Exhibit 10.28

 

EXECUTION COPY

 

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TRANSACTION AGREEMENT

 

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Between

 

BOSTON SCIENTIFIC CORPORATION

 

and

 

ABBOTT LABORATORIES

 

Dated as of January 8, 2006

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I

 

DEFINITIONS

 

 

 

 

SECTION 1.01. Certain Defined Terms

 

1

SECTION 1.02. Definitions

 

5

 

 

 

ARTICLE II

 

PURCHASE AND SALE

 

 

 

 

SECTION 2.01. Purchase and Sale of the Business

 

6

SECTION 2.02. Assumption and Exclusion of Liabilities

 

7

SECTION 2.03. Purchase Price; Allocation of Purchase Price

 

8

SECTION 2.04. Milestone Payments

 

9

SECTION 2.05. Closing

 

9

 

 

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF BOSTON SCIENTIFIC

 

 

 

 

SECTION 3.01. Organization, Authority and Qualification

 

9

SECTION 3.02. No Conflict

 

10

SECTION 3.03. Governmental Consents and Approvals

 

10

SECTION 3.04. Litigation

 

10

SECTION 3.05. Certain Regulatory Matters

 

10

SECTION 3.06. Brokers

 

10

SECTION 3.07. Disclaimer

 

10

 

 

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF ABBOTT

 

 

 

 

SECTION 4.01. Organization and Authority of Abbott

 

11

SECTION 4.02. No Conflict

 

11

SECTION 4.03. Governmental Consents and Approvals

 

11

SECTION 4.04. Litigation

 

12

SECTION 4.05. Brokers

 

12

SECTION 4.06. Disclaimer

 

12

 

 

 

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

 

 

 

SECTION 5.01. Conduct of Business; Merger Agreement

 

12

SECTION 5.02. Representations and Warranties in Purchase Agreement

 

12

SECTION 5.03. Access to Information; Confidentiality

 

12

SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents

 

13

SECTION 5.05. Notifications

 

15

 

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SECTION 5.06. Release of Indemnity Obligations

 

15

SECTION 5.07. Supply Arrangements

 

15

SECTION 5.08. License and Technology Transfer Agreement

 

17

SECTION 5.09. Transition Services

 

22

SECTION 5.10. Abbott Loan

 

23

SECTION 5.11. Tax Election

 

24

SECTION 5.12. Insurance

 

24

SECTION 5.13. Further Action

 

24

SECTION 5.14. Timing of Transactions

 

25

SECTION 5.15. Other Agreements

 

25

 

 

 

ARTICLE VI

 

EMPLOYEE MATTERS

 

 

 

 

SECTION 6.01. Transferred Employees

 

26

SECTION 6.02. Employee Benefits

 

26

SECTION 6.03. General Matters

 

29

SECTION 6.04. Mutual Non-Solicitation

 

29

 

 

 

ARTICLE VII

 

TAXES

 

 

 

SECTION 7.01. Apportionment

 

30

SECTION 7.02. Tax Return Filing and Amendment

 

30

SECTION 7.03. Resolution of Tax Controversies

 

30

 

 

 

ARTICLE VIII

 

CONDITIONS TO CLOSING

 

 

 

 

SECTION 8.01. Conditions to Obligation of Boston Scientific

 

31

SECTION 8.02. Conditions to Obligation of Abbott

 

32

 

 

 

ARTICLE IX

 

TERMINATION

 

SECTION 9.01. Termination

 

33

SECTION 9.02. Effect of Termination

 

33

 

 

 

ARTICLE X

 

INDEMNIFICATION

 

 

 

SECTION 10.01. Survival of Representations and Warranties

 

33

SECTION 10.02. Indemnification by Boston Scientific

 

34

SECTION 10.03. Indemnification by Abbott

 

34

SECTION 10.04. Limits on Indemnification

 

35

SECTION 10.05. Notice of Loss; Third Party Claims

 

35

 

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ARTICLE XI

 

GENERAL PROVISIONS

 

 

 

SECTION 11.01. Expenses

 

36

SECTION 11.02. Notices

 

36

SECTION 11.03. Public Announcements

 

37

SECTION 11.04. Severability

 

37

SECTION 11.05. Entire Agreement

 

38

SECTION 11.06. Assignment

 

38

SECTION 11.07. Amendment

 

38

SECTION 11.08. Waiver

 

38

SECTION 11.09. No Third Party Beneficiaries

 

38

SECTION 11.10. Other Remedies; Specific Performance

 

38

SECTION 11.11. Interpretive Rules

 

39

SECTION 11.12. Governing Law

 

39

SECTION 11.13. Waiver of Jury Trial

 

39

SECTION 11.14. Counterparts

 

40

 

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TRANSACTION AGREEMENT, dated as of January 8, 2006 (this “Agreement”), between
BOSTON SCIENTIFIC CORPORATION, a Delaware corporation (“Boston Scientific”), and
ABBOTT LABORATORIES, an Illinois corporation (“Abbott”).

 

WHEREAS, Boston Scientific intends to make an offer to acquire all of Guidant
Corporation, an Indiana corporation (“Guidant”), on the terms and conditions set
forth in a proposed Agreement and Plan of Merger (the “Merger Agreement”) among
Boston Scientific, Galaxy Merger Sub, Inc., an Indiana corporation and a wholly
owned subsidiary of Boston Scientific (“Sub”), and Guidant;

 

WHEREAS, Guidant, directly and through its Affiliates, is engaged in, among
other things, the vascular intervention and endovascular solutions businesses
(such businesses of Guidant and its Affiliates, collectively, the “Business”) at
various locations around the world;

 

WHEREAS, subject to Boston Scientific’s and Guidant’s entry into the Merger
Agreement and either the satisfaction or (to the extent permitted by law) waiver
of the conditions to the parties’ obligations to close the transactions
contemplated by the Merger Agreement or the acquisition by Boston Scientific of
Guidant pursuant to the Merger Agreement, Boston Scientific wishes to sell, or
cause to be sold, to Abbott and/or one or more of its Affiliates (collectively,
the “Purchaser”), and Purchaser wishes to purchase from Boston Scientific or
Guidant, all right, title and interest in and to all assets of the Business, and
in connection therewith Purchaser is willing to assume certain liabilities
relating thereto, all upon the terms and subject to the conditions set forth
herein and in the other definitive agreements to be negotiated by the parties;
and

 

WHEREAS, in connection with the purchase and sale of the Business contemplated
by this Agreement, Boston Scientific and Abbott will enter into a Purchase
Agreement (the “Purchase Agreement”) and the other Definitive Agreements (as
defined herein) containing terms and conditions consistent with this Agreement.

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

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

 

“Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person; provided,
however that TAP Pharmaceutical Products, Inc. (“TAP”)and its subsidiaries shall
be deemed not to be Affiliates of Abbott, but

 

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only for so long as Abbott (either directly or indirectly) owns fifty percent or
less of the voting stock of TAP (or its subsidiaries) or does not otherwise have
control of TAP (or its subsidiaries). For purposes of this Agreement, with
respect to all periods following consummation of the Merger or the transactions
contemplated by this Agreement, as applicable, “Affiliate” shall include,
(i) with respect to Boston Scientific, Guidant and its Affiliates following the
Merger, (ii) with respect to Abbott, any Person to be acquired pursuant to this
Agreement, and (iii) with respect to each party hereto, any Person resulting
from any internal reorganization, provided such resulting Person is an
Affiliate.

 

“Business Day” means any day that is not a Saturday, a Sunday or other day on
which banks are required or authorized by Law to be closed in The City of New
York.

 

“Carotid Stent Assets” means the Assets related to the research, development,
manufacture, distribution, marketing and sale of carotid stent systems,
including embolic protection devices.

 

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

 

“control” (including the terms “controlled by” and “under common control with”),
with respect to the relationship between or among two or more Persons, means the
possession, directly or indirectly or as trustee, personal representative or
executor, of the power to direct or cause the direction of the affairs or
management of a Person, whether through the ownership of voting securities, as
trustee, personal representative or executor, by contract, credit arrangement or
otherwise.

 

“Definitive Agreements” means the Purchase Agreement, the Supply Agreements, the
License and Technology Transfer Agreement, the Transition Services Agreement,
the Note, the release and/or settlement agreement in respect of Actions between
Boston Scientific and/or its Affiliates and Guidant and/or its Affiliates
relating to the Business to the extent contemplated herein and such other
agreements as may be mutually agreed between the parties.

 

“DES Intellectual Property” means all Intellectual Property included in the
Assets, including Intellectual Property available to Guidant pursuant to
agreements with third parties and subject to the terms of those agreements, that
is used in Guidant’s drug eluting stent system program having a priority date
prior to, or otherwise existing as of, the date of the Closing, including
Intellectual Property relating to the bare metal and bioabsorbable stents,
drugs, polymers and delivery systems used with respect to such drug eluting
stent systems.

 

“DES Stents” means the everolimus eluting stent system in development by Guidant
or its Affiliates at the time of the Closing, as approved by applicable
Governmental Authorities, including the FDA, and any improvements or iterations
thereof approved for sale during the term of the applicable supply arrangements
and of the type that could be approved by a supplement to an approved PMA rather
than requiring a new PMA if such DES Stent were to be sold in the United States.

 

“Existing DES Stents” means the drug eluting stent system in development by
Guidant or its Affiliates between the date of Closing and the later of the date
on which a DES

 

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Stent is approved for sale in Europe and the date on which a DES Stent is
approved for sale in the United States.

 

“FDA” means the United States Food and Drug Administration.

 

“Governmental Authority” means any United States federal, state or local or any
non-United States government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.

 

“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

“Intellectual Property” means all intellectual property rights of any kind,
including rights in, to and concerning (a) patents, patent applications and
statutory invention registrations, including divisionals, continuations,
continuations-in-part, re-issues and re-examinations thereof, (b) trademarks,
service marks, trade dress, logos, trade names, corporate names and other source
identifiers, registrations and applications for registration thereof, including
all extensions, modifications and renewals of same, (c) published and
unpublished works of authorship and copyrights therein, and copyright
registrations and applications for registration thereof and all renewals,
extensions, restorations and reversions thereof, (d) software, data, databases
and compilations of information, and (e) confidential and proprietary
information, inventions, formulas, processes, developments, technology,
research, trade secrets and know-how.

 

“IRS” means the Internal Revenue Service of the United States.

 

“J&J Merger Agreement” means the Amended and Restated Agreement and Plan of
Merger, dated as of November 14, 2005, among Johnson & Johnson, Shelby Merger
Sub, Inc. and Guidant or any amended or successor agreement thereof.

 

“Knowledge” means, when used in connection with a Person with respect to any
matter in question, the actual knowledge of the Person’s executive officers
after making due inquiry of the current employees having primary responsibility
for such matter.

 

“Law” means any United States federal, state, local or non-United States
statute, law, ordinance, regulation, rule, code, order, other requirement or
rule of law.

 

“Liabilities” means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including those arising under any Law, Action or Governmental
Order and those arising under any contract, agreement, arrangement or
undertaking (but excluding any performance obligations under any such contracts,
agreements, arrangements or undertakings).

 

“Material Adverse Effect” means any change, effect, event, occurrence, state of
facts or development which individually or in the aggregate would reasonably be
expected to

 

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result in any change or effect, that is materially adverse to the business,
financial condition or results of operations of the Business, taken as a whole;
provided, however, that none of the following shall be deemed, either alone or
in combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Material Adverse
Effect: (A) any change, effect, event, occurrence, state of facts or development
(1) in the financial or securities markets or the economy in general, (2) in the
industries in which the Business operates in general, to the extent that such
change, effect, event, occurrence, state of facts or development does not
disproportionately impact the Business, or (3) resulting from any divestiture
that may be required to be effected pursuant to the terms of this Agreement, or
(B) any failure, in and of itself, by the Business to meet any internal or
published projections, forecasts or revenue or earnings predictions (it being
understood that the facts or occurrences giving rise or contributing to such
failure may be deemed to constitute, or be taken into account in determining
whether there has been or would reasonably be expected to be, a Material Adverse
Effect).

 

“Merger” means the merger pursuant to the Merger Agreement.

 

“Novartis Agreement” means the Everolimus Local Delivery License Agreement
(Exclusive), dated September 17, 2002, by and between Novartis Pharma AG and
Novartis AG, both Swiss corporations, and Advanced Cardiovascular Systems, Inc.,
a California corporation, on behalf of itself and its affiliates, as amended
and/or supplemented from time to time.

 

“Person” means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization, joint venture or other
entity.

 

“PMA” means an application submitted to the FDA to obtain pre-market approval
with respect to the safety and effectiveness of devices, which approval is
required under Section 515 of the Medical Device Amendments of 1976 to the
Federal Food, Drug, and Cosmetic Act.

 

“Pre-Closing Tax Period” means any taxable period (or portion thereof) ending on
or prior to the Closing.

 

“Regulations” means the Treasury Regulations (including temporary regulations)
promulgated by the United States Department of Treasury with respect to the Code
or other federal tax statutes.

 

“Restricted Persons” means the Persons listed on Schedule 1.01 attached hereto
or any of their Affiliates.

 

“Straddle Period” means any taxable period beginning before Closing and ending
after the Closing.

 

“Tax” or “Taxes” means any and all taxes, levies, duties, tariffs and similar
charges in the nature of a tax (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed by
any Governmental Authority or taxing authority, including taxes on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, share capital, capital stock, payroll, employment, social
security, workers’ compensation, unemployment compensation, or net worth; taxes
in the

 

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nature of excise, withholding, ad valorem, stamp, transfer, value added, or
gains taxes; license, registration and documentation fees; and customs’ duties,
and tariffs.

 

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

 

“Transferred Subsidiary” means any direct or indirect subsidiary of Guidant
acquired by way of stock purchase pursuant to this Agreement.

 

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

 

Definition

 

Location

 

 

 

“Abbott”

 

Preamble

“Agreement”

 

Preamble

“Allocation”

 

2.03(b)

“Allocation Accounting Firm”

 

2.03(b)

“ASP”

 

5.07(h)

“Assets”

 

2.01(a)

“Assumed Liabilities”

 

2.02(a)

“Business”

 

Recitals

“Closing”

 

2.05

“Confidentiality Agreement”

 

5.03(b)

“EU Merger Regulation”

 

3.03

“EVT”

 

2.01(b)(iii)

“Excluded Assets”

 

2.01(b)

“Excluded Businesses”

 

2.01(b)(iii)

“Excluded Liabilities”

 

2.02(b)

“First DES Stent”

 

5.08(m)

“Guidant”

 

Recitals

“Guidant CIC Plans”

 

6.03(b)

“Initial Purchase Price”

 

2.03(a)

“License and Technology Transfer Agreement”

 

5.08(a)

“Loss”

 

10.02

“Merger Agreement”

 

Recitals

“Milestone Payment”

 

2.04

“Mixed Account”

 

5.09(d)

“Mixed Contract”

 

5.09(c)

“Non-U.S. Business Employee”

 

6.01(b)

“Non-U.S. Transferred Employee”

 

6.01(b)

“Note”

 

5.10(a)

“Purchaser”

 

Preamble

“Purchase Price”

 

2.03(a)

“Settlement Agreement”

 

5.08(1)

 

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Definition

 

Location

 

 

 

“Shared Asset”

 

2.01(b)(ii)

“Shares”

 

2.01(a)

“Supply Agreements”

 

5.07(a)

“Territory”

 

5.07(a)

“Third Party Claim”

 

10.05(b)

“Transferred Employees”

 

6.01(b)

“Transition Services Agreement”

 

5.09(a)

“U.S. Business Employee”

 

6.01(a)

“U.S. Transferred Employee”

 

6.01(a)

 

ARTICLE II

 

PURCHASE AND SALE

 

SECTION 2.01. Purchase and Sale of the Business. (a) Upon the terms and subject
to the conditions of this Agreement, at the Closing, Boston Scientific shall
sell, convey, assign and transfer, or cause Guidant and/or its Affiliates to
sell, convey, assign and transfer, to Purchaser all the assets (including, where
applicable, stock or other equity interests of subsidiaries of Guidant
(“Shares”)), rights, properties and business of every kind and description and
wherever located, whether tangible or intangible, real, personal or mixed, that
are used primarily in, or related primarily to (with “primarily” being
determined by taking into account revenues, assets, personnel, registrations and
other relevant factors), the Business (together with, to the extent available,
the right to bring an Action for the infringement or other violation thereof
prior to the Closing and the right to recover and retain all damages or proceeds
therefrom) (the “Assets”), and Purchaser shall purchase the Assets; provided,
however, that, subject to Section 5.11, at Abbott’s election (which shall be
exercised as promptly as practicable after the date hereof), the Assets of any
subsidiaries of Guidant, the assets of which are used primarily in, or related
primarily to, the Business, may be purchased by Purchaser by purchasing Shares
rather than the applicable Assets, in which case the parties shall cooperate
with respect to the transfer from such subsidiaries of any assets that are not
Assets, any Liabilities that are not Assumed Liabilities and any employees who
are not Transferred Employees. For the purposes of this Agreement, references to
the Business shall be deemed to include the Assets and the Shares if the context
so requires.

 

(b) Notwithstanding anything in Section 2.01(a) to the contrary, Purchaser shall
not purchase, and the Assets shall not include, any right, title and interest in
or to any of the following assets (the “Excluded Assets”):

 

(i)                                     all cash and cash equivalents,
securities (other than the Shares, if any) and negotiable instruments on hand,
in lock boxes, in financial institutions or elsewhere, including any cash
residing in any collateral cash account securing any obligation or contingent
obligation;

 

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(ii)                                  subject to Sections 5.08(h) and 5.09, any
right, property or asset used both in the Business and in any other business of
Guidant (a “Shared Asset”) that is both (1) not used primarily in, or related
primarily to, the Business, and (2) that is not reasonably capable of being
transferred with the Assets;

 

(iii)                               all businesses of Guidant and its
subsidiaries not included in the Business, including the cardiac rhythm
management, endovascular repair and cardiac surgery businesses, the capital
stock and equity interests of Endovascular Technologies, Inc., a Delaware
corporation (“EVT”), or any subsidiary thereof or any assets of EVT or any
subsidiary thereof, and including all rights of Guidant, EVT and any other
Guidant subsidiary with respect to the ANCURE ENDOGRAFT System (collectively,
the “Excluded Businesses”); and

 

(iv)                              all assets of any employee or independent
contractor compensation or benefit plan, program or arrangement that is
maintained or contributed to by Guidant, Boston Scientific or any of their
respective Affiliates (other than a stand-alone plan, program or arrangement
that is sponsored by a Transferred Subsidiary and covers primarily employees of
the Business) and that is not transferred to Purchaser or its Affiliate pursuant
to Article VI.

 

(c) Boston Scientific and Abbott will share all rights, benefits and obligations
associated with investments by Guidant or any of its Affiliates in other Persons
(other than Affiliates of Guidant) engaged in the vascular interventional or
endovascular solutions businesses, and, prior to the Closing, each of Boston
Scientific and Abbott will use its reasonable best efforts to identify such
investments and to agree on a mechanism for sharing such rights, benefits and
obligations.

 

SECTION 2.02. Assumption and Exclusion of Liabilities. (a) Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, Purchaser
shall assume, and agree to pay, perform and discharge when due, any and all of
the Liabilities to the extent relating to the Business or the Assets, other than
the Excluded Liabilities set forth in Section 2.02(b) below (the “Assumed
Liabilities”).

 

(b) After the Closing, Boston Scientific and/or its Affiliates shall retain (or,
if necessary, expressly assume), and shall be responsible for paying, performing
and discharging when due, and Purchaser shall not assume (by succession,
transfer or assignment or otherwise) or have any responsibility for, any of the
following Liabilities (the “Excluded Liabilities”):

 

(i)                                     all Liabilities to the extent relating
to or arising out of the Excluded Assets;

 

(ii)           all Liabilities to the extent relating to or arising out of
assets or businesses of Boston Scientific, Guidant or any of their Affiliates
that are not included in the Assets or related to the Business;

 

(iii)          all Liabilities (1) (A) arising from death or personal injury
relating to, resulting from, caused by or arising out of, directly or
indirectly, the ANCURE ENDOGRAFT System used in the treatment of abdominal
aortic aneurysms, including

 

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any such Liabilities for negligence, strict liability, design or manufacturing
defect, conspiracy, failure to warn, or breach of express or implied warranties
of merchantability or fitness for any purpose or use, or (B) otherwise relating
to such System, (2) arising from defibrillator product recalls and any related
litigation, or (3) arising from any Guidant shareholder litigation with respect
to or arising out of the transactions pursuant hereto or the J&J Merger
Agreement;

 

(iv)          except as provided in Section 6.02(f), all Liabilities (including
all claims arising out of any death, accident, disease or injury occurring on or
before the Closing, whether asserted before or after the Closing) relating to or
arising from any employee or independent contractor compensation or benefit
plan, program or arrangement that is maintained or contributed to by Guidant,
Boston Scientific or any of its or their respective Affiliates (other than a
stand-alone plan, program or arrangement that is sponsored by a Transferred
Subsidiary and covers primarily employees of the Business) and that is not
transferred to Purchaser or its Affiliate pursuant to Article VI; and

 

(v)                                 all indebtedness for borrowed money.

 

SECTION 2.03. Purchase Price; Allocation of Purchase Price. (a) Abbott shall
pay, or cause the applicable Purchaser to pay, an aggregate purchase price for
the Assets equal to the sum of (i) an amount in cash equal to $3,800,000,000
(the “Initial Purchase Price”), (ii) the Milestone Payments, and (iii) the
Assumed Liabilities (collectively, the “Purchase Price”). The Initial Purchase
Price shall be paid at the Closing by wire transfer in immediately available
funds to a bank account designated by Boston Scientific not fewer than three
Business Days prior to the date of the Closing.

 

(b)                                 Within 20 days of the execution by Boston
Scientific of the Merger Agreement, Abbott shall provide Boston Scientific with
a proposed allocation of the Purchase Price among the Asset categories (the
“Allocation”) for Boston Scientific’s review and comment. For purposes of the
Allocation, Asset categories shall consist of the following two classes:
(i) Assets located or owned in the United States, and (ii) Assets located or
owned outside of the United States. If Boston Scientific does not provide any
comments to Abbott in writing within 20 days following delivery by Abbott of the
proposed Allocation, then the Allocation proposed by Abbott shall be deemed to
be final and binding, absent manifest error. If, however, Boston Scientific
submits comments to Abbott within such 20-day period, Abbott and Boston
Scientific shall negotiate in good faith to resolve any differences within 20
days of such submission. If Boston Scientific and Abbott are unable to reach a
resolution within such 20 day period, then all remaining disputed items shall be
submitted for resolution by an internationally-recognized, independent
accounting firm mutually selected by Abbott and Boston Scientific (the
“Allocation Accounting Firm”), which shall make a final determination as to the
disputed items within 20 days after such submission, but in no event later than
20 days following the closing of the Merger, and such determination shall be
final and binding on Boston Scientific and Abbott. The fees and disbursements of
the Allocation Accounting Firm shall be shared equally between Boston Scientific
and Abbott. Any subsequent adjustments to the Purchase Price shall be reflected
in the Allocation in a manner consistent with Section 1060 of the Code and the
Regulations thereunder. For all Tax purposes, Abbott and Boston Scientific agree
that the transactions contemplated by this Agreement shall be reported in a
manner consistent with the

 

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terms of this Agreement, including the Allocation, and that neither of them will
take any position inconsistent therewith in any Tax Return, in any refund claim,
in any litigation, or otherwise.

 

SECTION 2.04. Milestone Payments. In addition to the Initial Purchase Price,
within three Business Days following the first date of the achievement of the
following events, Abbott shall pay to Boston Scientific the following payments
(each, a “Milestone Payment”) by wire transfer in immediately available funds to
a bank account designated by Boston Scientific (or, if notice of such
designation is received by Abbott later than three Business Days following such
first date, the applicable payment shall be made within three Business Days
following receipt of such designation): (a) a single, one-time payment in cash
equal to $250,000,000, upon and subject to the condition that Abbott or any of
its Affiliates or designees has received approval from the FDA to market and
sell an everolimus eluting stent in the United States on or before the tenth
anniversary of the Closing, and (b) a single, one-time payment in cash equal to
$250,000,000, upon and subject to the condition that Abbott or any of its
Affiliates or designees has received approval from the Ministry of Health,
Labour and Welfare of Japan to market and sell an everolimus eluting stent in
Japan on or before the tenth anniversary of the Closing. Total Milestone
Payments shall not exceed $500,000,000.

 

SECTION 2.05. Closing. Subject to the terms and conditions of this Agreement and
the Purchase Agreement, the sale and purchase of the Business and the assumption
of the Assumed Liabilities contemplated by this Agreement and the Purchase
Agreement shall take place at a closing (the “Closing”) to be held at the
offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York at
10:00 a.m., New York time, on the second Business Day following the satisfaction
or waiver of the conditions to the obligations of the parties hereto set forth
in Article VIII, or at such other place or at such other time or on such other
date as Boston Scientific and Abbott may mutually agree upon in writing.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES
OF BOSTON SCIENTIFIC

 

Boston Scientific hereby represents and warrants to Purchaser as follows:

 

SECTION 3.01. Organization, Authority and Qualification. Boston Scientific is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the State of Delaware and has all necessary corporate power and
authority to enter into, execute and deliver this Agreement, to carry out its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Boston Scientific, the
performance by Boston Scientific of its obligations hereunder and the
consummation by Boston Scientific of the transactions contemplated hereby have
been duly authorized by all requisite corporate action on the part of Boston
Scientific. This Agreement has been duly executed and delivered by Boston
Scientific, and, assuming due authorization, execution and delivery by Abbott,
this Agreement is a legal, valid and binding obligation of Boston Scientific,
enforceable against it in accordance with its terms.

 

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SECTION 3.02. No Conflict. Assuming that all consents, approvals, authorizations
and other actions described in Section 3.03 have been obtained and any
applicable waiting period has expired or been terminated, and except as may
result from any facts or circumstances relating solely to Purchaser, the
execution, delivery and performance of this Agreement by Boston Scientific do
not and will not (a) violate, conflict with or result in the breach of the
certificate of incorporation or by laws (or similar organizational documents) of
Boston Scientific, (b) conflict with or violate any Law or Governmental Order
applicable to Boston Scientific, or (c) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to
others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other instrument or
arrangement to which Boston Scientific is a party, except, in the case of
clauses (b) and (c), as would not materially and adversely affect the ability of
Boston Scientific to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement.

 

SECTION 3.03. Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement by Boston Scientific do not and will not require
any consent, approval, authorization or other order of, action by, filing with
or notification to, any Governmental Authority, except (a) the requirements of
the applicable Council Regulation of the European Union, as amended (the “EU
Merger Regulation”), and, to the extent applicable, the requirements of the HSR
Act and the antitrust Laws of any other relevant jurisdiction, or (c) as may be
necessary as a result of any facts or circumstances relating solely to Purchaser
or any of its Affiliates.

 

SECTION 3.04. Litigation. As of the date hereof, no Action by or against Boston
Scientific is pending or, to the Knowledge of Boston Scientific, threatened,
that could affect the legality, validity or enforceability of this Agreement or
the consummation of the transactions contemplated hereby.

 

SECTION 3.05. Certain Regulatory Matters. Except for the Subpoena Regarding the
Matter of Investigation of Guidant Corporation from the State of California
Department of Justice, Office of the Attorney General, to the actual knowledge
of the individuals listed on Schedule 3.05 attached hereto, as of the date of
this Agreement, there is no pending or threatened demand letter or Governmental
Order outstanding or any investigation by any Governmental Authority involving
the Business or Guidant or its subsidiaries that, individually or in the
aggregate, has had or would reasonably be expected to have, a Material Adverse
Effect.

 

SECTION 3.06. Brokers. Boston Scientific will be solely responsible for the fees
and expenses of any broker, finder or investment banker entitled to any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Boston Scientific.

 

SECTION 3.07. Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE III OR AS MAY BE
SET FORTH IN ANY DEFINITIVE AGREEMENT, NONE OF BOSTON SCIENTIFIC, ITS AFFILIATES
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES
MAKE OR HAVE MADE ANY

 

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OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
RESPECT OF GUIDANT, ITS AFFILIATES OR THE BUSINESS. ANY SUCH OTHER
REPRESENTATION OR WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

OF ABBOTT

 

Abbott hereby represents and warrants to Boston Scientific as follows:

 

SECTION 4.01. Organization and Authority of Abbott. Abbott is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Illinois and has all necessary corporate power and authority to enter into,
execute and deliver this Agreement, to carry out its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Abbott, the performance by Abbott of its obligations
hereunder and the consummation by Abbott of the transactions contemplated hereby
have been duly authorized by all requisite corporate action on the part of
Abbott. This Agreement has been duly executed and delivered by Abbott, and,
assuming due authorization, execution and delivery by Boston Scientific, this
Agreement is a legal, valid and binding obligation of Abbott enforceable against
it in accordance with its terms.

 

SECTION 4.02. No Conflict. Assuming compliance with the HSR Act, the pre-merger
notification and waiting period requirements of the EU Merger Regulation and the
making and obtaining of all filings, notifications, consents, approvals,
authorizations and other actions referred to in Section 4.03, the execution,
delivery and performance by Abbott of this Agreement do not and will not
(a) violate, conflict with or result in the breach of any provision of the
certificate of incorporation or bylaws (or similar organizational documents) of
Abbott, (b) conflict with or violate any Law or Governmental Order applicable to
Abbott or its respective assets, properties or businesses or (c) conflict with,
result in any breach of, constitute a default (or event which with the giving of
notice or lapse of time, or both, would become a default) under, require any
consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any note, bond,
mortgage or indenture, contract, agreement, lease, sublease, license, permit,
franchise or other instrument or arrangement to which Abbott is a party, except,
in the case of clauses (b) and (c), as would not materially and adversely affect
the ability of Abbott to carry out its obligations under, and to consummate the
transactions contemplated by, this Agreement.

 

SECTION 4.03. Governmental Consents and Approvals. The execution, delivery and
performance by Abbott of this Agreement do not and will not require any consent,
approval, authorization or other order of, action by, filing with, or
notification to, any Governmental Authority, except (a) the requirements of the
EU Merger Regulation and, to the extent applicable, the requirements of the HSR
Act and the antitrust Laws of any other relevant jurisdiction, or (b) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent or materially delay the
consummation by Purchaser of the transactions contemplated by this Agreement.

 

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SECTION 4.04. Litigation. As of the date hereof, no Action by or against Abbott
is pending or, to the Knowledge of Abbott, threatened, that could affect the
legality, validity or enforceability of this Agreement or the consummation of
the transactions contemplated hereby.

 

SECTION 4.05. Brokers. Abbott will be solely responsible for the fees and
expenses of any broker, finder or investment banker entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Purchaser.

 

SECTION 4.06. Disclaimer. EXCEPT AS SET FORTH IN THIS ARTICLE IV OR AS MAY BE
SET FORTH IN ANY DEFINITIVE AGREEMENT, NONE OF ABBOTT, ITS AFFILIATES OR ANY OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR REPRESENTATIVES MAKE OR HAVE
MADE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN
EQUITY, IN RESPECT OF ABBOTT OR ITS AFFILIATES. ANY SUCH OTHER REPRESENTATION OR
WARRANTY IS HEREBY EXPRESSLY DISCLAIMED.

 

ARTICLE V

 

ADDITIONAL AGREEMENTS

 

SECTION 5.01. Conduct of Business; Merger Agreement. (a) Except as may otherwise
be agreed between Boston Scientific and Abbott, from the date of execution of
the Merger Agreement until the earlier of the termination of the Merger
Agreement or the closing date under the Merger Agreement, Boston Scientific will
enforce its rights under the Merger Agreement with respect to, and will not
waive, amend or agree to amend, any provisions of the Merger Agreement relating
to, the Business.

 

(b) Boston Scientific has given Abbott an opportunity to review a draft of the
Merger Agreement. The Merger Agreement, if any, entered into by Boston
Scientific and Guidant, insofar as it relates to the Business, shall be the same
in all material respects, as such draft.

 

SECTION 5.02. Representations and Warranties in Purchase Agreement. The Purchase
Agreement shall include representations and warranties (i) by Boston Scientific
and Abbott, on behalf of themselves and each of their respective subsidiaries or
Affiliates (to the extent party to a Definitive Agreement) substantially similar
to those set forth in Articles III and IV hereto relating to the Definitive
Agreements to which such Person is a party and the transactions contemplated
thereby, and (ii) by Boston Scientific regarding the Business that are
substantially similar in scope and substance to the representations and
warranties of Guidant contained in the Merger Agreement, except that with
respect thereto, any qualifications or exceptions as to materiality, material
adverse effect or similar qualifiers or exceptions shall refer to materiality
with respect to or effects on the Business as opposed to effects on Guidant and
its subsidiaries, taken as a whole.

 

SECTION 5.03. Access to Information; Confidentiality. (a) From the date hereof
until the Closing, upon reasonable notice, Boston Scientific shall use its
reasonable best

 

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efforts to cause Guidant to: (a) afford Purchaser and its authorized
representatives reasonable access to the offices, properties and books and
records of the Business, and (b) furnish to the officers, employees, and
authorized agents and representatives of Purchaser such additional financial and
operating data and other information regarding the Business (or copies thereof)
as Purchaser may from time to time reasonably request; provided, however, that
any such access or furnishing of information shall be conducted at Purchaser’s
expense, during normal business hours, under the supervision of Boston
Scientific’s or its Affiliates’ personnel and in such a manner as not to
interfere with the normal operations of the Business. Notwithstanding anything
to the contrary in this Agreement, Boston Scientific shall not be required to
request that Guidant disclose any information to Purchaser if such disclosure
would be reasonably likely to (x) cause significant competitive harm to the
Business if the transactions contemplated hereby are not consummated, (y)
jeopardize any attorney-client or other legal privilege or (z) contravene any
applicable Laws, fiduciary duty or binding agreement entered into prior to the
date hereof.

 

(b) The terms of the letter agreement dated as of December 17, 2005 (the
“Confidentiality Agreement”) between Boston Scientific and Abbott are hereby
incorporated herein by reference and shall continue in full force and effect
until the Closing, at which time such Confidentiality Agreement and the
obligations of Abbott under this Section 5.03(b) shall terminate; provided,
however, that, from and after the Closing, except as would have been permitted
under the terms of the Confidentiality Agreement, (i) Abbott shall, and shall
cause its officers, directors, employees, representatives and Affiliates to,
treat and hold as confidential, and not disclose to any Person, information
related to the discussions and negotiations between the parties regarding this
Agreement and the transactions contemplated hereby and all confidential
information relating to Boston Scientific and the Excluded Businesses, and
(ii) Boston Scientific shall, and shall cause its officers, directors,
employees, representatives and Affiliates to, treat and hold as confidential,
and not disclose to any Person, information related to the discussions and
negotiations between the parties regarding this Agreement and the transactions
contemplated hereby and all confidential information relating to the Assets and
the Business. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall nonetheless continue in full force
and effect.

 

(c) Nothing provided to Abbott pursuant to Section 5.03(a) shall in any way
amend or diminish Abbott’s obligations under the Confidentiality Agreement.
Abbott acknowledges and agrees that any Evaluation Material provided to Abbott
pursuant to Section 5.03(a) or otherwise by or on behalf of Guidant, Boston
Scientific or any officer, director, employee, agent, representative, accountant
or counsel thereof shall be subject to the terms and conditions of the
Confidentiality Agreement.

 

SECTION 5.04. Regulatory and Other Authorizations; Notices and Consents.
(a) Each of Boston Scientific and Abbott shall use its reasonable best efforts
to obtain, and, to the extent necessary, Boston Scientific will use its
reasonable best efforts to cause Guidant to obtain, promptly all authorizations,
consents, orders and approvals of all Governmental Authorities that may be or
become necessary for the performance of its and the other party’s obligations
pursuant to, and the consummation of the transactions contemplated by, this
Agreement. Boston Scientific and Abbott will cooperate with one another in
promptly seeking to obtain all such authorizations, consents, orders and
approvals; provided, however, that neither Boston Scientific nor Guidant shall
be required to pay any fees or other payments to any such

 

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Governmental Authorities in order to obtain any such authorization, consent,
order or approval (other than normal filing fees that are imposed by Law on
Boston Scientific or Guidant). Neither Boston Scientific nor Abbott shall
knowingly take any action that would have the effect of materially delaying,
impairing or impeding the receipt of any authorizations, consents, orders and
approvals of any Governmental Authority; provided, however, that in no way shall
reasonable and timely negotiations in good faith by Abbott with any applicable
Governmental Authority relating to the sale, license or other disposition or
holding separate (through the establishment of a trust or otherwise) of Assets
or assets or property of Abbott requested or required by such Governmental
Authority in order to obtain such authorization, consent, order or approval be
deemed to constitute an act materially delaying, impairing, or impeding the
receipt of authorizations, consents, orders and approvals of such Governmental
Authority. Boston Scientific and Abbott each agree to make, or to cause to be
made, (i) if required, an appropriate filing of a notification and report form
pursuant to the HSR Act and the EU Merger Regulation and (ii) any other filing
or notification required by any other applicable Law, in each case, with respect
to the transactions contemplated by this Agreement as promptly as practicable
after the date of this Agreement in the case of the HSR Act and the EU Merger
Regulation, and as promptly as reasonably practicable in the case of any other
filing or notification, and to supply promptly any additional information and
documentary material that may be requested pursuant to the HSR Act and the EU
Merger Regulation or any other applicable Law.

 

(b) Without limiting the generality of Abbott’s undertaking pursuant to
Section 5.04(a), Abbott shall, on a reasonable and timely basis consistent with
Section 5.04(a): (i) propose, negotiate, commit to and effect, by consent
decree, hold separate orders or otherwise, the sale, divestiture or disposition
of the Carotid Stent Assets, Abbott’s carotid stent assets or any other assets
not material to the Business or the Assets, or (ii) if a Governmental Authority
does not allow Abbott to acquire the Carotid Stent Assets (for purposes of
divestiture or otherwise), agree to exclude the Carotid Stent Assets from the
Assets. If the Carotid Stent Assets are excluded from the Assets, then (x)
Boston Scientific shall engage an investment banking firm selected by, or
satisfactory to, Abbott and on terms reasonably satisfactory to Abbott to sell
the Carotid Stent Assets within a reasonable period of time following the
Closing or as otherwise directed by the applicable Governmental Authorities, (y)
Boston Scientific shall remit all of the proceeds of such sale (net of Taxes and
the costs and expenses paid by Boston Scientific and any of its Affiliates in
connection with such sale) to Abbott, and (z) Abbott shall use its reasonable
best efforts to effect the separation of the Carotid Stent Assets from the
Assets, including entering into appropriate transition services or similar
agreements with Boston Scientific or any other Person to which the Carotid Stent
Assets are divested. For all Tax purposes, the parties agree to treat all
remittances of proceeds pursuant to this Section 5.04(b)(y) as adjustments to
the Purchase Price.

 

(c) Each party to this Agreement shall promptly notify the other party of any
communication it or any of its Affiliates receives from any Governmental
Authority relating to the matters that are the subject of this Agreement and
permit the other party to review in advance any proposed communication by such
party to any Governmental Authority. Neither party to this Agreement shall agree
to participate in any meeting with any Governmental Authority in respect of any
filings, investigation or other inquiry related to the transactions contemplated
by this Agreement unless it consults with the other party in advance and, to the
extent permitted by such Governmental Authority, gives the other party the
opportunity to attend and participate at

 

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such meeting. Subject to the Confidentiality Agreement, the parties to this
Agreement will coordinate and cooperate fully with each other in exchanging such
information and providing such assistance as the other party may reasonably
request in connection with the foregoing and in seeking early termination of any
applicable waiting periods including under the HSR Act and the EU Merger
Regulation. Subject to the Confidentiality Agreement, the parties to this
Agreement will provide each other with copies of all correspondence, filings or
communications between them or any of their representatives, on the one hand,
and any Governmental Authority or members of its staff, on the other hand, with
respect to this Agreement and the transactions contemplated by this Agreement.

 

SECTION 5.05. Notifications. Each party hereto shall promptly notify the other
party in writing of any fact, change, condition, circumstance or occurrence or
nonoccurrence of any event of which it is aware that will or is reasonably
likely to result in (a) any representation or warranty made by such party to be
untrue or inaccurate in any material respect at any time after the date of this
Agreement and prior to the Closing, (b) any material failure on such party’s
part to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder, and (c) the failure of any condition
precedent set forth in Article VIII of this Agreement; provided, however, that
the delivery of any notice pursuant to this Section 5.05 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice. In addition, Boston Scientific shall promptly (i) notify Abbott in
writing upon the occurrence of any event that will or is reasonably likely to
result in the termination of the Merger Agreement, and (ii) to the extent
permitted, forward copies of any notices received or delivered by Boston
Scientific pursuant to the Merger Agreement that materially affect the Business,
the Assets, Purchaser’s rights with respect thereto or the likelihood of
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof or of the Merger pursuant to the Merger Agreement.

 

SECTION 5.06. Release of Indemnity Obligations. Boston Scientific and Abbott
will cooperate with each other with a view to entering into arrangements
effective as of the Closing whereby Purchaser would be substituted for Guidant
or its Affiliates in any guarantees, letters of comfort, indemnities or similar
arrangements entered into by Guidant or its Affiliates in respect of the
Business (but only to the extent such guarantees, letters of comfort,
indemnities or arrangements constitute Assumed Liabilities). If Purchaser cannot
enter into such arrangements, Boston Scientific shall cause Guidant not to
terminate such guaranty arrangements without Purchaser’s consent; provided,
however, that Purchaser shall enter into a separate guaranty with Guidant or one
of its Affiliates to guarantee the performance of the obligations of the
relevant Person pursuant to the contract underlying such guaranty arrangements.

 

SECTION 5.07. Supply Arrangements. (a) Following the Closing, Abbott will supply
Boston Scientific, on an interim and private label basis, with DES Stents. In
connection with the foregoing obligation, on or prior to the Closing, the
parties will enter into four interim supply agreements, each effective as of the
Closing (collectively, the “Supply Agreements”). Each of the Supply Agreements
shall contain pricing and other terms as provided in this Section 5.07 and other
terms and conditions customary for similar supply agreements and shall cover the
supply of DES Stents in the following territories (one Supply Arrangement for
each territory): United States, Japan, Europe and Rest of World (each, a
“Territory”).

 

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(b) During the term of the supply arrangements, if Boston Scientific
manufactures drug eluting stent systems substantially identical to DES Stents
being supplied by Abbott under the supply arrangements, then Boston Scientific
shall pay to Abbott an amount equal to 40% of the result obtained by subtracting
from the ASP (as defined below), the sum of (A) royalties payable to third
parties by Boston Scientific with respect to such drug eluting stent systems
sold by it, (B) 7% of the ASP, representing Boston Scientific’s variable selling
costs for such drug eluting stent systems, and (C) Boston Scientific’s cost of
manufacturing such drug eluting stent systems, as reported by Boston Scientific
to Abbott on a semiannual basis (subject to audit by a third party reasonably
acceptable to the parties). If Boston Scientific wishes to substitute the
delivery system of a DES Stent being supplied by Abbott under the supply
arrangements, then, at its option, Boston Scientific may either (i) deliver the
substitute component to Abbott for inclusion in DES Stents to be supplied by
Abbott to Boston Scientific, or (ii) manufacture the DES Stents itself, in which
case Boston Scientific shall, during the term of the applicable supply
arrangement, pay to Abbott an amount equal to 40% of the result obtained by
subtracting from the ASP (as defined below), the sum of (A) royalties payable to
third parties by Boston Scientific with respect to the DES Stents sold by it,
(B) 7% of the ASP, representing Boston Scientific’s variable selling costs for
DES Stents, and (C) Boston Scientific’s cost of manufacturing DES Stents, as
reported by Boston Scientific to Abbott on a semiannual basis (subject to audit
by a third party reasonably acceptable to the parties). At the request of Boston
Scientific, Abbott will supply to Boston Scientific at cost any components used
to make DES Stents. Boston Scientific shall reimburse Abbott for any actual
costs associated with changeovers from Abbott to Boston Scientific components
included in the DES Stents.

 

(c) Abbott’s obligation to supply DES Stents to Boston Scientific in the United
States, Europe and Japan shall terminate on the later of (i) December 31, 2010,
and (ii) the date that is one year following the last date on which Boston
Scientific has received all requisite approvals from applicable Governmental
Authorities to sell an everolimus eluting stent on a Boston Scientific stent
platform in the applicable Territory; provided, however, that such obligation
will not terminate on a date that is later than June 30, 2012. Abbott’s
obligation to supply DES Stents to Boston Scientific in the Rest of World shall
terminate on December 31, 2010.

 

(d) If there is a shortage of DES Stents or Abbott’s ability to supply DES
Stents is otherwise constrained, then an equal number of DES Stents by volume
for each product code will be allocated between Abbott and Boston Scientific.

 

(e) Each DES Stent supplied to Boston Scientific will have a remaining shelf
life at the time of delivery at least equal to 50% of the approved shelf life of
such DES Stent.

 

(f) Abbott will use its reasonable best efforts to develop, manufacture and
obtain approvals for, and each of Abbott and Boston Scientific will use its
reasonable best efforts to market and sell, Existing DES Stents during the term
of the applicable supply arrangements in the applicable Territory; provided,
however, that Abbott will not be required to continue to use such efforts to
develop, manufacture and obtain approvals for Existing DES Stents in any
Territory if in Abbott’s reasonable judgment the results of clinical trials with
respect to an Existing DES Stent in such Territory are such that such Existing
DES Stent is unlikely to be approved for marketing and sale by the applicable
Governmental Authority or, if approved, is

 

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unlikely to be competitive with other drug eluting stent systems then being
sold. Nothing contained in this Section 5.07(f) will require Abbott to continue
to use such efforts if Abbott reasonably determines that such action would
result in a product that infringes any Intellectual Property of any Person
(other than Intellectual Property included in the Assets).

 

(g) DES Stents sold by Abbott and Boston Scientific will be separately branded,
priced and marketed.

 

(h) The transfer price paid by Boston Scientific to Abbott for each DES Stent
will be equal to Abbott’s cost of manufacturing such DES Stent, as reported by
Abbott to Boston Scientific on a semiannual basis (subject to audit by a third
party reasonably acceptable to the parties), payable quarterly in arrears, plus
a manufacturing margin on DES Stents sold by Boston Scientific equal to 40% of
the result obtained by subtracting from the average selling price for DES Stents
sold by Boston Scientific (the “ASP”), the sum of (A) royalties payable to third
parties by Boston Scientific with respect to the DES Stents sold by it, (B) 7%
of the ASP, representing Boston Scientific’s variable selling costs for DES
Stents, and (C) Abbott’s cost of manufacturing DES Stents, as reported by Abbott
to Boston Scientific on a semiannual basis (subject to audit by a third party
reasonably acceptable to the parties); provided, however, that if, during any
semiannual period during the term of the supply arrangement, the ASP of the DES
Stent in any Territory is less than $400, then the transfer price for such DES
Stent in such Territory during such period shall instead be equal to Abbott’s
cost of manufacturing such DES Stent, as reported by Abbott to Boston Scientific
on a semiannual basis (subject to audit by a third party reasonably acceptable
to the parties), payable quarterly in arrears, plus a manufacturing margin on
DES Stents sold by Boston Scientific equal to 25% of such cost of manufacturing.

 

(i) Boston Scientific will be required to pay any royalty payments to third
parties required pursuant to any license agreements or arrangements in respect
of any sales by Boston Scientific or its Affiliates of DES Stents. Boston
Scientific will also be required to reimburse Abbott for 50% of all outstanding
developmental milestones payable under Section 7.1 of the Novartis Agreement.
The minimum payments pursuant to Sections 8.4 and 9.4 of the Novartis Agreement
shall be paid by each party in proportion to the net sales of DES Stents sold by
such party during the applicable period.

 

(j) The ASP in a particular Territory will be based on data available from an
independent market research firm acceptable to Abbott and Boston Scientific. If
such independent data is unavailable, then the ASP will be established at the
beginning of each calendar year based on the ASP of DES Stents sold by Boston
Scientific in such Territory during the first six months of the immediately
preceding calendar year (subject to audit by Abbott), with an adjustment at the
end of each six-month period to reflect the actual selling price of DES Stents
during the penultimate six-month period.

 

SECTION 5.08. License and Technology Transfer Agreement. (a) Upon the Closing,
Abbott shall grant to Boston Scientific and its Affiliates, to the fullest
extent permitted by Law and the agreements included in the Assets, a perpetual,
exclusive (except for Abbott and its Affiliates), royalty-free license (with no
right to sublicense other than “have made” rights solely on behalf of Boston
Scientific) to use the DES Intellectual Property (except for trademarks

 

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and related rights, other than as set forth in Section 5.07 or in the Supply
Agreements or as otherwise agreed by the parties). In connection with the
foregoing obligation, on or prior to the Closing Abbott and Boston Scientific
will enter into a License and Technology Transfer Agreement (the “License and
Technology Transfer Agreement”). The license granted pursuant to this
Section 5.08(a) is not assignable by Boston Scientific except in connection with
a merger, change of control, or sale of all or substantially all of Boston
Scientific’s and its Affiliates’ vascular intervention business. Boston
Scientific shall be responsible for all royalties payable by it and its
Affiliates with respect to products sold by Boston Scientific and its Affiliates
using the DES Intellectual Property licensed to Boston Scientific and its
Affiliates pursuant to this Section 5.08. The parties hereby acknowledge that
the spirit of this Section 5.08 and of the License and Technology Transfer
Agreement is that Boston Scientific and its Affiliates will have access to the
DES Intellectual Property as if they were co-owners thereof, including with
respect to Boston Scientific’s ability to supplement Abbott’s PMA for DES
Stents.

 

(b) Within 90 days after the Closing, each of Boston Scientific and Abbott shall
conduct an initial inventory of DES Intellectual Property for purposes of
facilitating the license and technology transfers contemplated by this
Section 5.08. In connection with the foregoing, Abbott shall give Boston
Scientific sufficient access to the Assets and Transferred Employees to enable
it to conduct such an inventory. The parties will cooperate to minimize any
disruption to the Transferred Employees or the Business during such period.

 

(c) From and after the Closing, Abbott will provide Boston Scientific with
(i) copies of, and reasonable access to, all studies, analyses and other
materials relating to pre-clinical work and clinical trial data or information
relating to Existing DES Stents or any other drug eluting stent program in
development by Guidant or its Affiliates at the time of Closing; (ii) copies of
Abbott’s submissions to all Governmental Authorities in connection with
obtaining the requisite approvals to sell Existing DES Stents, (iii) reasonable
access to the appropriate personnel of Abbott for purposes of understanding, and
authorization to use in Boston Scientific’s regulatory filings, Abbott’s
regulatory submissions, data and positions in connection with obtaining
approvals to sell Existing DES Stents, (iv) information, including studies,
analyses and other materials, relating to product performance of Existing DES
Stents, (v) such technology and assistance included in the Assets as is
necessary to enable Boston Scientific to have, within 12 months of the Closing,
a validated manufacturing system sufficient to obtain FDA approval that will
allow Boston Scientific to manufacture Existing DES Stents with yields and
volumes comparable to those being manufactured by Abbott, (vi) the information
and access described in clauses (i), (ii), (iii) and (iv) of this
Section 5.08(c), to the extent related to any improvements or iterations to
Existing DES Stents made prior to receipt of approval to sell such stents in
Japan, and (vii) such assistance and access as is reasonably necessary for
Boston Scientific to benefit fully from the DES Intellectual Property licensed
hereunder or under the License and Technology Transfer Agreement.
Notwithstanding the foregoing, neither Abbott nor its Affiliates will be
required to provide Boston Scientific access to information that does not relate
to DES Intellectual Property, nor shall the provision of information pursuant to
this Section 5.08(c) materially interfere with Abbott’s ability to conduct its
business in the ordinary course. The parties will cooperate to effect the
technology transfers contemplated by this Section 5.08 within 24 months
following the Closing. The information and access described in clauses (i),
(ii), (iii), (iv), (v) and (vii) will terminate on the second anniversary of the
Closing, after which (and during the term of the applicable supply arrangement)
Boston Scientific shall

 

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receive from Abbott such access and information with respect to any improvements
or iterations to DES Stents as are reasonably necessary to allow Boston
Scientific to use the DES Intellectual Property as contemplated by this
Section 5.08.

 

(d) From and after the Closing, Boston Scientific and Abbott will vigorously
defend against any Action by any third party alleging that Existing DES Stents
or DES Stents infringe any Intellectual Property of such third party. From and
after the Closing, the parties will consult with each other with respect to a
strategy for asserting DES Intellectual Property against third parties.

 

(e) From and after the Closing, Boston Scientific will not, on behalf of itself
or its Affiliates, file, initiate, join, maintain or prosecute any Action
against Abbott or any of its Affiliates based on or related to an allegation
that (i) (A) any product that is approved for sale in the US, Europe or Japan,
manufactured by Guidant or any of its Affiliates or for Guidant or any of its
Affiliates by any Person other than a Restricted Person, and sold by Guidant or
any of its Affiliates in commercial quantities as of the Closing, or (B) any
products in human clinical trials as of the Closing manufactured by Guidant or
any of its Affiliates or for Guidant or any of its Affiliates by any Person
other than a Restricted Person, or (ii) any improvement or iteration of any
product described in the preceding clause (i) infringes, misappropriates or
otherwise violates any Intellectual Property owned, controlled or otherwise held
by any of Boston Scientific or any of its Affiliates; provided, however, that
nothing contained in this Section 5.08(e) shall prevent Boston Scientific or any
of its Affiliates from filing, initiating, joining, maintaining or prosecuting
any Action against Abbott or any of its Affiliates based upon an allegation that
any change, including any change in the method of manufacture, to any of the
products described in clause (i) of this Section 5.08(e) infringes,
misappropriates or otherwise violates any Intellectual Property owned,
controlled or otherwise held by any of Boston Scientific or any of its
Affiliates; and provided, further, that with respect to drug eluting stent
systems, such improvement or iteration shall incorporate everolimus as the sole
therapeutic agent as well as the same polymers as are used in the drug eluting
stent system in development by Guidant or its Affiliates as of the Closing. The
covenant not to sue contained in this Section 5.08(e) shall extend only to
suppliers, licensees, distributors and customers of Abbott and its Affiliates
that are not Restricted Persons.

 

(f) From and after the Closing, to the extent Law or any agreement included in
the Assets prevents Abbott from licensing any DES Intellectual Property to
Boston Scientific pursuant to this Section 5.08, Abbott will not, on behalf of
itself or its Affiliates, file, initiate, join, maintain or prosecute any Action
against Boston Scientific or any of its Affiliates based upon an allegation that
any product of Boston Scientific or any of its Affiliates infringes,
misappropriates or otherwise violates any such DES Intellectual Property.

 

(g) Not later than the Closing, Boston Scientific will, on behalf of itself and
its Affiliates, release, acquit and forever discharge Abbott and its Affiliates
of and from any and all pending and potential claims (including all existing
Actions by Boston Scientific and any of its Affiliates) against Guidant or any
of its Affiliates and all demands, actions, suits, debts, liabilities, losses,
attorneys’ fees, expenses, judgments, settlements and other damages, expenses or
costs of whatever nature, whether known or unknown, pending or future, certain
or contingent arising out of, derived from, predicated upon or relating to any
product manufactured by Guidant or any of its Affiliates or for Guidant or any
of its Affiliates by any Person other than a

 

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Restricted Person, approved for sale in the US, Europe or Japan and sold by
Guidant or any of its Affiliates in commercial quantities as of the Closing.

 

(h) The parties recognize the benefit of maintaining their own product identity
in connection with drug-eluting stent products. To this end, the license granted
pursuant to this Agreement shall not extend to or cover “knock-off” products. A
“knock-off” product is one that is developed or acquired after public release of
an earlier product of another party or any of its Affiliates or after knowledge
of an earlier product of another party or any of its Affiliates is otherwise
acquired and is substantially identical to and is intended to imitate the
earlier product. Notwithstanding the foregoing, if Abbott cannot supply Boston
Scientific with DES Stents during the term of the supply arrangements, then
Boston Scientific may, during the period that Abbott is not supplying Boston
Scientific with DES Stents and for 90 days thereafter, make and sell DES Stents
itself, with no obligation to make the payments contemplated by Section 5.07(b).

 

(i) Boston Scientific, on behalf of itself and its Affiliates, shall grant to
Abbott and its Affiliates, as of the Closing, a non-exclusive, royalty-free,
worldwide license under all Intellectual Property owned or, to the extent
permitted by the applicable agreement, licensed to (with the right to
sublicense) or otherwise controlled by, Guidant or any of its Affiliates
immediately prior to the consummation of the Merger that is used in the Business
but is not included in the Assets. The license granted pursuant to this
Section 5.08(i) is not assignable by Abbott except in connection with a merger,
change of control, or sale of all or substantially all of Abbott’s vascular
intervention business. The license will be sublicensable by Abbott to all
suppliers, licensees, distributors and customers of Abbott and its Affiliates
that are not Restricted Persons.

 

(j) None of the entry into this Agreement, any agreement contemplated hereby or
any provision hereof or thereof, shall be deemed as an admission by either party
of any wrongdoing, or of the validity or invalidity of any position taken or
proposed to be taken by or against the other party in past, present or future
litigation.

 

(k) In addition to the covenants contained in Section 5.08(e), for a period of
five years following the date of the Closing, (i) Boston Scientific will not, on
behalf of itself or its Affiliates, file, initiate, join, maintain or prosecute
any Action against Abbott or any of its Affiliates based on or related to an
allegation that any vascular interventional or endovascular products
manufactured by Abbott or any of its Affiliates or for Abbott or any of its
Affiliates by any Person other than a Restricted Person (provided that the
arrangement described in Schedule 5.08(k) attached hereto shall not deprive
Abbott of the benefit of this covenant with respect to the product involved in
such arrangement) infringe, misappropriate or otherwise violate any Intellectual
Property owned, controlled or otherwise held by Boston Scientific or any of its
Affiliates; provided that Boston Scientific’s covenant not to sue contained in
this Section 5.08(k) shall extend only to suppliers, licensees, distributors and
customers of Abbott and its Affiliates that are not Restricted Persons; and
(ii) Abbott will not, on behalf of itself or its Affiliates, file, initiate,
join, maintain or prosecute any Action against Boston Scientific or any of its
Affiliates based on or related to an allegation that any vascular interventional
or endovascular products manufactured by Boston Scientific or any of its
Affiliates or for Boston Scientific or any of its Affiliates by any Person other
than a Restricted Person infringe, misappropriate or otherwise violate any
Intellectual Property owned, controlled or otherwise held by Abbott or any of
its

 

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Affiliates; provided that Abbott’s covenant not to sue contained in this
Section 5.08(k) shall extend only to suppliers, licensees, distributors and
customers of Boston Scientific and its Affiliates that are not Restricted
Persons. The parties hereby acknowledge that no implicit or explicit license is
granted under this Section 5.08(k) and that neither of them is receiving,
pursuant to this Agreement, any rights to the Intellectual Property of the other
party other than as expressly set forth herein.

 

(l) Abbott hereby acknowledges that it has elected not to make available to
Boston Scientific its patents under the Settlement Agreement dated February 20,
2004 by and among Guidant, Boston Scientific and certain of their Affiliate
parties thereto (the “Settlement Agreement”). Accordingly, Abbott hereby
acknowledges that the Guidant Companies (as defined in the Settlement Agreement)
will forego the benefits of the licenses and covenants not to sue granted under
the Settlement Agreement by the Boston Scientific Companies (as defined in the
Settlement Agreement), and that the Boston Scientific Companies will continue to
have the benefits of the licenses and covenants not to sue granted to them by
the Guidant Companies in accordance with the terms and conditions of the
Settlement Agreement.

 

(m) Abbott and Boston Scientific agree that if, between the date of the Closing
and the date on which the Guidant drug eluting stent system that is the subject
of human clinical trials as of the Closing Date is first approved for sale in
Europe or the United States (the “First DES Stent”), Abbott reasonably
determines that it is required to make any changes (including any change in the
method of manufacturing) to the First DES Stent in response to requests, and in
connection with receiving approvals, from the applicable Governmental Authority,
then Abbott will, subject to Section 5.07(f), use its reasonable best efforts to
make such changes if such changes would not result in a product that infringes
the Intellectual Property of any Person other than Boston Scientific or any of
its Affiliates or Abbott or any of its Affiliates. If, having made such changes,
the First DES Stent would infringe the Intellectual Property of Boston
Scientific or any of its Affiliates, Boston Scientific agrees that it will not,
on behalf of itself or its Affiliates, file, initiate, join, maintain or
prosecute any Action against Abbott or any of its Affiliates based on or related
to an allegation that the First DES Stent infringes, misappropriates or
otherwise violates any Intellectual Property owned, controlled or otherwise held
by any of Boston Scientific or any of its Affiliates; provided, however, that
any subsequent changes to the First DES Stent will be subject to
Section 5.08(e). If, having made such changes, the First DES Stent would
infringe the Intellectual Property of Abbott or any of its Affiliates, Abbott
agrees that it will not, on behalf of itself or its Affiliates, file, initiate,
join, maintain or prosecute any Action against Boston Scientific or any of its
Affiliates based on or related to an allegation that the First DES Stent
infringes, misappropriates or otherwise violates any Intellectual Property
owned, controlled or otherwise held by Abbott or any of its Affiliates;
provided, however, that Abbott’s covenant not to sue contained in this
Section 5.08(m) shall not extend to or cover any subsequent changes made by
Boston Scientific or any of its Affiliates to the First DES Stent.

 

(n) Other than with respect to everolimus, nothing in this Agreement will extend
to or cover the use by any Person: (i) other than Boston Scientific or any of
its Affiliates, of paclitaxel or any other pharmaceutical owned by Boston
Scientific or any of its Affiliates, and (ii) other than Abbott or any of its
Affiliates, of zotarolimus (ABT-578) or any other pharmaceutical owned by Abbott
or any of its Affiliates.

 

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SECTION 5.09. Transition Services. (a) Following the Closing (i) Boston
Scientific or one or more of its Affiliates will provide or make available to
the Business those services, rights, properties and assets of Guidant and its
Affiliates that are not included in the Assets reasonably required by Purchaser
and such Affiliates to enable them to conduct the Business substantially as
conducted as of the Closing, and (ii) Purchaser and its Affiliates will provide
or make available to Boston Scientific and its Affiliates those services,
rights, properties and assets reasonably required by Boston Scientific and its
Affiliates to enable them to conduct the business conducted by Guidant and its
Affiliates, other than the Business, in substantially the same manner as
conducted as of the Closing, to the extent those services, rights, properties
and assets are included in the Assets. In connection with the foregoing
obligations, on or prior to the Closing, Boston Scientific and, to the extent
applicable, its Affiliates shall enter into a transition services agreement with
Purchaser and, to the extent applicable, its Affiliates (the “Transition
Services Agreement”). The services, rights, properties and assets provided or
made available hereunder will, in each case, be provided or made available at
prices or rates determined on the basis of actual cost incurred by the
applicable provider in performing the applicable service or making available the
applicable rights, properties or assets for the recipient, including a
reasonable allocation for overhead expenses attributable thereto, calculated in
a manner consistent with past custom and practice, without markup for profit.
Without limiting the generality of the foregoing, Purchaser and its Affiliates
will have the right to use or obtain copies of the information technology
systems of Guidant necessary to operate the Business for such period of time as
Purchaser and its Affiliates reasonably deem necessary in order to allow them to
transition to alternative systems if necessary.

 

(b) Shared Assets shall constitute Assets if such Shared Assets are used
primarily in, or related primarily to, the Business. Otherwise, Shared Assets
shall be retained by Boston Scientific. It is hereby understood and agreed that
the party that does not receive Shared Assets shall receive the benefit and use
of any such Shared Assets pursuant to this Agreement, the Transition Services
Agreement or a lease or similar agreement.

 

(c) Unless the parties agree otherwise, any agreement to which Guidant or any of
its subsidiaries is a party prior to the Closing that inures to the benefit or
burden of each of the Business and the Excluded Assets (“Mixed Contract”) shall
be separated on or after the Closing, so that each of Purchaser and Boston
Scientific shall be entitled to the rights and benefits and shall assume the
related portion of any Liabilities (other than in the case of Purchaser,
Excluded Liabilities) inuring to their respective businesses. If any Mixed
Contract cannot be so separated, Abbott and Boston Scientific shall, and shall
cause each of their respective Affiliates to, take such other reasonable and
permissible action to cause; (i) the Assets associated with that portion of each
Mixed Contract that relates to the Business to be enjoyed by Purchaser; (ii) the
Liabilities (other than in the case of Purchaser, Excluded Liabilities) related
with that portion of each Mixed Contract that relates to the Business to be
borne by Purchaser; (iii) the assets associated with the portion of each Mixed
Contract that relates to the Excluded Assets to be enjoyed by Boston Scientific;
and (iv) the Liabilities (other than in the case of Purchaser, Excluded
Liabilities) related with that portion of each Mixed Contract that relates to
the Excluded Assets to be borne by Boston Scientific. The parties will cooperate
with each other to effect such separation.

 

(d) Except as may otherwise be agreed by the parties, the parties shall not seek
to assign any account receivable or accounts payable relating to both the
Business and the Excluded

 

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Assets (“Mixed Account”). Abbott and Boston Scientific shall, and shall cause
each of their respective Affiliates to, take such other reasonable and
permissible actions to cause (i) the Assets associated with that portion of each
Mixed Account that relates to the Business to be enjoyed by Purchaser; (ii) the
Liabilities (other than in the case of Purchaser, Excluded Liabilities) related
with that portion of each Mixed Account that relates to the Business to be borne
by Purchaser; (iii) the assets associated with that portion of each Mixed
Account that relates to the Excluded Assets to be enjoyed by Boston Scientific;
and (iv) the Liabilities (other than in the case of Purchaser, Excluded
Liabilities) related with that portion of each Mixed Account that relates to the
Excluded Assets to be borne by Boston Scientific.

 

(e) At and immediately after the Closing, but in no event no later than 365 days
after the Closing, Purchaser shall cease to use and remove or cover the name
“Guidant” from all signs, billboards, advertising materials (other than
promotional inserts), telephone listings, stationary, office forms or other
similar materials of the Business, unless such use is required by a Governmental
Authority. Boston Scientific hereby grants to Abbott and its Affiliates, for a
period of 5 years after the Closing, a non-exclusive and royalty free license to
use all trademarks and trade names that include the name “Guidant” used in the
Business as of the Closing. Thereafter, Abbott and its Affiliates shall not use
such trademarks and trade names in connection with the Business or otherwise;
provided, however, that nothing in this Section 5.09(e) shall prohibit Abbott
and any of its Affiliates from selling any inventory in existence as of the
fifth anniversary of the Closing, which inventory bears any such trademarks and
trade names used in the Business. The parties will discuss in good faith whether
Abbott may, at its request, continue to use such trademarks and trade names
after the fifth anniversary of the Closing. Boston Scientific hereby covenants
that, for a period of 5 years after the Closing, Boston Scientific, Guidant and
any of its or their Affiliates shall not use any of the Guidant trademarks and
trade names in connection with products included in the vascular intervention
field, including DES Stents. The parties will cooperate with each other to avoid
any confusion in the marketplace during the period when both parties are using
the Guidant name. If Boston Scientific or Abbott divests the Carotid Stent
Assets in accordance with Section 5.04(b), then Boston Scientific shall grant to
the purchaser of such Carotid Stent Assets a license to use the Guidant name in
connection therewith in a manner consistent with this Section 5.09(e) for a
reasonable transition period.

 

SECTION 5.10. Abbott Loan. (a) At the Closing, Abbott will lend Boston
Scientific $700,000,000 on a subordinated basis (relative to any senior
indebtedness of Boston Scientific during the term of the loan) by wire transfer
of immediately available funds to a bank account designated in writing by Boston
Scientific to Purchaser not fewer than three Business Days prior to the date of
the Closing. In connection with the foregoing obligation, Abbott and Boston
Scientific shall enter into a subordinated promissory note (the “Note”). The
full principal amount of the loan shall be payable on the fifth anniversary of
the Closing. Interest shall accrue on the outstanding principal amount of the
loan at a rate of 5.25% per annum. Interest shall be payable in arrears
semiannually, and on the date on which the principal amount of the loan is paid
in full. If Boston Scientific defaults in the payment of the outstanding
principal amount of the loan on the fifth anniversary of the Closing, and if
such default continues for a period of 15 days, the license granted pursuant to
Section 5.08(a) will terminate upon written notice by Abbott upon the expiration
of such 15-day period.

 

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(b) In the event of a failure by Boston Scientific to pay any principal or
interest when due (by operation of Law or otherwise) on the loan or on Boston
Scientific’s principal credit agreement or then outstanding public indebtedness,
any proceeds Boston Scientific receives or is entitled to receive with respect
to Milestone Payments pursuant to Section 2.04 will be applied, by set-off or
recoupment, to prepay any amounts then outstanding under the loan. The loan will
be prepayable at any time, in whole or in part, without penalty, at the option
of Boston Scientific. Each such prepayment of the loan shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.

 

SECTION 5.11. Tax Election. Abbott, in its sole discretion, may require Boston
Scientific and/or its Affiliates, or Guidant and/or its Affiliates, as the case
may be, to participate in the making of an election under section 338(h)(10) of
the Code with respect to the purchase of any Shares that qualify for such
treatment, including as a result of such an election. Boston Scientific and
Guidant shall cooperate with Abbott in effecting each such election, including
its timely filing. In connection with each such election, Abbott shall
reasonably determine the fair market values of the assets of such entity, which
shall in no event exceed the purchase price allocation to such entity under
Section 2.03(b), and such valuations shall be binding on Boston Scientific
and/or its Affiliates, or Guidant and/or its Affiliates, in completing any
income tax returns reflecting gain or loss from the election. Abbott shall
reimburse Boston Scientific and its Affiliates for any additional Taxes incurred
as a result of their participation in any election under section 338(h)(10) of
the Code.

 

SECTION 5.12. Insurance. The parties agree to cooperate in structuring the
transactions contemplated by this Agreement so as to preserve to the fullest
extent possible available insurance coverage with respect to Assumed
Liabilities, the Business and any “D&O” coverage for employees of Guidant or its
subsidiaries who primarily perform or have primarily performed their services
for or with respect to the Business prior to the Closing.

 

SECTION 5.13. Further Action. (a) Each of Boston Scientific and Abbott shall use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, to do or cause to be done all things necessary, proper or advisable
under applicable Law and the agreements included in the Assets, and to execute
and deliver such documents and other papers and any other agreements, as may be
necessary to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated by this Agreement or to effect the
separation of the Business and the Assets from other Guidant assets, including,
to the extent practicable, reasonable steps to divide Shared Assets that are
divisible and to obtain all required consents from third parties. Without
limiting the generality of the foregoing, Boston Scientific and Abbott shall
work diligently and in good faith toward the execution of, and shall, on or
prior to the Closing, execute the Purchase Agreement and the other Definitive
Agreements with such terms and conditions required pursuant hereto and such
other terms and conditions as are mutually agreeable to the parties.

 

(b) Boston Scientific agrees that it shall not solicit, initiate, facilitate or
pursue any arrangement relating to the Business or the Assets with any third
parties other than Purchaser prior to the termination of this Agreement.

 

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(c) To the extent that any of the transfers, distributions, deliveries and the
assumptions required to be made in connection with the transactions contemplated
by this Agreement shall not have been so consummated at Closing, the parties
shall cooperate and use their reasonable best efforts to effect such
consummation as promptly thereafter as reasonably practicable, including
executing and delivering such further instruments of transfer and taking such
other actions as the parties may reasonably request in order to effectuate the
purposes of this Agreement or to more effectively transfer to Purchaser or
confirm Purchaser’s right, title to or interest in, all of the Assets, to put
Purchaser in actual possession and operating control thereof and to permit
Purchaser to exercise all rights with respect thereto (including rights under
contracts and other arrangements as to which the consent of any third party to
the transfer thereof shall not have previously been obtained). In the event and
to the extent that Boston Scientific or Abbott is unable to obtain any required
consents, Boston Scientific or Guidant shall (i) continue to be bound thereby
pending assignment to Purchaser, (ii) at the direction and expense of Purchaser,
pay, perform and discharge fully all of its obligations thereunder from and
after the closing and prior to assignment to Purchaser and (iii) without further
consideration therefor, pay, assign and remit to Purchaser promptly all monies,
rights and other consideration received in respect of such agreements. Boston
Scientific or Guidant shall exercise or exploit its rights and options under all
such agreements, leases, licenses and other rights and commitments when and only
as reasonably directed by Purchaser. If and when any such consent shall be
obtained or such agreement, lease, license or other right shall otherwise become
assignable, Boston Scientific shall, or shall cause Guidant to, promptly assign
all its rights and obligations thereunder to Purchaser without payment of
further consideration and Purchaser shall, without the payment of any further
consideration therefor, assume such rights and obligations.

 

(d) In the event that the parties determine that certain assets, rights or
properties which properly constitute Assets were not transferred to Purchaser at
Closing, then Boston Scientific shall promptly take all steps reasonably
necessary to transfer and deliver any and all of such assets to Purchaser
without the payment by Abbott of any further consideration therefor. In the
event that the parties determine that certain assets which do not properly
constitute Assets were transferred to Purchaser at Closing, then Purchaser shall
promptly take all steps reasonably necessary to transfer and deliver any and all
of such assets to Boston Scientific without the payment by Boston Scientific of
any further consideration therefor.

 

SECTION 5.14. Timing of Transactions. Boston Scientific may, and will if
requested by Abbott, cause Guidant to (a) assume obligations of Boston
Scientific under this Agreement and/or the Definitive Agreements (provided, that
no such assumption shall (unless Abbott expressly agrees to the contrary)
relieve Boston Scientific of such obligations) and (b) effect the Closing
contemplated by this Agreement prior to the closing of the Merger, in either
case if all of the respective conditions to Boston Scientific’s, Sub’s and
Guidant’s obligations to consummate the Merger, as set forth in the Merger
Agreement, shall have been satisfied or waived, and each of Boston Scientific
and Sub shall have notified Guidant, and Guidant shall have notified Boston
Scientific and Sub, in writing that it is ready, willing and able to consummate
the Merger as set forth in the Merger Agreement and will consummate such Merger
immediately following the action set forth in subclauses (a) and (b).

 

SECTION 5.15. Other Agreements. Nothing in this Agreement or the Definitive
Agreements shall prohibit Abbott from pursuing arrangements or agreements with
Johnson &

 

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Johnson or any other third party which has publicly announced a proposal that
the Guidant board of directors has determined to be, or to be reasonably likely
to result in or lead to, a Superior Proposal (as defined in the Merger
Agreement). This Agreement and any Definitive Agreements entered into by the
parties shall automatically terminate immediately prior to the closing of the
acquisition of Guidant by Johnson & Johnson if such a closing occurs.

 

ARTICLE VI

 

EMPLOYEE MATTERS

 

SECTION 6.01. Transferred Employees. (a) As of the Closing, Purchaser or one of
its Affiliates shall employ the U.S. Business Employees (as defined below) who
are employed by the Transferred Subsidiaries, and on or prior to the Closing,
Purchaser or one of its Affiliates shall offer employment to each of the other
then-current U.S. Business Employees, in each case on substantially the same
terms and conditions as in effect prior to the Closing (except as otherwise
provided herein). For purposes of this Agreement, “U.S. Business Employee” means
an employee of a Transferred Subsidiary employed in the United States as of the
Closing, or an employee of the Business employed in the United States, in each
case who primarily performs his or her services for or with respect to the
Business as of the Closing, including any such employee who is inactive because
of leave of absence, vacation, holiday or long-term disability. For purposes of
this Agreement, “U.S. Transferred Employee” means each U.S. Business Employee of
the Transferred Subsidiaries and each other U.S. Business Employee who accepts
the offer of employment by Purchaser or its Affiliate.

 

(b) Purchaser or one of its Affiliates shall (i) continue to employ each
Non-U.S. Business Employee (as defined below) of a Transferred Subsidiary as of
the Closing (where employment continues by operation of Law), (ii) continue to
employ each Non-U.S. Business Employee as of the Closing (where employment
transfers by operation of Law), and (iii) on or prior to the Closing, make
offers of employment with respect to all other Non-U.S. Business Employees whose
employment does not transfer to Purchaser by operation of Law, in each case on
substantially the same terms and conditions as in effect for each such employee
prior to the Closing (except as otherwise provided herein). For purposes of this
Agreement, “Non-U.S. Business Employee” means an employee of the Business as of
the Closing who primarily performs his or her services for or with respect to
the Business outside the U.S. as of the Closing, including any such employee who
is inactive because of leave of absence, vacation, holiday or long-term
disability, and “Non-U.S. Transferred Employee” means each Non-U.S. Business
Employee of a Transferred Subsidiary, whose employment transfers to Purchaser or
one of its Affiliates by operation of Law, or who accepts the offer of
employment by Purchaser or one of its Affiliates. Collectively, the U.S.
Transferred Employees and the Non-U.S. Transferred Employees shall be referred
to as “Transferred Employees”.

 

SECTION 6.02. Employee Benefits. (a) For a period of twelve months following the
Closing, Transferred Employees who remain in the employment of Purchaser or any
of its Affiliates shall receive employee benefits that in the aggregate are
substantially comparable to the employee benefits provided to such employees
immediately prior to the Closing. For the six-month period immediately following
the expiration of the twelve-month period described in the preceding sentence,
the Transferred Employees who remain in the

 

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employment of Purchaser and its Affiliates shall receive employee benefits that
in the aggregate are substantially comparable to either the employee benefits
provided to such employees immediately prior to the Closing or the employee
benefits provided to similarly situated employees of Purchaser or any of its
Affiliates. For a period of not less than eighteen months following the Closing,
the Transferred Employees who remain in the employment of Purchaser or any of
its Affiliates shall receive base salary or wage rates that are not less than
those in effect for such Transferred Employees immediately prior to the Closing;
provided, however, that neither Purchaser nor any of its Affiliates shall have
any obligation to issue, or adopt any plans or arrangements providing for the
issuance of, shares of capital stock, warrants, options, stock appreciation
rights or other rights in respect of any shares of capital stock of any entity
or any securities convertible or exchangeable into such shares pursuant to any
such plans or arrangements; and provided, further, that no plans or arrangements
of Guidant or Boston Scientific or any of its or their respective Affiliates
providing for such issuance shall be taken into account in determining whether
employee benefits are substantially comparable in the aggregate, except as
otherwise required by Law. Except as required by Law or expressly provided in
Section 6.03(b), nothing contained in this Agreement shall be construed as
requiring Purchaser or one of its Affiliates to continue or offer any specific
employee benefit plans or to continue the employment of any specific person.
Notwithstanding anything in this Article VI to the contrary, Purchaser and its
Affiliates shall be responsible for any severance or similar termination
payments or to pay severance benefits that may become payable to any U.S.
Business Employee who is not a Transferred Employee, and Abbott shall indemnify
Boston Scientific from any and all liabilities for such payments. In the event
that any of the obligations to make severance or similar termination payments or
to pay severance benefits to U.S. Business Employees are covered by cash,
insurance contracts, or other assets specifically set aside and designated by
Guidant for this purpose, Boston Scientific shall cause to be transferred to
Purchaser or to the appropriate benefit or compensation plan or arrangement of
Purchaser or its Affiliate, such cash, insurance contracts or other assets as of
the Closing.

 

(b) Purchaser shall recognize the prior service of each Transferred Employee as
if such service had been performed with Purchaser (i) for purposes of vesting
(but not benefit accrual) under Purchaser’s defined benefit pension plan, (ii)
for purposes of eligibility for vacation under Purchaser’s vacation program,
(iii) for purposes of eligibility and participation under any health or welfare
plan maintained by Purchaser (other than any post-employment health or
post-employment welfare plan), (iv) for purposes of eligibility for the company
matching contribution under a 401(k) savings plan maintained by Purchaser (it
being understood that each Transferred Employee who was participating in
Guidant’s 401(k) savings plan immediately prior to becoming eligible to
participate in that 401(k) savings plan of Purchaser or its Affiliates shall be
immediately eligible for the company matching contribution under that 401(k)
savings plan maintained by Purchaser or one of its Affiliates), and (v) unless
covered under another arrangement with or of Guidant, for benefit accrual
purposes under Purchaser’s severance plan, (in the case of each of clauses (i),
(ii), (iii), (iv) and (v), solely to the extent that (x) Boston Scientific makes
such plan or program available to employees of the Surviving Corporation (as
defined in the Merger Agreement), it being Boston Scientific’s current intention
to do so, (y) such recognition does not result in any duplication of benefits,
but (z) not for purposes of any other employee benefit plan of Purchaser or any
of its Affiliates or any other purpose not expressly described in this Section
6.02(b), except as required by Law).

 

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(c) With respect to any welfare plan maintained by Purchaser in which
Transferred Employees are eligible to participate after the Closing, Purchaser
shall (i) waive all limitations as to preexisting conditions and exclusions with
respect to participation and coverage requirements applicable to such employees
to the extent such conditions and exclusions were satisfied or did not apply to
such employees under the welfare plans maintained by Guidant prior to the
Closing and (ii) provide each Transferred Employee with credit for any
co-payments and deductibles paid prior to the Closing in satisfying any
analogous deductible or out-of-pocket requirements to the extent applicable
under any such plan.

 

(d) With respect to Non-U.S. Transferred Employees, Purchaser shall, and shall
cause its applicable Affiliates to, comply with all applicable Laws, directives
and regulations relating to the Non-U.S. Transferred Employees. Purchaser and
its Affiliates shall be responsible for any severance, redundancy or similar
termination payments that may become payable to any Non-U.S. Business Employee
in connection with the transactions contemplated by this Agreement, and Abbott
shall indemnify Boston Scientific from any and all liabilities for such
payments; provided, however, that to the extent that, after the Closing,
Purchaser or any of its Affiliates incurs a second severance, redundancy or
similar termination payment liability with respect to any particular Non-U.S.
Business Employee who becomes a Non-U.S. Transferred Employee under Section
6.01(b) and who is subsequently terminated by Purchaser for just cause within 12
months of the Closing, Boston Scientific shall indemnify Purchaser for an amount
equal to the lesser of the two severance liabilities. In the event that any of
the obligations to make severance, redundancy or similar termination payments to
Non-US Business Employees are covered by cash, insurance contracts, or other
assets specifically set aside and designated by Guidant for this purpose, Boston
Scientific shall cause to be transferred to Purchaser or to the appropriate
benefit or compensation plan or arrangement of Purchaser or its Affiliate, such
cash, insurance contracts, or other assets as of the Closing.

 

(e) Purchaser shall assume all liabilities (other than any stock option
liabilities described in Section 6.03(a)) related to the Non-U.S. Transferred
Employees, including, without limitation, any liabilities under any employee
benefit plan of Guidant regardless of whether such employee benefit plan
transfers automatically to Purchaser as a result of the transactions
contemplated by this Agreement. In addition to any cash, insurance contracts or
other assets that will transfer automatically to Purchaser or its Affiliates or
to the Non-U.S. Transferred Employees as a result of the transactions
contemplated by this Agreement, Boston Scientific shall cause to be transferred
to Purchaser or its Affiliates, or the appropriate compensation or benefit plan
of Purchaser or its Affiliates, such cash, insurance contracts, or other assets,
if any, specifically set aside and designated by Guidant in respect of the
liabilities related to the Non- U.S. Transferred Employees as of the Closing,
including, without limitation, assets of any applicable compensation or benefit
plan of Guidant, to the extent such assets do not transfer automatically to
Purchaser or its Affiliates as a result of the transactions contemplated by this
Agreement. However, any such transfer shall be subject to the consent of the
affected Non-U.S. Transferred Employees to the extent required by Law.

 

(f) With respect to U.S. Transferred Employees, Abbott shall pay Boston
Scientific an amount equal to the present value as of the Closing of the excess,
if any, of the pre- Closing liabilities attributable to the U.S. Transferred
Employees over the assets, accruals and reserves set aside and designated by
Guidant in respect of those types of liabilities, in each

 

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instance to the extent provided by, and as determined in accordance with, the
principles set forth on Schedule 6.02(f). Should such designated assets,
accruals and reserves allocable to such liabilities exceed those liabilities,
Boston Scientific shall pay Abbott such excess. In either event, a single
payment for the net amount of the difference shall be paid within 12 months of
the Closing. In addition, Boston Scientific will cause all Transferred Employees
to be fully vested in their account balances under the Guidant Employee Savings
and Stock Ownership Plan (as defined in the Merger Agreement) and they shall
receive a proportionate share of any previously unallocated shares of stock that
may be allocated to participants under such plan in connection with the
transactions contemplated by this Agreement and the Merger Agreement; provided,
however, that nothing in this sentence shall require Boston Scientific or its
Affiliates to contribute any additional amount to such plan.

 

SECTION 6.03. General Matters. (a) All outstanding Guidant stock options held
immediately prior to the Closing by any Transferred Employee shall be
extinguished in accordance with their terms upon the Closing, and, in
satisfaction thereof, Boston Scientific shall provide the holder of each such
option, as soon as practicable following the Closing, but in all cases within
the period necessary to comply with Code Section 409A, either (i) a payment in
cash equal to the excess of the aggregate fair market value of the Guidant
shares as of the Closing subject to each such option as of the Closing over the
aggregate exercise price of such option with respect to those shares, net any
applicable withholding Taxes, or (ii) a number of shares of common stock of
Boston Scientific with a fair market value as of the Closing equal to the excess
of the aggregate fair market value of the shares subject to each such option
over the aggregate exercise price of such option, net any applicable withholding
Taxes, to be determined by applying the conversion formula in Section 5.04(a) of
the Merger Agreement to each Guidant option to determine the number of shares of
common stock of Boston Scientific that would have been subject to such option
and the exercise price of such option, adjusted as if the option holder had not
been a Transferred Employee, at Boston Scientific’s election provided that such
election applies to all Transferred Employees.

 

(b) After the Closing, Purchaser shall maintain and administer the Guidant
Change in Control Severance Pay Plan for Select Employees and the Guidant Change
in Control Severance Pay Plan for Employees (the “Guidant CIC Plans”) with
respect to any benefits afforded thereunder to any Transferred Employees;
provided, however, that Purchaser or any of its Affiliates shall have the right
to amend or terminate the Guidant CIC Plans with respect to the Transferred
Employees in accordance with their terms.

 

(c) No provision of this Agreement or the corresponding provisions of the
Purchase Agreement shall create any third party beneficiary rights in any
employee of the Business, or any other current or former employee, independent
contractor, or director of Guidant, Boston Scientific, Purchaser or any of its
or their respective Affiliates, in respect of employment or any other matter.

 

SECTION 6.04. Mutual Non-Solicitation. Without the prior written consent of
Abbott, Boston Scientific shall not, for a period of two years following the
Closing, take any action to solicit any sales representative or person
performing a similar function who is a Transferred Employee and who is employed
by the Business (whether as an employee or independent contractor) to terminate
his or her employment with the Business or to seek or

 

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accept employment with Boston Scientific or any of its Affiliates. Without the
prior written consent of Boston Scientific, Abbott shall not, and shall cause
the Purchaser not to, for a period of two years following the Closing, take any
action to solicit any sales representative or person performing a similar
function who is employed by Guidant or its Affiliates immediately prior to the
consummation of the Merger (other than any Transferred Employee) and who, after
the consummation of the Merger, is employed by the Surviving Corporation or its
successor or any of their Affiliates (whether as an employee or independent
contractor) and primarily performs his or her services for or with respect to
the Excluded Businesses, to terminate his or her employment with the Surviving
Corporation or its successor or their Affiliates or to seek or accept employment
with Abbott or any of its Affiliates. Notwithstanding the foregoing, nothing
contained herein shall prevent either party or their Affiliates from offering
employment or service to persons who respond to a general solicitation or
advertisement that is not specifically directed at them (and nothing shall
prohibit such general solicitation or advertisement).

 

ARTICLE VII

 

TAXES

 

SECTION 7.01. Apportionment. With respect to any Tax Return for any Straddle
Period of a Transferred Subsidiary, Abbott will, to the extent permitted by Law,
elect to treat the Closing as the last day of the taxable year or period and
will apportion any Taxes arising out of or relating to a Straddle Period to the
Pre-Closing Period under the “closing-the-books” method as described in Treasury
Regulation Section 1.1502-76(b)(2)(i) (or any similar provision of state, local
or foreign law). In any case where applicable Law does not permit a Transferred
Subsidiary to treat the Closing as the last day of the taxable year or period,
any Taxes arising out of or relating to a Straddle Period will be apportioned to
the Pre-Closing Period based on a closing of the books; provided, however, that
(a) exemptions, allowances or deductions that are calculated on an annualized
basis (including depreciation, amortization and depletion deductions) will be
apportioned on a daily pro rata basis, (b) solely for purposes of determining
the marginal tax rate applicable to income during such period in a jurisdiction
in which such tax rate depends upon the level of income, annualized income will
be taken into account, and (c) real and personal property Taxes shall be
allocated on a per diem basis.

 

SECTION 7.02. Tax Return Filing and Amendment. Boston Scientific will prepare
and file, or cause to be prepared and filed, all Tax Returns of each Transferred
Subsidiary with respect to periods ending on or before Closing to the extent
such returns have not been filed prior to Closing, and Boston Scientific will
pay, or cause to be paid, all Taxes shown as due thereon. Abbott will prepare
and file, or cause to be prepared and filed all Tax Returns of each Transferred
Subsidiary with respect to any Straddle Period to the extent such returns have
not been filed prior to Closing, and Abbott will pay, or cause to be paid, all
Taxes shown as due thereon; provided that nothing in this Section 7.02 shall
affect the rights of Abbott to indemnification under Section 10.02(a)(iii). A
copy of the relevant portions of any such Straddle Period Tax Return filed shall
be provided to Boston Scientific no later than five days after such Tax Return
was filed.

 

SECTION 7.03. Resolution of Tax Controversies. In the event that a Governmental
Authority determines a deficiency in any Tax, the party ultimately responsible
for

 

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such Tax under this Agreement, whether by indemnity or otherwise, shall have
authority to determine whether to dispute such deficiency determination and to
control the prosecution or settlement of such dispute.

 

ARTICLE VIII

 

CONDITIONS TO CLOSING

 

SECTION 8.01. Conditions to Obligation of Boston Scientific. The obligation of
Boston Scientific to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or written waiver, at or prior to the
Closing, of each of the following conditions:

 

(a)           Representations, Warranties and Covenants. Each of the
representations and warranties of Abbott contained in this Agreement shall be
true and correct in all material respects as of the Closing, with the same force
and effect as if made as of the Closing (other than such representations and
warranties as are made as of another date, which shall be true and correct in
all material respects as of such date), except in either case where any failure
of such representations and warranties to be so true and correct would not
materially delay or prevent the consummation of the transactions contemplated
hereby, and the covenants and agreements contained in this Agreement to be
complied with by Abbott on or before the Closing shall have been complied with
in all material respects, and Boston Scientific shall have received a
certificate signed on behalf of Abbott by an officer of Abbott to such effect;

 

(b)           Governmental Approvals. Any waiting period (and any extension
thereof) under the HSR Act and the EU Merger Regulation applicable to the
purchase of the Business contemplated by this Agreement, and any agreement with
a Governmental Authority not to consummate the transactions contemplated by this
Agreement, shall have expired or shall have been terminated, and Boston
Scientific or Abbott, as the case may be, shall have obtained all
authorizations, consents, orders and approvals of all Governmental Authorities
that, if not received, would make any of the transactions contemplated by this
Agreement or any of the other Definitive Agreements illegal or otherwise
prohibit the consummation of such transactions;

 

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

 

(d)           Merger Consummated; Closing Conditions Satisfied. Either (i) the
closing of the Merger shall have occurred, or (ii) to the extent Boston
Scientific or Abbott has elected to consummate the transactions contemplated by
this Agreement or the Purchase Agreement prior to the consummation of the Merger
as contemplated by Section 5.14, all of the respective conditions to Boston
Scientific’s, Sub’s and Guidant’s obligations to consummate the Merger, as set
forth in the Merger Agreement, shall have been satisfied

 

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or waived, and each of Boston Scientific and Sub shall have notified Guidant,
and Guidant shall have notified Boston Scientific and Sub, in writing (with
copies of such notices having been delivered to Abbott) that it is ready,
willing and able to consummate the Merger (and will consummate the Merger
immediately following the consummation of the transactions contemplated by this
Agreement or the Purchase Agreement).

 

SECTION 8.02. Conditions to Obligation of Abbott. The obligation of Abbott to
consummate the transactions contemplated by this Agreement shall be subject to
the fulfillment or written waiver, at or prior to the Closing, of each of the
following conditions:

 

(a)           Representations, Warranties and Covenants. Each of the
representations and warranties of Boston Scientific contained in this Agreement
shall be true and correct as of the Closing, with the same force and effect as
if made as of the Closing (other than such representations and warranties as are
made as of another date, which shall be true and correct as of such date),
except in either case where any failure of such representations and warranties
to be so true and correct would not materially delay or prevent the consummation
of the transactions contemplated hereby, and the covenants and agreements
contained in this Agreement to be complied with by Boston Scientific on or
before the Closing shall have been complied with in all material respects, and
Abbott shall have received a certificate signed on behalf of Boston Scientific
by an officer of Boston Scientific to such effect;

 

(b)           Governmental Approvals. Any waiting period (and any extension
thereof) under the HSR Act or the EU Merger Regulation applicable to the
purchase of the Business contemplated by this Agreement, and any agreement with
a Governmental Authority not to consummate the transactions contemplated by this
Agreement, shall have expired or shall have been terminated, and Boston
Scientific or Purchaser, as the case may be, shall have obtained all
authorizations, consents, orders and approvals of all Governmental Authorities
that, if not received, would make any of the transactions contemplated by this
Agreement illegal or otherwise prohibit the consummation of such transactions;

 

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

 

(d)           Merger Consummated; Closing Conditions Satisfied. Either (i) the
closing of the Merger shall have occurred, or (ii) to the extent Boston
Scientific or Abbott has elected to consummate the transactions contemplated by
this Agreement or the Purchase Agreement prior to the consummation of the Merger
as contemplated by Section 5.14, all of the respective conditions to Boston
Scientific’s, Sub’s and Guidant’s obligations to consummate the Merger, as set
forth in the Merger Agreement, shall have been satisfied or waived, and each of
Boston Scientific and Sub shall have notified Guidant, and Guidant shall have
notified Boston Scientific and Sub, in writing (with copies of such notices
having been delivered to Abbott) that it is ready, willing and able to
consummate

 

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the Merger (and will consummate the Merger immediately following the
consummation of the transactions contemplated by this Agreement or the Purchase
Agreement).

 

ARTICLE IX

 

TERMINATION

 

SECTION 9.01. Termination. This Agreement may be terminated, or in the case of
clause (e) below shall terminate, at any time prior to the Closing in the
following circumstances:

 

(a)           by the mutual written consent of Boston Scientific and Abbott;

 

(b)           by either Boston Scientific or Abbott, if the Closing shall not
have occurred by September 30, 2006; provided, however, that the right to
terminate this Agreement under this Section 9.01(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement shall
have been the cause of, or shall have resulted in, the failure of the Closing to
occur on or prior to such date;

 

(c)            by either Boston Scientific or Abbott in the event that any
Governmental Order restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement shall have become final and
non-appealable;

 

(d)           by Abbott if Boston Scientific has failed to submit to Guidant a
publicly- announced firm offer regarding a proposed acquisition of Guidant by
Boston Scientific prior to the close of business on the fourth Business Day
following execution of this Agreement; or

 

(e)           immediately, without any action by either Boston Scientific or
Abbott, (i) upon the approval of the J&J Merger Agreement by the shareholders of
Guidant, (ii) in accordance with Section 5.15 hereof, (iii) if the Merger
Agreement is not entered into by February 7, 2006, or (iv) upon any termination
of the Merger Agreement.

 

SECTION 9.02. Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.01, this Agreement shall forthwith become
void and there shall be no liability on the part of either party hereto except
(a) as set forth in Section 5.03 and Article XI and (b) that nothing herein
shall relieve either party from liability for any breach of this Agreement
occurring prior to such termination.

 

ARTICLE X

 

INDEMNIFICATION

 

SECTION 10.01. Survival of Representations and Warranties. The representations
and warranties of the parties hereto contained in this Agreement and the
Purchase Agreement shall terminate at the Closing.

 

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SECTION 10.02. Indemnification by Boston Scientific. (a) From and after the
Closing, Abbott and its Affiliates, officers, directors, agents, successors and
assigns (the “Abbott Indemnified Parties”) shall be indemnified and held
harmless by Boston Scientific for and against all losses, damages, claims, costs
and expenses, interest, awards, judgments and penalties (including reasonable
attorneys’ and consultants’ fees and expenses) actually suffered or incurred by
them (hereinafter, a “Loss”) to the extent arising out of or related to:

 

(i)             the Excluded Assets;

 

(ii)           the Excluded Liabilities;

 

(iii)          Taxes of Boston Scientific, Guidant or any of their Affiliates
(as a transferee or successor by contract or otherwise and including any Taxes
arising under Regulation 1.1502-6 or similar Law) attributable to any
Pre-Closing Tax Period (other than Taxes referred to in the last sentence of
Section 5.11); and

 

(iv)          Taxes of Abbott or any of its Affiliates for any Post-Closing
Period that would not have been incurred but for a net adjustment to a
Pre-Closing Period Tax Liability of Guidant or any of its Affiliates.

 

(b) In addition to the provisions of Section 10.02(a), from and after the
Closing, the Abbott Indemnified Parties shall be indemnified and held harmless
by Boston Scientific for and against (i) any action between the date hereof and
the Closing with respect to the Assets, the U.S. Business Employees, the
Non-U.S. Business Employees or the Business that would have been a breach of the
covenants contained in Section 4.01 of the Merger Agreement if such covenants
had been made with respect to the Assets, the U.S. Business Employees, the
Non-U.S. Business Employees or the Business rather than having been made with
respect to Guidant’s assets, employees and businesses; provided, however, that
Boston Scientific shall have no obligation to indemnify any Abbott Indemnified
Party pursuant to this clause (i) unless and until the aggregate amount of all
such amounts indemnifiable under this clause (i) exceeds $100,000,000, in which
case Boston Scientific will only be liable for amounts indemnifiable under this
clause (i) in excess of such amount; and (ii) the occurrence of a Material
Adverse Effect between the date of this Agreement and the Closing. Boston
Scientific and Abbott will use their reasonable best efforts to agree on the
amount of any indemnification payable under this Section 10.02(b). In the event
Boston Scientific and Abbott are unable to reach agreement on such amount
despite the use of such efforts, such amount shall be determined by an
independent investment banking firm or accounting firm (depending on the subject
matter of the claim) of international reputation reasonably acceptable to each
of Boston Scientific and Abbott using customary valuation methodologies. The
determination of such independent investment banking firm shall be final and
binding on Boston Scientific and Abbott. The fees and expenses of such
independent investment banking firm shall be shared equally between Boston
Scientific and Abbott.

 

SECTION 10.03. Indemnification by Abbott. From and after the Closing, Boston
Scientific and its Affiliates, officers, directors, agents, successors and
assigns shall be indemnified and held harmless by Abbott for and against any and
all Losses to the extent arising

 

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out of or related to the Business (other than the Excluded Liabilities) and the
Assumed Liabilities.

 

SECTION 10.04. Limits on Indemnification. (a) Notwithstanding anything to the
contrary contained in this Agreement, neither party hereto shall have any
Liability under Section 10.02(a) for any punitive, incidental, consequential,
special or indirect damages, except to the extent that any such damages are
awarded in connection with a Third Party Claim against an indemnified party and
such indemnified party is entitled to be indemnified hereunder as a result of
the facts or circumstances giving rise to such Third Party Claim.

 

(b)           For all purposes of this Article X, “Losses” shall be net of any
insurance or other recoveries actually paid to an indemnified party or its
Affiliates in connection with the facts giving rise to the right of
indemnification.

 

SECTION 10.05. Notice of Loss; Third Party Claims. (a) An indemnified party
shall give the indemnifylng party notice of any matter that an indemnified party
has determined has given or could give rise to a right of indemnification under
this Agreement, within 60 days of such determination, stating the amount of the
Loss, if known, and method of computation thereof, and containing a reference to
the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises.

 

(b) If an indemnified party shall receive notice of any Action from or involving
any third party that the indemnified party believes is reasonably likely to give
rise to a right of indemnification under this Article X (each, a “Third Party
Claim”), then, as promptly as practicable after the receipt of such notice, the
indemnified party shall give the indemnifying party notice of such Third Party
Claim, stating the amount of the Loss, if known, and method of computation
thereof and containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or arises; provided,
however, that the failure to provide such notice shall not release the
indemnifying party from any of its obligations under this Article X except to
the extent that such failure actually results in a detriment to the indemnifying
party and shall not relieve the indemnifying party from any other Liability that
it may have to any indemnified party other than under this Article X. The
indemnifying party shall be entitled to assume and control the defense of such
Third Party Claim at its expense and through counsel reasonably satisfactory to
the indemnified person if it gives notice of its intention to do so to the
indemnified party within 15 days of the receipt of such notice from the
indemnified party. If the indemnifying party elects to undertake any such
defense against a Third Party Claim, the indemnified party may participate in
such defense at its own expense. The indemnified party shall reasonably
cooperate with the indemnifying party in such defense and make available to the
indemnifying party, at the indemnifying party’s expense, all witnesses,
pertinent records, materials and information in the indemnified party’s
possession or under the indemnified party’s control relating thereto as is
reasonably required by the indemnifying party. If the indemnifying party elects
to direct the defense of any such claim or proceeding, it shall not consent to
the entry of any judgment or enter into any settlement with respect to such
Third Party Claim without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld or delayed. No indemnifying
party shall be liable for any settlement of a Third Party Claim effected without
such indemnifying party’s prior written consent, which consent shall not be
unreasonably withheld or delayed.

 

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SECTION 10.06. Tax Treatment of Indemnity Payments. For all Tax purposes, the
parties agree to treat all payments made under any indemnity provisions
contained in this Agreement as adjustments to the Purchase Price.

 

ARTICLE XI

 

GENERAL PROVISIONS

 

SECTION 11.01. Expenses. Except as otherwise specified in this Agreement, all
costs and expenses, including fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
other Definitive Agreements and the transactions contemplated hereby and thereby
shall be borne by the party incurring such costs and expenses, whether or not
the Closing shall have occurred.

 

SECTION 11.02. Notices. All notices, requests, claims, demands and other
communications 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 an internationally recognized overnight courier service, by
facsimile, by e-mail or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties hereto 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 11.02):

 

(a)           if to Boston Scientific:

 

Boston Scientific Corporation
One Boston Scientific Place
Natick, Massachusetts 01760

Fax: (508) 650-8960

Attention: General Counsel

 

with a copy to:

 

Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022-6069
Fax: (212) 848-7179
Attention: Peter D. Lyons

Clare O’Brien

 

(b)           if to Abbott:

 

Abbott Laboratories
Dept. 0392, Bldg. AP6D
100 Abbott Park Road
Abbott Park, Illinois 60064-3500
Fax: (847) 935-8207
Attention: Chief Operating Officer, Medical Products Group

 

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with a copy to:

 

Abbott Laboratories
Dept. 364, Bldg. AP6D
100 Abbott Park Road
Abbott Park, Illinois 60064-6020 USA
Fax: (847) 938-6277
Attention: General Counsel

 

and a copy to:

 

Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017-3903
Fax: (212) 455-2502
Attention: Charles I. Cogut

William E. Curbow

 

SECTION 11.03. Public Announcements. Each party to this Agreement shall consult
with the other party before issuing, and shall provide the other party the
opportunity to review and comment upon, any press release or other public
announcement in respect of this Agreement or the transactions contemplated
hereby and shall not issue any press release or other public statements or
otherwise communicate with any news media regarding this Agreement and/or the
transactions contemplated hereby without the consultation and prior written
consent of the other party unless otherwise required by Law or applicable stock
exchange regulation and then only with such advance notice to and consultation
with the other party as is practical. The parties to this Agreement shall
cooperate as to the timing and contents of any such press release, public
announcement or communication. The parties agree that they shall each issue a
press release announcing the execution of this Agreement, the contents of which
shall be reasonably satisfactory to the other party. Notwithstanding the
foregoing, neither party shall have any obligation to consult with the other
party or provide the other party with an opportunity to review and comment upon
any press release or other public announcement announcing a termination of this
Agreement, and such party may issue such press release or public announcement or
otherwise communicate with any news media regarding such termination without the
consent of the other party; provided, however, that the non-terminating party
shall have received advance written notice of the other party’s intention to
terminate this Agreement.

 

SECTION 11.04. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect for so long as the economic or legal substance of the
transactions contemplated by this Agreement is not affected in any manner
materially adverse to either party hereto. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated by this Agreement
are consummated as originally contemplated to the greatest extent possible.

 

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SECTION 11.05. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, between Boston Scientific and Abbott with
respect to the subject matter hereof and thereof.

 

SECTION 11.06. Assignment. This Agreement may not be assigned without the
express written consent of Boston Scientific and Abbott (which consent may be
granted or withheld in the sole discretion of Boston Scientific or Abbott), as
the case may be; provided, however, that (a) either party may, without the
consent of the other party, assign its rights and obligations, in whole or in
part, under this Agreement to one or more of its controlled Affiliates, except
that no such assignment shall relieve the assigning party from the performance
of its obligations hereunder, (b) Boston Scientific may, without the consent of
Abbott, assign its rights and obligations, in whole or in part, under this
Agreement to Guidant so long as Boston Scientific remains liable for its
obligations hereunder, or to any acquiror of all or substantially all of Boston
Scientific’s vascular intervention business, and (c) Abbott may, without the
consent of Boston Scientific, assign its rights and obligations, in whole or in
part, under this Agreement to any designee of Abbott in the event Abbott divests
any of the Assets that would otherwise be acquired by Abbott pursuant hereto due
to applicable antitrust laws and regulations. Any purported assignment in
contravention of this provision shall be null and void.

 

SECTION 11.07. Amendment. This Agreement may not be amended or modified except
(a) by an instrument in writing signed by, or on behalf of, Boston Scientific
and Abbott or (b) by a waiver in accordance with Section 11.08.

 

SECTION 11.08. Waiver. Either party to this Agreement may (a) extend the time
for the performance of any of the obligations or other acts of the other party,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered by the other party pursuant
hereto or (c) to the extent permitted by applicable Law, waive compliance with
any of the agreements of the other party or conditions to such party’s
obligations contained herein. Any such extension or waiver shall be valid only
if set forth in an instrument in writing signed by the party to be bound
thereby. Any waiver of any term or condition shall not be construed as a waiver
of any subsequent breach or a subsequent waiver of the same term or condition,
or a waiver of any other term or condition of this Agreement. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of any of such rights.

 

SECTION 11.09. No Third Party Beneficiaries. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns and nothing herein is intended to or shall
confer upon any other Person any legal or equitable right, benefit or remedy of
any nature whatsoever, including any rights of employment for any specified
period, under or by reason of this Agreement.

 

SECTION 11.10. Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by Law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that

 

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any provision of this Agreement is not performed in accordance with its specific
terms or is otherwise breached. It is accordingly agreed that the parties shall
be entitled to seek an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at Law or in equity.

 

SECTION 11.11. Interpretive Rules. The words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement refer to this Agreement
as a whole and not to any particular provision of this Agreement, and all
Article and Section references are to this Agreement unless otherwise specified.
The words “include,” “includes” and “including” will be deemed to be followed by
the phrase “without limitation.” The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. No provision of this Agreement
shall be construed to require either party or their respective officers,
directors, subsidiaries or Affiliates to take any action which would violate or
conflict with any applicable Law. The word “if’ means “if and only if.” The word
“or” shall not be exclusive. The meanings given to terms defined herein will be
equally applicable to both the singular and plural forms of such terms. Whenever
the context may require, any pronoun includes the corresponding masculine,
feminine and neuter forms. Except as otherwise expressly provided herein, all
references to “dollars” or “$” will be deemed references to the lawful money of
the United States of America.

 

SECTION 11.12. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York. All Actions arising out
of or relating to this Agreement shall be heard and determined exclusively in
any New York federal court sitting in the Borough of Manhattan of The City of
New York; provided, however, that if such federal court does not have
jurisdiction over such Action, such Action shall be heard and determined
exclusively in any New York state court sitting in the Borough of Manhattan of
The City of New York. Consistent with the preceding sentence, the parties hereto
hereby (a) submit to the exclusive jurisdiction of any federal or state court
sitting in the Borough of Manhattan of The City of New York for the purpose of
any Action arising out of or relating to this Agreement brought by either party
hereto and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated by this Agreement may not be enforced
in or by any of the above-named courts. Each party further irrevocably consents
to the service of process out of any of the aforementioned courts in any such
Action by the mailing of copies thereof by mail to such party at its address set
forth in this Agreement, such service of process to be effective upon
acknowledgment of receipt by registered mail; provided, however, that nothing in
this Section 11.12 shall affect the right of any party to serve legal process in
any other manner permitted by law. The consent to jurisdiction set forth in this
Section 11.12 shall not constitute a general consent to service of process in
the State of New York and shall have no effect for any purpose except as
provided in this Section 11.12.

 

SECTION 11.13. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW

 

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ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.13.

 

SECTION 1 1.14. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement.

 

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IN WITNESS WHEREOF, Boston Scientific and Abbott have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.

 

 

BOSTON SCIENTIFIC CORPORATION

 

 

 

 

 

By:

/s/ Lawrence C. Best

 

 

 

Name:

Lawrence C. Best

 

 

Title:

Executive Vice President, Chief
Financial Officer

 

 

 

 

 

ABBOTT LABORATORIES

 

 

 

 

 

By:

/s/ Richard A. Gonzalez

 

 

 

Name:

Richard A. Gonzalez

 

 

Title:

President and Chief Operating
Officer, Medical Products
Group

 

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SCHEDULE 1.0l

 

RESTRICTED PERSONS

 

•     Johnson & Johnson

•     Medtronic, Inc.

•     St. Jude Medical, Inc.

•     Conor Medsystems, Inc.

•     ev3 Inc.

•                  any other Person that has publicly announced prior to Closing
an intention to develop a drug eluting stent product (other than any Person with
which any of Abbott, Guidant or Boston Scientific, as the context requires, has
an agreement or purchasing arrangement as of the date hereof)

 

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SCHEDULE 3.05

 

KNOWLEDGE

 

•     Fredericus A. Colen

Executive Vice President and Chief Technology Officer

 

•     Brian R. Burns

Senior Vice President, Quality

 

•     Paul W. Sandman

Executive Vice President and General Counsel

 

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SCHEDULE 5.08(k)

 

OEM Agreement dated May 9, 2002 between Abbott Vascular Devices Ireland Limited
and Medtronic Vascular Galway Limited, as amended.

 

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SCHEDULE 6.02(f)

PAYMENT PRINCIPLES

 

1.               SERP / Pension – An amount equal to:

 

(i)                                     The actuarially determined accumulated
benefit obligations attributable to the U.S. Transferred Employees, compared to

 

(ii)                                  The assets, accruals and reserves
attributable to the U.S. Transferred Employees.

 

This actuarial determination would be performed using the actuarial assumptions
used by Guidant in preparing its most recent 10-K; provided, however, the
discount rate will be determined as of the date of Closing in the same manner as
the discount rate was determined in Guidant’s most recent Form 10-K. Assets,
accruals, and reserves shall be allocated in proportion to the related
liability.

 

2.                Active Healthcare – An amount equal to:

 

(i)                                     The reserve established by Guidant at
Closing for unreported medical claims (IBNR) attributable to the U.S.
Transferred Employees, compared to

 

(ii)                                  The actual medical claims made by such
employees with respect to those previously unreported medical claims plus the
recalculated IBNR for such claims determined at a date six months following
Closing.

 

In the event these amounts cannot be so determined at a commercially reasonable
cost, Abbott and Boston will agree upon a fair and equitable method of making
such determination.

 

3.               401(K) /ESOP –This plan is not taken into account for purposes
of this schedule.

 

4.              Retiree Healthcare Plan - This plan is not taken into account
for purposes of this schedule.

 

5.              Other Employee Plans – Where either (i) plan assets, accruals or
reserves or (ii) plan liabilities can be determined on an individual
employee-by-employee basis at a commercially reasonable cost, they shall be so
determined for purposes of making the calculations hereunder. Where they cannot
be so determined, Abbott and Boston will agree upon a fair and equitable method
of making such determination.

 

6.               Plan Administration Costs – Plan administration costs will be
disregarded, and will not be a factor, in the calculations under this schedule.

 

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