Document:

<PAGE>

                                                                   EXHIBIT 10.17

                                OPTION AGREEMENT

                                  Dated As Of

                                 March 31, 2000

                                  RELATING TO

                           JAPANESE EDWARDS BUSINESS
<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)

                                                                            Page
                                                                            ----

ARTICLE I DEFINITIONS......................................................   1
1.1.   Definitions.........................................................   1
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ARTICLE II GRANT OF OPTION.................................................   6
2.1.   Grant of Option.....................................................   6
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2.2.   Exercise Period.....................................................   6
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2.3.   Manner of Exercise..................................................   6
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2.4.   Transfer of Purchased Business......................................   6
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ARTICLE III DETERMINATION OF STRIKE PRICE..................................   6
3.1.   Strike Price........................................................   6
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3.2.   Opening Net Worth...................................................   6
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3.3.   Closing Date Net Worth .............................................   7
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3.4.   Access to Information...............................................   8
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ARTICLE IV PURCHASE AND SALE...............................................   8
4.1.   Purchased Business..................................................   8
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4.2.   Excluded Assets.....................................................  10
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4.3.   Assumed Liabilities.................................................  11
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4.4.   Excluded Liabilities................................................  12
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ARTICLE V CLOSING; POST-CLOSING ADJUSTMENT.................................  12
5.1.   Conditions to Closing...............................................  12
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5.2.   Closing Date........................................................  13
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5.3.   Edwards Optionholder's  Deliveries at Closing.......................  13
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5.4.   Baxter Japan's Deliveries at Closing................................  13
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5.5.   Post Closing Adjustment.............................................  13
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5.6.   Non-Assignable Contracts............................................  13
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5.7.   Further Assurances..................................................  14
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5.8.   Novation of Assumed Liabilities.....................................  15
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ARTICLE VI REPRESENTATIONS AND WARRANTIES..................................  16
6.1.   Organization, Good Standing and Authority of Baxter Japan...........  16
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6.2.   Organization, Good Standing and Authority of Edwards Optionholder...  16
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6.3.   No Other Representations or Warranties..............................  16
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ARTICLE VII PRE-CLOSING COVENANTS..........................................  17
7.1.   Operation of Japanese Edwards Business..............................  17
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7.2.   Consents of Third Parties; Governmental Approvals...................  18
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7.3.   Services............................................................  18
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7.4.   Financial Statements................................................  19
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<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)

                                                                            Page
                                                                            ----

ARTICLE VIII POST-CLOSING COVENANTS........................................  19
8.1.   Collection of Accounts Receivable...................................  19
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8.2.   Agreements Relating to Edwards Optionholder and Baxter Japan........  20
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8.3.   Informal, Nondocumented Real Estate Leases..........................  20
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ARTICLE IX [INTENTIONALLY OMITTED].........................................  21

ARTICLE X EMPLOYEES AND EMPLOYEE BENEFIT MATTERS...........................  21
10.1.  Employment of Edwards Employees.....................................  21
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10.2.  Terminations/Layoff/Severance.......................................  21
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10.3.  Employee Benefit Plans..............................................  21
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10.4.  Transfer of Account Balances and Accrued Benefits...................  22
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10.5.  Welfare Benefits....................................................  22
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10.6.  Stock Purchase Plans................................................  23
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10.7.  Workers' Compensation...............................................  23
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10.8.  Vacation Pay Policy.................................................  23
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10.9.  Information to be Provided to Baxter................................  23
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10.10. Transfer of Employee Files..........................................  23
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10.11. Employment Solicitation.............................................  23
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ARTICLE XI INSURANCE MATTERS...............................................  24

ARTICLE XII INDEMNIFICATION................................................  27
12.1.  Indemnification by Edwards Optionholder.............................  27
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12.2.  Indemnification by Baxter Japan.....................................  27
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12.3.  Applicability of and Limitation on Indemnification..................  28
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12.4.  Adjustment of Indemnifiable Losses..................................  28
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12.5.  Procedures for Indemnification of Third Party Claims................  29
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12.6.  Procedures for Indemnification of Direct Claims.....................  31
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12.7.  Remedies Cumulative.................................................  31
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ARTICLE XIII DISPUTE RESOLUTION............................................  31
13.1.  General.............................................................  31
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13.2.  Escalation.  .......................................................  32
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13.3.  Arbitration.  ......................................................  32
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13.4.  Procedures..........................................................  32
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13.5.  Injunctive Relief...................................................  33
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ARTICLE XIV GENERAL PROVISIONS.............................................  33
14.1.  Notices.............................................................  33
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14.2.  Successors and Assigns..............................................  34
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14.3.  Access to Records after Closing.....................................  34
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14.4.  Entire Agreement; Amendments........................................  35
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<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)

                                                                            Page
                                                                            ----

14.5.  Interpretation......................................................  35
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14.6.  Waivers.............................................................  35
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14.7.  Expenses............................................................  35
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14.8.  Partial Invalidity..................................................  35
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14.9.  Execution in Counterparts...........................................  35
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14.10. Governing Law.......................................................  35
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14.11. Submission to Jurisdiction..........................................  36
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14.12. Termination.........................................................  36
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14.13. Survival of Obligations.............................................  36
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14.14. Currency............................................................  36
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<PAGE>

EXHIBITS

A    Description of Japanese Edwards Business
B    Form of Instrument of Assignment
C    Form of Instrument of Assumption
D    Valuation Date Balance Sheet
E    Form of TK Agreement

                                   SCHEDULES

1.1    Agreed Accounting Principles
4.1(iv)    Governmental Permits
4.1(v)    Real Estate Leases
4.1(vi)    Personal Property
4.1(vii)    Contracts
4.1(ix)    Product Registrations and Import Licenses
7.3    Services/Facilities
[10.4     Allocation of Pension Plan Assets]
<PAGE>

                                OPTION AGREEMENT

          OPTION AGREEMENT, dated as of March 31, 2000 (this "Agreement"),
                                                              ---------
between Baxter Limited, a Japanese corporation ("Baxter Japan"),  and Edwards
                                                 ------------
Lifesciences Limited, a Japanese corporation ("Edwards Optionholder").
                                               --------------------

          WHEREAS, Baxter Japan currently conducts all of the business of the
Cardiovascular Group of Baxter International Inc. in Japan, all as more
specifically described in Exhibit A hereto (the "Japanese Edwards Business");
                          ---------              -------------------------
and

          WHEREAS, Baxter Japan desires to grant to Edwards Optionholder, and
Edwards Optionholder desires to acquire from Baxter Japan, an irrevocable option
to purchase, on a going concern basis, the Japanese Edwards Business, all on the
terms and subject to the conditions set forth herein;

          NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Baxter Japan and
Edwards Optionholder as follows:

                                   ARTICLE I
                                  DEFINITIONS

1.1.  Definitions.  In this Agreement, the following terms have the meanings
      -----------
specified or referred to in this Section 1.1 and shall be equally applicable to
                                 -----------
both the singular and plural forms.  Any agreement referred to below shall mean
such agreement as amended, supplemented and modified from time to time to the
extent permitted by the applicable provisions thereof and by this Agreement.

          "Action" means any action, claim, suit, arbitration, inquiry,
           ------
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative entity,
agency or commission or any arbitration tribunal.

          "Affiliate" means, with respect to any Person, any other Person which
           ---------
directly or indirectly controls, is controlled by or is under common control
with such Person.

          "Agreed Accounting Principles" means Japanese generally accepted
           ----------------------------
accounting principles consistently applied, provided that, with respect to any
                                            --------
matter as to which there is more than one Japanese generally accepted accounting
principle, Agreed Accounting Principles means the generally accepted accounting
principles applied in the preparation of the Valuation Date Balance Sheet;

provided further that, notwithstanding the foregoing, Agreed Accounting
-------- -------
Principles shall include the accounting policies and be subject to the
allocation methodology and direct accounts described in Schedule 1.1; and
                                                        ------------
provided further that, for purposes of the Agreed Accounting Principles, no
-------- -------
known adjustments for items or matters, regardless of the amount thereof, shall
be deemed to be immaterial.
<PAGE>

          "Assumed Liabilities" has the meaning specified in Section 4.3.
           -------------------                               -----------

          "Baxter" means Baxter International Inc., a Delaware corporation.
           ------

          "Baxter Japan" has the meaning specified in the first paragraph of
           ------------
this Agreement.

          "Baxter Japan Change in Control" shall mean (i) the acquisition,
           ------------------------------
directly or indirectly, by any Person or Persons of more than 30% of the voting
stock of Baxter Japan or any Person that controls Baxter Japan, other than an
acquisition by Baxter of, or a Person or Persons that are controlled by Baxter
of, Baxter Japan, (ii) any merger or consolidation involving Baxter or any
Affiliate of Baxter that requires a vote of the stockholders of Baxter, or (iii)
the sale, assignment, transfer or other disposition (including any disposition
through a merger) of all or substantially all of the business and assets of any
Person that controls Baxter Japan.

          "Baxter Japan Group Member" means Baxter Japan and its Affiliates and
           -------------------------
their respective successors and assigns.

          "Baxter Japan Pension Plan" has the meaning specified in Section 10.4.
           -------------------------                               ------------

          "Closing" has the meaning specified in Section 5.2.
           -------                               -----------

          "Closing Date" has the meaning specified in Section 5.2.
           ------------                               -----------

          "Closing Date Balance Sheet" means the balance sheet established
           --------------------------
pursuant to the provisions of Section 3.3.
                              ------------

          "Contracts" means all contracts, agreements, arrangements, leases
           ---------
(other than Real Estate Leases), manufacturers' warranties, memoranda,
understandings and offers open for acceptance of any nature, whether written or
oral.

          "Divested Business" means any portion of the Japanese Edwards Business
           -----------------
that is divested by Baxter Japan between the date hereof and the Closing Date.

          "Edwards" means Edwards Lifesciences Corporation, a Delaware
           -------
corporation.

          "Edwards Division President" means any person appointed as President
           --------------------------
of the Edwards division of Baxter Japan and approved by Edwards.

          "Edwards Employees" means the employees of Baxter Japan who are
           -----------------
assigned to the Edwards division of Baxter Japan.

          "Edwards Optionholder" has the meaning specified in the first
           --------------------
paragraph of this Agreement.

          "Edwards Optionholder Change in Control" shall mean (i) the
           --------------------------------------
acquisition, directly or indirectly, by any Person or Persons of more than 30%
of the voting stock of Edwards Optionholder or any Person that controls Edwards
Optionholder, other than an acquisition by Edwards of, or a Person or Persons
that are controlled by

                                       2
<PAGE>

Edwards of, Edwards Optionholder, (ii) any merger or consolidation involving
Edwards or any Affiliate of Edwards that requires a vote of the stockholders of
Edwards, or (iii) the sale, assignment, transfer or other disposition (including
any disposition through a merger) of all or substantially all of the business
and assets of any Person that controls Edwards Optionholder.

          "Edwards Optionholder Group Member" means Edwards Optionholder and its
           ---------------------------------
Affiliates and their respective successors and assigns.

          "Edwards Products" means the products referred to in Exhibit A,
           ----------------
together with any additional products manufactured, imported or distributed by
the Japanese Edwards Business after the date hereof.

          "Encumbrance" means any lien, claim, charge, security interest,
           -----------
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restriction of any kind.

          "Estimated Strike Price" shall mean an amount equal to (Yen) [23.2
           ----------------------
billion plus the (Yen) equivalent of $30MM].

          "Excluded Assets" has the meaning specified in Section 4.2.
           ---------------                               -----------

          "Excluded Liabilities" has the meaning specified in Section 4.4.
           --------------------                               -----------

          "Exercise Period" shall mean the period during which the Option is
           ---------------
exercisable, as specified in Section 2.2.
                             -----------

          "Expense" means any and all expenses incurred in connection with
           -------
investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).

          "Final TK Balance Sheet" shall mean the balance sheet delivered by
           ----------------------
Baxter Japan as part of its full accounting as of the date of expiration or
termination of the TK Agreement.

          "Governmental Body" means any foreign, federal, state, local or other
           -----------------
governmental authority or regulatory body.

          "Governmental Permits" means all licenses, franchises, permits,
           --------------------
privileges, immunities, approvals and other authorizations from a Governmental
Body.

          "Indemnified Party" shall have the meaning specified in Section 12.4.
           -----------------                                      ------------

          "Indemnifying Party" shall have the meaning specified in Section 12.4.
           ------------------                                      ------------

          "Indemnity Payment" shall have the meaning specified in Section 12.5.
           -----------------                                      ------------

                                       3
<PAGE>

          "Instrument of Assignment" means an Instrument of  Assignment in the
           ------------------------
form of Exhibit B.
        ---------

          "Instrument of Assumption" means an Instrument of Assumption in the
           ------------------------
form of Exhibit C.
        ---------

          "Insurance Amount" has the meaning specified in Section 11.4.
           ----------------                               ------------

          "Insurance Charges" has the meaning specified in Section 11.7.
           -----------------                               ------------

          "IV Business" means the business of importing and distributing
           -----------
Infusors, TDR solutions and sets, EIS infusion pumps, Interlink products,
Epidural trays [and Sabratek pumps].

          "Japan Distribution Agreement" means the Japan Distribution Agreement
           ----------------------------
dated as of [March 31, 2000] between Baxter Japan and Edwards Lifesciences LLC.

          "Japanese Edwards Business" has the meaning specified in the first
           -------------------------
recital.

          "Liability" means any and all debts, liabilities and obligations,
           ---------
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising (unless otherwise
specified in this Agreement), including all costs and expenses relating thereto,
and including, without limitation, those debts, liabilities and obligations
arising under any law, rule, regulation, Action, threatened Action, order or
consent decree of any Governmental Body or any award of any arbitrator of any
kind, and those arising under any contract, commitment or undertaking.

          "Loss" means any and all losses, costs, obligations, liabilities,
           ----
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges.

          "Net Worth Adjustment" means (i) the Closing Net Worth (as defined in
           --------------------
Section 3.3) minus (ii) the Opening Net Worth (as defined in Section 3.2).
-----------                                                  -----------

          "New Subsidiary" has the meaning specified in Section 2.4.
           --------------                               -----------

          "Notice of Exercise" has the meaning specified in Section 2.3.
           ------------------                               -----------

          "Opening Balance Sheet" means the balance sheet established pursuant
           ---------------------
to the provisions of Section 3.2.
                     -----------

          "Operating Agreements" shall mean the agreements referred to in
           --------------------
Section 7.3.
-----------

          "Option" has the meaning specified in Section 2.1.
           ------                               -----------

          "Owned Real Property" means each parcel of real property owned by
           -------------------
Baxter Japan and used in or relating to the Japanese Edwards Business.

          "Permitted Encumbrances" means (a) liens for taxes and other
           ----------------------
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary

                                       4
<PAGE>

course of business for sums not yet due and payable and (c) other liens or
imperfections on property which are not material in amount or do not materially
detract from the value or materially impair the existing use of the property
affected by such lien or imperfection.

          "Person" means any individual, corporation, partnership, joint
           ------
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.

          "Pre-Closing Claims Administration"  has the meaning specified in
           ---------------------------------
Section 11.6.
------------

          "Purchased Business" has the meaning specified in Section 4.1.
           ------------------                               -----------

          "Real Estate Leases" has the meaning specified in Section 4.1(d).
           ------------------                               --------------

          "Retained Business" means all businesses of Baxter Japan other than
           -----------------
the Japanese Edwards Business.

          "Shared Agreements" has the meaning specified in Section 8.2(a).
           -----------------                               --------------

          "Software" means computer software programs and software systems,
           --------
including, without limitation, all databases, compilations, tool sets,
compilers, higher level or "proprietary" languages, related documentation and
materials, whether in source code, object code or human readable form.

          "Strike Price" has the meaning specified in Section 3.1.
           ------------                               -----------

          "Subsidiary" means, when used with reference to any Person, any
           ----------
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such Person or by any one or more of its Subsidiaries, or by such Person and
one or more of its Subsidiaries; provided, however, that no Person that is not
                                 --------  -------
directly or indirectly wholly-owned by any other Person shall be a Subsidiary of
such other Person unless such other Person controls, or has the right, power or
ability to control, that Person.

          "Tax" means any net income, alternative or add-on minimum, gross
           ---
income, gross receipts, consumption, property, sales, use, transfer, gains,
license, excise, employment, payroll, withholding or minimum tax, or any other
tax custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Body.

          "TK Agreement" means a Tokumei Kumiai Agreement between Baxter Japan
           ------------
and Edwards Lifesciences Finance Limited, in substantially the form attached as
Exhibit E hereto.

          "Transferred Employee" has the meaning specified in Section 10.1.
           --------------------                               ------------

                                       5
<PAGE>

          "Valuation Date Balance Sheet" means the December 31, 1999 balance
           ----------------------------
sheet of the Japanese Edwards Business attached as Exhibit D hereto.
                                                   ---------

                                  ARTICLE II
                                GRANT OF OPTION

2.1.  Grant of Option.  In consideration of the payment by Edwards Optionholder
      ---------------
of (Yen) [equivalent of $12.34 MM] and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Baxter Japan hereby grants and issues to Edwards Optionholder, upon the terms
and conditions set forth herein, an irrevocable option (the "Option") to
                                                             ------
purchase all, but not less than all, of the Purchased Business in exchange for
(i) cash in an amount equal to the Strike Price,  and (ii) the assumption by
Edwards Optionholder of the Assumed Liabilities.

2.2.  Exercise Period.  The Option may be exercised at any time (i) from and
      ---------------
including August 1, 2002  through and including the earlier of (x) March 31,
2005 and (y) 180 days after the occurrence of an Edwards Optionholder Change in
Control, (ii) in the event of a Baxter Japan Change in Control, during a period
of 180 days thereafter, and (iii) in the event Baxter Japan provides a notice of
termination under Article 12(4) of the TK Agreement, during a period of 180 days
after such notice is given; provided, however, that if Edwards provides a notice
                            --------  -------
of termination under Article 12(1) of the TK Agreement, the Option may be
exercised only during a period of 180 days after such notice is given, and
clauses (i), (ii) and (iii) above shall no longer apply.

2.3.  Manner of Exercise.  Edwards Optionholder may exercise the Option at any
      ------------------
time during the Exercise Period by delivering a written notice of exercise (the
"Notice of Exercise") to Baxter Japan.
 ------------------

2.4.  Transfer of Purchased Business.  Edwards Optionholder agrees that Baxter
      ------------------------------
Japan may, at its option, at any time prior to the [exercise of the Option]
[Closing Date], transfer all of the Purchased Business and Assumed Liabilities,
determined as of the date of transfer, to a subsidiary of Baxter Japan (the "New
                                                                             ---
Subsidiary").  If so, the parties will amend this Agreement to provide for
----------
Edwards Optionholder to have the option to purchase all of the capital stock of
the New Subsidiary in exchange for cash in an amount equal to the Strike Price,
and the remainder of this Agreement shall be amended to the extent necessary or
advisable as a result of such change in structure.

                                  ARTICLE III
                         DETERMINATION OF STRIKE PRICE

3.1.  Strike Price.  (a)  The "Strike Price" shall be an amount equal to (i)
      ------------
(Yen) [23.2 billion plus the (Yen) equivalent of $30MM] plus (ii) the Net Worth
Adjustment.

3.2.  Opening Net Worth.
      -----------------

                                       6
<PAGE>

(a)  The term "Opening Net Worth" shall mean (i) the sum of all assets reflected
               -----------------
     in the Opening Balance Sheet minus (ii) the sum of all liabilities
     reflected in the Opening Balance Sheet.

(b)  As promptly as practicable following the date hereof, Baxter Japan shall
     prepare, in accordance with the Agreed Accounting Principles, a balance
     sheet as of the date hereof with respect to the Purchased Business and the
     Assumed Liabilities, as if the Closing Date were March 31, 2000  (the
     "Preliminary Opening Balance Sheet"), and shall deliver same to Edwards
     ----------------------------------
     Optionholder.

(c)  Promptly following receipt of the Preliminary Opening Balance Sheet,
     Edwards Optionholder may review the same and, within 30 days after the date
     of such receipt, may deliver to Baxter Japan a certificate (signed by its
     chief financial officer or its chief accounting officer) setting forth its
     objections to the Preliminary Opening Balance Sheet, together with a
     summary of the reasons therefor and calculations which, in its view, are
     necessary to eliminate such objections.  In the event Edwards Optionholder
     does not so object within such 30-day period, the Preliminary Opening
     Balance Sheet shall be final and binding as the Opening Balance Sheet for
     purposes of this Agreement.

(d)  In the event Edwards Optionholder so objects within such 30-day period,
     Edwards Optionholder and Baxter Japan shall use their reasonable efforts to
     resolve by written agreement (the "Opening Agreed Adjustments") any
                                        --------------------------
     differences as to the Opening Balance Sheet and, in the event Baxter Japan
     and Edwards Optionholder so resolve all such differences, the Preliminary
     Opening Balance Sheet, as adjusted by the Opening Agreed Adjustments, shall
     be final and binding as the Opening Balance Sheet for purposes of this
     Agreement.

(e)  If all such differences are not resolved by Opening Agreed Adjustments
     within the 30-day period next following such 30-day objection period, then
     Edwards Optionholder and Baxter Japan shall submit the objections that are
     then unresolved to an international accounting firm acceptable to both
     Baxter Japan and Edwards Optionholder and such firm (the "Accounting Firm")
                                                               ---------------
     shall be directed by Edwards Optionholder and Baxter Japan to resolve the
     unresolved objections (based solely on the presentations by Edwards
     Optionholder and by Baxter Japan as to whether any disputed matter had been
     determined in a manner consistent with the Agreed Accounting Principles) as
     promptly as reasonable practicable and to deliver written notice to each of
     Edwards Optionholder and Baxter Japan setting forth its resolution of the
     disputed matters.  The Preliminary Opening Balance Sheet, after giving
     effect to any Opening Agreed Adjustments and to the resolution of disputed
     matters by the Accounting Firm, shall be final and binding as the Opening
     Balance Sheet for purposes of this Agreement.

3.3.  Closing Date Net Worth .
      -----------------------

(a)  The term "Closing Date Net Worth" shall mean (i) the sum of all assets
               ----------------------
     reflected in the Closing Date Balance Sheet minus (ii) the sum of all
     liabilities reflected in the Closing Date Balance Sheet.

(b)  As promptly as practicable following the Closing Date (but not later than
     30 days after the Closing Date), Baxter Japan shall prepare, in accordance
     with the Agreed

                                       7
<PAGE>

     Accounting Principles, a balance sheet as of the Closing Date with respect
     to the Purchased Business and the Assumed Liabilities (the "Preliminary
                                                                 -----------
     Closing Date Balance Sheet") and shall deliver same to
     --------------------------
     Edwards Optionholder.

(c)  Promptly following receipt of the Preliminary Closing Date Balance Sheet,
     Edwards Optionholder may review the same and, within 30 days after the date
     of such receipt, may deliver to Baxter Japan a certificate (signed by its
     chief financial officer or its chief accounting officer) setting forth its
     objections to the Preliminary Closing Date Balance Sheet, together with a
     summary of the reasons therefor and calculations which, in its view, are
     necessary to eliminate such objections.  In the event Edwards Optionholder
     does not so object within such 30-day period, the Preliminary Closing Date
     Balance Sheet shall be final and binding as the Closing Date Balance Sheet
     for purposes of this Agreement.

(d)  In the event Edwards Optionholder so objects within such 30-day objection
     period, Edwards Optionholder and Baxter Japan shall use their reasonable
     efforts to resolve by written agreement (the "Closing Agreed Adjustments")
                                                   --------------------------
     any differences as to the Preliminary Closing Date Balance Sheet and, in
     the event Baxter Japan and Edwards Optionholder so resolve all such
     differences, the Preliminary Closing Date Balance Sheet as adjusted by the
     Closing Agreed Adjustments shall be final and binding as the Closing Date
     Balance Sheet for purposes of this Agreement.

(e)  If all such differences are not resolved by the Closing Agreed Adjustments
     within the 30-day period next following such 30-day period, then Edwards
     Optionholder and Baxter Japan shall submit the objections that are then
     unresolved to the Accounting Firm and such firm shall be directed by
     Edwards Optionholder and Baxter Japan to resolve the unresolved objections
     (based solely on the presentations by Edwards Optionholder and by Baxter
     Japan as to whether any disputed matter had been determined in a manner
     consistent with the Agreed Accounting Principles) as promptly as reasonably
     practicable and to deliver written notice to each of Edwards Optionholder
     and Baxter Japan setting forth its resolution of the disputed matters.  The
     Preliminary Closing Date Balance Sheet, after giving effect to any Closing
     Agreed Adjustments and to the resolution of disputed matters by the
     Accounting Firm, shall be final and binding as the Closing Date Balance
     Sheet for purposes of this Agreement.

3.4.  Access to Information.  The parties hereto shall make available to each
      ---------------------
other and, if applicable, the Accounting Firm, such books, records and other
information (including work papers) as any of the foregoing may reasonably
request to prepare or review the Preliminary Opening Balance Sheet, the
Preliminary Closing Date Balance Sheet or any matters submitted to the
Accounting Firm pursuant to the terms hereof.  The fees and expenses of the
Accounting Firm hereunder shall be paid 50% by Edwards Optionholder and 50% by
Baxter Japan.

                                  ARTICLE IV
                               PURCHASE AND SALE

4.1.  Purchased Business.  In the event that Edwards Optionholder exercises the
      ------------------
Option, upon the terms and subject to the conditions of this Agreement, on the
Closing Date,

                                       8
<PAGE>

Baxter Japan shall sell, transfer, assign, convey and deliver to Edwards
Optionholder, and Edwards Optionholder shall purchase from Baxter Japan, on a
going concern basis, all of Baxter Japan's right, title and interest in and
under the Japanese Edwards Business and all of the assets and properties of
Baxter Japan of every kind and description, wherever located, real, personal or
mixed, tangible or intangible, relating exclusively to the Japanese Edwards
Business as the same shall exist on the Closing Date (herein collectively called
the "Purchased Business"), including, without limitation, all right, title and
     ------------------
interest of Baxter Japan in, to and under:

(i)  all notes, accounts and other receivables generated by the Japanese Edwards
     Business;

(ii) all prepayments relating exclusively to the Japanese Edwards Business;

(iii)  all raw materials, supplies, work-in-process, spare parts and other
materials relating exclusively to the Japanese Edwards Business, other than
items of inventory relating to products to be supplied by Baxter Japan to
Edwards Optionholder after the Closing under Operating Agreements entered into
pursuant to Section 7.3;
            -----------

(iv) all Governmental Permits that relate exclusively to the Japanese Edwards
     Business including those listed or described in Schedule 4.1(iv);
                                                     ----------------

(v)  the real estate leases and leasehold improvements that relate exclusively
     to the Japanese Edwards Business including those listed or described in
     Schedule 4.1(v) (the "Real Estate Leases");
     ---------------       ------------------

(vi) all machinery, equipment, vehicles, furniture and other personal property
     that relate exclusively to the Japanese Edwards Business including those
     listed or described in Schedule 4.1(vi);
                            ----------------

(vii)  all Contracts that relate exclusively to the Japanese Edwards Business,
including the Japan Distribution Agreement and the Contracts listed or described
in Schedule 4.1(vii);
   -----------------

(viii)  all trade secrets and other proprietary or confidential information used
exclusively in connection with the Japanese Edwards Business;

(ix) all product registrations and import licenses that relate exclusively to
the Japanese Edwards Business including those listed or described in
     Schedule 4.1(ix);
     ----------------

(x)  all (x) Software that relates exclusively to the Japanese Edwards Business,
(y) PC-based Software located on hardware included in the assets of the
Purchased Business and (z) any Contracts related to the aforementioned
Software;

(xi) all of Baxter Japan's rights, claims or causes of action against third
parties relating exclusively to the Japanese Edwards Business;

                                       9
<PAGE>

(xii)  all books and records (including all data and other information stored on
discs, tapes or other media) of Baxter Japan relating exclusively to the
Japanese Edwards Business;

(xiii)  all office supplies, production supplies, purchase orders, forms,
labels, shipping material, art work, catalogues, sales brochures, operating
manuals and advertising and promotional material and all other printed or
written material that relate exclusively to the Japanese Edwards Business;

(xiv)  Baxter Japan's interest in and to all telephone, telex and telephone
facsimile numbers, domain names and other directory listings utilized
exclusively in connection with the Japanese Edwards Business; and

(xv) all other assets, tangible or intangible, including all goodwill and all
deposits or other security from customers of the Japanese Edwards Business,
that are exclusive to the operations of, or otherwise relate exclusively
to, the Japanese Edwards Business.

4.2.  Excluded Assets.  Notwithstanding the provisions of Section 4.1, the
      ---------------                                     -----------
Purchased Business shall not include the following (herein referred to as the

"Excluded Assets"):
----------------
(i)  all cash, bank deposits and cash equivalents, except for (i) all
     deposits or other security from customers of the Japanese Edwards Business,
     (ii) deposits securing bonds, letters of credit, leases and all other
     obligations related to the Japanese Edwards Business and (iii) petty cash
     and impressed funds related to the Japanese Edwards Business;

(ii) the name "Baxter" or any related or similar trade names, trademarks,
     service marks or logos to the extent the same incorporate the name "Baxter"
     or any variation thereof;

(iii)  Baxter Japan's rights, claims or causes of action against third parties
relating to the Japanese Edwards Business which may arise in connection with the
discharge by Baxter Japan of the Excluded Liabilities;

(iv)  [all contracts of insurance;]

(v)  all corporate minute books, stock transfer books, the corporate seal and
     all hanko of Baxter Japan;
         -----
(vi) any right, title or interest of Baxter Japan in any tax refund, credit or
     benefit (including any income with respect thereto) relating to the
     operations of the Japanese Edwards Business prior to the Closing Date;

(vii)  all assets relating to all employee benefit plans of Baxter Japan, other
than as provided in Article X;
                    ---------

                                       10
<PAGE>

(viii)  all real estate owned or leased by Baxter Japan at its Miyazaki plant
and all leasehold improvements thereon except for those leasehold improvements
specifically listed or described in Schedule 4.1(v);
                                    ---------------

(ix)  the IV Business; and

(x)  All other assets, properties and rights of Baxter Japan not used
     exclusively in the conduct of the Japanese Edwards Business and not
     specifically included in the Purchased Business.

4.3.  Assumed Liabilities.  On the Closing Date, Edwards Optionholder shall
      -------------------
assume and agree to discharge, in accordance with their respective terms and
subject to the respective conditions thereof, all contractual and other
Liabilities of Baxter Japan arising out of or related to the Japanese Edwards
Business, any Divested Business and/or any of the past or present facilities of
Baxter Japan used primarily in connection with the Japanese Edwards Business or
any Divested Business, including, without limitation:

(i)  All Liabilities in respect of Taxes except income Taxes;

(ii) All Liabilities of Baxter Japan under the Contracts and Real Estate Leases
     included in the Purchased Business;

(iii)  All Liabilities of Baxter Japan under the TK Agreement, other than
payment obligations under Articles 11 and 12 of the TK Agreement;

(iv) All warranty, performance and similar obligations entered into or made
     prior to the Closing Date with respect to the products or services of the
     Japanese Edwards Business;

(v)  All Liabilities related to any and all Actions asserting a violation of any
     law, rule or regulation related to or arising out of the operations of the
     Japanese Edwards Business, whether before or after the Closing Date;

(vi) All Liabilities arising under any laws regarding the management, control
     and clean-up of hazardous materials (including off-site waste disposal
     liabilities) relating to or arising out of the operations of the Japanese
     Edwards Business, whether before or after the Closing Date;

(vii)  All Liabilities in connection with workers' compensation claims of past,
current or prospective employees of the Japanese Edwards Business, whether
incurred prior to, on or after the Closing Date;

(viii)  All Liabilities relating to severance or termination of any Edwards
Employees whether before or after the Closing Date, and including any Edwards
Employees who do not accept employment by Edwards Optionholder at the Closing
Date;

                                       11
<PAGE>

(ix) All Liabilities associated with the transfer of assets from the Baxter
     Japan Pension Plan to the Edwards Japan Pension Plan; and

(x)  All other Liabilities relating to the Japanese Edwards Business, whether
     existing on the Closing Date or arising at any time or from time to time
     after the Closing Date, and whether based on circumstances, events or
     actions arising before or after the Closing Date, whether or not such
     Liabilities shall have been disclosed herein, and whether or not reflected
     on the books and records of Baxter Japan.

All of the foregoing liabilities and obligations to be assumed by Edwards
Optionholder hereunder (excluding any Excluded Liabilities) are referred to
herein as the "Assumed Liabilities."
               -------------------

4.4.  Excluded Liabilities.  Edwards Optionholder shall not assume or be
      --------------------
obligated to pay, perform or otherwise discharge any Liability of Baxter Japan
not expressly assumed by Edwards Optionholder pursuant to Section 4.3 (all such
                                                          -----------
liabilities and obligations not being assumed being herein called the "Excluded
                                                                       --------
Liabilities") and, notwithstanding anything to the contrary in Section 4.3, none
-----------                                                    -----------
of the following shall be Assumed Liabilities for purposes of this Agreement:

(i)  any Liabilities in respect of income Taxes; and

(ii) any Liabilities or obligations in respect of any Excluded Assets.

                                   ARTICLE V
                        CLOSING; POST-CLOSING ADJUSTMENT

5.1.  Conditions to Closing.  (a)  Following exercise of the Option, the
      ---------------------
obligation of Baxter Japan to close the transactions contemplated hereby is
subject to the satisfaction or the waiver by Baxter Japan of each of the
following conditions:

(i)  The absence of any material statutory, regulatory or judicial prohibition
     to the consummation of the transactions contemplated hereby; and

(ii) The completion of the transfer from Baxter Japan to Edwards Optionholder of
     all material Japanese import approvals and  product registrations for the
     Edwards Products or the receipt by Baxter Japan of an agreement by Edwards,
     in form and substance satisfactory to Baxter Japan in its sole discretion,
     to indemnify Baxter Japan and its Affiliates for any failure to complete
     such transfer.

(b)  Following exercise of the Option, the obligation of Edwards Optionholder to
     close the transactions contemplated hereby is subject to the satisfaction
     or the waiver by Edwards Optionholder of each of the following conditions:

(i)  The absence of any material statutory, regulatory or judicial prohibition
     to the consummation of the transactions contemplated hereby; and

                                       12
<PAGE>

(ii) The completion of the transfer of all material Japanese import approvals
     and product registrations for the Edwards Products from Baxter Japan to
     Edwards Optionholder.

5.2.  Closing Date.  The closing of the transactions contemplated by this
      ------------
Agreement (the "Closing") shall be consummated at __:00 A.M., local time, as
                -------
soon as practicable after satisfaction or waiver of the conditions set forth in

Section 5.1(a) (ii) and 5.1(b)(ii), or at such other date and time as may be
-------------------     ----------
agreed upon by Edwards Optionholder and Baxter Japan, at the offices of
_________________, or at such other place or at such other time as shall be
agreed upon by Edwards Optionholder and Baxter Japan.  The time and date on
which the Closing is actually held are sometimes referred to herein as the
"Closing Date".
-------------

5.3.  Edwards Optionholder's  Deliveries at Closing.  Subject to fulfillment or
      ---------------------------------------------
waiver by Edwards Optionholder of the conditions set forth in Section 5.1(b), at
                                                              --------------
Closing Edwards Optionholder shall (i) pay Baxter Japan an amount equal to the
Estimated Strike Price by wire transfer of immediately available funds to the
account designated in writing by Baxter Japan and (ii) deliver to Baxter Japan a
duly executed Instrument of Assumption and duly executed counterparts of the
Operating Agreements.

5.4.  Baxter Japan's Deliveries at Closing.  Subject to fulfillment or waiver by
      ------------------------------------
Baxter Japan of the conditions set forth in Section 5.1(a), at Closing Baxter
                                            --------------
Japan shall deliver to Edwards Optionholder (i) a duly executed Instrument of
Assignment and duly executed counterparts of the Operating Agreements and (ii)
such other certificates and documents of title, assignment, transfer and
conveyance as the parties shall reasonably deem necessary to transfer title in
and to the Purchased Business.

5.5.  Post Closing Adjustment.  Promptly (but not later than five days) after
      -----------------------
the Closing Date Balance Sheet becomes final and binding pursuant to Section
                                                                     -------
3.3:
---

(a)  if the Strike Price exceeds the Estimated Strike Price, Edwards
     Optionholder shall pay to Baxter Japan, by wire transfer of immediately
     available funds to such bank account of Baxter Japan as Baxter Japan shall
     designate in writing to Edwards Optionholder, the amount of such excess,
     plus interest on such amount from the Closing Date to the date of payment
     thereof at [interest rate to come from Kent Stemper]; or

(b)  if the Estimated Strike Price exceeds the Strike Price, Baxter Japan shall
     pay to Edwards Optionholder, by wire transfer of immediately available
     funds to such bank account of Edwards Optionholder as Edwards Optionholder
     shall designate in writing to Baxter Japan, the amount of such excess, plus
     interest on such excess from the Closing Date to the date of payment
     thereof at [interest rate to come from Kent Stemper].

5.6.  Non-Assignable Contracts.  In the event and to the extent that the parties
      ------------------------
are unable to obtain any consent, approval or amendment to any Contract, lease,
license or other rights relating to the Japanese Edwards Business that otherwise
would be transferred or assigned to Edwards Optionholder or one of its
Subsidiaries as contemplated by this Agreement or any

                                       13
<PAGE>

other agreement or document contemplated hereby, (i) Baxter Japan shall continue
to be bound thereby and the purported transfer or assignment to Edwards
Optionholder shall automatically be deemed deferred until such time as all legal
impediments are removed and/or all necessary consents have been obtained, and
(ii) unless not permitted by the terms thereof or by law, Edwards Optionholder
shall pay, perform and discharge fully all the obligations of Baxter Japan
thereunder from and after the Closing Date, or such earlier date as such
transfer or assignment otherwise would have taken place, and indemnify Baxter
Japan and its Affiliates for all indemnifiable Losses arising out of such
performance by Edwards Optionholder. Baxter Japan shall, without further
consideration therefor, pay and remit to Edwards Optionholder promptly all
monies, rights and other considerations received in respect of such performance.
Baxter Japan shall exercise or exploit its rights and options under all such
Contracts, leases, licenses and other rights and commitments referred to in this
Section 5.6 only as reasonably directed by Edwards Optionholder and at Edwards
-----------
Optionholder's expense. If and when any such consent shall be obtained or such
Contract, lease, license or other right shall otherwise become assignable or be
able to be novated, Baxter Japan shall promptly assign and novate (to the extent
permissible) all of its rights and obligations thereunder to Edwards
Optionholder without payment of further consideration, and Edwards Optionholder
shall, without the payment of any further consideration therefor, assume such
rights and obligations.  To the extent that the assignment of any Contract,
lease, license or other right (or the proceeds thereof) pursuant to this Section
                                                                         -------
5.6 is prohibited by law, the assignment provisions of this Section 5.6 shall
---                                                         -----------
operate to create a subcontract with Edwards Optionholder to perform each
relevant unassignable Contract, lease or license of Baxter Japan at a
subcontract price equal to the monies, rights and other considerations received
by Baxter Japan with respect to the performance by Edwards Optionholder under
such subcontract.

5.7.  Further Assurances.  (a)  In addition to the actions specifically provided
      ------------------
for elsewhere in this Agreement, each of the parties shall use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws, regulations and agreements to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement and the other agreements and documents contemplated hereby.  Without
limiting the generality of the foregoing, each party shall cooperate with the
other party to execute and deliver, or use commercially reasonable efforts to
cause to be executed and delivered, all instruments, including instruments of
conveyance, assignment and transfer, and to make all filings with, and to obtain
all consents, approvals or authorizations of, any Governmental Body or any other
Person under any permit, license, Contract or other instrument, and to take all
such other actions as such party may reasonably be requested to take by the
other party from time to time, consistent with the terms of this Agreement, in
order to confirm the title of Edwards Optionholder to all of the Japanese
Edwards Business, to put Edwards Optionholder in actual possession and operating
control of the Purchased Business and to permit Edwards Optionholder to exercise
all rights with respect thereto and to effectuate the provisions and purposes of
this Agreement, and the other agreements and documents contemplated hereby;
provided, however, that Edwards Optionholder shall be solely liable for the
--------  -------
payment of any costs associated with transferring any import approvals and
product registrations for the Edwards Products; and provided further, that
                                                    -------- -------
except as stated in the previous proviso, neither party shall be obligated to
pay any consideration to any third party in connection with any of the
foregoing.  In addition, Baxter Japan shall use reasonable efforts to remove or
cause to be removed any liens for borrowed money existing on the Purchased
Business immediately prior to the Closing Date other

                                       14
<PAGE>

than liens securing Assumed Liabilities or liens incurred in connection with the
transactions contemplated by this Agreement.

(b)  If, as a result of mistake, oversight or otherwise, any asset reasonably
     necessary to the conduct of the Japanese Edwards Business is not
     transferred to Edwards Optionholder, or any asset reasonably necessary to
     the conduct of the Retained Business is transferred to Edwards
     Optionholder, Edwards Optionholder and Baxter Japan shall negotiate in good
     faith after the Closing Date to determine whether such asset should be
     transferred to Edwards Optionholder or Baxter Japan, as the case may be,
     and/or the terms and conditions upon which such asset shall be made
     available to Edwards Optionholder or Baxter Japan, as the case may be.
     Unless expressly provided to the contrary in this Agreement and the other
     agreements and documents contemplated hereby, if as a result of mistake,
     oversight or otherwise, any Liability arising out of or relating to the
     Japanese Edwards Business is retained by Baxter Japan, or any Liability
     arising out of or relating to the Retained Business is assumed by Edwards
     Optionholder, Edwards Optionholder and Baxter Japan shall negotiate in good
     faith after the Closing Date to determine whether such Liability should be
     transferred to Edwards Optionholder or Baxter Japan, as the case may be,
     and/or the terms and conditions upon which any such Liability shall be
     transferred.

(c)  If either party identifies any commercial or other service that is needed
     to assure a smooth and orderly transition of the Japanese Edwards Business
     in connection with the consummation of the transactions contemplated
     hereby, and that is not otherwise governed by the provisions of this
     Agreement or the Operating Agreements, the parties will cooperate in
     determining whether there is a mutually acceptable arm's-length basis on
     which one party will provide such service to the other party.

5.8.  Novation of Assumed Liabilities.  (a)  It is expressly understood and
      -------------------------------
agreed to by the parties that upon the assumption by Edwards Optionholder of the
Assumed Liabilities, Baxter Japan and its officers, directors, and employees
shall be released unconditionally by Edwards Optionholder from any and all
Liability, whether joint, several or joint and several, for the discharge,
performance or observance of any of the Assumed Liabilities, so that Edwards
Optionholder will be solely responsible for such Assumed Liabilities.

(b)  Edwards Optionholder shall, at the request of Baxter Japan, use
     commercially reasonable efforts to obtain, or cause to be obtained, any
     consent, approval, release, substitution or amendment required to novate
     (including with respect to any government contract) or assume all
     obligations under the Assumed Liabilities, or to obtain in writing the
     unconditional release of all parties to such arrangements other than
     Edwards Optionholder and its Affiliates; provided, however, that Edwards
                                              --------  -------
     Optionholder shall not be obligated to pay any consideration therefor to
     any third party from whom such consents, approvals, releases, substitutions
     or amendments are requested.

(c)  In the event that the Parties are unable to obtain a novation or assignment
     and release with respect to a particular Contract included in the Purchased
     Business, at the expiration of the base term of such Contract, Edwards
     Optionholder agrees that it will not exercise any option to renew such
     Contract or, to the extent such Contract provides for automatic renewal,
     Edwards Optionholder agrees that it will not allow such Contract to enter
     an auto-

                                       15
<PAGE>

     renewal period unless Edwards Optionholder obtains the prior written
     consent of Baxter Japan to such extension or auto-renewal.

                                  ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

6.1.  Organization, Good Standing and Authority of Baxter Japan.  Baxter Japan
      ---------------------------------------------------------
hereby represents and warrants to Edwards Optionholder as follows: Baxter Japan
is a corporation duly organized and validly existing and in good standing under
the laws of Japan. Baxter Japan has full power and authority to execute, deliver
and perform this Agreement. The execution, delivery and performance of this
Agreement by Baxter Japan have been duly authorized and approved by Baxter
Japan's board of directors and stockholders. This Agreement has been duly
authorized, executed and delivered by Baxter Japan.

6.2.  Organization, Good Standing and Authority of Edwards Optionholder.
      -----------------------------------------------------------------
Edwards Optionholder represents and warrants to Baxter Japan as follows: Edwards
Optionholder is a corporation duly organized and validly existing under the laws
of Japan. Edwards Optionholder has full power and authority to execute, deliver
and perform this Agreement. The execution, delivery and performance of this
Agreement by Edwards Optionholder has been duly authorized and approved by
Edwards Optionholder's board of directors and do not require the further
authorization or consent of Edwards Optionholder or its stockholder. This
Agreement has been duly authorized, executed and delivered by Edwards
Optionholder.

6.3.  No Other Representations or Warranties.  Baxter Japan does not represent
      --------------------------------------
or warrant in any way (i) as to the value or freedom from encumbrance of, or any
other matter concerning, any of the Purchased Business or (ii) as to the legal
sufficiency to convey title to any part of the Purchased Business on the
execution, delivery and filing of the Instrument of Assignment.  ALL ASSETS
INCLUDED IN THE PURCHASED BUSINESS ARE BEING TRANSFERRED ON AN "AS IS, WHERE IS"
BASIS WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY
OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and Edwards Optionholder
shall bear the economic and legal risks that any conveyances of such assets
shall prove to be insufficient or that Edwards Optionholder's title to any such
assets shall be other than good and marketable and free of encumbrances.  Baxter
Japan does not make any representation or warranty with respect to whether the
consents, approvals, or filings and applications obtained or made prior to
consummation of the transactions contemplated by this Agreement shall satisfy
the provisions of all applicable agreements or the requirements of all
applicable laws or judgments, and, subject to Section 5.6, Edwards Optionholder
                                              -----------
shall bear the economic and legal risk that any necessary consents or approvals
are not obtained or that any requirements of law or judgments are not complied
with.

                                       16
<PAGE>

                                  ARTICLE VII
                             PRE-CLOSING COVENANTS

7.1.  Operation of Japanese Edwards Business.  (a)  Until either (i) the Closing
      ---------------------------------------
Date (if the Option is exercised) or (ii) the end of the Exercise Period (if the
Option is not exercised), Baxter Japan shall operate and carry on the Japanese
Edwards Business (pursuant to the terms of the TK Agreement (if applicable))
only in the ordinary course and substantially as presently operated and shall
not, without the express written approval of Edwards Optionholder:

(i)  change the primary line of business of the Japanese Edwards Business; or

(ii) sell, lease (as lessor), transfer or otherwise dispose of, or mortgage or
     pledge, any of the assets of the Japanese Edwards Business that, upon
     exercise of the Option, would constitute part of the Purchased Business
     (including, without limitation, Baxter Japan's rights under the
     Distribution Agreement), other than accounts receivable, inventory and
     other property sold or otherwise disposed of for fair value in the ordinary
     course of the Japanese Edwards Business consistent with past practice;
     provided, however, that this clause (ii) shall not apply to any transfer of
     all of the assets of the Japanese Edwards Business to an Affiliate of
     Baxter Japan in which case all of such transferred assets shall remain
     subject to the Option.

(b)  If the Option is exercised, then from and after the date it receives the
     Notice of Exercise through and including the Closing Date, Baxter Japan
     shall not, without the approval of the Edwards Division President:

(i)  make any change in the Japanese Edwards Business or its operations or make
     any capital expenditure in respect of the Japanese Edwards Business which
     shall exceed the amount budgeted therefor;

(ii) enter into any contract for the purchase or sale of real property that
     would be included in the Purchased Business or exercise any option to
     extend a Real Estate Lease;

(iii)  sell, lease (as lessor), transfer or otherwise dispose of (other than to
an Affiliate of Baxter Japan), or mortgage or pledge, or impose or suffer to be
imposed any lien, charge, security interest, mortgage, pledge or other defect in
title on, any part of the Purchased Business, other than accounts receivable,
inventory and minor amounts of personal property sold or otherwise disposed of
for fair value in the ordinary course of the Japanese Edwards Business
consistent with past practice and other than Permitted Encumbrances;

(iv) cancel any debts owed to or claims held by Japanese Edwards Business
     (including the settlement of any claims or litigation) other than in the
     ordinary course of the Japanese Edwards Business consistent with past
     practice;

(v)  create, incur or assume, or agree to create, incur or assume, any
     indebtedness for borrowed money in respect of the Japanese Edwards Business
     or enter into, as lessee, any capitalized lease obligations (as defined in
     Statement of Financial

                                       17
<PAGE>

     Accounting Standards No. 13);

(vi) accelerate or delay collection of any notes or accounts receivable
     generated by the Japanese Edwards Business in advance of or beyond their
     regular due dates or the dates when the same would have been collected in
     the ordinary course of the Japanese Edwards Business consistent with past
     practice;

(vii)  delay or accelerate payment of any account payable or other liability of
the Japanese Edwards Business beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of the Japanese
Edwards Business consistent with past practice;

(viii)  allow the levels of raw materials, supplies, work-in-process or other
materials included in the inventory of the Japanese Edwards Business to vary in
any material respect from the levels customarily maintained;

(ix) institute any increase in any profit-sharing, bonus, incentive, deferred
     compensation, insurance, pension, retirement, medical, hospital,
     disability, welfare or other employee benefit plan with respect to
     employees of the Japanese Edwards Business; or

(x)  make any change in the compensation of the employees of the Japanese
     Edwards Business other than changes made in accordance with normal
     compensation practices and consistent with past compensation practices.

7.2.  Consents of Third Parties; Governmental Approvals.  (a)  If the Option is
      -------------------------------------------------
exercised, Baxter Japan and Edwards Optionholder will act diligently and
reasonably to secure the consent, approval or waiver of any third party that is
reasonably required for the consummation of transactions contemplated by this
Agreement; provided, however, that Edwards Optionholder shall be solely liable
           --------  -------
for the payment of any costs associated with transferring any import approvals
and product registrations for the Edwards Products; and provided further, that
                                                        -------- -------
except as stated in the previous proviso, neither party shall have any
obligation to offer or pay any consideration in order to obtain any such
consents or approvals; and provided further, that Baxter Japan shall not make
                           -------- -------
any agreement or understanding affecting the Purchased Business or the Japanese
Edwards Business as a condition for obtaining any such consents or waivers
except with the prior written consent of Edwards Optionholder.

(b)  If the Option is exercised, Baxter Japan and Edwards Optionholder shall act
     diligently and reasonably, and shall cooperate with each other, to secure
     any consents and approvals of any Governmental Body required to be obtained
     by them in order to assign or transfer any Governmental Permits to Edwards
     Optionholder or to permit the consummation of the transactions contemplated
     by this Agreement; provided that Baxter Japan shall not make any agreement
                        --------
     or understanding affecting the Purchased Business or the Japanese Edwards
     Business as a condition for obtaining any such consents or approvals except
     with the prior written consent of Edwards Optionholder.

7.3.  Services.  If the Option is exercised, Edwards Optionholder and Baxter
      --------
Japan will work together to identify any services (including those relating to
occupation and use

                                       18
<PAGE>

of facilities) that are needed to assure a smooth and orderly transition of the
Japanese Edwards Business and, to the extent practicable, negotiate and prepare
mutually acceptable agreements to govern the provision of such services after
the Closing Date (the "Operating Agreements"). Schedule 7.3 sets forth a
                       --------------------     ------------
non-exclusive list of services and facilities for which Operating Agreements may
be required.

7.4.  Financial Statements.  Until either (i) the Closing Date (if the Option is
      --------------------
exercised) or (ii) the end of the Exercise Period (if the Option is not
exercised), Baxter Japan will deliver to Edwards Optionholder, within 25 days
after the end of each fiscal quarter, an unaudited balance sheet, income
statement with respect to the Japanese Edwards Business, all prepared in
accordance with the Agreed Accounting Principles.

                                 ARTICLE VIII
                             POST-CLOSING COVENANTS

          The following covenants shall apply from and after the Closing Date:

8.1.  Collection of Accounts Receivable.
      ---------------------------------

(a)  Baxter Japan shall be entitled to control all collection actions related to
     the Retained Business, including the determination of what actions are
     necessary or appropriate and when and how to take any such action.

(b)  CVG and its Subsidiaries shall be entitled to control all collection
     actions related to the Purchased Business, including the determination of
     what actions are necessary or appropriate and when and how to take any such
     action.

(c)  If, after the Closing Date, Edwards Optionholder or any of its Affiliates
     shall receive any remittance from any account debtors with respect to the
     accounts receivable arising out of the Retained Business or other amounts
     due Baxter Japan in respect of services rendered or products sold by Baxter
     Japan after the Closing Date, or Baxter Japan or any of its Affiliates
     shall receive any remittance from any account debtors with respect to the
     accounts receivable arising out of the Purchased Business or other amounts
     due Edwards Optionholder or its Affiliates in respect of services rendered
     or products sold by Edwards Optionholder or its Affiliates after the
     Closing Date, such party shall receive and deposit such remittance and
     deliver cash in an amount equal thereto to the other party as soon as
     practicable.  In the absence of any designation of the specific invoice
     being paid by a customer thereby, payments from account debtors shall be
     applied to the earliest invoice outstanding with respect to indebtedness of
     such account debtor owing to either Edwards Optionholder or Baxter Japan.

(d)  Each party shall deliver to the other such schedules and other information
     with respect to the accounts receivable included in the Purchased Business
     and those not included therein as each shall reasonably request from time
     to time in order to permit such parties to reconcile their respective
     records and to monitor the collection of all accounts receivable (whether
     or not included in the Purchased Business).  Each party shall afford the
     other reasonable access to its books and records relating to any accounts
     receivable.

                                       19
<PAGE>

8.2.  Agreements Relating to Edwards Optionholder and Baxter Japan.  (a)  Each
      ------------------------------------------------------------
of Edwards Optionholder and Baxter Japan shall use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate, make effective and perform its
or its Subsidiaries' allocable portion of all purchase, distribution and other
obligations under all Contracts with customers, suppliers, vendors or other
third parties relating to both the Japanese Edwards Business and the Retained
Business (the "Shared Agreements").  Each of Baxter Japan and Edwards
               -----------------
Optionholder shall be entitled to the rights and privileges of its allocable
portion of the Shared Agreements.

(b)  Each of Edwards Optionholder and Baxter Japan shall use commercially
     reasonable efforts to take, or cause to be taken, all actions, and to do,
     or cause to be done, all things reasonably necessary, proper or advisable
     under applicable laws, regulations and agreements to afford the rights and
     privileges of the allocable portion of the Shared Agreements to the other.

(c)  Liabilities pursuant to, arising under or relating to a Shared Agreements
     shall be allocated between Baxter Japan, on the one hand, and Edwards
     Optionholder on the other hand, as follows:

(i)  First, if a Liability is incurred exclusively in respect of a benefit
     received by one party, the party receiving such benefit shall be
     responsible for such Liability; and

(ii) Second, if a Liability cannot be so allocated under clause (i), such
     Liability shall be allocated between the parties based on the relative
     proportions of total benefit received (based upon the performance under
     such Shared Agreement during the twelve-month period immediately prior to
     the Closing Date) under the relevant Shared Agreement.  Notwithstanding the
     foregoing, each party shall be responsible for any and all Liabilities
     arising out of or resulting from its breach of the relevant Shared
     Agreement.

(d)  If either Baxter Japan, on the one hand, or Edwards Optionholder, on the
     other hand, improperly receives any benefit or payment under any Shared
     Agreement that was intended for the other, the party receiving such benefit
     or payment will use commercially reasonable efforts to deliver, transfer or
     otherwise afford such benefit or payment to the other party.

8.3.  Informal, Nondocumented Real Estate Leases.  Each party may continue to
      ------------------------------------------
occupy, from and after the Closing Date, such space in the facilities of the
other party as is occupied immediately prior to the Closing Date, or such other
space therein as may be mutually agreed to from time to time by Edwards
Optionholder and Baxter Japan, and which occupancy is otherwise not documented
by any written leasing agreement or otherwise provided for in the Operating
Agreements, on the following terms and conditions:

(a)  The occupying party shall pay to the other party rent with respect to such
     occupied space for the period from and after the Closing Date during which
     such space is so

                                       20
<PAGE>

     occupied, which rent shall be determined by the other party on the same
     basis on which the other party allocates rent with respect to the occupancy
     of space by business units of the other party or as the occupying party
     presently is paying, whichever is lower. Such rent shall be payable from
     time to time by the occupying party (but not more frequently than monthly)
     promptly following delivery by the other party to the occupying party of a
     statement therefor.

(b)  The occupying party may, at any time, upon not less than 15 days' prior
     written notice to Baxter's Director of Corporate Real Estate, with a copy
     to Edwards, terminate its occupancy of any or all of such space.

(c)  The other party may, at any time, upon not less than 30 days' prior written
     notice to the occupying party, require the occupying party to cease
     occupancy of any or all of such space as designated in a notice sent to the
     occupying party.

                                  ARTICLE IX
                            [INTENTIONALLY OMITTED]

                                   ARTICLE X
                     EMPLOYEES AND EMPLOYEE BENEFIT MATTERS

10.1.  Employment of Edwards Employees.  On the Closing Date, Edwards
       --------------------------------
Optionholder shall make an offer to employ each Edwards Employee at the same
salary and wage rate levels (including bonus programs) paid by Baxter Japan as
in effect on the Closing Date; provided, however, that Edwards Optionholder and
                               --------  -------
its Affiliates retain the right to determine the compensation of all such
Edwards Employees after the Closing Date.  Edwards Optionholder and Baxter Japan
shall use commercially reasonable efforts to accomplish any transfers of
employment required by this Section 10.1 in a timely manner.  Each Edwards
                            ------------
Employee who accepts this offer of employment is referred to as a "Transferred
                                                                   -----------
Employee".
--------

10.2.  Terminations/Layoff/Severance.  Edwards Employees shall not be eligible
       -----------------------------
for any severance benefits from Baxter Japan as a result of either their
employment by Edwards Optionholder or its Affiliates or any subsequent
termination of employment with Edwards Optionholder or its Affiliates.

10.3.  Employee Benefit Plans.   (a)  Except as otherwise specifically provided
       ----------------------
in this Article X, all Transferred Employees shall cease to participate in the
        ---------
Baxter Japan employee benefit plans and programs (the "Baxter Plans") as of the
                                                       ------------
Closing Date.

(b)  No later than the Closing Date, Edwards Optionholder and/or its Affiliates
     shall establish its own employee benefit plans and programs for the benefit
     of eligible Transferred Employees including, but not limited to, a pension
     plan (the "Edwards Japan Pension Plan"), [a savings plan (the "Edwards
     Japan Savings Plan"),] a medical plan (including dental and vision), a
     long-term disability plan, a group life insurance plan, an overseas travel
     insurance plan, and a housing loan subsidy program (collectively, the

     "Edwards Welfare Plans").  Additionally, Edwards Optionholder shall
     ----------------------
     continue to contribute to the ["Kosei Nenkin" Old Age Employees' Pension
     Plan] on behalf of Transferred Employees.

                                       21
<PAGE>

     Notwithstanding the foregoing, Edwards Optionholder shall not contribute on
     behalf of the Transferred Employees to the multiemployer fund entitled the
     [Employee Pension Fund].

10.4.  Transfer of Account Balances and Accrued Benefits.  Subject to applicable
       -------------------------------------------------
law and the provisions of the [Baxter Tax Qualified Pension Plan] (the "Baxter
                                                                        ------
Japan Pension Plan"), as soon as administratively practicable following the
------------------
Closing Date, or effective as of any other date as agreed to in writing by the
plan administrator for the Baxter Japan Pension Plan and the plan administrator
for the Edwards Japan Pension Plan, the accrued benefits (the "Transferred
                                                               -----------
Accrued Benefits") of all Baxter Japan Pension Plan participants who are
----------------
Transferred Employees shall be transferred from the Baxter Japan Pension Plan to
[the Edwards Japan Pension Plan] (the "Edwards Japan Pension Plan").  The amount
                                       --------------------------
of Transferred Accrued Benefits shall be determined by the actuaries for the
respective plans by the Closing Date in accordance with the methodology
described in Schedule 10.4.  Each Transferred Employee shall receive credit for
             -------------
all purposes under the Edwards Japan Pension Plan for the periods of service
with Baxter Japan or any of its Subsidiaries or Affiliates.  The plan
administrator for the Edwards Japan Pension Plan shall take any other action
reasonably requested by the plan administrator for the Baxter Japan Pension Plan
that is necessary or advisable, in the opinion of the plan administrator for the
Baxter Pension Plan, to maintain the tax-qualified status of the Baxter Japan
Pension Plan or to avoid the imposition of any penalties with respect to such
plan.

10.5.  Welfare Benefits.
       ----------------

(a)  Each Transferred Employee who becomes eligible to participate in the
     Edwards Welfare Plans shall be credited under such plans with periods of
     service with any Baxter Japan Group Member for all purposes under such
     plans.

(b)  Baxter Japan shall pay all costs associated with the provision of
     disability benefits to any Edwards Employee or former Edwards Employee who
     as of the Closing Date is totally and permanently disabled.  Edwards
     Optionholder shall pay all costs associated with the provision of
     disability benefits to any Edwards Employee or former Edwards Employee
     other than the persons described in the first sentence of this Section
     10.5(b) in an amount equal to the benefits such persons would have received
     if they had remained covered under the Baxter Plans during the period of
     such disability leave.  Notwithstanding the foregoing, any Transferred
     Employee receiving benefits under the [Baxter Japan Long-Term Disability
     Plan] on the Closing Date shall continue to receive benefits under the
     terms of such plan and the insurance contract used to fund such plan, and
     Edwards Optionholder shall not be charged for the payment of such benefits.
     [As of the Closing Date, Edwards Optionholder shall assume all Liabilities
     determined under FAS 112 relating to all Edwards Employees.]

(c)  Baxter Japan shall pay all claims under the [Baxter Japan Medical Plan]
     (including dental and vision benefits) relating to Transferred Employees
     that as of the Closing Date have been incurred but not paid, but only if
     claims for such costs are submitted in written form to the authorized
     agents of Baxter Japan during the six-month period beginning on the Closing
     Date.

                                       22
<PAGE>

10.6.  Stock Purchase Plans.  Except as otherwise provided in the Baxter Stock
       --------------------
Purchase Plan, on the Closing Date, all Transferred Employees shall cease to be
eligible to purchase Baxter Common Stock under the terms of the Baxter
International Inc. Employees Stock Purchase Plan for International Employees
(the "Baxter Stock Purchase Plan").
      --------------------------

10.7.  Workers' Compensation.  As soon as administratively practicable following
       ---------------------
the Closing Date, a risk management representative for each of the parties shall
agree upon the allocation between the parties of responsibility and liability
for workers' compensation claims and expenses relating to current and former
Edwards Employees.

10.8.  Vacation Pay Policy.  After the Closing Date, it is expected that Edwards
       -------------------
Optionholder shall maintain for its employees a vacation pay policy, and Edwards
Optionholder shall be responsible for costs incurred to provide vacation pay to
Transferred Employees following such date.  Edwards Optionholder shall assume
any and all Baxter Japan Liabilities to provide to Transferred Employees
vacation that such persons accrued under the Baxter Japan vacation pay policy as
of the Closing Date, and no payment of such accrued vacation pay shall be made
by Baxter Japan on the Closing Date.

10.9.  Information to be Provided to Baxter Japan.  Edwards Optionholder (or its
       ------------------------------------------
applicable Affiliate) shall provide any information that Baxter Japan may
reasonably request, including information relating to dates of termination of
employment, in order to provide benefits to any eligible Transferred Employee
under the terms and conditions described herein or under the applicable Baxter
Plans.  Any information relating to an employee's termination of employment
shall be provided by Edwards Optionholder to Baxter Japan as soon as available
to Edwards Optionholder or any of its Affiliates, but in any event no later than
30 days after such information is made available to Edwards Optionholder or any
such Affiliates.

10.10.  Transfer of Employee Files.  By a specified date as agreed upon by
        --------------------------
Edwards Optionholder and Baxter Japan following the Closing Date, Baxter Japan
shall transfer to Edwards Optionholder complete copies of the personnel files
relating to all Transferred Employees.

10.11.  Employment Solicitation.  During the period beginning on the Closing
        -----------------------
Date and ending one year after the Closing Date, neither Baxter Japan nor
Edwards Optionholder shall, nor shall they permit any of their respective
Subsidiaries, Affiliates or agents to, directly or indirectly, except as
provided in the following sentence, actively solicit or recruit for employment
any then current employee of the other or of any of the other's Subsidiaries.
Nothing contained in this Section 10.11 shall (i) prohibit the hiring of any
                          -------------
employee who in good faith is believed to be actively seeking employment on his
or her own initiative without prior contact initiated by any employee or agent
of the company where employment is sought, or any of such company's Affiliates;
provided, however, that such employee or the hiring company has obtained
authorization from the Department Manager of Human Resources of his or her
current employer; or (ii) prohibit Baxter Japan or Edwards Optionholder or any
of their respective Subsidiaries from hiring any person who has terminated
employment with the other company.  The foregoing restriction shall cease to
apply one year after the Closing Date.

                                       23
<PAGE>

                                  ARTICLE XI
                               INSURANCE MATTERS

11.1.  Insurance Prior to the Closing Date.  Edwards Optionholder does hereby
       -----------------------------------
agree that Baxter Japan shall not have any Liability whatsoever as a result of
the insurance policies and practices of Baxter Japan in effect at any time prior
to the Closing Date, including any assistance rendered to Edwards Optionholder
by Baxter Japan in the placement of its insurance program, including as a result
of the level or scope of any such insurance, the creditworthiness of any
insurance carrier, the terms and conditions of any policy and the adequacy or
timeliness of any notice to any insurance carrier with respect to any claim or
potential claim or otherwise.

11.2.  Ownership of Existing Policies and Programs.  Baxter Japan shall continue
       -------------------------------------------
to own all property, casualty and liability insurance policies and programs,
including primary and excess general liability, errors and omissions,
automobile, workers' compensation, property, fire, crime, surety and other
similar insurance policies, in effect on or before the Closing Date
(collectively, the "Baxter Japan Policies"  and individually, a "Baxter Japan
                   ----------------------                       -------------
Policy").  [Baxter Japan shall use commercially reasonable efforts to maintain
------
commercially reasonable insurance coverage in full force and effect up to and
including the Closing Date, and, subject to the provisions of this Agreement,
Baxter Japan shall retain all of its rights, benefits and privileges, if any,
under the Baxter Japan Policies.]  Nothing contained herein shall be construed
to be an attempt to assign or to change the ownership of the Baxter Japan
Policies.

11.3.  Procurement of Insurance for Edwards Optionholder.  To the extent not
       -------------------------------------------------
already provided for by the terms of the Baxter Japan Policies, Baxter Japan
shall use commercially reasonable efforts to cause Edwards Optionholder [and its
Affiliates] to be named as additional insureds under Baxter Japan Policies whose
effective policy periods include the Closing Date, in respect of claims for
which coverage is available under the terms and conditions of Baxter's policies,
arising out of or relating to periods prior to the Closing Date; provided,
                                                                 --------
however, that nothing contained herein shall be construed to require Baxter
-------
Japan to pay any additional premium or other charges in respect to, or waive or
otherwise limit any of its rights, benefits or privileges under, any Baxter
Japan Policy in order to effect the naming of Edwards Optionholder [or its
Affiliates] as such additional insureds.

11.4.  Acquisition and Maintenance of Post-Closing Edwards Optionholder's
       ------------------------------------------------------------------
Insurance Policies and Programs.  Commencing on and as of the Closing Date,
--------------------------------
Edwards Optionholder shall be responsible for establishing and maintaining
separate property, casualty and liability insurance policies and programs
(including primary and excess general liability, errors and omissions,
automobile, workers' compensation, property, fire, crime, surety and other
similar insurance policies) for activities and claims involving Edwards
Optionholder and the Japanese Edwards Business.  Edwards Optionholder will
exercise commercially reasonable efforts to secure liability insurance to avoid
potential gaps in coverage for claims arising from events prior to the Closing
Date, which gap would not exist had the Japanese Edwards Business continued to
be covered with the same retroactive dates existing in the Baxter Japan Policies
in effect on the Closing Date.  Edwards Optionholder shall be responsible for
all administrative and financial matters relating to insurance policies
established and maintained by Edwards Optionholder for claims relating to any
period on or after the Closing Date involving Edwards

                                       24
<PAGE>

Optionholder. Notwithstanding any other agreement or understanding to the
contrary, except as set forth in this Section 11.7 with respect to claims
                                      ------------
administration and financial administration of the Baxter Japan Policies, Baxter
Japan shall not have any responsibility for or obligation to Edwards or any of
its Affiliates relating to property and casualty insurance matters for any
period, whether prior to, on or after the Closing Date.

11.5.  Edwards Optionholder Directors' and Officers' Insurance.  Baxter [Japan]
       --------------------------------------------------------
shall use commercially reasonable efforts to cause the persons currently serving
as officers and/or directors of Baxter Japan to be covered for a period of [six
(6)] years from the Closing Date by the directors' and officers' liability
insurance policy maintained by Baxter as of the Closing Date (including
corporate reimbursement) (provided that Baxter Japan may substitute therefor
                          --------
policies of at least the same coverage and amounts containing terms and
conditions that are not less advantageous than such policy) with respect to
matters covered under the existing policy occurring prior to the Closing Date
that were committed by such officers and/or directors in their capacity as such;

provided, however, that in no event shall Baxter be required to expend with
--------  -------
respect to any year more than 200% of the current annual premium expended by
Baxter (the "Insurance Amount" to maintain or procure insurance coverage
            -----------------
pursuant hereto; and provided, further, that if Baxter is unable to maintain or
                     --------  -------
obtain the insurance called for by this Section 11.5, Baxter shall use
                                        ------------
commercially reasonable efforts to obtain as much comparable insurance as
available for the Insurance Amount.  In the event Baxter [Japan] or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any Person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Baxter [Japan] assume the obligations set forth in this Section 11.5.
                                                                   ------------
The provisions of this Section 11.5 are intended to be for the benefit of, and
                       ------------
shall be enforceable by, each such officer and director and his or her heirs and
representatives.]  As provided in Section 12.4, any amount Edwards Optionholder
                                  ------------
is required to pay to Baxter Japan as an indemnity under this Agreement is
reduced to the extent Baxter Japan receives insurance proceeds from the above
coverage, but only to the extent such proceeds are actually received by Baxter
Japan.

11.6.  Pre-Distribution Insurance Claims Administration.  Edwards Optionholder
       ------------------------------------------------
acknowledges that Baxter Japan has and will continue to experience losses and
receive claims that are, or might be, covered by one or more Baxter Japan
Policies, and prior to the Closing Date will make decisions and commitments
regarding administration of such claims, including reaching agreements and
stipulations regarding such claims (collectively, "Pre-Closing Claims
                                                  -------------------
Administration").  Edwards Optionholder covenants not to contest or challenge in
----------------
any manner any action taken by Baxter Japan prior to the Closing Date in
connection with or relating to Pre-Closing Claims Administration, or to
interfere with the performance of any agreement, commitment or stipulation so
made by Baxter Japan in connection with or relating to Pre-Closing Claims
Administration.

11.7.  Post-Distribution Insurance Claims Administration.  Baxter Japan shall
       --------------------------------------------------
have the primary right, responsibility and authority for claims administration
and financial administration of claims that relate to or affect the Baxter Japan
Policies.  Upon notification by Edwards Optionholder of a claim relating to
Edwards Optionholder [or an Affiliate thereof] under one or more of the Baxter
Japan Policies, Baxter Japan shall cooperate with Edwards

                                       25
<PAGE>

Optionholder in asserting and pursuing coverage and payment for such claim by
the appropriate insurance carrier(s). In asserting and pursuing such coverage
and payment, Baxter Japan shall have sole power and authority to make binding
decisions, determinations, commitments and stipulations on its own behalf and on
behalf of Edwards Optionholder, which decisions, determinations, commitments and
stipulations shall be final and conclusive if made to maximize the overall
economic benefit of the Baxter Japan Policies. Edwards Optionholder assumes
responsibility for, and shall pay to the appropriate insurance carriers or
otherwise, any premiums, retrospectively-rated premiums, defense costs,
indemnity payments, deductibles, retentions or other charges (collectively,
"Insurance Charges") whenever arising, which shall become due and payable under
------------------
the terms and conditions of any applicable Baxter Japan Policy in respect of any
liabilities, losses, claims, actions or occurrences, whenever arising or
becoming known, involving or relating to any of the assets, businesses,
operations or liabilities of the Japanese Edwards Business, whether the same
relate to the period prior to, on or after the Closing Date.  To the extent that
the terms of any applicable Baxter Japan Policy provide that Baxter Japan shall
have an obligation to pay or guarantee the payment of any Insurance Charges
relating to Edwards Optionholder, Baxter Japan shall be entitled to demand that
Edwards Optionholder make such payment directly to the Person [or any of its
Affiliates] entitled thereto.  In connection with any such demand, Baxter Japan
shall submit to Edwards Optionholder a copy of any invoice received by Baxter
Japan pertaining to such Insurance Charges together with appropriate supporting
documentation, to the extent available.  In the event that Edwards Optionholder
fails to pay any such Insurance Charges when due and payable, whether at the
request of the party entitled to payment or upon demand by Baxter Japan, Baxter
Japan may (but shall not be required to) pay such insurance charges for and on
behalf of Edwards Optionholder and, thereafter, Edwards Optionholder shall
forthwith reimburse Baxter Japan for such payment.  Subject to the other
provisions of this Article XI, the retention by Baxter Japan of the Baxter Japan
                   ----------
Policies and the responsibility for claims administration and financial
administration of such policies are in no way intended to limit, inhibit or
preclude any right of Edwards Optionholder, Baxter Japan or any other insured to
insurance coverage for any Insured Claims under the Baxter Japan Policies.

11.8.  Non-Waiver of Rights to Coverage.  An insurance carrier that otherwise
       --------------------------------
would be obligated to pay any claim shall not be relieved of the responsibility
with respect thereto, or, solely by virtue of the provisions of this Article XI,
                                                                     ----------
have any subrogation rights with respect thereto, it being expressly understood
and agreed that no insurance carrier or any third-party shall be entitled to a
windfall (i.e., a benefit they would not be entitled to receive had the Closing
          ----
not occurred or in the absence of the provisions of this Article XI) by virtue
                                                         ----------
of the provisions hereof.

11.9.  Scope of Affected Policies of Insurance.  The provisions of this Article
       ----------------------------------------                         -------
XI relate solely to matters involving liability, casualty and workers'
--
compensation insurance, and shall not be construed to affect any obligation of
or impose any obligation on the parties with respect to any life, health and
accident, dental or medical insurance policies applicable to any of the
officers, directors, employees or other representatives of the parties or their
Affiliates.

                                       26
<PAGE>

                                  ARTICLE XII
                                INDEMNIFICATION

12.1.  Indemnification by Edwards Optionholder.  From and after the Closing
       ---------------------------------------
Date, Edwards Optionholder shall indemnify and hold harmless each Baxter Japan
Group Member from and against any and all Loss and Expense incurred or suffered
by such Baxter Japan Group Member in connection with, relating to, arising our
of or due to, directly or indirectly, any of the following items:

(a)  the Japanese Edwards Business as conducted on or at any time prior to the
     Closing Date (other than Excluded Liabilities);

(b)  the Purchased Business;

(c)  the Assumed Liabilities;

(d)  the breach by Edwards Optionholder of any covenant or agreement set forth
     in this Agreement or the Instrument of Assumption, regardless of when or
     where the loss, claim, accident, occurrence, event or happening giving rise
     to the Expense or Loss took place, or whether any such loss, claim,
     accident, occurrence, event or happening is known or unknown, or reported
     or unreported;

(e)  the employee benefits provided or the actions taken or omitted to be taken
     with respect thereto in connection with this Agreement or otherwise
     relating to the provision of employee benefits to Edwards Employees, their
     beneficiaries, alternate payees or any other person claiming benefits
     through them (except to the extent such Expenses or Losses are specifically
     allocated to Baxter Japan pursuant to Section 12.2(e), including Expenses
                                           ---------------
     or Losses arising in connection with (i) Edwards Optionholders' reduction,
     elimination or failure to provide any benefit accrued by its employees
     (including benefits accrued prior to the Closing Date) and (ii) the
     transfer of account balances and accrued benefits as described in Section
                                                                       -------
     10.4 where such Expenses or Losses are incurred as a result of any act or
     ----
     omission by Edwards Optionholder (or a representative of Edwards
     Optionholder);

(f)  the indemnifiable matters set forth in Section 5.6 and Article X; and
                                            -----------     ---------

(g)  Baxter Japan's inability to terminate the employment of any Edwards
     Employees following the termination or expiration of this Agreement.

12.2.  Indemnification by Baxter Japan.  From and after the Closing Date, Baxter
       -------------------------------
Japan shall indemnify and hold harmless each Edwards Optionholder Group Member
from and against any and all Loss and Expense incurred or suffered by such
Edwards Optionholder Group Member in connection with, relating to, arising out
of or due to, directly or indirectly, any of the following items:

(a)  the business (other than the Japanese Edwards Business) conducted by Baxter
     Japan on or at any time prior to the Closing Date;

                                       27
<PAGE>

(b)  the assets owned by Baxter Japan other than assets included in the
     Purchased Business and the Shared Agreements;

(c)  the Liabilities (including the Excluded Liabilities) of Baxter Japan other
     than the Assumed Liabilities;

(d)  the breach by Baxter Japan of any covenant or agreement set forth in this
     Agreement or the Instrument of Assignment, regardless of when or where the
     loss, claim, accident, occurrence, event or happening giving rise to the
     Expense or Loss took place, or whether any such loss, claim, accident,
     occurrence, event or happening is known or unknown, or reported or
     unreported; and

(e)  Baxter Japan's reduction, elimination or failure to provide any benefit
     previously provided to its employees, other than a benefit assumed by
     Edwards Optionholder pursuant to Article X, or any act or omission by
                                      ---------
     Baxter Japan in connection with the transfer of assets and liabilities as
     described in Section 10.4.
                  ------------

12.3.  Applicability of and Limitation on Indemnification.
       --------------------------------------------------

(a)  EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATIONS UNDER THIS
     ARTICLE XII SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON
     BEHALF OF ANY INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER
     THE LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS
     CLAIMED HEREUNDER IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY OR
     ARISES AS AN OBLIGATION FOR CONTRIBUTION.

(b)  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
     SHALL BAXTER JAPAN BE LIABLE TO ANY EDWARDS OPTIONHOLDER GROUP MEMBER, OR
     EDWARDS OPTIONHOLDER BE LIABLE TO ANY BAXTER JAPAN GROUP MEMBER, UNDER THIS
     AGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
     DAMAGES, INCLUDING LOSS OF ANTICIPATED PROFITS OR LOSS OR DIMINUTION OF
     REVENUES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR
     OTHERWISE, EXCEPT TO THE EXTENT THAT SUCH LIABILITY HAS BEEN ASSERTED BY A
     THIRD PARTY AGAINST A PARTY ENTITLED TO INDEMNIFICATION HEREUNDER.

12.4.  Adjustment of Indemnifiable Losses.
       ----------------------------------
(a)  The amount that either party (an "Indemnifying Party") is required to pay
                                       ------------------
     to any Person entitled to indemnification hereunder (an "Indemnified
                                                              -----------
     Party") shall be reduced (including retroactively) by any Insurance
     Proceeds and other amounts actually recovered by or on behalf of such
     Indemnified Party in reduction of the related Expense or Loss.  If an
     Indemnified Party receives a payment (an "Indemnity Payment") required by
                                               -----------------
     this Agreement from an Indemnifying Party in respect of any Expense or Loss
     and subsequently actually receives Insurance Proceeds or other amounts in
     respect of such Expense or Loss, then such Indemnified Party shall pay to
     the Indemnifying Party a sum equal to the lesser of (i) the amount

                                       28
<PAGE>

     of such Insurance Proceeds or other amounts actually received or (ii) the
     net amount of Indemnity Payments actually received previously. The
     Indemnified Party agrees that the Indemnifying Party shall be subrogated to
     such Indemnified Party under any insurance policy.

(b)  An insurer who otherwise would be obligated to pay any claim shall not be
     relieved of the responsibility with respect thereto, or, solely by virtue
     of the indemnification provisions hereof, have any subrogation rights with
     respect thereto, it being expressly understood and agreed that no insurer
     or any other third-party shall be entitled to a "windfall" (i.e., a benefit
     he or she would not be entitled to receive in the absence of the
     indemnification provisions) by virtue of the indemnification provisions
     hereof.

(c)  If any Indemnified Party realizes a Tax benefit or detriment in one or more
     Tax periods by reason of having incurred an Expense or a Loss for which
     such Indemnified Party receives an Indemnity Payment from an Indemnifying
     Party (or by reason of the receipt of any Indemnity Payment), then such
     Indemnified Party shall pay to such Indemnifying Party an amount equal to
     the Tax benefit or such Indemnifying Party shall pay to such Indemnified
     Party an additional amount equal to the Tax detriment (taking into account,
     without limitation, any Tax detriment resulting from the receipt of such
     additional amounts), as the case may be.  The amount of any Tax benefit or
     any Tax detriment for a Tax period realized by an Indemnified Party by
     reason of having incurred an Expense or a Loss (or by reason of the receipt
     of any Indemnity Payment) shall be deemed to equal the product obtained by
     multiplying (i) the amount of any deduction or loss or inclusion in income
     for such period resulting from such Expense or Loss (or the receipt of any
     Indemnity Payment or additional amount), as the case may be (without regard
     to whether such deduction or loss or such inclusion in income results in
     any actual decrease or increase in Tax liability for such period), by (ii)
     the highest applicable marginal Tax rate for such period (provided,
     however, that the amount of any Tax benefit attributable to an amount that
     is creditable shall be deemed to equal the amount of such creditable item).
     Any payment due under this Section 12.4(c) with respect to a Tax benefit or
                                ---------------
     Tax detriment realized by an Indemnified Party in a Tax period shall be due
     and payable within 30 days from the time the return for such Tax period is
     due, without taking into account any extension of time granted to the party
     filing such return.

12.5.  Procedures for Indemnification of Third Party Claims.
       ----------------------------------------------------
(a)  If any third-party shall make any claim or commence any arbitration
     proceeding or suit (collectively, a "Third Party Claim") against any one or
                                          -----------------
     more of the Indemnified Parties with respect to which an Indemnified Party
     intends to make any claim for indemnification against Edwards Optionholder
     under Section 12.1 or against Baxter Japan under Section 12.2, such
           ------------                               ------------
     Indemnified Party shall promptly give written notice to the Indemnifying
     Party describing such Third Party Claim in reasonable detail, and the
     following provisions shall apply.  Notwithstanding the foregoing, the
     failure of any Indemnified Party to provide notice in accordance with this

     Section 12.5(a) shall not relieve the related Indemnifying Party of its
     ---------------
     obligations under this Article XII, except to the extent that such
                            -----------
     Indemnifying Party is actually prejudiced by such failure to provide
     notice.

(b)  The Indemnifying Party shall have the right to assume the defense of any
     such Third Party Claim.  If the Indemnifying Party elects not to conduct
     and control the defense

                                       29
<PAGE>

     of such Third Party Claim, the Indemnified Party shall have the right to
     defend, contest, settle or compromise such Third Party Claim in the
     exercise of its exclusive discretion subject to the provisions of
     Section 12.5(c), and the Indemnifying Party shall, upon
     ---------------
     request from any of the Indemnified Parties, promptly pay to such
     Indemnified Parties in accordance with the other terms of this Section
                                                                    -------
     12.5(b) the amount of any Expense or Loss resulting from their liability to
     -------
     the third-party claimant. If the Indemnifying Party assumes the defense of
     the Third Party Claim, the Indemnifying Party shall have the right to
     undertake, conduct and control, through counsel reasonably acceptable to
     the Indemnified Party, and at its sole expense, the conduct and settlement
     of such Third Party Claim, and the Indemnified Party shall cooperate with
     the Indemnifying Party in connection therewith, provided that (i) the
     Indemnifying Party shall not thereby permit any lien, encumbrance or other
     adverse charge to thereafter attach to any asset of any Indemnified Party;
     (ii) the Indemnifying Party shall not thereby permit any injunction against
     any Indemnified Party; (iii) the Indemnifying Party shall permit the
     Indemnified Party and counsel chosen by the Indemnified Party and
     reasonably acceptable to the Indemnifying Party to monitor such conduct or
     settlement and shall provide the Indemnified Party and such counsel with
     such information regarding such Third Party Claim as either of them may
     reasonably request (which request may be general or specific), but the fees
     and expenses of such counsel (including allocated costs of in-house counsel
     and other personnel) shall be borne by the Indemnified Party unless (A) the
     Indemnifying Party and the Indemnified Party shall have mutually agreed to
     the retention of such counsel or (B) the named parties to any such Third
     Party Claim include the Indemnified Party and the Indemnifying Party and in
     the reasonable opinion of counsel to the Indemnified Party representation
     of both parties by the same counsel would be inappropriate due to actual or
     likely conflicts of interest between them, in either of which cases the
     reasonable fees and disbursements of counsel for such Indemnified Party
     (including allocated costs of in-house counsel and other personnel) shall
     be reimbursed by the Indemnifying Party to the Indemnified Party; and (iv)
     the Indemnifying Party shall agree promptly to reimburse to the extent
     required under this Article XII the Indemnified Party for the full amount
                         -----------
     of any Expense or Loss resulting from such Third Party Claim and all
     related expenses incurred by the Indemnified Party.  In no event shall the
     Indemnifying Party, without the prior written consent of the Indemnified
     Party, settle or compromise any claim or consent to the entry of any
     judgment that does not include as an unconditional term thereof the giving
     by the claimant or the plaintiff to the Indemnified Party a release from
     all Liability in respect of such claim.

  If the Indemnifying Party shall not have undertaken the conduct and control of
the defense of the Third Party Claim as provided above, the Indemnifying Party
shall nevertheless be entitled through counsel chosen by the Indemnifying Party
and reasonably acceptable to the Indemnified Party to monitor the conduct or
settlement of such claim by the Indemnified Party, and the Indemnified Party
shall provide the Indemnifying Party and such counsel with such information
regarding such Third Party Claim as either of them may reasonably request (which
request may be general or specific), but all costs and expenses incurred in
connection with such monitoring shall be borne by the Indemnifying Party.

(c)  So long as the Indemnifying Party is contesting any such Third Party Claim
     in good faith, the Indemnified Party shall not pay or settle any such Third
     Party Claim.  Notwithstanding the foregoing, the Indemnified Party shall
     have the right to pay or settle any such Third Party Claim, provided that
     in such event the Indemnified Party shall waive any right

                                       30
<PAGE>

     to indemnity therefor by the Indemnifying Party, and no amount in respect
     thereof shall be claimed as an Expense or a Loss under this Section
                                                                 -------
     12.5(c).
     --------

  If the Indemnifying Party shall have undertaken the conduct and control of the
defense of any Third Party Claim as provided above, the Indemnified Party, on
not less than 30 days prior written notice to the Indemnifying Party, may make
settlement (including payment in full) of such Third Party Claim, and such
settlement shall be binding upon the parties for the purposes hereof, unless
within said 30-day period the Indemnifying Party shall have requested the
Indemnified Party to contest such Third Party Claim at the expense of the
Indemnifying Party.  In such event, the Indemnified Party shall promptly comply
with such request and the Indemnifying Party shall have the right to direct the
defense of such claim or any litigation based thereon subject to all the
conditions of Section 12.5(b).  Notwithstanding anything in this Section 12.5(c)
              ---------------                                    ---------------
to the contrary, if the Indemnified Party, in the belief that a claim may
materially and adversely affect it other than as a result of money damages or
other money payments, advises the Indemnifying Party that it has determined to
settle a claim, the Indemnified Party shall have the right to do so at its own
cost and expense, without any requirement to contest such claim at the request
of the Indemnifying Party, but without any right under the provisions of this
Section 12.5(c) for indemnification by the Indemnifying Party.
---------------

(d)  The provisions of this Section 12.5 and Section 12.6 shall not apply to
                            ------------     ------------
     income Taxes (which are covered by the Tax Sharing Agreement).

12.6.  Procedures for Indemnification of Direct Claims.    Any claim for
       -----------------------------------------------
indemnification on account of an Expense or a Loss made directly by the
Indemnified Party against the Indemnifying Party and that does not result from a
Third Party Claim shall be asserted by written notice from the Indemnified Party
to the Indemnifying Party specifically claiming indemnification hereunder.  Such
Indemnifying Party shall have a period of 30 business days after the receipt of
such notice within which to respond thereto.  If such Indemnifying Party does
not respond within such 30 business day period, such Indemnifying Party shall be
deemed to have accepted responsibility to make payment and shall have no further
right to contest the validity of such claim.  If such Indemnifying Party does
respond within such 30 business-day period and rejects such claim in whole or in
part, such Indemnified Party shall be free to pursue resolution as provided in
Article XIII.
------------

12.7.  Remedies Cumulative.  The remedies provided in this Article XII shall be
       -------------------                                 -----------
cumulative and, subject to the provisions of Article XIII below, shall not
                                             ------------
preclude assertion by an Indemnified Party of any other rights or the seeking of
any and all other remedies against any Indemnifying Party.

                                 ARTICLE XIII
                               DISPUTE RESOLUTION

13.1.  General.  Any dispute arising out of or relating to this Agreement, the
       -------
Instrument of Assignment or the Instrument of Assumption shall be solved in
accordance with the procedures specified in this Article XIII which shall be the
                                                 ------------
sole and exclusive procedures for the resolution of any such disputes.

                                       31
<PAGE>

13.2.  Escalation.  The parties will attempt in good faith to resolve
       ----------
expeditiously any dispute, claim or controversy arising out of or relating to
the execution, interpretation and performance of this Agreement (including the
validity, scope and enforceability of this arbitration provision) promptly by
negotiations between executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for the administration of this Agreement. Either party may give
the other party written notice (an "Escalation Notice") of any dispute not
                                    -----------------
resolved in the normal course of business. Within fifteen days after delivery of
the Escalation Notice, the receiving party shall submit to the other a written
response. The Escalation Notice and the response thereto shall include (a) a
statement of each party's position and a summary of arguments supporting that
position, and (b) the name and title of the executive who will represent that
party and of any other person who will accompany the executive.  Within 30 days
after delivery of the Escalation Notice, the executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute.  All reasonable
requests for information made by one party to the other will be honored.  All
negotiations pursuant to this clause are confidential and shall be treated as
compromise and settlement negotiations for purposes of applicable rules of
evidence.

13.3.  Arbitration.  Any dispute, claim or controversy arising out of or
       -----------
relating to this Agreement or its breach, termination or validity which has not
been resolved by the specified  non-binding procedure set forth in Section 13.2
                                                                   ------------
within 90 days of the date of delivery of the Escalation Notice shall be settled
by binding arbitration in accordance with the CPR Non-Administered Arbitration
Rules in effect on the date of this Agreement, by three independent and
impartial arbitrators, none of whom shall be appointed by either party. The
arbitration shall be governed by the United States Arbitration Act, 9 U. S. C.
(S) (S) 1- 16, as the same may be amended from time to time, and judgment upon
the award rendered by the arbitrators may be entered by any court having
jurisdiction thereof.  The place of the arbitration shall be Lake County,
Illinois or Orange County, California, and shall be determined by the party that
initiated the dispute resolution process. The arbitrators may award attorneys'
fees in their discretion. Otherwise, the arbitrators are not empowered to award
damages in excess of compensatory damages, and each party hereby irrevocably
waives any right to recover such damages.

13.4.  Procedures.  The parties may request limited discovery in accordance with
       ----------
the Federal Rules of Civil Procedure of the United States (the "F.R.C.P.") for a
                                                                --------
period of 120 days after the initiation of the arbitration process. All issues
regarding compliance with discovery requests shall be decided by the arbitrators
pursuant to the F.R.C.P. The parties agree that the recipient of a discovery
request shall have 10 business days after the receipt of such request to object
to any or all portions of such request and shall respond to any portions of such
request not so objected within 30 business days of the receipt of such request.
All objections shall be in writing and shall indicate the reasons for such
objections. The objecting party shall ensure that all objections and responses
are received by the other party within the above time periods; failure to comply
with the specified time period shall be addressed as set forth in F.R.C.P. 37.
Any party seeking to compel discovery following receipt of an objection shall
file with the other party and the arbitrators a motion to compel, including a
copy of the initial request and the objection. The arbitrators shall allow 10
business days for the responses to the motion to compel before ruling. Claims of
privilege and other objections shall be determined as they would be in United
States federal court in a case applying Illinois law. The arbitrators may grant
or deny the motion to

                                       32
<PAGE>

compel, in whole or in part, concluding that the discovery request is or is not
appropriate under the circumstances, taking into account the needs of the
parties and the desirability of making discovery expeditious and cost-effective.
The statute of limitations of the State of Illinois applicable to the
commencement of a lawsuit shall apply to the date of initial written
notification of a dispute and shall be extended until commencement of
arbitration if all interim deadlines have been complied with by the notifying
party.

13.5.  Injunctive Relief.  Nothing contained in this Article XIII shall prevent
       -----------------                             ------------
either party from resorting to judicial process if injunctive or other equitable
relief from a court is necessary to prevent serious and irreparable injury to
one party or to others. The use of arbitration procedures will not be construed
under the doctrine of laches, waiver or estoppel to affect adversely either
party's right to assert any claim or defense.

                                  ARTICLE XIV
                               GENERAL PROVISIONS

14.1.  Notices.  All notices or other communications required or permitted
       -------
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally, or when sent by registered or certified mail or by private
courier or facsimile transmission (provided that in the case of facsimile
transmission, a confirmation copy of the notice shall be delivered by hand or
sent by courier within two days of transmission) addressed as follows:

          If to Edwards Optionholder, to:

          Edwards Lifesciences Limited
          Rokubancho 2-8, Chiyoda-ku
          Tokyo 102-0085 Japan
          Attention:  __________
          Facsimile:  81-3-5213-5802

          with a copy to:

          ______________________
          ______________________
          ______________________
          ______________________
          Attention:  __________

          If to Baxter Japan, to:

          Baxter Limited
          4, Rokubancho, Chiyoda-ku
          Tokyo 102-8468 Japan
          Attention:  __________
          Facsimile:  81-3-5213-5111

          with a copy to:

                                       33
<PAGE>

          ______________________
          ______________________
          ______________________
          ______________________
          Attention:  __________

or to such other address as such party may indicate by a notice delivered to the
other party hereto.

14.2.  Successors and Assigns.  (a)  Either party may assign any of its rights
       ----------------------
under this Agreement, but no such assignment shall relieve such party of its
obligations hereunder.

(b)  This Agreement shall be binding upon and inure to the benefit of the
     parties hereto and their successors and permitted assigns.  The successors
     and permitted assigns hereunder shall include without limitation, in the
     case of Edwards Optionholder, any permitted assignee as well as the
     successors in interest to such permitted assignee (whether by merger,
     liquidation (including successive mergers or liquidations) or otherwise).
     Except to the extent otherwise provided in Section 11.5 or Article XII,
                                                ------------    -----------
     nothing in this Agreement, expressed or implied, is intended or shall be
     construed to confer upon any Person other than the parties and successors
     and assigns permitted by this Section 14.2 any right, remedy or claim under
                                   ------------
     or by reason of this Agreement.

14.3.  Access to Records after Closing.  (a)  For a period of ten years after
       -------------------------------
the Closing Date, Baxter Japan and its representatives shall have reasonable
access to all of the books and records of the Japanese Edwards Business
transferred to Edwards Optionholder hereunder to the extent that such access may
reasonably be required by Baxter Japan in connection with matters relating to or
affected by the operations of the Japanese Edwards Business prior to the Closing
Date.  Such access shall be afforded by Edwards Optionholder upon receipt of
reasonable advance notice and during normal business hours.  Baxter Japan shall
be solely responsible for any costs or expenses incurred by it pursuant to this
Section 14.3(a).  If Edwards Optionholder shall desire to dispose of any of such
---------------
books and records prior to the expiration of such ten-year period, Edwards
Optionholder shall, prior to such disposition, give Baxter Japan a reasonable
opportunity, at Baxter Japan's expense, to segregate and remove such books and
records as Baxter Japan may select.

(b)  For a period of ten years after the Closing Date, Edwards Optionholder and
     its representatives shall have reasonable access to all of the books and
     records relating to the Japanese Edwards Business which Baxter Japan or any
     of its Affiliates may retain after the Closing Date.  Such access shall be
     afforded by Baxter Japan and its Affiliates upon receipt of reasonable
     advance notice and during normal business hours.  Edwards Optionholder
     shall be solely responsible for any costs and expenses incurred by it
     pursuant to this Section 14.3(b).  If Baxter Japan or any of its Affiliates
                      ---------------
     shall desire to dispose of any of such books and records prior to the
     expiration of such ten-year period, Baxter Japan shall, prior to such
     disposition, give Edwards Optionholder a reasonable opportunity, at Edwards
     Optionholder's expense, to segregate and remove such books and records as
     Edwards Optionholder may select.

                                       34
<PAGE>

14.4.  Entire Agreement; Amendments.  This Agreement and the Exhibits and
       ----------------------------
Schedules referred to herein and the documents delivered pursuant hereto contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings
or letters of intent between or among any of the parties hereto.  This Agreement
shall not be amended, modified or supplemented except by a written instrument
signed by an authorized representative of Edwards Optionholder and by the
President of Baxter Japan.

14.5.  Interpretation.  Article titles and headings to sections herein are
       --------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.  The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein.

14.6.  Waivers.  Any term or provision of this Agreement may be waived, or the
       -------
time for its performance may be extended, by the party or parties entitled to
the benefit thereof.  Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any party, it is
authorized in writing by an authorized representative of such party.  The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision.  No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

14.7.  Expenses.  All costs and expenses incident to its negotiation and
       --------
preparation of this Agreement will be paid by Baxter Japan.  Each party will pay
all costs and expenses incident to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with.

14.8.  Partial Invalidity.  Wherever possible, each provision hereof shall be
       ------------------
interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.

14.9.  Execution in Counterparts.  This Agreement may be executed in one or more
       -------------------------
counterparts, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties
hereto and delivered to each of Baxter Japan and Edwards Optionholder.

14.10.  Governing Law.  This Agreement shall be governed by and construed in
        -------------
accordance with the internal laws (as opposed to the conflicts of law
provisions) of the State of Illinois.

                                       35
<PAGE>

14.11.  Submission to Jurisdiction.  Baxter Japan and Edwards Optionholder
        --------------------------
hereby irrevocably submit in any suit, action or proceeding arising out of or
related to this Agreement or any of the transactions contemplated hereby or
thereby to the jurisdiction of the United States District Court for the Northern
District of Illinois and the jurisdiction of any court of the State of Illinois
located in Chicago and waive any and all objections to jurisdiction that they
may have under the laws of the State of Illinois or the United States.

14.12.  Termination.  (a)  Anything contained in this Agreement to the contrary
        -----------
notwithstanding, this Agreement may be terminated at any time by mutual written
consent of Edwards Optionholder and Baxter Japan.  This Agreement shall
terminate automatically if the Exercise Period expires prior to exercise of the
Option.

(b)  If this Agreement is terminated pursuant to this Section 14.12, all further
                                                      -------------
     obligations of the parties under this Agreement shall be terminated without
     further liability of any party to the other, provided that nothing herein
     shall relieve any party from liability for its willful breach of this
     Agreement.

14.13.  Survival of Obligations.  All representations, warranties, covenants and
        -----------------------
obligations contained in this Agreement shall survive the consummation of the
transactions contemplated by this Agreement.

14.14.  Currency.  All payments under this Agreement shall be denominated in
        --------
Yen.

                                       36
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed the day and year first above written.

                                    BAXTER LIMITED

                                    By:___________________________
                                       Name:  Robert Hurley
                                       Title: President and
                                              Representative Director

                                    EDWARDS LIFESCIENCES LIMITED

                                    By:___________________________
                                       Name:  Takashi Tsumori
                                       Title: Chairman and
                                              Representative Director

                                       37
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                           Japanese Edwards Business

The Cardiovascular Group sells or is engaged in the development of following
product categories in Japan through its three business units (Cardiovascular
Surgery, or CVS, Anesthesia and Medication Delivery, or AMD, and Vascular and
Interventional Cardiology, or VIC):

 .  Tissue and mechanical heart valves and rings, pericardial patches,
oxygenators, and cardiopulmonary bypass circuits including reservoirs and
arterial filters, cardioplegia devices, heart-lung machines, centrifugal pumps,
arterial and venous cannulae, CDI oxygen monitor cells, Novacor left ventricular
assist devices

 .  Thermo-dilution (Swan-Ganz) catheters, pacing catheters, central venous
catheters, venous introducers, Invos cerebral tissue oxygen monitor devices, VIA
continuous arterial blood gas monitor devices

 .  Direct blood pressure monitor kit, disposable pressure transducers,
Embolectomy (Fogarty) catheters, Lifepath abdominal aortic aneurysm endovascular
graft system, Datascope intra-aortic balloon pumps and catheters, VasoSeal
collagen hemostasis devices, UniCath percutaneous transluminal coronary
angioplasty balloon catheters and stents, Medtronic pacemakers

The Cardiovascular Group in Japan also manufacturers Custom Pac cardiopulmonary
circuits and direct blood pressure monitor kits at the Miyazaki plant.

                                       38
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                          BILL OF SALE AND ASSIGNMENT

          Pursuant to that certain Option Agreement dated as of March 31, 2000
(the "Option Agreement")  by and between Baxter Limited, a Japanese corporation
("Baxter Japan"), and Edwards Lifesciences Limited, a Japanese corporation
("Edwards Optionholder"), for good and valuable consideration paid to Baxter
Japan by or on behalf of Edwards Optionholder, the receipt of which is hereby
acknowledged by Baxter Japan, Baxter Japan does hereby sell, transfer, assign,
convey and deliver to Edwards Optionholder the Purchased Business (all
capitalized terms not defined herein shall have the meanings specified in the
Option Agreement); provided, however, as to any lease, contract, agreement,
                   --------  -------
permit or other authorization or rights included in the Purchased Business that
cannot be conveyed, assigned, transferred, contributed, set over or delivered
effectively without the consent of a third party, which consent has not been
obtained, this Bill of Sale and Assignment shall be of no force or effect until
such requisite consent is obtained, whereupon this Bill of Sale and Assignment
shall become of full force and effect with respect thereto.

          EXCEPT FOR THE REPRESENTATIONS, WARRANTIES AND OTHER AGREEMENTS
SPECIFICALLY PROVIDED FOR IN THE OPTION AGREEMENT, ALL OF THE ASSETS SOLD
HEREUNDER ARE SOLD TO EDWARDS OPTIONHOLDER "AS IS" WITHOUT ANY IMPLIED WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE,
VALUE, FREEDOM FROM ENCUMBRANCE OR ANY REPRESENTATION OR WARRANTY, EXPRESSED OR
IMPLIED.

          This Bill of Sale and Assignment shall be binding upon Baxter Japan,
its successors and assigns, and shall inure to the benefit of Edwards
Optionholder, its successors and assigns.

          IN WITNESS WHEREOF, Baxter Japan has caused this instrument to be duly
executed and delivered as of ____________________.

                              BAXTER LIMITED

                              By: _____________________________
                              Name:
                              Title:
<PAGE>

                                                                       Exhibit C
                                                                       ---------

                            INSTRUMENT OF ASSUMPTION
                            ------------------------

          Pursuant to that certain Option Agreement dated as of March 31, 2000
(the "Option Agreement") by and between Baxter Limited, a Japanese corporation
("Baxter Japan"), and Edwards Lifesciences Limited, a Japanese corporation
("Edwards Optionholder"), for good and valuable consideration paid to Edwards
Optionholder by or on behalf of Baxter Japan, the receipt of which is hereby
acknowledged by Edwards Optionholder, Edwards Optionholder does hereby assume
and agree to pay, perform or otherwise discharge, in accordance with their terms
and subject to the respective conditions thereof, the Purchased Business (all
capitalized terms not defined herein shall have the meanings specified in the
Option Agreement).

          This Instrument of Assumption shall be binding upon the successors and
assigns of Edwards Optionholder and shall inure to the benefit of the successors
and assigns of Baxter Japan.

          IN WITNESS WHEREOF, Edwards Optionholder has caused this instrument to
be duly executed and delivered as of ____________.

                                    EDWARDS LIFESCIENCES LIMITED

                                    By:__________________________
                                    Name:
                                    Title:<PAGE>

                                                                   EXHIBIT 10.18

                          JAPAN DISTRIBUTION AGREEMENT

                           dated as of April 1, 2000

                                 by and between

                                 BAXTER LIMITED

                                      and

                            EDWARDS LIFESCIENCES LLC
<PAGE>

                                                   Page
                  TABLE OF CONTENTS                ----

ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION......   3
ARTICLE II DISTRIBUTION OF PRODUCTS...............   8
ARTICLE III RESTRICTIONS ON EDWARDS; EXCLUSIVITY..   9
ARTICLE IV TERM...................................  10
ARTICLE V PRICES AND FEES.........................  10
ARTICLE VI INVOICING AND PAYMENTS.................  11
ARTICLE VII BAXTER'S DUTIES.......................  12
ARTICLE VIII EDWARDS' DUTIES......................  12
ARTICLE IX STANDARD OF CARE; CONSULTATION.........  13
ARTICLE X TRANSFER OF TITLE AND RISK OF LOSS......  13
ARTICLE XI WARRANTIES.............................  14
ARTICLE XII TRADEMARKS............................  14
ARTICLE XIII TERMINATION..........................  15
ARTICLE XIV INDEMNITY.............................  17
ARTICLE XV COMPLIANCE WITH LAWS...................  22
ARTICLE XVI INSURANCE.............................  24
ARTICLE XVII FORCE MAJEURE........................  24
ARTICLE XVIII CONFIDENTIALITY.....................  25
ARTICLE XIX LIMITATION OF LIABILITY AND REMEDIES..  26
ARTICLE XX DISPUTE RESOLUTION.....................  28
ARTICLE XXI ASSIGNMENT............................  29
ARTICLE XXII MISCELLANEOUS PROVISIONS.............  29

                         i
<PAGE>

                             EXHIBITS AND SCHEDULES

Exhibits
--------

Exhibit A -- Japanese Edwards Business
Exhibit B -- Reporting Positions

Schedules
---------

Schedule A -- Baxter's Duties
Schedule B -- Edwards' Duties
Schedule C -- Products
Schedule D -- Product Prices
Schedule E -- Service Levels

                                      ii
<PAGE>

                         JAPAN DISTRIBUTION AGREEMENT

     THIS JAPAN DISTRIBUTION AGREEMENT (this "Agreement"), dated as of April 1,
2000 (the "Effective Date"), is by and between Baxter Limited, a Japanese
corporation with its principal offices at __________________ ("Baxter Japan"),
and Edwards Lifesciences LLC, a Delaware limited liability company with its
principal offices at ___________________ ("Edwards").

                                    RECITALS

     Prior to the Effective Date, Baxter Japan performed certain sales,
marketing, customer service, and distribution functions in connection with
Edwards' business.

     Baxter (as defined below) is willing to continue to perform such functions
without interruption commencing as of the Effective Date, provided that Edwards
is willing to commit to supplying Edwards' products to Baxter on a long-term
basis.

     Baxter and Edwards desire that Baxter continue to perform such functions as
Edwards' distributor pursuant to the terms and conditions set forth in this
Agreement.

                                   AGREEMENT

     In consideration of the mutual undertakings contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, Baxter and Edwards agree as follows:

                                   ARTICLE I
                      DEFINITIONS; RULES OF CONSTRUCTION

     1.1  Definitions.  As used in this Agreement:

          (a) "Action" shall mean any action, claim, suit, arbitration, inquiry,
subpoena, discovery request, proceeding or investigation by or before any court
or grand jury, any governmental or other regulatory or administrative entity,
agency or commission or any arbitration tribunal.

          (b) "Administrative and Legal Requirements" shall mean any applicable
laws, statutes, regulations, rules, codes (including the Fair Competition Code
approved by the Japan Fair Trade Commission), ordinances or orders enacted,
adopted, issued or promulgated by any court or Governmental Body.

          (c) "Affiliate" shall mean any Person controlling, controlled by, or
under common control with another Person. For the purpose of this definition and
Section 13.1(b), the term "control" means the power to direct the management of
a Person, directly or indirectly, whether solely through the ownership of voting
securities (as in the case of a subsidiary), by contract, or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to

                                       3
<PAGE>

the foregoing. Edwards Lifesciences and Baxter International shall not be deemed
to be Affiliates of each other.

          (d)  "Agreed Accounting Principles" shall mean Japanese generally
accepted accounting principles consistently applied, provided that, with respect
to any matter as to which there is more than one generally accepted accounting
principle, Agreed Accounting Principles means the generally accepted accounting
principles applied in the preparation of the Valuation Date Balance Sheet
attached to the Japan Option Agreement; [provided further that, notwithstanding
the foregoing, Agreed Accounting Principles shall include the accounting
policies and be subject to the exceptions described in Schedule __]; and
provided further that, for purposes of the Agreed Accounting Principles, no
known adjustments for items or matters, regardless of the amount thereof, shall
be deemed to be immaterial.

          (e)  "Annual Budget" shall mean, with respect to any business of
Baxter Japan, the operating budget for such business approved pursuant to the
normal annual budgeting process.

          (f)  "Baxter" shall mean whichever of the following is the party-in-
interest hereunder at any given time: (i) Baxter Japan, (ii) Baxter Japan's
direct or indirect successor-in-interest, or (iii) Baxter Japan's direct or
indirect assignee pursuant to ARTICLE XXI.

          (g)  "Baxter International" shall mean Baxter International Inc., a
Delaware corporation.

          (h)  "Baxter Japan" shall have the meaning set forth in the preamble
to this Agreement.

          (i)  "Baxter Japan Officer or Director" shall mean any officer or
director of Baxter Japan who is not a CVG Japan Employee.

          (j)  "Competitor" shall mean, with respect to Edwards, any Person to
whom a Transfer of the exclusive distribution rights hereunder would violate the
prohibitions on such relationships set forth in Part 3 of Chapter 1 (Sole
Distributorship Contract Between Competitors) of the Japan Antimonopoly Act
Guidelines Concerning Distribution Systems and Business Practices.

          (k)  "Contract Year" means the period from the Effective Date through
March 31, 2001, and each twelve-month period commencing upon April 1 of the year
2001 and each year thereafter during the Term.

          (l)  "CVG Japan Employee" shall mean the employees of Baxter Japan who
are assigned to the Edwards division of Baxter Japan.

          (m)  "Edwards" shall have the meaning set forth in the preamble to
this Agreement.

          (n)  "Edwards Lifesciences Corporation" shall mean Edwards
Lifesciences Corporation, a Delaware Corporation.

                                       4
<PAGE>

          (o)  "Edwards Optionholder" shall mean Edwards Lifesciences Limited, a
Japanese corporation.

          (p)  "Expenses" shall mean any and all expenses incurred in connection
with investigating, defending or asserting any claim, action, suit or proceeding
incident to any matter indemnified against hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).

          (q)  "Governmental Body" shall mean any national, prefectural, or
other governmental authority or regulatory body.

          (r)  "Harm to Reputation" shall mean a loss in the fair value of the
goodwill associated with the Japanese Edwards Business or the Other Japanese
Businesses, as the case may be, but not including any loss in value attributable
to Lost Profits for which indemnification is available pursuant to clause (a) or
(b) of Section 14.1 or clause (i) or (ii) of Section 14.2(a), as the case may
be.

          (s)  "Insurance Proceeds" shall mean those monies (i) received by an
insured from an insurance carrier, (ii) paid by an insurance carrier on behalf
of the insured or (iii) received from any third Person in the nature of
insurance, contribution or indemnification in respect of any Liability, in each
such case net of any applicable premium adjustments (including reserves and
retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.

          (t)  "Japan Option Agreement" shall mean the Option Agreement dated as
of April 1, 2000, by and between Baxter Japan and Edwards Optionholder.

          (u)  "Liability" shall mean any and all debts, liabilities and
obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless
otherwise specified in this Agreement), including all costs and expenses
relating thereto, and including those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any Governmental Authority or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.

          (v)  "Japanese Edwards Business" shall mean the business of the
Cardiovascular Group of Baxter International Inc. in Japan, all as more
specifically described in Exhibit A hereto, together with any additional
businesses undertaken after the date hereof by the Edwards division of Baxter
Japan.

          (w)  "Losses" shall mean any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties, damages,
expenses, deficiencies or other charges, and shall include (i) for the purpose
of clauses (a) and (b) of Section 14.1 and clauses (i) and (ii) of Section
14.2(a) only, Lost Profits for any period during which the sales activities of
Baxter Japan are suspended or restricted by any Governmental Body, and (ii) for
the

                                       5
<PAGE>

purpose of clauses (a) and (b) of Section 14.1 and clauses (i) and (ii) of
Section 14.2(a) only, Harm to Reputation.

          (x)  "Lost Profits" shall mean, for any period during which the sales
activities of the Japanese Edwards Business or the Other Japanese Businesses are
suspended or restricted by any Governmental Body, the amount by which (i) its
Projected Profit for such period exceeds (ii) its actual income (loss) before
income taxes for such period, determined in accordance with the Agreed
Accounting Principles.

          (y)  "Mutually Approved President" shall mean any person appointed as
President of the Edwards division of Baxter Japan and approved in writing by
Edwards.

          (z)  "Notice" shall mean notice given in accordance with Section 22.1.

          (aa) "Option Period" shall mean the period from the Effective Date
through and including the earlier of (i) the closing of the transactions
contemplated by the Japan Option Agreement, and (ii) the expiration of the
Exercise Period under the Japan Option Agreement.

          (bb) "Other Japanese Business" shall mean all businesses of Baxter
Japan other than the Japanese Edwards Business.

          (cc) "Person" shall mean an individual, corporation, partnership,
limited liability company, unincorporated syndicate, association or
organization, trust, trustee, executor, administrator or other legal
representative, governmental authority or agency, or any group of Persons acting
in concert.

          (dd) "Products" shall mean the products manufactured by or on behalf
of Edwards and set forth in Schedule C (as amended from time to time in
accordance with the terms of this Agreement) together with the parts and
components necessary for the repair and replacement thereof.

          (ee) "Product Line" shall mean a group of Products in Schedule C
designated as a product line.

          (ff) "Projected Profit" shall mean, for any period and business, the
projected income (loss) before income taxes of such business for such period, as
shown in the most recent Annual Budget for such business (the "Budgeted Profit")
multiplied by a fraction, the numerator of which shall be the actual income
(loss) before income taxes for such business for the most recent twelve months
ending prior to such period and the denominator of which shall be the Budgeted
Profit for such twelve months; provided, however, that if, as a result of an
event (such as a material acquisition or disposition) occurring after the
approval of the Annual Budget for any business, such Annual Budget is no longer
representative of the expected income (loss) before income taxes of such
business, the Projected Profit shall be an amount, determined pursuant to the
Dispute Resolution procedures in ARTICLE XX, that fairly represents the income
(loss) before income taxes that such business would have earned in the relevant
period if the event or state of facts giving rise to the claim for Lost Profits
had not occurred. If Projected

                                       6
<PAGE>

Profit is determined pursuant to ARTICLE XX, all relevant factors, including the
Annual Budget, any updated forecasts and actual performance of the business
prior to the relevant period, shall be taken into account. For the avoidance of
doubt, Projected Profit shall not take into account any event or state of facts
that gives rise to the claim for which Lost Profits are sought.

          (gg)  "Tax" shall mean:

          (i)  any federal, state, local or foreign net income, gross income,
     gross receipts, consumption, windfall profit, severance, property,
     production, sales, use, license, excise, franchise, employment, payroll,
     withholding, alternative or add-on minimum, ad valorem, value-added,
     transfer, stamp or environmental tax, or any other tax, custom, duty,
     governmental fee or other like assessment or charge of any kind whatsoever,
     together with any interest or penalty, addition to tax or additional amount
     imposed by any Governmental Body; and

          (ii)  any liability of either party for the payment of amounts with
     respect to payments of a type described in clause (i) above as a result of
     being a member of an affiliated, consolidated, combined or unitary group,
     or as a result of any obligation of either party under a tax sharing
     arrangement or tax indemnity arrangement.

          (hh) "Term" shall mean the period of time provided in ARTICLE IV
hereof, including any and all extensions thereof.

          (ii) "Territory" shall mean the country of Japan.

          (jj) "Third-Party Claims" shall mean any and all Actions by, and
liabilities to, third parties.

          (kk) "Transfer" shall mean any assignment, transfer, sale or other
disposition to a Person that is not an Affiliate of the transferor, including
any transfer by way of merger or consolidation or otherwise by operation of law.

     1.2  Other Terms.  Terms defined in other Sections (or in any Schedule)
will have the meanings therein provided.

     1.3  Rules of Construction.  In this Agreement, unless a clear, contrary
intention appears:

          (a)  the singular number includes the plural number and vice versa;

          (b)  reference to any Person includes such Person's successors and
assigns that are permitted by this Agreement;

          (c)  reference to any gender includes the other gender;

                                       7
<PAGE>

          (d)  reference to any Section or Schedule means such Section of this
Agreement or such Schedule to this Agreement, as the case may be, and reference
in any Section or other provision to any clause means such clause of such
Section or provision;

          (e)  "herein," "hereunder," "hereof," "hereto," and words of similar
import shall be deemed references to this Agreement as a whole and not to any
particular Section or other provision hereof;

          (f)  "including" (and with correlative meaning "include") means
"including but not limited to";

          (g)  relative to the determination of any period of time, "from" means
"from and including," "to" means "to but excluding," and "through" means
"through and including";

          (h)  reference to any law (including statutes and ordinances) means
such law (including all rules and regulations promulgated thereunder) as
amended, modified, codified or reenacted, in whole or in part, and in effect at
the time of determining compliance or applicability;

          (i)  accounting terms used herein shall have the meanings historically
attributed to them by Baxter International and its subsidiaries based upon
Baxter International's internal financial policies and procedures in effect
prior to the date of this Agreement;

          (j)  the provisions contained in the Schedules shall control over any
conflicting provisions contained in the body of this Agreement; and

          (k)  the headings contained in this Agreement are for reference only
and are not to be used in construing this Agreement.

     1.4  Construction.  The parties acknowledge that they negotiated this
Agreement with the benefit of legal representation, and no rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against either party shall apply. Subject to Section 22.5, this
Agreement shall be interpreted and construed to the maximum extent possible so
as to uphold the enforceability of each of the terms and provisions hereof, it
being understood and acknowledged that this Agreement was entered into by the
parties after substantial negotiations and with full awareness by the parties of
the terms and provisions hereof and the consequences thereof.

                                  ARTICLE II
                           DISTRIBUTION OF PRODUCTS

     2.1  Grant of Distribution Rights. With respect to sales of all Products in
the Territory, Edwards hereby grants to Baxter and Baxter hereby accepts the
right (which shall be exclusive except as provided herein) to distribute the
Products to customers in the Territory. In connection therewith, Baxter shall
perform sales support, marketing support, customer service, physical
distribution, and distribution-related activities as set forth in ARTICLE VII.

                                       8
<PAGE>

     2.2  Exceptions and Limitations. Edwards reserves all rights not expressly
granted to Baxter hereunder. Subject to Section 21.3, Baxter may appoint
subagents or subdistributors to fulfill its obligations hereunder, provided that
Baxter shall be responsible for the acts and omissions of such subagents and
subdistributors, if any, as if such subagents and subdistributors were employees
of Baxter.

     2.3  Relationship.  Baxter shall maintain the principal contractual
relationship with the customer for sales, sales support, credit, collections,
and customer service in connection with the provision of the Products. Edwards
shall use reasonable efforts to cooperate with Baxter and to facilitate Baxter's
fulfillment of its obligations hereunder.

                                  ARTICLE III
                     RESTRICTIONS ON EDWARDS; EXCLUSIVITY

     3.1  Restrictions on Edwards.

          (a)  Edwards and Edwards Lifesciences shall not, and shall cause their
Affiliates, and any other Person acting on behalf of any of them or their
Affiliates, not to distribute or grant, directly or indirectly, to any
Person other than Baxter the right to distribute the Products to customers
in the Territory, provided that Edwards shall have the right:

          (i)  to distribute Products to customers within the Territory other
than through Baxter if and to the extent Baxter is unable to so distribute the
Products due to (A) regulatory requirements; or (B) Baxter being otherwise
prohibited or prevented from selling and/or distributing the Products to any
customer or class of customers other than by customer decision;

          (ii)  to sell and distribute Products to customers within the
Territory other than through Baxter if (A) Baxter's rights under this Agreement
are assigned to a Competitor, or (B) Baxter becomes a Competitor by selling
products other than the Products; and

          (iii)  except as set forth in Section 3.3, sell and distribute
products that are not Products as defined herein through relationships that do
not include Baxter.

          (b)  This Agreement shall in no way limit the right of Edwards and its
Affiliates to market, sell, or otherwise distribute the Products outside the
Territory.

     3.2  Exceptions.  Edwards shall have the right to request exceptions to the
foregoing restrictions on a case-by-case basis in connection with sales to
specific customers. Such exceptions shall require written approval of Baxter's
President, but such approval shall not be unreasonably withheld.

     3.3  Product Exclusivity.

          (a)  Prior to directly or indirectly selling or distributing to
customers in the Territory any product (other than a Product) developed by
Edwards or manufactured by or on behalf of Edwards, Edwards shall notify
Baxter's President regarding Edwards' intent with respect to such product.
Baxter shall have the right, but not the obligation, to add such product

                                       9
<PAGE>

to Schedule C and this Agreement, and if so added, such product shall be deemed
to be one of the Products. Edwards may delete from Schedule C and this Agreement
any Product, the manufacture and sale of which has been generally discontinued
by Edwards. On or before November 30 of each Contract Year, Edwards shall
provide to Baxter an updated version of Schedule C including any Product
additions or deletions expected to occur in the subsequent Contract Year. In
addition, Edwards shall notify Baxter at least 90 days prior to generally
discontinuing the manufacture and sale of any Product.

          (b)  If Edwards or Edwards Lifesciences is Transferred, then, in
connection with any product of the transferee (or any of its Affiliates) that is
directly or indirectly sold or distributed to customers in the Territory and is
in the same domestic market (as such term is used in the Japan Antimonopoly Act
Guidelines Concerning Sole Distributorship) as the Products (each a "Transferee
Product"), Baxter shall have the right, but not the obligation, to add such
Transferee Product to Schedule C and this Agreement, and if so added, such
Transferee Product shall be deemed to be one of the Products. Notwithstanding
the foregoing, if a Transferee Product is subject to sale or distribution to
customers in the Territory pursuant to an agreement between a third-party
distributor and the transferee (or its Affiliate), then the foregoing right of
Baxter shall not apply to such Transferee Product during the term of such
agreement provided that (i) such agreement was entered into by such third-party
distributor and such transferee (or its Affiliate) more than 90 days prior to
such Transfer; (ii) such transferee (or its Affiliate) shall not extend or renew
the term of such agreement during or after the 90-day period immediately prior
to such Transfer; and (iii) such transferee shall exercise any right of
termination or nonrenewal in connection with such agreement to be effective as
soon as possible after such Transfer.

                                  ARTICLE IV
                                     TERM

     The term of this Agreement (the "Term") shall commence on the Effective
Date and, except as otherwise provided herein, expire at the end of the day on
March 31, 2015.

                                   ARTICLE V
                                PRICES AND FEES

     5.1  Product Prices.  For each Product ordered by Baxter and supplied by
Edwards, Baxter shall pay to Edwards the applicable purchase price set forth in
Schedule D.

     5.2  Price Changes.

          (a)  The purchase prices that Baxter shall pay to Edwards for the
Products shall be adjusted effective on January 1 of each Contract Year and
shall apply to all Products purchased by Baxter during such Contract Year. The
purchase price for each Product shall be set using a resale price method
pursuant to which the purchase price to be paid by Baxter to Edwards shall be
determined by applying a discount (the "Percentage Discount") to an estimate of
the Average Sales Price ("ASP") charged by Baxter to a third-party customer
during the Term.

          (b)  The Percentage Discount shall be calculated for each Contract
Year and shall be set at a level designed to yield to Baxter an overall net
operating profit with respect to

                                       10
<PAGE>

such sales of the Products by the Edwards division of Baxter Japan that will be
equivalent, as a percentage of sales, to the simple average of the net operating
profit of the cardiovascular division of Baxter Japan for the years 1990 through
1997. The Percentage Discount may vary from Product to Product, as mutually
agreed by the parties, so long as the overall projected result is consistent
with this target. For each Contract Year, Edwards, in consultation with Baxter,
shall prepare the estimates of the ASP for each Product and the sales volume for
each Product. For each Contract Year, Baxter, in consultation with Edwards and
based upon Edwards' estimates of sales volumes, shall prepare the estimates of
Baxter's Costs to distribute the Products and the total sales discounts, returns
and allowances for the Products.

          (c)  The purchase prices paid by Baxter for the Products shall be
subject to a quarterly adjustment to produce a margin to Baxter that is
equivalent to that which would have resulted if the actual ASPs for such quarter
were equal to the estimated ASPs used in determining the Percentage Discount.

     5.3  Other Fees.  Edwards shall pay or reimburse Baxter for any other fees,
costs or expenses set forth in this Agreement including paying to Baxter any
agreed-upon amounts in connection with the FCA services described in Section 5.3
of Schedule A.

                                  ARTICLE VI
                            INVOICING AND PAYMENTS

     6.1  Invoicing.  Edwards shall bill Baxter by submitting invoices to Baxter
for payment of amounts due under this Agreement. Such invoices will specify the
Products ordered and Baxter's purchase order number and will be accompanied by
or be followed by such other supporting detail as Baxter may reasonably request.

     6.2  Payment.  Baxter will pay or cause its Affiliates to pay all amounts
due pursuant to this Agreement within 60 days after the date of each invoice
hereunder.

     6.3  Overdue Payments.  If any amounts due hereunder have not been received
by the due date, such overdue amounts shall bear interest from the due date at
the rate of 1% per month, or portion thereof, until received.

     6.4  Disputed Amounts.  Either party shall have the right to withhold any
amounts due hereunder if such party in good faith disputes the amount claimed by
the other party to be due hereunder and such party notifies the other party of
such dispute on or before the applicable due date. The foregoing right to
withhold payment of disputed amounts shall be limited to amounts disputed in
good faith, and interest will accrue in accordance with Section 6.3 and be
payable on the net amount determined to be due. Any such dispute shall be
resolved in accordance with ARTICLE XX.

     6.5  Suspension of Performance.  In addition to any other rights available
to it at law or in equity, upon ten days' prior Notice to Baxter, Edwards may
cease acceptance of orders and suspend supply of Products hereunder if an
undisputed amount due hereunder has not been paid by Baxter within 30 days after
its due date, and such suspension may continue until such payment has been made.

                                       11
<PAGE>

     6.6  No Acknowledgement.  Neither payments made by Baxter nor the
acceptance of payments by Edwards in the amount of or less than the amount shown
on any invoice from Edwards shall be construed as an acceptance or agreement
with the amount so stated or the amount received. Either party may recover from
the other the amount of any overpayment or underpayment. Without limiting the
generality of the foregoing, Edwards may supplement any invoice it renders to
Baxter hereunder for less than the full amount to which it is entitled; provided
that such supplement is made within a reasonable time after the date of the
invoice being supplemented.

     6.7  Audit.  Either party may audit the other party's books and records to
the extent necessary to determine such other party's compliance with the terms
of this Agreement. In addition, Baxter may inspect or review Edwards' production
and quality control processes and records, and such inspection or review shall
be deemed to be an "audit" subject to the terms of this Section 6.7. The party
performing the audit may use independent auditors who may participate fully in
such audit. If an audit is proposed with respect to information which the party
to be audited wishes not to disclose to the other party ("Restricted
Information"), then on the written demand of the party to be audited, the
individuals conducting the audit with respect to Restricted Information will be
limited to the independent auditors of the party requesting the audit. In such
event, the party to be audited shall pay the costs of the independent auditors
conducting such audit, but only with respect to that portion of the audit
relating to the Restricted Information. Such independent auditors shall enter
into an agreement with the parties hereto, on terms that are agreeable to both
parties hereto, under which such independent auditors shall agree to maintain
the confidentiality of the information obtained during the course of such audit
and establishing what information such auditors will be permitted to disclose to
report the results of any audit of Restricted Information to the party
requesting the audit. Any such audit shall be conducted during regular business
hours and in a manner that does not interfere unreasonably with the operations
of the party being audited. Each party may perform such an audit one time in
each twelve-month period during the Term; provided that a party may perform an
additional audit at any time if the preceding audit reveals a failure to conform
to the terms of this Agreement. Each audit shall begin upon the date specified
by the auditing party in a Notice to the other party a minimum of 30 days prior
to the commencement of the audit and shall be performed diligently and in good
faith and shall be completed within a reasonable period of time.

                                  ARTICLE VII
                                BAXTER'S DUTIES

     During the Term, Baxter shall maintain the facilities and personnel
necessary to fulfill its obligations and responsibilities hereunder including
the duties set forth in Schedule A.

                                 ARTICLE VIII
                                EDWARDS' DUTIES

     During the Term, Edwards shall maintain the facilities and personnel
necessary to fulfill its obligations and responsibilities hereunder including
the duties set forth in Schedule B.

                                       12
<PAGE>

                                  ARTICLE IX
                         STANDARD OF CARE; CONSULTATION

     9.1  General.  Each party will use (and will cause its Affiliates to use)
commercially reasonable efforts in the performance of its obligations hereunder
and will do so with the same degree of care, skill and prudence customarily
exercised when engaged in similar activities for itself and its Affiliates.
Subject to the provisions of ARTICLE XIX, if a party's performance is
inaccurate, incomplete, or untimely, such party shall, if practicable, promptly
perform or reperform such obligations.  In performing its responsibilities
hereunder, each party shall accord the other party and such other party's
Affiliates the same priority as it provides itself and its Affiliates under
comparable circumstances.  Without limiting the generality of the foregoing, in
connection with its performance hereunder, neither party will discriminate
against the other party or any of such other party's Affiliates solely because
the other party or one of such other party's Affiliates is the recipient of such
performance.  The parties shall consult with each other with respect to
performance of their obligations hereunder.  Each party shall give due
consideration to any suggestion by the other to improve performance.

     9.2  Overall Level of Service.  Each party will use commercially reasonable
efforts to perform its obligations with the same levels of efficiency, accuracy
and effectiveness as such obligations were performed immediately prior to the
effective date of this Agreement.  In addition, Baxter will use commercially
reasonable efforts to perform its obligations in accordance with the service
levels set forth in Schedule E but shall not be liable for damages caused by any
failure to meet the specified service levels in the absence of gross negligence
or willful misconduct.  The parties agree to consult with each other with
respect to such service levels and their respective performance in attaining
same.  Each party shall consider any suggestion by the other to improve such
party's performance, but such party shall have no obligation to accept or
implement any such suggestion that it does not, in its sole discretion, deem
advisable and in its best interests.

     9.3  Annual Meetings.  Baxter and Edwards shall hold an annual meeting to
discuss (a) the performance of the Japanese Edwards Business as well as product
and market developments relevant to the coming year's operations, and (b) budget
projections affecting the projected price discounts.  The annual meeting shall
be held at Edwards Lifesciences headquarters in Irvine, California, or at such
other location as the parties may agree, and shall be attended by the CEO and
General Counsel of each of Baxter International and Edwards Lifesciences (or
their respective designees) and the Representative Directors of Baxter Japan.
The date of the annual meeting shall be determined by mutual agreement of the
parties.

                                   ARTICLE X
                       TRANSFER OF TITLE AND RISK OF LOSS

     Title to the Products and the risk of loss of such Products shall transfer
from Edwards to Baxter at the time that Baxter or Baxter's designee takes
delivery of the Products from Edwards DDU at the port of entry in Japan.

                                       13
<PAGE>

                                  ARTICLE XI
                                  WARRANTIES

     11.1  Product Warranty.  The following shall apply to all Products sold or
transferred to Baxter Japan prior to or after the Effective Date.  Edwards
warrants to Baxter that, at the time of delivery to Baxter (or Baxter's
designee): (a) the Products have been manufactured by Edwards in accordance
with Good Manufacturing Practices as required by the United States Food and Drug
Administration and Edwards quality control processes and standards which
processes and standards shall meet the minimum requirements of the Ministry of
Health and Welfare of Japan for medical devices and associated products; (b) the
Products conform to the Product specifications in all material respects; (c) the
Products will be free from defects in materials and workmanship under normal use
and service for a period of twelve months commencing on the date that such
Products are received by Baxter Japan; (d) the Products shall not be subject to
expiration for a minimum of nine months thereafter; (e) the design and material
of product packaging (and the quality systems and procedures governing packaging
and transportation operations) are adequate to prevent damage to the Products
including moisture damage, insect damage, and/or contamination with dust or
dirt; and (f) Edwards shall have good and marketable title to all Products free
and clear of all liens or encumbrances (other than any created by Baxter).

     11.2  Disclaimer.  THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL
OTHER WARRANTIES OF ANY KIND, WHETHER STATUTORY, WRITTEN, ORAL, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND
MERCHANTABILITY. IN NO EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, TORT
LIABILITY (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL EDWARDS BE LIABLE TO BAXTER
FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

     11.3  Limitation of Liability.  ANY LIABILITY OF EDWARDS TO BAXTER UNDER
THE WARRANTY CONTAINED IN THIS ARTICLE XI SHALL BE LIMITED TO THE TOTAL PRICE
PAID BY BAXTER FOR THE PRODUCTS THAT ARE THE SUBJECT OF SUCH LIABILITY PLUS ALL
COSTS FOR FREIGHT AND OTHER DIRECT EXPENSES INCURRED BY BAXTER WITH RESPECT TO
SUCH PRODUCTS. SUBJECT TO THE FOREGOING, IF, AT THE TIME OF DELIVERY TO BAXTER
(OR BAXTER'S DESIGNEE), A PRODUCT FAILS TO CONFORM IN ALL MATERIAL RESPECTS TO
THE PRODUCT SPECIFICATIONS, THEN EDWARDS SHALL EITHER (AT EDWARDS' OPTION) (a)
REPLACE SUCH PRODUCT WITHOUT ANY ADDITIONAL CHARGE TO BAXTER, OR (b) REFUND TO
BAXTER THE PURCHASE PRICE PLUS ALL COSTS FOR FREIGHT AND OTHER DIRECT EXPENSES
INCURRED BY BAXTER.

                                  ARTICLE XII
                                   TRADEMARKS

     12.1  Ownership.  Baxter acknowledges that Edwards or its Affiliates are
the owners or licensees of the trademarks and trade names that Edwards and its
Affiliates use in the promotion and sale of the Products hereunder, and that
Baxter has no right or interest in such trademarks or trade names.  Prior to
using any such trademarks or trade names, Baxter shall provide to Edwards

                                       14
<PAGE>

specimens of the proposed use of such trademarks or trade names, and Baxter
shall not use such trademarks or trade names unless Edwards approves in writing
of each such proposed use, such approval not to be unreasonably withheld or
delayed.  Notwithstanding the foregoing (a) Edwards hereby grants to Baxter
Japan the limited right during the Term to use the EDWARDS or EDWARDS
LIFESCIENCES mark in connection with and to refer to the operating division of
Baxter Japan that engages in the Japanese Edwards Business (i.e., the Edwards
division of Baxter Japan or similar uses); and (b) Edwards hereby grants to
Baxter during the Term the exclusive, limited right to use the EDWARDS and
EDWARDS LIFESCIENCES marks in the Territory in connection with the Japanese
Edwards Business.  Baxter Japan's and Baxter's rights to use such Edwards marks
shall be subject to all reasonable usage guidelines communicated by Edwards to
Baxter Japan and Baxter, respectively.  Edwards shall not grant to any third-
party the right to use such Edwards marks in the Territory during the Term in
connection with the development, manufacture, marketing, sales or support of
products that are competitive with or otherwise related to the Products
hereunder or any other products or services of the Japanese Edwards Business.

     12.2  Infringement.  Baxter shall notify Edwards promptly of any
infringement or improper use by any third party of the trademarks or trade names
connoting Edwards if it comes to Baxter's attention that such infringement or
improper use is taking place. In connection therewith, Baxter shall provide to
Edwards all related information of which Baxter has knowledge. Edwards shall
have sole discretion and control with regard to any proceedings related to
infringement or improper use of its trademarks and trade names. Baxter may
choose to be represented by its own counsel in any such proceedings, but such
representation shall be solely at Baxter's expense.

     12.3  Equitable Remedies.  Baxter acknowledges that Edwards may not have an
adequate remedy at law for the breach by Baxter of any covenant contained in
Section 12.1.  Accordingly, if Baxter breaches any such covenant, Edwards may,
in addition to the other remedies that may be available to Edwards, file a suit
in equity to enjoin Baxter from any further breach of any of the terms of
Section 12.1.

                                 ARTICLE XIII
                                  TERMINATION

     13.1  Change in Control.

           (a)   General.

           (i)   In the event of a Change in Control of Edwards, Edwards shall
     give Notice to Baxter within 30 days after the occurrence of such Change in
     Control. Baxter may terminate this Agreement in whole, or solely with
     respect to Edwards' rights set forth in Section 7 of Schedule A, in the
     event of any such Change in Control with respect to Edwards by giving
     Notice of such termination to Edwards as provided below.

           (ii)  Baxter may exercise the rights of termination described in the
     preceding paragraph (i) by providing to Edwards a Notice of termination,
     specifying the date of termination, at any time within the 60-day period
     immediately following the receipt by

                                      15
<PAGE>

     Baxter of the applicable Notice of Change in Control given by Edwards
     pursuant to the first sentence of Section 13.1(a)(i).

           (iii)  The date of termination specified by Baxter in the Notice of
     termination for a termination in whole shall be the last day of a calendar
     month that is not earlier than the third full calendar month following the
     date of the Notice of termination and not later than the sixth full
     calendar month following the date of the Notice of termination. The date of
     termination specified by Baxter in the Notice of termination for a
     termination solely with respect to Edwards' rights set forth in Section 7
     of Schedule A shall be the last day of a calendar month that is not earlier
     than the first full calendar month following the date of the Notice of
     termination and not later than the third full calendar month following the
     date of the Notice of termination.

           (b)  Definitions.  For purposes hereof, "Change in Control" shall
mean (i) the acquisition, directly or indirectly, by any Person or Persons of
more than 30% of the voting stock of either party to this Agreement or any
person that controls either party, other than such an acquisition by a Person
that is controlled by the Ultimate Parent of such party, (ii) any merger or
consolidation involving the Ultimate Parent of Edwards or any Affiliate of such
Ultimate Parent that requires a vote of the stockholders of the Ultimate Parent
of Edwards, (iii) the acquisition by the Ultimate Parent of Edwards of any
Person that constitutes a "significant subsidiary" of such Ultimate Parent
within the meaning of Rule 1-02(w) of Regulation S-X of the Regulations of the
Securities and Exchange Commission, substituting 50 percent for 10 percent in
the tests used therein to determine significant subsidiary, and (iv) the sale,
assignment, transfer or other disposition (including any disposition through a
merger) of all or substantially all of the business and assets of any Person
that controls Edwards. "Ultimate Parent" means Baxter International in the case
of Baxter and Edwards Lifesciences in the case of Edwards.

           (c)  Confidential Information.  During the period commencing with any
such Change in Control and continuing through the end of the Term (and
thereafter, if appropriate), Edwards shall take any and all action reasonably
requested by Baxter to protect any confidential information of Baxter from
disclosure to or use by any Affiliate of Edwards other than a Person that,
immediately prior to the occurrence of the Change in Control, was an Affiliate
of Edwards that regularly accessed such confidential information for a
reasonable business purpose.

     13.2  Other Terminations.  Each party shall have the right to terminate
this Agreement effective upon delivery of Notice to the other party if the other
party materially defaults in the performance of any of its covenants or
obligations contained in this Agreement (including a failure to comply with the
Foreign Corrupt Practices Act (as amended)), and such default is not remedied to
the nondefaulting party's reasonable satisfaction within 30 days after Notice to
the defaulting party of such default, or if such default is not capable of
rectification within 30 days, if the defaulting party has not promptly commenced
to rectify the default within such 30-day period or is not proceeding diligently
to rectify the default.

    13.3  Procedures Upon Termination.  Upon any termination of this Agreement,
each party shall complete its work in process and otherwise cooperate with the
other party as reasonably necessary to avoid disruption of the normal business
operations of such other party, and such termination shall not affect either
party's rights that arose prior to the effective date of

                                      16
<PAGE>

such termination. Except as otherwise required pursuant to ARTICLE XVIII and
Section 22.10, each party shall destroy or return to the other party all records
made or obtained in the course of performance hereunder that contain information
that is protected from disclosure by such party under ARTICLE XVIII. If either
party elects to destroy any records as permitted above, such party shall provide
the other party with written confirmation of such destruction.

     13.4  Continued Service.  If this Agreement expires or is terminated
pursuant to this ARTICLE XIII, Baxter and Edwards shall comply fully with this
Agreement and use reasonable efforts to adequately service existing customers of
the Products until such expiration or termination becomes effective. Edwards
shall reimburse Baxter for (a) any termination or severance payments actually
paid by Baxter to any CVG Japan Employees as a result of the termination or
expiration of this Agreement, and (b) any Losses incurred by Baxter as a result
of Baxter's inability to terminate the employment of any CVG Japan Employees
following such termination or expiration.

     13.5  Sell-Off.  Notwithstanding any provision of this Agreement or any
other agreement between Baxter, Edwards, and/or their respective Affiliates, the
parties acknowledge that Baxter and its Affiliates shall be entitled to continue
to sell or otherwise dispose of the Products within the Territory from and after
the effective date of the expiration or termination of this Agreement if such
Products were owned by Baxter on the date of such expiration or termination;
provided that Baxter shall not substantially increase its inventory of Products
in anticipation of such expiration or termination.

                                  ARTICLE XIV
                                   INDEMNITY

     14.1  Baxter's Obligation.  Except as provided in Section 14.2(a)(v)(B),
Baxter shall indemnify and hold harmless Edwards and each of its Subsidiaries,
Affiliates, directors, officers, employees, agents and counsel and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Edwards Indemnified Parties"), from and against any and all Expenses or
Losses incurred or suffered by Edwards (and/or one or more of the Edwards
Indemnified Parties), in connection with, relating to, arising out of or due to,
directly or indirectly, any of the following items:

           (a)  any fines, penalties or other sanctions imposed by a
Governmental Body that (i) arise out of the operation of the Other Japanese
Businesses during the Option Period and (ii) affect the Japanese Edwards
Business;

           (b)  any failure of the Other Japanese Businesses to comply, during
the Option Period, with any applicable Administrative and Legal Requirements;

           (c)  any exercise of control or influence over the operation of the
Japanese Edwards Business during the Option Period by a Baxter Japan Officer or
Director, without the approval of the Mutually Approved President; and

           (d)  any and all Third-Party Claims that arise out of or relate to:

                                      17
<PAGE>

           (i)  any actual or alleged patent, copyright or trademark
     infringement, or misappropriation or violation of any other proprietary
     right, arising out of Baxter's performance pursuant to this Agreement (but
     not arising out of or relating to any of the proprietary rights in the
     Products as delivered); or

           (ii)  any tort claim (including any claim for personal injury,
     wrongful death or property damage) to the extent such claim arises from any
     grossly negligent act or omission or willful misconduct by Baxter (or its
     employees or agents) in the course of its performance pursuant to this
     Agreement, including any misrepresentation concerning the characteristics
     or method of usage of Products or relating to the storage, handling or
     delivery of Products.

     14.2  Edwards' Obligation.

           (a)  Except as provided in Sections 14.2(b) and 14.4, Edwards shall
indemnify and hold harmless Baxter and each of its Subsidiaries, Affiliates,
directors, officers, employees, agents and counsel and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Baxter Indemnified Parties"), from and against any and all Expenses or Losses
incurred or suffered by Baxter (and/or one or more of the Baxter Indemnified
Parties), in connection with, relating to, arising out of or due to, directly or
indirectly, any of the following items (and to the extent related to Products
shall apply to all Products sold or transferred to Baxter Japan prior to or
after the Effective Date):

           (i)  any fine, penalties or other sanctions imposed by a Governmental
     Body that (A) arise out of the operation of the Japanese Edwards Business
     during the Option Period and (B) affect the Other Japanese Businesses;

           (ii)  any failure of the CVG Japanese Business to comply, during the
     Option Period, with any applicable Administrative and Legal Requirements;

           (iii)  any exercise of control or influence over the operation of
     Other Japanese Businesses during the Option Period by an officer or
     director of the Edwards division of Baxter Japan and without the approval
     of Baxter's President;

           (iv)  any claim or Action that is brought by a CVG Employee against
     Baxter Japan and that relates to or arises out of events that occurred
     prior to the end of the Option Period, other than a claim or Action that
     arises out of an event or action described in Section 14.1(c); and

           (v)  any and all Third-Party Claims that arise out of or relate to:

                (A)  any tort claim (including any claim for personal injury,
                     wrongful death or property damage) to the extent such claim
                     arises from any grossly negligent act or omission or
                     willful misconduct by Edwards (or its employees or other
                     agents) in the course of its performance pursuant to this
                     Agreement;

                                      18
<PAGE>

                (B)  defects in the Products;

                (C)  any actual or alleged patent, copyright or trademark
                     infringement, or misappropriation or violation of any other
                     proprietary right related to a Product;

                (D)  any actual or alleged breach of any warranty (including
                     written warranties included within the Product packaging)
                     or obligation, if any, accompanying the Products, subject
                     to the limitations in ARTICLE XI to the extent provided
                     therein; and

                (E)  any claim for personal injury, wrongful death or property
                     damage arising out of the use of a Product.

Expenses shall be reimbursed or advanced when and as incurred promptly upon
submission of statements to Edwards by Baxter or any Baxter Indemnified Party.

           (b)  Notwithstanding the foregoing, none of the Baxter Indemnified
Parties shall be entitled to indemnification under clause (i), (ii) or (iii) of
Section 14.2(a) for (i) any Expenses or Losses that are included in the Profits
and Losses allocated under the TK Agreement or (ii) any period during which
Baxter or its Affiliates shall cause (A) the President of the Edwards division
of Baxter Japan to be someone other than a person approved by Edwards or (B) any
of the positions listed in Exhibit B hereto to report directly to anyone other
than Mutually Approved President.

     14.3  Applicability of Indemnification.  EXCEPT AS EXPRESSLY PROVIDED
HEREIN, THE INDEMNITY OBLIGATION UNDER THIS ARTICLE XIV SHALL APPLY
NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON BEHALF OF ANY INDEMNIFIED PARTY
AND SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE,
COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT
LIABILITY, ABSOLUTE LIABILITY OR ARISES AS AN OBLIGATION FOR CONTRIBUTION.

     14.4  Adjustment of Indemnifiable Losses.

           (a)  The amount that any party (an "Indemnifying Party") is required
to pay to any Person entitled to indemnification hereunder (an "Indemnified
Party") shall be reduced (including retroactively) by any Insurance Proceeds and
other amounts actually recovered by or on behalf of such Indemnified Party in
reduction of the related Expense or Loss. If an Indemnified Party receives a
payment (an "Indemnity Payment") required by this Agreement from an Indemnifying
Party in respect of any Expense or Loss and subsequently actually receives
Insurance Proceeds or other amounts in respect of such Expense or Loss, then
such Indemnified Party shall pay to the Indemnifying Party a sum equal to the
lesser of (i) the amount of such Insurance Proceeds or other amounts actually
received or (ii) the net amount of Indemnity Payments actually received
previously. The Indemnified Party agrees that the Indemnifying Party shall be
subrogated to such Indemnified Party under any insurance policy.

                                      19
<PAGE>

          (b)  An insurer who otherwise would be obligated to pay any claim
shall not be relieved of the responsibility with respect thereto, or, solely by
virtue of the indemnification provisions hereof, have any subrogation rights
with respect thereto, it being expressly understood and agreed that no insurer
or any other third party shall be entitled to a "windfall" (i.e., a benefit he
or she would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof.

          (c)  If any Indemnified Party realizes a Tax benefit or detriment in
one or more Tax periods by reason of having incurred a Loss for which such
Indemnified Party receives an Indemnity Payment from an Indemnifying Party (or
by reason of the receipt of any Indemnity Payment), then such Indemnified Party
shall pay to such Indemnifying Party an amount equal to the Tax benefit or such
Indemnifying Party shall pay to such Indemnified Party an additional amount
equal to the Tax detriment (taking into account, without limitation, any Tax
detriment resulting from the receipt of such additional amounts), as the case
may be. The amount of any Tax benefit or any Tax detriment for a Tax period
realized by an Indemnified Party by reason of having incurred a Loss (or by
reason of the receipt of any Indemnity Payment) shall be deemed to equal the
product obtained by multiplying (i) the amount of any deduction or loss or
inclusion in income for such period resulting from such Loss (or the receipt of
any Indemnity Payment or additional amount), as the case may be (without regard
to whether such deduction or loss or such inclusion in income results in any
actual decrease or increase in Tax liability for such period), by (ii) the
highest applicable marginal Tax rate for such period (provided, however, that
the amount of any Tax benefit attributable to an amount that is creditable shall
be deemed to equal the amount of such creditable item). Any payment due under
this Section 14.4 with respect to a Tax benefit or Tax detriment realized by an
Indemnified Party in a Tax period shall be due and payable within 30 days from
the time the return for such Tax period is due, without taking into account any
extension of time granted to the Party filing such return.

          (d)  All Indemnity Payments under this ARTICLE XIV shall be
denominated in Yen.

     14.5  Procedures for Indemnification of Third-Party Claims.

          (a)  In the event of a Third-Party Claim against any one or more of
the Indemnified Parties with respect to which an Indemnified Party intends to
make any claim for indemnification against Baxter under Section 14.1 or against
Edwards under Section 14.2, such Indemnified Party shall promptly give written
notice to the Indemnifying Party describing such Third-Party Claim in reasonable
detail, and the following provisions shall apply. Notwithstanding the foregoing,
the failure of any Indemnified Party to provide notice in accordance with this
Section 14.5(a) shall not relieve the related Indemnifying Party of its
obligations under this ARTICLE XIV, except to the extent that such Indemnifying
Party is actually prejudiced by such failure to provide notice.

          (b)  The Indemnifying Party shall have 20 business days after receipt
of the notice referred to in Section 14.5(a) to notify the Indemnified Party
that it elects to conduct and control the defense of such Third-Party Claim. If
the Indemnifying Party does not give the foregoing notice, the Indemnified Party
shall have the right to defend, contest, settle or compromise such Third-Party
Claim in the exercise of its exclusive discretion subject to the

                                       20
<PAGE>

provisions of Section 14.5(c), and the Indemnifying Party shall, upon request
from any of the Indemnified Parties, promptly pay to such Indemnified Parties in
accordance with the other terms of this Section 14.5(b) the amount of any
Expense or Loss resulting from their liability to the third-party claimant. If
the Indemnifying Party gives the foregoing notice, the Indemnifying Party shall
have the right to undertake, conduct and control, through counsel reasonably
acceptable to the Indemnified Party, and at its sole expense, the conduct and
settlement of such Third-Party Claim, and the Indemnified Party shall cooperate
with the Indemnifying Party in connection therewith, provided that (i) the
Indemnifying Party shall not thereby permit any lien, encumbrance or other
adverse charge to thereafter attach to any asset of any Indemnified Party; (ii)
the Indemnifying Party shall not thereby permit any injunction against any
Indemnified Party; (iii) the Indemnifying Party shall permit the Indemnified
Party and counsel chosen by the Indemnified Party and reasonably acceptable to
the Indemnifying Party to monitor such conduct or settlement and shall provide
the Indemnified Party and such counsel with such information regarding such
Third-Party Claim as either of them may reasonably request (which request may be
general or specific), but the fees and expenses of such counsel (including
allocated costs of in-house counsel and other personnel) shall be borne by the
Indemnified Party unless (A) the Indemnifying Party and the Indemnified Party
shall have mutually agreed to the retention of such counsel or (B) the named
parties to any such Third-Party Claim include the Indemnified Party and the
Indemnifying Party and in the reasonable opinion of counsel to the Indemnified
Party representation of both parties by the same counsel would be inappropriate
due to actual or likely conflicts of interest between them, in either of which
cases the reasonable fees and disbursements of counsel for such Indemnified
Party (including allocated costs of in-house counsel and other personnel) shall
be reimbursed by the Indemnifying Party to the Indemnified Party; and (iv) the
Indemnifying Party shall agree promptly to reimburse to the extent required
under this ARTICLE XIV the Indemnified Party for the full amount of any Expense
or Loss resulting from such Third-Party Claim and all related expenses incurred
by the Indemnified Party. In no event shall the Indemnifying Party, without the
prior written consent of the Indemnified Party, settle or compromise any claim
or consent to the entry of any judgment that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a release from all Liability in respect of such claim. If the
Indemnifying Party shall not have undertaken the conduct and control of the
defense of any Third-Party Claim as provided above, the Indemnifying Party shall
nevertheless be entitled through counsel chosen by the Indemnifying Party and
reasonably acceptable to the Indemnified Party to monitor the conduct or
settlement of such claim by the Indemnified Party, and the Indemnified Party
shall provide the Indemnifying Party and such counsel with such information
regarding such Third-Party Claim as either of them may reasonably request (which
request may be general or specific), but all costs and expenses incurred in
connection with such monitoring shall be borne by the Indemnifying Party.

          (c)  So long as the Indemnifying Party is contesting any such Third-
Party Claim in good faith, the Indemnified Party shall not pay or settle any
such Third-Party Claim. Notwithstanding the foregoing, the Indemnified Party
shall have the right to pay or settle any such Third-Party Claim, provided that
in such event the Indemnified Party shall waive any right to indemnity therefor
by the Indemnifying Party, and no amount in respect thereof shall be claimed as
an Expense or a Loss under this Section 14.5(c). If the Indemnifying Party shall
have undertaken the conduct and control of the defense of any Third-Party Claim
as provided above,

                                       21
<PAGE>

the Indemnified Party, on not less than 30 days prior written notice to the
Indemnifying Party, may make settlement (including payment in full) of such
Third-Party Claim, and such settlement shall be binding upon the Parties for the
purposes hereof, unless within said 30-day period the Indemnifying Party shall
have requested the Indemnified Party to contest such Third-Party Claim at the
expense of the Indemnifying Party. In such event, the Indemnified Party shall
promptly comply with such request and the Indemnifying Party shall have the
right to direct the defense of such claim or any litigation based thereon
subject to all the conditions of Section 14.5(b). Notwithstanding anything in
this Section 14.5(c) to the contrary, if the Indemnified Party, in the belief
that a claim may materially and adversely affect it other than as a result of
money damages or other money payments, advises the Indemnifying Party that it
has determined to settle a claim, the Indemnified Party shall have the right to
do so at its own cost and expense, without any requirement to contest such claim
at the request of the Indemnifying Party, but without any right under the
provisions of this Section 14.5(c) for indemnification by the Indemnifying
Party.

     14.6  Procedures for Indemnification of Direct Claims.  Any claim for
indemnification on account of an Expense or a Loss made directly by the
Indemnified Party against the Indemnifying Party and that does not result from a
Third-Party Claim shall be asserted by written notice from the Indemnified Party
to the Indemnifying Party specifically claiming indemnification hereunder.  Such
Indemnifying Party shall have a period of 30 business days after the receipt of
such notice within which to respond thereto.  If such Indemnifying Party does
not respond within such 30 business-day period, such Indemnifying Party shall be
deemed to have accepted responsibility to make payment and shall have no further
right to contest the validity of such claim.  If such Indemnifying Party does
respond within such 30 business-day period and rejects such claim in whole or in
part, such Indemnified Party shall be free to pursue resolution as provided in
ARTICLE XX

     14.7  No Third-Party Beneficiaries.  Except to the extent expressly
provided otherwise in this ARTICLE XIV, the indemnification provided for in this
Agreement shall not inure to the benefit of any third party or parties and shall
not relieve any insurer or other third party who otherwise would be obligated to
pay any claim or assume the responsibility with respect thereto, or, solely by
virtue of the indemnification provisions hereof, provide any subrogation rights
with respect thereto, and each Party agrees to waive such rights against the
other to the fullest extent permitted.

     14.8  Remedies Cumulative.  The remedies provided in this ARTICLE XIV shall
be cumulative and, subject to the provisions of ARTICLE XIX below, shall not
preclude assertion by an Indemnified Party of any other rights or the seeking of
any and all other remedies against any Indemnifying Party.

                                  ARTICLE XV
                             COMPLIANCE WITH LAWS

     15.1  Baxter Compliance.  Baxter shall comply (or cause compliance) in all
material respects with all laws, rules, regulations and directives applicable to
the conduct of Baxter's business or the possession of Products pursuant to this
Agreement including the following:

                                       22
<PAGE>

          (a)  giving prompt written notice to Edwards if Baxter should become
aware of any defect or condition (actual or alleged) which may alter the quality
of the Products in any material respect or may render any of the Products in
violation of any applicable law, rule, regulation or directive including any
violation which could require any alteration of the specifications of any
Product, affect the sale of any Product, cause revocation of any regulatory
approval with respect to any Product or its sale hereunder, or give rise to a
claim against Edwards by any person, and Baxter shall promptly notify Edwards
upon becoming aware of any changes in any laws, rules, regulations or directives
applicable to the manufacture, sale, packaging, labeling, possession or use of
the Products;

          (b)  keeping appropriate records of all lot coded Products and serial
numbered Products shipped to customers; and

          (c)  complying with Edwards' reasonable instructions regarding the
return or disposal of any Products affected by holds or recalls.

     15.2  Edwards Compliance.  Edwards shall comply (or cause compliance) in
all material respects with all laws, rules, regulations and directives
applicable to the conduct of Edwards' business or the manufacture, packaging,
labeling and sale to Baxter of Products pursuant to this Agreement including the
following:

          (a)  giving prompt written notice to Baxter if Edwards should become
aware of any defect or condition (actual or alleged) which may alter the quality
of the Products in any material respect or may render any of the Products in
violation of any applicable law or regulation of the Territory, including,
without limitation, any violation which could require any alteration of the
specifications of any Product, affect the sale of any Product, cause revocation
of any federal, state or other regulatory approval with respect to any Product
or its sale hereunder or give rise to a claim against Baxter by any person; and

          (b)  giving prompt written notice to Baxter of any and all Products
affected by holds or recalls and, if Edwards requests that Baxter return or
dispose of any of such Products, promptly reimburse Baxter for the price paid by
Baxter for such returned or disposed Products along with any direct costs of
returning or disposing of such Products.

     15.3  Specific Federal Requirements.

          (a)  To the extent applicable to the subject matter of this Agreement,
and pursuant to the requirements of 42 CFR 420.300 et seq., Baxter shall make
available to the Secretary of Health and Human Services ("HHS"), the Comptroller
of the General Accounting Office ("GAO"), or their authorized representatives,
all contracts, books, documents and records relating to the nature and extent of
costs hereunder for a period of four years after the furnishing of services
hereunder. In addition, if any part of Baxter's obligations is to be provided by
subcontract, Baxter shall require by contract that such subcontractor make
available to the HHS and GAO, or their authorized representatives, all
contracts, books, documents and records relating to the nature and costs
thereunder for a period of four years after the furnishing of services
thereunder.

                                       23
<PAGE>

          (b)  The services provided hereunder will be provided in compliance
with applicable Equal Employment Opportunity requirements including, where
applicable, those set forth in Section 202 of Executive Order 11246, as amended.

     15.4  Additional Requirements.

          (a)  Baxter will periodically confirm that the Products to be imported
are produced under and in accordance with appropriate manufacturing and quality
control systems, and such confirmation will include reviewing the current the
United States Food and Drug Administration Certificate to Foreign Government
(CFG) document which certifies that the applicable manufacturing plant is in
compliance with current Good Manufacturing Practice requirements.

          (b)  Edwards will promptly communicate to Baxter any proposed change
or changes in the Products having the potential to impact product quality,
safety or efficacy, and such changes may include changes in or to: (i) the
design of the Product; (ii) the composition or source of any raw material; (iii)
the method of producing, processing or testing the Product; (iv) the
subcontractors that produce, process or test; (v) the site of manufacture; (vi)
labeling; (vii) the design or material of any packaging component; and (viii)
the sterilization method, condition or site. Such communications will be
directed to Baxter Japan's Regulatory and Scientific Affairs Director and QA
Manager.

          (c)  Edwards will promptly communicate to Baxter any decision by
Edwards to recall or hold any Product if such decision is related to the
Product's quality, safety or efficacy, and such communication shall include: (i)
Product code number of affected Products, (ii) lot or serial number(s) of
affected Products, (iii) the reason for such hold or recall, and (iv)
instructions for the disposition of the Products. Such communications will be
directed to the President of Baxter.

                                  ARTICLE XVI
                                   INSURANCE

     Each party is responsible for carrying any insurance desired by it in its
sole discretion, including comprehensive general liability insurance, insurance
to cover its facilities, products liability insurance and business interruption
insurance.

                                 ARTICLE XVII
                                 FORCE MAJEURE

     The obligations of either party to perform under this Agreement shall be
excused during each period of delay caused by matters (not including lack of
funds or other financial causes) such as strikes, supplier delays, shortages of
raw materials, government orders or acts of God, that are reasonably beyond the
control of the party obligated to perform; provided that nothing contained in
this Agreement shall affect either party's ability or discretion with respect to
any strike or other employee dispute or disturbance and all such strikes,
disputes or disturbances shall be deemed to be beyond the control of such party.
A condition of force majeure shall be deemed to continue only so long as the
affected party shall be taking all reasonable actions necessary to

                                       24
<PAGE>

overcome such condition. If either party shall be affected by a condition of
force majeure, such party shall give the other party prompt Notice thereof,
which Notice shall contain the affected party's estimate of the duration of such
condition and a description of the steps being taken or proposed to be taken to
overcome such condition of force majeure. Any delay occasioned by any such cause
shall not constitute a default under this Agreement, and the obligations of the
parties shall be suspended during the period of delay so occasioned. During any
period of force majeure, the party that is not directly affected by such
condition of force majeure shall be entitled to take any reasonable action
necessary to mitigate the effects of such condition of force majeure, and the
provisions of Section 3.1 shall be suspended to the extent necessary to permit
any such action, and any financial obligations shall be adjusted in a fair and
equitable manner.

                                 ARTICLE XVIII
                                CONFIDENTIALITY

     18.1  Baxter Information.  Edwards shall hold (and shall use reasonable
efforts to cause its employees and representatives to hold) in confidence (in a
manner consistent with Edwards' treatment of its own confidential information)
all information concerning Baxter (a) contained in any of the Schedules to this
Agreement or otherwise received by Edwards from Baxter after the Effective Date
relating to the determination of the fees and charges payable hereunder, (b)
obtained from Baxter using access to Baxter's information through any interface
between Baxter's systems and Edwards' systems maintained in connection with
Baxter's provision of services hereunder, (c) obtained from Baxter in the course
of an audit pursuant to Section 6.7, or (d) furnished to or obtained by Edwards
after the Effective Date in the course of its receipt of services hereunder.
Edwards shall not use such information for any purpose other than as
contemplated under this Agreement or for verifying compliance with this
Agreement.

     18.2  Edwards Information.  Baxter shall hold (and shall use its reasonable
efforts to cause its employees and representatives to hold) in confidence (in a
manner consistent with Baxter's treatment of its own confidential information)
all information concerning Edwards (a) furnished to or obtained by Baxter after
the Effective Date in the course of providing services hereunder, or (b)
obtained from Edwards using access to Edwards' information through any interface
between Baxter's systems and Edwards' systems maintained in connection with
Baxter's provision of services hereunder.  Baxter shall not use such information
for any purpose other than as contemplated under this Agreement or for verifying
compliance with this Agreement.

     18.3  General.

          (a)  Each party shall be responsible for preventing unauthorized
access by such party's agents and employees to data transferred to or otherwise
made available to the other party under this Agreement.

          (b)  The obligations of confidentiality and nondisclosure imposed
under this ARTICLE XVIII shall not apply to data and information that the
recipient can demonstrate:

          (i)  is published or is or otherwise becomes available to the general
     public as part of the public domain without breach of this Agreement by the
     recipient;

                                       25
<PAGE>

          (ii)  has been furnished or made known to the recipient by a third
     party without any obligation on the recipient to keep it confidential and
     under circumstances that are not known to the recipient to involve a breach
     of the third party's obligations to the other party;

          (iii)  was developed independently of information furnished to the
     recipient under this Agreement; or

          (iv)  was known to the recipient at the time of receipt thereof from
     the other party, was not improperly obtained from the other party and is
     not otherwise subject to (a) the confidentiality restrictions contained in
     the Reorganization Agreement dated as of March 15, 2000, between Baxter
     International and Edwards Lifesciences or (b) any other obligation to keep
     it confidential.

     18.4  Injunctive Relief.  Each party (the "first party") acknowledges that
the other party would not have an adequate remedy at law for the breach by the
first party of any one or more of the covenants contained in this ARTICLE XVIII
and agrees that, in the event of such breach, the other party may, in addition
to the other remedies which may be available to it, apply to a court for an
injunction to prevent breaches of this ARTICLE XVIII and to enforce specifically
the terms and provisions of this Article.

     18.5  Required Disclosures.  The provisions of this Section shall not
preclude disclosures required by law; provided, however, that each party will
use reasonable efforts to notify the other, prior to making any such disclosure,
and permit the other to take such steps as it deems appropriate (including
obtaining a protective order) to minimize any loss of confidentiality.

                                  ARTICLE XIX
                      LIMITATION OF LIABILITY AND REMEDIES

     19.1  Damages.

          (a)  Except for the right to recover Lost Profits and Harm to
Reputation under clauses (a) and (b) of Section 14.1 and clauses (i) and (ii) of
Section 14.2(a) and except for damages asserted by a third party against a party
entitled to indemnification hereunder, in no event, whether based on contract,
indemnity, warranty, tort (including negligence), strict liability or otherwise,
shall either party or any of its directors, officers, employees or agents, be
liable for incidental, consequential, special, exemplary, or punitive damages.
The foregoing limitation and disclaimer shall apply irrespective of whether the
possibility of such incidental, consequential, special, exemplary, or punitive
damages had been disclosed in advance or could have reasonably been foreseen.

          (b)  The limitations and disclaimers of obligations and liabilities
contained in this ARTICLE XIX are intended to apply to the fullest extent
permitted by law; provided that such limitations and disclaimers shall not limit
amounts payable with respect to any express indemnity provided for in this
Agreement.

                                       26
<PAGE>

     19.2  Exclusive Remedies.

          (a)  Except in the case of the gross negligence or willful misconduct
of Baxter or its Affiliates, Edwards' exclusive remedies against Baxter for any
breach of, or other act or omission arising out of or relating to, this
Agreement or Baxter's performance hereunder shall be:

          (i)  the right to receive refunds of the amount of any payment in
     excess of amounts owed under this Agreement;

          (ii)  the right to require reperformance of any obligation to the
     extent required pursuant to ARTICLE IX;

          (iii)  the right to indemnification as provided in Section 14.1;

          (iv)  the right to injunction, specific performance or other equitable
     nonmonetary relief when available under applicable law;

          (v)  the right to terminate this Agreement for material breach as set
     forth in Section 13.2; and

          (vi)  the right to actual damages for breach of ARTICLE XVIII.

          (b)  Except in the case of the gross negligence or willful misconduct
of Edwards or its Affiliates, Baxter's exclusive remedies against Edwards for
any breach of, or other act or omission arising out of or relating to, this
Agreement or Edwards' performance hereunder shall be:

          (i)  the right to indemnification as provided in Section 14.2;

          (ii)  the right to require Edwards to repair or replace (at Edwards'
     option and expense) any Product that proves not to be in conformity with
     applicable labeling or specifications, and Edwards shall pay the
     transportation and other costs incurred by Baxter with respect to any
     Products returned to Baxter for repair or replacement under this Section
     19.2(b)(ii), or, at Edwards' option, reimburse Baxter for any such costs;

          (iii)  the right to injunction, specific performance or other
     equitable non-monetary relief when available under applicable law;

          (iv)  the right to terminate this Agreement for material breach as
     set forth in Section 13.2; and

          (v)  the right to actual damages for breach of ARTICLE XVIII.

                                       27
<PAGE>

                                  ARTICLE XX
                              DISPUTE RESOLUTION

     20.1  General.  Any dispute arising out of or relating to this Agreement
shall be resolved in accordance with the procedures specified in this ARTICLE
XX, which shall be the sole and exclusive procedures for the resolution of any
such disputes.

     20.2  Escalation.  The parties will attempt in good faith to resolve any
claim or controversy arising out of or relating to the execution, interpretation
and performance of this Agreement (including the validity, scope and
enforceability of this mediation and arbitration provision) promptly by
negotiations between executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for the administration of this Agreement. Any party may give the
other party written notice of any dispute not resolved in the normal course of
business. Within fifteen days after delivery of the notice, the receiving party
shall submit to the other a written response. The notice and the response shall
include (a) a statement of each party's position and a summary of arguments
supporting that position, and (b) the name and title of the executive who will
represent that party and of any other person who will accompany the executive.
Within 30 days after delivery of the notifying party's notice, the executives of
both parties shall meet at a mutually acceptable time and place, and thereafter
as often as they reasonably deem necessary, to attempt to resolve the dispute.
All reasonable requests for information made by one party to the other will be
honored. All negotiations pursuant to this clause are confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.

     20.3  Arbitration.  Any dispute arising out of or relating to this
Agreement or its breach, termination or validity which has not been resolved by
the specified non-binding procedure within 90 days of the initiation of the date
of delivery of notice shall be settled by binding arbitration in accordance with
the CPR Non-Administered Arbitration Rules in effect on the date of this
Agreement, by three independent and impartial arbitrators, none of whom shall be
appointed by either party. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. (S)(S) 1-16, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction
thereof. The place of the arbitration shall be Lake County, Illinois, or Orange
County, California, and shall be determined by the party that initiated the
dispute resolution process. The arbitrators may award attorneys' fees in their
discretion. Otherwise, the arbitrators are not empowered to award damages in
excess of compensatory damages, and each party hereby irrevocably waives any
right to recover such damages.

     20.4  Procedures.  The parties may request limited discovery in accordance
with the Federal Rules of Civil Procedure for a period of 120 days after the
initiation of the arbitration process.  All issues regarding compliance with
discovery requests shall be decided by the arbitrators pursuant to the Federal
Rules of Civil Procedure.  The parties agree that the recipient of a discovery
request shall have ten business days after the receipt of such request to object
to any or all portions of such request and shall respond to any portions of such
request not so objected within 30 business days of the receipt of such request.
All objections shall be in writing and shall indicate the reasons for such
objections.  The objecting party shall ensure that all objections and responses
are received by the other party within the above time periods; failure to comply
with the specified time period shall be addressed as set forth in F.R.C.P. 37.
Any party

                                       28
<PAGE>

seeking to compel discovery following receipt of an objection shall file with
the other party and the arbitrators a motion to compel, including a copy of the
initial request and the objection. The arbitrators shall allow ten business days
for the responses to the motion to compel before ruling. Claims of privilege and
other objections shall be determined as they would be in United States federal
court in a case applying Illinois law. The arbitrators may grant or deny the
motion to compel, in whole or in part, concluding that the discovery request is
or is not appropriate under the circumstances, taking into account the needs of
the parties and the desirability of making discovery expeditious and cost-
effective. The statute of limitations of the State of Illinois applicable to the
commencement of a lawsuit shall apply to the date of initial written
notification of a dispute and shall be extended until commencement of
arbitration if all interim deadlines have been complied with by the notifying
party.

     20.5  Injunctive Relief.  Nothing contained in this ARTICLE XX shall
prevent either party from resorting to judicial process if injunctive or other
equitable relief from a court is necessary to prevent serious and irreparable
injury to one party or to others. The use of arbitration procedures will not be
construed under the doctrine of laches, waiver or estoppel to affect adversely
either party's right to assert any claim or defense.

                                  ARTICLE XXI
                                   ASSIGNMENT

     21.1  General.  This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, provided, however, that, except as provided below, Edwards shall not
Transfer its interest in the Agreement, including Transfers by operation of law
such as by way of merger or consolidation, without Baxter's prior written
consent, which consent may not be unreasonably withheld.

     21.2  Transfers by Baxter.  Baxter may Transfer its rights and obligations
hereunder to any Person to which Baxter shall Transfer the business and assets
of Baxter related to Baxter's fulfillment of its obligations hereunder, provided
that any such acquiring Person shall assume in writing the portion of Baxter's
obligations hereunder relating to the business and assets so Transferred, and
shall deliver a signed copy of such assumption instrument to Edwards.  Baxter
shall have no further liability in connection with any of its obligations so
assumed by such acquiring Person.

     21.3  Delegation.  Baxter shall have the right to delegate performance of
any of its obligations hereunder to any Person that is not a Competitor of
Edwards, but no such delegation shall relieve Baxter of any liability therefor
except as otherwise provided in Section 21.2.

                                 ARTICLE XXII
                           MISCELLANEOUS PROVISIONS

     22.1  Notices.  All notices and other communications required under this
Agreement shall be in writing and shall be deemed to have been given if
delivered by hand, or sent by courier or facsimile transmission (provided that
in the case of facsimile transmission, a confirmation copy of the notice shall
be delivered by hand or sent by courier within 2 days of transmission),
addressed:

                                       29
<PAGE>

     To Baxter:

               Baxter Limited

               -------------------------

               -------------------------

               -------------------------
               (facsimile number:          )
                                 ----------

          with copies to:

               -------------------------

               -------------------------

               -------------------------

               -------------------------
               (facsimile number:          )
                                 ----------

          To Edwards:

               Edwards Lifesciences LLC

               -------------------------

               -------------------------

               -------------------------
               (facsimile number:          )
                                 ----------

          with copies to:

               -------------------------

               -------------------------

               -------------------------

               -------------------------
               (facsimile number:          )
                                 ----------

until notice of a change in address or addressee is given as provided in this
Section 22.1.  All notices given in accordance with this Section 22.1 shall be
effective, if delivered by hand or by courier, at the time of delivery, and, if
communicated by facsimile transmission, at the time of transmission.

     22.2  Entire Agreement.  This Agreement is the entire agreement between the
parties hereto with respect to the subject matter hereof, there being no prior
written or oral promises or representations not incorporated herein.

                                       30
<PAGE>

     22.3  Choice of Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois and the federal
laws of the United States of America applicable therein, as though all acts and
omissions related hereto occurred in Illinois. Subject to ARTICLE XX (including
the right to obtain judgment upon the award rendered by the arbitrators in any
court having jurisdiction thereof), any lawsuit arising from or related to this
Agreement shall only be brought in the United States District Court for the
Northern District of Illinois, the Circuit Court of Lake County, Illinois, the
United States District Court for the Central District of California, or the
Superior Court of Orange County, California, and the specific choice from among
the foregoing shall be determined by the party initiating such lawsuit. To the
extent permissible by law, the parties hereby consent to the jurisdiction and
venue of such courts. Each party hereby waives, releases and agrees not to
assert, and agrees to cause its Affiliates to waive, release and not assert, any
rights such party or its Affiliates may have under any foreign law or regulation
that would be inconsistent with the terms of this Agreement as governed by
Illinois law.

     22.4  Amendment; Waiver. No amendment or modification of the terms of this
Agreement shall be binding on either party unless reduced to writing and signed
by (a) in the case of Baxter, its President, and (b) in the case of Edwards, its
______________. The waiver by either party of any particular default by the
other party shall not affect or impair the rights of the party so waiving with
respect to any subsequent default of the same or a different kind; nor shall any
delay or omission by either party to exercise any right arising from any default
by the other affect or impair any rights which the nondefaulting party may have
with respect to the same or any future default.

     22.5  Severability. If any provision of this Agreement is held to be
invalid, illegal, void or otherwise unenforceable in any jurisdiction by reason
of any rule of law, administrative decision, judicial decision, public policy or
otherwise, such provision shall be ineffective in such jurisdiction to the
extent of such invalidity, illegality, voidness or unenforceability without
affecting, impairing or invalidating any remaining provisions of this Agreement.
Any such invalid, illegal, void or otherwise unenforceable provisions shall be
replaced by valid enforceable substitute provisions that are as similar as
possible to such invalid, illegal, void or otherwise unenforceable provisions
with respect to the economic and other commercial effects upon the parties,
which substitute provisions shall be established pursuant to the dispute
resolution procedure set forth in ARTICLE XX.

     22.6  Relationship of the Parties. By virtue of this Agreement, neither
party shall be deemed the other party's agent, partner, joint venturer, or legal
representative, and neither party has express or implied authority to bind the
other in any manner whatsoever.

     22.7  Survival. The rights and obligations of the parties under ARTICLE IX,
ARTICLE XI, ARTICLE XIV, ARTICLE XVIII, ARTICLE XIX, and ARTICLE XX and Sections
6.7, 13.1(c), 13.3, 13.4 and 13.5, as well as all rights and obligations with
respect to any amounts that remain unpaid under ARTICLE VI hereof as of the date
of termination or expiration, shall survive any termination or expiration of
this Agreement.

     22.8  Counterparts. For convenience of the parties hereto, this Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original for all purposes.

                                       31
<PAGE>

     22.9  Beneficiaries. Except for the provisions of ARTICLE XIV, which are
also for the benefit of the other Persons indemnified, this Agreement is solely
for the benefit of the parties hereto and their respective Affiliates,
successors and permitted assigns and shall not confer upon any other Person any
remedy, claim, liability, reimbursement or other right in excess of those
existing without reference to this Agreement.

     22.10  Records Retention.

          (a)  Each party will retain all information obtained or created in the
course of performance hereunder in accordance with the records retention
guidelines of the other party existing from time to time. Each party has advised
the other of its respective guidelines as in effect on the Effective Date and
will advise the other party of any subsequent changes therein.

          (b)  The following provisions of this Section apply only to records
required for tax purposes as identified in Edwards' record retention guidelines.
In accordance with Baxter's records retention policy as of the date hereof with
respect to such records, Baxter shall retain (as necessary for a period of up to
10 years or more) all information needed for tax audits which was obtained or
created in the course of performance hereunder with respect to Edwards. If any
particular hardware or software is necessary to access any information to be
retained by Baxter pursuant to this Section 22.10(b), then Baxter shall ensure
that it has the continuing right to use such hardware and software for as long
as Baxter is obligated to retain such information hereunder. Baxter has advised
Edwards of Baxter International's records retention policy currently in effect.
Baxter will provide Edwards (and afford Edwards full access to, and the right to
inspect and copy at any reasonable time) such information and use of such
equipment and software upon Edwards' reasonable request, at no cost to Edwards
(other than reasonable out-of-pocket expenses of Baxter). At the expiration of
the applicable records retention period, Baxter may dispose of the information
upon prior Notice to Edwards. For a period of 45 days immediately following such
Notice, Edwards shall have the right to remove and take title to all such
information (in any form including books, records, computer tapes, and computer
disks). Edwards shall reimburse Baxter for any reasonable out-of-pocket expenses
incurred to retain such information after this Agreement is terminated or
expires.

          (c)  The foregoing record retention requirements are in addition to
any record retention requirements that are contained in the Reorganization
Agreement between Baxter International and Edwards Lifesciences dated as of
March 15, 2000. In the event of any conflict in the period for retention of
records between this Agreement and the Reorganization Agreement, the longest
retention period shall be applicable.

                                *  *  *  *  *  *

                                       32
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their authorized representatives as of the effective date of this Agreement.

BAXTER LIMITED                                EDWARDS LIFESCIENCES LLC

By:                                           By:
   ---------------------------                   -------------------------
   Name:                                         Name:
        ----------------------                        --------------------
   Title:                                        Title:
         ---------------------                         -------------------

For purposes of Sections 3.1 and 3.3(b) only:

EDWARDS LIFESCIENCES CORPORATION

By:
   ------------------------------
   Name:
        -------------------------
   Title:
         ------------------------

                                       33
<PAGE>

                                   EXHIBIT A

                           JAPANESE EDWARDS BUSINESS

The Cardiovascular Group sells or is engaged in the development of following
product categories in Japan through its three business units (Cardiovascular
Surgery or CVS, Anesthesia and Medication Delivery or AMD, Vascular and
Interventional Cardiology or VIC);

 .  Tissue and mechanical heart valves and rings, pericardial patches,
   oxygenators, and cardiopulmonary bypass circuits including reservoirs and
   arterial filters, cardioplegia devices, heart-lung machines, centrifugal
   pumps, arterial and venous cannulae, CDI oxygen monitor cells, Novacor left
   ventricular assist devices

 .  Thermo-dilution (Swan-Ganz) catheters, pacing catheters, central venous
   catheters, venous introducers, Invos cerebral tissue oxygen monitor devices,
   and VIA continuous arterial blood gas monitor devices

 .  Direct blood pressure monitor kit, disposable pressure transducers,
   Embolectomy (Fogarty) catheters, Lifepath abdominal aortic aneurysm
   endovascular graft system, Datascope intra-aortic balloon pumps and
   catheters, VasoSeal collagen hemostasis devices, UniCath percutaneous
   transluminal coronary angioplasty balloon catheters and stents, Medtronic
   pacemakers

The Cardiovascular Group in Japan also manufacturers Custom Pac cardiopulmonary
circuits and direct blood pressure monitor kits at Miyazaki plant.

                                       34
<PAGE>

                                   EXHIBIT B

                              CVG JAPAN EMPLOYEES

List of CVG Japan Employees as of April 1, 2000
-----------------------------------------------

<TABLE>
<CAPTION>
          Exhibit B, List of CVG Japan Employees

            Employee Number        Last Name                   First Name
          -------------------------------------------------------------------
          <S>                      <C>                         <C>
                 1020         Kubota                       Nobuo
                 1042         Koyanagi                     Masanori
                 1047         Mizutani                     Toshiei
                 1048         Mitani                       Takashi
                 1049         Yatagawa                     Toshio
                 1081         Omichi                       Makoto
                 1114         Toki                         Korehiro
                 1184         Kusakabe                     Noriyuki
                 1218         Uematsu                      Yasuo
                 1265         Matsushita                   Satoru
                 1288         Syakagoori                   Shinji
                 1307         Umeda                        Toshiaki
                 1313         Ueno                         Eiichi
                 1329         Nakamura                     Hiroya
                 1332         Fukuhara                     Hitoshi
                 1378         Ayukawa                      Shinichiro
                 1465         Mizuno                       Nobutaka
                 1466         Nawa                         Kiyoshi
                 1485         Syoji                        Kumiko
                 1512         Kawakami                     Toshio
                 1619         Ohuchi                       Hiroaki
                 1710         Hariya                       Akihiko
                 1714         Maruyama                     Satoshi
                 1715         Yagi                         Yasuji
                 1764         Obata                        Masateru
                 1780         Kawamoto                     Teruyuki
                 1784         Kaneko                       Yutaka
                 1805         Kobayashi                    Akito
                 1811         Sakamoto                     Shiro
                 1813         Sadakiyo                     Yuki
                 1817         Sato                         Hiromi
                 1823         Shima                        Hiroshi
                 1837         Tanaka                       Hiroshi
</TABLE>

                                       35
<PAGE>

<TABLE>
<CAPTION>
                 <S>          <C>                          <C>
                 1838         Takada                       Koichiro
                 1854         Tominaga                     Munenori
                 1868         Nomoto                       Yoshitaka
                 1871         Hirayama                     Keitaro
                 1873         Himeno                       Tetsuya
                 1877         Fumiyama                     Hideo
                 1878         Fukushima                    Masami
                 1881         Fukushima                    Shinichi
                 1884         Ebihara                      Kuniko
                 1897         Morishige                    Shinji
                 1898         Momono                       Hidetoshi
                 1899         Mogami                       Mikio
                 1907         Yamano                       Satohiro
                 1916         Yumita                       Shin
                 1918         Yoshida                      Katsuto
                 1919         Yokoyama                     Kiyotaka
                 1920         Yoshii                       Akihiro
                 1921         Watanabe                     Hiroshi
                 1925         Ikezawa                      Masumi
                 1944         Takahashi                    Mutsuo
                 1956         Kobayashi                    Minoru
                 1959         Seike                        Hisazou
                 1960         Seki                         Shinzo
                 1962         Tsumugi                      Masaharu
                 1975         Murata                       Tetsumaru
                 1976         Murakami                     Toshiki
                 1985         Ishikawa                     Haruki
                 1993         Murakawa                     Shinsaku
                 1995         Okada                        Mieko
                 2008         Kato                         Suguru
                 2009         Arai                         Kazumi
                 2012         Itaya                        Yukihiko
                 2013         Osaki                        Keisuke
                 2019         Konishi                      Kenichi
                 2021         Shimizu                      Shigehide
                 2027         Nishiyama                    Sadaji
                 2029         Hashimoto                    Susumu
                 2031         Matsui                       Kiyomi
                 2036         Adachi                       Eiji
                 2039         Asano                        Tatsushi
                 2044         Ishizaki                     Junichi
                 2049         Ikegame                      Sumio
                 2052         Iwata                        Noriyuki
                 2055         Ueno                         Toru
                 2067         Ogata                        Daisuke
                 2068         Ozawa                        Kenji
</TABLE>

                                       36
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 2071         Ota                          Keiji
                 2072         Okawa                        Tetsuo
                 2073         Omukai                       Michiharu
                 2074         Okutsu                       Ryuichiro
                 2076         Onuma                        Naoki
                 2101         Nakamaru                     Tamotsu
                 2110         Hamada                       Akio
                 2113         Hayashi                      Hironori
                 2126         Kaneda                       Hitomi
                 2127         Kamizaki                     Taketoshi
                 2128         Sokai                        Yasunori
                 2136         Kawamura                     Toshiyuki
                 2144         Hara                         Yoshihiro
                 2152         Omomi                        Ryuko
                 2157         Saeki                        Aya
                 2162         Maeda                        Naomi
                 2177         Kajiura                      Reiko
                 2179         Tatsumoto                    Masashi
                 2181         Ohara                        Masanori
                 2195         Kato                         Yuji
                 2202         Kawashima                    Mitsuru
                 2242         Maeda                        Tsutomu
                 2275         Ukegawa                      Seiji
                 2295         Shinagawa                    Junichiro
                 2297         Suga                         Hiroshi
                 2299         Tada                         Hiroshi
                 2300         Tamai                        Michihiro
                 2304         Hishida                      Fumiaki
                 2308         Yonemaru                     Akitaka
                 2321         Takeuchi                     Ikuko
                 2337         Yanagida                     Naoyuki
                 2363         Mitsui                       Kenichi
                 2371         Sakurai                      Michio
                 2375         Ariyoshi                     Yasuhiro
                 2389         Morita                       Masahiro
                 2398         Kuroki                       Yasuyuki
                 2415         Shozu                        Masaya
                 2420         Oguma                        Yuko
                 2421         Kato                         Terumi
                 2423         Sakamura                     Fumi
                 2450         Haruta                       Norihisa
                 2452         Furukawa                     Masatoshi
                 2454         Yoneda                       Yasuo
                 2455         Igarashi                     Katsuya
                 2457         Era                          Msatoshi
                 2468         Takahashi                    Shigeharu
</TABLE>

                                       37
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 2477         Yamanaka                     Kenji
                 2481         Shinohata                    Hidemi
                 2487         Hirose                       Michiko
                 2508         Sakashita                    Yuko
                 2538         Suzuki                       Chiaki
                 2556         Saegusa                      Hiroyuki
                 2561         Shoji                        Hiroyoshi
                 2564         Nakanowatari                 Katsuya
                 2565         Nakawatari                   Masashi
                 2566         Hashimoto                    Kenji
                 2595         Miura                        Hieki
                 2646         Watanabe                     Shigeru
                 2648         Miyahara                     Yuho
                 2668         Koshima                      Yuichi
                 2671         Asano                        Fumi
                 2689         Numao                        Fumiko
                 2700         Aratani                      Yasumasa
                 2738         Kuboi                        Kenichi
                 2739         Hiruma                       Eiji
                 2745         Matsugami                    Kyoko
                 2747         Kikuchi                      Norihito
                 2749         Shioji                       Toshikazu
                 2756         Hamada                       Kazuyuki
                 2765         Kawada                       Kuniyuki
                 2774         Ota                          Naoyuki
                 2788         Kouso                        Yasuhiro
                 2805         Otsuka                       Katsuki
                 2816         Sakagoshi                    Seiji
                 2819         Takashima                    Michio
                 2823         Teramoto                     Toshiyuki
                 2838         Meguro                       Yushi
                 2865         Honda                        Akihiko
                 2875         Nakai                        Hideki
                 2876         Inoue                        Takahiro
                 2877         Osaku                        Tomohiro
                 2878         Mori                         Takashi
                 2879         Tsuji                        Soichi
                 2880         Naoe                         Satoko
                 2886         Hidaka                       Ritsuko
                 2887         Era                          Misuzu
                 2888         Hidaka                       Miki
                 2889         Takahashi                    Kyoko
                 2892         Taniguchi                    Yukiko
                 2893         Niisaka                      Yuko
                 2894         Yasuda                       Harumi
                 2895         Seo                          Kifumi
</TABLE>

                                       38
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 2936         Komiya                       Noriko
                 2943         Shingaki                     Keiko
                 2944         Nagaoka                      Keiko
                 2946         Shimizu                      Izumi
                 2947         Nagata                       Hifumi
                 2949         Nukumizu                     Rumi
                 2950         Tezuka                       Kazumi
                 2951         Sakuragi                     Nami
                 2952         Yamazaki                     Yoko
                 2953         Fujisaki                     Mayumi
                 2958         Ishiwata                     Takayuki
                 2961         Uchiya                       Taiki
                 2962         Umeda                        Takanori
                 2966         Kato                         Kumiko
                 2972         Kojima                       Mizuho
                 2978         Takiguchi                    Shinji
                 2980         Nakayama                     Yuichiro
                 2983         Horie                        Hirofumi
                 3004         Kuroki                       Sayumi
                 3007         Maeda                        Kumiko
                 3010         Konishi                      Nobuko
                 3011         Goto                         Masako
                 3012         Kondo                        Yumi
                 3016         Sakuraba                     Tsutomu
                 3017         Kaneko                       Kozue
                 3024         Nakajima                     Hiroe
                 3027         Kataoka                      Yoshio
                 3028         Shiiba                       Satoe
                 3032         Aizawa                       Takeshi
                 3034         Isoda                        Takahiko
                 3039         Ito                          Yukari
                 3041         Mikumo                       Yumi
                 3043         Taniguchi                    Kumiko
                 3048         Kuhara                       Rieko
                 3075         Morimoto                     Shigeo
                 3078         Hamada                       Satomi
                 3079         Nagao                        Sayuri
                 3081         Nagasaki                     Akemi
                 3129         Sasaki                       Tsunaaki
                 3133         Sugimoto                     Shoichi
                 3137         Toyota                       Hidejiro
                 3139         Horiuchi                     Tetsuya
                 3140         Oda                          Toshinobu
                 3143         Togashi                      Hideto
                 3154         Yamauchi                     Akira
                 3170         Yamauchi                     Takeshi
</TABLE>

                                       39
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 3171         Kaidou                       Chie
                 3176         Shimizu                      Junichi
                 3194         Kanaishi                     Yuika
                 3195         Kushima                      Kurumi
                 3199         Kodama                       Naoko
                 3200         Imai                         Emiko
                 3212         Basaki                       Mika
                 3222         Yasuda                       Arumi
                 3226         Yamamoto                     Yoshitaka
                 3243         Miyake                       Toshiharu
                 3244         Omata                        Hiroshi
                 3245         Asai                         Mitsuki
                 3246         Mochihara                    Yumi
                 3247         Horimoto                     Keiko
                 3248         Yasuda                       Saori
                 3249         Yamamoto                     Miki
                 3253         Nagasawa                     Akira
                 3255         Yamazaki                     Manabu
                 3257         Otahara                      Aki
                 3268         Nagatomo                     Yayoi
                 3285         Ichikawa                     Takayuki
                 3287         Mizutani                     Hideki
                 3289         Nakamura                     Kenji
                 3290         Nakamura                     Tomokazu
                 3291         Nishikawa                    Kazuhiko
                 3292         Sakurai                      Masatoshi
                 3294         Tsuiki                       Shoutarou
                 3295         Makino                       Morihide
                 3296         Waji                         Masayuki
                 3297         Tsunoda                      Noriko
                 3299         Murai                        Aki
                 3300         Yamaguchi                    Satoko
                 3304         Kanzaki                      Takafumi
                 3305         Kuroki                       Junko
                 3308         Tanaka                       Shoko
                 3309         Yachi                        Mayumi
                 3315         Ito                          Yohei
                 3317         Mori                         Yusuke
                 3319         Sasaki                       Rie
                 3347         Togawa                       Daisuke
                 3352         Kobayashi                    Yuko
                 3353         Fukusumi                     Yukitomo
                 3355         Nakamura                     Reiko
                 3356         Otsuki                       Hirono
                 3370         Kondo                        Jyunko
                 3371         Nagasaki                     Yuki

</TABLE>

                                      40
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 3379         Kikuchi                      Toshihiko
                 3386         Omatsu                       Koichi
                 4005         Haraguchi                    Noriko
                 4007         Kawamura                     Seiko
                 4011         Todoroki                     Yoshiko
                 4014         Masaoka                      Yuko
                 4045         Tsuru                        Hideyuki
                 4052         Morinaga                     Tamako
                 4053         Uchitake                     Mako
                 4055         Sato                         Yukiko
                 4063         Wakasa                       Yuki
                 4070         Nozaki                       Hirotaka
                 4071         Nobutoki                     Akihisa
                 4072         Ogata                        Rika
                 4073         Yamashita                    Satomi
                 4086         Yasumori                     Noriyuki
                 4089         Shindo                       Yuka
                 4090         Goto                         Yoshimi
                 4097         Kawabata                     Nobumichi
                 4098         Nagai                        Reiko
                 4099         Nakane                       Kosaku
                 4105         Umehara                      Tsuguaki
                 4107         Arita                        Miwako
                 4108         Kimura                       Satomi
                 4109         Tsue                         Hiroko
                 4113         Suzuki                       Sadashi
                 4114         Sato                         Yukari
                 4116         Iwasa                        Makoto
                 4120         Ichitani                     Yoshiki
                 4123         Ishii                        Yoshiyuki
                 4124         Miyamoto                     Shinichiro
                 4125         Sato                         Isanori
                 4127         Kato                         Masanori
                 4138         Yamaguchi                    Kenichi
                 4139         Kikuchi                      Mihoko
                 4140         Sato                         Yoshihide
                 4145         Idebata                      Ryoko
                 4146         Hamada                       Atsuyo
                 4163         Kumasegawa                   Keiko
                 4164         Shibata                      Yoko
                 4166         Sasaki                       Yuji
                 4174         Kimura                       Yukihiro
                 4175         Ishimura                     Yuka
                 4176         Sakakibara                   Yumi
                 4179         Saito                        Danro
                 4194         Sugawara                     Yoshifumi

</TABLE>

                                      41
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 4200         Kuboi                        Kenji
                 4212         Honjyo                       Atsushi
                 4220         Kato                         Kosuke
                 4221         Kato                         Kaori
                 4222         Kushima                      Miho
                 4223         Saito                        Hifumi
                 4224         Nishihara                    Mieko
                 4235         Kuraki                       Hiroshi
                 4236         Inabe                        Junpei
                 4237         Minami                       Aiko
                 4246         Miki                         Masahiro
                 4248         Takemoto                     Sayuri
                 4249         Harada                       Emi
                 4254         Julian                       King
                 4267         Hayasaka                     Hajime
                 4270         Sekido                       Akira
                 4273         Saneyasu                     Tomomi
                 4274         Nishino                      Makiko
                 4275         Sawamoto                     Shinichi
                 4277         Honda                        Tsutomu
                 4278         Morikawa                     Eiji
                 4290         Hatazawa                     Yoshinkori
                 4302         Suzuki                       Kazuya
                 4304         Morita                       Koki
                 4306         Matsumura                    Nobuyoshi
                 4307         Kumasaki                     Kenichi
                 4308         Kato                         Etsuko
                 4310         Ikeda                        Naomi
                 4312         Takahagi                     Hiroko
                 4315         Kasutani                     Koji
                 4317         Kusaka                       Shinji
                 4331         Ushiyama                     Mie
                 4344         Terabayashi                  Mai
                 4345         Kuramochi                    Yugo
                 4347         Takigawa                     Kiyoko
                 4348         Futami                       Siro
                 4354         Sakamoto                     Eriko
                 4368         Kuniko                       Inoue
                 4372         Atomi                        Michihiro
                 4383         Mtsumoto                     Takashi
                 4386         Okamoto                      Tadao
                 4389         Watanabe                     Hirofumi
                 4390         Ogata                        Nozomu
                 4391         Okuzawa                      Daisuke
                 4392         Hashizume                    Kenichi
                 4393         Nakamura                     Kimiatsu
</TABLE>

                                      42
<PAGE>

<TABLE>
                 <S>          <C>                          <C>
                 4394         Miyamoto                     Koji
                 4395         Ono                          Atsuko
</TABLE>

Direct Reporting Positions
--------------------------

<TABLE>
<CAPTION>
Exhibit B, Direct Reporting Positions

         Name                                  Responsibilities
-----------------------------------------------------------------------------
<S>                                            <C>
Kosuke Kato                                    GM, CVS
                                               Manufacturing
Akihiko Honda                                  GM, AMD
Pawan Tomkoria                                 GM, VIC
                                               Logistics
Hitoshi Fukuhara                               Finance
                                               Information Services
Shinsaku Murakawa                              Business Development
                                               Communications
Masami Ikezawa                                 Human Resources
                                               General Administrative
Takeshi Aizawa                                 Regulatory Affairs
                                               Quality Control
Open                                           Regal
</TABLE>

                                      43
<PAGE>

                                  SCHEDULE A

                                BAXTER'S DUTIES

1.   Sales. Baxter shall use commercially reasonable efforts to make sales the
     Products in accordance with the following, and such efforts shall be in
     lieu of any standard of performance implied by any applicable statute or
     regulation:

     1.1  Baxter shall generate sales interest in the Products.

     1.2  Baxter shall promote sales of the Products, and such promotion shall
          be at a level that is no less than the level of promotion by Baxter
          prior to the Effective Date.

     1.3  Baxter shall participate with Edwards in quarterly reviews of Baxter's
          performance relative to applicable service levels.

     1.4  Baxter shall permit Edwards to offer sales incentives directly to
          Baxter sales personnel in accordance with Baxter's marketing plan.

2.   Marketing. Baxter shall use commercially reasonable efforts to market the
     Products in accordance with the following and such efforts shall be in lieu
     of any standard of performance implied by any applicable statute or
     regulation:

     2.1  Baxter shall provide all appropriate marketing services that are
          reasonably commensurate with the Product sales targets agreed upon by
          the parties.

     2.2  Baxter shall develop and implement a marketing plan for the Territory
          and shall use reasonable efforts to ensure that such plan complements
          Edwards' overall marketing strategy.

     2.3  Baxter shall maintain its own communications resources and, prior to
          publication, shall submit to Edwards for Edwards' approval all Baxter
          promotional/communication endeavors specifically referring to the
          Products.

3.   Materials Management.

     3.1  Finished Goods Requirements Planning. Baxter will adhere to reasonable
          stocking, storage and delivery levels established by Edwards for the
          Products in the Territory; provided that Baxter shall not be required
          to carry more than 60 days inventory on hand in the Territory based
          upon either (a) sales targets agreed upon by the parties, if any; or
          (b) Baxter's forecasts provided in accordance with Section 3.5 of this
          Schedule.

     3.2  Purchasing. Baxter shall submit purchase orders to Edwards for the
          Products as follows:

          3.2.1  to Edwards' Affiliate in Horw, Switzerland, for heart valves
                 and rings;

                                      44

<PAGE>

          3.2.2  to Edwards' Affiliate in Sau Paolo, Brazil, for Products
                 produced by Edwards Lifesciences Macchi Ltda.; and

          3.2.3  to Edwards in Irvine, California, for Products sourced from the
                 United States.

     3.3  Pick-Up. Upon notification by Edwards, Baxter (or its designee) shall
          promptly pick up from the applicable Edwards' manufacturing or
          distribution facilities the Products ordered by Baxter; provided that
          Edwards shall continue to ship directly to customers in the Territory
          those Products that the Japan Edwards Business drop shipped to
          customers in the Territory from its manufacturing and distribution
          facilities prior to the Effective Date. Edwards shall continue to ship
          such Products using a common carrier designated by Baxter.

     3.4  Inspection.  Baxter shall implement inspection procedures to verify
          that the Products are free from damage when received.

     3.5  Reporting. Baxter shall provide to Edwards a monthly sales report
          detailing Product sales for such month by customer, subdivision and
          Product.

     3.6  Tracing Reports. In addition, upon Edward's reasonable request, Baxter
          will provide to Edwards electronically (to the extent that Baxter is
          reasonably capable) a sales tracing report. At a minimum, such report
          will include for all Products (a) the model number, (b) the quantity
          shipped, (c) the average selling price, (d) the lot number or serial
          number, and (e) the customer name and address.

     3.7  Forecasts. Within seven business days after the end of each calendar
          month, Baxter shall provide to Edwards a rolling twelve-month forecast
          (beginning with the then-current month) of Baxter's requirements for
          the Products including such requirements for sales, samples,
          promotions, consignment, inventories and backorders. Baxter shall send
          each forecast to Irvine, California, or shall load it into Baxter's
          Global Data Exchange system in a manner that will permit access by
          Edwards.

4.   Distribution.

     4.1  Warehouse Management.

          4.1.1  Baxter will be responsible for the management of all Baxter
                 facilities.

          4.1.2  Except as otherwise agreed, Baxter will adhere to existing
                 receiving, storage, and shipping practices including such
                 practices applicable to time-/ temperature-sensitive Products.

     4.2  Order Fulfillment.

          4.2.1  Baxter shall take and process customer orders for the Products.

                                      45

<PAGE>

          4.2.2  Baxter will pick, pack, and ship each customer order in
                 accordance with the terms of the order or other terms agreed
                 upon between Baxter and the customer.

     4.3  Outbound Shipment.

          4.3.1  Baxter shall be responsible for the selection and routing
                 (private fleet or commercial carrier) of each customer order.

          4.3.2  Baxter shall pay for freight for all outbound shipments (i.e.,
                 shipments to customers).

          4.3.3  Baxter will be responsible for freight claims and will be
                 responsible for resolving with customers any disputes regarding
                 product deliveries, shortages, and overages.

     4.4  Lot Tracing. For each Product shipment, Baxter shall maintain records
          including the model number, lot or serial number, quantity shipped,
          and the name and address of the first consignee.

     4.5  Returned Goods Management. Except as otherwise provided in connection
          with FCAs, Baxter shall be solely responsible for all dealings with
          customers related to Product returns.

     4.6  Customer Service.  Baxter shall provide customer service and support
          as follows:

          4.6.1  Product/Service Specifications. Baxter shall forward to Edwards
                 any requests for Product information that is not reasonably
                 available to Baxter.

          4.6.2  Service Commitment. Baxter shall use commercially reasonable
                 efforts to provide high-quality, professional customer service
                 to customers of the Products .

          4.6.3  Order Tracing. Baxter shall maintain the ability to identify to
                 customers the location of Products in the order process.

     4.7  Post-Sales Service.

          4.7.1  Credit and Collection. Baxter shall be responsible for all
                 collection and credit approval processes for all invoices.
                 Baxter shall have the sole authority to issue credits.

          4.7.2  Credits for Shortages, Damages, and Misdeliveries. Baxter shall
                 issue credits and resolve customer issues . Baxter shall
                 communicate with Edwards regarding same if there are recurring
                 problems that may affect Edwards' responsibilities.

                                      46

<PAGE>

          4.7.3  Pricing Disputes.  Baxter will handle pricing disputes between
                 Baxter and its customers.

          4.7.4  Back Order Status and Resolution.  Baxter will be accountable
                 for managing customer communication of back orders to provide
                 accurate and timely information on resolution. Appropriate
                 product substitution information will be communicated to
                 customer. Baxter will transmit back order details in the same
                 manner as such details were transmitted immediately prior to
                 the Effective Date.

          4.7.5  Product Complaint.  Initial customer complaints will be logged
                 by Baxter customer service and forwarded to Edwards' Vice
                 President of Regulatory Affairs (or such person's designee) at
                 a frequency to be agreed upon by the parties. Such complaints
                 may be escalated for resolution per applicable regulatory
                 procedures.

     4.8  Pricing/Billing.

          4.8.1  Baxter will negotiate the delivered price for the Products.

          4.8.2  Baxter shall process all billing to the customer.

     4.9  Product Registrations.  Baxter shall hold all Product registrations
          and shall be the importer of record for all Products.

5.   Communications With Regulatory Agencies.

     5.1  The parties shall mutually agree upon a strategy for all
          communications by Baxter with applicable regulatory authorities in
          connection with the Products.

     5.2  Baxter shall be responsible for communications with applicable
          regulatory authorities in the Territory if such regulatory authorities
          require notification in connection with their regulation of the
          Products.

     6.   Product Field Corrective Actions.

     6.1  Baxter shall cooperate with Edwards in performing any FCA by
          identifying affected Products and customers, developing an action-
          specific management plan detailing specific responsibilities, and
          notifying customers of any such action. Baxter shall encourage
          customers to follow instructions related to any hold or recall
          situation.

     6.2  Baxter shall perform field corrective action ("FCA") services in a
          manner consistent with the quality systems, procedures and
          specifications as of the Effective Date including:

          6.2.1  identification of customers who received the Product involved
                 in the FCA;

                                      47
<PAGE>

          6.2.2  notification to customers of the FCA in accordance with the FCA
                 strategy developed by Edwards;

          6.2.3  retrieval of affected Products from customers and storage of
                 such Products inside a Baxter facility for up to six months
                 from the date of initiation of the FCA;

          6.2.4  if instructed by Edwards, shipment of Products affected by the
                 FCA to Edwards, freight collect;

          6.2.5  minor inspection of Products by Baxter if required by the FCA
                 strategy developed by Edwards;

          6.2.6  discard and destruction of Products by Baxter utilizing
                 nonhazardous waste disposal methods;

          6.2.7  preparation of an FCA report for Edwards that identifies all
                 customers that received the affected Product, defines the
                 number of Product units returned to Baxter, specifies the
                 number of Product units used by the Customer, and specifies any
                 evidence of harm or injury related to the use of the affected
                 Product; and storage of Products affected by an FCA for periods
                 longer than six months or storage of such Products in rented
                 trailers; an incoming inspection of all Products for open FCAs
                 for periods longer than 12 months from the date of initiation
                 of the FCA; and

          6.2.8  third-party invoices for any of the services listed above.

     6.3  At Edwards' request and with Edwards' approval, Baxter shall perform
          FCA services not included above for additional compensation to be
          agreed upon. Edwards will be invoiced separately for such additional
          services. Examples of additional FCA services addressed by this
          Section include:

          6.3.1  all third-party invoices related to expenses incurred by Baxter
                 that arise out of the need for Edwards to issue an FCA for
                 Products;

          6.3.2  inspection (if more than minor) or rework of Products by
                 Baxter;

          6.3.3  storage of Products affected by an FCA for periods longer than
                 six months or storage of such Products in rented trailers; and

          6.3.4  incoming inspection of all Products for open FCAs for periods
                 longer than 12 months from the date of initiation of the FCA.

     6.4  Baxter shall use commercially reasonable efforts to accomplish the FCA
          tasks identified within the time periods specified by Edwards in its
          FCA strategy. If extraordinary volume or other circumstances make such
          time periods impracticable, Edwards and Baxter will make reasonable
          adjustments by extending time periods, setting priorities or
          otherwise.

     6.5  Subject to local restrictions regarding disposition of affected
          Products, routine dispositions (as designated by Edwards) shall be
          issued to Baxter's facilities within five business days, and Baxter
          shall process such dispositions within five business days thereafter.

     6.6  Subject to local restrictions regarding disposition of affected
          Products, expedited or extraordinary dispositions (as designated by
          Edwards) shall be issued to

                                      48
<PAGE>

          Baxter's facilities within one business day, and Baxter shall process
          such dispositions within one business day.

     6.7  Reconciled disposition reports for quantity variance shall be
          negotiated between Baxter and Edwards at the time of disposition.

     6.8  The necessity for and content of sampling plans and protocols shall be
          negotiated by the parties at the time of the FCA.

7.   Consultation.  Baxter shall consult with Edwards prior to implementing any
     capital expenditure that could be expected to have a substantial impact
     upon pricing under Article 5.2 above. Any capital expenditure or series of
     related capital expenditures related to the Japanese CVG Business which
     shall exceed (Yen)_________ shall be deemed to have a substantial impact on
     pricing for purposes of this provision.

                                      49
<PAGE>

                                   SCHEDULE B

                                EDWARDS' DUTIES

1.   Sales.
     -----

     1.1  Edwards shall participate with Baxter in quarterly reviews of
          performance relative to applicable service levels.

     1.2  Edwards shall develop and provide to Baxter a recommended price list
          for the Products.

     1.3  Edwards shall work with Baxter to develop mutually agreed-upon sales
          targets.

2.   Marketing.
     ---------

     2.1  Edwards shall develop a marketing plan and shall provide Baxter with
          access to Edwards' global marketing, strategic and other information
          that Baxter will need in order to fulfill its duties under this
          Agreement and to maintain and expand the Japanese Edwards Business.
          Edwards shall provide reasonable assistance and advice regarding
          clarification and implementation of Edwards' marketing strategy.

     2.2  Edwards shall maintain its own communications resources and will
          coordinate communications messages with Baxter where appropriate. If
          Baxter is required to obtain Edwards approval regarding a
          communication, Edwards shall not unreasonably withhold or delay such
          approval.

3.  Notification. Edwards shall notify Baxter when the Products ordered by
    Baxter are ready for pick-up by Baxter (or its designee) from AEI (Edwards'
    freight forwarder) or from Edwards' warehouses in Irvine, California;
    Memphis, Tennessee; Anasco, Puerto Rico; Horw, Switzerland; or Uden, The
    Netherlands. Notwithstanding the foregoing, Edwards shall continue to ship
    directly to customers in the Territory those Products that the Japan Edwards
    Business drop shipped to customers in the Territory from its manufacturing
    and distribution facilities prior to the Effective Date. Edwards shall
    continue to ship such Products using a common carrier designated by Baxter.

4.  Training. Edwards shall provide to Baxter a reasonable amount of training in
    connection with the sales, marketing and distribution of Products. Edwards
    shall provide a trainer at Edwards' cost and expense, provided that Baxter
    shall pay all costs and expenses of its personnel attending such training.

5.  Product Changes. Edwards will promptly notify Baxter of any proposed change
    or changes in the Products having the potential to impact product quality,
    safety and/or efficacy, and such changes include changes in (a) product
    design; (b) composition or source or any raw material; (c) method of
    producing, processing or testing; (d) subcontractors for producing,
    processing or testing; (e) site of manufacture;

<PAGE>

     (f) labeling, (g) design and material of any packaging component; and (h)
     sterilization method, condition and/or site.

6.   Packaging Quality and Load Build Configuration. Edwards shall be
     responsible for ensuring that the quality of packaging and load build
     configuration will conform to uniform distribution standards (e.g.,
     palletized, etc.) as agreed by the parties.

7.   Returned Goods Processing. Edwards shall promptly provide instructions to
     Baxter regarding the disposal or return to Edwards of Products returned by
     customers.

8.   Product FCAs.
     ------------

     8.1  Edwards shall provide to Baxter in a format to be agreed upon by the
          parties all information reasonably required by Baxter to perform
          Baxter's duties in connection with Product FCAs. Such information
          shall include, without limitation, product identifiers, reason
          priority, and any information related to disposition plans.

     8.2  Edwards shall have sole authority to initiate any FCA. If Edwards is
          required to initiate an FCA for any Product, Edwards' Vice President,
          Quality (or such person's designee) shall notify the senior Baxter
          quality or regulatory officer for the Territory (or such person's
          designee).

     8.3  Edwards shall cooperate with Baxter in performing any FCA by
          identifying affected Products and customers, developing an action-
          specific management plan detailing specific responsibilities, and
          notifying customers of any such action. Edwards and Baxter shall
          encourage customers to follow instructions related to any FCA
          situation.

9.   Customer Service Support. Edwards will use commercially reasonable efforts
     to provide Product-related technical support to Baxter, including the basic
     technical information resident on Edwards' computer system, technical
     letters and clinical information. Edwards will respond to Product-related
     technical questions from or referred by Baxter.

10.  Technical Support. Edwards shall continue to provide technical support
     services in the same manner as provided in connection with the Japanese
     Edwards Business prior to the Effective Date.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}]]