EXHIBIT 10.7 SCS LICENSE AGREEMENT

EXHIBIT 10.7

SCS LICENSE AGREEMENT

This SCS License Agreement (the "Agreement"), which is agreed to be effective as hereinafter provided, is by and between St. Jude Medical, Inc., a Minnesota corporation having its principal place of business at One Lillehei Plaza, St. Paul, Minnesota, 55117 ("St. Jude"), and Boston Scientific Corporation, a Delaware corporation having its principal place of business at One Boston Scientific Place, Natick Massachusetts, 01760-1537 ("BSC").

RECITALS

A.           Advanced Bionics Corporation ("ABS"), a wholly-owned subsidiary of BSC and Advanced Neuromodulation Systems, Inc. ("ANS"), a wholly-owned subsidiary of St. Jude, are adverse parties in the following currently pending litigation matters (collectively referred to as the "SCS Cases"):

• • • • 1)    Advanced Neuromodulation Systems, Inc. v. Advanced Bionics Corporation , Civil Action No. 4:04cv131 (E.D. Tex);

        2)    Advanced Bionics Corporation v. Advanced Neuromodulation System, Inc. , Civil Action No. 4:04cv131 (E.D. Tex.); and

        3)   the arbitration proceeding before the International Institute for Conflict Prevention and Resolution, Case No. G-06-08A.

         

B.           St. Jude and BSC and certain of their respective Affiliates are engaged in, inter alia , the design, development, manufacture, and sale of devices for spinal cord stimulation.

C.           St. Jude and BSC and certain of their respective Affiliates own or hold certain rights in the Patents-In-Suit.

D.          Pursuant to a Settlement Agreement dated July 29, 2006, St. Jude and BSC have agreed to terminate the SCS Cases in return for, inter alia , the granting of certain rights by and between St. Jude and BSC concerning the Patents-In-Suit (the "Settlement Agreement").

Now therefore, in consideration of the covenants and agreements set forth herein and the Settlement Agreement, pursuant to which a number of additional cases between St. Jude and BSC are either resolved or limited in scope, and for valuable consideration receipt of which is hereby acknowledged, St. Jude and BSC mutually agree as follows:

ARTICLE I

Definitions of Certain Terms

For the purposes of this Agreement, the following terms shall have the meaning specified below. Whenever used in the Agreement, "include," "includes," and "including" shall be deemed to be followed by "without limitation," whether or not it is followed by such words.

Section 1.01 . Affiliate . "Affiliate" means any person or entity that controls or is controlled by or is under common control with St. Jude or BSC on the Effective Date or at any time thereafter. For purposes of this Section 1.01, ownership, directly or indirectly, of more than fifty percent (50%) of the capital stock or other comparable ownership interest of the corporation or entity carrying the right to vote for or appoint directors or their equivalent (if not a corporation) shall constitute control thereof. "Affiliate" of a third party means a person or entity that controls, is controlled by, or under common control with, such third party.

Section 1.02 . Patents-In-Suit . "Patents-In-Suit" means U.S. Patent Nos. 6,516,227; 6,381,496; 6,216,045; 6,154,678; and 4,793,353.

Section 1.03 . BSC Licensed Patents .

(a)          "BSC Licensed Patents" means U.S. Patent Nos. 6,516,227 and 6,381,496, including all divisionals, continuations, continuations-in-part, reissues, reexaminations and foreign counterparts, except as set forth in Section 1.03(c), below.

(b)          Without limiting the foregoing, the term "BSC Licensed Patents" specifically includes, but is not limited to, all present patents and patent applications listed on Exhibit A of this Agreement. BSC believes that Exhibit A is a complete listing of its U.S. patents and patent applications within the foregoing definition of BSC Licensed Patents which are in existence as of the Effective Date, and any errors, overinclusions, or omissions from Exhibit A will be deemed to be inadvertent and not a material breach. Present foreign patents and patent applications, including foreign counterparts of U.S. patents and patent applications listed on Exhibit A, have intentionally not been included in Exhibit A but are deemed to be BSC Licensed Patents if they are covered by the foregoing definition in this Section 1.03.

(c)          Notwithstanding the foregoing, the term "BSC Licensed Patents" specifically excludes the following:

• • (3)          any patent claim with priority based on U.S. Patent Nos. 6,516,227 or 6,895,280 that claims multiple independent current sources for generating independently-controlled stimulus currents on multiple electrodes, thereby having the equivalent function to the device as claimed in any of the claims excluded pursuant to sub-sections (1) and (2), above.

Section 1.04 . St. Jude Licensed Patents .

(a)          "St. Jude Licensed Patents" means U.S. Patent Nos. 6,154,678 and 4,793,353, including all divisionals, continuations, continuations-in-part, reissues, reexaminations and foreign counterparts.

(b)          "St. Jude Licensed Patents" also means U.S. Patent No. 6,216,045, including all divisionals, continuations, continuations-in-part, reissues, reexaminations, and foreign counterparts, for use in the SCS Field and excludes any use outside of the SCS Field.

(c)          Without limiting the foregoing, the term "St. Jude Licensed Patents" specifically includes, but is not limited to, all present patents and patent applications listed on Exhibit A of this Agreement. St. Jude believes that Exhibit A is a complete listing of its U.S. patents and patent applications within the foregoing definition of St. Jude Licensed Patents which are in existence as of the Effective Date, and any errors, overinclusions, or omissions from Exhibit A will be deemed to be inadvertent and not a material breach. Present foreign patents and patent applications, including foreign counterparts of U.S. patents and patent applications listed on Exhibit A, have intentionally not been included in Exhibit A but are deemed to be St. Jude Licensed Patents if they are covered by the foregoing definition in this Section 1.04.

Section 1.05 . SCS Field . "SCS Field" shall mean spinal cord stimulation to treat or manage chronic pain of the trunk and limbs.

Section 1.06 . Effective Date . "Effective Date" shall mean July 29, 2006.

ARTICLE II

Cross License

Section 2.01 . License . Subject to the terms, conditions, and limitations set forth herein:

(a)          St. Jude grants (and will cause its Affiliates to grant) to BSC and its Affiliates a non-exclusive, irrevocable, perpetual, fully paid-up (except for royalties due to a third party, if any) worldwide license or sublicense, as the case may be, without the right to sublicense, under the St. Jude Licensed Patents to make, have made, use, sell, have sold, offer for sale, distribute, have distributed, and otherwise dispose of products, including supplying or causing to be supplied components thereof for use therein, and further including importing products, or components thereof for use therein, into any jurisdiction where St. Jude Licensed Patents are effective and which are manufactured in accordance with a method of any St. Jude Licensed Patent.

(b)          BSC grants (and will cause its Affiliates to grant) to St. Jude and its Affiliates a non-exclusive, irrevocable, perpetual, fully paid-up (except for royalties due to a third party, if any) worldwide license or sublicense, as the case may be, without the right to sublicense, under the BSC Licensed Patents to make, have made, use, sell, have sold, offer for sale, distribute, have distributed, and otherwise dispose of products, including supplying or causing to be supplied components thereof for use therein, and further including importing products, or components thereof for use therein, into any jurisdiction where BSC Licensed Patents are effective and which are manufactured in accordance with a method of any BSC Licensed Patent.

(c)          If any party has products made for it under the above license grant, such products must bear its or one of its Affiliates’ trade names or trademarks; however, such products may bear third-party trade names or trademarks for materials or components used in such products.

(d)          The licenses granted in this Section 2.01 shall be irrevocable except for the specific exceptions described in the change of control situations contemplated by provisions of Section 9.02 below.

Section 2.02 . Regarding OEM Activities . The licenses granted or to be granted under this Article II shall not be used in such a way as to manufacture products on an original equipment manufacturer ("OEM") basis for any person or entity other than St. Jude and its Affiliates or BSC

and its Affiliates. The licenses granted or to be granted under this Article II shall apply to and for the benefit of products manufactured by a party to this Agreement for a third party who is licensed under the appropriate patents of the other party to this Agreement where, and to the extent that, the third party’s license permits such third party to "have made" such products for such third party. Nothing in this Agreement shall preclude the use of the licenses granted or to be granted under this Article II by a party or its Affiliate for the purpose of having products manufactured by a third party on an OEM basis for such party or its Affiliate; provided, however, that such products must bear the trademark or trade name of such party or its Affiliate. Notwithstanding the foregoing, such products may bear third-party trade names or trademarks for materials or components used in such products.

Section 2.03 . Certain Conditions, Limitations and Understandings . The licenses and sublicenses granted under this Agreement are expressly made subject to the following conditions, limitations and understandings:

(a)          The licenses are personal to the parties hereto, and are nonassignable and nontransferable, except as set forth in Section 9.02 below.

(b)          The parties and their Affiliates shall have the right, in their sole and absolute discretion, to control the maintenance, abandonment, extension, and licensing of their own patents including the BSC Licensed Patents and St. Jude Licensed Patents; provided however, that no such license or other transfer of interest shall in any manner abridge the rights of the other party granted under this Agreement.

(c)          The owner of a BSC Licensed Patent or St. Jude Licensed Patent shall have the right to enforce, or not to enforce, such patents in its sole and absolute discretion against all persons and organizations other than a party or Affiliate of a party hereto.

(d)          The licenses granted herein shall not extend to any technical know-how or design information, manufacturing, marketing, and/or processing information or know-how, designs, drawings, mask works, specifications, software source code, algorithms, clinical data, or other documents directly or indirectly pertinent to the use of the BSC Licensed Patents or St. Jude Licensed Patents, or to the use of any trademarks or trade names, service marks, or software copyrights or other copyrights (including copyright registrations) of any party, and the parties acknowledge that there is no obligation upon any party or its Affiliates to provide such information, know-how, designs, drawings, mask works, specifications, software source code, algorithms, clinical data, or other documents.

(e)          Except as otherwise expressly provided in this Agreement, all licenses are granted for the life of the covered patents.

(f)           All licenses and sublicenses required to be granted by Affiliates under this Agreement shall be subject to the terms and conditions set forth in this Agreement.

(g)          Any assignment or other transfer by a party or its Affiliate of that entity’s interest in (i) a BSC Licensed Patent or (ii) a St. Jude Licensed Patent shall be made subject to the rights of the other party and its Affiliates under this Agreement.

(h)          Any license extended to an Affiliate shall continue only so long as "Affiliate" status is maintained, or as permitted pursuant to the other party’s consent.

ARTICLE III

Representations, Warranties and Limitations

Section 3.01 . Certain Representations and Warranties .

(a)          Each party represents and warrants to the other party as follows and acknowledges that each of the following representations and warranties has been relied upon by the other party and is material to the other party’s decision to enter into the Agreement: each party hereto has the requisite power and authority, corporate and otherwise, to execute and perform the Agreement, to grant the licenses and sublicenses provided for herein, and, except as provided in this Section 3.01, to cause such party’s Affiliates to execute and perform the Agreement and to grant the licenses and sublicenses provided for herein.

(b)          To the extent that a party shall lack the requisite authority to cause an Affiliate of such party to execute or perform this Agreement or to grant the licenses or sublicenses as provided in this Agreement, then such party shall defend, indemnify, and hol