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Put Option Agreement - BAXTER INTERNATIONAL INC - 11-29-1995

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Put Option Agreement - BAXTER INTERNATIONAL INC - 11-29-1995 Powered By Docstoc
					EXHIBIT(c)(3) PUT OPTION AGREEMENT THIS PUT OPTION AGREEMENT (the "Agreement"), is entered into as of November 22, 1995 by and between PSICOR, Inc., a Pennsylvania corporation ("PSICOR") and Dunaway Holdings, Inc., a Delaware corporation ("Purchaser"). RECITALS WHEREAS, PSICOR is the owner, beneficially or of record, of all of the outstanding shares of common stock, no par value, of Psicor Office Laboratories, Inc., a New Jersey corporation (the "Company"); and WHEREAS, in order to induce Baxter Healthcare Corporation, a Delaware corporation and Baxter CVG Services II, Inc., a Pennsylvania corporation (together, "Baxter") to enter into that certain Agreement and Plan of Merger (the "Merger Agreement") with PSICOR, pursuant to which Baxter will acquire PSICOR on the terms and subject to the conditions set forth therein, Purchaser is willing to grant to PSICOR a put option on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements of the parties contained herein, and intending to be legally bound hereby, the parties agree as follows: 1. PUT. Purchaser hereby grants to PSICOR a put option (the "Put Option") pursuant to which following the consummation of the tender offer contemplated by the Merger Agreement Purchaser may be required to purchase from PSICOR all of the common stock (the "Common Stock") of the Company, as provided in the Purchase Agreement attached to this Agreement and marked as Exhibit A (the "Purchase Agreement"), in the event that no Higher POL Offer (as defined in Section 6.13 of the Merger Agreement) is accepted by PSICOR in accordance with the Merger Agreement.

2. PUT NOTICE. PSICOR shall give written notice (the "Put Notice") to Purchaser of its intention to exercise the Put Option, specifying the time and date not earlier than one business day from the date such Put Notice is given for the closing of such sale (the "Put Closing"). From and after the date of any change in control at PSICOR, and through the Put Closing, PSICOR shall cause the Company to conduct its business in the ordinary course. 3. CLOSING. The Put Closing shall be held on the date specified in the Put Notice unless, on such date, there shall be any preliminary or permanent injunction or other order by any court of competent jurisdiction or any other legal restraint or prohibition preventing the consummation of such sale, in which event such Put Closing shall be held as soon as practicable following the lifting, termination or suspension of such injunction, order, restraint or prohibition (each party agreeing to use its reasonable efforts to have such injunction, order, restraint or prohibition lifted, terminated or suspended), but in any event within five business days thereof. Notwithstanding the foregoing, in no event shall the Put Closing occur on or prior to the closing or termination of the tender offer contemplated by the Merger Agreement. 4. ACKNOWLEDGEMENT. Purchaser understands and acknowledges that PSICOR has no obligation to sell to it the Common Stock and that this Agreement is being entered into solely to facilitate the Merger Agreement and to allow PSICOR to satisfy, in the event that no Higher POL Offer is accepted, the closing condition set out in Section 7.3(b) of the Merger Agreement if Baxter does not waive such closing condition. 5. FEES AND EXPENSES. Except as contemplated by this Agreement, all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated hereby, including the legal fees and expenses of Purchaser which shall be paid by PSICOR. Notwithstanding the foregoing sentence, in the event that the Put Option is exercised, the excess of Purchaser's legal fees and expenses over $20,000 which have been paid by PSICOR shall be added to the Closing Intercompany Account Balance (as defined in the

2. PUT NOTICE. PSICOR shall give written notice (the "Put Notice") to Purchaser of its intention to exercise the Put Option, specifying the time and date not earlier than one business day from the date such Put Notice is given for the closing of such sale (the "Put Closing"). From and after the date of any change in control at PSICOR, and through the Put Closing, PSICOR shall cause the Company to conduct its business in the ordinary course. 3. CLOSING. The Put Closing shall be held on the date specified in the Put Notice unless, on such date, there shall be any preliminary or permanent injunction or other order by any court of competent jurisdiction or any other legal restraint or prohibition preventing the consummation of such sale, in which event such Put Closing shall be held as soon as practicable following the lifting, termination or suspension of such injunction, order, restraint or prohibition (each party agreeing to use its reasonable efforts to have such injunction, order, restraint or prohibition lifted, terminated or suspended), but in any event within five business days thereof. Notwithstanding the foregoing, in no event shall the Put Closing occur on or prior to the closing or termination of the tender offer contemplated by the Merger Agreement. 4. ACKNOWLEDGEMENT. Purchaser understands and acknowledges that PSICOR has no obligation to sell to it the Common Stock and that this Agreement is being entered into solely to facilitate the Merger Agreement and to allow PSICOR to satisfy, in the event that no Higher POL Offer is accepted, the closing condition set out in Section 7.3(b) of the Merger Agreement if Baxter does not waive such closing condition. 5. FEES AND EXPENSES. Except as contemplated by this Agreement, all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated hereby, including the legal fees and expenses of Purchaser which shall be paid by PSICOR. Notwithstanding the foregoing sentence, in the event that the Put Option is exercised, the excess of Purchaser's legal fees and expenses over $20,000 which have been paid by PSICOR shall be added to the Closing Intercompany Account Balance (as defined in the Purchase Agreement) for purposes of Section 2.2 of the Purchase Agreement; and PROVIDED, FURTHER, that the $25,000 retention fee payable to Dain Bosworth Incorporated in connection with the transaction contemplated hereby shall also be added to the Closing Intercompany Account Balance for purposes of such Section 2.2. 2

6. AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects by written agreement of the parties hereto. 7. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon personal delivery, facsimile transmission (which is confirmed), telex or delivery by an overnight express courier service (delivery, postage or freight charges prepaid), or on the fourth day following deposit in the United States mail (if sent by registered or certified mail, return receipt requested, delivery, postage or freight charges prepaid), addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to PSICOR, to: PSICOR, Inc. 16818 Via del Campo Court San Diego, California 92127 Telecopy No. (619) 485-5107 Attention: Denise E. Botticelli, Esq. with a copy to: Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 Telecopy No.(313) 568-6915 Attention: Frederick M. Miller, Esq.

6. AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects by written agreement of the parties hereto. 7. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon personal delivery, facsimile transmission (which is confirmed), telex or delivery by an overnight express courier service (delivery, postage or freight charges prepaid), or on the fourth day following deposit in the United States mail (if sent by registered or certified mail, return receipt requested, delivery, postage or freight charges prepaid), addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to PSICOR, to: PSICOR, Inc. 16818 Via del Campo Court San Diego, California 92127 Telecopy No. (619) 485-5107 Attention: Denise E. Botticelli, Esq. with a copy to: Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 Telecopy No.(313) 568-6915 Attention: Frederick M. Miller, Esq. and a copy to: Baxter Healthcare Corporation 17221 Red Hill Avenue Irvine, California 92714 Telecopy No. (714) 474-6444 Attention: Jay P. Wertheim, Esq. Vice President, Law 3

(b) if to Purchaser, to: Dunaway Holdings, Inc. 18075 Polvera Way San Diego, California 92101 Telecopy No. (619) Attention: Michael W. Dunaway with a copy to: Baker & McKenzie 101 West Broadway San Diego, California 92101 Telecopy No (619) 236-0429 Attention: John J. Hentrich, Esq. 8. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 9. GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the principles of conflicts of law thereof. 10. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be

(b) if to Purchaser, to: Dunaway Holdings, Inc. 18075 Polvera Way San Diego, California 92101 Telecopy No. (619) Attention: Michael W. Dunaway with a copy to: Baker & McKenzie 101 West Broadway San Diego, California 92101 Telecopy No (619) 236-0429 Attention: John J. Hentrich, Esq. 8. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 9. GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Pennsylvania without giving effect to the principles of conflicts of law thereof. 10. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto; provided, however that Purchaser may assign this Agreement to any company of which Michael W. Dunaway owns, directly or indirectly, all of the outstanding common stock. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns. 12. TERM. This Agreement shall terminate, and shall no longer be exercisable, from and after the earlier of (a) termination of the Merger Agreement or (b) May 21, 1996. 4

13. ATTORNEYS' FEES. In the event of litigation relating to this Agreement, if a court of competent jurisdiction determines that this Agreement has been breached by either party, then the breaching party will reimburse the non-breaching party for its reasonable costs and expenses (including without limitation legal fees and expenses) incurred in connection with all such litigation. 5

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. PSICOR, Inc.
By: /s/ Trudy V. Dunaway -----------------------------

Dunaway Holdings, Inc.
By: /s/ Michael W. Dunaway ----------------------------Michael W. Dunaway President

6

13. ATTORNEYS' FEES. In the event of litigation relating to this Agreement, if a court of competent jurisdiction determines that this Agreement has been breached by either party, then the breaching party will reimburse the non-breaching party for its reasonable costs and expenses (including without limitation legal fees and expenses) incurred in connection with all such litigation. 5

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. PSICOR, Inc.
By: /s/ Trudy V. Dunaway -----------------------------

Dunaway Holdings, Inc.
By: /s/ Michael W. Dunaway ----------------------------Michael W. Dunaway President

6

EXHIBIT(c)(4) PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "Agreement") is entered into as of ___________, 1995 by and among PSICOR, Inc., a Pennsylvania corporation ("Seller"), Dunaway Holdings, Inc., a Delaware corporation ("Purchaser"), and Psicor Office Laboratories, Inc. a New Jersey corporation (the "Company"). RECITALS WHEREAS, Seller has entered into an Agreement and Plan of Merger, dated as of November 22, 1995 (the "Merger Agreement"), with Baxter Healthcare Corporation, a Delaware corporation ("Baxter"), and Baxter CVG Services II, Inc., a Pennsylvania corporation and wholly owned subsidiary of Baxter ("Baxter Sub"), pursuant to which Baxter will acquire Seller, on the terms and conditions set forth in the Merger Agreement, by means of a tender offer by Baxter Sub (the "Offer") for all outstanding shares of common stock, no par value, of Seller, at $17.50 per share, net to the seller in cash, followed by a merger (the "Merger") of Baxter Sub into Seller (capitalized terms used herein and not otherwise defined are used as defined in the Merger Agreement); and WHEREAS, as an inducement to Baxter to acquire Seller, and as a condition to Baxter's willingness to enter into the Merger Agreement and consummate the transactions contemplated thereby, Seller has agreed to sell to Purchaser all of the Seller's right, title and interest in all of the outstanding shares (the "Company Shares") of common stock, no par value, of the Company, together with all of Seller's rights, interests, liabilities and obligations relating to the Company, if no higher offer for the Company is accepted by Seller in accordance with the terms of the Merger Agreement; and WHEREAS, the Board of Directors of Seller has been informed of the material facts as to the relationship to Seller of Purchaser and its shareholders and as to the transactions contemplated hereunder and, by majority vote of the disinterested directors has determined that such transactions are fair to Seller and

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. PSICOR, Inc.
By: /s/ Trudy V. Dunaway -----------------------------

Dunaway Holdings, Inc.
By: /s/ Michael W. Dunaway ----------------------------Michael W. Dunaway President

6

EXHIBIT(c)(4) PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "Agreement") is entered into as of ___________, 1995 by and among PSICOR, Inc., a Pennsylvania corporation ("Seller"), Dunaway Holdings, Inc., a Delaware corporation ("Purchaser"), and Psicor Office Laboratories, Inc. a New Jersey corporation (the "Company"). RECITALS WHEREAS, Seller has entered into an Agreement and Plan of Merger, dated as of November 22, 1995 (the "Merger Agreement"), with Baxter Healthcare Corporation, a Delaware corporation ("Baxter"), and Baxter CVG Services II, Inc., a Pennsylvania corporation and wholly owned subsidiary of Baxter ("Baxter Sub"), pursuant to which Baxter will acquire Seller, on the terms and conditions set forth in the Merger Agreement, by means of a tender offer by Baxter Sub (the "Offer") for all outstanding shares of common stock, no par value, of Seller, at $17.50 per share, net to the seller in cash, followed by a merger (the "Merger") of Baxter Sub into Seller (capitalized terms used herein and not otherwise defined are used as defined in the Merger Agreement); and WHEREAS, as an inducement to Baxter to acquire Seller, and as a condition to Baxter's willingness to enter into the Merger Agreement and consummate the transactions contemplated thereby, Seller has agreed to sell to Purchaser all of the Seller's right, title and interest in all of the outstanding shares (the "Company Shares") of common stock, no par value, of the Company, together with all of Seller's rights, interests, liabilities and obligations relating to the Company, if no higher offer for the Company is accepted by Seller in accordance with the terms of the Merger Agreement; and WHEREAS, the Board of Directors of Seller has been informed of the material facts as to the relationship to Seller of Purchaser and its shareholders and as to the transactions contemplated hereunder and, by majority vote of the disinterested directors has determined that such transactions are fair to Seller and

that it is advisable and in the best interests of Seller and its shareholders to engage in such transactions; and WHEREAS, Purchaser desires to purchase the Company Shares on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements contained herein, the parties hereto agree as follows:

EXHIBIT(c)(4) PURCHASE AGREEMENT THIS PURCHASE AGREEMENT (the "Agreement") is entered into as of ___________, 1995 by and among PSICOR, Inc., a Pennsylvania corporation ("Seller"), Dunaway Holdings, Inc., a Delaware corporation ("Purchaser"), and Psicor Office Laboratories, Inc. a New Jersey corporation (the "Company"). RECITALS WHEREAS, Seller has entered into an Agreement and Plan of Merger, dated as of November 22, 1995 (the "Merger Agreement"), with Baxter Healthcare Corporation, a Delaware corporation ("Baxter"), and Baxter CVG Services II, Inc., a Pennsylvania corporation and wholly owned subsidiary of Baxter ("Baxter Sub"), pursuant to which Baxter will acquire Seller, on the terms and conditions set forth in the Merger Agreement, by means of a tender offer by Baxter Sub (the "Offer") for all outstanding shares of common stock, no par value, of Seller, at $17.50 per share, net to the seller in cash, followed by a merger (the "Merger") of Baxter Sub into Seller (capitalized terms used herein and not otherwise defined are used as defined in the Merger Agreement); and WHEREAS, as an inducement to Baxter to acquire Seller, and as a condition to Baxter's willingness to enter into the Merger Agreement and consummate the transactions contemplated thereby, Seller has agreed to sell to Purchaser all of the Seller's right, title and interest in all of the outstanding shares (the "Company Shares") of common stock, no par value, of the Company, together with all of Seller's rights, interests, liabilities and obligations relating to the Company, if no higher offer for the Company is accepted by Seller in accordance with the terms of the Merger Agreement; and WHEREAS, the Board of Directors of Seller has been informed of the material facts as to the relationship to Seller of Purchaser and its shareholders and as to the transactions contemplated hereunder and, by majority vote of the disinterested directors has determined that such transactions are fair to Seller and

that it is advisable and in the best interests of Seller and its shareholders to engage in such transactions; and WHEREAS, Purchaser desires to purchase the Company Shares on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements contained herein, the parties hereto agree as follows: 1. PURCHASE AND SALE. On the terms and subject to the conditions set forth in this Agreement, at the Closing Date, Seller shall sell to Purchaser, and Purchaser shall purchase and acquire from Seller, all of Seller's right, title and interest in the Company Shares, together with all of Seller's rights, interests, liabilities, and obligations relating to the Company, including without limitation those set forth in Schedule 1(a) hereto, but specifically excluding the intercompany liabilities, obligations and indebtedness identified on Schedule 1(b) hereto and such additional items as shall be added to Schedule 1(b) subject to the reasonable agreement of the parties, for an aggregate purchase price of $4 million, subject to adjustment as provided in Section 2.2(b) below (the "Purchase Price"). 2. DELIVERY OF STOCK AND PAYMENT OF THE PURCHASE PRICE. 2.1 CLOSING DATE. The closing of the transactions contemplated by Section 1 (the "Closing") shall take place at a time and on a date to be specified by the parties, consistent with the terms of the Put Option Agreement (as defined below); provided, however, that in no event shall the Closing occur prior to January 4, 1996. The Closing shall occur at the offices of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los Angeles, California 90071, unless another date or place is agreed to in writing by the parties hereto. The date on which the Closing is held shall be referred to in this Agreement as the "Closing Date."

that it is advisable and in the best interests of Seller and its shareholders to engage in such transactions; and WHEREAS, Purchaser desires to purchase the Company Shares on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements contained herein, the parties hereto agree as follows: 1. PURCHASE AND SALE. On the terms and subject to the conditions set forth in this Agreement, at the Closing Date, Seller shall sell to Purchaser, and Purchaser shall purchase and acquire from Seller, all of Seller's right, title and interest in the Company Shares, together with all of Seller's rights, interests, liabilities, and obligations relating to the Company, including without limitation those set forth in Schedule 1(a) hereto, but specifically excluding the intercompany liabilities, obligations and indebtedness identified on Schedule 1(b) hereto and such additional items as shall be added to Schedule 1(b) subject to the reasonable agreement of the parties, for an aggregate purchase price of $4 million, subject to adjustment as provided in Section 2.2(b) below (the "Purchase Price"). 2. DELIVERY OF STOCK AND PAYMENT OF THE PURCHASE PRICE. 2.1 CLOSING DATE. The closing of the transactions contemplated by Section 1 (the "Closing") shall take place at a time and on a date to be specified by the parties, consistent with the terms of the Put Option Agreement (as defined below); provided, however, that in no event shall the Closing occur prior to January 4, 1996. The Closing shall occur at the offices of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los Angeles, California 90071, unless another date or place is agreed to in writing by the parties hereto. The date on which the Closing is held shall be referred to in this Agreement as the "Closing Date." 2.2 PAYMENT OF THE PURCHASE PRICE. (a) At the closing, Purchaser shall deliver to Seller the Purchase Price, payable as follows: (i) the sum of $1 million (the "Cash Pay2

ment"), such amount to be subject to adjustment as provided in Section 2.2(b) below, by wire transfer of immediately available funds to an account designated by Seller and (ii) a $3 million principal amount note due on the tenth anniversary of the Closing (the "Note"), in the form set forth in Exhibit 2.2 attached hereto. (b) The Cash Payment shall be adjusted as follows: (i) if the amount of the Closing Intercompany Account Balance (as defined below) is greater than the Year-end Intercompany Account Balance (as defined below), the Cash Payment shall be increased by an amount equal to the difference between the Closing Intercompany Account Balance and the Year-end Intercompany Account Balance. (c) The Company shall deliver, no earlier than five business days before the Closing Date (such date, the "Determination Date"), (i) a consolidated pro forma balance sheet of the Company as of the Determination Date prepared in accordance with this Section 2.2(c) (the "Closing Balance Sheet") in substantially the form (including without limitation the line items, columns and headings) of, and prepared in a manner consistent with, the September 30, 1995 balance sheet included in the Company's Year-end Financial Statements (as defined below) (the "Year-end Balance Sheet"), and (ii) a calculation of the estimated adjustment, if any, to the Cash Payment under Section 2.2(b). The Closing Balance Sheet shall be prepared in accordance with generally accepted accounting principles, applied on a basis consistent with the accounting principles used in preparing the Year-end Balance Sheet. The parties shall promptly review the Closing Balance Sheet promptly following the Determination Date and reasonably agree on the amount of such adjustment, if any, prior to the Closing Date. Baxter and Baxter Sub shall be deemed to be third party beneficiaries of this Section 2.2.

ment"), such amount to be subject to adjustment as provided in Section 2.2(b) below, by wire transfer of immediately available funds to an account designated by Seller and (ii) a $3 million principal amount note due on the tenth anniversary of the Closing (the "Note"), in the form set forth in Exhibit 2.2 attached hereto. (b) The Cash Payment shall be adjusted as follows: (i) if the amount of the Closing Intercompany Account Balance (as defined below) is greater than the Year-end Intercompany Account Balance (as defined below), the Cash Payment shall be increased by an amount equal to the difference between the Closing Intercompany Account Balance and the Year-end Intercompany Account Balance. (c) The Company shall deliver, no earlier than five business days before the Closing Date (such date, the "Determination Date"), (i) a consolidated pro forma balance sheet of the Company as of the Determination Date prepared in accordance with this Section 2.2(c) (the "Closing Balance Sheet") in substantially the form (including without limitation the line items, columns and headings) of, and prepared in a manner consistent with, the September 30, 1995 balance sheet included in the Company's Year-end Financial Statements (as defined below) (the "Year-end Balance Sheet"), and (ii) a calculation of the estimated adjustment, if any, to the Cash Payment under Section 2.2(b). The Closing Balance Sheet shall be prepared in accordance with generally accepted accounting principles, applied on a basis consistent with the accounting principles used in preparing the Year-end Balance Sheet. The parties shall promptly review the Closing Balance Sheet promptly following the Determination Date and reasonably agree on the amount of such adjustment, if any, prior to the Closing Date. Baxter and Baxter Sub shall be deemed to be third party beneficiaries of this Section 2.2. (d) As used in this Agreement, (i) "Year-end Intercompany Account Balance" shall be the intercompany account balance as reflected on the Year-end Balance Sheet with respect to the Company (excluding any intercompany debt which Seller and the Company hereby covenant shall be forgiven prior to the Closing), and (ii) "Closing Intercompany Account Balance" shall be such Intercompany Account Balance, if any, as reflected on the Closing Balance Sheet (including without limitation the amounts to be added thereto pursuant to Section 5 of the Put Option Agreement, dated November 22, 1995, by and between Seller and Purchaser (the "Put Option Agreement") and Section 8.1 hereof). 3

2.3 STOCK CERTIFICATES. At the Closing Date, Seller shall deliver to Purchaser stock certificates evidencing the Company Shares duly endorsed in blank for transfer to Purchaser, or accompanied by a separate stock transfer power duly endorsed in blank. 3. REPRESENTATIONS AND WARRANTIES. 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and warrants to Purchaser and the Company as follows: (a) Seller has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. (b) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by Seller's Board of Directors, and no other corporate proceedings on the part of Seller are necessary, as a matter of law or otherwise, to authorize this Agreement and to consummate the transactions so contemplated. (c) This Agreement has been duly and validly executed and delivered by Seller and is a valid and binding agreement of Seller, enforceable against it in accordance with its terms, except (i) as such enforcement may be subject to bankruptcy, insolvency or similar laws now or hereafter in effect relating to creditors rights, and (ii) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND THE COMPANY. Purchaser and

2.3 STOCK CERTIFICATES. At the Closing Date, Seller shall deliver to Purchaser stock certificates evidencing the Company Shares duly endorsed in blank for transfer to Purchaser, or accompanied by a separate stock transfer power duly endorsed in blank. 3. REPRESENTATIONS AND WARRANTIES. 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and warrants to Purchaser and the Company as follows: (a) Seller has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. (b) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by Seller's Board of Directors, and no other corporate proceedings on the part of Seller are necessary, as a matter of law or otherwise, to authorize this Agreement and to consummate the transactions so contemplated. (c) This Agreement has been duly and validly executed and delivered by Seller and is a valid and binding agreement of Seller, enforceable against it in accordance with its terms, except (i) as such enforcement may be subject to bankruptcy, insolvency or similar laws now or hereafter in effect relating to creditors rights, and (ii) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 3.2 REPRESENTATIONS AND WARRANTIES OF PURCHASER AND THE COMPANY. Purchaser and the Company hereby jointly and severally represent and warrant to Seller as follows: (a) Each of Purchaser and the Company has the corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. (b) The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby has been duly and validly authorized by the respective Boards of Directors of Purchaser and the 4

Company, and no other corporate proceedings on the part of Purchaser or the Company are necessary, as a matter of law or otherwise, to authorize this Agreement and to consummate the transactions so contemplated. (c) This Agreement has been duly and validly executed and delivered by Purchaser and the Company and is a valid and binding agreement of each of Purchaser and the Company, enforceable against each of them in accordance with its terms, except (i) as such enforcement may be subject to bankruptcy, insolvency or similar laws now or hereafter in effect relating to creditors rights, and (ii) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (d) The Company Shares to be purchased by Purchaser pursuant to this Agreement are being acquired by Purchaser solely for its own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them. Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of acquiring the Company Shares and engaging in the other transactions contemplated hereby. Purchaser has fully analyzed the proposed business and business plan of the Company, has been afforded access to all information concerning the same as it has considered appropriate, and is proceeding with the transaction contemplated by this Agreement on the basis of its own analysis and evaluation of the merits and risks of the proposed business, and not on the basis of any business plan, projections or other forward-looking information furnished to it by or on behalf of Seller or the Company. (e) Purchaser does not intend to implement a "plant closing" or a "mass layoff," as those terms are defined in the Worker Adjustment and Retraining Notification Act ("WARN Act"), 29 U.S.C. Section 2101 ET SEQ., in respect of the Company within one hundred fifty (150) days of the Closing Date.

Company, and no other corporate proceedings on the part of Purchaser or the Company are necessary, as a matter of law or otherwise, to authorize this Agreement and to consummate the transactions so contemplated. (c) This Agreement has been duly and validly executed and delivered by Purchaser and the Company and is a valid and binding agreement of each of Purchaser and the Company, enforceable against each of them in accordance with its terms, except (i) as such enforcement may be subject to bankruptcy, insolvency or similar laws now or hereafter in effect relating to creditors rights, and (ii) as the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (d) The Company Shares to be purchased by Purchaser pursuant to this Agreement are being acquired by Purchaser solely for its own account, for investment purposes only, and with no present intention of distributing, selling or otherwise disposing of them. Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the risks and merits of acquiring the Company Shares and engaging in the other transactions contemplated hereby. Purchaser has fully analyzed the proposed business and business plan of the Company, has been afforded access to all information concerning the same as it has considered appropriate, and is proceeding with the transaction contemplated by this Agreement on the basis of its own analysis and evaluation of the merits and risks of the proposed business, and not on the basis of any business plan, projections or other forward-looking information furnished to it by or on behalf of Seller or the Company. (e) Purchaser does not intend to implement a "plant closing" or a "mass layoff," as those terms are defined in the Worker Adjustment and Retraining Notification Act ("WARN Act"), 29 U.S.C. Section 2101 ET SEQ., in respect of the Company within one hundred fifty (150) days of the Closing Date. (f) Neither the Company nor any of its subsidiaries, if any, has an "excess loss account" in the stock of any affiliate within the meaning of Treasury Regulation section 1.1502-19 of the Internal Revenue Code of 1986, as amended (the "Code"). 5

4. COVENANTS. 4.1 SOLICITATION. (a) Seller and its subsidiaries and affiliates, including without limitation the Company, may, directly or indirectly, initiate, solicit, encourage, discuss, negotiate or participate in, or provide any information concerning the Company's business, properties or assets pursuant to a confidentiality agreement, to any corporation, partnership, person or other entity or group ("Person") concerning, or take any action to facilitate the making of, any offer or proposal which constitutes or is reasonably likely to lead to any Acquisition Proposal (as defined below) of the Company. (b) Seller shall promptly notify Purchaser and Baxter of any Acquisition Proposals (including without limitation the terms and conditions thereof and the identity of the Person making it), and shall keep Purchaser and Baxter reasonably apprised of all developments with respect to any such Acquisition Proposal. Seller shall give Purchaser written notice of any Acquisition Proposal that Seller intends to accept in accordance with the terms hereof at least two business days prior to accepting such offer or otherwise entering into any agreement or understanding with respect thereto. (c) As used in this Agreement, "Acquisition Proposal" shall mean any offer involving the Company, any proposal for a merger, consolidation or other business combination involving the Company or any subsidiary of the Company, any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the business or assets of, the Company or any subsidiary of the Company, any proposal or offer with respect to any recapitalization or restructuring with respect to the Company or any subsidiary of the Company or any proposal or offer with respect to any other transaction similar to any of the foregoing with respect to the Company, or any subsidiary of the Company. 4.2 ADDITIONAL ACTIONS. Subject to the terms and conditions of this Agreement, each of the parties

4. COVENANTS. 4.1 SOLICITATION. (a) Seller and its subsidiaries and affiliates, including without limitation the Company, may, directly or indirectly, initiate, solicit, encourage, discuss, negotiate or participate in, or provide any information concerning the Company's business, properties or assets pursuant to a confidentiality agreement, to any corporation, partnership, person or other entity or group ("Person") concerning, or take any action to facilitate the making of, any offer or proposal which constitutes or is reasonably likely to lead to any Acquisition Proposal (as defined below) of the Company. (b) Seller shall promptly notify Purchaser and Baxter of any Acquisition Proposals (including without limitation the terms and conditions thereof and the identity of the Person making it), and shall keep Purchaser and Baxter reasonably apprised of all developments with respect to any such Acquisition Proposal. Seller shall give Purchaser written notice of any Acquisition Proposal that Seller intends to accept in accordance with the terms hereof at least two business days prior to accepting such offer or otherwise entering into any agreement or understanding with respect thereto. (c) As used in this Agreement, "Acquisition Proposal" shall mean any offer involving the Company, any proposal for a merger, consolidation or other business combination involving the Company or any subsidiary of the Company, any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the business or assets of, the Company or any subsidiary of the Company, any proposal or offer with respect to any recapitalization or restructuring with respect to the Company or any subsidiary of the Company or any proposal or offer with respect to any other transaction similar to any of the foregoing with respect to the Company, or any subsidiary of the Company. 4.2 ADDITIONAL ACTIONS. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, or to remove any injunctions or other impediments or delays, to consummate and make effective the purchase of the Company Shares and the other transactions contemplated by this Agreement. In case at any time after the Closing any further action 6

is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall take all such necessary action. 4.3 SERVICES AGREEMENT. At or prior to the Closing, Seller and Purchaser shall in good faith negotiate the terms of a Services Agreement in substantially the form set forth in Exhibit 4.3 attached hereto providing for the delivery by Seller of such administrative and warehousing services as the Company may reasonably request that Seller can reasonably provide, at Seller's cost of providing any such services, and upon such other terms and subject to such other conditions as are provided therein. 4.4 PUBLIC DISCLOSURE. Nothing contained in this Agreement shall prohibit Seller or its Board of Directors from making such disclosure to Seller's shareholders which, in the opinion of the Board of Directors of Seller, after consultation with its legal counsel to the Company, may be required under applicable law. 4.5 WARN ACT. For purposes of the WARN Act, Purchaser acknowledges and agrees that (a) the Closing is and shall be the same as the "effective date" within the meaning of the WARN Act; (b) the transaction contemplated by this Agreement is and shall be a sale of part of Seller's business; (c) any person who is an employee of the Seller which is part of the Company's business as of the Closing shall be considered to be an employee of Purchaser immediately after the Closing; and (d) any "employment loss" within the meaning of the WARN Act suffered by any employee of the Company immediately upon or after the Closing shall have been caused by Purchaser's separate and distinct decision not to continue the employment of such employee, and not by the sale of the Company. Purchaser further agrees to assume responsibility for giving any and all notices required by the WARN Act or any similar state law or regulation, to assume liability for any alleged failure to give

is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall take all such necessary action. 4.3 SERVICES AGREEMENT. At or prior to the Closing, Seller and Purchaser shall in good faith negotiate the terms of a Services Agreement in substantially the form set forth in Exhibit 4.3 attached hereto providing for the delivery by Seller of such administrative and warehousing services as the Company may reasonably request that Seller can reasonably provide, at Seller's cost of providing any such services, and upon such other terms and subject to such other conditions as are provided therein. 4.4 PUBLIC DISCLOSURE. Nothing contained in this Agreement shall prohibit Seller or its Board of Directors from making such disclosure to Seller's shareholders which, in the opinion of the Board of Directors of Seller, after consultation with its legal counsel to the Company, may be required under applicable law. 4.5 WARN ACT. For purposes of the WARN Act, Purchaser acknowledges and agrees that (a) the Closing is and shall be the same as the "effective date" within the meaning of the WARN Act; (b) the transaction contemplated by this Agreement is and shall be a sale of part of Seller's business; (c) any person who is an employee of the Seller which is part of the Company's business as of the Closing shall be considered to be an employee of Purchaser immediately after the Closing; and (d) any "employment loss" within the meaning of the WARN Act suffered by any employee of the Company immediately upon or after the Closing shall have been caused by Purchaser's separate and distinct decision not to continue the employment of such employee, and not by the sale of the Company. Purchaser further agrees to assume responsibility for giving any and all notices required by the WARN Act or any similar state law or regulation, to assume liability for any alleged failure to give such notice, and to indemnify and hold harmless Seller for any and all claims asserted by any employees of the Company, or any representatives of such employees, under the WARN Act or any similar state law or regulation, because of a "plant closing" or "mass layoff" affecting the Company occurring at any time including without limitation those claims occurring prior to the Closing. 7

4.6 COOPERATION WITH RESPECT TO TAX MATTERS. (a) Seller and Purchaser recognize that the Company has joined with Seller and certain of its subsidiaries and affiliates in filing unitary, consolidated, or combined Tax Returns (as defined below). After the Closing Date (i) Seller shall include (to the extent required or permitted by law) the taxable income or loss, and all other items, of the Company for periods ending before or on the Closing Date, in its unitary, consolidated or combined Tax Returns, and (ii) with respect to any other Tax Returns for any taxable period that includes but does not end on the Closing Date (the "Straddle Tax Returns"), Seller shall prepare a schedule (the "Apportionment Schedule") apportioning, on a basis consistent with the preparation of Seller's consolidated Federal income tax return for the taxable period ending on the Closing Date, the taxable income or loss, and all other items, of the Company allocable to the period up to and including the Closing Date (the "Pre-Closing Period") and the period after the Closing Date (the "Post-Closing Period") by an interim closing of the books as of the end of the day on the Closing Date. (b) After the Closing Date, each of Purchaser and the Company on the one hand, and Baxter and Seller on the other, shall (i) provide, or cause to be provided, to each other's respective subsidiaries, officers, employees, representatives and affiliates, such assistance as may reasonably be requested by any of them in connection with the preparation of any Tax Return or any Audit (as defined below) of the Company in respect of which Purchaser or the Company, on the one hand, or Baxter or Seller on the other, as the case may be, are responsible pursuant to Section 4.6(c)-(d) hereof and (ii) retain, or cause to be retained, for so long as any such Taxable Years or Audits shall remain open for adjustments, any records or information which may be relevant to any such Tax Returns or Audits. The assistance provided for in this Section 4.6 shall include without limitation each of Purchaser and the Company on the one hand, and Baxter and Seller on the other, (x) making their agents and employees and the agents and employees of their respective subsidiaries and affiliates available to each other on a mutually convenient basis to provide such assistance as might reasonably be expected to be of use in connection with any such Tax Returns or Audits and (y) providing, or causing to be provided, such information as might reasonably be expected to be of use in connection with any such Tax Returns or Audits, including without limitation records, returns, schedules, documents, work papers, opinions, letters or memoranda, or other relevant

4.6 COOPERATION WITH RESPECT TO TAX MATTERS. (a) Seller and Purchaser recognize that the Company has joined with Seller and certain of its subsidiaries and affiliates in filing unitary, consolidated, or combined Tax Returns (as defined below). After the Closing Date (i) Seller shall include (to the extent required or permitted by law) the taxable income or loss, and all other items, of the Company for periods ending before or on the Closing Date, in its unitary, consolidated or combined Tax Returns, and (ii) with respect to any other Tax Returns for any taxable period that includes but does not end on the Closing Date (the "Straddle Tax Returns"), Seller shall prepare a schedule (the "Apportionment Schedule") apportioning, on a basis consistent with the preparation of Seller's consolidated Federal income tax return for the taxable period ending on the Closing Date, the taxable income or loss, and all other items, of the Company allocable to the period up to and including the Closing Date (the "Pre-Closing Period") and the period after the Closing Date (the "Post-Closing Period") by an interim closing of the books as of the end of the day on the Closing Date. (b) After the Closing Date, each of Purchaser and the Company on the one hand, and Baxter and Seller on the other, shall (i) provide, or cause to be provided, to each other's respective subsidiaries, officers, employees, representatives and affiliates, such assistance as may reasonably be requested by any of them in connection with the preparation of any Tax Return or any Audit (as defined below) of the Company in respect of which Purchaser or the Company, on the one hand, or Baxter or Seller on the other, as the case may be, are responsible pursuant to Section 4.6(c)-(d) hereof and (ii) retain, or cause to be retained, for so long as any such Taxable Years or Audits shall remain open for adjustments, any records or information which may be relevant to any such Tax Returns or Audits. The assistance provided for in this Section 4.6 shall include without limitation each of Purchaser and the Company on the one hand, and Baxter and Seller on the other, (x) making their agents and employees and the agents and employees of their respective subsidiaries and affiliates available to each other on a mutually convenient basis to provide such assistance as might reasonably be expected to be of use in connection with any such Tax Returns or Audits and (y) providing, or causing to be provided, such information as might reasonably be expected to be of use in connection with any such Tax Returns or Audits, including without limitation records, returns, schedules, documents, work papers, opinions, letters or memoranda, or other relevant materials relating thereto. 8

(c) Seller shall be responsible for, and shall have ultimate discretion with respect to, (i) all Tax Returns required or permitted by applicable law to be filed by the Company (or by Seller on its behalf) with respect to periods that end no earlier than October 1, 1994 and no later than the Closing Date, (ii) any Tax Return in which the Company has joined with Seller in the filing of such return on a unitary, consolidated, or combined basis, (iii) any elections related to such Tax Returns referred to in (i) and (ii) immediately above, and (iv) any Audit (including the execution of any waiver of limitation with respect to any Audit) relating to any such Tax Returns; FURTHER, Purchaser and the Company shall cooperate with Baxter and Seller for the purpose of making any election under applicable law including, an election to permit the Company to file any short period Tax Return for the taxable period ending on the Closing Date and an election under Treasury Regulation Section 1.1504-20(g) of the Code. Purchaser shall be responsible for, and shall have ultimate discretion with respect to, any Audit of the Company for any taxable period ending on or prior to September 30, 1994, other than an Audit of any Tax Return in which the Company has joined with Seller in the filing of such returns on a unitary, consolidated, or combined basis. In the event that any Audit for which the Seller or Purchaser is responsible pursuant to this Section 4.2(c) could reasonably be expected to result in a material increase in Tax liability for which the other party would be liable, the party responsible for such Audit agrees to consult in good faith with the other party in respect of the specific issues that could give rise to such increased Tax liability. (d) Purchaser and the Company shall be responsible for, and shall have ultimate discretion with respect to, (i) all Tax Returns required to be filed by the Company with respect to periods that begin after the Closing Date and (ii) the Straddle Tax Returns, if any, and (iii) any Audit (including the execution of any waiver of limitation with respect to any Audit) relating to any such Tax Returns. In the case of any Straddle Tax Return, the filing of which could be reasonably expected to give rise to, or result in, a material increase in the Tax liability for which Baxter or Seller would be liable, Purchaser and the Company agree to consult in good faith with Baxter and Seller in respect of the specific matters that could give rise to such increased Tax liability.

(c) Seller shall be responsible for, and shall have ultimate discretion with respect to, (i) all Tax Returns required or permitted by applicable law to be filed by the Company (or by Seller on its behalf) with respect to periods that end no earlier than October 1, 1994 and no later than the Closing Date, (ii) any Tax Return in which the Company has joined with Seller in the filing of such return on a unitary, consolidated, or combined basis, (iii) any elections related to such Tax Returns referred to in (i) and (ii) immediately above, and (iv) any Audit (including the execution of any waiver of limitation with respect to any Audit) relating to any such Tax Returns; FURTHER, Purchaser and the Company shall cooperate with Baxter and Seller for the purpose of making any election under applicable law including, an election to permit the Company to file any short period Tax Return for the taxable period ending on the Closing Date and an election under Treasury Regulation Section 1.1504-20(g) of the Code. Purchaser shall be responsible for, and shall have ultimate discretion with respect to, any Audit of the Company for any taxable period ending on or prior to September 30, 1994, other than an Audit of any Tax Return in which the Company has joined with Seller in the filing of such returns on a unitary, consolidated, or combined basis. In the event that any Audit for which the Seller or Purchaser is responsible pursuant to this Section 4.2(c) could reasonably be expected to result in a material increase in Tax liability for which the other party would be liable, the party responsible for such Audit agrees to consult in good faith with the other party in respect of the specific issues that could give rise to such increased Tax liability. (d) Purchaser and the Company shall be responsible for, and shall have ultimate discretion with respect to, (i) all Tax Returns required to be filed by the Company with respect to periods that begin after the Closing Date and (ii) the Straddle Tax Returns, if any, and (iii) any Audit (including the execution of any waiver of limitation with respect to any Audit) relating to any such Tax Returns. In the case of any Straddle Tax Return, the filing of which could be reasonably expected to give rise to, or result in, a material increase in the Tax liability for which Baxter or Seller would be liable, Purchaser and the Company agree to consult in good faith with Baxter and Seller in respect of the specific matters that could give rise to such increased Tax liability. (e) Each of Purchaser and the Company, on the one hand, and Baxter and Seller, on the other shall promptly inform, keep regularly apprised of the progress with respect to, and notify the other party in writing not later than (i) five business days after the receipt of any notice of any Audit or (ii) ten business days prior to the settlement or final determination of any Audit for 9

which it was responsible pursuant to Section 4.6(c)-(d) hereof which could affect the Tax liability of such other party for any taxable year. (f) To the extent that Seller and the Company file unitary, consolidated, or combined Tax Returns for any taxable period commencing on or after October 1, 1995, and ending on or before the Closing Date, the Company shall be liable to Seller, and shall make timely payments to Seller in respect thereof, for Taxes in amounts equal to the amount of Taxes that the Company would have paid to the relevant Tax authority had the Company filed Tax Returns for such period on a stand-alone basis (the "Stand Alone Tax Liability"). Upon the filing of any such Tax Returns with the relevant Tax authority, the Company shall promptly make a final payment to Seller (or Seller shall promptly refund to Company) an amount equal to the difference between (i) the Stand Alone Tax Liability of the Company, as reasonably calculated by Seller, and (ii) the aggregate amount of payments previously made by the Company to Seller in respect thereof (the "True-up Amount"). Interest shall accrue at the annual rate of 8% in respect of any True-up Amount that remains unpaid (A) in the case of an amount due from Purchaser, 15 days after the presentation of written notice to Purchaser of such True-up Amount and (B) in the case of Seller, 15 days after the filing of the Tax Return giving rise to such True-up Amount. (g) As used in this Agreement: (i) the term "Tax" or "Taxes" shall include all Federal, state, local and foreign taxes, assessments, and governmental charges (whether imposed directly or through withholdings), including any interest, penalties and additions to Taxes applicable thereto; (ii) the term "Tax Returns" shall include any Federal, state, local and foreign tax returns, declarations, elections, statements, reports, schedules and information returns or the refiling of any such Tax Returns previously filed; and

which it was responsible pursuant to Section 4.6(c)-(d) hereof which could affect the Tax liability of such other party for any taxable year. (f) To the extent that Seller and the Company file unitary, consolidated, or combined Tax Returns for any taxable period commencing on or after October 1, 1995, and ending on or before the Closing Date, the Company shall be liable to Seller, and shall make timely payments to Seller in respect thereof, for Taxes in amounts equal to the amount of Taxes that the Company would have paid to the relevant Tax authority had the Company filed Tax Returns for such period on a stand-alone basis (the "Stand Alone Tax Liability"). Upon the filing of any such Tax Returns with the relevant Tax authority, the Company shall promptly make a final payment to Seller (or Seller shall promptly refund to Company) an amount equal to the difference between (i) the Stand Alone Tax Liability of the Company, as reasonably calculated by Seller, and (ii) the aggregate amount of payments previously made by the Company to Seller in respect thereof (the "True-up Amount"). Interest shall accrue at the annual rate of 8% in respect of any True-up Amount that remains unpaid (A) in the case of an amount due from Purchaser, 15 days after the presentation of written notice to Purchaser of such True-up Amount and (B) in the case of Seller, 15 days after the filing of the Tax Return giving rise to such True-up Amount. (g) As used in this Agreement: (i) the term "Tax" or "Taxes" shall include all Federal, state, local and foreign taxes, assessments, and governmental charges (whether imposed directly or through withholdings), including any interest, penalties and additions to Taxes applicable thereto; (ii) the term "Tax Returns" shall include any Federal, state, local and foreign tax returns, declarations, elections, statements, reports, schedules and information returns or the refiling of any such Tax Returns previously filed; and (iii) the term "Audit" shall include any audit, assessment of Taxes, reassessment of Taxes, or other examination by any taxing authority or any judicial or administrative proceedings or appeal of such proceedings. 10

4.7 SECTION 338(h)(10) ELECTION. (a) At the request of Baxter and in its sole discretion, Purchaser shall make a joint election with Seller under section 338(h)(10) of the Code, and/or comparable state income tax provisions, with respect to the purchase of the Company Shares. Seller represents that its sale of Company Shares is eligible for, and Purchaser represents that it is qualified to make, such election. If the election is made, Purchaser and Seller shall on the Closing Date exchange completed and executed copies of Internal Revenue Service Form 8023, required schedules related thereto, and comparable state forms. If any changes are required to be made to these forms as a result of information that is first available after the Closing Date, the parties shall promptly agree on such changes. If such election is made, Purchaser and Seller shall negotiate in good faith, and agree to, an allocation of the purchase price of the Company Shares among the assets of the Company that are deemed to have been acquired pursuant to section 338(h)(10) of the Code, the Treasury regulations promulgated thereunder, and comparable state income tax provisions (the "Section 338 Asset Allocation"). Purchaser and Seller shall use the Section 338 Asset Allocation for purposes of all reports and returns with respect to Taxes, including Internal Revenue Service Form 8594 and comparable state forms. (b) In the event that Baxter elects to make a section 338(h)(10) election pursuant to this Section 4.7, (i) the auditors of Purchaser shall, from year to year, reasonably determine the Tax benefit that is derived from such election by Purchaser or the Company during the Post-Closing Period (the "Section 338 Tax Benefit Amount") until such tax benefit has been fully realized by Purchaser or the Company, and (ii) Purchaser shall, within 30 days after the filing of the Tax Return for the taxable year in respect of which such benefit is computed, make a payment to Seller in an amount equal to the Section 338 Tax Benefit Amount. The parties hereto agree that, as long as the Note remains outstanding, 50% of any such payment made pursuant to this Section 4.7(b) shall be deemed to be a payment of principal on the Note. (c) Seller, Purchaser, and the Company shall make available to Baxter, as requested, all records, information and documents, and shall take or cause its proper officers and directors to take any and all actions requested by the

4.7 SECTION 338(h)(10) ELECTION. (a) At the request of Baxter and in its sole discretion, Purchaser shall make a joint election with Seller under section 338(h)(10) of the Code, and/or comparable state income tax provisions, with respect to the purchase of the Company Shares. Seller represents that its sale of Company Shares is eligible for, and Purchaser represents that it is qualified to make, such election. If the election is made, Purchaser and Seller shall on the Closing Date exchange completed and executed copies of Internal Revenue Service Form 8023, required schedules related thereto, and comparable state forms. If any changes are required to be made to these forms as a result of information that is first available after the Closing Date, the parties shall promptly agree on such changes. If such election is made, Purchaser and Seller shall negotiate in good faith, and agree to, an allocation of the purchase price of the Company Shares among the assets of the Company that are deemed to have been acquired pursuant to section 338(h)(10) of the Code, the Treasury regulations promulgated thereunder, and comparable state income tax provisions (the "Section 338 Asset Allocation"). Purchaser and Seller shall use the Section 338 Asset Allocation for purposes of all reports and returns with respect to Taxes, including Internal Revenue Service Form 8594 and comparable state forms. (b) In the event that Baxter elects to make a section 338(h)(10) election pursuant to this Section 4.7, (i) the auditors of Purchaser shall, from year to year, reasonably determine the Tax benefit that is derived from such election by Purchaser or the Company during the Post-Closing Period (the "Section 338 Tax Benefit Amount") until such tax benefit has been fully realized by Purchaser or the Company, and (ii) Purchaser shall, within 30 days after the filing of the Tax Return for the taxable year in respect of which such benefit is computed, make a payment to Seller in an amount equal to the Section 338 Tax Benefit Amount. The parties hereto agree that, as long as the Note remains outstanding, 50% of any such payment made pursuant to this Section 4.7(b) shall be deemed to be a payment of principal on the Note. (c) Seller, Purchaser, and the Company shall make available to Baxter, as requested, all records, information and documents, and shall take or cause its proper officers and directors to take any and all actions requested by the other in order to comply with this Section 4.7 and in order for Baxter to determine whether to request that Purchaser and Seller make the section 338(h)(10) election pursuant to Section 4.7(a) hereof. 11

4.8 EMPLOYEE BENEFIT PLANS. (a) As of the Closing, the Company shall cease to be a participating employer under any Seller Benefit Plan (as defined below), and the Company and Seller shall take all such action necessary to effectuate such cessation of participation. As of the Closing, Seller shall take all such action necessary to assume or retain all liabilities under those Seller Benefit Plans set forth on Schedule 3.11(a) of the Merger Agreement (the "Disclosed Seller Benefit Plans"), including benefits accrued by employees and former employees of the Company under the Disclosed Seller Benefit Plans prior to the Closing, except for any Company Benefit Plan Liabilities (as defined below). As of the Closing, the Company shall take all such action necessary to assume or retain the Company Benefit Plan Liabilities. Except as required by law, or as otherwise provided below in Section 4.8(b), Seller shall have no responsibility for benefits accrued by employees of the Company from and after the Closing under any Seller Benefit Plan or Company Benefit Plan (as defined below). (b) Except with respect to any Company Benefit Plan Liabilities, Seller shall honor or cause its insurance carriers to honor all claims for benefits by each employee of the Company participating in any Disclosed Seller Benefit Plan that is an employee welfare benefit plan (as such term is defined in section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder) (i) with respect to claims incurred prior to the Closing in accordance with the terms of each such plan and (ii) with respect to claims incurred on or after the Closing only as required by applicable law. To the extent that (x) any employees of the Company have, prior to the Closing or, as of the Closing, but subject to the provisions and limitations elsewhere set forth in this Section 4.8 (including without limitation with regard to (A) the Company's ceasing to be a participating employer under any Seller Benefit Plan as of the Closing, (B) Seller's (as distinguished from "Seller's Benefit Plans") lack of responsibility with respect to benefits accrued by employees of the Company from and after the Closing and (c) the Company's obligations under Section 4.8(c)), accrued benefits or claims which are or will become payable or reimbursable under a Disclosed Seller Benefit Plan and

4.8 EMPLOYEE BENEFIT PLANS. (a) As of the Closing, the Company shall cease to be a participating employer under any Seller Benefit Plan (as defined below), and the Company and Seller shall take all such action necessary to effectuate such cessation of participation. As of the Closing, Seller shall take all such action necessary to assume or retain all liabilities under those Seller Benefit Plans set forth on Schedule 3.11(a) of the Merger Agreement (the "Disclosed Seller Benefit Plans"), including benefits accrued by employees and former employees of the Company under the Disclosed Seller Benefit Plans prior to the Closing, except for any Company Benefit Plan Liabilities (as defined below). As of the Closing, the Company shall take all such action necessary to assume or retain the Company Benefit Plan Liabilities. Except as required by law, or as otherwise provided below in Section 4.8(b), Seller shall have no responsibility for benefits accrued by employees of the Company from and after the Closing under any Seller Benefit Plan or Company Benefit Plan (as defined below). (b) Except with respect to any Company Benefit Plan Liabilities, Seller shall honor or cause its insurance carriers to honor all claims for benefits by each employee of the Company participating in any Disclosed Seller Benefit Plan that is an employee welfare benefit plan (as such term is defined in section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder) (i) with respect to claims incurred prior to the Closing in accordance with the terms of each such plan and (ii) with respect to claims incurred on or after the Closing only as required by applicable law. To the extent that (x) any employees of the Company have, prior to the Closing or, as of the Closing, but subject to the provisions and limitations elsewhere set forth in this Section 4.8 (including without limitation with regard to (A) the Company's ceasing to be a participating employer under any Seller Benefit Plan as of the Closing, (B) Seller's (as distinguished from "Seller's Benefit Plans") lack of responsibility with respect to benefits accrued by employees of the Company from and after the Closing and (c) the Company's obligations under Section 4.8(c)), accrued benefits or claims which are or will become payable or reimbursable under a Disclosed Seller Benefit Plan and (y) the Company's premium payments, contributions or liabilities under such Disclosed Seller Benefit Plan have been properly paid or accrued as of the Closing, Seller shall cause such benefits or claims to be recognized and paid under the Seller Benefit Plans in accordance with the terms of the Seller Benefit Plans. (c) The Company agrees to be responsible for all liabilities and obligations whatsoever in connection with or attributable to claims made by or on behalf of persons who were employed by the Company at, prior to or following the Closing in respect of (i) severance pay, salary continuation, group health care continuation coverage and similar obligations relating to the termination or alleged termination of any such person's employment with the Company by reason of, in connection with or following the consummation of the 12

transactions contemplated by this Agreement or the Merger Agreement, (ii) any Seller Benefit Plan other than a Disclosed Seller Benefit Plan, and (iii) any Company Benefit Plan Liabilities. (d) Effective as of the Closing, the Company shall establish a tax-qualified defined contribution plan (the "Company 401(k) Plan"), which shall qualify as a cash or deferred plan under Section 401(k) of the Code and shall provide benefits to employees of the Company with respect to service after the Closing. As soon as practicable after the Company has received a favorable determination letter from the Internal Revenue Service with respect to the tax- qualified status of the Company 401(k) Plan (or an opinion of counsel satisfactory to Seller that the Company 401(k) Plan is so qualified), Seller and the Company shall cooperate to effect a trusteeto-trustee transfer to the Company 401(k) Plan, in cash or in kind (as determined by Seller), of the fair market value of the assets, determined as of the date immediately prior to the date of such transfer, of the 401(k) plan and the employee stock ownership plan currently maintained by Seller (the "Seller Tax-Qualified Plans") attributable to participants therein who are then employees of the Company. From and after the date of such transfer, neither Seller nor either of the Seller Tax-Qualified Plans shall have any liability under either such plan with respect to any such employee. (e) If the Closing (i) shall occur on or before January 1, 1996, Seller shall cause the Company to, and (ii) shall not have occurred on or before January 1, 1996, Seller shall cause the Company, effective as of January 1, 1996, to establish a plan qualifying under Section 125 of the Code providing for flexible spending accounts providing benefits no less favorable than those provided under Seller's Section 125 plan as of the date hereof.

transactions contemplated by this Agreement or the Merger Agreement, (ii) any Seller Benefit Plan other than a Disclosed Seller Benefit Plan, and (iii) any Company Benefit Plan Liabilities. (d) Effective as of the Closing, the Company shall establish a tax-qualified defined contribution plan (the "Company 401(k) Plan"), which shall qualify as a cash or deferred plan under Section 401(k) of the Code and shall provide benefits to employees of the Company with respect to service after the Closing. As soon as practicable after the Company has received a favorable determination letter from the Internal Revenue Service with respect to the tax- qualified status of the Company 401(k) Plan (or an opinion of counsel satisfactory to Seller that the Company 401(k) Plan is so qualified), Seller and the Company shall cooperate to effect a trusteeto-trustee transfer to the Company 401(k) Plan, in cash or in kind (as determined by Seller), of the fair market value of the assets, determined as of the date immediately prior to the date of such transfer, of the 401(k) plan and the employee stock ownership plan currently maintained by Seller (the "Seller Tax-Qualified Plans") attributable to participants therein who are then employees of the Company. From and after the date of such transfer, neither Seller nor either of the Seller Tax-Qualified Plans shall have any liability under either such plan with respect to any such employee. (e) If the Closing (i) shall occur on or before January 1, 1996, Seller shall cause the Company to, and (ii) shall not have occurred on or before January 1, 1996, Seller shall cause the Company, effective as of January 1, 1996, to establish a plan qualifying under Section 125 of the Code providing for flexible spending accounts providing benefits no less favorable than those provided under Seller's Section 125 plan as of the date hereof. (f) The term "Seller Benefit Plan" shall mean any employee benefit plan, program, policy, arrangement, practice or contract, including without limitation any such plan, program, policy, arrangement, practice or contract actually set forth or required to be set forth on Schedule 3.11(a) to the Merger Agreement, that is sponsored, maintained or contributed to by Seller, or to which Seller is a party. The term "Company Benefit Plan" shall mean any employee benefit plan, program, policy, arrangement, practice or contract, including without limitation any such plan, program, policy, arrangement, practice or contract of a type described in Section 3.11(a) of the Merger Agreement, that is sponsored, maintained or contributed to by the Company or to which the Company is a party. The term "Company Benefit Plan Liabilities" shall mean any benefits accrued or claims incurred by employees and former 13

employees of the Company under (i) any Seller Benefit Plan that is not a Disclosed Seller Benefit Plan, (ii) any Disclosed Seller Benefit Plan that is an employee welfare benefit plan that is a self-insured plan, and (iii) any Disclosed Seller Benefit Plan to the extent such liabilities otherwise were or should have been accrued as liabilities of the Company (such as, for example, with respect to any bonus plan or pool as to which liabilities were or should have been accrued as liabilities of the Company). The term "Company Benefit Plan Liabilities" shall also include the amount by which any applicable premiums under any Disclosed Seller Benefit Plan attributable to employees and former employees of the Company have not been properly paid or accrued as liabilities of the Company. 4.9 BROKERS OR FINDERS. Each of Purchaser and the Company (a) represents, as to itself, its subsidiaries and its affiliates, that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any brokers' or finders' fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, and (b) agrees to indemnify and hold Seller, Baxter, their respective affiliates and the other indemnified parties referred to in Section 6.1 hereof harmless from and against any and all claims, liabilities or obligations with respect to any other fees, commissions or expenses asserted by any person on the basis of any act or statement alleged to have been made by such parties or their respective affiliates. 4.10 INDEMNIFICATION AGREEMENT. Seller acknowledges that there are in effect between it and Michael W. Dunaway, President of Purchaser, and between it and Trudy V. Dunaway, those Indemnification Agreements dated as of August 7, 1995 (the "Indemnification Agreements"), and that the Indemnification Agreements will continue to be the obligation of Seller, subject to the terms and conditions thereof, after the Closing hereunder. Seller further specifically acknowledges that under the Indemnification Agreements, and subject to the terms and conditions thereof, it is obligated to indemnify and hold harmless each of Mr. and Mrs.

employees of the Company under (i) any Seller Benefit Plan that is not a Disclosed Seller Benefit Plan, (ii) any Disclosed Seller Benefit Plan that is an employee welfare benefit plan that is a self-insured plan, and (iii) any Disclosed Seller Benefit Plan to the extent such liabilities otherwise were or should have been accrued as liabilities of the Company (such as, for example, with respect to any bonus plan or pool as to which liabilities were or should have been accrued as liabilities of the Company). The term "Company Benefit Plan Liabilities" shall also include the amount by which any applicable premiums under any Disclosed Seller Benefit Plan attributable to employees and former employees of the Company have not been properly paid or accrued as liabilities of the Company. 4.9 BROKERS OR FINDERS. Each of Purchaser and the Company (a) represents, as to itself, its subsidiaries and its affiliates, that no agent, broker, investment banker, financial advisor or other firm or person is or will be entitled to any brokers' or finders' fee or any other commission or similar fee in connection with any of the transactions contemplated by this Agreement, and (b) agrees to indemnify and hold Seller, Baxter, their respective affiliates and the other indemnified parties referred to in Section 6.1 hereof harmless from and against any and all claims, liabilities or obligations with respect to any other fees, commissions or expenses asserted by any person on the basis of any act or statement alleged to have been made by such parties or their respective affiliates. 4.10 INDEMNIFICATION AGREEMENT. Seller acknowledges that there are in effect between it and Michael W. Dunaway, President of Purchaser, and between it and Trudy V. Dunaway, those Indemnification Agreements dated as of August 7, 1995 (the "Indemnification Agreements"), and that the Indemnification Agreements will continue to be the obligation of Seller, subject to the terms and conditions thereof, after the Closing hereunder. Seller further specifically acknowledges that under the Indemnification Agreements, and subject to the terms and conditions thereof, it is obligated to indemnify and hold harmless each of Mr. and Mrs. Dunaway in connection with any Proceeding (as that term is defined in the Indemnification Agreements), arising out of any claims against each of Mr. and Mrs. Dunaway by any third party or parties, or derivatively on behalf of Seller, based on allegations of self-dealing or breach of fiduciary duty by each of Mr. and Mrs. Dunaway in the context of the transactions contemplated by this Agreement. Each of Mr. and Mrs. Dunaway shall be third party beneficiaries of this Section 4.10. 14

5. CONDITIONS OF PURCHASE AND SALE. 5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of the parties to consummate the Closing shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the following conditions: (a) LEGAL ACTION. No temporary restraining order, preliminary injunction or permanent injunction or other order precluding, restraining, enjoining, preventing or prohibiting the consummation of the Agreement shall have been issued by any Federal, state or foreign court or other governmental or regulatory authority and remain in effect. (b) STATUTES. No Federal, state, local or foreign statute, rule or regulation shall have been enacted which prohibits the consummation of the Agreement or would make the consummation of the Agreement illegal. (c) CONSENTS. All material authorizations, consents or approvals required to be obtained on or prior to the Closing Date in connection with the consummation of the transaction contemplated by this Agreement shall have been obtained. 5.2 ADDITIONAL CONDITION TO OBLIGATIONS OF SELLER. The obligations of Seller to consummate the Closing shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the additional condition that Seller shall have received an opinion of its financial advisor (or such other evidence satisfactory to it) to the effect that the consideration to be received by Seller under Section 1 hereof for the transactions contemplated hereby is fair to Seller and its shareholders from a financial point of view. 6. INDEMNIFICATION; REMEDIES.

5. CONDITIONS OF PURCHASE AND SALE. 5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of the parties to consummate the Closing shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the following conditions: (a) LEGAL ACTION. No temporary restraining order, preliminary injunction or permanent injunction or other order precluding, restraining, enjoining, preventing or prohibiting the consummation of the Agreement shall have been issued by any Federal, state or foreign court or other governmental or regulatory authority and remain in effect. (b) STATUTES. No Federal, state, local or foreign statute, rule or regulation shall have been enacted which prohibits the consummation of the Agreement or would make the consummation of the Agreement illegal. (c) CONSENTS. All material authorizations, consents or approvals required to be obtained on or prior to the Closing Date in connection with the consummation of the transaction contemplated by this Agreement shall have been obtained. 5.2 ADDITIONAL CONDITION TO OBLIGATIONS OF SELLER. The obligations of Seller to consummate the Closing shall be subject to the satisfaction or waiver, on or prior to the Closing Date, of the additional condition that Seller shall have received an opinion of its financial advisor (or such other evidence satisfactory to it) to the effect that the consideration to be received by Seller under Section 1 hereof for the transactions contemplated hereby is fair to Seller and its shareholders from a financial point of view. 6. INDEMNIFICATION; REMEDIES. 6.1 INDEMNIFICATION AND REIMBURSEMENT BY PURCHASER AND THE COMPANY. Purchaser and the Company, jointly and severally, covenant and agree to defend, indemnify and hold harmless Seller and its officers, directors, employees, agents, advisers, representatives and affiliates (including without limitation Baxter and Baxter Sub) (each an "indemnified party") from and against any and all costs, losses, damages, liabilities, obligations, lawsuits, deficiencies, claims, demands and expenses (whether or not arising out of third party claims), including without limitation interest, penalties, taxes and reasonable attorneys' 15

fees and expenses in connection therewith and all amounts paid in investigation, defense or settlement of the foregoing (collectively, "Damages") that are incurred in connection with, arise out of or result from: (a) any inaccuracy in any representation or warranty by Purchaser or the Company made or contained in this Agreement; (b) any failure of Purchaser or the Company to perform any covenant or agreement made or contained in this Agreement; (c) any and all liabilities and obligations of the Company, whether primary or secondary, direct or indirect or fixed, absolute, inchoate or contingent, and whether reflected on the financial statements of the Company or Seller including without limitation those listed in Schedule 1(a) hereto; (d) the operation of the Company's business or Purchaser's ownership, operation or use of the Company's assets; (e) the matters contemplated by Sections 4.5, 4.8 and 4.9 hereof; and (f) the matters contemplated by Section 6.2 hereof. The indemnification agreement in this Section 6 shall not be deemed to preclude or otherwise limit in any way the exercise of any remedies or other rights (including without limitation rights of contribution) which an indemnified

fees and expenses in connection therewith and all amounts paid in investigation, defense or settlement of the foregoing (collectively, "Damages") that are incurred in connection with, arise out of or result from: (a) any inaccuracy in any representation or warranty by Purchaser or the Company made or contained in this Agreement; (b) any failure of Purchaser or the Company to perform any covenant or agreement made or contained in this Agreement; (c) any and all liabilities and obligations of the Company, whether primary or secondary, direct or indirect or fixed, absolute, inchoate or contingent, and whether reflected on the financial statements of the Company or Seller including without limitation those listed in Schedule 1(a) hereto; (d) the operation of the Company's business or Purchaser's ownership, operation or use of the Company's assets; (e) the matters contemplated by Sections 4.5, 4.8 and 4.9 hereof; and (f) the matters contemplated by Section 6.2 hereof. The indemnification agreement in this Section 6 shall not be deemed to preclude or otherwise limit in any way the exercise of any remedies or other rights (including without limitation rights of contribution) which an indemnified party may have under statute or common law. 6.2 TAX INDEMNITY. Purchaser and the Company shall be liable for, pay to the appropriate taxing authorities when due, and hold Baxter and Seller harmless against, all Taxes which relate to (a) the taxable periods ending before or on September 30, 1994, but only to the extent that such Taxes exceed the Tax liabilities reserved for on the Closing Balance Sheet; and (b)(i) the taxable periods that begin on or after the Closing Date, (ii) the PostClosing Period, and (iii) any Straddle Tax Return. 6.3 PAYMENTS IN RESPECT OF CERTAIN TAX CLAIMS. To the extent that a claim may be made relating to that certain Stock Purchase Agreement dated as of July 19, 1994 among Seller, the Company and certain other parties named therein in respect of Taxes that results in an actual benefit to Purchaser, the 16

Company or any of their respective affiliates, Purchaser or the Company shall pay promptly to Baxter or Seller (at the direction of Baxter) an amount equal to the lesser of (a) the actual benefit realized by Purchaser, the Company any of their respective affiliates or (b) the actual detriment realized by Baxter or Seller, in each case in connection with or related to such claim. 6.4 PROCEDURE FOR INDEMNIFICATION. (a) If an indemnified party receives notice of any claim, assertion or the commencement of any action or proceeding or becomes aware of any matter with respect to which Purchaser and the Company, as indemnifying parties (the "Indemnitors"), are obligated to provide indemnification pursuant to this Section 6 (an "Indemnifiable Claim"), the indemnified party shall promptly give written notice thereof to the Indemnitors (a "Notice of Claim"). The failure of any indemnified party to give timely notice hereunder shall not affect such party's rights to indemnification hereunder, except to the extent that the Indemnitor demonstrates that the defense of such action is prejudiced by the indemnified party's failure to give such notice. (b) The Indemnitors shall have the right if they so elect by written notice delivered to the indemnified party to assume the defense with respect to any Indemnifiable Claim with counsel reasonably satisfactory to the indemnified party. Any indemnified party shall have the right to employ separate counsel reasonably satisfactory to Indemnitors in any such action and to participate in the defense thereof at the expense of such indemnified party except as otherwise provided herein; provided, however that the Indemnitors shall be entitled to primary control of the defense thereof subject to the terms and conditions hereof. The Indemnitors shall not settle or

Company or any of their respective affiliates, Purchaser or the Company shall pay promptly to Baxter or Seller (at the direction of Baxter) an amount equal to the lesser of (a) the actual benefit realized by Purchaser, the Company any of their respective affiliates or (b) the actual detriment realized by Baxter or Seller, in each case in connection with or related to such claim. 6.4 PROCEDURE FOR INDEMNIFICATION. (a) If an indemnified party receives notice of any claim, assertion or the commencement of any action or proceeding or becomes aware of any matter with respect to which Purchaser and the Company, as indemnifying parties (the "Indemnitors"), are obligated to provide indemnification pursuant to this Section 6 (an "Indemnifiable Claim"), the indemnified party shall promptly give written notice thereof to the Indemnitors (a "Notice of Claim"). The failure of any indemnified party to give timely notice hereunder shall not affect such party's rights to indemnification hereunder, except to the extent that the Indemnitor demonstrates that the defense of such action is prejudiced by the indemnified party's failure to give such notice. (b) The Indemnitors shall have the right if they so elect by written notice delivered to the indemnified party to assume the defense with respect to any Indemnifiable Claim with counsel reasonably satisfactory to the indemnified party. Any indemnified party shall have the right to employ separate counsel reasonably satisfactory to Indemnitors in any such action and to participate in the defense thereof at the expense of such indemnified party except as otherwise provided herein; provided, however that the Indemnitors shall be entitled to primary control of the defense thereof subject to the terms and conditions hereof. The Indemnitors shall not settle or compromise any Indemnifiable Claim without the prior written consent of the indemnified parties. If the Indemnitors do not notify the indemnified party within five days after receipt of the Notice of Claim (or within such shorter response period as is required to avoid prejudice to the ability to defend against such Indemnifiable Claim) that Indemnitors intend to assume the defense with respect to such Indemnifiable Claim, then the indemnified parties may assume the defense with respect to such Indemnifiable Claim at the Indemnitor's sole cost and expense. (c) The Indemnitors and the indemnified parties shall make available to each other all books, records, documents and other information within their control that are reasonably necessary or appropriate for such defense. The Indemnitors shall keep the indemnified parties promptly and fully apprised of 17

the progress of the defense of the Indemnifiable Claim all other developments with respect to such Indemnifiable Claim. (d) The Indemnitors shall be liable for any settlement of any action effected pursuant to and in accordance with this Section 6 and for any final judgment (subject to any right of appeal), and the Indemnitors agree to indemnify and hold harmless an indemnified party from and against any Damages by reason of such settlement or judgment. 7. TERMINATION. 7.1 TERMINATION. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) By the mutual written consent of the parties hereto; (b) By any party hereto if the Merger Agreement is terminated in accordance with its terms; or (c) By Seller if it accepts an Acquisition Proposal under Section 4.1 of this Agreement in accordance with the provisions of Section 6.13 of the Merger Agreement. 7.2 EFFECT OF TERMINATION. In the event of a termination of this Agreement as provided in Section 7.1 above, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of Seller, Purchaser and the Company, or any of them, or their

the progress of the defense of the Indemnifiable Claim all other developments with respect to such Indemnifiable Claim. (d) The Indemnitors shall be liable for any settlement of any action effected pursuant to and in accordance with this Section 6 and for any final judgment (subject to any right of appeal), and the Indemnitors agree to indemnify and hold harmless an indemnified party from and against any Damages by reason of such settlement or judgment. 7. TERMINATION. 7.1 TERMINATION. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing: (a) By the mutual written consent of the parties hereto; (b) By any party hereto if the Merger Agreement is terminated in accordance with its terms; or (c) By Seller if it accepts an Acquisition Proposal under Section 4.1 of this Agreement in accordance with the provisions of Section 6.13 of the Merger Agreement. 7.2 EFFECT OF TERMINATION. In the event of a termination of this Agreement as provided in Section 7.1 above, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void and there shall be no liability or obligation on the part of Seller, Purchaser and the Company, or any of them, or their respective officers, directors, employees or affiliates, except (a) for fraud or for material breach of this Agreement and (b) as set forth in this Section 7.2 and Section 8.1 hereof. 8. GENERAL PROVISIONS. 8.1 FEES AND EXPENSES. Except as otherwise specifically contemplated by this Agreement, all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated hereby shall be paid as contemplated by Section 5 of the Put Option Agreement. 18

8.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects by written agreement of the parties hereto. 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties in this Agreement shall survive the Closing, except to the extent survival is specifically contemplated by this Agreement. 8.4 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon personal delivery, facsimile transmission (which is confirmed), telex or delivery by an overnight express courier service (delivery, postage or freight charges prepaid), or on the fourth day following deposit in the United States mail (if sent by registered or certified mail, return receipt requested, delivery, postage or freight charges prepaid), addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Seller, to: PSICOR, Inc. 16818 Via del Campo Court San Diego, California 92127 Telecopy No. (619) 485-5107 Attention: Denise E. Botticelli, Esq.

8.2 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects by written agreement of the parties hereto. 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties in this Agreement shall survive the Closing, except to the extent survival is specifically contemplated by this Agreement. 8.4 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given upon personal delivery, facsimile transmission (which is confirmed), telex or delivery by an overnight express courier service (delivery, postage or freight charges prepaid), or on the fourth day following deposit in the United States mail (if sent by registered or certified mail, return receipt requested, delivery, postage or freight charges prepaid), addressed to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Seller, to: PSICOR, Inc. 16818 Via del Campo Court San Diego, California 92127 Telecopy No. (619) 485-5107 Attention: Denise E. Botticelli, Esq. with a copy to: Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 Telecopy No. (313) 568-6915 Attention: Frederick M. Miller, Esq. and a copy to: Baxter Healthcare Corporation 17221 Red Hill Avenue Irvine, California 92714 Telecopy No. (714) 474-6444 Attention: Jay P. Wertheim, Esq. 19

Vice President, Law (b) if to Purchaser, to: Dunaway Holdings, Inc. 18075 Polvera Way San Diego, California 92128 Telecopy No. (619) ___________ Attention: Michael W. Dunaway with a copy to: Baker & McKenzie 101 West Broadway San Diego, California 92101 Telecopy No. (619) 236-0429 Attention: John J. Hentrich, Esq. (c) if to the Company, to: Psicor Office Laboratories, Inc. 1305 Fulton Street Rahway, New Jersey 07065 Telecopy No. ( ) ______ Attention:_______________

Vice President, Law (b) if to Purchaser, to: Dunaway Holdings, Inc. 18075 Polvera Way San Diego, California 92128 Telecopy No. (619) ___________ Attention: Michael W. Dunaway with a copy to: Baker & McKenzie 101 West Broadway San Diego, California 92101 Telecopy No. (619) 236-0429 Attention: John J. Hentrich, Esq. (c) if to the Company, to: Psicor Office Laboratories, Inc. 1305 Fulton Street Rahway, New Jersey 07065 Telecopy No. ( ) ______ Attention:_______________ with a copy to:

Telecopy No. ( ) ______ Attention: _____________ 8.5 DEFINITIONS; INTERPRETATION. As used in this Agreement, the term, "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 20

8.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 8.7 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof, and (b) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder (except (i) with respect to Section 4.10 hereof, as to which Mr. Dunaway shall be a third party beneficiary and (ii) for Baxter and its affiliates who shall be third party beneficiaries of all of the terms and provisions hereof, including without limitation, Sections 2.2, 4.1, 4.6, 4.7, 4.9 and 6 hereof and this Section 8.7). 8.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 8.9 GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State of California without giving effect to the principles of conflicts of law thereof. 8.10 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns.

8.6 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. 8.7 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof, and (b) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder (except (i) with respect to Section 4.10 hereof, as to which Mr. Dunaway shall be a third party beneficiary and (ii) for Baxter and its affiliates who shall be third party beneficiaries of all of the terms and provisions hereof, including without limitation, Sections 2.2, 4.1, 4.6, 4.7, 4.9 and 6 hereof and this Section 8.7). 8.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 8.9 GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State of California without giving effect to the principles of conflicts of law thereof. 8.10 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns. 21

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. SELLER: PSICOR, Inc. By:___________________________ Name: Title: PURCHASER: Dunaway Holdings, Inc. By:___________________________ Name: Michael W. Dunaway Title: President COMPANY: Psicor Office Laboratories, Inc. By:___________________________ Name: Title: 22

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the date first above written. SELLER: PSICOR, Inc. By:___________________________ Name: Title: PURCHASER: Dunaway Holdings, Inc. By:___________________________ Name: Michael W. Dunaway Title: President COMPANY: Psicor Office Laboratories, Inc. By:___________________________ Name: Title: 22

EXHIBIT (c)(5) CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT This Confidentiality and Non-disclosure Agreement (the "Agreement") is made and entered into effective as of this 13th day of October, 1995, by and between PSICOR, INC., a Pennsylvania corporation (the "Company"), and BAXTER HEALTHCARE CORPORATION, a Delaware corporation ("Recipient"). In consideration of the mutual covenants and conditions contained herein, to induce the Company to provide certain information to Recipient and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement do hereby agree as follows: 1. DEFINITION OF CONFIDENTIAL INFORMATION. For all purposes of this Agreement, the term "Confidential Information" shall collectively refer to all information or material disclosed or provided by the Company to Recipient, either orally or in writing, or obtained by Recipient from a third party or any other source at the Company's direction, concerning any aspect of the business or affairs of the Company or its "affiliates" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), including without limitation, any information or material pertaining to products, formulae, specifications, designs, processes, plans, policies, procedures, employees, work conditions, legal and regulatory affairs, assets, inventory, discoveries, trademarks, patents, manufacturing, packing, distribution, sales, marketing, expenses, financial statements and data, customer and supplier lists, raw materials, costs of goods and relationships with third parties. Confidential Information also includes any notes, analyses, compilations, studies or other material or documents prepared by Recipient which contain, reflect or are based, in whole or in part, on the Confidential Information. Notwithstanding the foregoing, Confidential Information shall not include information or material that (i) is publicly available or becomes publicly available through no action or fault of Recipient, (ii) was already in Recipient's possession or known to Recipient prior to being disclosed or provided to Recipient by or on behalf of the Company, PROVIDED, that, to the Recipient's knowledge, after reasonable inquiry, the source of such

EXHIBIT (c)(5) CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT This Confidentiality and Non-disclosure Agreement (the "Agreement") is made and entered into effective as of this 13th day of October, 1995, by and between PSICOR, INC., a Pennsylvania corporation (the "Company"), and BAXTER HEALTHCARE CORPORATION, a Delaware corporation ("Recipient"). In consideration of the mutual covenants and conditions contained herein, to induce the Company to provide certain information to Recipient and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement do hereby agree as follows: 1. DEFINITION OF CONFIDENTIAL INFORMATION. For all purposes of this Agreement, the term "Confidential Information" shall collectively refer to all information or material disclosed or provided by the Company to Recipient, either orally or in writing, or obtained by Recipient from a third party or any other source at the Company's direction, concerning any aspect of the business or affairs of the Company or its "affiliates" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), including without limitation, any information or material pertaining to products, formulae, specifications, designs, processes, plans, policies, procedures, employees, work conditions, legal and regulatory affairs, assets, inventory, discoveries, trademarks, patents, manufacturing, packing, distribution, sales, marketing, expenses, financial statements and data, customer and supplier lists, raw materials, costs of goods and relationships with third parties. Confidential Information also includes any notes, analyses, compilations, studies or other material or documents prepared by Recipient which contain, reflect or are based, in whole or in part, on the Confidential Information. Notwithstanding the foregoing, Confidential Information shall not include information or material that (i) is publicly available or becomes publicly available through no action or fault of Recipient, (ii) was already in Recipient's possession or known to Recipient prior to being disclosed or provided to Recipient by or on behalf of the Company, PROVIDED, that, to the Recipient's knowledge, after reasonable inquiry, the source of such information or material was not bound by a contractual, legal or fiduciary obligation of confidentiality to the Company or any other party with respect thereto, or (iii) was or is obtained by Recipient from a third party, PROVIDED, that to the Recipient's knowledge, after reasonable inquiry, such third party was not bound by a contractual, legal or fiduciary obligation of confidentiality to the Company or any other party with respect to such information or material.

2. RESTRICTIONS ON DISCLOSURE AND USE. Recipient does hereby covenant and agree with the Company as follows: 2.1 NON-DISCLOSURE. Recipient shall keep confidential and shall not disclose, or cause or permit to be disclosed, to any person or entity, (i) any information about a potential acquisition of or merger with the Company (the "Transaction") or the fact that Recipient has received the Confidential Information and is considering the Transaction and all discussions between the Company and Recipient related thereto, except the Recipient may make such disclosure if it has been advised by its outside counsel that such disclosure must be made in order that Recipient not commit a violation of law and if Recipient provides the Company, prior to making such disclosure, with notice of the decision to make such disclosure, and (ii) the Confidential Information, except, in either case, to those officers, employees or other authorized agents and representatives of Recipient to whom disclosure is reasonably necessary in Recipient's judgment in connection with the Transaction and who shall agree to be bound by the terms of this Agreement, and except as otherwise consented to in writing by the Company. Recipient shall take all actions reasonably necessary to ensure that the Confidential Information remains strictly confidential and is not disclosed to or seen, used or obtained by any person or entity except in accordance with the terms of this Agreement. Recipient agrees not to contact any employees not specifically designated by the Company, customers or suppliers of the Company or its affiliates with respect to the Transaction or for the purpose of obtaining information for use in evaluating the Transaction, without the Company's prior written consent. Recipient further agrees that all inquiries, requests for information and other communications concerning the Transaction shall be made only to the employees designated by the Company or through Dain Bosworth Incorporated, the advisor to the Company, unless and until another contact person is identified to Recipient in writing by the Company.

2. RESTRICTIONS ON DISCLOSURE AND USE. Recipient does hereby covenant and agree with the Company as follows: 2.1 NON-DISCLOSURE. Recipient shall keep confidential and shall not disclose, or cause or permit to be disclosed, to any person or entity, (i) any information about a potential acquisition of or merger with the Company (the "Transaction") or the fact that Recipient has received the Confidential Information and is considering the Transaction and all discussions between the Company and Recipient related thereto, except the Recipient may make such disclosure if it has been advised by its outside counsel that such disclosure must be made in order that Recipient not commit a violation of law and if Recipient provides the Company, prior to making such disclosure, with notice of the decision to make such disclosure, and (ii) the Confidential Information, except, in either case, to those officers, employees or other authorized agents and representatives of Recipient to whom disclosure is reasonably necessary in Recipient's judgment in connection with the Transaction and who shall agree to be bound by the terms of this Agreement, and except as otherwise consented to in writing by the Company. Recipient shall take all actions reasonably necessary to ensure that the Confidential Information remains strictly confidential and is not disclosed to or seen, used or obtained by any person or entity except in accordance with the terms of this Agreement. Recipient agrees not to contact any employees not specifically designated by the Company, customers or suppliers of the Company or its affiliates with respect to the Transaction or for the purpose of obtaining information for use in evaluating the Transaction, without the Company's prior written consent. Recipient further agrees that all inquiries, requests for information and other communications concerning the Transaction shall be made only to the employees designated by the Company or through Dain Bosworth Incorporated, the advisor to the Company, unless and until another contact person is identified to Recipient in writing by the Company. In the event that Recipient is requested or required (by oral questions, interrogatories, request for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any of the Confidential Information, Recipient shall provide the Company with prompt written notice of any such request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, Recipient is nonetheless, based on advice of its outside counsel, legally compelled to disclose Confidential Information to any tribunal or else stand liable to contempt or suffer other 2

censure or penalty, Recipient may, without liability hereunder, disclose to such tribunal only that portion of the Confidential Information which such counsel advises Recipient is legally required to be disclosed, provided that Recipient shall use its reasonable efforts to preserve the confidentiality of the Confidential Information, including, without limitation, by cooperating with the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be afforded the Confidential Information by such tribunal. 2.2 OWNERSHIP. The Confidential Information is owned solely and exclusively by the Company, shall remain the exclusive property of the Company unless transferred to Recipient in the Transaction, and Recipient shall have no right, title or interest in or to any of the Confidential Information or any material developed therefrom. 2.3 USE. Recipient shall use or cause the Confidential Information to be used only to evaluate the Transaction and in a manner consistent with the terms and conditions of this Agreement and at no time shall Recipient otherwise use the Confidential Information for the benefit of itself or any other third party or in any manner adverse to, or to the detriment of, the Company or its affiliates or their respective shareholders, other than in connection with the registration or completion of a Transaction. 2.4 OTHER PARTIES BOUND. All affiliates of Recipient and all directors, officers, employees, agents and representatives of Recipient or its affiliates shall be included within the definition of the term "Recipient" for purposes of this Agreement and shall be bound by the terms and conditions of this Agreement. Recipient shall be responsible for any breaches of this Agreement by any of its affiliates and any directors, officers, employees, agents and representatives of Recipient or its affiliates. 3. NO SOLICITATION OR HIRING OF EMPLOYEES. For a period of one year from the date of this Agreement, Recipient and its affiliates will not knowingly solicit the employment of, or offer employment to, any

censure or penalty, Recipient may, without liability hereunder, disclose to such tribunal only that portion of the Confidential Information which such counsel advises Recipient is legally required to be disclosed, provided that Recipient shall use its reasonable efforts to preserve the confidentiality of the Confidential Information, including, without limitation, by cooperating with the Company to obtain an appropriate protective order or other reliable assurance that confidential treatment will be afforded the Confidential Information by such tribunal. 2.2 OWNERSHIP. The Confidential Information is owned solely and exclusively by the Company, shall remain the exclusive property of the Company unless transferred to Recipient in the Transaction, and Recipient shall have no right, title or interest in or to any of the Confidential Information or any material developed therefrom. 2.3 USE. Recipient shall use or cause the Confidential Information to be used only to evaluate the Transaction and in a manner consistent with the terms and conditions of this Agreement and at no time shall Recipient otherwise use the Confidential Information for the benefit of itself or any other third party or in any manner adverse to, or to the detriment of, the Company or its affiliates or their respective shareholders, other than in connection with the registration or completion of a Transaction. 2.4 OTHER PARTIES BOUND. All affiliates of Recipient and all directors, officers, employees, agents and representatives of Recipient or its affiliates shall be included within the definition of the term "Recipient" for purposes of this Agreement and shall be bound by the terms and conditions of this Agreement. Recipient shall be responsible for any breaches of this Agreement by any of its affiliates and any directors, officers, employees, agents and representatives of Recipient or its affiliates. 3. NO SOLICITATION OR HIRING OF EMPLOYEES. For a period of one year from the date of this Agreement, Recipient and its affiliates will not knowingly solicit the employment of, or offer employment to, any officer of the Company or its affiliates without the Company's prior written consent. 4. RETURN OF CONFIDENTIAL INFORMATION. Recipient shall, upon accomplishing the limited purpose of evaluating the Transaction, or at any time upon the request of the Company, (a) immediately return to the Company all Confidential Information (including notes, writing and other materials developed therefrom by Recipient) and all copies thereof and retain none for its files, or (b) destroy all Confi3

dential Information, originals and copies, and provide an affidavit verifying such destruction. Notwithstanding such return or destruction, Recipient shall continue to be bound by this Agreement. 5. NO REPRESENTATIONS OR WARRANTIES. The Confidential Information is being provided to Recipient "as is" and without any representation or warranty of any kind, either express or implied, regarding the accuracy or completeness or other quality of the Confidential Information. In no event shall the Company or its affiliates or any of their respective directors, officers, employees, agents or representatives (including, without limitation, Dain Bosworth Incorporated) have any liability to Recipient relating to or arising out of any use of the Confidential Information, except as may be provided in a definitive agreement in connection with the Transaction. 6. EQUITABLE REMEDIES. Recipient hereby agrees that its failure to perform any obligation or duty which it has agreed to perform under this Agreement will cause irreparable harm to the Company, which harm cannot be adequately compensated for by money damages. It is further agreed by Recipient that an order of specific performance or for injunctive relief against Recipient in the event of a breach or default under the terms of this Agreement would be equitable and would not work a hardship on Recipient. Accordingly, in the event of a breach or default by Recipient hereunder, the Company, in addition to whatever other remedies are or might be available at law or in equity, shall have the right either to compel specific performance by, or to obtain injunctive relief against, Recipient, with respect to any obligation or duty herein or breach thereof. 7. NO LICENSES GRANTED. The Company grants no licenses, by implication or otherwise, under any patent, copyright, trademark, trade secret or other rights by disclosing Confidential Information under this Agreement. 8. DEFINITIVE AGREEMENT. Except for the terms and conditions of this Agreement, Recipient and the Company each understand and agree that no contract or agreement providing for any transaction involving the

dential Information, originals and copies, and provide an affidavit verifying such destruction. Notwithstanding such return or destruction, Recipient shall continue to be bound by this Agreement. 5. NO REPRESENTATIONS OR WARRANTIES. The Confidential Information is being provided to Recipient "as is" and without any representation or warranty of any kind, either express or implied, regarding the accuracy or completeness or other quality of the Confidential Information. In no event shall the Company or its affiliates or any of their respective directors, officers, employees, agents or representatives (including, without limitation, Dain Bosworth Incorporated) have any liability to Recipient relating to or arising out of any use of the Confidential Information, except as may be provided in a definitive agreement in connection with the Transaction. 6. EQUITABLE REMEDIES. Recipient hereby agrees that its failure to perform any obligation or duty which it has agreed to perform under this Agreement will cause irreparable harm to the Company, which harm cannot be adequately compensated for by money damages. It is further agreed by Recipient that an order of specific performance or for injunctive relief against Recipient in the event of a breach or default under the terms of this Agreement would be equitable and would not work a hardship on Recipient. Accordingly, in the event of a breach or default by Recipient hereunder, the Company, in addition to whatever other remedies are or might be available at law or in equity, shall have the right either to compel specific performance by, or to obtain injunctive relief against, Recipient, with respect to any obligation or duty herein or breach thereof. 7. NO LICENSES GRANTED. The Company grants no licenses, by implication or otherwise, under any patent, copyright, trademark, trade secret or other rights by disclosing Confidential Information under this Agreement. 8. DEFINITIVE AGREEMENT. Except for the terms and conditions of this Agreement, Recipient and the Company each understand and agree that no contract or agreement providing for any transaction involving the Company shall be deemed to exist between Recipient and the Company unless and until a final definitive agreement has been executed and delivered, and Recipient and the Company each hereby waive in advance, any claims (including, without limitation, breach of contract) in connection with any transaction involving the Company unless and until Recipient and the Company shall have entered into a final definitive agreement. Recipient and the Company each also agree that unless and until a final definitive agreement between Recipient and the Company has been executed and 4

delivered, neither Recipient nor the Company will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this Agreement except for the matters specifically agreed to herein. The Company reserves the right, in its sole discretion, to reject any and all proposals made by Recipient and to terminate discussions and negotiations with Recipient at any time. Recipient further understands that, except as otherwise agreed to in writing, (i) the Company shall be free to conduct any process for any transaction involving the Company, if and as the Company in its sole discretion shall determine (including, without limitation, negotiating with any other interested party and entering into a definitive agreement without prior notice to Recipient or any other person), (ii) any procedures relating to such process or transaction may be changed at any time in the Company's sole discretion without notice to Recipient or any other person, and (iii) Recipient shall not have any claims whatsoever against the Company or any of its agents or representatives (including, without limitation, Dain Bosworth Incorporated) arising out of or relating to any transaction involving the Company (other than any claims against the parties to a definitive agreement with Recipient in accordance with the terms thereof) nor, unless a definitive agreement is entered into with Recipient, against any third party with whom a transaction is entered into. 9. STANDSTILL. 9.1 Recipient hereby convenants and agrees that, until twelve months from the date of this Agreement, without the prior written consent of the Company, Recipient will not in any manner, directly or indirectly, or in connection with any other person or entity, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company, (ii) any tender or exchange offer, merger or other business combination involving the Company, (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company, or (iv) any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under the Exchange Act) or consents

delivered, neither Recipient nor the Company will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this Agreement except for the matters specifically agreed to herein. The Company reserves the right, in its sole discretion, to reject any and all proposals made by Recipient and to terminate discussions and negotiations with Recipient at any time. Recipient further understands that, except as otherwise agreed to in writing, (i) the Company shall be free to conduct any process for any transaction involving the Company, if and as the Company in its sole discretion shall determine (including, without limitation, negotiating with any other interested party and entering into a definitive agreement without prior notice to Recipient or any other person), (ii) any procedures relating to such process or transaction may be changed at any time in the Company's sole discretion without notice to Recipient or any other person, and (iii) Recipient shall not have any claims whatsoever against the Company or any of its agents or representatives (including, without limitation, Dain Bosworth Incorporated) arising out of or relating to any transaction involving the Company (other than any claims against the parties to a definitive agreement with Recipient in accordance with the terms thereof) nor, unless a definitive agreement is entered into with Recipient, against any third party with whom a transaction is entered into. 9. STANDSTILL. 9.1 Recipient hereby convenants and agrees that, until twelve months from the date of this Agreement, without the prior written consent of the Company, Recipient will not in any manner, directly or indirectly, or in connection with any other person or entity, (a) effect or seek, offer or propose (whether publicly or otherwise) to effect or participate in, (i) any acquisition of any securities (or beneficial ownership thereof) or assets of the Company, (ii) any tender or exchange offer, merger or other business combination involving the Company, (iii) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company, or (iv) any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under the Exchange Act) or consents to vote any securities of the Company; (b) form, join or in any way participate in a "group" (as such term is used in Section 13(d)(3) of the Exchange Act) or otherwise act, alone or with others, to seek to acquire or affect control or influence the management, Board of Directors or policies of the Company; or (c) enter into any discussions or arrangements with any third party other than the Company, its representatives, or advisors to the Recipient regarding any of the foregoing. 5

9.2 Notwithstanding paragraph 9.1 above, Recipient shall not be prohibited from proposing to the Company's Board of Directors a cash transaction structured as a tender offer followed by a merger in which all holders of the Company's Common Stock (including outstanding options to acquire shares of the Company's Common Stock, whether vested and exercisable or not) will receive cash consideration of not less than $17.50, net, per share of the Company's Common Stock. 10. TRADING IN SECURITIES. Recipient acknowledges that it is aware, and agrees to advise its directors, officers, employees, agents and representatives who are informed as to the matters which are the subject of this Agreement, that the United States securities laws prohibit any person who has material, non-public information concerning the Transaction from purchasing or selling securities of a company that may be party to such Transaction or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. 11. MISCELLANEOUS. This Agreement shall be binding upon, and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns, but this Agreement shall not be assignable by Recipient without the prior written consent of the Company. This Agreement constitutes the complete agreement between the parties hereto with respect to the subject matter hereof and shall continue in full force and effect until terminated by mutual agreement of the parties hereto. This Agreement specifically revokes and supersedes the Mutual Confidentiality Agreement entered into between the Company and Baxter Healthcare Corporation dated April 21, 1994. The section headings used herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. This Agreement shall be construed, performed and enforced in accordance with, and governed by, the internal laws of the State of California, without giving effect to the principles of conflicts of law thereof, and each party consents to personal jurisdiction in such state and voluntarily submits to the jurisdiction of the courts of such state in any action or proceeding relating to this Agreement.

9.2 Notwithstanding paragraph 9.1 above, Recipient shall not be prohibited from proposing to the Company's Board of Directors a cash transaction structured as a tender offer followed by a merger in which all holders of the Company's Common Stock (including outstanding options to acquire shares of the Company's Common Stock, whether vested and exercisable or not) will receive cash consideration of not less than $17.50, net, per share of the Company's Common Stock. 10. TRADING IN SECURITIES. Recipient acknowledges that it is aware, and agrees to advise its directors, officers, employees, agents and representatives who are informed as to the matters which are the subject of this Agreement, that the United States securities laws prohibit any person who has material, non-public information concerning the Transaction from purchasing or selling securities of a company that may be party to such Transaction or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. 11. MISCELLANEOUS. This Agreement shall be binding upon, and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns, but this Agreement shall not be assignable by Recipient without the prior written consent of the Company. This Agreement constitutes the complete agreement between the parties hereto with respect to the subject matter hereof and shall continue in full force and effect until terminated by mutual agreement of the parties hereto. This Agreement specifically revokes and supersedes the Mutual Confidentiality Agreement entered into between the Company and Baxter Healthcare Corporation dated April 21, 1994. The section headings used herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. This Agreement shall be construed, performed and enforced in accordance with, and governed by, the internal laws of the State of California, without giving effect to the principles of conflicts of law thereof, and each party consents to personal jurisdiction in such state and voluntarily submits to the jurisdiction of the courts of such state in any action or proceeding relating to this Agreement. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision hereof is held to be invalid, illegal or unenforceable under any applicable law or rule in any jurisdiction, such provision will be ineffective only to the extent of such invalidity, illegality, or unenforceability, without invalidating the remainder of this Agreement. This Agreement may not be modified or amended and no provision hereof may be waived, in whole or in part, except by a written agreement signed by the 6

parties hereto. No waiver of any breach of default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 12. TERM. Except as otherwise specifically provided herein, the provisions of this Agreement shall terminate and be of no further force or effect two years from the date first written above. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date first set forth above.
The Company PSICOR, INC. The Recipient BAXTER HEALTHCARE CORPORATION

By: /s/ Denise Botticelli --------------------------Its: General Counsel --------------------------

By: /s/ Jay P. Wertheim ---------------------------Its: Vice President, Law ---------------------------

7

parties hereto. No waiver of any breach of default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 12. TERM. Except as otherwise specifically provided herein, the provisions of this Agreement shall terminate and be of no further force or effect two years from the date first written above. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date first set forth above.
The Company PSICOR, INC. The Recipient BAXTER HEALTHCARE CORPORATION

By: /s/ Denise Botticelli --------------------------Its: General Counsel --------------------------

By: /s/ Jay P. Wertheim ---------------------------Its: Vice President, Law ---------------------------

7