Document:

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                                                                   EXHIBIT 10.16

                            TOKUMEI KUMIAI AGREEMENT

This Tokumei Kumiai Agreement is made this 1st day of April, 2000, between
Baxter Limited, a company organized under the laws of Japan having its head
office at 4, Rokubancho, Chiyoda-ku, Tokyo, Japan, as Eigyo-sha (the
"Operator"), and Edwards Lifesciences Finance Limited, a company established
under the laws of Japan having its head office at 2-8 Rokubancho, Chiyoda-ku,
Tokyo, Japan, as Tokumei Kumiai-In (the "Investor").

                                  WITNESSETH:

WHEREAS, the Operator has been engaged in various businesses in Japan,
including: (i) the cardiovascular business described in Exhibit A hereto("CV
Business"); (ii) the renal business to manufacture, import, and distribute
products and provide services to improve therapies to treat and combat kidney
disease; (iii) the biotechnology business to import and distribute products and
therapies and to provide services in transfusion medicine; and (iv) the
intravenous business described in Exhibit B hereto ("IV Business").

AND WHEREAS, the Operator has established the CV Business in Japan, possesses
all relevant CV Business import licenses in Japan, has established effective
distribution channels in Japan, has employees fully dedicated to the success of
the CV
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Business in Japan, and desires to increase the value of the CV Business in
Japan;

AND WHEREAS, the Operator has established the IV Business in Japan, possesses
all relevant IV Business import licenses in Japan, has established effective
distribution channels in Japan, has employees fully dedicated to the success of
the IV Business in Japan, and desires to increase the value of the IV Business
in Japan but such business is currently too small to operate economically unless
it can share staff and other resources with the CV Business;

AND WHEREAS, the Operator desires current access to capital, for purposes of the
CV Business and IV Business and for purposes of a one-time loan of unused funds
to certain Affiliates of Operator, in a form which will complement its future
financing options and decisions, and which will not inhibit its ability to
engage in future financing related to any of its businesses;

AND WHEREAS, the Operator wishes to increase the value of its CV Business and IV
Business in Japan, but also desires to reduce its overall exposure to the annual
variability in the profitability of the CV Business, and wishes to grow the
small IV Business to a size where it can economically operate as a stand alone
division independent of the CV Business;

AND WHEREAS, as an eigyo sha of a tokumei kumiai ("TK") as described in Articles
535 through 542 of the Japanese Commercial Code, the Operator is willing to
provide the Investor, as a tokumei kumiai'in of a TK, with a share of the

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annual profits or losses of the CV Business and the IV Business, in recognition
of the following consideration from the Investor:

* the amount of the TK contribution under this Agreement;

* the willingness of the Investor to forego any right to share in any
appreciation in the value of the CV Business and the IV Business over the term
of this Agreement;

* the willingness of the Investor to grant the Operator the right to withdraw
the IV Business from the TK Business pursuant to Article 11 hereof;

AND WHEREAS, the Investor desires to provide financing, through the contribution
as the Investor, to the Operator and to receive profits or losses realized from
the CV Business and IV Business, subject to the risks and rewards of the CV
Business and IV Business, in accordance with the terms of this Agreement;

NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and other good consideration, the parties hereto agree as follows:

Article 1.  Definitions

In this Agreement the following expressions shall, except where the context
otherwise requires, have the following respective meanings:

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"Account" shall mean the deposit account in the name of the Operator established
at the head office of The Bank of Tokyo Mitsubishi, Ltd. or such other bank
accounts as may be established by the Operator from time to time and notified to
the Investor.

"Affiliate" shall mean, with respect to either party, a juridical person (i)
that owns, directly or indirectly, at least fifty percent (50%) of the voting
shares or ownership interest in such party, or (ii) at least fifty percent (50%)
of the voting shares or ownership interest of which are owned, directly or
indirectly, by an Affiliate as defined in item (i).

"Agreement" shall mean this Tokumei Kumiai Agreement, as originally executed by
the parties hereto and as the same may be amended, modified or supplemented from
time to time in accordance with the terms hereof.

"Auditor" shall mean PricewaterhouseCoopers or such successor firm (also serving
as general corporate auditor for the Operator) as may be appointed by the
Operator.

"Capital Contribution" shall mean the amount that the Investor shall contribute
to the Operator pursuant to Article 4 herein. The parties hereto hereby confirm
that the Capital Contribution has been determined after considering (i) the fair
market value of the CV Business and the IV Business of the Operator, which have
been appraised by PricewaterhouseCoopers as of February 29, 2000, and (ii) the
value of the one time loans included within the TK Business.

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"CV Business" shall have the meaning set forth in the first recital and shall
include, after the date hereof, all activities conducted by Operator pursuant to
the Japan Distribution Agreement.

"Effective Date" shall mean the date first written above or such other date as
the parties hereto agree.

"Fiscal Period" shall mean each month following the Effective Date.  The first
Fiscal Period shall commence on the Effective Date and end on April 30, 2000.

"IV Business" shall have the meaning set forth in the first recital.

"Investor's Allocation Formula" shall mean 90% of the "Net Profits" or "Net
Losses", as the case may be, plus 10% of the "Notional Yield" and, in accordance
with Article 5, Paragraph 3, below, shall not include Profits or Losses
attributable to realized or unrealized appreciation or depreciation of the TK
Business or the Property upon expiration or termination of this Agreement.

"Japan Distribution Agreement" shall mean the Japan Distribution Agreement dated
as of April 1, 2000 between Operator and Edwards Lifesciences LLC, an Affiliate
of Investor, as the same may be amended from time to time.

"Losses" shall mean the Net Loss Before Income Tax, if any, of the Operator
arising from the operation of the TK Business as shall be determined by the
Operator in accordance with generally accepted accounting principles applicable
in Japan,

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subject to audit review rights as set forth in Article 8 below.

"Net Losses" shall mean, for any Fiscal Period, (i) the excess, if any, of the
"Notional Yield" over the "Profits" for such Fiscal Period or (ii) the "Losses"
less the "Notional Yield" (i.e. the Notional Yield amount will increase the Net
Losses) for such Fiscal Period.

"Net Profits" shall mean, for any Fiscal Period, the excess, if any, of the
"Profits", over the "Notional Yield" for such Fiscal Period.

"Notional Yield" shall mean the monthly return on a notional investment of (Yen)
23.2 billion, paying a rate of return equivalent to the annual coupon rate as of
April 3, 2000 on ten-year Japanese Government Bonds plus 50 basis points;
provided that Notional Yield for the first month under this Agreement shall be
calculated from April 3, 2000 forward.

"Operator's Allocation Formula" shall mean 10% of the "Net Profits" or "Net
Losses", as the case may be, plus 90% of the "Notional Yield".

"Payment Date" shall mean April 3, 2000.

"Profits" shall mean the Net Income Before Income Taxes, if any, of the Operator
arising from the operation of the TK Business as shall be determined by the
Operator in accordance with generally accepted accounting principles applicable
in Japan, subject to audit review rights as set forth in Article 8 below.

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"Property" shall mean all of the assets and property of the Operator which are
utilized by the Operator in the operation of the TK Business.

"TK Business" shall mean the CV Business, the IV Business and the one-time loan
of unused funds to certain Affiliates (Baxter World Trade S.A., a Belgium
company and Baxter Holdings Limited) of Operator.

"Tokumei Kumiai" shall mean the tokumei kumiai relationship established pursuant
to the terms of this Agreement and Articles 535 through 542 of the Commercial
Code of Japan.

Article 2.  The Tokumei Kumiai

(1)  The purpose of the Tokumei Kumiai shall be to achieve the business
     objectives of the Operator and the Investor as summarized above, and to
     allocate and distribute the  Profits or Losses of the TK Business between
     the Investor and the Operator in accordance with the terms of this
     Agreement.

(2)  The Operator shall use the Capital Contribution for purposes of the TK
     Business.

(3)  The Operator shall  use reasonable care in the conduct of the TK Business
     with the intention of preserving the Property and maximizing the Profits,
     but shall not be deemed to have breached this Article 2(3) in the absence
     of gross negligence or willful or wanton misconduct.

(4)  The TK Business shall be conducted by and under the name of the Operator as
     a separate division.

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(5)  The Investor acknowledges and agrees that it shall have no ownership rights
     or claims whatsoever in respect of the Property and shall have no right to
     participate in the operation or management of the TK Business, which in all
     respects shall be conducted solely by the Operator, and to participate in
     the results thereof in the manner and to the extent as provided herein.

(6)  The Operator acknowledges and agrees that this Agreement does not
     constitute the Operator as an agent or legal representative of the Investor
     for any purpose and that the Operator is not authorized to assume or create
     any obligation or responsibility, expressed or implied, on behalf or in the
     name of the Investor, or to bind the Investor in any manner.

Article 3.  Representations and Warranties of the Operator

The Operator hereby represents and warrants to the Investor as follows:

(1)  Authority of Operator

The Operator has full power, authority and legal right to enter into this
Agreement, to perform its obligations hereunder and to conduct the TK Business.

(2)  Government and Third Party Consents

No material consent, authorization, license, permit, registration or approval
of, or other action by, or notice to, any governmental or public body or
authority or any other party is required in connection with the Operator's
execution

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and delivery of this Agreement or the performance by the Operator of its
obligations hereunder.

(3)  Effect of Agreement

The Operator's execution and delivery of this Agreement, performance of the
Operator's obligations hereunder and consummation of the transactions
contemplated hereby will not (a) violate any provision of any material statute,
law, act, ordinance, or other code, decree, order, rule, regulation, license,
permit, authorization of any governmental body or court to which Operator is
subject; or (b) violate any material judgment, order, writ, injunction or decree
of any court applicable to the Operator.

(4)  Restrictive Documents

The Operator is not subject to, or a party to, any material mortgage, lien,
lease, license, permit, agreement, contract, instrument, law, rule, ordinance,
regulation, order, judgment or decree, or any other material restriction of any
kind or character, which would prevent consummation of the transactions
contemplated by this Agreement, compliance by the Operator with the terms,
conditions and provisions hereof or the continued operation of the Operator's
business after the date hereof on substantially the same basis as heretofore
operated, aside from that certain Option Agreement dated March 31, 2000 between
Operator and Edwards Lifesciences Limited, which has been disclosed to the
Investor.

(5)  Financial Statements

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The Operator has heretofore furnished the Investor with copies of (1) the income
statement of the Operator for the period from April 1, 1998 through March 31,
1999, and (2) the balance sheet of the Operator as of March 31, 1999, both of
which financial statements have been attached as Exhibit C hereto (the
"Financial Statements").  The Financial Statements fairly present the financial
condition and results of operations of the Operator as of the dates and for the
periods therein specified in conformity with generally accepted accounting
principles applicable in Japan, except for the absence of footnotes and for
normal year-end audit adjustments.

(6)  No Adverse Changes

Since March 31, 1999 there has not been (a) any material adverse change in the
financial condition or in the results of operations, business, prospects,
Property or assets of the Operator not provided for or disclosed in the
Operator's business plan provided to the Investor; (b) any material loss,
damage, destruction or other casualty to the Property or assets of the Operator
not covered by insurance; (c) any material change in any material method of
accounting or accounting practice; (d) any material adverse change in the
relationships of the Operator with its principal suppliers, customers or
employees; (e) any material capital expenditure by the Operator or commitment
therefor not provided for in the Operator's business plan provided to the
Investor; (f) except as contemplated by the Japan Distribution Agreement, any
amendment or termination of any material contract, lease or other instrument to
which it is a party or any agreement

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to amend or terminate any such contract, lease or instrument; and (g) any sale,
assignment or transfer of any material asset or Property of the Operator.

(7)  Litigation

Except for the case of Nippon Zion v. Baxter Limited, currently pending in the
Tokyo District Court and previously disclosed to Investor, there are no material
actions, suits, proceedings or investigations pending or, to the best knowledge
of the Operator, threatened against the Operator which might materially
adversely affect the CV Business, the IV Business, the Property, or any other
assets or rights of the Operator.

Article 4.  Capital Contributions

(1)  The Investor shall transfer 23.2 billion yen ((Yen) 23,200,000,000) in
     immediately available funds to the Account as its original Capital
     Contribution to the Operator on the Payment Date.

(2)  The Investor shall make additional Capital Contributions to the Operator on
     a monthly basis, if and as required by Article 5(5), such that the
     remaining balance of the Investor's original Capital Contribution shall not
     be diminished by the portion of Net Losses allocable to the Investor under
     the Investor's Allocation Formula.

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Article 5.  Distribution and Allocation of Profits and Losses

(1)  The Operator shall compute the Profits or Losses, as the case may be, and
     Notional Yield for each Fiscal Period, and notify the Investor of the same
     within 10 days after the end of such Fiscal Period.  The Profits and Losses
     shall include actual interest earned from the one-time loan of unused funds
     to certain Affiliates and shall be determined after allocating the costs
     and expenses of the Operator among the CV Business, the IV Business and its
     other businesses in a reasonable manner to be separately determined between
     the Operator and the Investor.  If any subsequent adjustments are required
     (by reason of audit or otherwise) to the Profits or Losses computed for any
     particular Fiscal Period, those adjustments shall be taken into account in
     determining Profits or Losses for the Fiscal Period in which such
     adjustments are made.

(2)  The Operator shall allocate the Net Profits, Net Losses, and Notional Yield
     for each Fiscal Period to the Investor in accordance with the Investor's
     Allocation Formula.

(3)  Profits or Losses attributable to unrealized appreciation or depreciation
     of the CV Business, the IV Business or the Property (or to appreciation or
     depreciation realized as a result of the expiration or termination, or any
     event that causes the expiration or termination, of this Tokumei Kumiai
     Agreement, below),

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     shall, upon expiration or termination of this Tokumei Kumiai Agreement
     pursuant to Article 12, be allocated wholly to the Operator.

(4)  The amount of the Net Profits and Notional Yield allocated to the Investor
     pursuant to Article 5(2) shall be distributed to the Investor within 25
     days after the end of the applicable Fiscal Period, by remitting cash to
     the bank account of the Investor notified to the Operator.  For avoidance
     of doubt, unused funds lent out under the TK Business shall be deemed
     available for remittance up to the amount of any such distribution. The
     remaining Net Profits and Notional Yield, being those allocated to the
     Operator, shall be deemed to be distributed to the Operator at the same
     time.

(5)  If, for any Fiscal Period, Net Losses are allocated to the Investor
     pursuant to Article 5(2), the Investor shall make an additional Capital
     Contribution equal to the amount of such allocated Net Loss to the Operator
     within 25 days after the end of the applicable Fiscal Period.

Article 6.  Liability of the Operator

All obligations and liabilities of any kind incurred with respect to the TK
Business shall be liabilities of the Operator and not the Investor. However,
liabilities incurred by the Operator with respect to the CV Business or (subject
to Article 11) the IV Business, including product liabilities attributable to
the CV Business or IV Business, will be

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included within the computation of Profits and Losses herein for the periods in
which they accrue.

Article 7.  Rights of Investor

The Investor, its employees, directors or agents, may after giving prior written
notice to the Operator, during the Operator's regular business hours, examine
the condition of the Property and the activities of the Tokumei Kumiai and audit
the Tokumei Kumiai's books of account and other records at its own cost.

Article 8.  Accounting

(1)  The Operator shall prepare and maintain accurate books of account and
     records covering all transactions relating to the TK Business.

(2)  The Operator shall, within 10 days after the end of each Fiscal Period,
     prepare and deliver to the Investor financial statements of the Tokumei
     Kumiai for the relevant Fiscal Period.

(3)  The Operator shall, within 90 days after the end of each calendar year,
     provide to the Investor audited financial statements of the Tokumei Kumiai
     for that calendar year.

(4)  The Operator shall, within 90 days after the expiration or the termination
     of this Agreement, provide to the Investor audited financial statements
     with respect to the Tokumei Kumiai for the period commencing the day
     following the end of its immediately preceding calendar

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     year and ending as of the date of the expiration or the termination.

(5)  The Investor shall be entitled (i) to request that the Operator produce
     audited financial statements, and/or (ii) to conduct its own audit of the
     financial statements, in each case for any Fiscal Period or Fiscal Periods.
     If the Investor does not agree with the results of any such audited
     financial statements produced by the Operator pursuant to (i) above, or if
     the Operator does not agree with the results of any such audit conducted by
     the Investor pursuant to (ii) above, such dispute will be resolved pursuant
     to Article 21.  The cost of any such audits performed by or for the
     Operator pursuant to (i) above shall be charged to the Tokumei Kumiai.  The
     cost of any such audits performed by or for the Investor pursuant to (ii)
     above shall be borne by the Investor; provided, however that if a
     discrepancy of more than 5% of the reported Profit or Loss for the Fiscal
     Period or Fiscal Periods subject to such audit is ultimately found to exist
     between the audit performed by or for the Investor (as adjusted pursuant to
     the dispute resolution procedures of Article 21) and the financial
     information provided to the Investor by the Operator, the cost of the audit
     shall be borne by the Operator.

Article 9.  Assignment

(1)  The Operator shall not be permitted to assign any of its rights, duties or
     obligations under this Agreement to

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     any non-Affiliates without the prior written consent of the Investor.

(2)  The Investor shall be permitted to assign any or all of its rights under
     this Agreement to any third party without the consent of the Operator.

Article 10.  Term

This Agreement shall take effect on the Effective Date and shall continue in
force for a period of ten years, subject to the termination provisions described
in Article 12, below. At the expiration of such term, the parties may mutually
agree to renew this Agreement with such changes as may be warranted by changes
in circumstances during the initial ten year term.

Article 11.  Modification of TK Business

(1)  The Operator retains the right, within its sole discretion, to modify the
     definition of the TK Business to exclude the IV Business.  If the Operator
     does not exercise such rights under this Article, the IV Business will
     continue to be part of the definition of the TK Business.

(2)  The Operator will not modify the definition of the TK Business to exclude
     the IV Business for a period of twenty-one (21) months from the Effective
     Date of this Agreement, except subject to the notice and modification fee
     clauses described within this Article.

(3)  If the Operator wishes to modify the definition of the TK Business to
     exclude the IV Business, it must provide

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     written notice to the Investor at least six months prior to the effective
     date of such modification under this Article.

(4)  If the Operator provides such notice such that the effective date of such
     modification is within the period described in Clause 2 of this Article,
     the Operator will pay to Investor a modification fee equal to the expected
     allocation to Investor related to the IV Business for the remaining portion
     of the twenty-one month period, based on an expected allocation of (Yen)
     20,000,000 per month, which expected amount may not become fixed or
     conclusive prior to the time of the exclusion of the IV Business, and may
     be subject to any amendment through reasonable consultations between the
     Operator and Investor.

(5)  The expenses relating to the modification of the TK Business pursuant to
     this Article will not be reflected in the financial statements of the
     Tokumei Kumiai.

Article 12.  Termination

(1)  The Investor may terminate this Agreement in the event of any material
     breach by the Operator of a term of this Agreement occurs which is not
     rectified within 60 days after receipt by Operator of written notice of
     breach from the Investor; provided, however, that if Operator disputes such
     termination, this Agreement shall remain in full force and effect until
     completion of the dispute resolution procedures in Article 21.

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(2)  The Agreement shall terminate in the event either party 1) enters
     bankruptcy, corporate reorganization or similar proceedings or 2) is
     dissolved or liquidated, unless the relevant party assigns its rights and
     obligations to another entity as permitted under the terms of Article 9.

(3)  This Agreement shall terminate immediately prior to the disposition by the
     Operator of any substantial portion of the CV Business outside of the
     ordinary course of business, unless the Investor provides written consent
     to an assignment of the Operator's rights and obligations under this
     Agreement to the Purchaser pursuant to the terms of Article 9.

(4)  The provisions of Article 10 of this Agreement notwithstanding, if Operator
     shall provide notice in writing of a desire to terminate this Agreement at
     any time prior to the tenth anniversary of the Effective Date, then this
     Agreement shall be terminated on the date that falls six months following
     the Investor's receipt of such notice.

(5)  The provisions of Article 10 of this Agreement notwithstanding, this
     Agreement may be terminated at any time by the written mutual agreement of
     the parties specifying the effective date of such termination.

Article 13.  Consequences of Expiration or Termination

(1)  In the event of the expiration of this Agreement or the termination of this
     Agreement pursuant to Article 10 or

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     12 herein, the Operator shall (i) distribute to the Investor, within five
     (5) days after such expiration or termination, cash in an amount equal to
     the original Capital Contribution made pursuant to Article 4(1), and (ii)
     provide to the Investor, within ninety (90) days after the date of such
     expiration or termination, audited financial statements with respect to the
     Tokumei Kumiai and a full and proper accounting of Profits, Losses and
     Notional Yield as of the date of the expiration or the termination in
     accordance with Article 8(4). Within five (5) days after the audited
     financial statements are provided pursuant to the preceding sentence, (i)
     the Operator shall distribute to the Investor the Investor's share of Net
     Profits (excluding any and all unrealized appreciation or depreciation in
     the value of the CV Business and the IV Business) and Notional Yield
     accrued under the principles of Article 5(2) as of the date of such
     expiration or termination and to the extent not previously distributed to
     the Investor and/or (ii) the Investor shall pay to Operator any Net Losses
     allocated to the Investor pursuant to this Agreement which have not been
     followed by additional Capital Contributions, as prescribed in Article 4,
     above. In no event shall the Investor acquire any right or interest in the
     Property (including any appreciation in the value thereof) or in the CV
     Business or the IV Business.

(2)  If, at any time following the expiration or termination of this Agreement,
     the Operator shall pay any liability

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     arising from the operation of the TK Business during the term of this
     Agreement (including, without limitation, contingent liabilities incurred
     during the term of this Agreement) and that was not taken into account in
     determining Net Profits and Net Losses hereunder, the Investor shall
     reimburse the Operator for 90% of such amount within ten (10) business days
     after receipt of notice thereof from the Operator.

(3)  If, at any time following the expiration or termination of this Agreement,
     the Operator shall receive any payment that results from the operation of
     the TK Business (other than the one-time loan of cash to Affiliates of the
     Operator) during the term of this Agreement (including, without limitation,
     any reimbursement of liabilities pursuant to the Japan Distribution
     Agreement) and that was not taken into account in determining Net Profits
     and Net Losses hereunder, the Operator shall pay 90% of such amount to
     Investor within ten (10) business days after Operator's receipt of such
     payment.

(4)  The provisions of Clauses (2) and (3) of this Article 13 shall survive the
     expiration or termination of this Agreement.

Article 14.  Notices

All notices, requests, demands or other communications that shall or may be
given hereunder shall be in writing in the

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English language and shall be deemed to have been duly given or made:

     (a)  at the time of delivery to a duly authorized person, if delivered by
          hand;

     (b)  upon receipt, if made by letter, or

     (c)  if given by telefax when confirmed by telephone or return telefax.
          Such notices, requests, demands or other communications shall be
          dispatched to or given at:

If to Investor:

          Edwards Lifesciences Finance Limited
          2-8 Rokubancho, Chiyoda-ku
          Tokyo, 102-0085 Japan
          Attention: President, Director

with a copy to:

          Edwards Lifesciences Corporation
          17221 Red Hill Avenue
          Irvine, California 92614
          USA
          Attention: International Counsel
          Telefax: 949-250-6868

If to Operator:

          Baxter Limited
          4, Rokubancho, Chiyoda-ku

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          Tokyo 102-8468 Japan
          Attention: President
          Telefax: 81-3-5213-5111

with a copy to:

          Baxter International Inc.
          One Baxter Parkway
          Deerfield, Illinois 60015
          USA
          Attention: International Counsel
          Facsimile: 847-948-4634

or such other person, address or number as either party may designate in writing
to the other by a similar notice.

Article 15.  Amendments

This Agreement may not be renewed, amended or modified in any manner, except by
an instrument in writing signed by an authorized representative of Investor and
the President of Operator.

Article 16.  Waiver

The waiver, express or implied, by either of the parties hereto of any right
hereunder or of any failure to perform any term of this Agreement or breach
hereof by the other party hereto shall not constitute or be deemed a waiver of
any other right hereunder or of any other failure to perform any term of this
Agreement or breach hereof by such other party, whether of a similar or
dissimilar nature thereto.

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Article 17.  Severability

Should any provision of this Agreement be held in whole or in part invalid or
unenforceable, such provision or part thereof shall be deemed deleted from this
Agreement and, to the extent not so held invalid or unenforceable, each
provision hereof shall remain in full force and effect.  In the event any
provision deleted hereunder is deemed by either party to be a material provision
hereof, the parties shall negotiate in good faith a mutually acceptable
substitute provision that gives full effect to the spirit and intent of this
Agreement.

Article 18.  Confidentiality

Neither the Operator nor the Investor may divulge the contents of this Agreement
or any information with respect to the operation of the Tokumei Kumiai or the
other party; provided that this restriction shall not apply in the event (i)
disclosure is requested by appropriate authorities pursuant to statutory
authority or (ii) either party determines, with the advice of counsel, that such
disclosure is required pursuant to applicable securities laws or regulations or
stock exchange requirements.

Article 19.  Late Interest

In the event the Operator or the Investor shall be late in the payment of money
provided for in this Agreement, such party shall pay interest at the rate of 3%
over the then-effective Japanese long-term prime rate per annum in respect to
the relevant outstanding amount for the period from and

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including the date payment thereof was due until and including the date full
payment thereof is made.

Article 20.  Governing Law

This Agreement shall be executed in the English language and shall be governed
by and construed in accordance with the laws of Japan.

Article 21.  Dispute Resolution

(1)  Any dispute arising out of or relating to this Agreement shall be resolved
     in accordance with the procedures specified in this Article 21 which shall
     be the sole and exclusive procedures for the resolution of any such
     disputes.

(2)  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

                                      -24-
<PAGE>

     (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.

(3)  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 clause (2)
     above within 90 days of the date of delivery of the Escalation Notice shall
     be finally settled by arbitration in Tokyo pursuant to the Commercial
     Arbitration Rules of the Japan Commercial Arbitration Association.

Article 22.  Section Headings

The headings in this Agreement are inserted for convenience and identification
only, and are in no way intended to describe, interpret, define, or limit the
scope, extent, or intent of this Agreement or any provision thereof.

                                      -25-
<PAGE>

Article 23.  Copies

This Agreement shall be executed in two (2) original copies, with the Operator
and the Investor each retaining one original.

                                     *****

                                      -26-
<PAGE>

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

Baxter Limited                    Edwards Lifesciences
                                  Finance Limited

/s/ James Robert Hurley           /s/ Bruce P. Garren
-----------------------           -------------------
Name: James Robert Hurley         Name: Bruce P. Garren
Title: President and              Title: General Counsel
       Representative Director

                                      -27-
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                                  CV 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, Lifespan PTFE endovascular
   grafts, Fogarty atraumatic occlusion clips and clamps, Intramed angioscopy
   equipment, Thombex PMT clot extraction catheters

 .  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
<PAGE>

   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.
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                                  IV Business
                                  -----------

The IV Business consists of the importation and distribution of the products
that Operator currently sells or plans to sell in Japan in the following product
categories:

 .    Infusors, TUR solutions and sets, EIS infusion pumps and Interlink
     products, epidural trays and Sabratek pumps,

together with any improved versions of such products introduced after date
hereof.  For the avoidance of doubt, the IV Business shall not include any
products subsequently acquired by Operator or its Affiliates as a result of an
acquisition or similar transaction that closes after date hereof.
<PAGE>

                                                                       Exhibit C
                                                                       ---------

                              Financial Statements
                              --------------------

See attached.<PAGE>

                                                                   Exhibit 10.17

                               OPTION AGREEMENT

                                  Dated As Of

                                March 31, 2000

                                  RELATING TO

                           JAPANESE EDWARDS BUSINESS
<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<C>      <S>                                                                <C>
ARTICLE I  DEFINITIONS.........................................................1
  1.1.   Definitions...........................................................1

ARTICLE II  GRANT OF OPTION....................................................6
  2.1.   Grant of Option.......................................................6
  2.2.   Exercise Period.......................................................6
  2.3.   Manner of Exercise....................................................6
  2.4.   Transfer of Purchased Business........................................6

ARTICLE III  DETERMINATION OF STRIKE PRICE.....................................7
  3.1.   Strike Price..........................................................7
  3.2.   Opening Net Worth.....................................................7
  3.3.   Closing Date Net Worth ...............................................8
  3.4.   Access to Information.................................................9

ARTICLE IV  PURCHASE AND SALE..................................................9
  4.1.   Purchased Business....................................................9
  4.2.   Excluded Assets......................................................10
  4.3.   Assumed Liabilities..................................................11
  4.4.   Excluded Liabilities.................................................12

ARTICLE V  CLOSING; POST-CLOSING ADJUSTMENT...................................12
  5.1.   Conditions to Closing................................................12
  5.2.   Closing Date.........................................................13
  5.3.   Edwards Optionholder's  Deliveries at Closing........................13
  5.4.   Baxter Japan's Deliveries at Closing.................................13
  5.5.   Post Closing Adjustment..............................................13
  5.6.   Non-Assignable Contracts.............................................14
  5.7.   Further Assurances...................................................14
  5.8.   Novation of Assumed Liabilities......................................15

ARTICLE VI  REPRESENTATIONS AND WARRANTIES....................................16
  6.1.   Organization, Good Standing and Authority of Baxter Japan............16
  6.2.   Organization, Good Standing and Authority of Edwards Optionholder....16
  6.3.   No Other Representations or Warranties...............................16

ARTICLE VII  PRE-CLOSING COVENANTS............................................17
  7.1.   Operation of Japanese Edwards Business...............................17
  7.2.   Consents of Third Parties; Governmental Approvals....................18
  7.3.   Services.............................................................19
  7.4.   Financial Statements.................................................19
</TABLE>

                                       i
<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<C>      <S>                                                                <C>
ARTICLE VIII  POST-CLOSING COVENANTS..........................................19
  8.1.   Collection of Accounts Receivable....................................19
  8.2.   Agreements Relating to Edwards Optionholder and Baxter Japan.........20
  8.3.   Informal, Nondocumented Real Estate Leases...........................21

ARTICLE IX  [INTENTIONALLY OMITTED]...........................................21

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

ARTICLE XI  INSURANCE MATTERS.................................................24
  11.1.  Insurance Prior to the Closing Date..................................24
  11.2.  Ownership of Existing Policies and Programs..........................24
  11.3.  Procurement of Insurance for Edwards Optionholder....................24
  11.4.  Acquisition and Maintenance of Post-Closing Edwards Optionholder's
         Insurance Policies and Programs......................................24
  11.5.  Edwards Optionholder Directors' and Officers' Insurance..............25
  11.6.  Pre-Closing Insurance Claims Administration..........................25
  11.7.  Post-Closing Insurance Claims Administration.........................25
  11.8.  Non-Waiver of Rights to Coverage.....................................26
  11.9.  Scope of Affected Policies of Insurance..............................26

ARTICLE XII  INDEMNIFICATION..................................................27
  12.1.  Indemnification by Edwards Optionholder..............................27
  12.2.  Indemnification by Baxter Japan......................................27
  12.3.  Applicability of and Limitation on Indemnification...................28
  12.4.  Adjustment of Indemnifiable Losses...................................28
  12.5.  Procedures for Indemnification of Third Party Claims.................29
  12.6.  Procedures for Indemnification of Direct Claims......................31
  12.7.  Remedies Cumulative..................................................31

ARTICLE XIII  DISPUTE RESOLUTION..............................................31
  13.1.  General..............................................................31
</TABLE>

                                       ii
<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<C>      <S>                                                                <C>
  13.2.  Escalation...........................................................31
  13.3.  Arbitration..........................................................32
  13.4.  Procedures...........................................................32
  13.5.  Injunctive Relief....................................................33

ARTICLE XIV  GENERAL PROVISIONS...............................................33
  14.1.  Notices..............................................................33
  14.2.  Successors and Assigns...............................................34
  14.3.  Access to Records after Closing......................................34
  14.4.  Entire Agreement; Amendments.........................................35
  14.5.  Interpretation.......................................................35
  14.6.  Waivers..............................................................35
  14.7.  Expenses.............................................................35
  14.8.  Partial Invalidity...................................................35
  14.9.  Execution in Counterparts............................................35
  14.10. Governing Law........................................................36
  14.11. Submission to Jurisdiction...........................................36
  14.12. Termination..........................................................36
  14.13. Survival of Obligations..............................................36
  14.14. Currency.............................................................36
</TABLE>

                                      iii
<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         Description of IV Business

                                   SCHEDULES

1.1       Agreed Accounting Policies and Allocation Methodology
4.1(iv)   Governmental Permits
4.1(v)    Real Estate Leases
4.1(vi)   Personal Property
4.1(vii)  Contracts
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 (Japan) 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 Policies and Allocation Methodology" 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 Policies and Allocation
Methodology means the generally accepted accounting principles applied in the
preparation of the Valuation Date Balance Sheet; provided further that,
notwithstanding the foregoing, Agreed Accounting Policies and Allocation
Methodology 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 Policies and
Allocation Methodology, no known adjustments for items or matters, regardless of
the amount thereof, shall be deemed to be immaterial.
<PAGE>

          "Agreed Interest Rate" means, for any date, the sum of (i) the average
rate at which overnight deposits in Yen are offered to prime banks in the Tokyo
interbank market, as determined by reference to a mutually agreed-upon source,
plus (ii) 2.00%.

          "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.

          "Baxter Plans" has the meaning specified in Section 10.3(a).

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

                                       2
<PAGE>

          "Edwards Employees" means the employees of Baxter Japan who are
assigned to the Edwards Lifesciences division of Baxter Japan, including those
employees of the Edwards Lifesciences division at the Miyazaki plant.

          "Edwards Japan Pension Plan" has the meaning specified in Section
10.3(b).

          "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 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)26.41
billion.

          "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.

                                       3
<PAGE>

          "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.

          "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 11.5.

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

          "IV Business" has the meaning specified in Exhibit E hereto.

          "Japan Distribution Agreement" means the Japan Distribution Agreement
to be dated as of April 1, 2000 between Baxter Japan and Edwards Lifesciences
LLC.

          "Japanese Edwards Business" has the meaning specified in the first
recital and shall include, after the date hereof, all activities conducted by
Baxter Japan pursuant to the Japan Distribution Agreement.

          "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 Date 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.

                                       4
<PAGE>

          "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 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(v).

          "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

                                       5
<PAGE>

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 to be dated April 1,
2000, between Baxter Japan and Edwards Lifesciences Finance Limited.

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

          "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)1,337,500,000 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, 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

                                       6
<PAGE>

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)26.41 billion plus (ii) the Net Worth Adjustment.

          3.2.  Opening Net Worth.

          (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 Policies and
Allocation Methodology, 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

                                       7
<PAGE>

consistent with the Agreed Accounting Policies and Allocation Methodology) 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 Accounting Policies and Allocation Methodology, 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 Policies and Allocation Methodology) 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

                                       8
<PAGE>

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, 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, including all product registrations
     and import licenses, 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);

                                       9
<PAGE>

          (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 (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) Contracts related to the
     aforementioned Software;

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

          (xi)   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;

          (xii)  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;

          (xiii) 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

          (xiv)  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;

provided, however, that the Purchased Business shall not include any assets
listed in Schedules 4.1(iv), 4.1(v), 4.1(vi) or 4.1(vii) that are disposed of or
converted into cash after the date hereof.

          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 exclusively to the Japanese Edwards Business and (iii)
     petty cash and impressed funds related exclusively 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;

                                       10
<PAGE>

          (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;

          (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 accounts payable and accrued liabilities of the Japanese
     Edwards Business;

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

          (iv)   All Liabilities of Baxter Japan under the TK Agreement, other
     than payment obligations under Articles 5, 11 and 13 of the TK Agreement;

          (v)    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;

                                       11
<PAGE>

          (vi)   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;

          (vii)  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;

          (viii) 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;

          (ix)   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;

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

          (xi)   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:

                                       12
<PAGE>

               (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

               (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 10:00 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 Baxter,
One Baxter Parkway, Deerfield, Illinois 60015, USA, 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

                                       13
<PAGE>

          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 a floating rate equal to the
          Agreed Interest Rate in effect from time to time; 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 a floating
          rate equal to the Agreed Interest Rate in effect from time to time.

          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 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, 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

                                       14
<PAGE>

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 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

                                       15
<PAGE>

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-
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

                                       16
<PAGE>

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.

                                  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 Lifesciences 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

                                       17
<PAGE>

     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;
     provided, however, that this clause (iii) 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;

          (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 Accounting Standards No. 13) in respect
     of the Japanese Edwards Business;

          (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 neither party shall have any obligation to
offer or pay any consideration in order to obtain any such consents, approvals
or waivers; and provided further, that Baxter Japan shall not make any agreement
or understanding affecting the Purchased Business or the Japanese Edwards
Business

                                       18
<PAGE>

as a condition for obtaining any such consents, approvals 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, 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
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 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 Policies and Allocation Methodology.

                                 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)  Edwards 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

                                       19
<PAGE>

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.

          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 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

                                       20
<PAGE>

          from a breach of the relevant Shared Agreement attributable to the
          Japanese Edwards Business, in the case of Edwards Optionholder, or the
          Retained Business, in the case of Baxter Japan.

          (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 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 Japan, with a copy to Edwards Optionholder,
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

                                       21
<PAGE>

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 long-term disability plan, a
group life insurance plan and an overseas travel insurance plan (collectively,
the "Edwards Plans"). Additionally, Edwards Optionholder shall continue to
contribute to the "Kosei Nenkin" Old Age Employees' Pension Plan and the "Tokyo
Yakugyo" Health Insurance on behalf of Transferred Employees. Notwithstanding
the foregoing, Edwards Optionholder shall not contribute on behalf of the
Transferred Employees to the multiemployer fund entitled the Employee Pension
Fund ("EPF"); provided, however, that Edwards Optionholder shall pay cash or
stock allowances similar to premiums paid under EPF to the Transferred Employees
until Edwards Optionholder establishes or contributes to a program to replace
EPF for such Transferred Employees.

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

          (d)  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 receiving disability benefits from Baxter Japan.

          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 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

                                       22
<PAGE>

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.  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.

          10.6.  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.

          10.7.  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.

          10.8.  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.

          10.9.  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.

          10.10.  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 10.10 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

                                       23
<PAGE>

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.

                                  ARTICLE XI
                               INSURANCE MATTERS

          11.1.  Insurance Prior to the Closing Date.  Edwards Optionholder does
hereby agree that neither Baxter nor Baxter Japan shall have any Liability
whatsoever as a result of the insurance policies and practices of Baxter or
Baxter Japan in effect at any time prior to the Closing Date, including any
assistance rendered to Edwards Optionholder by Baxter or 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.  Unless otherwise
agreed by the parties, Baxter or Baxter Japan, as the case may be, 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 relating to
the Japanese Edwards Business (collectively, the "Baxter Policies" and
individually, a "Baxter Policy"). Between the date hereof and the Closing Date,
Baxter shall not discriminate between the insurance coverage applicable to the
Japanese Edwards Business and similar coverage applicable to Baxter Japan's
other businesses. Nothing contained herein shall be construed to be an attempt
to assign or to change the ownership of the Baxter Policies.

          11.3.  Procurement of Insurance for Edwards Optionholder.  To the
extent not already provided for by the terms of the Baxter Policies, Baxter
shall use commercially reasonable efforts to cause Edwards Optionholder and its
Affiliates to be named as additional insureds under Baxter Policies whose
effective policy periods include the Closing Date, in respect of claims for
which coverage is available under the terms and conditions of the Baxter
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 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
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 Policies in
effect

                                       24
<PAGE>

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 Optionholder. Notwithstanding any other
agreement or understanding to the contrary, except as set forth in Section 11.7
with respect to claims administration and financial administration of the Baxter
Policies, neither Baxter nor Baxter Japan shall 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 shall use commercially reasonable efforts to cause the persons serving as
officers and/or directors of Baxter Japan at the Closing Date 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 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 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
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 as an indemnity under this Agreement is reduced to the extent Baxter
receives insurance proceeds from the above coverage, but only to the extent such
proceeds are actually received by Baxter.

          11.6.  Pre-Closing Insurance Claims Administration.  Edwards
Optionholder acknowledges that Baxter has and will continue to experience losses
and receive claims that are, or might be, covered by one or more Baxter
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 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 in
connection with or relating to Pre-Closing Claims Administration.

          11.7.  Post-Closing Insurance Claims Administration.  Baxter shall
have the primary right, responsibility and authority for claims administration
and financial administration

                                       25
<PAGE>

of claims that relate to or affect the Baxter Policies. Upon notification by
Edwards Optionholder of a claim relating to Edwards Optionholder or an Affiliate
thereof under one or more of the Baxter Policies, Baxter shall cooperate with
Edwards 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 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 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 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 Policy provide that Baxter shall have an
obligation to pay or guarantee the payment of any Insurance Charges relating to
Edwards Optionholder, Baxter 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 shall submit to
Edwards Optionholder a copy of any invoice received by Baxter 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, Baxter 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 for such payment. Subject to the other provisions of this Article XI, the
retention by Baxter of the Baxter 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
or any other insured to insurance coverage for any Insured Claims under the
Baxter 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 out 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)  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 of

                                       28
<PAGE>

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 of such Third Party Claim, the Indemnified Party shall
have the right to defend, contest, settle or

                                       29
<PAGE>

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 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).

                                       30
<PAGE>

          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.

          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.

          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

                                       31
<PAGE>

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 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.

                                       32
<PAGE>

          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 (Japan) Limited
          Rokubancho 2-8, Chiyoda-ku
          Tokyo 102-0085 Japan
          Attention: Chairman and Representative Director
          Facsimile: 81-3-5213-5802

          with a copy to:

          Edwards Lifesciences Corporation
          17221 Red Hill Avenue
          Irvine, California 92614
          USA
          Attention: International Counsel
          Facsimile: 949-250-6868

          If to Baxter Japan, to:

          Baxter Limited
          4, Rokubancho, Chiyoda-ku
          Tokyo 102-8468 Japan
          Attention: President and Representative Director
          Facsimile: 81-3-5213-5111

                                       33
<PAGE>

          with a copy to:

          Baxter International Inc.
          One Baxter Parkway
          Deerfield, Illinois 60015
          USA
          Attention: International Counsel
          Facsimile: 847-948-4634

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

                                       34
<PAGE>

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.

          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.

                                       35
<PAGE>

          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.

          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: /s/ James Robert Hurley
                                       ------------------------
                                       Name: James Robert Hurley
                                       Title: President and
                                              Representative Director

                                    EDWARDS LIFESCIENCES (JAPAN)
                                    LIMITED

                                    By: /s/ Takashi Tsumori
                                        -------------------
                                       Name: Takashi Tsumori
                                       Title: Chairman and
                                              Representative Director

                                    For purposes of Article XI only:

                                    BAXTER INTERNATIONAL INC.

                                    By: /s/ Thomas J. Sabatino, Jr.
                                       ----------------------------
                                       Name: Thomas J. Sabatino, Jr.
                                       Title: General Counsel and
                                              Corporate Vice President

                                       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, Lifespan PTFE endovascular
   grafts, Fogarty atraumatic occlusion clips and clamps, Intramed angioscopy
   equipment, Thrombex PMT clot extraction catheters

 .  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.
<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 (Japan) 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 (Japan) 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 Assumed
Liabilities (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 (JAPAN) LIMITED

                                    By:__________________________
                                    Name:
                                    Title:
<PAGE>

                                                                       Exhibit D
                                                                       ---------

                          VALUATION DATE BALANCE SHEET
                          ----------------------------

See attached.
<PAGE>

                                                                       Exhibit E
                                                                       ---------

                           DESCRIPTION OF IV BUSINESS
                           --------------------------

The IV Business consists of the importation and distribution of the products
that  Operator currently sells or plans to sell in Japan in the following
product categories:

 .    Infusors, TUR solutions and sets, EIS infusion pumps and Interlink
     products, epidural trays and Sabratek pumps,

together with any improved versions of such products introduced after date
hereof.  For the avoidance of doubt, the IV Business shall not include any
products subsequently acquired by Operator or its Affiliates as a result of an
acquisition or similar transaction that closes after date hereof.

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