Asset Purchase Agreement - Siemens-Pacesetter Inc., St. Jude Medical Inc., and Siemens Medical Systems Inc.


                            ASSET PURCHASE AGREEMENT


                 THIS ASSET  PURCHASE  AGREEMENT  is entered into as of June 26,
1994, among  Siemens-Pacesetter,  Inc., a Delaware  corporation (the "Company"),
St. Jude Medical,  Inc., a Minnesota corporation ("SJM"), SJM Acquisition Corp.,
a  Delaware  corporation  and a wholly  owned  subsidiary  of SJM  ("Acquisition
Subsidiary")  and  Siemens  Medical  Systems,   Inc.,  a  Delaware   corporation
("Shareholder").

                  WHEREAS,  the Company and the  Subsidiaries are engaged in the
Business (each as defined herein);

                  WHEREAS,  Shareholder is the sole  shareholder of the Company;
and

                 WHEREAS, the Boards of Directors of SJM, Acquisition Subsidiary
and the Company have each  determined that it is in their best interests and the
best interests of their respective  shareholders that the Sellers sell,  assign,
transfer,  convey and deliver to SJM or its  Affiliates  all of the Assets,  and
that SJM or its  Affiliates  purchase  and  acquire  the  same,  subject  to the
assumption by SJM or its Affiliates of the Assumed  Liabilities  (each such term
being used as defined herein),  all upon the terms and subject to the conditions
set forth in this Agreement;

                 The parties hereto agree as follows:


                                   ARTICLE 1

                               TRANSFER OF ASSETS


                 1.1  Assets to Be Sold.  (a) On the terms  and  subject  to the
conditions  of this  Agreement,  the Company  and the  Subsidiaries  shall,  and
Shareholder shall cause Siemens Electric Limited,  a company organized under the
laws of Canada (the  "Shareholder  Affiliate" and, together with the Company and
the  Subsidiaries,  the  "Sellers"),  on the  Closing  Date,  to  sell,  assign,
transfer,  convey and deliver to SJM, or to such Affiliate or Affiliates of SJM,
as SJM may designate in writing to Shareholder (collectively, "SJM Affiliates"),
and SJM shall purchase or shall cause one of the SJM Affiliates to purchase from
the Sellers on the Closing  Date,  all of the right,  title and  interest of the
Sellers  in the  assets,  properties,  rights  and  goodwill  of every  kind and
description and wherever located, whether tangible or intangible, real, personal
or mixed, owned by the Sellers which are used or held for use in the Business or
Prior  Business,  other than the Excluded  Assets (the assets to be purchased by
SJM or the SJM Affiliates  pursuant to this Section 1.1 being referred to as the
"Assets"), including, without limitation, the following:


                            (i) all furniture,  fixtures,  equipment,  machinery
         and other tangible personal property,  used or held for use by a Seller
         and used in the Business or otherwise  owned or held by a Seller on the
         Closing Date for use in the Business;

                            (ii)  all  vehicles  used  in  the  Business  on the
         Closing Date;

                            (iii) all  inventories  sold as part of the Business
         and all  merchandise,  supplies or other personal  property used in the
         Business;

                            (iv) all third-party  accounts and notes  receivable
         of the  Sellers  arising  from the  conduct  of the  Business  or Prior
         Business before the Closing Date;

                           (v) all  books of  account,  general,  financial  and
         personnel records,  invoices,  shipping records, supplier lists, device
         history   records,   manufacturing   records,   traceability   records,
         regulatory documents,  records, reports and correspondence,  laboratory
         notes, research records,  correspondence and other documents,  records,
         data files and service  manuals and any rights  thereto  (and copies of
         tax records) used in, or relating to, the Business on the Closing Date;

                           (vi) all claims,  causes of action, choses in action,
         rights of recovery and rights of set-off of any kind (including  rights
         to insurance  proceeds and rights under and pursuant to all warranties,
         representations and guarantees made by suppliers of products, materials
         or equipment,  or components  thereof),  pertaining to, arising out of,
         and enuring to the benefit, of any Seller and relating to the Business;

                           (vii) all sales and promotional literature,  customer
         lists and other sales-related materials owned, used, associated with or
         employed by and used in the Business on the Closing Date;

                           (viii) all rights of each Seller under all contracts,
         licenses,  sublicenses,  agreements, leases, commitments, and sales and
         purchase  orders,  and under all bids and offers  (to the  extent  such
         offers are transferable) relating to the Business on the Closing Date;

                           (ix) all patents,  trademarks,  service marks,  trade
         names, copyrights, registrations and applications for registration with
         respect to any of the  foregoing,  trade  secrets,  know-how  and other
         intellectual  property  owned by any Seller and used in the Business on
         the Closing Date;

                            (x) all  goodwill of the Sellers with respect to the
         Business on the Closing Date;

                           (xi) all permits, licenses,  agreements,  waivers and
         authorizations  held or used  by any  Seller  in  connection  with  the
         Business, to the extent transferable;

                           (xii)    all    product    approvals,     clearances,
         registrations,  permits, consents, waivers, certificates,  listings and
         exemptions submitted to or granted by a regulatory  authority,  foreign
         or  domestic,  for the purpose of  allowing  the  manufacture,  sale or
         distribution  of a product  of the  Business,  and all  other  permits,
         orders, certificates, authorizations or approvals of any supranational,
         national,  federal,  state,  provincial or local,  domestic or foreign,
         governmental authority or regulatory agency held by a Seller in respect
         of the Business;

                           (xiii)  all  advances,   deposits,   loans,   prepaid
         interest  and other  prepaid  expenses  of all  kinds of the  Business,
         including but not limited to prepaid expenses;

                           (xiv)  computer  software  and  firmware  used in the
         Business,  including,  without limitation,  software used in connection
         with production, inventory tracking and work in process testing;

                           (xv) any and all  interests in real  property  leases
         (including  leases  for  warehouse  space)  used or held for use in the
         Business by each Seller and described in Schedule 4.19 attached hereto,
         including,  without  limitation,  the  benefit  of  any  prepaid  rent,
         security  deposits  and  options  to renew or  purchase  in  connection
         therewith;

                           (xvi)  all real  property  owned by each  Seller  and
         SI-Pace, Inc., a California corporation ("SI-Pace") and used in respect
         of the Business,  which is described in Schedule 4.19 attached  hereto,
         together with (a) all privileges,  rights,  easements and appurtenances
         belonging  to such  real  property,  (b) all  development  rights,  air
         rights, mineral rights, water, water rights and water stock relating to
         such real property, (c) all rights of Sellers and SI-Pace in and to any
         streets,  alleys,  passages, other easements and other rights-of-way or
         appurtenances  included in, adjacent to or used in connection with such
         real property, before or after the vacation thereof, (d) all buildings,
         systems,  facilities,  fixtures,  structures,  fences,  parking  areas,
         machinery,  equipment,  apparatuses  and appliances  used in connection
         with the operation, maintenance, use or occupancy of the real property,
         such as heating and air  conditioning  systems and  facilities  used to
         provide  any  utility  services,  refrigeration,  ventilation,  garbage
         disposal,  recreation or other services on the real  property,  and (e)
         all tangible  personal property owned by Sellers and used in connection
         with the operation,  maintenance, use or occupancy of the real property
         and located on the real property;

                            (xvii) all right,  title and interest of the Sellers
         in and to any stock, options, warrants,  debentures or other securities
         of Angeion, Inc.;

                            (xviii) all insurance contracts (other than worker's
         compensation contracts) and other assets under the direction or control
         of the Sellers  maintained  for the purpose of funding the  liabilities
         assumed  by SJM or any SJM  Affiliate  that are  assumed  by SJM or any
         designated SJM Affiliate pursuant to Section 7.1 or 7.3;

                            (xix) all patents, trademarks,  service marks, trade
         names, copyrights, registrations and applications for registration with
         respect to any of the  foregoing,  trade  secrets,  know-how  and other
         intellectual  property  owned by any  Seller  and  related to the Prior
         Business;

                            (xx)   copies  of  all   device   history   records,
         traceability  records,  manufacturing  records,  regulatory  documents,
         records, reports and correspondence,  laboratory notebooks and research
         records relating to the Prior Business;

                            (xxi)    all    product    approvals,    clearances,
         registrations,  permits, consents, waivers, certificates,  listings and
         exemptions submitted to or granted by a regulatory  authority,  foreign
         or  domestic,  for the purpose of  allowing  the  manufacture,  sale or
         distribution of a product of the Prior Business; and

                            (xxii)  (A)  all  rights  of  the   Sellers  to  any
         insurance  proceeds,  or claims  therefor,  covering all damages to the
         Business as a result of the January  17,  1994  earthquake  (other than
         proceeds for  reimbursement of expenses paid prior to the Closing Date)
         and (B) the  reservation of any rights under any  applicable  insurance
         policies relating to that earthquake.

                 (b)  Notwithstanding  any  provision  of Section  2.1(a) to the
contrary,  the Assets shall exclude the following assets owned by one or more of
the Sellers (the "Excluded Assets"):

                            (i) all cash,  cash  equivalents  and bank  accounts
         owned by each Seller at the Closing  Date other than cash  representing
         insurance proceeds transferred to SJM pursuant to Section 1.1(a)(xxii);

                            (ii) all assets and  properties  of the  Shareholder
         Affiliate  (other than copies of the portion of any customer  list used
         in  the  Business),  whether  tangible  or  intangible,  that  are  not
         predominantly used in the conduct of the Business;

                            (iii) the shares of capital stock of each Subsidiary
         and the corporate books and records of each Subsidiary;


                                                         
                            (iv) all rights of each Seller under this Agreement;
         and

                            (v) any forward foreign exchange contract.

                 1.2 Assumption and Exclusion of  Liabilities.  (a) On the terms
and subject to the conditions of this Agreement, on the Closing Date, SJM shall,
or shall cause the appropriate  SJM Affiliate to, assume and shall pay,  perform
and discharge when due all Liabilities of each Seller arising out of the conduct
of the Business or relating to the Assets,  whether accrued or arising before or
after the Closing,  including,  without limitation, (x) all third-party accounts
payable,  Liabilities  arising  in  connection  with  any  contracts,  licenses,
sublicenses,  agreements,  leases,  commitments,  and sales and purchase  orders
included  in the Assets and all  Liabilities  relating  to  employees,  employee
benefits  assumed by SJM or the appropriate  SJM Affiliate  pursuant to Sections
7.1 and 7.3,  except  for the  Excluded  Liabilities,  and (y) all  Post-Closing
Products  Liability Losses and all Post-Closing  Litigation Losses (the "Assumed
Liabilities").

                 (b) The Sellers  shall  retain,  and shall be  responsible  for
paying,  performing  and  discharging  when  due,  and  neither  SJM nor the SJM
Affiliates  shall  assume  or  have  any   responsibility   for,  the  following
Liabilities of the Sellers (the "Excluded Liabilities"):

                            (i) all  Liabilities  (as  defined in Section  13.1)
         relating to or arising out of the Excluded Assets;

                            (ii)   Liabilities  for  contracts  or  Permits  not
         assigned  because a consent or  approval  referred  to in  Section  6.1
         cannot be  obtained,  except to the extent  that a Seller or any of its
         Affiliates  provides SJM or an SJM Affiliate the rights and benefits of
         any such contract or Permit;

                            (iii)  Liabilities  relating to employees,  employee
         benefits and Taxes  retained by the Sellers under Sections 7.1, 7.2 and
         7.3;

                            (iv)  Liabilities  to  third  parties  for  borrowed
         monies;

                            (v)   Liabilities   for   intercompany   Tax-sharing
         arrangements   referred  to  in  Schedule  4.6(viii)  and  indebtedness
         referred to in Section 6.3;

                            (vi) Pre-Closing Products Liability Losses;

                            (vii) Pre-Closing Litigation Losses;

                            (viii) Liabilities arising from Retained Litigation;
         and

                            (ix)  Liabilities  arising from Known  Environmental
         Conditions.

                 (c)  Notwithstanding  anything to the  contrary in this Section
1.2,  Liability  and  responsibility  for Taxes shall be as set forth in Section
7.2.

                 1.3 Transfer  Documentation and Possession.  The parties hereto
agree that, in order to effect the transfer of the Assets and the  assumption of
the Assumed  Liabilities,  the parties shall deliver the documents  described in
Sections 3.2 and 3.3, and such other  conveyance  documents as are  necessary to
convey (and as appropriate, record and perfect) title to the Assets to SJM or an
SJM Affiliate and for SJM or an SJM Affiliate to assume the Assumed Liabilities,
such other  documents to be in form and substance  mutually  satisfactory to the
Sellers and SJM and as may be necessary under the laws of the jurisdiction where
such Assets and Assumed  Liabilities  are  located to effect such  transfer  and
assumption. Coincident with the Closing, the Sellers shall deliver possession of
the Assets to SJM or the appropriate SJM Affiliate.


                                   ARTICLE 2

                                 CONSIDERATION

                  2.1  Consideration.  Subject to Section 2.2, the consideration
paid for the Assets shall be $414,300,000 (the "Cash Consideration").

                  2.2 Cash Consideration Adjustment.

                  2.2.1 The Cash  Consideration  shall be subject to adjustment,
if any,  after the Closing  Date (as defined in Article 3) as  specified in this
Section 2.2.

                  2.2.2 As soon as  practicable  (but in no event  later than 90
calendar days following the Closing Date), Shareholder shall prepare and deliver
to SJM an audited balance sheet for the Business (the "Closing  Balance Sheet"),
including the Company, the Subsidiaries and the Shareholder Affiliate, as of the
Closing Date,  together  with a  supplementary  statement  adjusting the balance
sheet to exclude certain assets and liabilities  which are not to be sold and to
include  certain other assets and  liabilities  which are to be sold, all as set
forth on  Schedule  2.2.2.  In the  preparation  of the Closing  Balance  Sheet,
Shareholder  shall  in good  faith  consider  all  reasonable  audit  procedures
suggested by SJM, and to the extent such suggested  procedures are acceptable to
Shareholder prepare the Closing Balance Sheet, in a manner consistent therewith.
The Deal  Balance  Sheet and the  Closing  Balance  Sheet  shall not include any
liability  or reserve  with  respect to any future  liabilities  relating  to or
arising out of the  Settlement  Agreement.  The Closing  Balance  Sheet shall be
accompanied by the report thereon of Price Waterhouse,  independent  accountants
of Shareholder ("Shareholder's  Accountants"),  stating that the Closing Balance
Sheet fairly presents the financial position of the Business at the Closing Date
in conformity with Schedule 2.2.2 and otherwise in accordance with United States
generally  accepted  accounting  principles  (hereinafter  referred  to as "U.S.
GAAP"),  which  Schedule  2.2.2  and  U.S.  GAAP  shall  be  applied  on a basis
consistent with the preparation of the Deal Balance Sheet (as defined in Section
4.2). During the preparation of the Closing Balance Sheet by Shareholder and the
period  of any  dispute  provided  for  in  Section  2.2.4,  SJM  shall  provide
Shareholder  and  Shareholder's  Accountants  reasonable  access  to the  books,
records,  facilities and employees of the Business,  and SJM, the SJM Affiliates
and  their   respective   successors,   if  any,  shall   cooperate  fully  with
Shareholder's  Accountants,  in each case to the extent  required by Shareholder
and Shareholder's  Accountants in order to prepare the Closing Balance Sheet and
to investigate the basis for any such dispute. SJM and its representatives shall
be given reasonable  access to the books,  records,  facilities and employees of
Shareholder and the Shareholder  Affiliate,  including all supporting  documents
and auditor's work papers used in the  preparation of the Closing Balance Sheet,
as necessary for it to review the Closing Balance Sheet.  SJM shall be permitted
to observe the physical  count of inventory to be undertaken in  preparation  of
the Closing Balance Sheet.

                 2.2.3 Subject to the  limitations  set forth in Section  2.2.4,
within 30 Business Days after the date of receipt by SJM of the Closing  Balance
Sheet:

                           (i) If the  amount  of Net  Book  Value  shown on the
         Closing  Balance Sheet is less than  $117,453,000  by at least $800,000
         (the "Designated Amount"), Shareholder shall immediately pay to SJM, as
         an  adjustment  to the Cash  Consideration,  in  immediately  available
         funds, an amount equal to such excess over the Designated Amount; and

                           (ii) If the  amount  of Net Book  Value  shown on the
         Closing  Balance  Sheet is greater  than  $117,453,000  by at least the
         Designated  Amount,  SJM shall immediately pay, as an adjustment to the
         Cash Consideration,  in immediately  available funds, to Shareholder an
         amount equal to such excess over the Designated Amount.

                  2.2.4 If not disputed by SJM in  accordance  with this Section
2.2.4, the Closing Balance Sheet delivered by Shareholder to SJM shall be final,
binding  and  conclusive  on the  parties  hereto.  SJM may  dispute any amounts
reflected on the Closing Balance Sheet to the extent that the net effect of such
disputed  amounts  in the  aggregate  would  be to  change  the Net  Book  Value
reflected on the Closing Balance Sheet by more than the Designated  Amount,  but
only on the basis that the amounts  reflected on the Closing  Balance Sheet were
not arrived at in  accordance  with  Schedule  2.2.2 and otherwise in accordance
with U.S. GAAP, or that the adjustments set forth in Schedule 2.2.2 or U.S. GAAP
were not applied on a basis  consistent with the preparation of the Deal Balance
Sheet;  provided,  however,  that SJM shall notify Shareholder and Shareholder's
Accountants in writing of each disputed  item,  specifying the amount thereof in
dispute and setting  forth,  in detail,  the basis for such  dispute,  within 30
Business Days of SJM's  receipt of the Closing  Balance  Sheet.  In the event of
such a dispute,  each of  Shareholder  and SJM shall  negotiate in good faith to
reconcile  their  differences.  If such dispute has not been resolved  within 10
Business Days after the notice  referred to in the  preceding  sentence has been
given, Ernst & Young ("SJM's  Accountants") and Shareholder's  Accountants shall
attempt to reconcile  their  differences,  and any  resolution by them as to any
disputed  amounts shall be final,  binding and conclusive on the parties hereto.
If any such resolution by SJM's Accountants and Shareholder's Accountants leaves
in dispute  amounts the net effect of which in the aggregate  (together with any
amounts  originally  disputed  by SJM but no  longer in  dispute  ("Non-Disputed
Amounts"))  would not be to change the Net Book Value  reflected  on the Closing
Balance Sheet by at least the Designated  Amount,  all the amounts  remaining in
dispute  shall  then be  deemed to have been  resolved  in favor of the  Closing
Balance Sheet, and such resolution shall be final, binding and conclusive on the
parties hereto. If SJM's Accountants and Shareholder's Accountants are unable to
reach a  resolution,  leaving in dispute  amounts the net effect of which in the
aggregate  (together with Non-Disputed  Amounts) would change the Net Book Value
reflected in the Closing Balance Sheet by at least the Designated Amount,  SJM's
Accountants and  Shareholder's  Accountants  shall submit the items remaining in
dispute that SJM shall be entitled to dispute by the terms of this Section 2.2.4
for resolution to Deloitte & Touche or such other independent accounting firm of
international  reputation as may be mutually  acceptable to Shareholder  and SJM
(the "Independent  Accounting  Firm"),  which shall,  within 30 Business Days of
such submission, determine and report to Shareholder and SJM upon such remaining
disputed items, and such report shall have the legal effect of an arbitral award
and shall be final,  binding and conclusive on Shareholder and SJM. The fees and
disbursements of the Independent  Accounting Firm shall be allocated between SJM
and  Shareholder  in the same  proportion  that  the  aggregate  amount  of such
remaining  disputed items so submitted to the Independent  Accounting Firm which
is  unsuccessfully  disputed  by each such party (as finally  determined  by the
Independent  Accounting  Firm)  bears  to the  total  amount  of such  remaining
disputed  items so  submitted.  No  adjustment  to any amount  payable by SJM or
Shareholder  pursuant  to Section  2.2.3  shall be made with  respect to amounts
disputed by SJM  pursuant to this  Section  2.2.4,  unless the net effect of the
amounts  successfully  disputed  by SJM  in the  aggregate  (together  with  the
Non-Disputed  Amounts) is to change the Net Book Value  reflected on the Closing
Balance Sheet by at least the Designated  Amount,  in which case such adjustment
shall only be made in an amount equal to any excess over the Designated  Amount.
Any amount that is payable under Section 2.2.3,  including,  without limitation,
any portion thereof that is subject to dispute under this Section 2.2.4 shall be
paid by Shareholder or SJM, as the case may be, in immediately  available funds,
within five  Business Days  following  the  resolution of such dispute and in an
amount in accordance with such resolution.

                 2.2.5   In   acting   under   this   Agreement,   Shareholder's
Accountants,  SJM's  Accountants  and the  Independent  Accounting Firm shall be
entitled to the privileges and immunities of arbitrators.

                 2.2.6 Any  payment  required  to be made by SJM or  Shareholder
pursuant to Section  2.2.3 shall bear interest from the Closing Date through the
date of  payment  on the  basis of the  average  of the daily  rate of  interest
publicly announced by Citibank,  N.A. in New York, New York from time to time as
its base rate from the Closing Date to the date of such payment.

                 2.2.7  Within  15  Business  Days of the date  hereof,  SJM and
Shareholder  shall agree on a form of Escrow Agreement (the "Escrow  Agreement")
with Citibank, N.A. (the "Escrow Agent"). On the Closing Date, SJM shall deposit
$13,000,000 of the Cash Consideration (the "Escrow Amount") into an account (the
Escrow  Account")  managed by the  Escrow  Agent.  Pursuant  to the terms of the
Escrow   Agreement,   the  Escrow   Agent  shall   release  the  Escrow   Amount
simultaneously  with a  determination  of a payment  obligation by either SJM or
Shareholder,  as the case may be, to the other in satisfaction of some or all of
the  obligations due by one to the other under Section 2.2.3. If SJM is required
to make a payment to Shareholder  under Section 2.2.3, some or all of the Escrow
Amount  shall be  released  to  Shareholder  to the extent of the payment due to
Shareholder   under  Section  2.2.3  and  credited  against  such  payment.   If
Shareholder is required to make a payment to SJM under Section 2.2.3, all of the
Escrow  Amount  shall be  released to SJM.  The fees and  expenses of the Escrow
Agent shall be paid equally by SJM and  Shareholder.  Any interest earned on the
Escrow  Amount while the Escrow  Amount is held in the Escrow  Account  shall be
distributed  to SJM and  Shareholder,  as the case may be,  on the same pro rata
basis as SJM or Shareholder  receives all or a portion of the Escrow Amount upon
the release thereof.

                 2.3   Allocation  of  Purchase   Price.   (a)  As  promptly  as
practicable  (but in no event later than 90 calendar days  following the Closing
Date),  SJM shall  deliver  to  Shareholder  a proposed  allocation  of the Cash
Consideration and the Assumed Liabilities among the Assets.

                 (b)  SJM and  Shareholder  agree  to  negotiate  in good  faith
regarding  the  allocation  referred to in  subsection  (a) above as promptly as
practicable. If SJM and Shareholder are unable (despite good faith negotiations)
to agree upon an  allocation  within 150 days after the  Closing  Date,  SJM and
Shareholder  shall  each be  individually  responsible  for  performing  its own
allocation.


                                   ARTICLE 3

                                    CLOSING

                 3.1 The Closing.  The closing of the transactions  contemplated
hereby (the  "Closing")  shall take place at the offices of Shearman & Sterling,
New  York,  New York,  at 10:00  a.m.  (New York City  time) on the later of (i)
August 31, 1994 and (ii) the fifth Business Day after the satisfaction or waiver
of the  conditions  in  Articles  8 and 9, or at such other time or place as the
parties may agree (the  "Closing  Date").  All  matters at the Closing  shall be
considered to take place  simultaneously,  and no delivery of any document shall
be deemed  completed  until all  transactions  and  delivery  of  documents  are
completed.

                  3.2 Deliveries of Shareholder and the Company. At the Closing,
Shareholder and the Company shall deliver or cause to be delivered to SJM or the
appropriate SJM Affiliates the following:

                  3.2.1 the Officers'  Certificates from an executive officer of
each of Shareholder and the Company,  in substantially the form of Exhibit 3.2.1
attached hereto;

                  3.2.2 the opinions of counsel for Shareholder and the Company,
in substantially the form of Exhibit 3.2.2 attached hereto;

                 3.2.3 copies of resolutions of the Company's Board of Directors
and of  Shareholder's  Board of  Directors,  each  certified  by the  respective
Secretary (or other authorized  officer) thereof as having been duly and validly
adopted and in full force and effect, authorizing execution and delivery of this
Agreement and  performance  respectively  by the Company and  Shareholder of the
transactions contemplated hereby;

                  3.2.4 an executed counterpart of the Medtronics Assignment and
Assumption Agreement, in substantially the form of Exhibit 3.2.4 attached hereto
(the "Medtronics Assignment");

                  3.2.5   a   license   agreement   among   St.   Jude   Medical
International,  Inc.,  SJM and  Siemens  AG,  in form and  substance  reasonably
satisfactory  to each  such  party,  whereby  Siemens  AG  grants to SJM and its
Affiliates  a  non-exclusive  short-term  transition  license to continue use of
those certain  inventories of products and packaging and, for a certain  period,
molds for production,  bearing the trademark  "SIEMENS"  existing at the Closing
Date;

                  3.2.6  certificates  evidencing  securities  of Angeion,  Inc.
owned by the Company;

                  3.2.7 assignments necessary to assign the real property leases
being transferred hereunder to SJM;

                  3.2.8 the Bill of Sale and the Deeds;

                  3.2.9  an  assignment  of  Proprietary   Rights  in  form  and
substance reasonably satisfactory to each of SJM and Shareholder;

                  3.2.10 an executed  counterpart  of the Canadian  Transitional
Services  Agreement in substantially  the form of, and having  substantially the
terms  contained  in,  Exhibit  3.2.10  (the  "Canadian   Transitional  Services
Agreement"); and.

                  3.2.11 an executed counterpart of the Escrow Agreement.

                  3.3  Deliveries  of SJM. At the Closing,  SJM shall deliver to
Shareholder, on behalf of the Sellers, the following:

                  3.3.1  the  Cash   Consideration   by  (x)  wire  transfer  in
immediately  available funds to a U.S. bank account designated by Shareholder to
SJM in writing at least two  Business  Days prior to the Closing Date and (y) to
the Escrow Agent pursuant to Section 2.2.7.;

                  3.3.2 the Officer's  Certificate from an executive  officer of
SJM, in substantially the form of Exhibit 3.3.2 attached hereto;

                  3.3.3 the  opinion of counsel for SJM,  in  substantially  the
form of Exhibit 3.3.3 attached hereto;

                  3.3.4 Certificates of Good Standing dated not more than thirty
(30)  days  prior to the  Closing  Date,  with  respect  to SJM and  Acquisition
Subsidiary  issued  by the  Secretaries  of State  of  Minnesota  and  Delaware,
respectively;

                  3.3.5  copies  of   resolutions   of  SJM's  and   Acquisition
Subsidiary's  Boards  of  Directors,  certified  by the  respective  Secretaries
thereof as having  been duly and  validly  adopted and in full force and effect,
authorizing  execution  and delivery of this  Agreement and  performance  of the
transactions contemplated hereby;

                  3.3.6 an executed counterpart of the Medtronics Assignment;

                  3.3.7 an executed counterpart of the Assumption Agreement; and

                  3.3.8 an executed  counterpart  of the  Canadian  Transitional
Services Agreement; and

                  3.3.9 an executed counterpart of the Escrow Agreement.

                  3.4 Further Documents.

                  3.4.1 SJM,  Shareholder  and the  Sellers  shall  execute  and
deliver,  or cause to be executed and delivered,  such other powers of attorney,
instruments,  documents  or  certificates  as the other  parties may  reasonably
request to effect or evidence the consummation of the transactions  contemplated
by this Agreement.


                                   ARTICLE 4

                 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
                                AND THE COMPANY

                 Shareholder  and the Company  represent  and warrant to SJM and
agree with SJM that:

                 4.1 Authority; Organization,  Capitalization and Qualification;
Effect of Agreement.

                 4.1.1  Authority.  Each of Shareholder and the Company has full
corporate power and authority to execute and deliver this Agreement, perform its
obligations  hereunder and to consummate the transactions  contemplated  hereby.
The execution and delivery of this Agreement, the performance by Shareholder and
the Company of their  obligations  under this Agreement and the  consummation by
Shareholder and the Company of the  transactions  contemplated  hereby have been
duly authorized by all necessary corporate action on the part of Shareholder and
the Company,  and no other  corporate  proceedings on the part of Shareholder or
the Company are  necessary  to  authorize  the  execution  and  delivery of this
Agreement and to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by Shareholder  and the Company and constitutes
the  valid  and  binding  obligation  of  Shareholder  and  the  Company  and is
enforceable  against  Shareholder  and the Company in accordance with its terms,
except to the extent that such  enforceability (i) may be limited by bankruptcy,
insolvency,  reorganization,  moratorium  or  other  similar  laws  relating  to
creditors' rights generally, and (ii) is subject to general principles of equity
(regardless  of whether such  enforceability  is  considered  in a proceeding in
equity or at law).

                 4.1.2  Organization and  Qualification of the Company.  Each of
the Company and the  Shareholder  Affiliate  is a  corporation  duly  organized,
validly  existing and in good  standing  under the laws of the State of Delaware
and Canada, respectively, and has full corporate power and authority to carry on
its  business  as it is now  being  conducted.  Each  of  the  Company  and  the
Shareholder  Affiliate is duly qualified to do business as a foreign corporation
in good standing in each jurisdiction  where the character of the property owned
or  leased  by it or the  nature  of its  activities  makes  such  qualification
necessary,  except for those  jurisdictions where the failure to be so qualified
would not, individually or in the aggregate,  have a Material Adverse Effect (as
defined in Section 13.1).  Shareholder has heretofore delivered, or caused to be
delivered,  to SJM true and  complete  copies of the  Company's  certificate  of
incorporation and bylaws.

                 4.1.3 Subsidiaries.  Except as set forth in Schedule 4.1.3, the
Company has no subsidiaries,  does not own,  directly or indirectly,  any stock,
partnership  interest,  joint venture  interest or other equity  interest in any
other Person,  and does not have the power to vote, or to exercise a controlling
influence  with  respect  to, any  securities  of any class of any  Person,  the
holders of which class are entitled to vote for the  election of  directors  (or
persons  serving  similar  functions) of such Person.  Schedule 4.1.3 lists each
Subsidiary,  and with respect to each Subsidiary,  lists the number of shares of
its authorized capital stock, the number and class of shares thereof duly issued
and outstanding, the names of all stockholders and the number of shares of stock
owned by each stockholder. For the purposes of Article 1 and the representations
and warranties in this Article 4, "Subsidiary" shall mean BDL Holdings, Inc. and
Bio-Devices Laboratories, Inc.

                 4.1.4 Title to Stock.  Shareholder holds all of the outstanding
capital stock of the Company free and clear of any Liens.

                 4.1.5.  Officers  and  Directors.  Schedule  4.1.5  contains an
accurate and complete  list of all of the current  directors and officers of the
Company.

                 4.1.6  Consents.  Except as disclosed  in Schedule  4.1.6 or as
would not, individually or in the aggregate,  have a Material Adverse Effect, no
consent,  approval,  waiver or other  action by any Person  under any  contract,
agreement,  indenture, lease, instrument or other document to which Shareholder,
the Company, the Shareholder  Affiliate or any Subsidiary is a party or by which
any of them or their Assets is bound is required or necessary for the execution,
delivery and performance of this Agreement or the other  documents  contemplated
hereby by Shareholder, the Shareholder Affiliate, any Subsidiary or the Company,
as the case may be, or the consummation of the transactions  contemplated hereby
or thereby.

                 4.1.7 No Default.  Except as disclosed in Schedule  4.1.7,  the
execution,  delivery and performance by Shareholder,  the Shareholder Affiliate,
any  Subsidiary  and  the  Company  of this  Agreement  or the  other  documents
contemplated   hereby  and  the   consummation  by  them  of  the   transactions
contemplated hereby and thereby do not and will not (a) except as would not have
individually,  or in the aggregate,  a Material  Adverse  Effect,  contravene or
constitute a default under or give rise to a right of termination,  cancellation
or  acceleration  of any right or obligation of  Shareholder or to a loss of any
benefit to which the Company,  the  Shareholder  Affiliate or any  Subsidiary is
entitled under (i) any provision of applicable  law or regulation  (assuming the
governmental  consents referred to in Section 4.9 have been obtained);  (ii) the
certificate of incorporation or bylaws of Shareholder or the Company;  (iii) any
Commitment (as defined in Section 4.6); or (iv) any judgment, injunction, order,
decree,  administrative  interpretation,  award or other instrument binding upon
Shareholder, the Company, any Subsidiary or the Shareholder Affiliate in respect
of the  Business  or (b)  except  as  would  not  have  individually,  or in the
aggregate,  a Material  Adverse Effect,  result in the creation or imposition of
any Lien on any Asset.

                 4.2  Financial  Statements.  Shareholder  has  delivered to SJM
copies of the audited  balance  sheets of the Business as of September  30, 1993
(together with a supplementary  statement adjusting such financial statements to
exclude certain assets and liabilities,  including certain  reserves,  which are
not to be sold and assumed and to include certain assets and  liabilities  which
are to be sold and  assumed,  all as set  forth on  Schedule  2.2.2  (the  "Deal
Balance Sheet")), as well as an audited income statement and cash flow statement
for the Business for the fiscal year ended September 30, 1993, together with the
related notes and schedules thereto (collectively,  the "Financial Statements").
The Financial  Statements are attached as Schedule 4.2. The Financial Statements
have been prepared from the books and records of the Business in accordance with
U.S. GAAP applied on a consistent basis, subject to normal year-end adjustments,
and fairly  present  the  financial  condition  of the  Business  as at the date
thereof and results of its operations for the periods covered  thereby  (subject
to the adjustments contained on the supplementary statement).  The supplementary
statement has been subjected to the auditing  procedures applied in the audit of
the  Financial  Statements  and is fairly  stated in all  material  respects  in
relation to the Financial  Statements.  Schedule  2.2.2.1 sets forth for each of
the Financial  Statements the  intercompany  eliminations  between the Financial
Statements and each of the  corresponding  "Non-U.S.  Financial  Statements" (as
defined  in the  Non-U.S.  Asset  Purchase  Agreement)  (which the  Sellers  are
assuming have been prepared in accordance  with U.S. GAAP) that are necessary to
prepare in  accordance  with U.S.  GAAP combined  financial  statements  for the
Financial Statements and the Non-U.S. Financial Statements. Shareholder has also
delivered to SJM unaudited  profit and loss information for the Business for the
period from October 1, 1993 through May 31, 1994, based on financial information
normally prepared by the Company for delivery to Shareholder.

                 4.3  Absence  of Certain  Developments.  Except as set forth in
Schedule 4.3,  since  September 30, 1993, the Business has been operated only in
the ordinary course, and neither the Company, any Subsidiary nor the Shareholder
Affiliate in respect of the Business, alone or in the aggregate, has:

                 4.3.1  mortgaged,  pledged or subjected to any Lien, any of its
property or assets, tangible or intangible, other than in the ordinary course of
business,  Permitted  Liens  and  Liens  that  will be  released  at or prior to
Closing;

                 4.3.2  except  as  contemplated  by this  Agreement,  (i) sold,
leased, assigned, transferred or otherwise disposed of any of its assets, except
for  inventory  sold in the ordinary  course of business,  or (ii)  cancelled or
compromised  any debt or claim,  or waived or released any right, in the case of
both (i) and (ii) above,  having a value of more than  $250,000 or an  aggregate
value in excess of $750,000;

                 4.3.3  except  as  contemplated  by this  Agreement,  made  any
material direct or indirect payments,  dividends,  sales or transfers of assets,
other than normal compensation, or made or granted any bonus or any wage, salary
increase,  severance or severance arrangement to any director, manager, officer,
salesperson,  distributor,  agent,  employee  or group of  employees  or made or
granted any increase in any employee compensation or benefit plan or arrangement
(except in accordance with past practice), or amended or terminated any existing
employee benefit plan or arrangement or adopted any new employee benefit plan or
arrangement;

                 4.3.4 sold, assigned, transferred or licensed to any Person any
rights under any patents,  trademarks,  service marks, trade names,  copyrights,
applications  for  registration  with  respect  to any of the  foregoing,  trade
secrets or other  intellectual  property  owned by, or licensed to, the Company,
any Subsidiary or the Shareholder Affiliate in respect of the Business;

                 4.3.5  entered  into any  settlement  agreement  regarding  the
breach or infringement  (or alleged breach or infringement) of any United States
or foreign intellectual property license, patent, copyright or trademark;

                 4.3.6 made any capital  expenditures  in excess of an aggregate
of $5,000,000;

                 4.3.7 suffered any extraordinary losses or waived any rights of
material value,  whether or not in the ordinary course of business or consistent
with past practice;

                 4.3.8  suffered any damage,  destruction  or loss of any assets
owned by the  Company  or used in the  operation  of the  Business  which in the
aggregate have a replacement cost of more than $1,500,000 whether or not covered
by insurance;

                 4.3.9  modified,  amended  or  terminated  any  Commitment  (as
defined in Section 4.6) in a manner materially adverse to the Business;

                 4.3.10    suffered any Material Adverse Effect;

                 4.3.11  been the  subject  of any  action  taken by the  United
States  Food and Drug  Administration  (the  "FDA")  or any  foreign  regulatory
authority having  jurisdiction over similar matters,  excluding  observations of
inspectors which have not resulted in any action,  claim or investigation by the
FDA or other regulatory authority;

                 4.3.12  declared,  set  aside  or paid  any  dividend  or other
distribution with respect to any shares of capital stock of the Company, or made
any  repurchase,   redemption  or  other  acquisition  by  the  Company  of  any
outstanding  shares of capital  stock or other  ownership  interests in or other
securities of the Company, except as contemplated by Section 6.9;

                 4.3.13 altered any material term of any outstanding security of
the Company;

                 4.3.14  made  any  change  in  any  method  of   accounting  or
accounting  practice or guideline by the Company,  the Shareholder  Affiliate in
respect of the Business or any  Subsidiary,  except for any such change required
by U.S.  GAAP or similar  rules and except for changes to obtain  uniformity  of
accounting policies and classifications;

                 4.3.15 entered into any foreign exchange  hedging  contracts or
any other financial derivative contracts;

                 4.3.16  undertaken any (i) incurrence,  assumption or guarantee
by the Company or any  Subsidiary of any  indebtedness  for borrowed money other
than in the ordinary course of business in amounts and on terms  consistent with
past  practices,  (ii) issuance or sale of any  securities  convertible  into or
exchangeable  for debt  securities  of the Company or any  Subsidiary,  or (iii)
issuance or sale of options or other  rights to acquire  from the Company or any
Subsidiary,  directly  or  indirectly,  debt  securities  of the  Company or any
Subsidiary or any securities  convertible into or exchangeable for any such debt
securities;

                 4.3.17  failed  to  maintain  its  inventory  in a  normal  and
customary  manner  materially  consistent with its prior  practice,  or made any
material  change in its  selling,  pricing or  advertising  practices  or credit
terms, limits or durations inconsistent with its prior practice;

                 4.3.18  discharged or satisfied  accounts payable other than in
the ordinary course of business consistent with past practice; or

                 4.3.19  entered into any  agreement or made any  commitment  to
take any of the types of action described in subparagraphs  4.3.1 through 4.3.18
above.

                 4.4 Title to Personal  Property and Assets.  The  Company,  the
Shareholder  Affiliate or a Subsidiary owns or has a valid leasehold interest in
all tangible  personal property  necessary for the conduct of the Business,  and
owns or has a valid  license or  sublicense  to use all computer  software  used
predominantly in the Business,  free and clear of all Liens, except as set forth
in  paragraph  (a) of  Schedule  4.4,  Permitted  Liens or as  reflected  on the
Financial Statements.  Except as set forth in paragraph (b) of Schedule 4.4, the
equipment and fixed assets of the Business are in good  condition and repair and
are usable in the ordinary course of business,  ordinary wear and tear excepted.
Shareholder,  the Shareholder  Affiliate and the Company have furnished to SJM a
summary of tangible personal property, owned or leased by, in the possession of,
or used by the Company,  the Shareholder  Affiliate (but only to the extent used
in the Business) or the  Subsidiaries.  The Assets  constitute all of the assets
and properties  necessary for the conduct of the Business as currently conducted
in all material respects.

                 4.5 Patents,  Trademarks  and  Copyrights.  To the knowledge of
Shareholder,  the  Subsidiaries  and the Company,  (a) Schedule 4.5(a) lists all
patents, trademarks,  service marks, trade names, copyrights,  registrations and
and applications for registration  with respect to any of the foregoing owned by
the Company or any Subsidiary;  (b) Schedule 4.5(b) lists all license agreements
under which third party owned patents,  trademarks,  service marks, trade names,
copyrights,  registrations  and  applications  for  registration  of  any of the
foregoing,  know-how,  technology  or other  intellectual  property  rights  are
licensed to the Company,  the Shareholder  Affiliate or any Subsidiary;  and (c)
Schedule 4.5(c) lists all claims and disputes pending or threatened (in writing)
with third parties alleging that the Company,  the Shareholder  Affiliate or any
Subsidiary,  on the one hand, or such third party, on the other hand,  infringes
on the other's  patents,  trademarks,  service marks,  trade names,  copyrights,
trade secrets or other intellectual  property rights. The Company has previously
furnished or made available to SJM all licenses  listed on Schedules  4.5(a) and
4.5(b).  On or before the Closing,  the Company shall make  available to SJM all
pending patent applications filed by the Company, the Shareholder  Affiliate (in
respect  of  the  Business)  or  any  Subsidiary.   Schedule  4.5(d)  lists  all
outstanding  orders,  judgments and decrees  restricting the use by the Company,
the Shareholder Affiliate or any Subsidiary of the patents, trademarks,  service
marks, trade names,  copyrights,  trade secrets or other  intellectual  property
rights owned or licensed by any of them. All of the license agreements listed on
Schedule  4.5(b)  will be in full  force and  effect on the  Closing  Date,  and
neither the Company, the Shareholder  Affiliate nor any Subsidiary is in default
under any of them nor, to the knowledge of  Shareholder  or the Company,  (i) is
any other party to any such license  agreement in default  thereunder,  nor (ii)
does any  condition  exist  that,  with  notice or lapse of time or both,  would
constitute a default thereunder,  except in each case for such failures to be in
full force and effect,  defaults or conditions that would not have individually,
or in the aggregate, a Material Adverse Effect. The right, title and interest of
the  Company,  the  Shareholder  Affiliate  and the  Subsidiaries  in and to the
Proprietary Rights and Proprietary Information are duly recorded (as applicable)
and free and clear of all Liens and rights of third parties other than Permitted
Liens and as otherwise  described in Schedule 4.5(e).  Each of the Company,  the
Shareholder  Affiliate  and  the  Subsidiaries  has  established  safeguards  to
maintain  the secrecy of its  Proprietary  Information  that it  considers to be
reasonable.  To the knowledge of Shareholder  and the Company,  the  information
which Shareholder,  the Shareholder Affiliate,  the Subsidiaries and the Company
believe is Proprietary  Information has not been disclosed by the Company or any
of its Affiliates to any other person, entity or governmental  agencies,  except
pursuant to confidentiality  agreements,  protective orders or law and except as
would not have individually,  or in the aggregate, a Material Adverse Effect. As
used herein,  "Proprietary  Information" means all know-how and technology owned
by the Company,  the Shareholder  Affiliate and the Subsidiaries and used in the
Business (except in the case of the Shareholder Affiliate,  such term shall mean
know-how and technology used  predominantly  in the Business);  and "Proprietary
Rights" means all patents, trademarks, service marks, copyrights,  registrations
and  applications  therefor  arising  out of,  and  owned  by the  Company,  the
Shareholder  Affiliate and the  Subsidiaries  as part of, the  Business.  To the
knowledge of the Company,  the  Subsidiaries and the Shareholder  Affiliate,  no
interference  actions  are  pending,  and no  notice  has  been  received  of an
intention  to provoke  an  interference  action or to  otherwise  challenge  the
validity  or  priority  of  inventorship  before  the United  States  Patent and
Trademark  Office or other  similar  authorities  with  respect to any patent or
application therefor included in the Assets.

                 4.6  Commitments.  Paragraph  (a) of Schedule  4.6 sets forth a
list of all of the following written contracts and other agreements to which the
Company  or any  Subsidiary,  or the  Shareholder  Affiliate  in  respect of the
Business,  is a  party  or by  which  the  Company  or  any  Subsidiary,  or the
Shareholder Affiliate in respect of the Business or any Assets, bound or subject
(collectively,  "Commitments"):  (i) customer  contracts and  agreements for the
sale of materials or products  which by their terms exceed one year or which are
in dollar amounts which equal or exceed $500,000 per annum; (ii) distributorship
agreements  and  manufacturer's  representative  agreements  which  provide  for
payments in excess of $500,000 per annum;  (iii) supply and vendor contracts for
sole source  components  or which provide for payments in excess of $350,000 per
annum;  (iv)  material  research and  development  agreements;  (v)  employment,
consulting,  independent contractor, severance, change in control, retention and
indemnification  agreements,  arrangements  or  understandings,  and  any  other
agreements, arrangements or understandings,  between the Company, any Subsidiary
or the  Shareholder  Affiliate  in respect of the  Business,  and any current or
former stockholder,  officer,  director,  employee,  consultant,  agent or other
representative,  which  provide for  payments in excess of $100,000 per annum or
with  respect  to any such  contract  under  which  the total  liability  of the
Company, any Subsidiary or the Shareholder  Affiliate in respect of the Business
equals or exceeds  $500,000;  (vi) contracts and other agreements with any labor
union or association representing any employee of the Company, any Subsidiary or
the  Shareholder  Affiliate  in respect of the  Business;  (vii)  joint  venture
agreements;  (viii) contracts or other agreements under which the Company agrees
to indemnify for or share Tax liability of any party;  (ix)  contracts and other
agreements  relating  to the  borrowing  of  money;  (x)  any  equipment  leases
requiring  payment  of at least  $100,000  within  a given  year  which  are not
cancelable  without  penalty  upon 90 days'  notice;  (xi)  agreements  settling
pending or threatened Litigation which require continuing  obligations after the
date hereof;  (xii) any  agreements  between the Company,  any Subsidiary or the
Shareholder  Affiliate (in respect of the Business) and any of their  Affiliates
(other  than  individuals);  (xiii)  agreements  granting  rights or  options to
purchase the securities or assets (other than  inventory in the ordinary  course
of business) of other companies or entities;  (xiv)  agreements  which limit the
Business from competing in any line of business or in any geographic  area other
than  distributorship  or  representation  agreements  which are exclusive as to
geographic  area;  or (xv) any other  contract  or other  agreement  (other than
contracts  and  agreements  of the type  specified in clauses (i) through  (xiv)
above)  that is material to the  Business,  whether or not made in the  ordinary
course of business.  There have been delivered or made available to SJM true and
complete  copies  of all  such  contracts  and  other  agreements  set  forth in
paragraph  (a) of Schedule  4.6. All of such  Commitments  are in full force and
effect, and none of the Company, any Subsidiary nor the Shareholder Affiliate is
in default  under any of them,  nor,  to the  knowledge  of  Shareholder  or the
Company,  (i) is any other  party to any such  contract  or other  agreement  in
material default thereunder, nor (ii) does any condition exist that, with notice
or lapse of time or both, would constitute a default thereunder. The Company has
not received any notification of any change in its  arrangements  with customers
and suppliers  that would  individually,  or in the  aggregate,  have a Material
Adverse Effect. Paragraph (b) of Schedule 4.6 indicates which of the Commitments
requires  the  consent of a third party to be  transferred  or to remain in full
force and effect following the consummation of the transactions  contemplated by
this Agreement.

                 4.7  Litigation.  Except as set forth in Schedule 4.7, there is
no  Litigation  pending  or,  to  Shareholder's  or  the  Company's   knowledge,
threatened   which  seeks  to  enjoin  or  obtain  damages  in  respect  of  the
consummation of the  transactions  contemplated  hereby.  Schedule 4.7 lists any
Litigation and, to Shareholder's or the Company's  knowledge,  any investigation
by a  governmental  entity,  in each  case  that (i)  involves  a  claim,  or to
Shareholder's  or the Company's  knowledge,  potential  claim, of liability,  in
excess of  $2,000,000,  against or affecting the Company,  any Subsidiary or the
Shareholder  Affiliate in respect of the Business or (ii)  enjoins,  or seeks to
enjoin, the operation of a portion of the Business or seeks declaratory judgment
if such injunction or judgment would, or if entered would, constitute a Material
Adverse Effect.

                 4.8  Compliance  with  Laws;  Permits.  Except  as set forth in
paragraph  (a) of Schedule  4.8, the Company,  a Subsidiary  or the  Shareholder
Affiliate  currently  holds all permits,  licenses,  clearances,  registrations,
consents, waivers, listings, exemptions, orders, certificates, authorizations or
approvals of any international, federal, provincial, state or local, domestic or
foreign,  governmental  authorities or regulatory agencies,  including,  without
limitation,  those  regulating  safety,  effectiveness  and market  clearance of
medical  devices  (the  "Permits"),  necessary to carry on the Business as it is
currently  being  conducted,  except for such Permits the absence of which would
not, individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in paragraph (b) of Schedule 4.8, no approval or consent of any Person
is needed in order  that any  Permit  shall  continue  in full  force and effect
following the  consummation of the  transactions  contemplated by this Agreement
and to assign such  Permits to SJM or one of its  Affiliates,  except  where the
failure to obtain such approvals or consents would not have individually,  or in
the aggregate,  a Material Adverse Effect.  Except as set forth in paragraph (c)
of Schedule 4.8, or as would not have a Material  Adverse  Effect,  the Company,
the Subsidiaries  and the Shareholder  Affiliate in respect of the Business have
complied with all applicable laws,  regulations,  Permits and orders of foreign,
federal,  state and  local  governments  and all  agencies  thereof  (including,
without  limitation,   the  FDA  or  any  foreign  regulatory  authority  having
jurisdiction  over  similar  matters)  that affect the Business and to which the
Company,  the  Subsidiaries  or the  Shareholder  Affiliate are subject,  and no
claims have been filed against the Company,  the Subsidiaries or the Shareholder
Affiliate  in respect of the  Business  alleging a  violation  of any such laws,
regulations or orders.  Except as set forth in paragraph (d) of Schedule 4.8, no
notice,  warning  or other  communication  from any  governmental  authority  in
respect of any failure or alleged  failure by the Company,  the  Subsidiaries or
the  Shareholder  Affiliate  in respect of the  Business to comply with any law,
regulation or order has been received by the Company,  the  Subsidiaries  or the
Shareholder Affiliate.

                 4.9 Governmental Consents.  Except for the filing under the HSR
Act and otherwise as set forth in Schedules 4.8 and 4.9, the execution, delivery
and performance by Shareholder,  the Shareholder Affiliate, the Subsidiaries and
the Company of this Agreement and the other  documents  contemplated  hereby and
the consummation by Shareholder, the Shareholder Affiliate, the Subsidiaries and
the Company of the transactions contemplated by this Agreement require no action
by, or in respect of, or filing with, any governmental body, agency, official or
authority.

                 4.10      Employee Benefit Plans.

                 4.10.1  Schedule  4.10.1 sets forth a true and complete list of
each material  Employee  Benefit Plan covering any Employee  (each as defined in
Section  4.10.5).  With  respect  to each  Employee  Benefit  Plan set  forth on
Schedule 4.10.1:

                           (a) Each  Company  Employee  Benefit  Plan  (and each
                 related trust,  insurance  contract,  or fund) complies in form
                 and in operation in all material  respects with its terms,  and
                 with all applicable  laws,  regulations,  ordinances,  codes or
                 other legally binding rules and other  requirements of all tax,
                 labor and other governmental  authorities  having  jurisdiction
                 over the  Company,  and all  applicable  collective  bargaining
                 agreements and works council rules,  including the requirements
                 of ERISA, the Code, and other applicable laws.


                           (b) All  employer  and  Employee  contributions  with
                 respect to Employees  which are due and owing as of the Closing
                 Date pursuant to Employee  Benefit  Plans and Employee  Benefit
                 Plans of the  Shareholder  Affiliate  with respect to Employees
                 have been or will be made in accordance with local law and past
                 practice.  Any  liabilities for amounts accrued with respect to
                 Employees under any Employee Benefit Plan set forth in Schedule
                 4.10.1 as of the Closing Date have been appropriately reflected
                 on the books and records of such Employee  Benefit Plan sponsor
                 in  accordance  with local law,  past  practice  and  generally
                 accepted accounting principles in the local jurisdiction.

                           (c) The Company or  Shareholder  has delivered to SJM
                 correct and complete  copies of all plan  documents and summary
                 plan  descriptions,  all material  communications to Employees,
                 all related trust agreements,  insurance  contracts,  and other
                 funding   agreements  which  implement  each  Company  Employee
                 Benefit Plan, and, where a plan document for a Company Employee
                 Benefit  Plan does not exist,  a detailed  description  of such
                 Company Employee Benefit Plan.

                           (d) No Company  Employee Benefit Plan is either (i) a
                 Multiemployer  Plan,  or (ii) except as  disclosed  on Schedule
                 4.10.1, an Employee Welfare Benefit Plan (as defined in Section
                 4.10.5) providing  medical,  health,  life insurance,  or other
                 welfare-type   benefits  for  current  or  future   retired  or
                 terminated Employees,  their spouses or their dependents (other
                 than in accordance with Code Section 4980B).

                           (e) Except as  disclosed on Schedule  4.10.1,  to the
                 knowledge of the Company and its  Subsidiaries,  there has been
                 no amendment to,  written  interpretation  of, or  announcement
                 (whether or not written) relating to, or any change in employee
                 participation or coverage under, any Employee Benefit Plan that
                 is not  reflected  in the text of such  Employee  Benefit  Plan
                 which would  materially  increase  the expense  (whether or not
                 such expense is recognized under generally accepted  accounting
                 principles) to the employer whose Employees are covered by such
                 Employee  Benefit Plan,  other than as a function of the number
                 of  plan  participants  or  as a  result  of a  change  in  the
                 applicable law.

                           (f) Except as  disclosed  on Schedule  4.10.1,  or as
                 otherwise expressly provided with respect to a Company Employee
                 Benefit Plan or as otherwise required by applicable law, to the
                 knowledge  of the Company and its  Subsidiaries,  no  condition
                 exists that would prevent the amendment or  termination  of any
                 Company Employee Benefit Plan with respect to any Employee.

                 4.10.2 With respect to each Company  Employee Benefit Plan that
any of the Company or its  Subsidiaries,  or any member of the Controlled  Group
(as defined in Section 4.10.5) which includes the Company and its  Subsidiaries,
maintains  or has  ever  maintained  for  Employees,  or to  which  any of  them
contributes,  has ever contributed,  or has ever been required to contribute for
Employees, except as set forth on Schedule 4.10.2:

                           (a) neither SJM nor any SJM  Affiliate has any direct
                 or  indirect  material  liability:  (i)  with  respect  to  any
                 complete or partial  termination  of any such Company  Employee
                 Benefit Plan (including any  Multiemployer  Plan (as defined in
                 Section  4.10.5)) or any Company Employee Benefit Plan that has
                 been the subject of a  Reportable  Event (as defined in Section
                 13.1) as to which  notices  would be  required to be filed with
                 the Pension Benefit Guaranty Corporation ("PBGC"), (ii) for any
                 breach of  fiduciary  duty or any  failure  to act or comply in
                 connection with the  administration or investment of the assets
                 of any  such  Company  Employee  Benefit  Plan,  (iii)  for any
                 transaction or holding of any asset under or in connection with
                 any  Company   Employee  Benefit  Plan  that  would  result  in
                 liability  under  Title I of  ERISA  or  liability  for any tax
                 pursuant to Section 4975 of the Code, or any Canadian tax laws,
                 (iv) to the PBGC  (other  than for PBGC  premium  payments)  or
                 otherwise  under  Title  IV of ERISA  or  under  the Code  with
                 respect to any such Company  Employee  Benefit Plan which is an
                 Employee  Pension  Benefit  Plan,  (v)  arising  out  of  or in
                 connection with any  Multiemployer  Plan (including  withdrawal
                 liability),  or (vi) under any Company  Employee  Benefit  Plan
                 which is an Employee  Welfare  Benefit Plan providing  medical,
                 health,  life  insurance,  or other  welfare type  benefits for
                 current  or  future  retired  or  terminated  employees,  their
                 spouses or their dependents  (other than required by applicable
                 U.S.  federal or state law or  Canadian  federal or  provincial
                 law);

                           (b) no  proceeding  by the PBGC to terminate any such
                 Employee Benefit Plan has been instituted or threatened; and

                           (c)  no   action,   suit,   proceeding,   hearing  or
                 investigation   with  respect  to  the  administration  or  the
                 investment of the assets of any such Company  Employee  Benefit
                 Plan  (other  than  routine  claims  for  benefits)  that could
                 reasonably be expected to result in a material liability to SJM
                 or  an  SJM  Affiliate  pending  or  threatened,   and  neither
                 Shareholder,  the  Company,  nor any members of the  Controlled
                 Group that includes the Company, has any knowledge of any basis
                 for  any   such   action,   suit,   proceeding,   hearing,   or
                 investigation.

                 4.10.3  Except as set forth on Schedule 4.10.3:

                           (a) the consummation of the transactions contemplated
                 by  this  Agreement  will  not  (i)  entitle  any  Employee  to
                 severance pay, supplementary  unemployment  compensation or any
                 similar  payment,  (ii)  accelerate  the  time  of  payment  or
                 vesting,  or increase the amount of any compensation due to any
                 such  Employee,  or (iii)  constitute  or involve a  prohibited
                 transaction  that is not  otherwise  covered by a statutory  or
                 administrative exemption; and

                           (b) no collective  bargaining  agreement,  employment
                 agreement or other  agreement  contains any "change in control"
                 or  similar  provisions  which may be  triggered  by any of the
                 transactions contemplated in this Agreement.

                 4.10.4 Except as disclosed in Schedule 4.10.4,  there have been
no statements by authorized  representatives of the Company or its Subsidiaries,
Shareholder or the Shareholder  Affiliate (in respect of the Business),  whether
oral or in writing,  regarding the Employee  Benefit Plans to be maintained  (or
not to be maintained)  by SJM or the designated SJM Affiliate  after the Closing
Date,  which will  result in material  liability  to SJM or the  designated  SJM
Affiliate, whether direct or indirect.

                 4.10.5  For purposes of this Agreement:

                           (a)  "Company   Employee   Benefit  Plan"  means  any
                 Employee  Benefit  Plan that  exists  immediately  prior to the
                 Closing   Date,   is  sponsored   solely  by  or  is  primarily
                 administered  by the Company or its  Subsidiaries  and covering
                 solely  Employees,  and any such Company  Employee Benefit Plan
                 shall be identified as such on Schedule 4.10.1.

                           (b)  "Controlled  Group" has the meaning set forth in
                 Code Sec. 414.

                           (c) "Employee"  means a current  employee,  including
                 both  active   employees   (including  light  duty  employees),
                 inactive employees  (including employees on a leave of absence,
                 sick leave,  short term  disability  or  worker's  compensation
                 disability  on  the  Closing   Date),   and  former   employees
                 (including retirees and employees on long term disability),  of
                 the Company or its  Subsidiaries  or any active employee of the
                 Shareholder Affiliate who is 100% engaged in the Business.

                           (d)  "Employee  Benefit  Plan"  means any  agreement,
                 plan,  program,  fund, policy,  contract or arrangement (either
                 written  or  unwritten)   providing   compensation,   benefits,
                 pension, retirement, profit sharing, stock bonus, stock option,
                 stock purchase, phantom or stock equivalent,  bonus, incentive,
                 deferred  compensation,   hospitalization,   medical,   dental,
                 vision, vacation,  insurance, sick pay, disability,  severance,
                 or similar  employee  benefits  covering any Employee,  and the
                 beneficiaries and dependents of the Employee, including without
                 limitation, (i) any Employee Welfare Benefit Plan (the "Welfare
                 Plan"), whether or not terminated, including but not limited to
                 any severance  agreement or plan,  any material  fringe benefit
                 plan  or  program,  any  medical  plan,  life  insurance  plan,
                 short-term or long-term disability plan, dental plan, personnel
                 policy,  vacation time,  holiday pay,  bonus  program,  service
                 award, moving expense reimbursement program or sick leave; (ii)
                 any deferred  compensation  or retirement  plan or  arrangement
                 which is an  Employee  Pension  Benefit  Plan,  whether  or not
                 terminated,  including  but not  limited to any excess  benefit
                 plan,  top  hat  plan,  or  deferred   compensation  plan,  any
                 Multiemployer  Plan,  defined  contribution  or defined benefit
                 arrangements  which are  Employee  Pension  Benefit  Plans (the
                 "Pension  Plans");  (iii)  any  other  plan,  program,  policy,
                 contract or arrangement, including but not limited to any bonus
                 or incentive  plan,  stock  options,  restricted  stock,  stock
                 bonus,   deferred  bonus  plan,  salary  reduction   agreement,
                 change-of-control  agreement,  retention agreement,  employment
                 agreement, or consulting agreement with former Employees.

                           (e) "Employee  Pension  Benefit Plan" has the meaning
                 set forth in ERISA Sec. 3(2).

                           (f) "Employee  Welfare  Benefit Plan" has the meaning
                 set forth in ERISA Sec. 3(1).

                           (g)  "ERISA"  means the  Employee  Retirement  Income
                 Security Act of 1974, as amended.

                           (h) "Multiemployer Plan" has the meaning set forth in
                 ERISA Sec. 3(37).

                 4.11  Employees.  Paragraph  (a) of Schedule  4.11 sets forth a
true  and  complete  list  of  all  Employees  (other  than  former  employees),
indicating  their  position  and base  salary  as of March 16,  1994.  Except as
described  in  paragraph  (b)  of  Schedule  4.11,  none  of  the  Employees  is
represented  by a union or other labor  organization,  nor are they covered by a
collective  bargaining  agreement,  and no union  organizing  efforts  have been
conducted  within the last three years, or to the knowledge of Shareholder,  the
Company  and its  Subsidiaries,  are now being  conducted  with  respect  to the
Employees.  The Company and its Subsidiaries are in material compliance with all
U.S.  laws,  regulations,  ordinances,  codes or  other  legally  binding  rules
applicable  to the Business  with respect to the  Employees and its own policies
respecting  employment  and  employment  practices,   terms  and  conditions  of
employment,  wages and hours, equal opportunity,  civil rights, labor relations,
occupational  health and safety and payroll taxes with respect to the Employees,
including, without limitation, the Immigration and Reform Control Act, Title VII
of the Civil  Rights Act of 1964,  the Civil Rights Act of 1991,  the  Americans
with Disabilities Act, the Federal Age  Discrimination in Employment Act and any
federal,  state or local law.  None of the Company is in receipt of a complaint,
demand letter or charge issued by a U.S. or Canadian federal,  state, provincial
or local agency which alleges a violation by the Company of any  applicable  law
or  regulation  respecting  employment  and  employment  practices,   terms  and
conditions of  employment,  wages and hours,  equal  opportunity,  civil rights,
labor relations, occupational health and safety or payroll taxes with respect to
the Employees. Neither the Company nor its Subsidiaries has engaged in any plant
closing, work force reduction or other action which has resulted or would result
in material liability under the Workers  Adjustment and Retraining  Notification
Act or any other  applicable  U.S. or Canadian law or regulation with respect to
the  Employees,  has been  issued any notice that any such action is to occur in
the future with respect to the Employees,  and are in material  compliance  with
all applicable  requirements of the  Immigration  Reform and Control Act and the
Consolidated  Omnibus  Budget  Reconciliation  Act of 1987 with  respect  to the
Employees.  Paragraph  (c) of Schedule  4.11 (which  shall be  delivered  to SJM
within 20 days of the date hereof)  shall set forth a true and complete  list of
all inactive  Employees and Employees  who are receiving  long-term  disability,
including the expected  duration of their disability or leave and the nature and
amount of any  benefits  provided by or through the Company,  its  Subsidiaries,
Shareholder or the Shareholder  Affiliate  during such period.  Paragraph (d) of
Schedule  4.11  sets  forth  a true  and  complete  list  of all of the  current
independent contractors of the Company and its Subsidiaries who in the past year
received aggregate payments in excess of $100,000.

                 4.12      Environmental Matters; OSHA.

                 4.12.1 The following  terms used in this section are defined as
follows:

                           (a)  "Environmental  Laws" is  defined as any and all
         applicable  federal,  state  and  local  treaties,  laws,  regulations,
         ordinances,  codes,  standards  or  criteria,  orders or decrees of any
         court,   agency,   entity,   organization  or  authority,   or  of  any
         jurisdiction where the Company or any Subsidiary is located or conducts
         business  pertaining to the public health and safety,  workers,  health
         and safety  and the  pollution  of or  protection  of the  environment,
         including but not limited to those related to air, water,  noise, odor,
         land, soil,  pesticide,  hazardous or toxic  substances and wastes,  in
         effect at the Closing Date.

                           (b)  "Regulated  Substances"  is  defined  as  toxic,
         radioactive   or  hazardous   substances   or  wastes,   pollutants  or
         contaminants,   including   but  not   limited   to:   asbestos;   urea
         formaldehyde;  the group of organic compounds known as  polychlorinated
         biphenyls; petroleum products including  gasoline, fuel oil, crude  oil
         and the various  constituents  of such  products;  and any substance or
         material  the  generation,  storage,  handling,  release,  disposal  or
         cleanup of which is regulated by any Environmental Law.

                           (c)  "Property"  is  defined  as all real  estate and
         property  now  or  formerly  owned  or  leased  by the  Company  or any
         Subsidiary,  including without limitation,  as of the Closing, the real
         property to be transferred to the Company  pursuant to Section 6.8. For
         purposes  of this  definition  only,  "Property"  includes  groundwater
         underlying the surface.

                 4.12.2 Schedule 4.12.2 lists all environmental conditions known
to Shareholder, the Subsidiaries or the Company existing on or prior to the date
hereof and arising or resulting from (i) the noncompliance by the Company or any
Subsidiary  with  any  applicable  Environmental  Law or (ii) the  release  of a
Regulated  Substance into the environment at or from the Property and, in either
case,  for which the Company or any  Subsidiary  would,  or would  reasonably be
expected  to, be  required  to expend in excess of $100,000 in order to clean up
any such Regulated  Substance or in order to bring the Company or any Subsidiary
into  compliance  with  any  such   Environmental   Law   (collectively   "Known
Environmental  Conditions").  Prior to the Closing,  Shareholder  or the Company
may,  from  time  to  time,  deliver  to  SJM a  revised  Schedule  4.12.2.  Any
environmental  conditions  listed on any such revised  Schedule  4.12.2 shall be
deemed to be included in the definition of "Known Environmental Conditions".

                 4.12.3 Except as disclosed on Schedule 4.12.3, to the knowledge
of Shareholder, the Subsidiaries and the Company, the Business has been operated
at all  times in  compliance  with any and all  applicable  Environmental  Laws,
except as would not have a Material Adverse Effect.

                 4.12.4 Except as disclosed on Schedule 4.12.4, to the knowledge
of Shareholder,  the Subsidiaries  and the Company,  the Company or a Subsidiary
has all governmental licenses,  permits and other authorizations required by any
and all  Environmental  Laws  necessary  to conduct and operate the  Business as
currently conducted or operated, and none of the Company or any Subsidiary is in
violation of any terms or conditions of such licenses, permits or authorizations
as of the Closing Date, except as would not have a Material Adverse Effect.

                 4.12.5 Except as disclosed on Schedule 4.12.5, to the knowledge
of  Shareholder,  the  Subsidiaries  and the  Company,  none of the Company or a
Subsidiary is presently  disposing of any  Regulated  Substance on the Property,
and  none  of the  Company  or a  Subsidiary  has in the  past  disposed  of any
Regulated Substance on the Property.

                 4.12.6 Except as disclosed on Schedule 4.12.6, to the knowledge
of  Shareholder,  the  Subsidiaries  and the Company,  the Property has not been
subject to any release or threatened release of any Regulated Substance,  except
as individually or in the aggregate would not have a Material Adverse Effect.

                 4.12.7 Except as disclosed on Schedule 4.12.7, to the knowledge
of Shareholder,  the  Subsidiaries  and the Company,  there are and have been no
above-ground or underground  storage tanks,  sumps or clarifiers  located on the
Property.

                 4.12.8 To the knowledge of Shareholder,  the  Subsidiaries  and
the  Company,  the Business is not being  operated in material  violation of the
Occupational  Safety  and  Health Act of 1970,  or the  regulations  promulgated
thereunder or any similar laws or regulations of any other country.

                 4.13      Company Products; Regulation.

                 4.13.1 Except as disclosed in paragraph (a) of Schedule  4.13.1
and except as would not have a Material Adverse Effect,  to the knowledge of the
Company  and  Shareholder,  since  January  1, 1992  there  have been no written
notices,  citations or decisions by any governmental or regulatory body that any
product  produced,  manufactured,  marketed  or  distributed  at any time by the
Business (the "Products") is defective or fails to meet any applicable standards
promulgated  by any such  governmental  or regulatory  body. To the knowledge of
Shareholder and the Company,  the Business has complied in all material respects
with its  policies,  procedures  and  specifications  with  respect  to  design,
manufacture,  labelling, testing and inspection of Products. Except as disclosed
in paragraph  (b) of Schedule  4.13.1,  since January 1, 1992 there have been no
recalls,  field  notifications  or seizures  ordered or, to the knowledge of the
Company or Shareholder,  threatened by any such  governmental or regulatory body
with respect to any of the Products.  Except as has been disclosed to SJM, since
January 1, 1992, the Company,  the  Shareholder  Affiliate and the  Subsidiaries
have not received,  and the Company and Shareholder do not have knowledge of any
reasonable basis for, any warning letter, or Section 305 notices from the FDA.

                 4.13.2 Except as would not have a Material Adverse Effect,  the
Company, the Shareholder Affiliate and the Subsidiaries are in possession of and
will,  upon SJM's request,  make available to SJM, all supportive  materials and
data  substantiating   representations   made  to  the  FDA  or  other  domestic
governmental  regulatory  authority in its filings therewith,  including any and
all testing data in the possession,  or under the control,  of the Company,  the
Shareholder  Affiliate  (but only to the  extent  used in the  Business)  or any
Subsidiary,  whether or not  submitted  to the FDA or other  domestic or foreign
governmental  regulatory  authority.  In addition,  the Company, the Shareholder
Affiliate (but only to the extent used in the Business), has identified or will,
upon SJM's  request,  identify to SJM, to the knowledge of  Shareholder  and the
Company, all international  locations where regulatory information and documents
are kept, except where the failure to identify any such locations would not have
a Material  Adverse  Effect.  The Products  perform in all material  respects in
compliance with the representations and performance  specifications as contained
in said filings.

                 4.14      Tax Matters.

                 4.14.1 United States  Person.  Each of the Sellers,  except the
Shareholder Affiliate, is a United States person within the meaning of the Code.

                 4.14.2 Canadian Person. The Shareholder Affiliate is a Canadian
corporation and is a tax resident of Canada.

                 4.14.3 Permanent Establishment or Business Activity.  Except as
set forth in Schedule 4.14.3, (i) neither the Company nor any Subsidiary has, or
has had, either a permanent  establishment in any foreign country, as defined in
any  applicable  tax treaty or  convention  between  the United  States and such
foreign  country,  or business  activity  in any  country  other than the United
States that would  subject it to a Tax in such country that would not apply to a
United States Person without a business  activity in such country;  and (ii) the
Shareholder Affiliate has no permanent  establishment in any foreign country, as
defined in any  applicable  tax  treaty or  convention  between  Canada and such
foreign  country and has no business  activity in any country  other than Canada
that  would  subject  it to a Tax in such  country  that  would  not  apply to a
Canadian corporation without business activity in such country.

                 4.14.4 Security for Tax-Exempt Obligations.  None of the Assets
directly  or  indirectly  secures  any debt the  interest on which is tax exempt
under Section 103(a) of the Code.

                 4.14.5   Tax-Exempt  Use  Property.   None  of  the  Assets  is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.

                 4.14.6 U.S. Real Property. None of the Assets being sold by the
Shareholder  Affiliate  constitutes an interest in real property  located in the
United States or property  that would  constitute an investment in United States
property  (as  defined  in Section  956(b) of the Code) if held by a  controlled
foreign corporation (as defined in Section 957 of the Code).

                 4.15 Material Obligations.  Except as would not have a Material
Adverse  Effect  individually  or in the  aggregate,  neither the  Company,  the
Shareholder  Affiliate  in respect of the Business  nor any  Subsidiary  has any
debts,  liabilities  or obligations of any nature  (whether  accrued,  absolute,
contingent, direct, indirect, perfected, inchoate, unliquidated or otherwise and
whether due or to become due)  arising out of  transactions  entered  into at or
prior to the Closing,  or any  transaction,  series of  transactions,  action or
inaction at or prior to the Closing, or any state of facts or condition existing
at or prior to the Closing  (regardless  of when such liability or obligation is
asserted)  including,  without  limitation,  any  Liabilities  arising  from  or
relating to the Prior Business,  except (a) to the extent specifically reflected
and  accrued  for or  reserved  against  in the  Financial  Statements,  (b) for
liabilities  set forth on Schedule 4.15 or (c) for  liabilities  and obligations
which  have  arisen  after the date of the Deal  Balance  Sheet in the  ordinary
course of business consistent with past practice.

                4.16  Brokerage.  Other than the fee payable by  Shareholder  to
Gleacher  & Co.,  its  investment  banker,  there  are no claims  for  brokerage
commissions,  finder's  fees or  similar  compensation  in  connection  with the
transactions  contemplated  by  this  Agreement  based  on  any  arrangement  or
agreement made by Shareholder or the Company.

                4.17 Affiliated Transactions.  Except as listed and described in
paragraph  (a) of Schedule 4.6 or in Schedule  4.17 hereto,  neither the Company
nor any Subsidiary is a party to any transaction or Commitment with any of their
respective  Affiliates,  and has no obligation or liability owing  thereunder in
respect of the Business in excess of $50,000 or which is not  cancelable  by the
Company or a Subsidiary on at least 60 days' notice without penalty.

                4.18  Insurance.  Schedule 4.18  constitutes a true and complete
description  of all of the  policies  in force and effect and a  description  of
their respective  coverage and limits  presently  applicable to or including the
operations and property of the Business. All such policies will terminate at the
Closing.  Neither  Shareholder,  the Company nor the  Shareholder  Affiliate has
received  any  notice of  cancellation  in  respect of  insurance  coverage  for
operations, assets and properties relating to the Business. All premiums due and
payable in respect of such insurance have been paid. There are no pending or, to
Shareholder's  or the Company's  knowledge,  threatened  terminations or premium
increases  with respect to any such policies and the Company,  the  Subsidiaries
and the  Shareholder  Affiliate are in compliance  with all material  conditions
contained therein.

                 4.19 Real Property.

                 4.19.1  Title to Owned Real  Property  and  Interests as Tenant
Under  Leased  Real  Property.  One or more of the  Sellers or SI-Pace  Inc.,  a
California corporation, hold:

                (a) fee  simple  title to all of the  real  property  listed  in
        Paragraph A of Schedule 4.19 attached hereto  (collectively,  the "Owned
        Real Property"), and

                (b) valid leasehold interests under each of the leases described
        in  Paragraph  B  of  Schedule  4.19  (collectively,  the  "Leased  Real
        Property")  attached hereto and all of such leases are in full force and
        effect, 

in each case free and clear of all Liens except, in each case,

                (i) liens for current  property  taxes  (including  supplemental
        taxes)  and  assessments  for the  1994-95  fiscal  year not yet due and
        payable,

                (ii) as to the Owned Real Property  referred to in Paragraph A.1
        of Schedule 4.19, the title  exceptions  referred to in Exception Nos. 2
        through 31, inclusive,  appearing in that certain Preliminary Report No.
        9410439-21 dated April 12, 1994 (a copy of which  preliminary  report is
        attached  hereto as part of  Schedule  4.19),  issued by First  American
        Title  Company  of Los  Angeles,  none of  which  title  exceptions  are
        easements which could have a Material Adverse Effect on the operation of
        the Business,

                (iii) as to the Owned Real Property referred to in Paragraph A.2
        of Schedule 4.19, the title  exceptions  referred to in Exception Nos. 2
        through 10, and 13  appearing  in that  certain  Preliminary  Report No.
        9410437-21 dated April 12, 1994 (a copy of which  preliminary  report is
        attached  hereto as  Paragraph  A.3 of Schedule  4.19),  issued by First
        American  Title Company of Los Angeles,  none of which title  exceptions
        are  easements  which  could  have  a  Material  Adverse  Effect  on the
        operation of the Business,

                (iv) as to the Owned Real Property  referred to in Paragraph A.3
        of Schedule 4.19, the title exceptions  referred to in Exception Nos. 3,
        4 and 5 appearing in that certain  Preliminary  Report No. 9433648 dated
        April 22, 1994 (a copy of which preliminary report is attached hereto as
        part of Schedule  4.19),  issued by First  American Title Company of Los
        Angeles, none of which title exceptions are easements which could have a
        Material Adverse Effect on the operation of the Business,

                (v) as to the  Leased  Real  Property,  minor  imperfections  of
        title, if any,

                (vi) zoning laws or other land use restrictions, and

                (vii) Liens which are reflected on the Financial Statements.

                4.19.2  Complete List and Description of all Owned Real Property
and Leased Real  Property.  The Owned Real Property and the Leased Real Property
(hereinafter   collectively   referred  to  as  the  "Real  Property")  together
constitute all real  properties used or occupied in connection with the Business
or reflected on the  Financial  Statements.  The Owned Real  Property  listed in
Paragraph  A of Schedule  4.19 is all of the real  property in which the Sellers
have an ownership interest in respect of the Business.  The Leased Real Property
listed in Paragraph B of Schedule 4.19 is all of the real property leased by any
of the Sellers as tenant and which is used or occupied for the Business.

                4.19.3 Delivery of all Title Insurance Policies,  Surveys, Title
Reports,  Leases and Property Reports.  Copies of all title insurance  policies,
title reports,  surveys,  leases,  architectural or engineering  reports,  soils
tests and reports, seismic tests and reports and environmental tests and reports
in the  possession  or control of the Sellers and which relate to the Owned Real
Property have been  delivered to SJM; and true,  correct and complete  copies of
all the leases relating to the Leased Real Property have been delivered to SJM.

                4.19.4  Condemnation.  To Sellers'  Knowledge,  Sellers have not
received  written  notice  or any  other  notice of any  pending  or  threatened
condemnation proceeding or other similar proceeding by any public authority with
respect to any of the Owned Real Property.

                4.19.5 Violation of Ordinances.  To Sellers' Knowledge,  Sellers
have not  received  any  written  notice  or any  other  notice  of any  claimed
violation  of  zoning,  building,  health,  or  similar  ordinances,   codes  or
regulations.

                4.19.6 Assessed Value. To Sellers' Knowledge,  no written notice
or  any  other  notice  of any  increase  in the  assessed  valuation  or of any
contemplated special assessment has been received by Sellers with respect to the
Owned Real Property.

                4.19.7  Government   Licenses.   To  Sellers'   Knowledge,   all
facilities  situated  on the Owned Real  Property  have  received  all  material
approvals of government authorities (including licenses and permits) required in
connection with the ownership or operation  thereof and, to Sellers'  knowledge,
Sellers have not received written notice or any other notice of any violation of
applicable  laws,  rules and  regulations  with respect to the  operation of the
same.

                4.19.8  Subleases.  There are no  leases,  subleases,  licenses,
concessions  or other  agreements,  written  or oral,  granting  to any party or
parties  the right of use or  occupancy  of any  portion  of any  parcel of Real
Property, except for the subleases described in Paragraph C of Schedule 4.19.

                4.19.9  Options.  There are no outstanding  options or rights of
first  refusal to  purchase  any parcel of Owned Real  Property,  or any portion
thereof or interest therein.

                4.19.10 Possession. There are no parties (other than Sellers) in
possession  of any parcel of Real  Property,  other than tenants under leases of
the Real  Property who are in possession  of space  pursuant to those  subleases
listed in Paragraph C of Schedule 4.19.

                 4.19.11  Utilities.  To  Sellers'  Knowledge,   all  facilities
located on each parcel of Owned Real  Property are supplied  with  utilities and
other  services  necessary for the operation of such  facilities  including gas,
electricity,  water,  telephone,  sanitary  sewer and storm sewer,  all of which
services are adequate for the operation of such facility as presently  conducted
for the operation of the Business in all material respects.

                4.19.12  Proceedings.  To Sellers'  Knowledge,  Sellers have not
received  notice of any pending or  contemplated  condemnation,  assessments  or
other  proceeding  or charge  affecting  the Real  Property  that  would  have a
Material Adverse Effect on the operation of the Business.

                4.19.13  Knowledge.  For purposes of this Section 4.19, the term
"Sellers' Knowledge" shall have the meaning set forth in Section 13.1.

                4.20 Inventory. The Company has previously disclosed to SJM by a
letter dated June 22, 1994 the accounting  guidelines  used by the Company,  the
Shareholder  Affiliate (in respect of the Business)  and the  Subsidiaries  (and
used in the  preparation  of the Deal Balance  Sheet) for valuing  Inventory (as
defined below), including,  without limitation, the guidelines used to determine
whether Inventory is obsolete or damaged, or will be slow-moving or defective.

                4.21 Accounts and Notes  Receivable.  The Company has previously
disclosed to SJM by a letter dated June 22, 1994 the accounting  guidelines used
by the Company the  Shareholder  Affiliate  (in respect of the Business) and the
Subsidiaries (and used in the preparation of the Deal Balance Sheet) for valuing
accounts receivable.


                                   ARTICLE 5

                     REPRESENTATIONS AND WARRANTIES OF SJM

                SJM represents  and warrants to Shareholder  and the Company and
agrees with Shareholder and the Company as follows:

                 5.1       Corporate Power and Authority; Effect of Agreement.

                 5.1.1 Each of SJM and  Acquisition  Subsidiary is a corporation
duly  organized,  validly  existing  and in  good  standing  under  the  laws of
Minnesota and Delaware, respectively, and has full corporate power and authority
to carry on its  business  as it is now being  conducted.  All of the issued and
outstanding capital stock of Acquisition Subsidiary is owned by SJM.

                 5.1.2 Each of SJM and Acquisition Subsidiary has full corporate
power  and  authority  to  execute  and  deliver  this  Agreement,  perform  its
obligations  hereunder and to consummate the transactions  contemplated  hereby.
The  execution  and  delivery  of this  Agreement,  the  performance  by SJM and
Acquisition  Subsidiary of its obligations hereunder and the consummation by SJM
and Acquisition  Subsidiary of the  transactions  contemplated  hereby have been
duly  authorized  by all  necessary  corporate  action  on the  part  of SJM and
Acquisition Subsidiary, and no other corporate proceedings on the part of SJM or
Acquisition  Subsidiary are necessary to authorize the execution and delivery of
this Agreement, or to consummate the transactions so contemplated.

                 5.1.3 This  Agreement  has been duly  executed and delivered by
SJM and  Acquisition  Subsidiary and  constitutes  the legal,  valid and binding
obligation  of SJM and  Acquisition  Subsidiary,  enforceable  against each such
party  in   accordance   with  its  terms,   except  to  the  extent  that  such
enforceability  (a) may be limited by  bankruptcy,  insolvency,  reorganization,
moratorium or other similar laws relating to creditors'  rights  generally,  and
(b) is subject to  general  principles  of equity  (regardless  of whether  such
enforceability is considered in a proceeding in equity or at law).

                 5.1.4  The  execution,  delivery  and  performance  by SJM  and
Acquisition  Subsidiary of this  Agreement or the other  documents  contemplated
hereby and the consummation by them of the transactions  contemplated hereby and
thereby do not and will not  contravene  or  constitute a default  under or give
rise to a right of  termination,  cancellation  or  acceleration of any right or
obligation of SJM or Acquisition Subsidiary or to a loss of any benefit to which
SJM or  Acquisition  Subsidiary  is  entitled  under (i)  except as would not be
materially adverse to the operations, results of operations, assets or financial
condition of SJM and the SJM  Affiliates,  taken as a whole,  or have a material
adverse effect on the ability of SJM or Acquisition Subsidiary to consummate the
transactions  contemplated by this Agreement, any provision of applicable law or
regulation  (assuming the governmental  consents referred to in Section 5.2 have
been  obtained);  (ii)  the  articles  of  incorporation  or  bylaws  of SJM and
Acquisition  Subsidiary;   (iii)  any  judgment,   injunction,   order,  decree,
administrative  interpretation,  award or other  instrument  binding upon SJM or
Acquisition Subsidiary; or (iv) result in the creation or imposition of any Lien
on any  asset of SJM or  Acquisition  Subsidiary  which  would  have a  material
adverse  effect on their ability to  consummate  the  transactions  contemplated
hereby.

                 5.2  Consents.  Except  for the  filing  under  the HSR Act and
otherwise as set forth in Schedule  5.2, no consent,  approval or  authorization
of, or exemption by, or filing with, any governmental or regulatory authority or
any other third party is required in connection with the execution,  delivery or
performance by SJM or Acquisition  Subsidiary of this Agreement or the taking by
SJM  or  Acquisition   Subsidiary  of  any  other  action  contemplated  hereby,
excluding, however, consents, approvals, authorizations, exemptions and filings,
if any, which any of Shareholder,  the Shareholder Affiliate,  any Subsidiary or
the Company is required to obtain or make.

                 5.3  Availability  of Funds.  SJM has  available,  or will have
available on the Closing Date,  sufficient  funds to enable it to consummate the
transactions contemplated by this Agreement.

                 5.4  Litigation.  There is no  Litigation  pending or, to SJM's
knowledge, threatened, which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby.

                 5.5  Brokerage.  Other than the fee  payable by SJM to CS First
Boston  Corporation,  its investment  banker,  there are no claims for brokerage
commissions,  finder's  fees or  similar  compensation  in  connection  with the
transactions  contemplated  by  this  Agreement  based  on  any  arrangement  or
agreement by SJM.

                 5.6  Certain  Ownership  Interests.  SJM  is  not  directly  or
indirectly  "significantly  funded"  (as  that  phrase  is  defined  in  Section
12(B)(c)(i)  of the Settlement  Agreement and Section  9.02(c)(i) of the License
Agreement),  nor is there,  directly or  indirectly  "significant  voting common
stock or other voting  equity  ownership"  (as that phrase is defined in Section
12(B)(c)(i) of the Settlement  Agreement) in SJM, by the Japanese  government or
investors of Japanese  nationality;  and (ii) it is not  directly or  indirectly
"significantly  funded" (as that term is defined in Section  12(B)(c)(ii) of the
Settlement  Agreement and Section 9.02(c)(ii) of the License Agreement),  nor is
there,  directly or indirectly  "significant voting common stock or other voting
equity  ownership"  (as that  phrase is defined in Section  12(B)(c)(ii)  of the
Settlement  Agreement  and 9.02 (c)(ii) of the License  Agreement)  in SJM, by a
national government other than Japan.


                                   ARTICLE 6

                                   COVENANTS

                 6.1  Cooperation.  Each  of the  parties  hereto  will  use its
reasonable  best  efforts  to  cause  the   consummation  of  the   transactions
contemplated  hereby in  accordance  with the terms and  conditions  hereof  and
applicable  law. Each of the parties hereto will use its reasonable best efforts
to obtain all  governmental  consents and approvals  necessary to consummate the
transactions  contemplated  by this Agreement and to cause the Closing to occur.
Each of  Shareholder,  the Company and the  Shareholder  Affiliate shall use its
reasonable  best  efforts to obtain the consent or approval of third  Persons to
the transactions  contemplated hereby with respect to the Commitments identified
on Schedule 4.6 and the Permits, if any, identified on paragraph (b) of Schedule
4.8 as  requiring  such consent or approval.  The Company,  Shareholder  and SJM
agree  that,  in the event any  consent or  approval  of any such  third  Person
necessary or  desirable to preserve for the Business any right or benefit  under
any such Commitment or Permit is not obtained prior to the Closing (and provided
that  SJM  waives  any  resulting  failure  of a  condition  under  Article  8),
Shareholder  will,  subsequent  to the Closing,  cooperate  with SJM and any SJM
Affiliate  in  attempting  to  obtain  such  consent  or  approval  as  promptly
thereafter  as  practicable.  If such  consent or approval  cannot be  obtained,
Shareholder  shall use its reasonable best efforts,  and cause the other Sellers
to use their reasonable best efforts,  to provide SJM and any SJM Affiliate with
the rights and  benefits of the  affected  Commitment  or Permit for the term of
such Commitment or Permit and, if and to the extent that  Shareholder or another
Seller  provides the rights and benefits under any such  Commitment or Permit or
any other contract for which consent or approval  cannot be obtained,  SJM shall
assume the obligations and burdens thereunder to such extent. After the Closing,
Shareholder and the other Sellers shall cooperate with SJM in the preparation of
any  financial  statements  required  to be  filed by SJM  with  respect  to the
Business pursuant to U.S. federal securities laws.

                 6.2  Conduct  of  Business.  From the  date  hereof  until  the
Closing,  the Company and the Shareholder  Affiliate shall cause the Business to
be conducted in the  ordinary  course  consistent  with past  practice.  Without
limiting  the  generality  of the  foregoing,  from the date  hereof  until  the
Closing:

                 6.2.1 Each of  Shareholder  and the  Company  will use and will
cause the  Shareholder  Affiliate  and the  Subsidiaries  to use all  reasonable
efforts to:

                 (a)       preserve the Business as a whole intact;

                 (b)  keep  available  the  services  of the  present  officers,
        employees  and agents of the Business  such that the  Business  will not
        suffer a Material Adverse Effect;

                 (c)  preserve  the  relationships  with  suppliers,  customers,
        distributors,   licensors  and  licensees  and  others  having  business
        dealings  with it such  that the  Business  will not  suffer a  Material
        Adverse Effect;

                 (d)  collect  the  receivables  of  the  Business  in a  manner
        consistent with past practice;

                 (e)  maintain  the  assets,  properties  and  interests  of the
        Business in customary  repair,  order and  condition or, with respect to
        the  casualty,  loss or damage of any  assets of the  Business  that are
        covered by insurance,  transfer,  at the Closing, to SJM the proceeds of
        any  insurance  recovery  with respect  thereto  (provided  that SJM has
        waived any failure of a  condition  under  Article 8 resulting  from the
        casualty, loss or damage);

                 (f) continue to  compensate  the employees of the Business in a
        manner consistent with past practice;

                 (g)  maintain the books,  accounts and records  relating to the
        Business in accordance  with past practice as used in the preparation of
        the Financial Statements described in Section 4.2 hereof; and

                 (h) promptly  inform SJM in writing of any  material  variances
        from the representations and warranties contained in Article 4 hereof.

                 6.2.2 Prior to the Closing,  without the prior written  consent
of SJM or unless otherwise contemplated or permitted by this Agreement,  neither
the Company,  the  Shareholder  Affiliate  (in respect of the  Business) nor the
Subsidiaries will:

                 (a) take any action described in Section 4.3 of this Agreement;

                 (b) except for the Shareholder Affiliate, amend its certificate
        of incorporation or bylaws;

                 (c) except for the Shareholder Affiliate,  merge or consolidate
        with any person,  acquire any stock or other  ownership  interest in any
        Person or  substantially  all of the assets of any business as an entity
        or liquidate,  dissolve or otherwise  reorganize or seek protection from
        creditors;

                 (d) except as set forth in Schedule 6.2.2, enter into any other
        agreements, commitments or contracts (including without limitation joint
        venture agreements or material license agreements) which are material to
        the Business,  except agreements,  commitments or contracts entered into
        in the  ordinary  course  for the  purchase,  sale or  lease of goods or
        services, consistent with past practice; or

                 (e) make any  investment of a capital nature either by purchase
        of stock or securities,  contributions to capital, property transfers or
        otherwise,  or by the  purchase  of any  property or assets of any other
        individual, firm or corporation.

                 6.3 Intercompany  Indebtedness.  Prior to the Closing Date, all
intercompany  indebtedness,  liabilities and obligations  owed by Shareholder or
any  Affiliate of  Shareholder  (other than the Company,  any  Subsidiary or any
other  Affiliate of Shareholder  (in respect of the Cardiac  Stimulation  Device
business  conducted by such  Affiliate)) on the one hand,  and the Company,  the
Shareholder  Affiliate  (in respect of the Business) or any  Subsidiary,  on the
other hand, shall be netted,  and if the Company,  the Shareholder  Affiliate or
any  Subsidiary  still has amounts  owing,  such amounts  shall be dividended to
their respective shareholders and if Shareholder or any such Affiliate still has
amounts owing, such amounts shall be forgiven.

                 6.4 Access.

                 6.4.1  Shareholder  and the Company  shall  provide,  and shall
cause each of the  Subsidiaries and the Shareholder  Affiliate to provide,  SJM,
its counsel, financial advisors,  auditors and other authorized representatives,
with such  information  as SJM from time to time  reasonably  may  request  with
respect to the Company,  the Assets,  the  Shareholder  Affiliate (but only with
respect to the Business) and the Subsidiaries, and shall permit, and shall cause
each of the other  Sellers to  permit,  SJM and its  representatives  reasonable
access,  during  regular  business  hours  and upon  reasonable  notice,  to the
offices, properties, books and records of the Company, the Shareholder Affiliate
(but only with respect to the Business), and the Subsidiaries,  as SJM from time
to time  reasonably may request,  and will instruct the  employees,  counsel and
financial  advisors  of  Shareholder,  the  Company,  the  Subsidiaries  and the
Shareholder  Affiliate  to cooperate  with the  investigation  of the  Business;
provided that no  investigation  shall affect any warranties or  representations
given by  Shareholder  or the  Company  to SJM in this  Agreement  and  provided
further,  however,  that any such  investigation  shall be  conducted  in such a
manner so as not to interfere  with the  operations  of the Business  consistent
with past  practice.  This will include,  without  limitation,  access  promptly
following  execution  of this  Agreement to  information,  books,  records,  and
personnel regarding product pricing, supplier costs, specifications for products
in development  and U.S.  patent  applications.  In addition,  to the extent not
previously delivered or made available to SJM, Shareholder and the Company shall
cause to be  delivered  or made  available  to SJM all  internal  or third party
environmental  and health and safety  studies  and reports  with  respect to the
Business,  including  without  limitation,  the audit  report  of  Stat-a-matrix
supporting  the  certificate  of compliance  submitted to the FDA as well as any
other audit reports from Stat-a-matrix and correspondence  between Stat-a-matrix
and the Company,  in each case after January 1, 1992. If, in the course of SJM's
investigation of the Business,  SJM learns of any fact or circumstance  that may
make any of Shareholder's or the Company's representations or warranties in this
Agreement untrue in any material respect,  SJM shall promptly inform Shareholder
of such fact or circumstance.

                 6.4.2 In order to facilitate  the resolution of any claims made
by or against or incurred by Shareholder  or Shareholder  Affiliate with respect
to third  parties prior to or after the Closing,  upon  reasonable  notice,  SJM
shall and shall  cause its  Affiliates  to,  after the  Closing:  (i) afford the
officers,  employees and authorized  agents and  representatives  of Shareholder
reasonable  access,  during regular business hours, to the offices,  properties,
books and records of Acquisition  Subsidiary (and any successor thereto) and its
Affiliates relating to the Business, (ii) furnish to the officers, employees and
authorized agents and  representatives of Shareholder such additional  financial
and other  information  regarding the Business as  Shareholder  may from time to
time reasonably  request and (iii) make available to Shareholder,  the employees
of Acquisition  Subsidiary (and any successor  thereto) and its Affiliates whose
assistance,  testimony  or  presence  is  necessary  to  assist  Shareholder  in
evaluating any such claims and in defending such claims,  including the presence
of such persons as witnesses in hearings or trials for such purposes;  provided,
however,  that such  investigation  shall not  unreasonably  interfere  with the
businesses  or  operations  of  SJM,  Acquisition  Subsidiary  or any  of  their
Affiliates;  provided  further,  however,  that  neither  SJM  nor  any  of  its
Affiliates shall be obligated to disclose any information which it holds under a
legally  binding  obligation  of  confidentiality  or which is  protected by any
privilege.

                 6.4.3 In order to facilitate  the resolution of any claims made
by or against or incurred by SJM or any of its Affiliates  with respect to third
parties  after  the  Closing,  upon  reasonable  notice,   Shareholder  and  the
Shareholder  Affiliate in respect of the Business shall, after the Closing:  (i)
afford the officers,  employees and authorized agents and representatives of SJM
reasonable  access,  during regular business hours, to the offices,  properties,
books and records of the Seller with  respect to the  Business,  (ii) furnish to
the officers,  employees and authorized agents and  representatives  of SJM such
additional financial and other information regarding the Business for the period
prior to the Closing as SJM may from time to time  reasonably  request and (iii)
make available to SJM, the employees of the Sellers whose assistance,  testimony
or  presence is  necessary  to assist SJM in  evaluating  any such claims and in
defending  such claims,  including  the presence of such persons as witnesses in
hearings or trials for such purposes; provided, however, that such investigation
shall not unreasonably  interfere with the business or operations of Shareholder
or its Affiliates;  provided further,  however, that neither Shareholder nor any
of its Affiliates shall be obligated to disclose any information which they hold
under a legally binding  obligation of  confidentiality or which is protected by
any privilege.

                 6.5  Non-Disclosure  Agreement.  The  terms  of  the  Bilateral
Non-Disclosure Agreement (the "Non-Disclosure  Agreement"),  dated as of October
27,  1993,  between the Company and SJM are hereby  incorporated  by  reference,
except that Section 10 thereof shall be deemed  amended to provide that New York
law shall govern the  Non-Disclosure  Agreement  and that any disputes  relating
thereto shall be brought  before a federal court sitting in New York,  New York.
Each of the parties hereto agrees to be bound by the terms of the Non-Disclosure
Agreement which is incorporated herein by reference. The NonDisclosure Agreement
shall remain in full force and effect until the Closing.

                 6.6  Antitrust,   Competition  Law  Filings.   As  promptly  as
practicable after the execution of this Agreement,  each party to this Agreement
shall file or cause its Affiliates to file any reports or notifications that may
be  required  to be  filed  under  the  HSR  Act  and  such  other  competition,
investment,  foreign exchange,  tax or other laws of such other jurisdictions as
may be necessary to effect the transactions contemplated by this Agreement.

                 6.7 Non-Foreign  Person Affidavit.  Shareholder and the Sellers
(other than the  Shareholder  Affiliate)  shall  furnish to SJM at or before the
Closing a non-foreign person affidavit, as provided for in Section 1445(b)(2) of
the Code.

                 6.8 Transfer of Real Property.  Sellers shall take such actions
as are  necessary  to  transfer,  or  cause to be  transferred,  to SJM (or such
Affiliates  of SJM that SJM shall  designate)  on the Closing  Date,  all of the
Owned Real  Property  and the Leased Real  Property,  subject  only to the title
exceptions referred to in Section 4.19.1 above.

                 6.9 Certain Dividends.  From the date hereof until the Closing,
each of the Company and the  Subsidiaries may declare and pay dividends to their
respective shareholders to reflect estimated pre-Tax earnings of the Company and
the Subsidiaries for the period from September 30, 1993 to the Closing Date.

                 6.10 Certain  Actions Prior to the Closing  Date.  Prior to the
Closing Date,  Shareholder  shall cause the Company to transfer,  whether in the
form of a dividend or otherwise, those assets listed on Schedule 6.10 out of the
Company.  Shareholder  shall not transfer to the Company or the Subsidiaries any
material assets, except as provided in Section 6.8.

                 6.11 Claims History. Without limiting the generality of Section
6.4, Shareholder,  the Shareholder Affiliate and the Company shall promptly make
available and furnish  access to SJM a products  claims  history with respect to
the Company,  the Shareholder  Affiliate (but only with respect to the Business)
and the Subsidiaries.

                 6.12 FDA  Recertification.  Without  limiting the generality of
Section 6.4, Shareholder and the Company shall promptly furnish to SJM copies of
written  communications with the FDA in respect of the Business made or received
by the  Company  pursuant  to or in  connection  with the terms of that  certain
Consent  Decree of  Permanent  Injunction  (captioned  U.S. v.  Siemens  Medical
Systems, Inc. and dated March 23, 1994) (the "Consent Decree") including without
limitation  certificates  of  compliance  made to the FDA by or on behalf of the
Company  or the  Subsidiaries,  and the  responses,  if any,  by the FDA of such
certificates.  Shareholder  and  the  Company  shall  promptly  furnish  or make
available  such  other  information  as SJM  may  reasonably  request  regarding
compliance by the Company and the Subsidiaries  with the applicable terms of the
Consent Decree.

                 6.13 Grant of License.  SJM and the SJM Affiliates hereby grant
to Siemens  Aktiengesellschaft  ("Siemens  AG"),  effective  at the  Closing,  a
worldwide,  irrevocable,  non-exclusive,  perpetual, royalty free, paid up right
and license to use the patents,  copyrights,  trade secrets, designs,  drawings,
software,  know-how,  technology and other intellectual property and proprietary
matters owned or used by the Company or any of its  Subsidiaries  or assigned or
transferred to SJM or one of its  Affiliates,  to make,  have made,  sell,  have
sold, use, lease,  license, or otherwise dispose of products intended for use in
or as  products,  other than Cardiac  Stimulation  Devices  (including,  without
limitation,  the right and license to make,  have made,  sell,  have sold,  use,
lease,  license or otherwise  dispose of Cardiac  Stimulation  Devices or parts,
components,  modules,  subsystems  or  subassemblies  thereof,  in or as  parts,
components,  modules,  subsystems or subassemblies of or for,  products intended
for use other than as Cardiac Stimulation Devices),  and to render services with
respect  to any such  products  used or  intended  for use or uses other than as
Cardiac Stimulation  Devices. The rights and licenses granted under this Section
6.13 may be freely sublicensed,  assigned,  transferred or disposed of, in whole
or in part,  without the prior written  consent of SJM, any of its Affiliates or
any of the  successors  in  interest  of any  of  the  foregoing;  any  license,
assignment,  transfer or other  disposition by SJM, any of its  Affiliates,  the
Company, any of its Subsidiaries and any of the successors in interest of any of
the  foregoing  shall be subject to such rights and licenses  granted to Siemens
AG.

                 6.14 Other  Financial  Statements.  On or before the earlier of
(i) the date which is 30 days from the date  hereof and (ii) the  Closing  Date,
the Company and  Shareholder  shall deliver to SJM an audited  balance sheet for
the Business as of September  30, 1992, as well as an audited  income  statement
and cash flow  statement  for the fiscal year then ended,  together with related
notes and schedules thereto, prepared from the books and records of the Business
in  accordance  with U.S. GAAP on a consistent  basis.  Upon the delivery by the
Company and  Shareholder to SJM of the Closing  Balance  Sheet,  the Company and
Shareholder  shall also deliver to SJM an audited income statement and cash flow
statement for the Business for the period  beginning  October 1, 1993 and ending
on the Closing Date,  together with related notes and schedules thereto.  Within
30  calendar  days  after  the  end of  June,  1994,  and  each  calendar  month
thereafter,  Shareholder  and the Company shall deliver to SJM unaudited  profit
and loss  information for the Business based on financial  information  normally
prepared by the Company for delivery to Shareholder.  To the extent necessary to
permit  SJM to comply  with the  rules and  regulations  of the  Securities  and
Exchange  Commission,  Shareholder  shall provide to SJM  financial  information
prepared in accordance with U.S. GAAP consisting of an unaudited interim balance
sheet,  dated as of the last day of, and an income  statement  and  statement of
cash flow, for the period  beginning  January 1, 1994 and ending on the last day
of, such calendar quarter as required by the applicable rules and regulations of
the Securities and Exchange Commission. If the last day of such calendar quarter
is after the Closing Date,  Shareholder  shall  cooperate in the  preparation of
such interim unaudited financial statements.


                                   ARTICLE 7

                              ADDITIONAL COVENANTS

                 7.1       Liability for Employee Benefit Plans.

                 7.1.1  In  General.  SJM  or an  Affiliate  of SJM  shall  make
available to those  Employees  listed on Schedule 4.11,  Employee  Benefit Plans
that  are no less  favorable  to such  Employees,  taken  as a  whole,  than the
Employee Benefits Plans made available to similarly  situated  employees of SJM.
SJM shall,  or shall cause an SJM Affiliate to, provide each Employee  listed on
Schedule  4.11 who becomes an employee of SJM or an SJM  Affiliate  with service
credit as of the Closing Date for their years of service with  Shareholder,  the
Company,  or any  Affiliate  of either the Company or  Shareholder  prior to the
Closing  Date for  purposes  of  eligibility  to  participate,  eligibility  for
benefits,  calculation of benefits (other than the accrual of benefits under any
Employee  Pension  Benefit Plan as defined in Section  4.10.5) and vesting under
the Employee  Benefit Plans made  available to such Employee as provided in this
Section  7.1.1.  SJM agrees to waive any  pre-existing  conditions  (other  than
pre-existing   conditions  recognized  by  the  Company  Employee  Benefit  Plan
immediately  prior to the Closing  Date) and credit the Employee for the current
plan year with any amounts  paid toward the  deductibles  and the  out-of-pocket
limits under such Employee  Benefit Plans.  SJM agrees to accept the transfer of
account balances in the Company's  health care and dependent care  reimbursement
Plans and to allow  Employees  to  continue  deductions  and  submitting  claims
through  year-end to the extent  permitted by law. As of the Closing  Date,  SJM
shall offer employment to each Employee (other than a former employee).

                 7.1.2 Liability for Company  Employee Benefit Plans. (a) On the
Closing Date,  subject to the provisions in Section 7.1.4 and except as provided
in Sections  7.1.2(c)  and 7.3,  SJM shall  assume,  or cause a  designated  SJM
Affiliate to assume,  each Company  Employee  Benefit Plans, and all liabilities
relating to such Company  Employee Benefit Plan,  whether arising before,  on or
after the Closing Date except for any  liabilities  under the  Employee  Benefit
Plans for Employees in Canada  arising  prior to the Closing  Date.  SJM, or the
designated SJM Affiliate referred to in the immediately preceding sentence, also
shall assume on the Closing Date all liabilities of Shareholder,  the Company or
any  of  their  respective   Subsidiaries  to  Employees  for  wages,  incentive
compensation,  vacations, perquisites, worker's compensation benefits, statutory
benefits and entitlements,  including,  without  limitation,  all obligations to
Employees  under  applicable  federal or local law,  including  pursuant  to the
Worker Adjustment and Retraining Notification Act and any COBRA Obligations.

                 (b) The Company or its  third-party  administrator,  trustee or
insurance  carrier  shall assign to SJM any  insurance  policies or other assets
segregated  for purposes of funding  benefits  pursuant to the Company  Employee
Benefit Plans, the Executive  Arrangements and any liabilities  assumed pursuant
to Section 7.1.2(a).

                 (c)       With respect to the Siemens-Pacesetter 401(k)  Profit
 Sharing Plan and Trust (the "Company 401(k) Plan"):

                 As of the Closing  Date,  SJM or the  designated  SJM Affiliate
         shall adopt, as sole sponsoring employer,  the Company 401(k) Plan and,
         as  of  such  adoption,   shall  assume  all  of  the  liabilities  and
         obligations  of the  Company  401(k)  Plan and of  Shareholder  and the
         Company  (except  for any  breach of any duty or  obligation  occurring
         prior to the Closing Date) with respect to the Company 401(k) Plan  and
         Shareholder  and the Company shall be relieved of all  liabilities  and
         obligations to the Plan's participants and their beneficiaries  arising
         under  the  Plan,  except  for any  breach  of any  duty or  obligation
         occurring  prior to the  Closing  Date.  As of the  Closing  Date,  the
         Company  shall  cease to be a  sponsoring  employer,  administrator  or
         fiduciary  with respect to the Company  401(k) Plan and shall  transfer
         direction  and control with respect to the Company  401(k) Plan and its
         related trust and assets to SJM or its designated SJM Affiliate.

                 7.1.3 Nothing herein  expressed or implied is intended or shall
be construed to confer upon or give to any person,  firm or  corporation,  other
than the parties hereto and their respective  permitted  successors and assigns,
any rights or remedies under or by reason of this Agreement.

                 7.1.4 Shareholder,  the Company, the Shareholder  Affiliate and
the Controlled Group that includes Shareholder,  shall indemnify,  save and hold
harmless  SJM,  and  the  SJM  Affiliates  designated  in  Section  2.1  and the
Controlled  Group of which SJM is a member  from and against any and all Losses:
(a) arising  under any Employee  Pension  Benefit  Plan or any Employee  Welfare
Benefit Plan  maintained or  contributed  to by the Company,  Shareholder or the
Shareholder  Affiliate  or any  member  of the  Controlled  Group of  which  the
Company, its Subsidiaries or the Shareholder Affiliate is a member, other than a
Company  Employee  Benefit  Plan  and  obligations  assumed  by SJM  and the SJM
Affiliates  pursuant to Section  7.1.2 above,  regardless  of whether the Losses
relate to conditions or events arising out of transactions which occur prior to,
on or after the Closing  Date;  (b) arising out of the  liabilities  retained by
Shareholder,  the Company or  Shareholder  Affiliate  under  Sections  7.1.2(a),
7.1.2(c) and 7.3; (c)  attributable to Employees who do not become  employees of
SJM or the  designated  Affiliate  of SJM on the  Closing  Date.  Subject to the
preceding  sentence,  SJM and the SJM Affiliates shall indemnify,  save and hold
harmless  Shareholder  and the  Shareholder  Affiliate  for  any and all  Losses
related to the Company Employee Benefit Plans and obligations assumed by SJM and
the SJM Affiliates  pursuant to Section 7.1.2 above,  regardless of whether such
Losses  relate to conditions or events  arising out of  transactions  that occur
prior to, on or following the Closing  Date.  The  provisions of Sections  10.4,
10.6 and 10.7 shall apply,  but the  provisions of Section 10.5 shall not apply,
to the indemnification provided under this Section 7.1.4.

                 7.2       Tax Matters.  The following provisions shall govern 
the  allocation  of responsibility as between SJM and Shareholder  for certain 
Tax matters following the Closing Date:

                 7.2.1 Responsibility for Taxes. Except as otherwise provided in
Sections  7.2.2  and  7.2.3,  Shareholder  shall be solely  responsible  for all
Liabilities for any and all Taxes of Shareholder,  the Sellers, their respective
Affiliates,  any group of  Persons  or member of a group of  Persons  with which
Shareholder,  any Seller and/or their  respective  Affiliates filed or files Tax
Returns  on a  combined  basis  and/or  any  Affiliated  Group or  member  of an
Affiliated  Group of which  Shareholder,  any  Seller  and/or  their  respective
Affiliates is, was or becomes a member. Except as otherwise provided in Sections
7.2.2 and 7.2.3, SJM shall be solely responsible for all Liabilities for any and
all Taxes of SJM, its  Affiliates,  any group of Persons or member of a group of
Persons  with which SJM and/or its  Affiliates  files Tax  Returns on a combined
basis, and/or any Affiliated Group or member of an Affiliated Group of which SJM
and/or its Affiliates is, was, or becomes a member,  except for  Liabilities for
Taxes imposed on Shareholder, the Sellers and/or their respective Affiliates for
which SJM or an SJM  Affiliate  becomes  liable  by  virtue  of its  status as a
successor to the Assets and/or the Business.

                 7.2.2 Sales and Other Tax.  SJM will pay,  and shall  indemnify
and hold the Company,  Shareholder and their Affiliates  harmless against, up to
$4,000,000  of (a)  transfer,  documentary,  recording,  notarial,  sales,  use,
registration,  stamp and other similar taxes, fees and expenses (including,  but
not limited to, all applicable  stock  transfer  taxes and real estate  transfer
taxes, however computed,  including a tax based on the excess of sale price over
original cost) and including any penalties,  interest and additions to such tax)
and  (b)  all  expenses  incurred  in the  transfer  of  intellectual  property,
including,   without   limitation,   the  cost  of  all  patent  and   trademark
registrations contemplated hereby, in each case incurred in connection with this
Agreement and the transactions  contemplated  hereby and each of Shareholder and
SJM will be  responsible  for the payment of, and shall  indemnify  and hold the
other party  harmless  against 50% of all such  amounts in excess of  $4,000,000
incurred in connection  with this  Agreement and the  transactions  contemplated
hereby;  provided,  however, that SJM will be solely responsible for the payment
of the Canadian Goods and Services Tax; and provided further that, if allowed by
Canadian  law,  SJM will be  permitted  to  satisfy  its  obligation  to pay the
Canadian  Goods and  Services  Tax by  assigning  its claim for a refund of such
taxes to the Shareholder  Affiliate.  To the extent  permitted under  applicable
law,  SJM shall  satisfy  its  obligation  under  this  Section  7.2.2 by paying
directly to the relevant tax authority (i) first, those taxes and expenses which
are  imposed by  applicable  law solely on SJM or its  Affiliates  and which SJM
acknowledges  at the time of the  Closing  are due and owing,  and (ii)  second,
those  taxes and  expenses  which are  imposed  by  applicable  law  jointly  on
Shareholder  or  its  Affiliates  and  SJM  or  its  Affiliates  and  which  SJM
acknowledges at the time of the Closing are due and owing.

                 7.2.3  Property  Taxes.  In the case of any taxable period that
includes (but does not end on) the Closing Date (a "Straddle Period"):

                 (a) Real,  personal  and  intangible  property  Taxes and other
similar taxes ("Property  Taxes") that are imposed by virtue of the ownership of
assets  (as  opposed to taxes that are  imposed as a result of the  transfer  of
assets)  with  respect  to the Assets  for a  Straddle  Period  shall be divided
between the Tax years (or  portions  thereof)  ending on or prior to the Closing
Date (the  "Pre-Closing  Tax Period") and a Post-Closing  Tax period that begins
the day following the Closing Date (a "Post-Closing Tax Period"), and the amount
of Taxes allocated to the  Pre-Closing Tax Period or a Post-Closing  Tax Period,
as the case may be, shall be equal to the amount of such Property  Taxes accrued
(i.e., based upon the date of assessment of such Property Taxes and not upon the
date of payment  thereof unless the Tax is related to a definite period of time,
in which case it will be treated as accruing  ratably  over that period) for the
entire Straddle Period  multiplied by a fraction,  the numerator of which is the
number of days during the Straddle Period that are in the Pre-Closing Tax Period
or a Post-Closing  Tax Period,  as the case may be, and the denominator of which
is the number of days in the Straddle Period.

                 (b)  Shareholder  shall  satisfy its  obligation  in respect of
Taxes for the Straddle  Period by paying to SJM the excess of (i) such  Straddle
Period Taxes for the  Pre-Closing  Tax Period over (ii) the sum of such Straddle
Period Taxes paid by  Shareholder,  the Seller or their  respective  Affiliates.
Shareholder  shall pay, or cause its Affiliate to pay,  such excess,  if any, to
SJM within  thirty  (30) days after the date of the Tax Return  relating to such
Straddle  Period Taxes is required to be filed (or, if later,  is actually filed
but no earlier than the later of the date SJM pays its share of Straddle  Period
Taxes or, if SJM or an  Affiliate  is  responsible  for filing the Tax Return in
question,  thirty  (30) days after  Shareholder  has  received a copy of the Tax
Return with respect to which the Straddle Period Taxes are owing). If the sum of
such Straddle Period Taxes paid by Shareholder,  the Sellers or their respective
Affiliates exceeds the Straddle Period Taxes for the Pre-Closing Tax Period, SJM
shall pay,  or cause its  Affiliate  to pay, to  Shareholder  the amount of such
excess,  if any,  within  thirty  (30)  days  after  the date of the Tax  Return
relating to such Straddle Period Taxes is required to be filed (or, if later, is
actually  filed but no earlier than the later of the date  Shareholder  pays its
share of Straddle Period Taxes or, if Shareholder or an Affiliate is responsible
for filing the Tax Return in question, thirty (30) days after SJM has received a
copy of the Tax Return  with  respect  to which the  Straddle  Period  Taxes are
owing).  Payments to be made pursuant to this paragraph by  Shareholder,  SJM or
their  affiliates  with  respect to any Straddle  Period shall be  appropriately
adjusted to reflect any final  determination  (which shall include the execution
of a Form 870-AD or successor form) with respect to Straddle Period Taxes.

                 7.2.4 Retention of Records.  Each of SJM and Shareholder  shall
retain (or cause to be retained) all books, records and other data pertaining to
Tax matters for all open  periods or  portions  thereof  ending on or before the
Closing Date other than books,  records and data pertaining to Taxes based on or
measured by income,  which  neither party shall have an obligation to retain for
the benefit of the other. In particular,  SJM and  Shareholder  shall retain (or
cause to be retained) all non-income-tax related Tax Returns, schedules and work
papers,  and all  material  records and other  documents  relating  thereto with
respect to the  operations of the Sellers  prior to the Closing Date,  until the
expiration of the statute of limitations  (and, to the extent notified by SJM or
Shareholder,  any extension thereof) of the respective Tax periods and shall not
destroy  any such  documents  thereafter  without  providing  thirty  (30) days'
written notice to Shareholder, or to SJM, as the case may be.

                 7.2.5 Notice; Cooperation.  Nothing in this Section 7.2.5 shall
require  any party to provide  notices or  cooperation  with  respect to matters
pertaining  to Taxes that are based on or  measured  by income.  Each of SJM and
Shareholder  shall promptly  provide  written notice to the other upon receiving
(or upon an Affiliate  receiving) notice from a taxing authority that additional
non-income Tax liabilities may exist or that any non-income-tax related books or
records  have  been  requested  by any  taxing  authority.  SJM and  Shareholder
covenant and agree that subsequent to the Closing,  upon  reasonable  notice and
during normal business hours,  they and their Affiliates will (i) give the other
party and its  representatives  information,  books and records  relevant to the
Sellers  to the  extent  necessary  to enable  the other  party to  prepare  its
non-income  tax  related  Returns,  and  (ii)  provide  the  other  party or its
Affiliates  with  such  information,  books and  records  as may  reasonably  be
requested in connection  with any  non-income-tax  related Tax Return,  inquiry,
election,  audit or other  examination by any taxing  authority,  or judicial or
administrative  proceeding  relating to liability for Taxes. SJM and Shareholder
also shall make  available to each other,  as reasonably  requested,  and at the
expense of the  requesting  party,  knowledgeable  employees  or advisors of the
party or its  Affiliates of which the request is made and personnel  responsible
for  preparing  and  maintaining  information,  books,  records and documents in
connection  with  non-income-tax  related  Tax  filings,   audits,  disputes  or
litigation.  If Shareholder,  SJM or any of their Affiliates pay any Taxes that,
pursuant to this Agreement,  are to be borne by another party,  such other party
shall promptly reimburse such paying party for the Taxes paid.

                 7.2.6  Refunds.  Except as  otherwise  provided in this Section
7.2.6,  any  refunds  or  credits  of Taxes  of  Shareholder,  Sellers  or their
Affiliates  relating to taxable  periods  ending on or before the  Closing  Date
shall be for the account of Shareholder;  provided, however, that any refunds or
credits of Taxes which are accrued on the Closing  Balance Sheet or which result
from  a  payment  of any  Taxes  by SJM or  any  Affiliate  either  directly  or
indirectly, shall belong to SJM. Any refunds or credits of Taxes relating to any
Straddle Period shall be equitably apportioned between Shareholder,  Sellers and
their Affiliates and SJM and its Affiliates consistently with Section 7.2.3. Any
amounts  payable to  Shareholder  pursuant to this Section 7.2.6 shall be net of
any Tax cost or benefit to SJM or its Affiliates  attributable to the receipt of
such  refund  and/or the  payment by SJM of such  amounts  to  Shareholder.  Any
amounts  payable to SJM pursuant to this  Section  7.2.6 shall be net of any Tax
cost or benefit to Shareholder,  Sellers or their Affiliates attributable to the
receipt of such refund and/or the payment by Shareholder of such amounts to SJM.
If any party receives any refunds or credits that,  pursuant to this  Agreement,
are the property of another  party,  such party shall promptly pay the amount of
such refunds or credits to the other party.

                 7.2.7 Certain Contest Rights. (a) Promptly after the receipt by
SJM or Shareholder or their respective Affiliates (the "Prospective Indemnitee")
of a written notice of any demand,  claim or circumstance which, after the lapse
of time,  would or might give rise to a claim or the commencement (or threatened
commencement) of any action,  proceeding or investigation  with respect to which
indemnity may be sought under this Section 7.2 (an  "Asserted  Tax  Liability"),
the Prospective Indemnitee shall give notice thereof (the "Tax Claim Notice") to
the other  party (the  "Prospective  Indemnitor").  The Tax Claim  Notice  shall
contain factual information (to the extent known to the Prospective  Indemnitee)
describing  the Asserted Tax  Liability in  reasonable  detail and shall include
copies of any notice or other document  received from any Taxing  authority with
respect to any such Asserted Tax Liability.  If the Prospective Indemnitee fails
to give the  Prospective  Indemnitor  notice of an  Asserted  Tax  Liability  as
required by this Section 7.2.3,  and if such failure to give notice results in a
detriment  to  the  Prospective  Indemnitor,   then  any  amount  to  which  the
Prospective Indemnitor is otherwise required to pay pursuant to Section 7.2 with
respect to the  Asserted  Tax  Liability  shall be reduced by the amount of such
detriment.

                 (b) The  Prospective  Indemnitor  may elect to direct,  through
counsel of its own choosing and at its own expense,  the  compromise or contest,
either  administratively or in the courts, of any Asserted Tax Liability. If the
Prospective  Indemnitor  elects to direct  the  compromise  or  contest  of such
Asserted  Tax  Liability,  it shall within 30 calendar  days (or sooner,  if the
nature of the  Asserted  Tax  Liability  so  requires)  notify  the  Prospective
Indemnitee  of its  intent  to do  so,  and  the  Prospective  Indemnitee  shall
cooperate  and shall  cause its  Affiliates  to  cooperate,  at the  Prospective
Indemnitor's  expense,  in the  compromise  or  contest  of  such  Asserted  Tax
Liability.  The  Prospective  Indemnitor  may not  enter  into on  behalf of the
Prospective  Indemnitee or its Affiliates a settlement agreement with respect to
any  Asserted  Tax  Liability  without  the written  consent of the  Prospective
Indemnitee;  provided,  however,  that, if the  Prospective  Indemnitee does not
grant such consent to the Prospective  Indemnitor with respect to the settlement
of an  Asserted  Tax  Liability,  the  Prospective  Indemnitor  may  satisfy its
indemnity  obligation  under this  Section 7.2 with  respect to the Asserted Tax
Liability by paying to the Prospective Indemnitee (or its Affiliates) the amount
which the  Prospective  Indemnitor  (or its  Affiliate)  would have paid if such
consent had been granted and the Asserted Tax Liability settled pursuant to such
settlement  agreement.  If the Prospective  Indemnitor  elects not to direct the
compromise  or  contest  of the  Asserted  Tax  Liability,  fails to notify  the
Prospective  Indemnitee  of its election,  contests its  obligation to indemnify
under this Section 7.2 or if the Prospective Indemnitee refuses to grant consent
to the Prospective  Indemnitor to enter into a settlement agreement with respect
to an Asserted Tax Liability,  the Prospective  Indemnitee or its Affiliates may
pay,  compromise or contest such  Asserted Tax  Liability,  and the  Prospective
Indemnitor shall cooperate (including granting any necessary powers of attorney)
in such contest.  The  Prospective  Indemnitee's  settlement or compromise of an
Asserted Tax Liability under the conditions set forth in the preceding  sentence
shall not affect the Prospective  Indemnitor's  indemnity obligation pursuant to
Section 7.2;  provided,  however,  that the  Prospective  Indemnitor will not be
obligated to indemnify the  Prospective  Indemnitee (or its  Affiliates) for any
amounts  in excess of the  amount  the  Prospective  Indemnitor  would have paid
pursuant to a settlement  agreement if the Prospective  Indemnitee had given its
written  consent to the  Prospective  Indemnitor with respect to such settlement
agreement.  In any event, the Prospective Indemnitor (or its Affiliates) and the
Prospective Indemnitee (or its Affiliates) may participate,  at its own expense,
in the contest of such Asserted Tax  Liability.  If the  Prospective  Indemnitor
chooses to direct the compromise or contest of any Asserted Tax  Liability,  the
Prospective  Indemnitee shall promptly empower and shall cause its Affiliates to
promptly  empower (by power of attorney and such other  documentation  as may be
appropriate)  such  representative  of  the  Prospective  Indemnitee  as it  may
designate to represent  the  Prospective  Indemnitor  or its  Affiliates  in any
audit, claim for refund or administrative or judicial proceeding insofar as such
audit,  claim for refund or  proceeding  involves an Asserted Tax  Liability for
which the Prospective Indemnitor would be liable under Section 7.2.

                 7.2.8 Indemnification. Shareholder agrees to indemnify and hold
SJM,  Acquisition  Subsidiary and their respective  Affiliates harmless from and
against   any  and  all  Taxes   resulting   from  any  breach  of  any  of  the
representations, warranties, covenants or other agreements of the Shareholder or
its  Affiliates  contained in this Section 7.2. SJM agrees to indemnify and hold
Shareholder,  the  Sellers and their  respective  Affiliates  harmless  from and
against   any  and  all  Taxes   resulting   from  any  breach  of  any  of  the
representations,  warranties,  covenants  or  other  agreements  of  SJM  or its
Affiliates  contained in this Section 7.2. In addition to Taxes,  this indemnity
obligation extends to (i) the reasonable costs incurred by the indemnified party
in collecting  under this  indemnity  agreement and (ii) legal fees, but only if
the Prospective  Indemnitor fails to acknowledge its indemnity  obligation under
this Section 7.2 within 30 days after notification by the Prospective Indemnitee
of the Asserted Tax Liability.

                 7.3  Liability for Executive Arrangements.

                 7.3.1  SJM  shall  on the  Closing  Date  assume  any  and  all
liability  directly  or  indirectly   related  to  the  Supplemental   Executive
Retirement  Plan ("SERP"),  Employment  Agreements,  Split Dollar Life Insurance
Agreement, Executive Life Insurance Agreements and Executive Savings Plan listed
on Schedule 7.3 (together,  the "Executive  Arrangements")  and SJM shall assume
all liabilities and perform all obligations of the Company and Shareholder under
the Executive  Arrangements;  provided,  however,  that Shareholder shall remain
liable and shall pay directly to such  executive the excess,  if any, of (i) the
Enhanced Benefit, over (ii) the Alternative Benefit payable under Section 5.2 of
the SERP and, if any interest  payable under  Section 5.2 or additional  amounts
payable pursuant to Section 5.3 of the SERP are due, the portion of the interest
and additional amount that is attributable solely to such excess. On or prior to
the Closing  Date,  Shareholder  shall  inform SJM of whether  the  transactions
contemplated  by this  Agreement  constitute  a Target Sale of the  Company,  as
defined in the SERP. SJM shall provide  Shareholder with prior written notice of
any claim  under  the SERP that  would  give  rise to a  Shareholder  obligation
hereunder and shall provide  Shareholder  with an opportunity to review,  at its
own expense, the calculation of benefits under the SERP.

                 7.4 Non-Competition.

                 7.4.1 During the period from the date of this  Agreement to and
including the fourth  anniversary of the date hereof (or, if not enforceable for
such period in any country,  for such shorter  period as shall be enforceable in
such country),  Shareholder shall not, nor shall it permit any of its Affiliates
to, directly or indirectly,  engage in the development,  marketing,  production,
sale or distribution  anywhere in the world of Competitive  Products (as defined
below).

                 7.4.2 As used in Section 7.4.1 hereof,  the phrase "directly or
indirectly,  engage  in"  includes  any  direct or  indirect  ownership,  profit
participation  or other interest by Shareholder  or its  Affiliates,  whether as
owner,  stockholder,  partner, joint venturer,  beneficiary or otherwise, in any
Person;  provided,  however,  that the  foregoing  provisions  shall not prevent
Shareholder  or any of its  Affiliates  from (a)  investing in  businesses  that
compete with the  Competitive  Products  where such  investments  are incidental
investments in public companies and constitute,  in the aggregate,  less than 5%
of the outstanding securities or voting interest of each of such companies,  (b)
acquiring  businesses  an  incidental  portion  (such portion being deemed to be
incidental  if the assets,  revenues or income  relating to the  business  which
competes with the Competitive  Products is less than 5% of the assets,  revenues
or income,  respectively,  of the  business  being  acquired) of the business of
which competes with the Competitive  Products  (unless the excess over 5% of the
competing  portion of such business is divested  within six months from the date
of  such  acquisition)  or (c)  investing  in  investment  funds  or  investment
partnerships  which in turn invest in companies or entities which may be engaged
in the  production,  sale or  distribution  of  Competitive  Products so long as
neither  Shareholder  nor  any of its  Affiliates  exercise  control  over  such
investment decisions.

                 7.4.3 As used in this Section 7.4, (i)  "Competitive  Products"
means  "Cardiac  Stimulation  Devices"  (as  defined in Section  13.1) and other
devices  performing  the same  purpose or function  as, or that are  competitive
with, Cardiac Stimulation  Devices,  and shall include products intended for use
in or as  products  that are Cardiac  Stimulation  Devices  (including,  without
limitation, parts, components,  modules, subsystems or subassemblies thereof, or
parts,  components,  modules,  subsystems or subassemblies of and for,  products
intended for use as or products that are Cardiac Stimulation  Devices) except to
the extent that they are intended  for use in or as products  other than Cardiac
Stimulation  Devices and (ii) "Affiliate" does not include any Person once it is
no longer an Affiliate of Siemens AG.

                 7.5  Non-Solicitation.  For thirty-six  months from the Closing
Date, neither  Shareholder nor the Shareholder  Affiliate,  on the one hand, nor
SJM nor any of its Affiliates,  on the other hand, shall specifically solicit to
hire any current  employees of the other party without the prior written consent
of such latter party,  provided that nothing  herein shall  restrict or preclude
the rights of either party to make generalized  searches for employees by use of
advertisements in the media (including  without  limitation,  trade media) or by
engaging search firms to engage in searches which are not targeted or focused on
the employees of the other party.

                 7.6 Siemens  Name.  Immediately  after the  Closing,  except as
otherwise  permitted under the License  Agreement  referred to in Section 3.2.5,
SJM will take all action  necessary to cease the use of the name  "Siemens"  (or
any variant  thereof) and related  trademarks,  corporate names, and trade names
incorporating  the name  "Siemens",  and any "Siemens" logos and trade dress, in
each case in connection  with the conduct of the Business.  On the Closing Date,
Shareholder shall take all necessary action to change the name of the Company to
exclude the word "Pace-Setter".

                 7.7  Confidentiality.  Except  as  otherwise  provided  in this
Agreement,  after the Closing, the Sellers and their Affiliates shall not use or
disclose to third  Persons any  information  disclosed  to and  transferred  and
assigned,  licensed or  otherwise  made  available to SJM or its  Affiliates  in
connection  with  the  Business  and  transfer  of  Assets  hereunder.   Without
limitation,  this  obligation  of  confidentiality  shall  apply to  information
related to the Products,  business plans, strategies,  technologies,  and future
business relationships of the Business. This obligation of confidentiality shall
not apply to the  extent  any such  information  (a) is or  becomes  part of the
public  domain  through no fault of the Sellers  (but only after and only to the
extent that it is published or otherwise becomes part of the public domain); (b)
after the Closing,  comes into the possession of the Sellers from a third Person
who was  not,  to the  Sellers'  knowledge,  under a  continuing  obligation  of
confidence to the disclosing  party; or (c) is disclosed by the Sellers pursuant
to any  judicial  compulsion,  provided  that SJM is  notified  at the time such
judicial  action is initiated.  Disclosures  relating to the Products,  business
plans,  strategies and future business relationships of SJM or the Company shall
not be deemed to be in the public  domain or in the  possession of the receiving
party  merely   because  they  are  embraced  (but  not  disclosed)  by  general
disclosures in the public domain or in the possession of the receiving party.

                 7.8  Bulk  Sales  Laws.  The  Company  shall  comply  with  the
provisions  of the "bulk sales" law of the State of  California,  and  otherwise
each of the parties  waives  compliance by the other parties with the provisions
of the "bulk  sales" laws of any  jurisdiction  which may be  applicable  to the
transactions contemplated by this Agreement.

                 7.9  Guarantee.  SJM  hereby  unconditionally   guarantees  the
obligations of the SJM Affiliates and Acquisition Subsidiary hereunder.

                 7.10 Real Estate Inspections.  Commencing from the date of this
Asset Purchase  Agreement and continuing  through the date of Closing,  SJM, its
agents,  contractors and  subcontractors  shall have the right to enter upon the
Owned Real Property,  at reasonable times (during ordinary  business hours) upon
not less than 48 hours' prior notice to the Company,  to make such  inspections,
surveys and tests of the Real Property and the improvements  situated thereon as
SJM may require.

                 7.11 Real Estate Related Reports.  Promptly after the execution
of this Asset  Purchase  Agreement,  Seller shall deliver to SJM, or cause to be
delivered to SJM,  copies of all  insurance  claims and reports  relating to the
Owned Real  Property  which have been  submitted  to insurance  companies  since
January 1, 1994,  insuring all or portions of the Real Property and all letters,
correspondence  and/or  reports  prepared by or at the request of such insurance
companies  that have been  delivered  to any of  Sellers  or which  Sellers  are
entitled to obtain from such insurance companies.

                 7.12  Reimbursement  for  Certain  Damages.  Shareholder  shall
reimburse  Acquisition  Subsidiary for the  out-of-pocket  costs incurred by the
Business  after the Closing Date to repair the damage to the floor in the "clean
room" at the Company's Valley View Court Facility as a result of the January 17,
1994 earthquake, including costs of employees who are idled for a period of time
as a result of the repair of such damage,  to the extent that such costs are not
covered by insurance  proceeds.  After the Closing  Date,  SJM shall,  and shall
cause Acquisition Subsidiary to, use its reasonable best efforts to mitigate the
Losses  incurred by the Business as a result of such damage that are not covered
by  insurance.  After the Closing  Date,  SJM shall pay to the  Shareholder  its
allocable  portion of any insurance  proceeds  received by SJM or its Affiliates
under Section 1.1(a)(xxii) for expenses paid by the Company prior to the Closing
Date to repair any damage  resulting from such  earthquake  prior to the Closing
Date to the extent that SJM or its Affiliates  receive insurance  proceeds after
the Closing Date for such expenses.

                                   ARTICLE 8

                        CONDITIONS TO SJM'S OBLIGATIONS

The  obligations  of SJM to consummate  the  transactions  contemplated  by this
Agreement shall be subject to the satisfaction (or waiver by SJM in writing), on
or prior to the Closing Date, of all of the following conditions:

                 8.1  Representations,  Warranties  and Covenants of Shareholder
and the Company.  The Sellers shall each have in all material respects performed
and complied with all of their  agreements and covenants  contained herein to be
performed  at or  prior  to  the  Closing  Date,  and  the  representations  and
warranties of Shareholder and the Company  contained herein shall be true on and
as of the Closing Date in all material respects.

                 8.2 Prohibition. No statute, rule or regulation or order of any
court or administrative  agency shall be in effect which prohibits  consummation
of the transactions contemplated hereby.

                 8.3  Deliveries.  Shareholder  and the Company  shall each have
made or caused to be made  delivery to SJM of the items set forth in Section 3.2
hereof.

                 8.4 No Material Adverse Effect. No occurrences or events which,
individually  or in the  aggregate,  have a Material  Adverse  Effect shall have
occurred following the date of this Agreement and be continuing.

                 8.5 HSR Compliance. The waiting period specified by the HSR Act
shall have expired or shall have been terminated.

                 8.6 Other  Governmental  Approvals.  All governmental  filings,
authorizations  and approvals which are identified on Schedules 4.9 and 5.2 that
are required for the consummation of the transactions  contemplated hereby or to
permit  SJM  and  its  Affiliates,   after   consummation  of  the  transactions
contemplated  hereby, to carry on the Business in the manner now conducted,  and
any of the consents and approvals  identified on Schedule 4.6 or Schedule 4.8(b)
the absence of which would have  individually,  or in the aggregate,  a Material
Adverse Effect, will have been made or obtained.

                 8.7  Non-U.S.  Asset  Purchase  Agreement.  The  closing of the
purchase and sale under the Non-U.S.  Asset  Purchase  Agreement  (as defined in
Section 13.1) shall have occurred.


                                   ARTICLE 9

                          CONDITIONS TO SHAREHOLDER'S
                         AND THE COMPANY'S OBLIGATIONS

The  obligations of the Company and  Shareholder to consummate the  transactions
contemplated by this Agreement shall be subject to the  satisfaction  (or waiver
by the Company and Shareholder in writing),  on or prior to the Closing Date, of
all of the following conditions:

                 9.1  Representations,  Warranties and Covenants of SJM. SJM and
Acquisition  Subsidiary each shall have in all material  respects  performed and
complied  with all of their  agreements  and  covenants  contained  herein to be
performed at or prior to the Closing Date,  and all of the  representations  and
warranties of SJM and Acquisition  Subsidiary  contained herein shall be true on
and as of the Closing Date in all material respects.

                 9.2 No Prohibition.  No statute, rule or regulation or order of
any  court  or  administrative   agency  shall  be  in  effect  which  prohibits
consummation of the transactions contemplated hereby.

                 9.3  Deliveries.  SJM  shall  have  made or  caused  to be made
delivery to the Company  and  Shareholder  of the items set forth in Section 3.3
hereof.

                 9.4 HSR Compliance. The waiting period specified by the HSR Act
shall have expired or shall have been terminated.

                 9.5 Other  Governmental  Approvals.  All governmental  filings,
authorizations  and approvals which are identified on Schedules 4.9 and 5.2 that
are required for the consummation of the transactions  contemplated  hereby will
have been made or obtained.

                 9.6  Non-U.S.  Asset  Purchase  Agreement.  The  closing of the
purchase  and sale  under the  Non-U.S.  Asset  Purchase  Agreement  shall  have
occurred.


                                   ARTICLE 10

                      INDEMNIFICATION AND RELATED MATTERS

                 10.1 Survival.  Subject to the limitations and other provisions
of this Agreement,  the  representations  and warranties of SJM, the Company and
Shareholder  contained herein shall survive the Closing and shall remain in full
force and effect,  regardless of any investigation  made by or on behalf of SJM,
the Company or  Shareholder,  as the case may be, for a period of one year after
the Closing Date; provided, however, that (A) the representations and warranties
in Sections 4.1.1, 4.1.2, 4.1.3, 4.1.4, 4.1.5, 4.3.1,  4.3.12,  4.3.13, 4.14 and
4.17 shall  survive for a period of two years after the  Closing  Date,  (B) the
representations  and  warranties in Sections  4.2,  4.3.17 and 4.3.18 shall only
survive  until  the  adjustment  to the Cash  Consideration  has  been  resolved
pursuant to Section 2.2, and (C) the  representations and warranties in Sections
4.7 and 4.18 shall not survive the Closing.

                 10.2  Indemnification by Shareholder.  Subject to the terms and
conditions  of this Article 10,  Shareholder  agrees to indemnify  and hold SJM,
Acquisition Subsidiary and their respective Affiliates, including, in each case,
any of their  respective  directors,  officers,  employees and  representatives,
harmless from and against:

                 10.2.1 Any and all Losses  resulting  from any breach of any of
the representations and warranties (as of the Closing Date),  covenants or other
agreements of the Company or Shareholder contained in this Agreement (other than
Sections  7.1 and 7.2,  it being  understood  that the sole  remedy  for  breach
thereof shall be pursuant to Sections 7.1 and 7.2, as the case may be); and

                 10.2.2    Losses resulting from Excluded Liabilities.

                 10.3   Indemnification   by  SJM.  Subject  to  the  terms  and
conditions of this Article 10, SJM agrees to indemnify and hold  Shareholder and
its  Affiliates,  including,  in  each  case,  any of its  or  their  respective
directors, officers, employees and representatives, harmless from and against:

                 10.3.1  Any and all  Losses  resulting  from any  breach of any
representations and warranties (as of the Closing Date), covenants or agreements
of SJM  contained in this  Agreement  (other than Sections 7.1 and 7.2, it being
understood that the sole remedy for breach thereof shall be pursuant to Sections
7.1 and 7.2, as the case may be); and

                 10.3.2    Losses resulting from Assumed Liabilities.

                 10.4   Determination  of  Damages  and  Related   Matters.   In
calculating  any  amounts  payable  to SJM,  Acquisition  Subsidiary  and  their
respective  Affiliates pursuant to Section 10.2 or payable to Shareholder or its
respective Affiliates pursuant to Section 10.3, such amounts shall be limited to
the amount of any Losses that remain after  deducting  therefrom  any  insurance
proceeds or any indemnity,  contribution or similar payment recoverable from the
indemnified  Person from any third party with  respect  thereto.  Any  indemnity
payment made pursuant to this Section 10 shall be decreased by the amount of the
indemnified Person's Tax benefit (as defined below), and increased by the amount
of the  indemnified  Person's  Tax cost (as  defined  below).  The amount of the
indemnified  Person's Tax benefit  shall be equal to the amount of the deduction
(or the present value of any increased depreciation or amortization  deductions)
resulting from the indemnified Loss,  multiplied by the highest marginal federal
income tax rate imposed on the indemnified Person. The amount of the indemnified
Person's  Tax cost shall be equal to the  amount of the  income (or the  present
value of any decreased  depreciation or amortization  deductions) resulting from
the receipt of the indemnity payment, multiplied by the highest marginal federal
tax rate imposed on the indemnified  person.  For purposes of this Section 10.4,
present  values  will be  computed  using  the  Applicable  Federal  Rate as the
discount  rate.  To the extent  permitted  by law,  the  parties  will treat all
indemnity  payments as  adjustments to the purchase  price and  liabilities  for
indemnified Losses as having been in existence at the time of the Acquisition.

                 10.5   Limitation   on   Indemnification    Liabilities.    The
indemnification  obligations  of  Shareholder  contained  in Section 10.2 hereof
shall not be effective  until the  aggregate  dollar  amount of all Losses which
would  otherwise be  indemnifiable  under Section 10.2 exceeds  $8,000,000  (the
"Threshold  Amount"),  and then only to the extent such aggregate amount exceeds
the Threshold  Amount.  The  indemnification  obligations of  Shareholder  under
Section 10.2 shall be effective  only until the dollar amount paid in respect of
the Losses indemnified  against under such Section aggregates to an amount equal
to $120,000,000  (the "Liability  Cap").  The Threshold Amount and the Liability
Cap  contained in this Section 10.5 shall not apply to any  obligations  arising
under Sections 2.2.4 and 2.3 regarding  fees and expenses,  Section 6.1,  6.4.2,
6.5, 6.6,  6.14,  Article 7 or Article 12 or to any Losses arising from Excluded
Liabilities.

                 10.6  Notice  of  Indemnification.   In  the  event  any  legal
proceeding  shall be  threatened  or  instituted or any claim or demand shall be
asserted  by any person in respect of which  payment  may be sought by one party
hereto from the other party under the  provisions of this  Agreement,  the party
seeking  indemnification  (the "Indemnitee") shall promptly cause written notice
of the assertion of any such claim of which it has knowledge which is covered by
this  indemnity  to be  forwarded  to the other party (the  "Indemnitor")  which
notice,  in the case of a claim  arising  under  Section 7.1, 7.2, 10.2 or 10.3,
must be  received  by the  Indemnitor  before  the  expiration  of the  relevant
survival  period set forth in Section  10.1 or if no such  period is  specified,
until the  applicable  period  under the  statute of  limitations  therefor  has
expired.  Any  notice  of a  claim  by  reason  of any  of the  representations,
warranties,  covenants or  agreements  contained in this  Agreement  shall state
specifically the representation, warranty, covenant or agreement with respect to
which  the claim is made,  the facts  giving  rise to an  alleged  basis for the
claim, and the amount of the liability asserted against the Indemnitor by reason
of the claim.

                 10.7  Indemnification  Procedure for Third-Party Claims. In the
event that an Indemnitee  receives  written  notice of the  commencement  of any
action  or  proceeding,  the  assertion  of any  claim  by a third  party or the
imposition  of any  penalty  or  assessment  for which  indemnity  may be sought
pursuant to this Article 10 (a "Third Party Claim"), and such Indemnitee intends
to seek  indemnity  pursuant to this Article 10, the  Indemnitee  shall promptly
provide the Indemnitor with notice of such action, proceeding, claim, penalty or
assessment,  and the Indemnitor  shall, upon receipt of such notice, be entitled
to participate in or, at the Indemnitor's option, assume the defense,  appeal or
settlement of such action, proceeding, claim, penalty or assessment with respect
to which such  indemnity has been invoked with counsel of its own choosing,  and
the Indemnitee will cooperate fully with the Indemnitor in connection therewith.
In the  event  that the  Indemnitor  fails to  assume  the  defense,  appeal  or
settlement of such action,  proceeding,  claim,  penalty or assessment within 30
days after receipt of notice thereof from the Indemnitee,  the Indemnitee  shall
have the right to  undertake  the  appeal  of such  action,  proceeding,  claim,
penalty or assessment at the Indemnitor's expense,  subject to the rights of the
Indemnitor in the immediately  succeeding  sentence.  If the Indemnitee  assumes
such defense and proposes to settle or compromise  any such action,  proceeding,
claim,  penalty or  assessment  then the  Indemnitee  shall give written  notice
thereof and the Indemnitor shall have the right to participate in the settlement
or assume or reassume the defense of such action, proceeding,  claim, penalty or
assessment.


                                   ARTICLE 11

                          TERMINATION PRIOR TO CLOSING

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

                 11.1.1    by the mutual written consent of the parties; or

                 11.1.2 by either Shareholder and the Company,  on the one hand,
or SJM and Acquisition Subsidiary, on the other hand, if there has been a breach
of a material representation or breach of a material covenant on the part of the
other party in the  representations,  warranties and covenants contained herein,
unless such breach is cured  within 30 days of receipt of notice of such breach;
or

                 11.1.3 by either Shareholder and the Company,  on the one hand,
or SJM and  Acquisition  Subsidiary,  on the other hand,  if the Closing has not
occurred  by  October  31,  1994;  provided  that no party  may  terminate  this
Agreement  pursuant to this clause if such party's failure to fulfill any of its
obligations  under this  Agreement  shall have been the reason  that the Closing
Date shall not have occurred on or before said date;  and provided  further that
such date shall be extended  until  December  31,  1994,  if the Closing did not
occur by such date because of the failure of SJM,  Shareholder or the Company to
receive one of the governmental approvals or authorizations contemplated by this
Agreement because of the failure of any applicable waiting period to expire; or

                 11.1.4 by either Shareholder and the Company,  on the one hand,
or SJM and Acquisition Subsidiary,  on the other hand, if there shall be any law
or regulation  that makes  consummation of the Acquisition or any other material
component  of  the  transactions   contemplated   hereby  illegal  or  otherwise
prohibited or if any judgment,  injunction,  order or decree  enjoining SJM, the
Company or Shareholder from consummating the transactions contemplated hereby is
entered and such  judgment,  injunction,  order or decree shall become final and
nonappealable.

                 11.2 Effect of  Termination.  If this  Agreement is  terminated
pursuant to Section 11.1, this Agreement shall become void and of no effect with
no  liability  on the  part of any  party  hereto,  except  (i) as set  forth in
Sections 6.5 and 12.6 and (ii) that nothing  shall  relieve any party hereto for
liability for any breach of this Agreement.


                                   ARTICLE 12

                                 MISCELLANEOUS

                 12.1 Entire Agreement.  This Agreement  (including the exhibits
hereto,  the  Schedules  and the  documents  referred  to  herein  and the other
documents  executed  by the parties on the date  hereof) and the  Non-Disclosure
Agreement  contain the entire  understanding of the parties hereto in respect of
the subject  matter  contained  herein and  supersede all prior  agreements  and
understandings  between the parties with respect to such subject  matter.  There
are  no  restrictions,  promises,  representations,  warranties,  covenants,  or
undertakings,  other than those  expressly  set forth or  referred  to herein or
therein.  Notwithstanding anything to the contrary contained herein, the parties
hereto agree that the Company and  Shareholder  shall not be deemed to have made
herein any  representations  and  warranties  with respect to the  "Business" or
"Assets" (as such terms are defined in the NonU.S. Asset Purchase Agreement).

                 12.2  Amendment;  Waiver.  No  waiver  and no  modification  or
amendment  of  any  provision  of  this  Agreement  shall  be  effective  unless
specifically made in writing and duly signed by the parties to be bound thereby.
Waiver  by a party  of any  breach  of or  failure  to  comply  with  any of the
provisions  of this  Agreement by any other party shall not be construed  as, or
constitute,  a  continuing  waiver  of, or a waiver of any other  breach  of, or
failure to comply with, any other provision of this Agreement.

                 12.3  Assignment.  This  Agreement  and  all of the  provisions
hereof shall be binding upon and inure to the benefit of the parties  hereto and
their respective  successors and permitted  assigns,  but neither this Agreement
nor any of the rights,  interests or obligations  hereunder shall be assigned by
any of the  parties  hereto  without  the  prior  written  consent  of the other
parties;  provided,  however, that SJM may assign this Agreement and its rights,
interests and  obligations in whole or in part hereunder to one or more directly
or  indirectly  wholly  owned   subsidiaries  of  SJM  without  the  consent  of
Shareholder or the Company;  provided,  however,  that such assignment shall not
relieve SJM of any of its obligations hereunder.

                 12.4 Headings;  Usage. The paragraph  headings contained herein
are for the purposes of convenience only and are not intended to define or limit
the contents of said  paragraphs.  The meanings of any terms defined  herein are
equally applicable to both the singular and plural forms of the terms defined.

                 12.5 Cooperation. Each party hereto shall cooperate, shall take
further  action and shall  execute and deliver such further  documents as may be
reasonably requested by the other party in order to carry out the provisions and
purposes of this Agreement.

                 12.6 Expenses.  Except as provided in Section 7.2.2,  SJM shall
bear its and  Acquisition  Subsidiary's,  and  Shareholder  shall bear its,  the
Company's,  the Shareholder Affiliate's and the Subsidiaries' costs and expenses
in connection with the negotiation, preparation, performance and consummation of
the  transactions  contemplated  by this  Agreement,  including all taxes of any
type,  the fees and  disbursements  of all attorneys,  accountants,  appraisers,
investment  bankers and advisors  retained by or representing them in connection
with the preparation and performance of this Agreement.

                 12.7  Governing  Law. This  Agreement  shall be governed by and
construed in  accordance  with the laws of the State of New York  applicable  to
contracts made and to be performed therein.

                 12.8  Disputes.  (a) Any dispute  between  SJM and  Shareholder
arising  out of or in  connection  with this  Agreement  (or any  agreements  or
documents  delivered  by the  parties  hereto  pursuant  to the  terms  of  this
Agreement)  or any  alleged  breach  hereof  may, at the option of either SJM or
Shareholder,  be submitted  for  discussion  and possible  resolution  by senior
officers  of SJM and  Shareholder,  as  designated  by  their  respective  chief
executive officers.

                  (b) Except as  provided  in Article 2, all  disputes  arising,
relating  to or arising  in  connection  with this  Agreement,  including  those
pertaining to the validity, interpretation,  construction or breach hereof or of
any legal obligation owed or claimed to be owed by any party hereto to any other
party hereto or its Affiliates,  that is not otherwise  amicably settled between
the  parties  shall  exclusively  be  resolved  by  arbitration  between SJM and
Shareholder  pursuant  to the  Commercial  Arbitration  Rules  of  the  American
Arbitration  Association (the "Rules"),  with the arbitration to be conducted in
the English language and taking place in New York, New York.

                 (c)  The   arbitral   tribunal   shall  be  composed  of  three
arbitrators appointed in accordance with the Rules. The Chairman of the arbitral
tribunal shall be nominated by the two  arbitrators  nominated  respectively  by
Shareholder and SJM, and if they fail to agree upon such Chairman within 30 days
after the second arbitrator has been appointed, such Chairman shall be appointed
by the American Arbitration  Association.  No arbitrator shall be or have been a
present or past employee,  officer, director, legal counsel, consultant or agent
of either party or its Affiliates.  All arbitrators shall be of legal education,
unless the parties agree otherwise at the time.  Unless prohibited or restricted
by applicable law, each party agrees to provide to the arbitrators and the other
party,  subject to a strict  confidentiality  agreement,  such documents,  other
evidence,  witness  testimony as may  reasonably be requested by the other party
and as are relevant to the issues being arbitrated. The arbitrators may restrict
or terminate  discovery  requests which they conclude are  unreasonable,  unduly
burdensome or not relevant to the issues being arbitrated.  Such discovery shall
occur during a reasonable time period.  The arbitrators shall not have the power
to act as "amiable  compositeurs"  with respect to any dispute submitted to such
arbitration,  but rather shall make their decision based on their  understanding
and  interpretation of the applicable law and facts. SJM expressly  acknowledges
and agrees  that  Siemens AG has not in any way  agreed to or  consented  to the
jurisdiction of the federal,  state or local courts of the United States for any
purpose whatsoever and shall not be so treated hereunder,  and SJM hereby waives
all rights to claim that  Siemens AG is subject to such  jurisdiction.  The fees
and  disbursements of the arbitrators  shall be allocated  between the disputing
party  and the  other  party  to the  dispute  in the same  proportion  that the
disputed items so submitted to the arbitrators that are unsuccessfully  disputed
by each (as finally  determined by the arbitrators) bears to the total amount of
all disputed items so submitted. Notwithstanding any provision of this Agreement
to the  contrary,  (i) any party shall be entitled to seek a judicial  order for
interim  relief to the extent  necessary to safeguard  the property  that is the
subject matter of an arbitration  proceeding  hereunder,  and (ii) judgment upon
the award rendered in any arbitration proceeding hereunder may be entered in any
court having jurisdiction or application may be made to such court in a judicial
acceptance  of the award and an order by  enforcement,  as the case may be.  The
parties  hereto agree that the  arbitrators  appointed  pursuant to this Section
12.8 shall have the power to grant  equitable  relief,  including  temporary and
permanent injunctive relief and specific performance.

                 12.9 Severability.  Whenever  possible,  each provision of this
Agreement  will be interpreted in such manner as to be effective and valid under
the  applicable  law,  but if any  provision  of  this  Agreement  is held to be
prohibited  by  or  invalid  under   applicable  law,  such  provision  will  be
ineffective  only to the  extent  of such  prohibition  or  invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

                 12.10     Counterparts.  This Agreement may be executed in one 
or more counterparts, all of which taken together will constitute one and the
same instrument.

                 12.11 Interpretation.  This Agreement has been fully negotiated
by the parties through their legal counsel.  Accordingly,  in interpreting  this
Agreement,  the rule of the interpretation requiring that documents be construed
against the draftsman shall be inapplicable.

                 12.12 Notices.  All notices,  requests and other communications
to any party hereunder shall be in writing and shall be given or made (and shall
be deemed to have been duly given or made upon  receipt)  by delivery in person,
by courier  service,  by cable,  by  facsimile  transmission,  by telegram or by
registered or certified mail (postage prepaid,  return receipt requested) to the
respective  parties at the  following  addresses (or at such other address for a
party as shall be specified in a notice  given in  accordance  with this Section
12.12):

                              if to Shareholder
                              or the Company, to:

                                                  Siemens Medical Systems, Inc.
                                                  186 Wood Avenue South
                                                  Iselin, NJ 08830
                                                  Facsimile No.: (908) 321-3441
                                                  Attention: Robert V. Dumke and
                                                             David Machlowitz

                           with a copy to:

                                                    Siemens Corporation
                                                    1301 Avenue of the Americas
                                                    New York, NY  10019-6022
                                                    Facsimile No.: (212)258-4945
                                                    Attention:  E. Robert Lupone

                           and

                                                    Shearman & Sterling
                                                    599 Lexington Avenue
                                                    New York, NY  10022
                                                    Facsimile No.: (212)848-7179
                                                    Attention:  Peter D. Lyons

                 if to SJM to:

                                         St. Jude Medical, Inc.
                                         One Lillehei Plaza
                                         St. Paul, Minnesota  55117
                                         Attention: Ronald Matricaria, President
                                                    and Chief Executive Officer
                                         Attention: Diane M. Johnson,
                                                    Vice President and 
                                                     General Counsel



                           with a copy to:        

                                                    Lindquist & Vennum
                                                    4200 IDS Center
                                                    80 South Eighth Street
                                                    Minneapolis, MN  55402
                                                    Attention:  Joel H. Green

                 12.13 Publicity.  Upon execution of this Agreement, the parties
shall  jointly  issue a press  release,  as agreed upon by them.  Neither  party
shall,  without the prior written  consent of the other,  issue any statement or
communication to the public or to the press regarding this Agreement,  or any of
the terms,  conditions or other facts with respect to the  Agreement,  except as
required by law or the rules of any recognized stock exchange.

                 12.14  No  Third  Party  Beneficiary.  The  provisions  of this
Agreement are for the sole benefit of the parties to this  Agreement and are not
for the benefit of any third party.


                                   ARTICLE 13

                                  DEFINITIONS

                 13.1 Definitions. For purposes of this Agreement, the following
terms have the meaning set forth below:

                 "Affiliate" means as to any Person controlling,  controlled by,
or under common control with,  such Person,  any officer,  director or executive
employee of such Person, and any Employee Benefit Plan maintained by such Person
(including, without limitation, related trusts and the fiduciaries thereof).

                 "Affiliated  Group"  means an  affiliated  group as  defined in
Section 1504 of the Code (or any  analogous  combined,  consolidated  or unitary
group defined under state, local or foreign income tax law) of which the Company
is or has been a member.

                 "Assets" shall have the meaning given to it in Section 1.1(a).

                 "Assumption  Agreement"  means the  Assumption  Agreement to be
executed by SJM and the Sellers on the Closing Date substantially in the form of
Exhibit 3.3.7

                 "Assumed  Liabilities"  shall have the  meaning  given to it in
Section 1.2(a).

                 "Bill of Sale"  means  the  Bill of Sale and  Assignment  to be
executed by the Sellers on the Closing Date substantially in the form of Exhibit
3.2.8A.

                 "Business"  means  the  research,  development,  manufacturing,
marketing,   assembly,   sales,  maintenance  and  service  of  Current  Cardiac
Stimulation  Devices by the Company and the  Subsidiaries  and shall exclude all
Prior Business.

                 "Business  Day" means any day that is not a Saturday,  a Sunday
or a day on which banks are  required or  permitted to be closed in the State of
New York. For purposes of Section 2.2 and 3.1, "Business Day" also means any day
that is not a  Saturday,  a Sunday or a day on which  banks are  required  to be
closed in the Kingdom of Sweden.

                 "Cardiac  Stimulation  Devices" means devices for  electrically
stimulating  or  shocking  the  heart and  internal  (but not  external)  holter
monitors which, in each case, are suitable for use by human patients, including,
without   limitation:    cardiac   pacemakers,    antitachycardia    pacemakers,
cardioverters  and  defibrillators,   including  combinations  thereof,  whether
implantable or not; pulse  generators  and other waveform  generators  specially
designed  for,  and used with,  such  devices;  leads,  electrodes  and  sensors
specially  designed for, and used with,  such devices;  mechanisms  designed for
coupling such generators in a stimulating,  shocking or sensing  relationship to
the heart;  data dispensing,  processing and gathering systems designed for such
devices, including programmers,  pacing system analyzers,  defibrillation system
analyzers,  testers, encoders,  decoders,  transmitters,  receivers and computer
software-controlled  systems (including the software) specially designed for use
with or as part of such devices.

                 "Cash  Consideration"  shall  have the  meaning  given to it in
Section 2.1.

                 "Closing" shall have the meaning given to it in Section 3.1.

                 "Closing  Balance  Sheet" shall have the meaning given to it in
Section 2.2.2.

                 "Closing  Date" shall have the  meaning  given to it in Section
3.1.

                 "COBRA  Obligation"  means  the  obligation  imposed  upon  any
Company Employee Benefit Plan to meet the requirements of Section 4980(B) of the
Code,  Part  6 of  Title  1 of  ERISA  or any  applicable  state  law  requiring
continuation coverage.

                 "Code" means the Internal Revenue Code of 1986, as amended.

                 "Commitments" shall have the meaning given to it in Section4.6.

                 "Company Employee Benefit Plan" shall have the meaning given it
in Section 4.10.5.

                 "Company  401(k)  Plan" has the meaning  given to it in Section
7.1.2(c).

                 "Competitive  Products"  shall have the meaning  given to it in
Section 7.4.3.

                 "Controlled  Group"  shall  have  the  meaning  given  to it in
Section 4.10.5.

                 "Current Cardiac Stimulation Devices" means Cardiac Stimulation
Devices as are under research or development, or manufactured or marketed by the
Company, the Shareholder Affiliate and the Subsidiaries at the Closing Date.

                 "Deal Balance Sheet" shall have the meaning given to it in 
Section 4.2.

                 "Deeds"  means the deeds to be  executed  by the Company on the
Closing  Date  substantially  in the form of  Exhibit  3.2.8B in order to convey
title to SJM or an SJM Affiliate of each parcel of Owned Real Property.

                 "Designated  Amount"  shall  have  the  meaning  given to it in
Section 2.2.3.

                 "Employee"  shall  have  the  meaning  given  to it in  Section
4.10.5.

                 "Employee  Benefit  Plan" shall have the meaning given to it in
Section 4.10.5.

                 "Employee  Pension Benefit Plan" has the meaning given to it in
Section 4.10.5.

                 "Employee Welfare Benefit Plan" shall have the meaning given to
it in Section 4.10.5.

                 "Environmental  Laws"  shall  have the  meaning  given to it in
Section 4.12.1(a).

                 "ERISA" has the meaning given to it in Section 4.10.5.

                 "Escrow  Agent"  shall have the meaning  given to it in Section
2.2.7.

                 "Escrow  Agreement"  shall  have  the  meaning  given  to it is
Section 2.2.7.

                 "Excluded Assets" shall have the meaning given to it in Section
1.1(b).

                 "Excluded  Liabilities"  shall have the meaning  given to it in
Section 1.2(b).


                 "Executive Arrangements" has the meaning given to it in Section
7.3.1.

                 "FDA" shall have the meaning given to it in Section 4.3.11.

                 "Financial  Statements"  shall have the meaning  given to it in
Section 4.2.

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

                 "knowledge"  means, with respect to the Company,  the knowledge
of the following  persons:  G. Jaensch,  M. Novack,  R. Sandler,  P. Palmer,  J.
Aldrich,  and D. Morley and, with respect to any other company, the knowledge of
the executive officers of such company.

                 "Known Environmental Condition" shall have the meaning given to
it in Section 4.12.2.

                 "Liabilities"   means  any  and  all  debts,   liabilities  and
obligations,  whether  accrued or fixed,  absolute or  contingent  or matured or
unmatured.

                 "License  Agreement" means the License Agreement,  dated August
26, 1992, between Siemens AG and Medtronics, Inc.

                 "Lien"  means  any  mortgage,   claim,  lien,  pledge,  charge,
security  interest,  option,  preemptive right,  assessment,  security interest,
restriction on transfer or encumbrance of any kind.

                 "Litigation" means any claim, action, suit or proceeding in any
court or before any arbitrator or governmental body, agency or official.

                 "Losses" means any and all  Liabilities,  obligations,  duties,
demands, claims, actions, causes of action, assessments, losses, costs, damages,
deficiencies, taxes, fines or expenses, including, without limitation, interest,
penalties,  reasonable  attorneys'  fees and all amounts paid in  investigation,
defense or  settlement  of any of the  foregoing;  provided,  however,  that the
foregoing shall not include consequential damages.

                 "Material  Adverse  Effect"  means any change in, or effect on,
the  Business as currently  conducted  that is, or is  reasonably  likely to be,
materially adverse to the operations, results of operations, assets or financial
condition of the Business,  taken as a whole, except for such changes or effects
that are the result of changes in general  economic  conditions  or changes that
generally affect the industry in which the Business is operated.

                 "Medtronics  Assignment"  shall have the meaning given to it in
Section 3.2.7.

                 "Multiemployer  Plan"  shall  have the  meaning  given to it in
Section 4.10.5.

                 "Net  Book  Value"  means  the  assets  minus  the  liabilities
reflected on the applicable balance sheet, as adjusted.

                 "Non-Disclosure  Agreement"  shall have the meaning given to it
in Section 6.5.

                 "Non-U.S.  Asset Purchase  Agreement"  means the Asset Purchase
Agreement  dated as of June 26,  1994 among St.  Jude  Medical  Inc.,  St.  Jude
Medical International, Inc. and Siemens-Elema AB.

                 "PBGC" shall have the meaning given to it in Section 4.10.2(a).

                 "Permits" shall have the meaning given to it in Section 4.8.

                 "Permitted  Liens" mean (i) Liens for inchoate  mechanics'  and
materialmen's  liens for  construction  in progress and workmen's,  repairmen's,
warehousemen's  and  carriers'  liens  arising  in the  ordinary  course  of the
Business which in the aggregate  have a value of less than $100,000,  (ii) Liens
for Taxes not yet payable and for Taxes being contested in good faith, and (iii)
Liens and  imperfections  of title the  existence of which would not  materially
affect  the use of the  property  subject  to such  lien,  consistent  with past
practice.

                 "Person"   means   any   individual,    sole    proprietorship,
partnership,  joint venture, trust, unincorporated  association,  corporation or
other such entity or government  (whether  domestic,  foreign,  Federal,  state,
county, city or otherwise,  including,  without limitation, any instrumentality,
division, agency or department thereof).

                 "Post-Closing  Litigation  Losses"  means all Losses  resulting
from any Litigation against the Company or the Business that are not Pre-Closing
Litigation Losses.

                 "Post-Closing  Products  Liability  Losses"  means  any  Losses
resulting from any product liability claims for Products  implanted or otherwise
used with a patient on,  before or after the Closing  Date arising from a death,
injury,  explant  or other  similar  occurrence  happening  or  alleged  to have
happened after the Closing Date.

                 "Pre-Closing Litigation Losses" means any Losses resulting from
any Litigation  pending or threatened against the Company or the Business on the
Closing Date.

                 "Pre-Closing   Products  Liability  Losses"  means  any  Losses
resulting from any product liability claims for Products  implanted or otherwise
used with a patient on or before the Closing Date arising from a death,  injury,
explant or other similar occurrence  happening or alleged to have happened on or
before the Closing Date.

                 "Pre-Closing  Tax Period" shall have the meaning given to it in
Section 7.2.3.

                 "Prior Business" means the research, development,  manufacture,
marketing,  assembly,  sales,  maintenance  and  service of Cardiac  Stimulation
Devices by each of the Company and the Subsidiaries or the Shareholder Affiliate
which has taken place and has been discontinued by the Company, the Subsidiaries
or the Shareholder Affiliate prior to the date hereof.

                 "Products" shall have the meaning given to it in Section 
4.13.1.

                 "Property"  shall  have  the  meaning  given  to it in  Section
4.12.1(c).

                 "Property  Taxes" shall have the meaning given to it in Section
7.2.3.

                 "Regulated  Substances"  shall have the meaning  given to it in
Section 4.12.1(b).

                 "Reportable  Event" shall have the meaning given to it in ERISA
Section 4043.

                 "Retained Litigation" means the Wilson class action suit.

                 "Rules" shall have the meaning given to it in Section 12.8.

                 "Sellers" has the meaning given to it in Section 1.1.

                 "Settlement  Agreement"  means the Settlement  Agreement  dated
September 9, 1992 between Siemens AG and Medtronics, Inc.

                 "Shareholder  Affiliate"  shall have the meaning given to it in
Section 1.1(a).

                 "Siemens AG" has the meaning given to it in Section 6.13.

                 "SJM's  Accountants"  shall  have  the  meaning  given to it in
Section 2.2.4.

                 "SJM Affiliates"  shall have the meaning given to it in Section
1.1(a).

                 "Straddle Period" shall have the meaning given to it in Section
7.2.3.

                 "Subsidiary"  means any  corporation  of which  the  securities
having a  majority  of the  ordinary  voting  power  in  electing  the  board of
directors are, at the time as of which any determination is being made, owned by
the Company either directly or through one or more Subsidiaries.

                 "Tax" or "Taxes"  means with respect to any person any federal,
state,  county,  local or foreign  income,  gross  receipts,  profits,  capital,
franchise,  estimated,  alternative minimum, add-on minimum,  estimated,  sales,
use, occupancy, transfer, registration, value added, ad valorem, excise, natural
resources, severance, stamp, occupation, premium, windfall profit, environmental
(including taxes under Section 59A of the Code), customs,  duties,  levies, real
property,  personal  property,  capital stock,  mercantile,  social security (or
similar),  unemployment,  disability,  payroll, license, employment, employee or
other withholding,  or other tax,  governmental fee or like assessment or charge
of any kind whatsoever, including any interest, penalties or additions to tax or
additional  amounts in respect of the  foregoing,  whether  disputed  or not and
whether  computed on a separate,  consolidated,  unitary,  combined or any other
basis;  the foregoing shall include any transferee or secondary  liability for a
Tax and any  liability  assumed by agreement or arising as a result of being (or
ceasing to be) a member of any Affiliated  Group (or being included (or required
to be  included)  in any Tax  Return  relating  thereto)  or as a result  of any
spin-off, distribution or other reorganization related to the disposition of any
assets  or  business  of the  Company  or any other  member  of the  Shareholder
Consolidated Group.

                 "Tax Returns" means  returns,  amendments,  statements,  forms,
information,  elections,  declarations,  reports, claims for refund, information
returns or other  documents  (including  any  related or  supporting  schedules,
statements or information)  filed or required to be filed in connection with the
determination,  assessment  or  collection  of any  Taxes  of any  party  or the
administration of any laws, regulations or administrative  requirements relating
to any Taxes.

                 "U.S. GAAP" shall have the meaning given to it in Section 
2.2.2.

                 IN WITNESS  WHEREOF,  the  parties  hereto have  executed  this
Agreement as of the date first written above.

                                                    ST. JUDE MEDICAL, INC.

                                 By  /s/ Ronald A. Matricaria 
                                         Ronald A. Matricaria 
                                     Its: President and Chief Executive Officer

                                 SJM ACQUISITION CORP.

                                 By  /s/ Ronald A. Matricaria 
                                     Ronald A Matricaria 
                                     Its: President and Chairman

                                 SIEMENS-PACESETTER, INC.

                                 By  /s/ Guenter Jaensch
                                     Guenter Jaensch
                                     Its: Chairman and Chief Executive Officer

                                 By /s/ Michael E. Novack
                                    Michael E. Novack
                                    Its:  Executive Vice President and Chief
                                          Financial Officer

                                 SIEMENS MEDICAL SYSTEMS, INC.

                                 By  /s/ Robert V. Dumke
                                     Robert V. Dumke
                                     Its:  President and Chief Executive Officer

                                 By /s/ David Machlawitz
                                    David Machlawitz
                                    Its: Secretary


                            ASSET PURCHASE AGREEMENT

                                     AMONG

                            ST. JUDE MEDICAL, INC.,

                             SJM ACQUISITION CORP.,

                            SIEMENS-PACESETTER, INC.

                                      AND

                         SIEMENS MEDICAL SYSTEMS, INC.

                                  dated as of

                                 June 26, 1994









                               TABLE OF CONTENTS



                                   ARTICLE 1

                               TRANSFER OF ASSETS


1.1 Assets to Be Sold                         1
1.2 Assumption and Exclusion of Liabilities   5
1.3 Transfer Documentation and Possession     6


                                   ARTICLE 2

                                 CONSIDERATION

2.1 Consideration                   6
2.2 Cash Consideration Adjustment   6
2.3 Allocation of Purchase Price    9


                                   ARTICLE 3

                                    CLOSING

3.1 The Closing                                 10
3.2 Deliveries of Shareholder and the Company   10
3.3 Deliveries of SJM                           11
3.4 Further Documents                           12


                                   ARTICLE 4

                 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
                                AND THE COMPANY

4.1 Authority; Organization, Capitalization 
    and Qualification; Effect of Agreement  12
4.2 Financial Statements                    14
4.3 Absence of Certain Developments         14
4.4 Title to Personal Property and Assets   17
4.5 Patents, Trademarks and Copyrights      17
4.6 Commitments                             18
4.7 Litigation                              19
4.8 Compliance with Laws; Permits           19
4.9 Governmental Consents                   20
4.10 Employee Benefit Plans                 20
4.11 Employees                              24
4.12 Environmental Matters; OSHA            25
4.13 Company Products; Regulation           27
4.14 Tax Matters                            28
4.15 Material Obligations                   28
4.16 Brokerage                              29
4.17 Affiliated Transactions                29
4.18 Insurance                              29
4.19 Real Property                          29
4.20 Inventory                              32
4.21 Accounts and Notes Receivable          32


                                   ARTICLE 5

                     REPRESENTATIONS AND WARRANTIES OF SJM

5.1 Corporate Power and Authority; Effect of Agreement   32
5.2 Consents                                             33
5.3 Availability of Funds                                34
5.4 Litigation                                           34
5.5 Brokerage                                            34
5.6 Certain Ownership Interests                          34


                                   ARTICLE 6

                                   COVENANTS

6.1 Cooperation                                  34
6.2 Conduct of Business                          35
6.3 Intercompany Indebtedness                    36
6.4 Access                                       36
6.5 Non-Disclosure Agreement                     38
6.6 Antitrust, Competition Law Filings           38
6.7 Non-Foreign Person Affidavit                 38
6.8 Transfer of Real Property                    38
6.9 Certain Dividends                            39
6.10 Certain Actions Prior to the Closing Date   39
6.11 Claims History                              39
6.12 FDA Recertification                         39
6.13 Grant of License                            39
6.14 Other Financial Statements                  40


                                   ARTICLE 7

                              ADDITIONAL COVENANTS

7.1 Liability for Employee Benefit Plans   40
7.2 Tax Matters                            42
7.3 Liability for Executive Arrangements   47
7.4 Non-Competition                        48
7.5 Non-Solicitation                       49
7.6 Siemens Name                           49
7.7 Confidentiality                        49
7.8 Bulk Sales Laws                        49
7.9 Guarantee                              49
7.10 Real Estate Inspections               50
7.11 Real Estate Related Reports           50


                                   ARTICLE 8

                        CONDITIONS TO SJM'S OBLIGATIONS


8.1 Representations, Warranties and
Covenants of Shareholder and the Company   50
8.2 No Prohibition                         51
8.3 Deliveries                             51
8.4 No Material Adverse Effect             51
8.5 HSR Compliance                         51
8.6 Other Governmental Approvals           51
8.7 Non-U.S. Asset Purchase Agreement      51


                                  ARTICLE 9

                          CONDITIONS TO SHAREHOLDER'S
                         AND THE COMPANY'S OBLIGATIONS

9.1 Representations, Warranties and Covenants of SJM   51
9.2 No Prohibition                                     52
9.3 Deliveries                                         52
9.4 HSR Compliance                                     52
9.5 Other Governmental Approvals                       52
9.6 Non-U.S. Asset Purchase Agreement                  52


                                   ARTICLE 10

                      INDEMNIFICATION AND RELATED MATTERS

10.1 Survival                                           52
10.2 Indemnification by Shareholder                     52
10.3 Indemnification by SJM                             53
10.4 Determination of Damages and Related Matters       53
10.5 Limitation on Indemnification Liabilities          54
10.6 Notice of Indemnification                          54
10.7 Indemnification Procedure for Third-Party Claims   54


                                   ARTICLE 11

                          TERMINATION PRIOR TO CLOSING

11.1 Termination                   55
11.2 Effect of Termination         55


                                   ARTICLE 12

                                 MISCELLANEOUS

12.1 Entire Agreement              56
12.2 Amendment; Waiver             56
12.3 Assignment                    56
12.4 Headings; Usage               56
12.5 Cooperation                   57
12.6 Expenses                      57
12.7 Governing Law                 57
12.8 Disputes                      57
12.9 Severability                  58
12.10 Counterparts                 58
12.11 Interpretation               58
12.12 Notices                      58
12.13 Publicity                    60
12.14 No Third Party Beneficiary   60


                                   ARTICLE 13

                                  DEFINITIONS

13.1 Definitions                                                              60


3.2.1      Form of Shareholder Officers' Certificates

3.2.2      Form of Opinions of Counsel for Shareholder and the Company

3.2.4      Form of Medtronics Assignment and Assumption Agreement

3.2.8A     Form of Bill of Sale and Assignment

3.2.8B     Form of Deed

3.2.10     Form of Canadian Transitional Services Agreement

3.3.2      Form of SJM Officer's Certificate

3.3.3      Form of Opinion of Counsel for SJM

3.3.7      Form of Assumption Agreement