadership in neuromodulation and cardiac rhythm management.  The sale of the Auditory business and drug pump program is consistent with our previously announced objective of selling assets we do not consider core to our long-term strategy.”

“We are very pleased that Advanced Bionics will continue serving the needs of the hearing impaired, as an independent company,” said Jeff Greiner, currently head of the Neuromodulation Group at Boston Scientific and one of the principals purchasing the Auditory and drug pump businesses.  “Advanced Bionics has always been a pioneer in developing innovative cochlear implant technology to treat severely and profoundly deaf children and adults.  We look forward to building on our proud record of achievement in hearing health, and to further developing the implantable drug pump technology.”

Under the terms of the agreements, the Pain Management business and emerging indications program will operate as Boston Scientific Neuromodulation under the leadership of Michael Onuscheck, currently head of the Pain Management business.  The business will continue to be headquartered in Valencia, California.  The Auditory business and drug pump program will operate as Advanced Bionics under the leadership of Jeff Greiner, and will be headquartered in Valencia, California.

Boston Scientific is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties.  For more information, please visit: www.bostonscientific.com.

This press release contains forward-looking statements.  Boston Scientific wishes to caution the reader of this press release that actual results may differ from those discussed in the forward-looking statements and may be adversely affected by, among other things, risks associated with product development and commercialization, clinical trials, intellectual property, regulatory approvals, competitive offerings, integration of acquired companies and separation of divested companies, Boston Scientific’s overall business strategy, and other factors described in Boston Scientific’s filings with the Securities and Exchange Commission.

 CONTACT:              Paul Donovan 508-650-8541 (office) 508-667-5165 (mobile) Media Relations Boston Scientific Corporation
Dan Brennan 508-650-8538 (office) 617-459-2703 (mobile) Investor Relations Boston Scientific Corporation