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                                                                   DRAFT 8/19/96













                         AGREEMENT AND PLAN OF REORGANIZATION



                             DATED AS OF ___________ 1996



                                    BY AND BETWEEN




                              BAXTER INTERNATIONAL INC.



                                         AND



                                ALLEGIANCE CORPORATION





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                                  TABLE OF CONTENTS

                                                                            Page

ARTICLE I.  DEFINITIONS AND INTERPRETATIONS...................................2
    Section 1.1  Definitions..................................................2
    Section 1.2  Rules of Construction........................................9


ARTICLE II.  THE SPIN-OFF....................................................10
    Section 2.1  Delivery of Allegiance Shares...............................10
    Section 2.2  Spin-Off of Allegiance Shares...............................10
    Section 2.3  Treatment of Fractional Shares..............................10
    Section 2.4  Baxter Board Action.........................................11
    Section 2.5  Additional Approvals........................................11


ARTICLE III.  TRANSFERS TO AHII..............................................11
    Section 3.1  General.....................................................11
    Section 3.2  Malaysian Glove Factory.....................................11
    Section 3.3  Euromedical.................................................12
    Section 3.4  France......................................................13
    Section 3.5  Germany.....................................................13
    Section 3.6  Malta.......................................................13
    Section 3.7  Mexico......................................................14
    Section 3.8  Canada......................................................14
    Section 3.9  Restrictions on Intercompany Debt...........................15
    Section 3.10  Transfer of Assets.........................................16
    Section 3.11  Transfer of Liabilities....................................16


ARTICLE IV.  TRANSFERS TO AHC................................................16
    Section 4.1  Organization of AHC.........................................16
    Section 4.2  Transferred Assets..........................................16
    Section 4.3  Excluded BHC Assets.........................................21
    Section 4.4  Assumed Liabilities.........................................22
    Section 4.5  Excluded Liabilities........................................23
    Section 4.6  Release of Baxter...........................................23


ARTICLE V.  ORGANIZATION OF ALLEGIANCE CORPORATION...........................23
    Section 5.1  Organization of Allegiance..................................23
    Section 5.2  Transfer of Certain Subsidiaries............................24
    Section 5.3  Transfer of Assets..........................................24
    Section 5.4  Transfer of Liabilities.....................................26
    Section 5.5  Excluded Liabilities........................................26
    Section 5.6  Intracompany Agreements.....................................26


ARTICLE VI.  DELIVERIES AT CLOSING...........................................26
    Section 6.1  Instruments of Conveyance...................................26
    Section 6.2  No Representations or Warranties............................27


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    Section 6.3  Non-Assignable Contracts....................................27
    Section 6.4  Further Assurances..........................................28


ARTICLE VII.  CERTAIN COVENANTS..............................................29
    Section 7.1  Conduct of Allegiance Business
                   Pending the Spin-Off Date.................................29
    Section 7.2  Registration and Listing....................................29
    Section 7.3  New Credit Facilities.......................................30
    Section 7.4  Post-Spin-Off Tax-Related Restrictions......................30
    Section 7.5  Insurance Policies and Claims
                   Administration............................................31
    Section 7.6  Intercompany Receivables and
                   Cash Management...........................................34
    Section 7.7  Intercompany Debt True-Up...................................35
    Section 7.8  Agreements Relating to Baxter
                   and Allegiance............................................36
    Section 7.9  Certain Releases............................................36
    Section 7.10  Litigation.................................................37
    Section 7.11  Liability for Previously
                   Delivered Products........................................37
    Section 7.12  Allegiance Bank Accounts...................................39
    Section 7.13  Subsidized Customer Leases.................................39
    Section 7.14  Ad Now Program.............................................39
    Section 7.15  Services to Dade...........................................39
    Section 7.16  Products at Cost to Dade...................................40


ARTICLE VIII.  INTELLECTUAL PROPERTY.........................................40
    Section 8.1  License of Allegiance
                   Intellectual Property to Baxter...........................40
    Section 8.2  License of Baxter Intellectual
                   Property to Allegiance....................................42
    Section 8.3  Use of Baxter Trade Names and Trademarks....................44


ARTICLE IX.  EMPLOYEES AND EMPLOYEE BENEFITS.................................46
    Section 9.1  Domestic and International
                   Allegiance Employee.......................................46
    Section 9.2  Employment of Domestic Allegiance
                   Employees.................................................46
    Section 9.3  Terminations/Layoff/Severance...............................46
    Section 9.4  International Allegiance Employees..........................47
    Section 9.5  Employment Solicitation.....................................47
    Section 9.6  WARN Act....................................................48
    Section 9.7  Leave of Absence Policies...................................48
    Section 9.8  Withdrawal From Participation in
                   Baxter Plans and Establishment
                   of Allegiance Plans.......................................49
    Section 9.9  Transfer of Savings Plan Account Balances...................49
    Section 9.10 Entitlement to Distributions
                   Under Pension Plan........................................50


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    Section 9.11  Welfare Benefits Provided
                   Under Allegiance Plans....................................50
    Section 9.12  Stock Purchase Plan........................................51
    Section 9.13  Workers' Compensation......................................51
    Section 9.14  Vacation Pay Policy........................................51
    Section 9.15  Non-Qualified Deferred Compensation
                   Plans.....................................................51
    Section 9.16  Information to Be Provided to Baxter.......................52
    Section 9.17  Corporate Action; Delegation
                   of Authority..............................................52
    Section 9.18  Split-Dollar Life Insurance................................52


ARTICLE X.  ACCESS TO INFORMATION............................................53
    Section 10.1  Access to Information......................................53
    Section 10.2  Production of Witnesses....................................53
    Section 10.3  Provision of Corporate Records.............................53
    Section 10.4  Confidentiality............................................53
    Section 10.5  Privileged Matters.........................................54


ARTICLE XI.  CONDITIONS PRECEDENT TO SPIN-OFF................................55
    Section 11.1  Tax Ruling.................................................56
    Section 11.2  No Actions.................................................56
    Section 11.3  NYSE Listing...............................................56
    Section 11.4  Opinions of Financial Advisor..............................56
    Section 11.5  Consents...................................................56
    Section 11.6  Registration Statement.....................................56
    Section 11.7  New Credit Facility........................................56
    Section 11.8  Pre-Spin-Off Transactions..................................56
    Section 11.9  Ancillary Agreements.......................................57
    Section 11.10  Resignations..............................................57
    Section 11.11  Board Approval............................................57
    Section 11.12  Election of Allegiance Board..............................57
    Section 11.13  Satisfaction of Conditions................................57


ARTICLE XII.  EXPENSES; TAXES................................................57
    Section 12.1  Allocation of Expenses.....................................57
    Section 12.2  Taxes......................................................58
    Section 12.3  Directors' and Officers' Insurance.........................58


ARTICLE XIII.  SURVIVAL, INDEMNIFICATION, CLAIMS AND OTHER MATTERS...........59
    Section 13.1  Survival...................................................59
    Section 13.2  Indemnification............................................59
    Section 13.3  Procedure for Indemnification..............................62
    Section 13.4  Direct Claims..............................................64
    Section 13.5  Adjustment of Indemnifiable Losses.........................64
    Section 13.6  Contribution...............................................66
    Section 13.7  No Third Party Beneficiaries...............................66


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    Section 13.8  Release of Pre-Divestiture Liabilities.....................66


ARTICLE XIV.  DISPUTE RESOLUTION.............................................67
    Section 14.1  Escalation.................................................67
    Section 14.2  Arbitration................................................67
    Section 14.3  Injunctive Relief..........................................68


ARTICLE XV.  MISCELLANEOUS PROVISIONS........................................68
    Section 15.1  Entire Agreement...........................................68
    Section 15.2  Choice of Law..............................................68
    Section 15.3  Amendment; Waiver..........................................69
    Section 15.4  Severability...............................................69
    Section 15.5  Counterparts...............................................69
    Section 15.6  Records Retention..........................................69
    Section 15.7  Beneficiaries..............................................69
    Section 15.8  Notices....................................................69
    Section 15.9  Termination................................................70
    Section 15.10 Performance................................................70


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List of Exhibits
- ----------------

Exhibit A     -    The Transferred Business
Exhibit B     -    The Transferred Services
Exhibit C     -    Transferred Subsidiaries
Exhibit D     -    Operating Agreements
Exhibit E     -    Tax Sharing Agreement
Exhibit F     -    June 31, 1996 Balance Sheet
Exhibit G     -    Certificate of Incorporation of Allegiance
Exhibit H     -    By-Laws of Allegiance
Exhibit I     -    Allegiance Preferred Share Purchase Rights Plan
Exhibit J     -    Allegiance Board of Directors



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                         AGREEMENT AND PLAN OF REORGANIZATION



         AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement"), dated as of
______________, 1996, by and between Baxter International Inc., a Delaware
corporation ("Baxter"), and Allegiance Corporation, a Delaware corporation
("Allegiance"), and, prior to the Spin-Off (as hereinafter defined), a wholly-
owned Subsidiary (as hereinafter defined) of Baxter.

                                 W I T N E S S E T H

         WHEREAS, Baxter through its Subsidiaries is engaged, INTER ALIA, in
the health care distribution, surgical and respiratory therapy products and
health care cost management business (as more fully described in EXHIBIT A
hereto, the "Transferred Business");

         WHEREAS, the Board of Directors of Baxter has determined that it would
be advisable and in the best interests of Baxter and its stockholders for Baxter
(i) to transfer to Allegiance and/or one or more of its Subsidiaries the
business, operations, assets and liabilities related to the Transferred
Business, and (ii) to transfer to Allegiance or one or more of its Subsidiaries,
the employees and certain liabilities related to the provision of the
administrative services and functions set forth in EXHIBIT B hereto (the
"Transferred Services") (the Transferred Business and the Transferred Services
are hereinafter referred to together as the "Allegiance Business");

         WHEREAS, Baxter has agreed to transfer and assign, or cause to be
transferred and assigned, to Allegiance or one or more of its Subsidiaries (i)
substantially all of the assets and properties of the Allegiance Business held
by Baxter, Baxter Healthcare Corporation, a Delaware corporation ("BHC"), and
certain other Subsidiaries of Baxter, and (ii) all of the issued and outstanding
shares owned by Baxter and its Subsidiaries of certain of its Subsidiaries as
set forth in EXHIBIT C hereto (the "Transferred Subsidiaries"), and Allegiance
has agreed to assume, or cause to be assumed by one or more of its Subsidiaries,
certain liabilities and obligations arising out of or relating to the Allegiance
Business;

         WHEREAS, the Board of Directors of Baxter has determined that it would
be advisable and in the best interests of Baxter and its stockholders for Baxter
to distribute all of the outstanding shares of Allegiance common stock, par
value $1.00 per share (together with the preferred share purchase rights
associated therewith, the "Allegiance Common Stock"), on a pro rata basis to the
holders of Baxter's common stock, par value $1.00 per share ("Baxter Common
Stock"); and


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         WHEREAS, on the Spin-Off Date (as hereinafter defined), Baxter will
cause the Agent (as hereinafter defined) to distribute in the manner described
herein to all holders of record of Baxter Common Stock as of the Record Date (as
hereinafter defined), without any consideration being paid by such holders,
outstanding shares of Allegiance Common Stock.

         NOW, THEREFORE, in consideration of the mutual undertakings contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Baxter and Allegiance agree as
follows:


                     ARTICLE I.  DEFINITIONS AND INTERPRETATIONS

         Section 1.1  DEFINITIONS.  As used in this Agreement, the following
terms shall have the meanings set forth below.

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

         "Active Allegiance Employee" means any regular full-time or part-time
employee of Baxter or one of its Subsidiaries who commences employment with
Allegiance or one of its Subsidiaries on the Spin-Off Date.

         "Affiliate" shall mean any Person controlling, controlled by, or under
direct or indirect common control with a party hereto.  For the purpose of this
definition, the term "control" means the power to direct the management of an
entity, directly or indirectly, whether through the ownership of voting
securities, by contract, or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.  After the Spin-Off
Date, Allegiance and Baxter shall not be deemed to be under common control for
purposes hereof due solely to the fact that Allegiance and Baxter have common
shareholders.

         "Agent" means First Chicago Trust Company of New York, the
distribution agent appointed by Baxter to distribute shares of Allegiance Common
Stock pursuant to the Spin-Off.

         "AHC" has the meaning set forth in SECTION 4.1.

         "AHFI" has the meaning set forth in SECTION 3.3.

         "AHII" has the meaning set forth in SECTION 3.1.

         "AHSB" has the meaning set forth in SECTION 3.2.


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         "Allegiance Business" has the meaning set forth in the recitals of
this Agreement.

         "Allegiance Credit Facility" has the meaning set forth in SECTION 7.3.

         "Allegiance Distributable Share" means the number of, or fractional,
Allegiance Shares which the Board of Directors of Baxter determines shall be
distributed with respect to each share of Baxter Common Stock pursuant to the
Spin-Off.

         "Allegiance Employee" means any Domestic or International Allegiance
Employee.

         "Allegiance Foreign Entity" means any Subsidiary of Baxter that is
located or incorporated in jurisdiction outside of the United States and will,
upon consummation of the transactions contemplated by this Agreement, become a
Subsidiary of Allegiance.

         "Allegiance Indemnified Party" has the meaning set forth in SECTION
13.2.

         "Allegiance Products" means those products manufactured by Allegiance
or its Subsidiaries (as they would exist immediately following the Spin-Off
Date) (except for products manufactured for Baxter or its Subsidiaries by
Allegiance or its Subsidiaries pursuant to the Manufacturing Contracts but
including those products manufactured for Allegiance and its Subsidiaries by
Baxter or its Subsidiaries pursuant to the Manufacturing Contracts).

         "Allegiance Retirement Plan" means the defined contribution plan which
shall be established by Allegiance after the Spin-Off Date for the benefit of
certain eligible employees.

         "Allegiance Share" means one share of Allegiance Common Stock.

         "Allegiance Welfare Plans" means the welfare benefit plans established
by Allegiance following the Spin-Off, which provide benefits that correspond to
benefits provided under the Baxter Welfare Plans.

         "Assumed Actions" has the meaning set forth in SECTION 7.10(a).

         "Assumed BHC Liabilities" has the meaning set forth in SECTION 4.4.

         "Balance Sheet" has the meaning set forth in SECTION 4.2(i).


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         "Baxter Belgium" has the meaning set forth in SECTION 3.6.

         "Baxter Cafeteria Plans" means the Baxter Healthcare and Dependent Day
Care Reimbursement Accounts.

         "Baxter Deutschland" has the meaning set forth in SECTION 3.5.

         "Baxter France" has the meaning set forth in SECTION 3.4.

         "Baxter Group" means Baxter and (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as Baxter, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with Baxter, (c) any organization (whether or not incorporated) which is a
member of an affiliated service group (within the meaning of Section 414(m) of
the Code) which includes Baxter, a corporation described in clause (a) of this
definition or a trade or business described in clause (b) of this definition, or
(d) any other entity which is required to be aggregated with Baxter pursuant to
regulations promulgated under Section 414(o) of the Code.

         "Baxter Indemnified Party" has the meaning set forth in SECTION 13.2.

         "Baxter Panama" has the meaning set forth in SECTION 3.2.

         "Baxter Pension Plan" means the Baxter International Inc. and
Subsidiaries Pension Plan.

         "Baxter Plan" means any employee benefit plan or program maintained by
Baxter.

         "Baxter Products" means those products manufactured by Baxter or its
Subsidiaries (as they would exist immediately following the Spin-Off Date)
(except for products manufactured for Allegiance or its Subsidiaries by Baxter
or its Subsidiaries pursuant to the Manufacturing Contracts but including those
products manufactured for Baxter and its Subsidiaries by Allegiance or its
Subsidiaries pursuant to the Manufacturing Contracts).

         "Baxter Retiree Welfare Plan" means the post-retirement medical
portion of the Baxter International Inc. and Subsidiaries Medical Plan and the
post-retirement life insurance portion of the Baxter Employee Group Term Life
Insurance Plan.


                                        - 4 -

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         "Baxter Savings Plan" means the Baxter International Inc. and
Subsidiaries Incentive Investment Plan.

         "Baxter Welfare Plans" means the Baxter Medical Plan, the Baxter Long-
Term Disability Insurance Plan, the Baxter Personal Accident Insurance Plan, the
Baxter Business Travel Accident Insurance Plan, the Group Universal Life
Insurance Plan and the Wellness Reimbursement Account.

         "BHC" has the meaning set forth in the recitals of this Agreement.

         "Board of Directors" means the board of directors of the referenced
corporation or any duly authorized committee thereof.

         "BWT" has the meaning set forth in SECTION 3.1.

         "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act, as amended.

         "Chateaubriant Plant" has the meaning set forth in SECTION 3.4.

         "Claims or Losses" means all losses, liabilities, claims, demands,
settlements, penalties, fines, damages, costs and expenses of whatever kind or
nature, known or unknown, contingent or otherwise (including reasonable
attorneys' fees and expenses, reasonable consultants' fees and expenses, court
costs, any and all expenses reasonably incurred in investigating, preparing for
or responding to or defending against any litigation or claim), commenced, made
or threatened, and any environmental clean-up or remediation claims and
expenses, including any requirements or obligations under CERCLA and any other
federal, state or local laws relating to cleanup of hazardous materials.

         "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and any applicable state law requiring continuation coverage
under a medical plan.

         "Code" means the Internal Revenue Code of 1986, as amended, and except
where the context otherwise requires, the regulations promulgated thereunder.

         "Contracts" has the meaning set forth in SECTION 4.2(viii).

         "Disabled Employee" means each employee who would have been a Domestic
Allegiance Employee had he or she not been on a long-term disability leave of
absence on the Spin-Off Date.


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         "Domestic Allegiance Employee" has the meaning set forth in SECTION
9.1.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "Euromedical" has the meaning set forth in SECTION 3.3.

         "Eurovac" has the meaning set forth in SECTION 3.6.

         "Exchange Act" has the meaning set forth in SECTION 7.2.

         "Excluded Baxter Liabilities" has the meaning set forth in SECTION
5.5.

         "Excluded BHC Assets" has the meaning set forth in SECTION 4.3.

         "Excluded BHC Liabilities" has the meaning set forth in SECTION 4.5.

         "Foreign Closing Date" means [August 31, 1996].

         "Foreign Exchange Rate" means, with respect to any currency other than
United States dollars, as of any date of determination, the average of the
opening bid and asked rates on such date at which such currency may be exchanged
for United States dollars as quoted by Bank of America, N.A.

         "German Business" has the meaning set forth in SECTION 3.5.

         "Inactive Allegiance Employee" means any employee of Baxter or one of
its Subsidiaries who becomes an employee of Allegiance or one of its
Subsidiaries on the Spin-Off Date and who immediately prior to the Spin-Off Date
is on an approved medical leave of absence or short-term disability leave or is
absent from active employment due to occupational illness or injury covered by
workers' compensation, but excluding any employee who is classified by Baxter or
any of its Subsidiaries as totally and permanently disabled on the Spin-Off Date
who is not on workers' compensation.

         "Indemnified Party" means any party who is entitled to receive payment
from an Indemnifying Party pursuant to ARTICLE XIII hereof.

         "Indemnifying Party" means any party who is required to pay any other
person pursuant to ARTICLE XIII hereof.


                                        - 6 -

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         "Indemnity Payment" means the amount an Indemnifying Party is required
to pay an Indemnified Party pursuant to ARTICLE XIII hereof.

         "Information Statement" has the meaning set forth in SECTION 7.2.

         "Insured Claims" means those liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Policies,
whether or not subject to deductibles, co-insurance, uncollectability, premium
adjustments (including reserves), retrospectively-rated premium adjustments or
retentions, but only to the extent that such liabilities are within applicable
Policy limits, including aggregates and deductibles.

         "Intercompany Receivables" means any intercompany receivables or
payables (other than Loans) arising in the ordinary course of business.

         "International Allegiance Employee" has the meaning set forth in
SECTION 9.1.

         "IRS" means the Internal Revenue Service.

         "Loan" means any intercompany indebtedness for borrowed money.

         "Malaysian Glove Branch" has the meaning set forth in SECTION 3.2.

         "Manufacturing Contracts" means the agreements set forth in EXHIBIT D
under the caption "Contract Manufacturing Agreements."

         "New Sub" has the meaning set forth in SECTION 3.8.

         "NYSE" means the New York Stock Exchange, Inc.

         "Operating Agreements" means the agreements listed on EXHIBIT D hereto
regarding the ongoing business and service relationships between Baxter and
Allegiance and their respective Affiliates following the Spin-Off.

         "Party" means Baxter or Allegiance.

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


                                        - 7 -

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         "Policies" has the meaning set forth in SECTION 7.5.

         "Privilege" has the meaning set forth in SECTION 10.5.

         "Privileged Information" has the meaning set forth in SECTION 10.5.

         "Real Property Leases" has the meaning set forth in SECTION 4.2(v).

         "Receivables" has the meaning set forth in SECTION 4.2(ii).

         "Record Date" means the date determined by the Board of Directors of
Baxter as the record date for the Spin-Off.

         "Registration Statement" has the meaning set forth in SECTION 7.2.

         "Retained Business" means those portions of the business of Baxter and
its current Subsidiaries which are not part of the Allegiance Business.

         "SEC" means the United States Securities and Exchange Commission.

         "Shared Agreements" has the meaning set forth in
SECTION 7.8.

         "Spin-Off" means the distribution of Allegiance Common Stock as a
dividend to holders of Baxter Common Stock on the basis provided for in ARTICLE
II hereof, which shall be effective as of the Spin-Off Date.

         "Spin-Off Date" means the date determined by the Board of Directors of
Baxter as the date on which the Allegiance Shares are payable to holders of
Baxter Common Stock as of the Record Date.

         "Subsidiary" means, when used with reference to any entity, any
corporation a majority of the outstanding voting securities of which are owned
directly or indirectly by such entity.

         "Tax Sharing Agreement" means the Tax Sharing Agreement attached as
EXHIBIT E hereto.

         "Taxes" means any federal, state, local or foreign net income, gross
income, gross receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, payroll, withholding, alternative
or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental
tax,


                                        - 8 -

<PAGE>

or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind.

         "Transferred Actions" has the meaning set forth in SECTION 7.10(b).

         "Transferred Assets" means any of the assets transferred to
Allegiance, AHC or AHII as contemplated by ARTICLES III, IV and V hereof.

         "Transferred BHC Assets" has the meaning set forth in SECTION 4.2.

         Section 1.2  RULES OF CONSTRUCTION.  (a)  In this Agreement, unless a
clear contrary intention appears:

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

         (ii)  reference to any Person includes such Person's successors and
    assigns but, if applicable, only if such successors and assigns are
    permitted by this Agreement;

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

         (iv)  reference to any Section or Exhibit or Schedule means such
    Section of this Agreement or such Exhibit or Schedule to this Agreement, as
    the case may be, and references in any Section or definition to any clause
    means such clause of such Section or definition;

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

         (vi)  "including" (and with correlative meaning "include") means
    including without limiting the generality of any description preceding such
    term;

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

         (viii)  accounting terms used herein shall have the meanings
    historically attributed to them by Baxter and its Subsidiaries prior to the
    Spin-Off;

         (ix)  in the event of any conflict between the provisions of the body
    of this Agreement and the Exhibits or


                                        - 9 -

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    Schedules hereto, the provisions of the body of this Agreement shall
    control; and

         (x)  the headings contained in this Agreement have been inserted for
    convenience of reference only and are not to be used in construing this
    Agreement.

         (b)  This Agreement was negotiated by the Parties with the benefit of
legal representation, and any rule of construction or interpretation otherwise
requiring this Agreement to be construed or interpreted against either Party
shall not apply to any construction or interpretation hereof.


                              ARTICLE II.  THE SPIN-OFF

         On the Spin-Off Date, Baxter shall distribute the Allegiance Shares as
follows:

         Section 2.1  DELIVERY OF ALLEGIANCE SHARES.  Baxter shall deliver to
the Agent one or more stock certificates representing all of the Allegiance
Shares then issued and outstanding, together with one or more stock power(s)
duly endorsed in blank.  In its capacity as Allegiance's transfer agent, the
Agent will cancel and reissue such shares in the manner described in SECTION 2.2
below.

         Section 2.2  SPIN-OFF OF ALLEGIANCE SHARES.  Allegiance shall provide
to the Agent sufficient certificates in such denominations as the Agent may
request in order to effect the Spin-Off.  Baxter shall instruct the Agent (i) to
distribute the Allegiance Shares, pro rata, to all holders of record of Baxter
Common Stock as of the Record Date on the basis of one Allegiance Share for each
_______ shares of Baxter Common Stock outstanding as of the Record Date, and
(ii) to deliver to Allegiance, as a contribution to Allegiance, all of the
remaining Allegiance Shares, if any, then held by the Agent.  Any such returned
Allegiance Shares shall be canceled immediately by Allegiance, and the Board of
Directors of Allegiance shall take appropriate action so that such returned
shares shall not constitute treasury shares.  All of the distributed Allegiance
Shares shall be validly issued, fully paid and nonassessable and shall be free
of any preemptive rights.

         Section 2.3  TREATMENT OF FRACTIONAL SHARES.  No certificates or scrip
representing fractional Allegiance Shares shall be issued in the Spin-Off.  In
lieu of receiving fractional shares, each holder of Baxter Common Stock who
would otherwise be entitled to receive a fractional Allegiance Share pursuant to
the Spin-Off will receive cash for such fractional share.  Baxter and Allegiance
shall instruct the Agent to determine the number of whole Allegiance Shares and
fractional Allegiance Shares


                                        - 10 -

<PAGE>

allocable to each holder of record of Baxter Common Stock as of the Record Date,
to aggregate all such fractional shares into whole shares and sell the whole
shares obtained thereby in the open market at the then prevailing prices on
behalf of holders who would otherwise be entitled to receive fractional share
interests, and the Agent shall distribute to each such holder such holder's
ratable share of the total proceeds of such sale after making appropriate
deductions of any amounts required for Federal tax withholding purposes and
after deducting any taxes attributable to the sale of such fractional share
interests.  Baxter shall bear the costs of commissions incurred in connection
with such sales.

         Section 2.4  BAXTER BOARD ACTION.  The Board of Directors of Baxter
shall, in its discretion, determine the Record Date and the Spin-Off Date and
all appropriate procedures in connection with the Spin-Off.  The Board of
Directors of Baxter shall also have the right to adjust at any time prior to the
Spin-Off Date the Allegiance Distributable Share.  The consummation of the
transactions provided for in this ARTICLE II shall only be effected after the
Spin-Off has been declared by the Board of Directors of Baxter and after all of
the conditions set forth in ARTICLE XI hereof shall have been satisfied.

         Section 2.5  ADDITIONAL APPROVALS.  Baxter shall cooperate with
Allegiance in effecting, and if so requested by Allegiance, Baxter shall, as the
sole stockholder of Allegiance prior to the Spin-Off, ratify any actions which
are reasonably necessary or desirable to be taken by Allegiance to effectuate,
the transactions referenced in or contemplated by this Agreement in a manner
consistent with the terms of this Agreement.


                                    ARTICLE III.      TRANSFERS TO AHII

         Section 3.1  GENERAL.  Prior to or promptly following the execution of
this Agreement, Baxter shall cause to be incorporated, under the General
Corporation Law of Delaware, Allegiance Healthcare International Inc. ("AHII")
as a wholly owned Subsidiary of Baxter World Trade Corporation, a Delaware
corporation ("BWT") and a wholly-owned Subsidiary of Baxter.  AHII shall be
qualified as a foreign corporation under the Business Corporation Act of
Illinois.  Subject to the terms and conditions of this Agreement, Baxter and
Allegiance hereby agree to take or cause to be taken any and all actions
necessary to effect the transactions described in this ARTICLE III, with each
transaction occurring prior to the Spin-Off Date and at the approximate times
and in the order described in SCHEDULE 3.1.

         Section 3.2  MALAYSIAN GLOVE FACTORY.  Baxter and Allegiance hereby
agree to take any and all actions necessary to effect the transfer to AHII of
all of the right, title and


                                        - 11 -

<PAGE>

interest of Panama Healthcare S.A. (Panama), a Panamanian corporation and a
wholly-owned Subsidiary of BWT ("Baxter Panama"), in the Baxter Panama branch in
Malaysia that produces gloves and all of the assets and liabilities related
thereto (the "Malaysian Glove Branch"), as follows:

         (i)  Allegiance Healthcare Sdn. Bhd. ("AHSB") shall be incorporated as
    a Subsidiary of Baxter Panama;

         (ii)  Baxter Panama shall declare a U.S.$100 million dividend payable
    to BWT on or before January 31, 1997;

         (iii)  AHSB shall borrow 10 million ringgits from Euromedical;

         (iv)  Baxter Panama shall transfer to AHSB all of its right, title and
    interest in and to the Malaysian Glove Branch plus-million ringgits in cash
    in return for AHSB stock and the assumption, by AHSB of __ million ringgits
    of intercompany debt due on the Spin-Off Date and owed to Baxter Panama;

         (v)  AHII shall borrow U.S.$1,000 from BHC;

         (vi)  Baxter Panama shall transfer to BWT all of its right, title and
    interest in and to the capital stock of AHSB;

         (vii)  BWT shall transfer to AHII all of its right, title and interest
    in and to the capital stock of AHSB in exchange for _____ shares of AHII
    common stock and U.S.$1,000 in cash; and

         (viii)  Contemporaneously with or immediately following the Spin-Off
    (1) AHII shall repay U.S.$1,000 to BHC, and (2) AHSB shall borrow from
    Allegiance __ million ringgits and use the proceeds of such indebtedness
    towards the repayment of all debt owed to Baxter Panama.

         Section 3.3  EUROMEDICAL.  Baxter and Allegiance hereby agree to take
any and all actions necessary to effect the transfer to AHII of all the right,
title and interest in Euromedical Industries Senderihan Berhad, a Malaysian
corporation ("Euromedical"), held by AHFI/Netherlands B.V., a Dutch corporation
and a wholly-owned Subsidiary of BWT ("AHFI"), as follows:

         (i)  AHFI shall be merged with and into BWT; and

         (ii)  BWT shall transfer to AHII all of BWT's right, title and
    interest in or to 75% of the outstanding common stock of Euromedical.


                                        - 12 -

<PAGE>


         Section 3.4  FRANCE.  Baxter and Allegiance hereby agree to take any
and all actions necessary to effect the transfer to AHII of all of the right,
title and interest of Baxter S.A. (France) ("Baxter France") in the
Chateaubriant manufacturing facility and all of the assets and liabilities
related thereto (the "Chateaubriant Plant") as follows:

         (i)  AHII shall form [Allegiance France S.A.] ("Allegiance France") as
    a French corporation and a wholly-owned Subsidiary of AHII;

         (ii)  BWT shall contribute ____________FF to AHII, which shall be due
    ________;

         (iii)  AHII shall contribute ___________ to Allegiance France as
    equity; and

         (iv)  Allegiance France shall purchase from Baxter France the
    Chateaubriant Plant for a purchase price equal to the book value of the
    Chateaubriant Plant, as determined in accordance with U.S. generally
    accepted accounting principles, to be paid in cash and in United States
    currency.

         Section 3.5  GERMANY.  Baxter and Allegiance hereby agree to take any
and all actions necessary to effect the transfer to AHII of all of the right,
title and interest of Baxter Deutschland GmbH ("Baxter Deutschland") in certain
German assets and liabilities related to the Allegiance Business (the "German
Business") as follows:

         (i)  AHII shall incorporate Allegiance Health Deutschland GmbH
    ("Allegiance Germany") will 58,000 DM as equity; and

         (ii)  Allegiance Germany shall acquire from Baxter Deutschland the
    German Business and 100,000 DM.

         Section 3.6  MALTA.  Baxter and Allegiance hereby agree to take any
and all actions necessary to effect the transfer to AHII of all of the right,
title and interest in Eurovac Ltd., a Malta corporation ("Eurovac") held by
Baxter S.A., a Belgium corporation ("Baxter Belgium"), as follows:

         (i)  Baxter shall loan _____ Maltese lira to Allegiance, which shall
    be due on the Spin-Off Date;

         (ii)  Allegiance shall loan _______ Maltese lira to Eurovac;

         (iii) Eurovac shall pay _______ Maltese lira to [Baxter Malta] to pay
    off a loan; and


                                        - 13 -

<PAGE>


         (iv)  Baxter Belgium shall distribute as a dividend all of the capital
    stock of Eurovac to its two stockholders (BWT and Baxter Pharmacy Services,
    a Delaware corporation and a wholly owned Subsidiary of BWT ("BPS"));

         (v)  BPS shall distribute as a dividend to BWT all of the capital
    stock of Eurovac held by it;

         (vi)  BWT shall transfer to AHII all of its right, title and interest
    in and to the capital stock of Eurovac; and

         (vii)  Allegiance shall repay _____ Maltese lira to Baxter.

         Section 3.7  MEXICO.  Baxter and Allegiance hereby agree to take any
and all actions necessary to effect the transfer to AHII of all of the right,
title and interest in certain Mexican corporations held by BHC and BWT as
follows:

         (i)  BWT shall transfer all of its right, title and interest in the
    capital stock in Productos Urologos de Mexico S.A. de C.V., a Mexico
    corporation and a wholly-owned Subsidiary of BWT ("Mexicali"), to AHII in
    exchange for ______ shares of AHII voting common stock , _____ shares of
    AHII non-voting common stock and U.S.$1,000 in cash;

         (ii)  BHC shall distribute all of its rights, title and interest in
    the capital stock in Cirpro de Delicias S.A. de C.V., a Mexico corporation
    and a wholly owned Subsidiary of BHC ("Cirpro"), Quiroproductos de
    Cuauhtemoc, S.A. de C.V., a Mexico corporation and a wholly owned
    Subsidiary of BHC ("Quiroproductos"), Convertors de Mexico S.A. de C.V., a
    Mexico corporation and a wholly owned Subsidiary of BHC ("Convertors"), and
    Cirmex de Chihuahua S.A. de C.V., a Mexico corporation and a wholly owned
    Subsidiary of BHC (together with Cirpro, Quiroproductos and Convertors, the
    "Mexican BHC Subsidiaries"), to Baxter;

         (iii) Baxter shall transfer all of its right, title and interest in
    the capital stock of the Mexican BHC Subsidiaries to BWT in exchange for
    U.S. $4,000 in cash; and

         (iv)  BWT shall transfer all of its right, title and interest in the
    capital stock of the Mexican BHC Subsidiaries to AHII in exchange for
    ______ shares of AHII voting common stock, _______ shares of AHII non-
    voting common stock and U.S.$4,000 in cash.

         Section 3.8  CANADA.  Baxter and Allegiance hereby agree to take any
and all actions necessary to effect the transfer to AHII of all of the right,
title and interest in the


                                        - 14 -

<PAGE>

Allegiance Business held by Baxter Corporation, a Canada corporation and a
wholly owned Subsidiary of BWT ("Baxter Canada"), as follows:

          (i)  Baxter Canada shall form NewSub ("New Sub") under the laws of
    Canada and shall contribute to it all of the right, title and interest of
    Baxter Canada in the Allegiance Business plus the Can $______ of
    intercompany indebtedness owed by Baxter Canada to BWTSA;

         (ii)  Baxter Canada shall adopt a new [charter] pursuant to which
    Baxter Canada will exchange all of its outstanding capital stock held by
    BWT for new shares of Class A Common Stock and Class B Common Stock, [with
    the Class B Common Stock equaling the value of the capital stock of New
    Sub];

         (iii)  BWT shall transfer to AHII all of BWT's holdings of Class B
    Common Stock in exchange for _____ shares of AHII voting common stock and
    _______ shares of AHII non-voting common stock;

         (iv)  AHII shall form Allegiance Canada under the laws of Canada
    ("Allegiance Canada") and shall transfer to Allegiance Canada all of the
    Class B Common Stock in exchange for ______ shares of Allegiance Canada
    common stock;

         (v)  Baxter Canada shall transfer to Allegiance Canada all of the
    outstanding capital stock of New Sub in exchange for ____ shares of
    Allegiance Canada's non-voting Series A Preferred Stock;

         (vi)  Allegiance Canada shall redeem all of its outstanding non-voting
    Series A Preferred in exchange for its promissory note in the principal
    amount of U.S.$_____ (the "Canadian Note"), and Baxter Canada shall redeem
    all of its outstanding Class B Common Stock from Allegiance Canada in
    exchange for the cancellation of the Canadian Note;

         (vii)  New Sub shall amalgamate with Allegiance Canada; and

         (viii)  Contemporaneously with or immediately following the Spin-Off,
    Allegiance Canada shall borrow Can $_______ from Allegiance and use the
    proceeds of such indebtedness to repay the intercompany indebtedness of New
    Sub to BWTSA assumed by Allegiance Canada pursuant to the amalgamation.

         Section 3.9  RESTRICTIONS ON INTERCOMPANY DEBT.  Neither Baxter nor
any Affiliate of Baxter shall make any Loan other than in the ordinary course of
business, to any Allegiance


                                        - 15 -

<PAGE>

Foreign Entity from the Foreign Closing Date through the Spin-Off Date, except
as specifically contemplated by this Agreement.

         Section 3.10  TRANSFER OF ASSETS.  Subject to the terms and conditions
of this Agreement, Baxter hereby agrees to convey, assign, transfer, contribute
and set over, or cause to be conveyed, assigned, transferred, contributed and
set over, to AHII on or prior to the Spin-Off Date, all of BWT's right, title
and interest in and to all assets, tangible or intangible, including all
goodwill, which are exclusive to the operations of the Allegiance Business.

         Section 3.11  TRANSFER OF LIABILITIES.  Subject to the terms and
conditions of this Agreement, Allegiance shall cause AHII to assume, effective
as of the Spin-Off Date, and pay, comply with and discharge all contractual and
other obligations of BWT arising out of or relating to the Allegiance Business
and/or its past or present facilities, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, whether existing on the date hereof
or arising at any time or from time to time after the date hereof, and whether
based on circumstances, events or actions arising heretofore or hereafter,
whether or not such obligations shall have been disclosed herein, and whether or
not reflected on the books and records or Balance Sheet of Allegiance.


                            ARTICLE IV.  TRANSFERS TO AHC

         Section 4.1  ORGANIZATION OF AHC.  Prior to or promptly following the
execution of this Agreement, Baxter shall cause to be incorporated, under the
General Corporation Law of Delaware, Allegiance Healthcare Corporation ("AHC")
as a wholly owned Subsidiary of BHC.  AHC shall be qualified as a foreign
corporation under the corporation laws of each state where the ownership of its
assets or conduct of its business makes such qualification necessary.

         Section 4.2  TRANSFERRED ASSETS.  Subject to the terms and conditions
of this Agreement, Baxter shall cause to be conveyed, assigned, transferred,
contributed and set over to AHC on or prior to the Spin-Off Date, and Allegiance
shall cause AHC to accept and receive on or prior to the Spin-Off Date all
right, title and interest of BHC in and to the tangible and intangible assets,
properties, rights and interests of the Allegiance Business (all of such assets
being hereinafter referred to as the "Transferred BHC Assets"), including the
following:

         (i)  BALANCE SHEET ASSETS.  All assets reflected or disclosed on the
    unaudited balance sheet of the Allegiance Business as of June 30, 1996
    attached as EXHIBIT F hereto, (the "Balance Sheet"), including all
    machinery, equipment,


                                        - 16 -

<PAGE>

    furniture and other tangible personal property (other than equipment and
    furniture located in properties to be retained by Baxter or its
    Subsidiaries hereunder), whether owned or leased, used primarily in the
    operation of the Allegiance Business, subject to acquisitions, dispositions
    and adjustments in the ordinary course of the Allegiance Business,
    consistent with past practice, after such date;

         (ii)  RECEIVABLES.

              (A) All accounts receivable, notes receivable, lease receivables,
         prepayments (other than prepaid insurance), advances and other
         receivables arising out or produced by the Allegiance Business and
         owing by any persons (the "Receivables");

              (B) all cash payments received after the Spin-Off Date on account
         of the Receivables;

              (C) all manufacturers' warranties or guarantees related to the
         Transferred BHC Assets or related to any of the Assumed BHC
         Liabilities; and

              (D) any and all manufacturers' or third party service replacement
         programs relating to the Transferred BHC Assets;

         (iii)  INVENTORIES.

              (A) All work-in-process, finished goods and spare parts inventory
         of Allegiance Products, other than (x) Allegiance Products transferred
         to BWT or one of its Subsidiaries for distribution outside the United
         States  and (y) Allegiance Products being manufactured by Baxter
         pursuant to the Manufacturing Contracts;

              (B) all raw materials inventory related to Allegiance Products;

              (C) all supplies, packaging and other inventories related to the
         Allegiance Business; and

              (D) all finished goods and spare parts inventory of Baxter
         Products transferred to the Allegiance Business for distribution
         within the United States as shown on the accounting records of Baxter
         on the Spin-Off Date; and

              (E)  Baxter manufactured products in Allegiance's inventory
         system which will be purchased at Baxter's distributor list price
         until such time when Baxter will convert to a consignment supplier;


                                        - 17 -

<PAGE>


         (iv)  OWNED REAL PROPERTY.  Those certain parcels of land set forth on
    SCHEDULE 4.2(iv) hereto, together with any and all buildings, plants and
    other structures and improvements thereon, any and all rights and
    privileges pertaining thereto or to any of such buildings, plants or other
    structures or improvements, including, without limitation, ownership
    interests, easements, permits, licenses, rights of way, leases, purchase
    and option agreements with respect to real property, and, to the extent
    constituting real property, any and all fixtures, machinery, equipment and
    other property attached thereto or located thereon and all other rights and
    interests of any nature in and to any other real estate of the Allegiance
    Business;

         (v)  REAL PROPERTY LEASES.  Those certain real estate leases set forth
    on SCHEDULE 4.2(v) hereto (the "Real Estate Leases") and any and all
    improvements, fixtures, machinery, equipment and other property located on
    the premises demised under such Real Estate Leases;

         (vi)  VEHICLES.  All vehicles used primarily in connection with the
    Allegiance Business, including those set forth on SCHEDULE 4.2(vi) hereto,
    whether owned or leased;

         (vii)  INTELLECTUAL PROPERTY.  All nonpatented inventions,
    discoveries, processes, formulations, trade secrets, know-how and technical
    data to the extent such intellectual property is used primarily in
    connection with the Allegiance Business including those set forth on
    SCHEDULE 4.2(vii) hereto, and all rights which are associated with such
    intellectual property, including, without limitation:  (1) the right to
    sue, recover and retain such recoveries for infringement of the foregoing
    prior to the Spin-Off Date; (2) the right to continue in the name of Baxter
    and its Subsidiaries any pending actions relating to the foregoing, and to
    recover and retain any damages therefrom, provided, however, that to the
    extent that such recoveries relate to infringements of both Baxter Products
    and Allegiance Products, such recoveries shall be apportioned between
    Baxter and Allegiance on a pro-rata basis based on the relative damages
    suffered by each, after reimbursement of each Parties' costs and expenses
    incurred in obtaining such recoveries; (3) the assignment of inventions and
    other intellectual properties made or conceived by employees, consultants
    or contractors of Baxter and its Subsidiaries as to which BHC and its
    Subsidiaries have rights under any agreement or otherwise relating to the
    foregoing; (4) the assignment of inventions and other intellectual
    properties made or conceived by third parties as to which BHC and its
    Subsidiaries have rights pursuant to executory agreements with said third
    parties relating to the foregoing; and (5) all permits, grants, contracts,
    agree-


                                        - 18 -

<PAGE>

    ments and licenses running to or from BHC and its Subsidiaries relating to
    the foregoing.  As of the Spin-Off Date, and except as permitted pursuant
    to the terms and conditions of SECTION 8.1 herein, Baxter and its
    Subsidiaries shall cease all use of the foregoing, and Baxter agrees to
    terminate any license granted to its Subsidiaries with respect to the
    foregoing.

         (viii)  CONTRACTS.  All of the following contracts, agreements,
    arrangements, leases (other than Real Estate Leases), manufacturers'
    warranties, memoranda, understandings and offers open for acceptance of any
    nature, whether written or oral (the "Contracts") (such Contracts being
    referred to as the "AHC Contracts"):

              (A) all Contracts related to acquisitions or divestitures of
         assets or stock exclusive to the Allegiance Business, including
         Contracts related to the transactions set forth on SCHEDULE
         4.2(viii)(A) hereto, except to the extent any such Contracts
         relate to the Retained Business and except to the extent
         indicated on SCHEDULE 4.2(viii)(A);

              (B) all Contracts with customers exclusive to the Allegiance
         Business and all Contracts with customers in the categories set
         forth on SCHEDULE 4.2(viii)(B) hereto;

              (C) all customer leases exclusive to the Allegiance
         Business, including those set forth on SCHEDULES 4.2(viii)(C) and
         7.13 hereto;

              (D) all government Contracts exclusive to the Allegiance
         Business, including those set forth on SCHEDULE 4.2(viii)(D)
         hereto;

              (E) all supplier Contracts exclusive to the Allegiance
         Business relating either to raw materials or distributed
         products, including those in the categories set forth on SCHEDULE
         4.2(viii)(E) hereto;

              (F) all joint development and confidentiality Contracts
         exclusive to the Allegiance Business, including those set forth
         on SCHEDULE 4.2(viii)(F) hereto;

              (G) all consulting Contracts exclusive to the Allegiance
         Business, including those set forth on SCHEDULE 4.2(viii)(G)
         hereto;


                                        - 19 -

<PAGE>


              (H) all dealer management Contracts and alternate
         distribution Contracts set forth on SCHEDULE 4.2(viii)(H);

              (I) all manufacturing Contracts exclusive to the Allegiance
         Business; and

              (J) all other Contracts exclusive to the Allegiance
         Business.

         (ix)  PERMITS AND LICENSES.  All permits, approvals, licenses,
    franchises, authorizations or other rights granted by any federal, state,
    local or foreign governmental authority held or applied for by Baxter and
    its Subsidiaries and which are exclusively used in the Allegiance Business
    or which relate exclusively to the Transferred BHC Assets or any of the
    Transferred Subsidiaries, and all other consents, grants, and other rights
    that are used exclusively, for the lawful ownership of the Transferred BHC
    Assets or the operation of the Allegiance Business and that are legally
    transferable to AHC;

         (x)  CLAIMS AND INDEMNITIES.  All rights, claims, demands, causes of
    action, judgments, decrees and rights to indemnity or contribution, whether
    contractual or otherwise, in favor of BHC arising out of the Allegiance
    Business, including those set forth on SCHEDULE 4.2(x) hereto;

         (xi)  SUBSIDIARIES, JOINT VENTURES AND MINORITY INTERESTS.  All shares
    of capital stock or equity or debt or other interests owned by Baxter and
    its Subsidiaries in the Subsidiaries, joint ventures and minority
    investments set forth on SCHEDULE 4.2(xi) hereto;

         (xii)  BOOKS AND RECORDS.  All books and records (including all
    records pertaining to customers, suppliers and personnel) wherever located,
    which relate primarily to the operation of the Allegiance Business;


         (xiii)  SUPPLIES.  All office supplies, production supplies, spare
    parts, purchase orders, forms, labels, shipping material, art work,
    catalogues, sales brochures, operating manuals and advertising and
    promotional material and all other printed or written material which relate
    primarily to the operation of the Allegiance Business;

         (xiv)  SOFTWARE.  All (A) software installed on the mainframe computer
    located in Building __ at McGaw Park, Illinois, except for the software set
    forth on SCHEDULE 4.2(xiv) hereto, (B) software based on AS400 and other
    mid-range hardware included in the Transferred BHC Assets, (C) PC-based
    software located on hardware included in the


                                        - 20 -

<PAGE>

    Transferred BHC Assets, and (D) any Contracts related to the aforementioned
    software; and

         (xv)  OTHER ASSETS.  All other assets, tangible or intangible,
    including all goodwill, which are exclusive to the operations of the
    Allegiance Business.

         Section 4.3  EXCLUDED BHC ASSETS.  Notwithstanding anything to the
contrary herein, the following assets (the "Excluded BHC Assets") are not, and
shall not be deemed to be, Transferred BHC Assets;

         (i)  Cash and cash equivalents, any cash on hand or in bank accounts,
    certificates of deposit, commercial paper and similar securities except for
    (A) cash and cash equivalents of the Transferred Subsidiaries [as of the
    Spin-Off Date], (B) deposits securing bonds, letters of credit, leases and
    all other obligations related to the Allegiance Business, and (C) petty
    cash and impressed funds related to the Allegiance Business;

         (ii)  Except as otherwise provided in the Tax Sharing Agreement, any
    right, title or interest of Baxter and its Subsidiaries in any U.S.
    federal, state or local tax refund, credit or benefit (including any income
    with respect thereto) relating to the U.S. operations of the Allegiance
    Business prior to the Spin-Off Date;

         (iii)  Any amounts accrued on the books and records of Baxter and its
    Subsidiaries or the Allegiance Business with respect to any Excluded
    Liabilities;

         (iv)  Assets relating to the provision of pensions and benefits to
    present or former employees of the Allegiance Business, but excluding
    assets transferred from the Baxter Savings Plan to the Allegiance
    Retirement Plan as described in ARTICLE IX;

         (v)  Any corporate allocations of non-Allegiance Business-related
    assets heretofore made by Baxter or its Subsidiaries to the Allegiance
    Business for internal management responsibility reporting purposes;

         (vi)  Any intellectual property rights in and to the name "Baxter" and
    the related emblem design, and any variants thereof, and the trademarks and
    trade names used by Baxter or its Subsidiaries in relation to the Retained
    Business except as provided in ARTICLE VIII; and

         (vii) The preferred stock of Dade International Inc. which is
    restricted by agreement from transfer, exchange,


                                        - 21 -

<PAGE>

    assignment, pledge or other disposal prior to December 20, 1996.

         Section 4.4  ASSUMED LIABILITIES.  Except as expressly limited in this
ARTICLE IV, Allegiance shall cause AHC to assume, effective as of the Spin-Off
Date, and pay, comply with and discharge all contractual and other obligations
and liabilities of BHC arising out of or relating to the Allegiance Business
and/or any of the past or present facilities of Baxter or any of its
Subsidiaries used primarily in connection with the Allegiance Business, whether
accrued, unrecorded, absolute, contingent or otherwise, and whether due or to
become due, including:

         (i)  All of the liabilities of BHC (excluding, except as provided in
    SECTION 4.4(ii), Loans owed to Baxter or any of its Subsidiaries) which are
    reflected, disclosed or reserved for on the Balance Sheet, as such
    liabilities may be increased or reduced in the operation of the Allegiance
    Business from the date of the Balance Sheet through the Spin-Off Date in
    the ordinary course of business consistent with past practice;

         (ii)  The Loans of BHC held by BWT and the Loans of BHC held by Baxter
    set forth on SCHEDULE 4.4(ii) hereto;

         (iii)  All liabilities and obligations of BHC in connection with the
    industrial revenue bond financings set forth on SCHEDULE 4.4(iii);

         (iv)  All liabilities and obligations of BHC under or related to the
    Real Estate Leases and the AHC Contracts, such assumption to occur as (i)
    assignee if such Real Estate Leases and AHC Contracts are assignable and
    are assigned or otherwise transferred to AHC, or (ii) subcontractor,
    sublessee or sublicensee as provided in SECTION 6.3 below if assignment of
    such Real Estate Leases and AHC Contracts and/or the proceeds thereof is
    prohibited by law, by the terms thereof or not permitted by the other
    contracting party;

         (v)  All warranty, performance and similar obligations entered into or
    made by BHC prior to the Spin-Off Date with respect to the products or
    services of the Allegiance Business;

         (vi)  All liabilities and obligations of BHC related to any and all
    Actions asserting a violation of any law, rule or regulation related to or
    arising out of the operations of the Allegiance Business, whether before or
    after the Spin-Off Date and the liabilities relating to any Assumed
    Actions;


                                        - 22 -

<PAGE>


         (vii)  All liabilities and obligations of BHC arising under (A) CERCLA
    and any other federal, state or local laws regarding the management,
    control and cleanup of hazardous materials (including off-site waste
    disposal liabilities) or (B) the Occupational Safety and Health Act or
    similar state laws or regulations, in either case relating to or arising
    out of the operations of the Allegiance Business, whether before or after
    the Spin-Off Date, including those set forth on SCHEDULE 4.4(vii) hereto;

         (viii)  All liabilities and obligations of BHC under any mortgage
    interest subsidy program on behalf of any Allegiance Employee;

         (ix)  All liabilities associated with the transfer of assets from the
    Baxter Savings Plan to the Allegiance Savings Plan; and

         (x)  All other liabilities and obligations of BHC relating to the
    Allegiance Business, whether existing on the date hereof or arising at any
    time or from time to time after the date hereof, and whether based on
    circumstances, events or actions arising heretofore or hereafter, whether
    or not such obligations shall have been disclosed herein, and whether or
    not reflected on the books and records or Balance Sheet.

         The liabilities and obligations described in this SECTION 4.4 are
referred to in this Agreement collectively as the "Assumed BHC Liabilities."

         Section 4.5  EXCLUDED LIABILITIES.  Notwithstanding anything to the
contrary in this Agreement, neither Allegiance nor any of its Subsidiaries shall
assume any of the liabilities set forth on SCHEDULE 4.5 hereto (the "Excluded
BHC Liabilities").

         Section 4.6  RELEASE OF BAXTER.  It is expressly understood and agreed
by the parties hereto that upon the assumption by AHC of the Assumed BHC
Liabilities, [Baxter,] its Subsidiaries, and its officers, directors and
employees shall be released by Allegiance and its Subsidiaries from any and all
liability, whether joint, several or joint and several, for the discharge,
performance or observance of any of the Assumed BHC  Liabilities.


                  ARTICLE V.  ORGANIZATION OF ALLEGIANCE CORPORATION

         Section 5.1  ORGANIZATION OF ALLEGIANCE.  Baxter and Allegiance shall
take any and all action necessary so that, at the Spin-Off Date, the Certificate
of Incorporation and By-laws


                                        - 23 -

<PAGE>

of Allegiance shall be in the forms attached hereto as EXHIBITS G and H,
respectively.  Prior to the Spin-Off Date, the Board of Directors of Allegiance
shall adopt a preferred share purchase rights plan in substantially the form
attached hereto as EXHIBIT I.  At the Spin-Off Date, the Allegiance Board of
Directors shall consist of, and Baxter and Allegiance shall take all actions
which may be required to elect or otherwise appoint as directors of Allegiance
on or prior to the Spin-Off Date, the persons named on EXHIBIT J.  Following the
transfers of Subsidiaries contemplated by SECTION 5.2, Allegiance shall take
appropriate action to be qualified as a foreign corporation under the Business
Corporation Act of Illinois.

         Section 5.2  TRANSFER OF CERTAIN SUBSIDIARIES.  Following the
consummation of the transactions contemplated by ARTICLES III and IV, Baxter and
Allegiance hereby agree to take, or cause to be taken, any and all actions
necessary to effect the following transactions prior to the Spin-Off Date:

         (i)  BWT shall distribute as a dividend to Baxter all of BWT's right,
    title and interest in and to the common stock of AHII;

         (ii)  Baxter shall transfer to Allegiance all of Baxter's right, title
    and interest in and to the common stock of AHII; and

        (iii)  BHC shall distribute as a dividend to Baxter all of BHC's right,
    title and interest in and to the common stock of AHC; and

         (iv)  Baxter shall contribute to Allegiance all of Baxter's right,
    title and interest in and to the common stock of AHC.

         Section 5.3  TRANSFER OF ASSETS.  Subject to the terms and conditions
of this Agreement, Baxter hereby agrees to convey, assign, transfer, contribute
and set over, or cause to be conveyed, assigned, transferred, contributed and
set over, to Allegiance on or prior to the Spin-Off Date, all of Baxter's right,
title and interest in and to the following assets:

         (i)  INTELLECTUAL PROPERTY.  (A) The foreign and domestic intellectual
    property rights relating exclusively to the Allegiance Business including
    the intellectual property rights set forth below:

                   (1)  the patents and patent applications set forth on
              SCHEDULE 5.3(i)(A)(1) hereto, including any continuations,
              continuations-in-part, divisions, renewals, reissues and
              extensions thereof;


                                       - 24 -

<PAGE>


                   (2)  the copyrights and copyright applications and
              registrations set forth on SCHEDULE 5.3(i)(A)(2) hereto; and

                   (3)  the trade names, trademarks, service marks and service
              names, whether or not registered, including those set forth on
              SCHEDULE 5.3(i)(A)(3) hereto and the goodwill associated with
              each of the foregoing (all of the rights described in this
              SECTION 5.3(i)(A) are referred to collectively as the "Allegiance
              Assigned Intellectual Property").

              (B)  The Allegiance Assigned Intellectual Property shall include,
         without limitation:  (1) the right to sue, recover and retain such
         recoveries for infringement of the Allegiance Assigned Intellectual
         Property prior to the Spin-Off Date; (2) the right to continue in the
         name of Baxter any pending actions relating to the Allegiance Assigned
         Intellectual Property, and to recover and retain any damages
         therefrom; (3) the assignment of inventions and other intellectual
         properties made or conceived by employees, consultants or contractors
         of Baxter as to which Baxter has rights under any agreement or
         otherwise relating to the Allegiance Assigned Intellectual Property;
         (4) the assignment of inventions and other intellectual properties
         made or conceived by third parties as to which Baxter has rights
         pursuant to executory agreements with said third parties relating to
         the Allegiance Assigned Intellectual Property; and (5) all permits,
         grants, contracts, agreements and licenses running to or from Baxter
         relating to the Allegiance Assigned Intellectual Property.  As of the
         Spin-Off Date, and except as permitted pursuant to the terms and
         conditions of SECTION 8.1 herein, Baxter and its Subsidiaries shall
         cease all use of the Allegiance Assigned Intellectual Property, and
         Baxter agrees to terminate any licenses granted to its Subsidiaries
         with respect to the Allegiance Assigned Intellectual Property.

              (C)  The parties recognize that as of the Spin-Off Date all of
         the Allegiance Assigned Intellectual Property may not have been
         identified on the appropriate schedules referred to hereinabove.  The
         parties agree that they shall take such other steps as may be
         necessary or appropriate in order to complete, ensure and perfect the
         conveyance, assignment, transfer, recordation, registration and/or
         delivery of all right, title and interest in and to any of the
         Allegiance Assigned Intellectual Property.


                                        - 25 -

<PAGE>


         (ii)  BALANCE SHEET ASSETS.  All assets reflected or disclosed on the
    Balance Sheet, subject to acquisitions, dispositions and adjustments in the
    ordinary course of the Allegiance Business, consistent with past practice,
    after June 30, 1996; and

         (iii)  OTHER ASSETS.  All other assets, tangible or intangible,
    including all goodwill, which are exclusive to the operations of the
    Allegiance Business.

         Section 5.4  TRANSFER OF LIABILITIES.  Subject to the terms and
conditions of this Agreement, Allegiance shall assume, effective as of the Spin-
Off Date, and pay, comply with and discharge all contractual and other
obligations and liabilities of Baxter arising out of or relating to the
Allegiance Business, and/or any of the past or present facilities of Baxter or
any of its Subsidiaries relating to the Allegiance Business, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, including:

         (i)  all liabilities and obligations under each of the guarantees and
    letters of credit set forth on SCHEDULE 5.4(i) hereto; and

         (ii)  all other liabilities and obligations of the Allegiance
    Business, whether existing on the date hereof or arising at any time or
    from time to time after the date hereof, and whether based on
    circumstances, events or actions arising heretofore or hereafter, whether
    or not such obligations shall have been disclosed herein, and whether or
    not reflected on the books and records of the Balance Sheet of Allegiance.

         Section 5.5  EXCLUDED LIABILITIES.  Notwithstanding anything to the
contrary in this Agreement, Allegiance shall not assume any of the Baxter
liabilities set forth in SCHEDULE 5.5 hereto (the "Excluded Baxter
Liabilities").

         Section 5.6  INTRACOMPANY AGREEMENTS.  Effective as of the Spin-Off
Date, Allegiance shall enter into the agreements with its Subsidiaries described
on SCHEDULE 5.6 hereto, providing for cost sharing, management services and
licensing of intellectual property between Allegiance and its Subsidiaries.


                          ARTICLE VI.  DELIVERIES AT CLOSING

         Section 6.1  INSTRUMENTS OF CONVEYANCE.  In order to effectuate the
transactions contemplated by ARTICLES III, IV and V, the Parties shall cause to
be executed and delivered prior to or as of the Spin-Off Date such deeds, bills
of sale, instruments of assumption, trademark and patent assignments, stock
powers,


                                        - 26 -

<PAGE>

certificates of title and other documents of assignment, transfer, assumption
and conveyance (collectively, the "Conveyancing Instruments") as the Parties
shall reasonably deem necessary or appropriate to effect such transactions.

         Section 6.2  NO REPRESENTATIONS OR WARRANTIES.  Subject to the
Operating Agreements, neither Baxter nor any of its Subsidiaries is, in this
Agreement or in any other agreement or document contemplated by this Agreement,
representing or warranting (a) as to the value or freedom from encumbrance of,
or any other matter concerning, any Transferred BHC Assets or Transferred
Subsidiaries or (b) as to the legal sufficiency to convey title to any
Transferred BHC Assets or Transferred Subsidiaries on the execution, delivery
and filing of the Conveyancing Instruments.  SUBJECT TO THE OPERATING
AGREEMENTS, ALL SUCH ASSETS AND SUBSIDIARIES ARE BEING TRANSFERRED "AS IS, WHERE
IS" WITHOUT ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, MARKETABILITY, TITLE, VALUE, FREEDOM FROM ENCUMBRANCE OR ANY
OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, and Allegiance and its
Subsidiaries shall bear the economic and legal risk that any conveyances of such
assets and Subsidiaries shall prove to be insufficient or that Allegiance's and
its Subsidiaries' title to any such assets and Subsidiaries shall be other than
good and marketable and free of encumbrances.  Neither Baxter nor any of its
Subsidiaries is, in this Agreement or in any other agreement or document
contemplated by this Agreement, representing or warranting that the obtaining of
the consents or approvals, the execution and delivery of any amendatory
agreements and the making of the filings and applications contemplated by this
Agreement shall satisfy the provisions of all applicable agreements or the
requirements of all applicable laws or judgments and, subject to SECTION 6.3,
Allegiance and its Subsidiaries shall bear the economic and legal risk that any
necessary consents or approvals are not obtained or that any requirements of law
or judgments are not complied with.  Notwithstanding the foregoing, the Parties
shall use reasonable efforts to obtain all consents and approvals, to enter into
all amendatory agreements and to make all filings and applications which may be
required for the consummation of the transactions contemplated by this
Agreement, including, without limitation, all applicable regulatory filings or
consents under federal or state environmental laws.

         Section 6.3  NON-ASSIGNABLE CONTRACTS.  In the event and to the extent
that Baxter or its Subsidiaries are unable to obtain any consent, approval or
amendment to any Contract, lease, license, or other rights relating to the
Allegiance Business, (i) Baxter and its Subsidiaries shall continue to be bound
thereby, and (ii) unless not permitted by the terms thereof or by law,
Allegiance or its Subsidiaries shall pay, perform and discharge fully all the
obligations of Baxter or its Subsidiaries thereunder from and after the Spin-Off
Date and indemnify Baxter


                                        - 27 -

<PAGE>

and its Subsidiaries for all Indemnifiable Losses arising out of such
performance by Allegiance or its Subsidiaries.  Baxter and its Subsidiaries
shall, without further consideration therefor, pay and remit to Allegiance or
its Subsidiaries promptly all monies, rights and other considerations received
in respect of such performance.  Baxter and its Subsidiaries shall exercise or
exploit its rights and options under all such Contracts, leases, licenses and
other rights and commitments referred to in this SECTION 6.3 only as reasonably
directed by Allegiance and at Allegiance's expense.  If and when any such
consent shall be obtained or such Contract, lease, license or other right shall
otherwise become assignable or able to be novated, Baxter or its Subsidiaries
shall promptly assign and novate (to the extent permissible) all its rights and
obligations thereunder to Allegiance or its Subsidiaries without payment of
further consideration, and Allegiance or its Subsidiaries shall, without the
payment of any further consideration therefor, assume such rights and
obligations.  To the extent that the assignment of any Contract (or their
proceeds) pursuant to this SECTION 6.3 is prohibited by law, the assignment
provisions of this SECTION 6.3 shall operate to create a subcontract with
Allegiance or its Subsidiaries to perform each relevant unassignable Baxter
Contract at a subcontract price equal to the monies, rights and other
considerations received by Baxter or its Subsidiaries with respect to the
performance by Allegiance or its Subsidiaries under such subcontract.

         Section 6.4  FURTHER ASSURANCES.  (a)  In addition to the actions
specifically provided for elsewhere in this Agreement, each of the Parties shall
use reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things, reasonably necessary, proper or advisable under
applicable laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement.  Without limiting the foregoing,
each Party shall cooperate with the other Party, and execute and deliver, or use
reasonable efforts to cause to be executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and to make all
filings with, and to obtain all consents, approvals or authorizations of, any
governmental or regulatory authority or any other Person under any permit,
license, Contract or other instrument, and to take all such other actions as
such Party may reasonably be requested to take by the other Party from time to
time, consistent with the terms of this Agreement, in order to confirm
Allegiance's title to all of the Allegiance Business, to put Allegiance or its
Subsidiaries in actual possession and operating control thereof and to permit
Allegiance or its Subsidiaries to exercise all rights with respect thereto and
to effectuate the provisions and purposes of this Agreement, the Tax Sharing
Agreement, the Operating Agreements and the other transactions contemplated
hereby or thereby.


                                        - 28 -

<PAGE>


         (b)  If as a result of mistake or otherwise, any asset reasonably
necessary to the conduct of the Allegiance Business has been omitted from the
Transferred BHC Assets or is not held by a Transferred Subsidiary, or any asset
reasonably necessary to the conduct of the Retained Business has been included
in the Transferred BHC Assets or is held by a Transferred Subsidiary,  Baxter
and Allegiance shall negotiate in good faith after the Spin-Off Date to
determine whether such asset should be transferred to Allegiance or one of its
Subsidiaries or to Baxter or one of its Subsidiaries, as the case may be, and/or
the terms and conditions upon which such asset shall be made available to
Allegiance or one of its Subsidiaries or to Baxter or one of its Subsidiaries,
as the case may be.


                           ARTICLE VII.  CERTAIN COVENANTS

         Section 7.1  CONDUCT OF ALLEGIANCE BUSINESS PENDING THE SPIN-OFF DATE.
Each of the Parties agrees that, from the date hereof until the Spin-Off Date,
except as otherwise expressly contemplated by this Agreement, it will use its
reasonable efforts to carry on the Allegiance Business diligently in the
ordinary course and substantially in the same manner as heretofore conducted and
to preserve intact the business organization and goodwill of the Allegiance
Business (including using its reasonable efforts to cause its respective
Subsidiaries to take such actions).

         Section 7.2  REGISTRATION AND LISTING.  Prior to the Spin-Off Date:

         (i)  Baxter and Allegiance shall prepare a registration statement on
    Form 10 (the "Registration Statement") to effect the registration of the
    Allegiance Common Stock under the Securities Exchange Act of 1934, as
    amended, and the rules and regulations promulgated thereunder (the
    "Exchange Act"), which Registration Statement shall include an information
    statement to be sent by Baxter to its stockholders in connection with the
    Spin-Off (the "Information Statement").  Allegiance shall file the
    Registration Statement with the SEC and shall use reasonable efforts to
    cause the Registration Statement to become effective under the Exchange Act
    as soon as reasonably practicable.  After the Registration Statement
    becomes effective, Baxter shall mail the Information Statement to the
    holders of Baxter Common Stock as of the Record Date.

         (ii)  The Parties shall use their reasonable efforts to take all such
    action as may be necessary or appropriate under state and foreign
    securities and "Blue Sky" laws in connection with the transactions
    contemplated by this Agreement.


                                        - 29 -

<PAGE>


         (iii)  Baxter and Allegiance shall prepare, and Allegiance shall file
    and seek to make effective, an application for the listing of the
    Allegiance Common Stock on the NYSE, subject to official notice of
    issuance.

         (iv)  The Parties hereto shall cooperate in preparing, filing with the
    SEC and causing to become effective any registration statements or
    amendments thereto which are necessary or appropriate in order to effect
    the transactions contemplated hereby or to reflect the establishment of, or
    amendments to, any employee benefit plans contemplated hereby.

         Section 7.3  NEW CREDIT FACILITIES.  On or prior to the Spin-Off Date,
Allegiance shall enter into a new credit facility or facilities with commercial
lenders (the "Allegiance Credit Facility") and use the proceeds of the
indebtedness incurred under the Allegiance Credit Facility to purchase ten year
debentures in the aggregate principal amount of $1,027,000,000 from AHC.  On the
Spin-Off Date, (i) Allegiance shall cause AHC to use the proceeds from the sale
of its ten year debentures to Allegiance to pay its [$400 million] intercompany
debt to BWT and its [$627 million] [less assumed industrial revenue bonds
pursuant to SECTION 4.4(iii)] intercompany debt to Baxter, and (ii) Baxter shall
cause BWT to pay its [$125 million] intercompany debt to Baxter and to
distribute as a dividend to Baxter the remaining [$275 million].

         Section 7.4  POST-SPIN-OFF TAX-RELATED RESTRICTIONS.   (a)  In order
to avoid potentially adverse tax consequences relating to the Spin-Off, for a
period of two years after the Spin-Off Date Allegiance shall not:  (i) cease to
engage in an active trade or business within the meaning of the Code, (ii) issue
or redeem any share of stock of Allegiance, except for issuances and redemptions
for the benefit of Allegiance's employees or to effect acquisitions by
Allegiance in the ordinary course of business or in connection with the issuance
of any convertible debt by Allegiance or in accordance with the requirements for
permitted purchases of Allegiance stock as set forth in Section 4.05(l)(b) of
Revenue Procedure 96-30 issued by the IRS, or (iii) liquidate or merge with any
other corporation; unless, with respect to (i), (ii) or (iii) above, either (a)
an opinion is obtained from counsel to Baxter, or (b) a ruling is obtained from
the IRS, in either case to the effect that such act or event will not adversely
affect the federal income tax consequences of the Spin-Off to Baxter, its
stockholders who receive Allegiance Shares or Allegiance.

         (b)  If, as a result of any transaction occurring after the Spin-Off
Date involving either the stock or assets of either Allegiance or any of its
Subsidiaries, or any combination thereof, the Spin-Off fails to qualify as tax
free under the 


                                        - 30 -

<PAGE>

provisions of Section 355 of the Code, Allegiance shall indemnify Baxter for 
all taxes, liabilities and associated expenses, including penalties and 
interest, incurred as a result of such failure of the Spin-Off to qualify
under Section 355 of the Code.  If the Spin-Off fails to qualify as tax free
under the provisions of Section 355 of the Code other than as a result of a 
transaction occurring after the Spin-Off Date involving either the stock or 
assets of Allegiance or any of its Subsidiaries, or any combination thereof, 
then Allegiance shall not be liable for such taxes, liabilities or expenses.

         Section 7.5  INSURANCE POLICIES AND CLAIMS ADMINISTRATION.  (a)
OWNERSHIP OF INSURANCE POLICIES AND PROGRAMS.  Baxter shall continue to own all
property and casualty insurance programs, including, without limitation, primary
and excess general liability, automobile, workers' compensation, property and
crime insurance policies in effect on or before the Spin-Off Date (collectively,
the "Baxter Policies" and individually, a "Baxter Policy").  Baxter shall use
reasonable efforts to maintain the Baxter Policies in full force and effect up
to and including the Spin-Off Date, and, subject to the provisions of this
SECTION 7.5, Baxter and its Subsidiaries shall retain all of their respective
rights, benefits and privileges, if any, under the Baxter Policies.  Allegiance
shall assume any liabilities or reserves recorded which relate to Allegiance or
any of its Subsidiaries as of the Spin-Off Date, including but not limited to
workers' compensation.  Nothing contained herein shall be construed to change
the ownership of the Baxter Policies.

         (b)  PROCUREMENT OF INSURANCE BY ALLEGIANCE.  To the extent not
already provided for by the terms of a Baxter Policy, Baxter shall use
reasonable efforts to cause Allegiance and the appropriate Allegiance
Subsidiaries to be named as additional insureds under Baxter Policies whose
effective policy periods include the Spin-Off Date, in respect of claims arising
or relating to periods prior to the Spin-Off Date; PROVIDED, HOWEVER, that
nothing contained herein shall be construed to require Baxter or any of its
Subsidiaries to pay any additional premium or other charges in respect to, or
waive or otherwise limit any of its rights, benefits or privileges under, any
Baxter Policy in order to effect the naming of Allegiance and its Subsidiaries
as such additional insureds.

         (c)  POST SPIN-OFF ALLEGIANCE POLICIES AND PROGRAMS.  Commencing on
and as of the Spin-Off Date, Allegiance shall be responsible for establishing
and maintaining its own separate property and casualty insurance (including,
without limitation, primary and excess general liability, automobile, workers'
compensation, property, fire, crime, surety and other similar insurance
policies) for activities and claims involving Allegiance or any of its
Subsidiaries or Affiliates.  Allegiance


                                        - 31 -

<PAGE>

will exercise reasonable efforts in securing casualty insurance to avoid
potential gaps in coverage for claiming arising prior to the Spin-Off Date which
would not exist had the Transferred Businesses continued to be covered with the
same retroactive and inception dates existing in the Baxter Policies in effect
on the Spin-Off Date.  Allegiance and each of its Subsidiaries, as appropriate,
shall be responsible for all administrative and financial matters relating to
insurance policies established and maintained by Allegiance and its Subsidiaries
or Affiliates for claims relating to any period on or after the Spin-Off Date
involving Allegiance or any of its Subsidiaries or Affiliates, to the extent
such claims administration does not effect or relate to the Baxter Policies.
Notwithstanding any other agreement or understanding to the contrary, except as
set forth in this SECTION 7.5 with respect to claims administration and
financial administration of the Baxter Policies, neither Baxter nor any of its
Subsidiaries shall have any responsibility for or obligation to Allegiance or
any of its Subsidiaries and Affiliates relating to liability and casualty
insurance matters for any period, whether prior to, on or after the Spin-Off
Date.

         (d)  POST SPIN-OFF CLAIMS ADMINISTRATION.  Baxter shall have sole
responsibility for claims and financial administration for claims which relate
to or affect the Baxter Policies.  Upon notification by Allegiance of a claim
relating to Allegiance or a Subsidiary or Affiliate thereof under one or more of
the Baxter Policies, Baxter shall cooperate with Allegiance in asserting and
pursuing coverage and payment for such claim by the appropriate insurance
carrier.  In asserting and pursuing such coverage and payment, Baxter shall have
sole power and authority to make binding decisions, determinations, commitments
and stipulations on its own behalf and on behalf of Allegiance and its
Subsidiaries and Affiliates, which power and authority Baxter shall use to
maximize the overall economic benefit of the Baxter Policies.  Allegiance, and
its Subsidiaries and Affiliates, assume responsibility for, and shall pay to the
appropriate insurance carriers or otherwise, any premiums, retrospectively-rated
premiums, defense costs, indemnity payments, deductibles, retentions or other
charges, as appropriate (collectively, "Insurance Charges"), whenever arising,
which shall become due and payable under the terms and conditions of any
applicable Baxter Policy in respect of any liabilities, losses, claims, actions
or occurrences, whenever arising or becoming known, involving or relating to any
of the assets, businesses, operations or liabilities of Allegiance or any of its
Subsidiaries or Affiliates, whether the same relate to the period prior to, on
or after the Spin-Off Date.  To the extent that the terms of any applicable
Baxter Policy provide that Baxter, as appropriate, shall have an obligation to
pay or guarantee the payment of any Insurance Charges, Baxter shall be entitled
to demand that Allegiance make such payment directly to the Person or entity
entitled thereto.  In connection with any such demand,


                                        - 32 -

<PAGE>

Baxter shall submit to Allegiance a copy of any invoice received by Baxter
pertaining to such Insurance Charges together with appropriate supporting
documentation, if available.  In the event that Allegiance fails to pay any
Insurance Charges when due and payable, whether at the request of the party
entitled to payment or upon demand by Baxter, Baxter may (but shall not be
required to) pay such insurance charges for and on behalf of Allegiance and,
thereafter, Allegiance shall forthwith reimburse Baxter for such payment.  The
retention by Baxter of the Baxter Policies and the responsibility for claims
administration and financial administration of the Policies are in no way
intended to limit, inhibit or preclude any right to insurance coverage for any
Insured Claims of an insured under the Baxter Policies.

         (e)  PRE SPIN-OFF INSURANCE CLAIMS ADMINISTRATION.  Allegiance and its
Subsidiaries and Affiliates acknowledge that Baxter has previously experienced
losses and received claims which were, or might have been, covered by one or
more Baxter Policies, and prior to the Spin-Off Date will have made decisions
and commitments regarding administration of such claims, and including reaching
agreements and stipulations regarding such claims, (collectively "Pre Spin-Off
Claims Administration").  Allegiance and its Subsidiaries and Affiliates
covenant not to contest or challenge in any manner any action taken by Baxter
prior to the Spin-Off Date in connection with or relating to Pre Spin-Off Claims
Administration, or to interfere with the performance of any agreement,
commitment or stipulation so made by Baxter in connection with such Pre-Spin-Off
Claims Administration.

         (f)  NON-WAIVER OF RIGHTS TO COVERAGE.  An insurance carrier which
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of the provisions of
this SECTION 7.5, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurance carrier or any third party
shall be entitled to a windfall (I.E., a benefit they would not be entitled to
receive had no Spin-Off occurred, or in the absence of the provisions of this
SECTION 7.5) by virtue of the provisions hereof.

         (g)  SCOPE OF EFFECTED POLICIES OF INSURANCE.  The provisions of this
SECTION 7.5 relate solely to matters involving property and casualty insurance
programs including, without limitation, primary and excess general liability,
automobile, workers' compensation, property and crime insurance policies, and
shall not be construed to affect any obligation of or impose any obligation on
the parties hereto with respect to any life, health and accident, dental or
medical insurance policies applicable to any of the officers, directors,
employees or other representatives of the Parties hereto or their Affiliates.


                                        - 33 -

<PAGE>


         Section 7.6  INTERCOMPANY RECEIVABLES AND CASH MANAGEMENT.

         (a) (i)  All Intercompany Receivables between Baxter or any of its
    Subsidiaries as they will exist after the Spin-Off, on the one hand, and
    any of Euromedical, Eurovac or [Malaysia Silicath], on the other hand,
    shall be settled as of 3:00 p.m., Chicago time, on August 26, 1996 in cash,
    with such cash settlement occurring on August 29, 1996.  Commencing from
    the opening of business on August 27, 1996, Intercompany Receivables
    between Baxter or any of its Subsidiaries, on the one hand, and any of
    Euromedical, Eurovac or [Malaysia Silicath] shall be recorded for
    accounting purposes as third party trade account receivables and payables.

         (ii)  All Intercompany Receivables between Baxter or any of its
    Subsidiaries, on the one hand, and the Malaysian Glove Branch, on the other
    hand, shall be settled as of 3:00 p.m., Chicago time, on September 23, 1996
    in cash, with such cash settlement occurring on September 26, 1996.
    Commencing from the opening of business on September 24, 1996, Intercompany
    Receivables between Baxter and its Subsidiaries, on the one hand, and the
    Malaysian Glove Branch, on the other hand, shall be recorded for accounting
    purposes as third party trade account receivables and payables.

         (iii)  All Intercompany Receivables between any domestic Subsidiary of
    Baxter or Allegiance and any entity outside of Baxter's United States
    consolidated tax return group shall be settled as of 3:00 p.m., Chicago
    time, on September 23, 1996 in cash with such cash settlement occurring on
    September 26, 1996.  Commencing from the opening of business on September
    24, 1996, Intercompany Receivables between any domestic Subsidiary of
    Baxter or Allegiance and any entity outside of Baxter's United States
    consolidated tax return group shall be recorded for accounting purposes as
    third party trade account receivables and payables.

         (b)  As provided in SECTION 4.3(i), Baxter shall be entitled to all
cash bank balances (other than cash and cash equivalents of the Transferred
Subsidiaries) existing immediately prior to the Spin-Off Date relating to the
Allegiance Business, or otherwise utilized or maintained in connection with the
Allegiance Business, including, without limitation, cash balances representing
deposited checks or drafts for which only a provisional credit has been allowed
in depository accounts which are to be transferred to Allegiance or any of its
Subsidiaries on or prior to the Spin-Off Date.  Any such cash balances as of the


                                        - 34 -

<PAGE>

Spin-Off Date which have not been transferred to Baxter shall be paid to Baxter.


         (c)  Allegiance or an appropriate Subsidiary thereof shall be
responsible for payment of all checks or drafts issued up to the Spin-Off Date
against disbursement accounts transferred to Allegiance or such Subsidiary,
which checks or drafts have not been charged against such disbursement accounts
on or prior to the Spin-Off Date.

         [(d)  Baxter shall assist Allegiance and each of its Subsidiaries in
establishing a separate cash management system effective as of and immediately
after the Spin-Off Date.  Commencing immediately after the Spin-Off Date, any
advances or other payments by Baxter or any of its Subsidiaries to or on behalf
of Allegiance or any of its Subsidiaries, or otherwise in connection with the
Allegiance Business or the Allegiance Employees, shall be recorded in the
accounts of Allegiance or its Subsidiaries, as appropriate, as a payable to
Baxter or of its Subsidiaries, as the case may be, and shall be paid to Baxter
on or prior to the Spin-Off Date.]

         (e)  Each Party shall, and shall cause its respective Subsidiaries to,
promptly remit to the other any cash or other payment received by such Party or
its Subsidiaries in respect of accounts or notes receivables of the other Party.

         Section 7.7  INTERCOMPANY DEBT TRUE-UP.

         (a)  CALCULATION OF OPERATIONAL CASH FLOW.  As soon as practicable,
but in any event within __ days after the Spin-Off Date, Baxter shall prepare a
statement of operational cash flow for its U.S. healthcare business excluding
the IV Systems Division (but including the respiratory therapy business unit
within the IV Systems Division), for the period January 1, 1996 through the
Spin-Off Date.  The operational cash flow statement shall be prepared from the
books and records of Baxter relating to its U.S. healthcare business in a manner
consistent with the definition of operational cash flow.  The statement shall
also be consistent with Baxter's historical cash flow allocation among its
various business units, except for the elimination of the one-month lag period
in recording the payment of certain liabilities such as payroll, payroll taxes,
sales and use taxes, on the Division's books.  The effect of the elimination of
this lag on operational cash flow (the "lag adjustment") shall be included as a
separate schedule accompanying the statement of operational cash flow.  Subject
to SECTION 7.7(c) the statement of operational cash flow delivered by Baxter to
Allegiance shall be final, binding and conclusive on the Parties for all
purposes of this Agreement and shall provide the basis for determining the
adjustments (if any) specified in SECTION 7.7(d).


                                        - 35 -

<PAGE>


         (b)  DEFINITION OF OPERATIONAL CASH FLOW.  Operational cash flow for
each Baxter operating unit represents net income plus depreciation and
amortization, increased or decreased, as appropriate, by cash restructuring
utilization and the net change in "managed capital" (as defined in Baxter
Finance Policy #1402) during the period, but excluding the effects of any non-
cash restructuring utilization and acquisitions and divestitures on managed
capital.  The operational cash flow shall be computed in the same manner as
reflected in the Consco Management Report, "Cash Flow Trends", except for the
elimination of the one month lag for certain items, as described in SECTION
7.7(a).

         (c)  DISPUTES. Any disputes regarding the computation of operational
cash flow shall be resolved in accordance with ARTICLE XIV of this Agreement.

         (d)  TRUE-UP.  In the event that the final determination of the Cash
Flow Statement indicates that the operational cash flow is less than
$___________ plus the lag adjustment, the amount of the difference shall be paid
by Allegiance to Baxter, as an adjustment to intercompany debt assumed by
Allegiance or its Subsidiaries pursuant to SECTION 4.4(ii), within 10 days of
the final determination of such adjustment.  In the event that the final
determination of the Cash Flow Statement indicates that the operational cash
flow is greater than $ _____________ plus the lag adjustment, the amount of the
difference shall be paid by Baxter to Allegiance, as an adjustment to
intercompany debt assumed by Allegiance pursuant to SECTION 4.4(ii), within 10
days of the final determination of such adjustment.

         Section 7.8  AGREEMENTS RELATING TO BAXTER AND ALLEGIANCE.  (a)  Each
of Baxter and Allegiance shall use its reasonable efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, all things, reasonably
necessary, proper or advisable under applicable laws, regulations and agreements
to consummate and make effective its or its Subsidiaries' pro rata portion of
all Contracts with customers, suppliers, vendors or other third parties relating
to both the Allegiance Business and the Retained Business (the "Shared
Agreements"), including those Shared Agreements set forth on SCHEDULE 7.8
hereto.  Each of Baxter and its Subsidiaries and Allegiance and its Subsidiaries
shall be entitled to the rights and privileges of its pro rata portion of the
Shared Agreements.

         (b)  Each of Baxter and Allegiance agree to perform, or cause to be
performed, their respective pro rata portions of all purchase, distribution, and
other obligations under the Shared Agreements.

         Section 7.9  CERTAIN RELEASES.  Baxter or one or more of its
Subsidiaries is a guarantor of certain obligations of the


                                        - 36 -

<PAGE>

Allegiance Business, including those obligations set forth on SCHEDULE 5.4(i).
Allegiance shall use its reasonable efforts to release Baxter and its
Subsidiaries from such guarantees prior to the Spin-Off Date and shall indemnity
Baxter and its Subsidiaries and save it harmless from any liabilities relating
to such guarantees.

         Section 7.10  LITIGATION.  (a)  On or as of the Spin-Off Date,
Allegiance and its Subsidiaries shall assume and pay all liabilities which may
result from the Assumed Actions and all fees and costs relating to the defense
of the Assumed Actions, including attorneys' fees and costs incurred after the
Spin-Off Date.  "Assumed Actions" shall mean those cases, claims and
investigations (on which Baxter or its Subsidiaries, other than Allegiance and
its Subsidiaries, is a defendant or the party against which the claim or
investigation is directed) related to the Allegiance Business and listed on
SCHEDULE 7.10(a).

         (b)  Baxter and its Subsidiaries shall transfer the Transferred
Actions to Allegiance and its Subsidiaries, and Allegiance and its Subsidiaries
shall receive and have the benefit of all of the proceeds of such Transferred
Actions.  "Transferred Actions" shall mean those cases and claims (on which
Baxter or its Subsidiaries are plaintiffs or claimants) relating to the
Allegiance Business and listed on SCHEDULE 4.2(x).

         Section 7.11  LIABILITY FOR PREVIOUSLY DELIVERED PRODUCTS.  The
following provisions shall apply to all Baxter Products sold or transferred to
the Allegiance Business prior to the Spin-Off Date for distribution and to all
Allegiance Products sold or transferred to the Retained Business prior to the
Spin-Off Date for distribution (in each case, the "Products"):

         (i)  Each Party warrants to the other Party that, at the time of
    delivery to the other Party or its Subsidiaries, the Products were not at
    the time of delivery (A) adulterated or misbranded within the meaning of
    the Federal Food, Drug and Cosmetic Act, as amended, and the regulations
    issued thereunder, or (B) products that may not under the provisions of
    Sections 404, 505, 514 or 515 of said Act be introduced into interstate
    commerce, or (C) banned devices under Section 516 of said Act.  [THE
    FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES OF ANY
    KIND WITH RESPECT TO THE PRODUCTS, WHETHER STATUTORY, WRITTEN, ORAL,
    EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF FITNESS FOR A PARTICULAR
    PURPOSE AND MERCHANTABILITY.  ANY LIABILITY OF A PARTY AND ITS SUBSIDIARIES
    TO THE OTHER PARTY AND ITS SUBSIDIARIES UNDER THE FOREGOING WARRANTY SHALL
    BE LIMITED TO THE TOTAL PRICE PAID BY SUCH PARTY AND ITS SUBSIDIARIES FOR
    THE PRODUCTS WHICH ARE THE SUBJECT OF SUCH LIABILITY PLUS ALL COSTS FOR
    TRANSPORTATION AND OTHER DIRECT EXPENSES INCURRED BY ALLEGIANCE AND ITS
    SUBSIDIARIES WITH


                                        - 37 -

<PAGE>

    RESPECT TO SUCH PRODUCTS].  A Party's and its Subsidiaries' exclusive
    remedy against the other Party and its Subsidiaries for any breach of the
    foregoing warranty shall be the right to require the other Party or its
    Subsidiaries to repair or replace (at the other Party's option and expense)
    any Product which proves not to be in conformity with applicable labeling
    or specifications.  The other Party or its Subsidiaries shall pay the
    transportation and other costs incurred by a Party or its Subsidiaries with
    respect to any Products returned to the other Party or its Subsidiaries for
    repair or replacement under this Section, or, at the other Party's option,
    reimburse a Party or its Subsidiaries for any such costs.  [The foregoing
    right to require repair or replacement shall commence on the date of
    receipt by a Party or its Subsidiaries of each Product from the other Party
    or its Subsidiaries and expire six months after receipt by the end-user
    customer (the "Repair or Replacement Period"), except that the Repair or
    Replacement Period for each Product the use of which is subject to an
    expiration date shall expire on the applicable expiration date, if sooner.]

         (ii)  Each Party and its Subsidiaries warrants to the other Party and
    its Subsidiaries that, at the time of delivery to the other Party or its
    Subsidiaries, the Party or its Subsidiaries shall have good and marketable
    title to all such Products free and clear of all liens or encumbrances
    (other than any created by the other Party or its Subsidiaries).

         (iii)  Each Party and its Subsidiaries shall indemnify and hold the
    Allegiance Indemnified Parties or the Baxter Indemnified Parties, as the
    case may be, harmless from and against, and in respect of, any and all
    Claims and Losses by any of the Allegiance Indemnified Parties or the
    Baxter Indemnified Parties, as the case may be, which result from a third
    party claim and which arise out of or relate to:  (A) any actual or alleged
    patent, copyright or trademark infringement, or violation of any other
    proprietary right, arising out of the purchase, sale or use of the
    Products; (B) defects in Products; (C) any actual or alleged breach of
    warranty or obligation, if any, accompanying the Product or Products,
    subject to the limitations in SECTION 7.11(i) to the extent provided
    therein; and (D) any claim for personal injury, wrongful death or property
    damage arising out of the use of a Product; PROVIDED that this SECTION
    7.11(iii) shall not apply to any Claim or Loss (x) to the extent that the
    Parties agree; (y) to any tort claim, including claims for personal injury,
    wrongful death or property damage, to the extent such claims are based upon
    any wrongful or negligent act or omission by the other Party or its
    Subsidiaries or business units (but excluding Subsidiaries of business
    units


                                        - 38 -

<PAGE>

    that become Subsidiaries or business units of the initial party as a result
    of the Spin-Off), or their employees or other agents, including, but not
    limited to, any Claims or Losses caused by any such wrongful or negligent
    act or omission constituting a representation concerning the
    characteristics or method of usage of Products, or relating to the storage,
    handling, or delivery of Products or selection of Products [for use in
    Kits]; [or (z) to any actual or alleged patent, copyright or trademark
    infringement, or violation of any other proprietary right, arising out of
    any act or omission of a Party, its Subsidiaries or any of their Affiliates
    or business units (but excluding Subsidiaries of business units that become
    Subsidiaries or business units of the initial party as a result of the
    Spin-Off), in connection with the sale of Kits or relating to any
    intellectual property owned by a Party, its Subsidiaries or any of their
    Affiliates and used in connection with the sale of Kits].

         Section 7.12  ALLEGIANCE BANK ACCOUNTS.  On or prior to the Spin-Off
Date, Baxter and its Subsidiaries shall transfer the bank accounts set forth on
SCHEDULE 7.12 hereto to Allegiance or one of its Subsidiaries, as directed by
Allegiance.  Allegiance shall cause any amounts received, by mistake or
otherwise, in such accounts after the Spin-Off Date on account of the Retained
Business to be promptly transferred to Baxter and its Subsidiaries, as
appropriate.

         Section 7.13  SUBSIDIZED CUSTOMER LEASES.  Allegiance hereby agrees
that, with respect to the lease agreements set forth on SCHEDULE 7.13 hereto
(the "Subsidized Customer Leases"), it shall cause AHC, from time to time as
such Subsidized Customer Leases are in effect, to make payments to BHC in
amounts sufficient to offset the reduction in rental payments given to the
customer resulting from purchases of Allegiance Products.  Such payments shall
be in amounts calculated in a manner consistent with past practice with respect
to such Subsidized Customer Leases.

         Section 7.14  AD NOW PROGRAM.  Baxter hereby agrees to cause BHC to
offer and administer the "Advantage Now" program for Baxter Products to the full
extent necessary to comply with Section 5(e)(12) of the Amended and Restated
Exclusive Distribution Agreement, dated as of September 15, 1995, by and between
Dade International Inc., a Delaware corporation ("Dade"), and BHC (the "Dade
Distribution Agreement").

         Section 7.15  SERVICES TO DADE.  If the Dade Transition Services
Agreement is assigned to Allegiance, Baxter will need to agree to provide those
services to Dade for which Allegiance does not have the capability.  If the
agreement remains with Baxter, Allegiance will need to agree to do the same.


                                        - 39 -

<PAGE>


         Section 7.16  PRODUCTS AT COST TO DADE.  (a)  Baxter hereby agrees to,
and to cause its appropriate Subsidiaries to, provide laboratory supply products
manufactured by Baxter and its Subsidiaries at actual cost to Dade for Dade's
internal use only and not for resale in accordance with Section 5(r) of the Dade
Distribution Agreement.

         (b)  Allegiance hereby agrees to, and to cause its appropriate
Subsidiaries to, provide laboratory supply products manufactured by Allegiance
and its Subsidiaries at actual cost to Dade for Dade's internal use only and not
for resale in accordance with the Amended and Restated Exclusive Distribution
Agreement, dated as of September 15, 1995, by and between Dade and Baxter Sales
and Distribution Corp., a Delaware corporation.


                         ARTICLE VIII.  INTELLECTUAL PROPERTY

         Section 8.1  LICENSE OF ALLEGIANCE INTELLECTUAL PROPERTY TO BAXTER.

         (a)  GRANT OF LICENSE.  Allegiance and its Subsidiaries hereby grant,
and Baxter and its Subsidiaries hereby accept and retain, a perpetual,
nonexclusive, fully paid-up, worldwide right and license to use, manufacture,
make, have made, sell and otherwise practice the patents, patent applications,
copyrights, trade secrets, technology, know-how, and other intellectual property
rights set forth on SCHEDULE 8.1(a), attached hereto and incorporated herein
(hereinafter, the "Licensed Allegiance Intellectual Property"), in connection
with the Baxter Products as of the Spin-Off Date, including new products which
are substitutes for, or line extensions of, such products.

         (b)  OWNERSHIP OF THE ALLEGIANCE INTELLECTUAL PROPERTY.  Baxter and
its Subsidiaries acknowledge that, subject to the foregoing license, Allegiance
and its Subsidiaries, as the case may be, are the sole and exclusive owner of
all of right, title and interest in and to the Licensed Allegiance Intellectual
Property.  Baxter and its Subsidiaries agree that they will do nothing
inconsistent with Allegiance's ownership of, or rights in, the Licensed
Allegiance Intellectual Property.  Allegiance and its Subsidiaries, at their
expense, agree to take all steps reasonably necessary to protect, enforce or
otherwise maintain in full force and effect the Licensed Allegiance Intellectual
Property, including, without limitation, the filing of any required renewals and
the payment of any required fees, taxes or other payments that may become due.
Baxter and its Subsidiaries shall cooperate with Allegiance and its Subsidiaries
in connection with such steps at Allegiance's reasonable request and at
Allegiance's expense, including, without limitation, by obtaining execution by
Baxter's and Baxter's Subsidiaries' employees, consultants and agents of any
papers Allegiance or its


                                        - 40 -

<PAGE>

Subsidiaries consider necessary to enable Allegiance and its Subsidiaries to
protect the Licensed Allegiance Intellectual Property.  Baxter and its
Subsidiaries shall make their employees, consultants and agents, who have direct
knowledge of facts pertaining to an invention that is the subject of a patent
application or another intellectual property right that is the subject of
intellectual property protection, available at Allegiance's expense to
Allegiance and its Subsidiaries for the purpose of disclosing sufficient facts
for the preparation of necessary documentation required for patent applications
and other protection.  At Allegiance's reasonable request and expense, Baxter
and its Subsidiaries will assist Allegiance and its Subsidiaries in the
preparation and review of patent documents related to the Licensed Allegiance
Intellectual Property to the extent that such assistance is necessary for such
preparation.  Baxter and its Subsidiaries do not represent that they are
qualified to provide any legal or other professional services, the providers of
which must be licensed or are otherwise subject to requirements of law
establishing educational, professional or similar qualifications for providers
of such service, and nothing contained in this Section shall be construed as
requiring Baxter and its Subsidiaries to provide any such services.  Allegiance
and its Subsidiaries will procure all such professional service from its own
employees or third parties.  All expenses, including, without limitation,
charges for staff costs, including travel and other expenses incurred in
connection with any assistance requested by Allegiance in the preparation or
prosecution of a patent will be reimbursed by Allegiance and will not constitute
a part of the payments for research and development work.  Allegiance and its
Subsidiaries shall not allow the protection for any Licensed Allegiance
Intellectual Property to lapse without not less than [three] months' prior
written notice to Baxter.  If Allegiance so notifies Baxter, (a) Baxter and its
Subsidiaries shall have the right, but not the obligation, to take such steps to
prevent such a lapse, at Baxter's expense and in Allegiance's and its
Subsidiaries' names, if necessary, and (b) Allegiance and its Subsidiaries shall
cooperate with Baxter and its Subsidiaries at Baxter's reasonable request and at
Baxter's expense.

         (c)  MARKING AND NOTICES.  Baxter and its Subsidiaries agree that any
products which are manufactured, made, offered, sold or otherwise distributed by
them pursuant to the license(s) granted hereunder shall bear a legal or
proprietary rights notice in such form as may be reasonably requested by and to
the extent directed by Allegiance from time to time.

         (d)  TERMINATION OF LICENSES.  The licenses granted in SECTION 8.1 may
be terminated by Baxter only under the following conditions:


                                        - 41 -

<PAGE>


         (i)  BREACH.  If Baxter or its Subsidiaries are in breach or default
    of a material term of this SECTION 8.1 which breach or default continues
    for sixty (60) days after written notice thereof by Allegiance, Allegiance
    may terminate the license granted pursuant to this SECTION 8.1, PROVIDED
    that such termination shall be limited to those Licensed Allegiance
    Intellectual Property rights that relate to the uncured breach.

         (ii)  DIVESTITURE.  If Baxter or its Subsidiaries sell, assign,
    transfer or otherwise divest themselves of ownership of any business units
    or product lines that use or are manufactured under the Licensed Allegiance
    Intellectual Property, Allegiance may terminate the license granted
    pursuant to this SECTION 8.1 by written notice to Baxter as to the Licensed
    Allegiance Intellectual Property rights with exception of any Licensed
    Allegiance Intellectual Property consisting of patents, patent
    applications, or inventions covering manufacturing processes which are
    being transferred in connection with such divestiture.

         (iii)  CHANGE OF CONTROL.  If more than 30% of the voting stock of
    Baxter or any Affiliate thereof is acquired, directly or indirectly, by a
    competitor of Allegiance in the field in which Allegiance or its
    Subsidiaries are then using the Licensed Allegiance Intellectual Property
    or Persons other than Baxter or an Affiliate of Baxter, then by written
    notice to Baxter Allegiance may terminate the license granted pursuant to
    this SECTION 8.1 in its entirety, in the case of the acquisition of the
    voting stock of Baxter, or as to such Affiliate in the case of the
    acquisition of the voting stock of an Affiliate.

         Section 8.2  LICENSE OF BAXTER INTELLECTUAL PROPERTY TO ALLEGIANCE.

         (a)  GRANT OF LICENSE.  Baxter and its Subsidiaries hereby grant, and
Allegiance and its Subsidiaries hereby accept and retain, a perpetual,
nonexclusive, fully paid-up, worldwide right and license to use, manufacture,
make, have made, sell and otherwise practice the patents, patent applications,
copyrights, trade secrets, technology, know-how, and other intellectual property
rights set forth on SCHEDULE 8.2(a), attached hereto and incorporated herein
(hereinafter, the "Licensed Baxter Intellectual Property") in connection with
the Allegiance Products as of the Spin-Off Date, including new products which
are substitutes for, or line extensions of, such products.

         (b)  OWNERSHIP OF THE BAXTER INTELLECTUAL PROPERTY.  Allegiance and
its Subsidiaries acknowledge that, subject to the foregoing license, Baxter and
its Subsidiaries are the sole and exclusive owner of all of right, title and
interest in and to the


                                        - 42 -

<PAGE>

Licensed Baxter Intellectual Property.  Allegiance and its Subsidiaries agree
that they will do nothing inconsistent with Baxter's and its Subsidiaries'
ownership of, or rights in, the Licensed Baxter Intellectual Property.  Baxter
and its Subsidiaries, at their expense, agree to take all steps reasonably
necessary to protect, enforce or otherwise maintain in full force and effect the
Licensed Baxter Intellectual Property, including, without limitation, the filing
of any required renewals and the payment of any required fees, taxes or other
payments that may become due.  Allegiance and its Subsidiaries shall cooperate
with Baxter and its Subsidiaries in connection with such steps at Baxter's
reasonable request and at Baxter's expense, including, without limitation, by
obtaining execution by Allegiance's and its Subsidiaries' employees, consultants
and agents of any papers Baxter or its Subsidiaries consider necessary to enable
Baxter and its Subsidiaries to protect the Licensed Baxter Intellectual
Property.  Allegiance and its Subsidiaries shall make their employees,
consultants and agents, who have direct knowledge of facts pertaining to an
invention that is the subject of a patent application or another intellectual
property right that is the subject of intellectual property protection,
available to Baxter and its Subsidiaries at Baxter's expense for the purpose of
disclosing sufficient facts for the preparation of necessary documentation
required for patent applications and other protection.  At Baxter's reasonable
request and expense, Allegiance and its Subsidiaries will assist Baxter and its
Subsidiaries in the preparation and review of patent documents related to the
Licensed Baxter Intellectual Property to the extent that such assistance is
necessary for such preparation.  Allegiance and its Subsidiaries do not
represent that they are qualified to provide any legal or other professional
services, the providers of which must be licensed or are otherwise subject to
requirements of law establishing educational, professional or similar
qualifications for providers of such service.  Nothing contained in this Section
shall be construed as requiring Allegiance and its Subsidiaries to provide any
such services.  Baxter and its Subsidiaries will procure all such professional
service from its own employees or third parties.  All expenses, including,
without limitation, charges for staff costs, including travel and other expenses
incurred in connection with any assistance requested by Baxter and its
Subsidiaries in the preparation or prosecution of a patent will be reimbursed by
Baxter and will not constitute a part of the payments for research and
development work.  Baxter and its Subsidiaries shall not allow the protection
for any Licensed Baxter Intellectual Property to lapse without prior written
notice to Allegiance.  If Baxter so notifies Allegiance, (a) Allegiance have the
right, but not the obligation, to take such steps to prevent such a lapse, at
Allegiance's expense and in Baxter's and its Subsidiaries' name, if necessary,
and (b) Baxter shall cooperate with Allegiance at Allegiance's and its
Subsidiaries' reasonable request and at Allegiance's expense.


                                         -43-

<PAGE>


         (c)  MARKING AND NOTICES.  Allegiance and its Subsidiaries agree that
any products which are manufactured, made, offered, sold or otherwise
distributed by them pursuant to the license(s) granted hereunder shall bear a
legal or proprietary rights notice in such form as may be reasonably requested
by and to the extent directed by Baxter from time to time.

         (d)  TERMINATION OF LICENSES.  The licenses granted in SECTION 8.2 may
be terminated by Allegiance only under the following conditions:

         (i)  BREACH.  If Allegiance or its Subsidiaries are  in breach or
    default of a material term of this SECTION 8.2 which breach or default
    continues for sixty (60) days after written notice thereof by Baxter,
    Baxter may terminate this Agreement, PROVIDED that such termination shall
    be limited to those Licensed Baxter Intellectual Property rights that
    relate to the uncured breach.

         (ii)  DIVESTITURE.  If Allegiance or its Subsidiaries sell, assign,
    transfer or otherwise divest themselves of ownership of any business units
    or product lines that use the Licensed Baxter Intellectual Property, Baxter
    may terminate the license granted pursuant to this SECTION 8.2 on written
    notice to Allegiance as to the Licensed Baxter Intellectual Property rights
    with the exception of any Licensed Baxter Intellectual Property consisting
    of patents, patent applications or inventions covering manufacturing
    processes which are being transferred in connection with such divestiture.

         (iii) CHANGE OF CONTROL.  If more than 30% of the voting stock of
    Allegiance or any Affiliate thereof is acquired, directly or indirectly, by
    a competitor of Baxter in the field in which Baxter or its Subsidiaries are
    then using the Licensed Baxter Intellectual Property, then by written
    notice to Allegiance Baxter may (A) in the case of the acquisition of the
    voting stock of Allegiance, terminate the license granted pursuant to this
    SECTION 8.2 in its entirety, or (B) in the case of the acquisition of the
    voting stock of an Affiliate, terminate the license granted pursuant to
    this SECTION 8.2 only with respect to such Affiliate.

         Section 8.3  USE OF BAXTER TRADE NAMES AND TRADEMARKS.
(a)  Allegiance and its Subsidiaries shall discontinue use of the names
"Baxter," "Baxter Healthcare," "Baxter International Inc." and all other
trademarks, service marks and trade names owned by or licensed to Baxter (the
"Baxter Marks") as follows:


                                        - 44 -

<PAGE>


         (i)  Allegiance and its Subsidiaries will cease use of the Baxter
    Marks on or in connection with materials other than labels of Allegiance
    Products, including, by way of example and not limitation, signs,
    stationery, trucks, and customer brochures, on or before December 31, 1997.

         (ii)  Allegiance and its Subsidiaries will cease use of the Baxter
    Marks on or in connection with Allegiance Products containing latex as soon
    as practical, but in no event later than March 31, 1997 with respect to
    gloves manufactured after that date and June 30, 1997 with respect to other
    products containing, as a significant component, natural rubber latex
    manufactured after that date.

         (iii)  Allegiance and its Subsidiaries will cease use of the Baxter
    Marks on or in connection with products of the type subject to regulation
    under Section 351 of the Public Health Service Act/by the Center for
    Biologic Evaluation Review (CBER) ("Biologics"), if any, as soon as
    practical, but in no event later than [June 30, 1997/March 31, 1997] with
    respect such products manufactured after that date.

         (iv)  Allegiance and its Subsidiaries will [cease use of the Baxter
    Marks on or in connection with/complete specifications to remove the Baxter
    Marks from] high volume products, namely, those products which constitute
    80% of Allegiance's product volume and a minimum of 80% of the total number
    of product code product labels, as of December 31, 1997.

         (v)  Allegiance and its Subsidiaries will cease use of the Baxter
    marks on or in connection with all other products as of June 30, 1998, in
    that neither Allegiance nor its Subsidiaries shall quality control release
    any products bearing any of the Baxter Marks after such date.

         (b)  Any use of the Baxter Marks by Allegiance or its Subsidiaries
pursuant to the above terms and conditions shall be in the same form as existed
prior to the Spin-Off Date and any products or processes offered by Allegiance
or its Subsidiaries for sale under the Baxter Marks shall meet the same product
specifications and quality assurance standards as existed prior to the Spin-Off
Date.  Any new label copy created after the Spin-Off Date or the  development of
which is in progress as of the Spin-Off Date, shall not bear any of the Baxter
Marks.


                                        - 45 -

<PAGE>



                     ARTICLE IX.  EMPLOYEES AND EMPLOYEE BENEFITS

         Section 9.1  DOMESTIC AND INTERNATIONAL ALLEGIANCE EMPLOYEES.
SCHEDULE 9.1 describes or otherwise identifies all Domestic and International
Allegiance Employees including all such employees who are then Inactive
Employees.  An "International Allegiance Employee" means any Active or Inactive
Allegiance Employee who, immediately prior to the Spin-Off Date is employed by a
Transferred Subsidiary in a foreign jurisdiction.  A "Domestic Allegiance
Employee" shall mean any Active or Inactive Allegiance Employee who is not an
International Allegiance Employee.

         Section 9.2  EMPLOYMENT OF DOMESTIC ALLEGIANCE EMPLOYEES.  On the
Spin-Off Date, Allegiance shall, or shall cause its Subsidiaries to, employ or
continue to employ each Domestic Allegiance Employee.  Allegiance and Baxter
(and their Subsidiaries) shall use their reasonable efforts to accomplish any
transfers of employment required by this SECTION 9.2 in a timely manner.  Active
Domestic Allegiance Employees shall be paid by Allegiance or one of its
Subsidiaries at the salary and wage rate levels paid by Baxter or its
Subsidiaries as of the Spin-Off Date; PROVIDED, HOWEVER, that Allegiance (or the
applicable Allegiance Subsidiary) retains the right to determine the
compensation of Domestic Allegiance Employees after the Spin-Off Date.

         Section 9.3  TERMINATIONS/LAYOFF/SEVERANCE.  (a)   Domestic Allegiance
Employees shall not be eligible for any severance benefits from Baxter or its
Subsidiaries or Affiliates as a result of either their employment by Allegiance
or its Subsidiaries or Affiliates or their subsequent termination of employment
with Allegiance or its Subsidiaries or Affiliates.  Notwithstanding the
foregoing, Baxter and Allegiance have agreed on the payment of certain severance
costs as provided in SECTION 9.12.

         (b)  Any Allegiance Employee who receives a written notice prior to
the Spin-Off Date regarding such employee's termination of employment on a fixed
date between the Spin-Off Date and January 31, 1997 from Allegiance or any of
its Subsidiaries shall be eligible to receive from Allegiance (or the applicable
Allegiance Subsidiary) severance pay which is calculated with the formula used
under the Baxter Severance Pay Plan.  No Allegiance Business unit shall notify
any Allegiance Employee prior to the Spin-Off Date that such person shall
terminate employment with Allegiance or any of its Subsidiaries on a fixed date
which is after January 31, 1997.  Allegiance (or the applicable Allegiance
Subsidiary) shall have the obligation to pay the severance benefits as provided
under the Baxter Severance Pay formula to any employee terminated by Baxter
prior to the Spin-Off Date while employed in any Allegiance Business


                                        - 46 -

<PAGE>

unit who is receiving severance benefits under the Baxter Severance Pay Plan and
to pay the severance benefits to any employee terminated by Allegiance after the
Spin-Off Date who is receiving severance benefits under the Allegiance Severance
Pay Plan.  The manner in which this SECTION 9.3(b) is implemented shall be
governed by the terms of the Allegiance Severance Pay Plan.

         (c)  Allegiance shall be responsible, and shall reimburse Baxter and
its Subsidiaries, for the payment of the severance and related costs and
expenses of any employee of Baxter and its Subsidiaries employed by a Subsidiary
or other entity which is included in the Allegiance Business and who receives
severance payments from Baxter or one of its Subsidiaries.  Baxter and
Allegiance shall each be responsible for the payment of one-half of the
severance of Allegiance Employees who currently provide IV customer service
functions in field locations who are terminated without cause within three
months following the Spin-Off Date.

         Section 9.4  INTERNATIONAL ALLEGIANCE EMPLOYEES.  On the Spin-Off
Date, or as soon thereafter as administratively practicable, Allegiance shall,
or shall cause its Subsidiaries to, employ or continue to employ each
International Allegiance Employee.  Allegiance and Baxter (and their
Subsidiaries) shall use their reasonable efforts to accomplish any transfers of
employment required by this SECTION 9.4 in a timely manner.  Allegiance and its
Subsidiaries shall ensure that International Allegiance Employees transferring
from Baxter or its international Subsidiaries to Allegiance or its international
Subsidiaries shall transfer their relationship to the relevant Allegiance
Subsidiary in accordance with applicable country law, including, without
limitation, laws regarding transfer of business assets and employee benefits.
On the Spin-Off Date, Allegiance shall assume all employment-related liabilities
arising from or incurred in connection with the International Allegiance
Employees, including but not limited to all liabilities relating to any employee
benefit plan as defined in Section 3(3) of ERISA but which is not covered by
ERISA pursuant to ERISA Section 4(b)(4), and Allegiance shall cause its
Subsidiaries to assume all such liabilities with respect to International
Allegiance Employees transferring from Baxter or its Subsidiaries to Allegiance
or its Subsidiaries on the Spin-Off Date.

         Section 9.5  EMPLOYMENT SOLICITATION.  During the period beginning on
the Spin-Off Date and ending one year after the Spin-Off Date, neither Baxter
nor Allegiance shall, or shall permit any of their respective Subsidiaries or
agents to, directly or indirectly, without the prior written consent of the
other, actively solicit or recruit for employment any then current employee of
the other or of any of the other's


                                        - 47 -

<PAGE>

Subsidiaries.  If an employee of Baxter or Allegiance intends to seek employment
from the other company, the employee must receive prior written consent from the
employee's current employer prior to seeking the employment and prior to the
other company hiring the employee.  An employee who voluntarily resigns his/her
employment, or whose employment is terminated would also be eligible for
employment consideration in the other company.  After the one-year period
beginning on the Spin-Off Date, the foregoing restriction shall not apply.

         Section 9.6  WARN ACT.  Allegiance and its Subsidiaries agree that
they shall not, at any time during the 90-day period following the Spin-Off
Date, effectuate (i) a "plant closing" as defined in the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act") affecting any site of
employment or operating units within any site of employment of the Allegiance
Business or (ii) take any action to precipitate a "mass layoff" as defined in
the WARN Act affecting any site of employment of the Allegiance Business,
except, in either case, after complying fully with the notice and other
requirements of the WARN Act.  Allegiance agrees to indemnify Baxter and its
Subsidiaries and to defend and hold Baxter and its Subsidiaries harmless from
and against any and all claims, losses, damages, expenses, obligations and
liabilities (including attorney's fees and other costs of defense) which Baxter
and its Subsidiaries may incur in connection with any suit or claim of violation
brought against Baxter under the WARN Act, which relate in whole or in part to
actions taken by Allegiance or its Subsidiaries with regard to any site of
employment of Allegiance or operating units within any site of employment of the
Allegiance Business.

         Section 9.7  LEAVE OF ABSENCE POLICIES.  (a)  Through the Spin-Off
Date, Baxter and its Subsidiaries shall be responsible for administering
compliance with the Baxter leave of absence policies with respect to Domestic
and International Allegiance Employees.

         (b)  Effective immediately after the Spin-Off Date: (i) Allegiance
shall adopt, and shall cause each Allegiance Subsidiary to adopt, its own leave
of absence policies; (ii) Allegiance shall honor, and shall cause each
Allegiance Subsidiary to honor, all terms and conditions of leaves of absence
which have been granted to any Allegiance Employee under a Baxter leave of
absence policy before the Spin-Off Date by Baxter or any of its Subsidiaries,
including such leaves that are to commence after the Spin-Off Date where Baxter
or any of its Subsidiaries has approved such leave or where an employee has
submitted appropriate paperwork to Baxter or any of its Subsidiaries for such
leave prior to the Spin-Off Date; (iii) Allegiance and its Subsidiaries shall be
solely responsible for administering leaves of absence policies and compliance
with all applicable laws with respect to their employees; and (iv)


                                        - 48 -

<PAGE>

Allegiance and its Subsidiaries shall recognize all periods of service of
Allegiance Employees with Baxter or any of its Subsidiaries, as applicable, to
the extent such service is recognized by Baxter or its Subsidiaries for the
purpose of eligibility for leave entitlement under the Baxter leave of absence
policies; PROVIDED, HOWEVER, that no duplication of benefits shall be required
by the foregoing.

         (c)  As soon as administratively possible after the  Spin-Off Date and
upon request to Baxter's Senior Vice President of Human Resources, Baxter shall
provide to Allegiance copies of all records pertaining to the Baxter leave of
absence policies with respect to all Allegiance Employees to the extent such
records have not been provided previously to Allegiance or one of its
Subsidiaries.

         Section 9.8  WITHDRAWAL FROM PARTICIPATION IN BAXTER PLANS AND
ESTABLISHMENT OF ALLEGIANCE PLANS.  (a)  Effective as of the Spin-Off Date,
Allegiance and its Subsidiaries shall cease to be participating employers in the
Baxter Plans and shall take any and all action necessary to effectuate their
withdrawal as participating employers under the terms of such plans.  Each
Allegiance Employee shall cease accruing benefits under the Baxter Plans as of
the Spin-Off Date (other than imputed compensation taken into account under the
Baxter Pension Plan from the Spin-Off Date through December 31, 1996).

         (b)  Effective as of the Spin-Off Date, Allegiance or any Allegiance
Subsidiary shall establish its own employee benefit plans for the benefit of
eligible employees of Allegiance and its Subsidiaries, including but not limited
to the Allegiance Retirement Plan, the Allegiance Welfare Plans and the
Allegiance 1996 Incentive Compensation Program, as described in the Registration
Statement.

         Section 9.9  TRANSFER OF SAVINGS PLAN ACCOUNT BALANCES.  Subject to
applicable law and the provisions of the Baxter Savings Plan, effective as of
the first day of the first calendar month following the Spin-Off, or effective
as of any other date as agreed to in writing by the plan administrator for the
Baxter Savings Plan and the plan administrator for the Allegiance Retirement
Plan, the account balances (including outstanding loans) of all Baxter Savings
Plan participants who are Allegiance Employees shall be spun off from the Baxter
Savings Plan and merged into the Allegiance Retirement Plan (the "Transferred
Accounts"). The plan administrator for the Allegiance Retirement Plan shall
distribute any amounts from such Transferred Accounts which may be necessary in
order for the Baxter Savings Plan to satisfy any requirements of applicable law
(including, but not limited to, nondiscrimination rules) as instructed by the
plan administrator for the Baxter Savings Plan.  The plan administrator for the
Allegiance Retirement Plan shall take any


                                        - 49 -

<PAGE>

other action reasonably requested by the plan administrator for the Baxter
Savings Plan which is necessary or advisable, in the opinion of the plan
administrator for the Baxter Savings Plan, to maintain the tax-qualified status
of the Baxter Savings Plan or to avoid the imposition of any penalties with
respect to such plan.

         Section 9.10  ENTITLEMENT TO DISTRIBUTIONS UNDER PENSION PLAN.  Each
Allegiance Employee shall be treated as having terminated employment with an
"Employer" as defined in the Baxter Pension Plan effective as of the Spin-Off
Date and shall be fully vested in his or her accrued benefit under the Baxter
Pension Plan as of such date; PROVIDED, HOWEVER, that no such employee shall be
treated as terminated for purposes of eligibility to receive plan distributions
until such employee is no longer eligible to have compensation with Allegiance
(or the applicable Allegiance Subsidiary) count for purposes of determining
benefits under the Baxter Pension Plan.

         Section 9.11  WELFARE BENEFITS PROVIDED UNDER ALLEGIANCE PLANS.  (a)
Each employee of Allegiance or any of its Subsidiaries who is eligible to
participate in the Allegiance Welfare Plans shall be credited with (1)
deductibles and co-payments paid by such employee during 1996 under the Baxter
Medical Plan (including dental benefits) and (2) periods of service with any
Baxter Group member for all purposes under such plan.

         (b)  Baxter (or the applicable Baxter Subsidiary) shall pay all costs
associated with the provision of disability benefits to any employee or former
employee of Allegiance or any of its Subsidiaries who as of the Spin-Off Date is
totally and permanently disabled.  Allegiance (or the applicable Allegiance
Subsidiary) shall pay all costs associated with the provision of disability
benefits to any employee or former employee of Allegiance or any of its
Subsidiaries other than the persons described in the first sentence of this
SECTION 9.11(b); Allegiance (or the applicable Allegiance Subsidiary) shall
provide benefits to any such persons who on the Spin-Off Date are entitled to
receive disability benefits in an amount equal to the benefits such persons
would have received if they had remained covered under the Baxter Plans during
the period of such disability leave.  As of the Spin-Off Date, Allegiance (or
the applicable Allegiance Subsidiary) shall assume all liabilities determined
under FAS 112 relating to all Allegiance Employees.

         (c)  Baxter (or the applicable Baxter Subsidiary) shall pay all claims
under the Baxter Medical Plan (including dental benefits) which as of the Spin-
Off Date have been incurred but not reported relating to employees of Allegiance
and its Subsidiaries, but only if claims for such costs are submitted in written
form to the authorized agents of Baxter (or the


                                        - 50 -

<PAGE>

applicable Baxter Subsidiary) during the six-month period beginning on the
Spin-Off Date.

         (d)  Baxter (or the applicable Baxter Subsidiary) shall pay all costs
associated with the provision of benefits under the terms of the Baxter Retiree
Welfare Plan for all persons who as of the Spin-Off Date have satisfied the age
and service eligibility requirements for receiving benefits under such plan.
Allegiance (or the applicable Allegiance Subsidiary) shall assume and pay all
costs associated with the provision of retiree welfare benefits for all
employees of Allegiance and its Subsidiaries who after the Spin-Off Date satisfy
the age and service eligibility requirements under the corresponding Allegiance
plan, if any, for receiving such benefits.

         (e)  Effective as of the Spin-Off Date, the account balances
(including assets and liabilities) of all participants in the Baxter Cafeteria
Plans who are Allegiance Employees shall be spun off from the Baxter Cafeteria
Plans and merged into the corresponding cafeteria plans which are established by
Allegiance or the applicable Allegiance Subsidiary.

         Section 9.12  STOCK PURCHASE PLAN.  Except as otherwise provided in
the plan, on the Spin-Off Date, employees of Allegiance and its Subsidiaries
shall not be eligible to purchase Baxter Common Stock under the terms of the
Baxter Stock Purchase Plan.

         Section 9.13  WORKERS' COMPENSATION.  As soon as administratively
practicable following the Spin-Off Date, a Senior Vice President of each of the
Parties shall agree upon the allocation between the Parties of responsibility
for workers' compensation claims relating to employees and former employees of
the Parties and their respective Subsidiaries.

         Section 9.14  VACATION PAY POLICY.  After the Spin-Off Date, it is
expected that Allegiance shall maintain for its employees and employees of its
Subsidiaries a vacation pay policy and Allegiance (or the applicable Allegiance
Subsidiary) shall be responsible for costs incurred to provide vacation pay to
employees of Allegiance and its Subsidiaries following such date.  Allegiance
(or the applicable Allegiance Subsidiary) shall assume any and all Baxter
liabilities to provide to Allegiance Employees vacation which such persons
accrued under the Baxter vacation pay policy as of the Spin-Off Date.

         Section 9.15  NON-QUALIFIED DEFERRED COMPENSATION PLANS.  Baxter (or
the applicable Baxter Subsidiary) shall assume the liability to provide benefits
accrued as of the Spin-Off Date under the Baxter and Subsidiaries Supplemental
Pension Plan with respect to all Allegiance Employees.  Allegiance (or the
applicable Subsidiary) shall assume the liability to provide


                                        - 51 -

<PAGE>

benefits accrued under the Baxter and Subsidiaries Incentive Investment Excess
Plan and the Baxter and Subsidiaries Deferred Compensation Plan with respect to
Allegiance Employees.  No assets shall be transferred between the Parties with
respect to the plans listed in this SECTION 9.16; PROVIDED, HOWEVER, that Baxter
shall receive a balance sheet credit for the amounts assumed in the first
sentence of this Section.

         Section 9.16  INFORMATION TO BE PROVIDED TO BAXTER.  Allegiance (or
the applicable Allegiance Subsidiary) shall provide any information which Baxter
(or any Baxter Subsidiary) may reasonably request, including but not limited to
information relating to dates of termination of employment, in order to provide
benefits to any eligible employee of Allegiance or any of its Subsidiaries under
the terms and conditions described herein or under the applicable Baxter Plans.
Any information relating to an employee's termination of employment shall be
provided by Allegiance (or the applicable Allegiance Subsidiary) to Baxter as
soon as available to Allegiance or any of its Subsidiaries, but in any event no
later than 30 days after such information is made available to Allegiance or any
such Subsidiaries.  Allegiance (or the applicable Allegiance Subsidiary) shall,
as necessary, update the system used to keep such information in such timely
manner as is required to administer the Baxter Plans.

         Section 9.17  CORPORATE ACTION; DELEGATION OF AUTHORITY.  Any action
taken by the Senior Vice President of Human Resources shall be considered to be
action taken by either Baxter or Allegiance or their respective Subsidiaries for
purposes of this ARTICLE IX.  Without limiting the foregoing, the Chief
Executive Officer of Baxter or Allegiance or their respective Subsidiaries may
delegate in writing to any other person the authority to act on behalf of Baxter
or Allegiance, respectively, or their respective Subsidiaries, with respect to
actions required under the terms of this ARTICLE IX.

         Section 9.18  SPLIT-DOLLAR LIFE INSURANCE.  Effective as of the Spin-
Off Date, Baxter (or the applicable Baxter Subsidiary) shall transfer to
Allegiance (or the applicable Allegiance Subsidiary) all split-dollar life
insurance policies relating to, and Allegiance (or the applicable Allegiance
Subsidiary) shall assume all liabilities associate with the provision of such
split-dollar life insurance to, any Allegiance Employee who as of such date had
attained 65 points as determined under the split-dollar life insurance policy
maintained by Baxter (or the applicable Baxter Subsidiary) with respect to such
person on such date.


                                        - 52 -

<PAGE>

                          ARTICLE X.  ACCESS TO INFORMATION

         Section 10.1  ACCESS TO INFORMATION.  At all times from and after the
Spin-Off Date for a period of ten years, (1) Baxter, upon reasonable notice,
shall afford Allegiance and its authorized accountants, counsel and other
designated representatives reasonable access during normal business hours to,
or, at Allegiance's expense, provide copies of, all records, books, contracts,
instruments, data, documents and other information relating to the Allegiance
Business or the Allegiance Employees (collectively, "Information") within
Baxter's possession or control, insofar as such access or copies are required by
Allegiance, and (2) Allegiance, upon reasonable notice, shall afford to Baxter
and its authorized accountants, counsel and other designated representatives
reasonable access during normal business hours to, or, at Baxter's expense,
provide copies of, Information within Allegiance's possession or control insofar
as such access or copies are required by Baxter.  Information may be requested
under this SECTION 10.1 for audit, accounting, claims defense, litigation and
tax purposes, for purposes of fulfilling disclosure and reporting obligations,
for compensation, benefit or welfare plan administration and for other proper
business purposes but not for competitive purposes.  Baxter and Allegiance shall
maintain the Information in the same way that Baxter maintains similar material
relating to the ongoing business of Baxter.

         Section 10.2  PRODUCTION OF WITNESSES.  At all times from and after
the Spin-Off Date, each Party shall use its reasonable efforts to make available
to the other Party (without cost to, and upon prior written request of, the
other Party) its officers, directors, employees and agents as witnesses to the
extent that the same may reasonably be required by the other Party in connection
with any legal, administrative or other proceedings in which the requesting
Party may from time to time be involved with respect to the Allegiance Business,
the Retained Business, the Spin-Off or any related transactions.

         Section 10.3  PROVISION OF CORPORATE RECORDS.  Prior to or as promptly
as practicable after the Spin-Off Date, Baxter shall deliver to Allegiance or
one or more of its Subsidiaries all corporate books and records of Allegiance
and its Subsidiaries and copies of all corporate books and records of Baxter
relating to the Allegiance Business, including in each case all active
agreements, litigation files and government filings.  From and after the Spin-
Off Date, all books, records and copies so delivered shall be the property of
Allegiance or such Subsidiaries.

         Section 10.4  CONFIDENTIALITY.  (a)  From and after the Spin-Off Date,
each of Baxter and Allegiance shall hold, and shall cause its officers,
employees, agents, consultants,


                                        - 53 -

<PAGE>

advisors and other representatives to hold, in strict confidence all non-public
information concerning the other Party or any of its Subsidiaries or Affiliates
obtained by it prior to the Spin-Off Date or furnished to it by such other Party
pursuant to this Agreement including, without limitation, any trade secrets,
technology, know-how-and other non-public, proprietary intellectual property
rights licensed pursuant to SECTIONS 8.1 and 8.2 herein, and shall not release
or disclose such information to any other person, except its representatives,
who shall be bound by the provisions of this SECTION 10.4; PROVIDED, HOWEVER,
that Baxter and Allegiance may disclose such information if, and only to the
extent that, (a) a disclosure of such information is compelled by judicial or
administrative process or, in the opinion of such Party's counsel, by other
requirements of law (in which case the disclosing party will provide, to the
extent practicable under the circumstances, advance written notice to the other
Party of its intent to make such disclosure), or (b) such Party can show that
such information (i) is published or is or otherwise becomes available to the
general public as part of the public domain without breach of this Agreement;
(ii) has been furnished or made known to the recipient without any obligation to
keep it confidential by a third Party under circumstances which are not known to
the recipient to involve a breach of the third party's obligations to a Party
hereto; (iii) was developed independently of information furnished to the
recipient under this Agreement; or (iv) in the case of information furnished
after the Spin-Off Date, was known to the recipient at the time of receipt
thereof from the other Party.

         (b) Each Party (the "first Party") acknowledges that the other Party
would not have an adequate remedy at law for the breach by the first Party of
any one or more of the covenants contained in this SECTION 10.4 and agrees that,
in the event of such breach, the other Party may, in addition to the other
remedies which may be available to it, apply to a court for an injunction to
prevent breaches of this SECTION 10.4 and to enforce specifically the terms and
provisions of this Section.  Notwithstanding SECTION 13.1 hereof, the provisions
of this SECTION 10.4 shall survive the Spin-Off Date indefinitely.

         Section 10.5  PRIVILEGED MATTERS.  (a) Each of Baxter and Allegiance
agree to maintain, preserve and assert all privileges, including, without
limitation, privileges arising under or relating to the attorney-client
relationship (which shall include without limitation the attorney-client and
work product privileges), not heretofore waived, that relate to the Allegiance
Business and the Transferred Services for any period prior to the Spin-Off Date
("Privilege" or "Privileges").  Each Party agrees that it shall not waive any
Privilege that could be asserted under applicable law without the prior written
consent of the other Party.  The rights and obligations created by this SECTION
10.5 shall apply to all information relating to the


                                        - 54 -

<PAGE>

Allegiance Business as to which, but for the Spin-Off, either Party would have
been entitled to assert or did assert the protection of a Privilege ("Privileged
Information"), including without limitation, any and all information generated
prior to the Spin-Off Date but which, after the Spin-Off, is in the possession
of either Party; and (2) all information generated, received or arising after
the Spin-Off Date that refers to or relates to Privileged Information generated,
received or arising prior to the Spin-Off Date.

         (b)  Upon receipt by either Party of any subpoena, discovery or other
request that may call for the production or disclosure of Privileged Information
or if either Party obtains knowledge that any current or former employee of
Baxter or Allegiance has received any subpoena, discovery or other request that
may call for the production or disclosure of Privileged Information, such Party
shall notify promptly the other Party of the existence of the request and shall
provide the other Party a reasonable opportunity to review the information and
to assert any rights it may have under this SECTION 10.5 or otherwise to prevent
the production or disclosure of Privileged Information.  Each Party agrees that
it will not produce or disclose any information that may be covered by a
Privilege under this SECTION 10.5 unless (1) the other Party has provided its
written consent to such production or disclosure (which consent will not be
unreasonably withheld), or (2) a court of competent jurisdiction has entered a
final, nonappealable order finding that the information is not entitled to
protection under any applicable Privilege.

         (c)  Baxter's transfer of books and records and other information to
Allegiance, and Baxter's agreement to permit Allegiance to possess Privileged
Information occurring or generated prior to the Spin-Off Date, are made in
reliance on Allegiance's agreement, as set forth in this SECTION 10.5, to
maintain the confidentiality of Privileged Information and to assert and
maintain all applicable Privileges.  The access to information being granted
pursuant to SECTION 10.1, the agreement to provide witnesses and individuals
pursuant to SECTION 10.2 and the transfer of Privileged Information to
Allegiance pursuant to this Agreement shall not be deemed a waiver of any
Privilege that has been or may be asserted under this SECTION 10.5 or otherwise.
Nothing in this Agreement shall operate to reduce, minimize or condition the
rights granted to Baxter in, or the obligations imposed upon Allegiance by, this
SECTION 10.5.


                    ARTICLE XI.  CONDITIONS PRECEDENT TO SPIN-OFF

         The obligation of Baxter to effect the Spin-Off is subject to the
satisfaction or the waiver by Baxter (if


                                        - 55 -

<PAGE>

permissible) at or prior to the Spin-Off Date of each of the following
conditions:

         Section 11.1  TAX RULING.  Baxter shall have received a ruling from
the United States Internal Revenue Service or, at Baxter's discretion, an
opinion of tax counsel, substantially to the effect that no income, gain or loss
will be recognized by Baxter or its stockholders (other than with respect to
cash received in lieu of fractional shares) upon the distribution to Baxter's
stockholders of shares of Allegiance Common Stock.

         Section 11.2  NO ACTIONS.  No action shall have been instituted or
threatened by or before any court or administrative body to restrain, enjoin or
otherwise prevent the Spin-Off or the other transactions contemplated hereby
(including but not limited to a stop order with respect to the effectiveness of
the Registration Statement), and no order, injunction or decree issued by any
court of competent jurisdiction shall be in effect restraining the Spin-Off or
such other transactions.

         Section 11.3  NYSE LISTING.  The Allegiance Shares shall have been
approved for listing on the NYSE, subject to official notice of issuance.

         Section 11.4  OPINIONS OF FINANCIAL ADVISOR.  The Board of Directors
of Baxter shall have received written opinions of CS First Boston Corporation to
the effect that (i) the Spin-Off will not have a material adverse effect on the
financial viability of Baxter after the Spin-Off or of Allegiance through the
period ending December 31, 1998 and (ii) the Spin-Off is fair to the
stockholders of Baxter from a financial point of view, which opinions shall not
have been withdrawn or modified.

         Section 11.5  CONSENTS.  All material authorizations, consents,
approvals and clearances of all federal, state, local and foreign governmental
agencies required to permit the valid consummation of the transactions
contemplated herein shall have been obtained without any conditions being
imposed that would have a material adverse effect on Allegiance.

         Section 11.6  REGISTRATION STATEMENT.  The Registration Statement
shall have become effective and no stop order shall have been issued or
threatened.

         Section 11.7  NEW CREDIT FACILITY.  The definitive agreements
governing the Allegiance Credit Facility shall have been executed.

         Section 11.8  PRE-SPIN-OFF TRANSACTIONS.  The pre-Spin-Off
transactions contemplated by ARTICLES III, IV and V of this Agreement shall have
been consummated in all material respects.


                                        - 56 -

<PAGE>


         Section 11.9  ANCILLARY AGREEMENTS.  Each of the Tax Sharing Agreement
and the Operating Agreements shall have been executed and each of such
agreements shall be in full force and effect.

         Section 11.10  RESIGNATIONS.  Baxter shall cause all of its designees
to resign or to be removed as officers and from all Boards of Directors or
similar governing bodies of Allegiance and its Affiliates and any Transferred
Subsidiary on which they serve.

         Section 11.11  BOARD APPROVAL.  The Board of Directors of Baxter shall
have given final approval of the Spin-Off.

         Section 11.12  ELECTION OF ALLEGIANCE BOARD.  The Board of Directors
of Allegiance as set forth on EXHIBIT J shall have been duly elected.

         Section 11.13  SATISFACTION OF CONDITIONS.  The satisfaction of such
conditions shall not create any obligations on the part of Baxter or any other
party hereto to effect the Spin-Off or in any way limit Baxter's power of
termination set forth in SECTION 15.9.


                            ARTICLE XII.  EXPENSES; TAXES

         Section 12.1  ALLOCATION OF EXPENSES.  (a)  Except as otherwise
provided in this Agreement or any other agreement contemplated hereby, or as
otherwise agreed to in writing by the Parties, all fees and expenses incurred in
connection with the transactions contemplated hereby or thereby shall be paid by
Baxter.  Specifically, (i) Baxter shall absorb all costs associated with the
dedication of internal resources and personnel to such transactions at all times
prior to the Spin-Off Date, (ii) Baxter will pay all fees and expenses which are
directly related to the implementation of the Spin-Off transactions on or prior
to the Spin-Off Date, and certain agreed software contractor fees and expenses
after the Spin-Off, and (iii) Allegiance will pay all fees and expenses with
respect to services for which Allegiance procures and receives the primary
benefit prior to and after the Spin-Off Date.

         (b)  Notwithstanding SECTION 12.1(a) above, Baxter shall be solely
responsible for the following costs incurred in connection with the transactions
contemplated hereby:  (i) the reasonable fees and expenses of Sidley & Austin in
connection with its representation of Baxter; (ii) the reasonable fees and
expenses of Skadden, Arps, Slate, Meagher & Flom in connection with its
representation of Baxter relating to the tax ruling and the opinion of counsel
on tax matters; (iii) the reasonable fees and expenses of McDermott, Will &
Emery in connection with its


                                        - 57 -

<PAGE>

representation of Allegiance relating to the creation of benefits plans; (iv)
the reasonable fees and expenses of Goldman Sachs & Co., First Chicago Bank and
Bank of America, N.A. relating to their financial advisory services rendered to
Baxter; (v) the reasonable fees and expenses of CS First Boston Corporation and
Lehman Brothers Inc. relating to their financial advisory services rendered to
Baxter; (vi) the reasonable fees and expenses of Price Waterhouse LLP in
connection with its audit and tax services rendered to Baxter; (vii) the
reasonable fees and expenses of [Towers, Perrin] and Hewitt Associates in
connection with their consulting services relating to benefits plans rendered to
Baxter and Allegiance; (viii) all SEC registration and "blue sky" filing fees
associated with the Registration Statement; (ix) the printing, mailing and
distributing the Information Statement to Baxter's stockholders; (x) the
reasonable fees and expenses of Allegiance's transfer agent and registrar
relating to the initial issuance of Allegiance Shares as a dividend to Baxter's
stockholders, (xi) the NYSE listing fees for the Allegiance Shares; (xii) the
design and initial printing of certificates of the Allegiance Shares; (xiii) the
initial distribution of the certificates of Allegiance Common Stock as a
dividend to Baxter stockholders; (xiv) the development, search and registration
of the name "Allegiance"; (xv) third party vendors for software licenses;
(xvi) retention bonuses to Allegiance employees in the amount of $5,271,174;
(xvii) office moving expenses in an amount not to exceed $3,500,000; and
(xviii)  various international professional services directly related to the
Spin-Off transactions.

         (c)  Notwithstanding SECTION 12(a)(i) above, Allegiance shall be
solely responsible for all fees, expenses and other costs incurred in connection
with the transactions contemplated hereby related to:  (i) any and all retention
bonuses in excess of $5,271,174; and (ii) any and all moving expenses in excess
of $3,500,000.

         Section 12.2  TAXES.  Baxter and Allegiance agree to cooperate to
determine the amount of sales, transfer or other similar taxes or fees
(including, without limitation, all real estate, patent, copyright and trademark
transfer taxes and recording fees) payable in connection with the transactions
contemplated by this Agreement (the "Transaction Taxes").  Baxter and/or
Allegiance as the case may be, agree to file promptly and timely the returns for
such Transaction Taxes with the appropriate taxing authorities and remit payment
of the Transaction Taxes.  Subject to the Tax Sharing Agreement, Baxter shall be
responsible for the payment of the Transaction Taxes.

         Section 12.3  DIRECTORS' AND OFFICERS' INSURANCE.  Baxter shall use
reasonable efforts to cause the persons currently serving as officers and/or
directors of Baxter who will become, effective as of the Spin-Off Date, officers
and/or


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<PAGE>

directors of Allegiance to be covered for a period of six years from the Spin-
Off Date by the directors' and officers' liability insurance policy maintained
by Baxter (PROVIDED that Baxter may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not less
advantageous than such policy) with respect to matters covered under the
existing policy occurring prior to the Spin-Off Date which were committed by
such officers and/or directors in their capacity as such; PROVIDED, HOWEVER,
that in no event shall Baxter be required to expend with respect to any year
more than 200% of the current annual premium expended by Baxter (the "Insurance
Amount") to maintain or procure insurance coverage pursuant hereto; and
PROVIDED, FURTHER, that if Baxter is unable to maintain or obtain the insurance
called for by this SECTION 12.3, Baxter shall use reasonable efforts to obtain
as much comparable insurance as available for the Insurance Amount.  In the
event Baxter or any of its successors or assigns (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Baxter assume the obligations set forth in this
SECTION 12.3.  The provisions of this SECTION 12.3 are intended to be for the
benefit of, and shall be enforceable by, each such officer and director and his
or her heirs and representatives.


                  ARTICLE XIII.  SURVIVAL, INDEMNIFICATION, CLAIMS
                                  AND OTHER MATTERS

         Section 13.1  SURVIVAL.  All covenants and agreements of Baxter and
Allegiance contained in this Agreement shall survive the Spin-Off Date
indefinitely, unless a specific survival or other applicable period is expressly
set forth therein.

         Section 13.2  INDEMNIFICATION.  (a)  Baxter shall indemnify, defend
and hold harmless Allegiance and each of its Affiliates, directors, officers,
employees and agents (collectively, "Allegiance Indemnified Parties") from and
against any and all Claims and Losses incurred or suffered by Allegiance (and/or
one or more of the Allegiance Indemnified Parties) in connection with or arising
out of or due to, directly or indirectly:

         (i)  any claim that the information included in the Registration
    Statement or the Information Statement which relates to Baxter or the
    Retained Business is false or misleading with respect to any material fact
    or omits to state any material fact required to be stated therein or


                                        - 59 -

<PAGE>

    necessary in order to make the statements therein, in light of the
    circumstances under which they were made, not misleading, regardless of
    whether the occurrence, action or other event giving rise to the applicable
    matter took place prior or subsequent to the Spin-Off;

         (ii)  the business (other than the Allegiance Business) conducted by
    Baxter or its Subsidiaries, Affiliates or predecessors on or at any time
    prior to the Spin-Off Date (including, but not limited to, any
    environmental liabilities associated with such business);

         (iii)  the Excluded BHC Assets;

         (iv)  the Excluded BHC Liabilities and the Excluded Baxter
    Liabilities;

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

         (vi)  Baxter's reduction, elimination or failure to provide any
    benefit previously provided to its employees (or employees of its
    Subsidiaries) and any act or omission by Baxter in connection with the
    transfer of assets and liabilities from the Baxter Savings Plan to the
    Allegiance Retirement Plan;

         (vii)  the indemnifiable matters set forth in SECTION 7.11(iii).

         (b)  Allegiance shall indemnify, defend and hold harmless Baxter and
each of its Affiliates, directors, officers, employees and agents (collectively,
"Baxter Indemnified Parties") from and against any and all Claims and Losses
incurred or suffered by Baxter (and/or one or more of the Baxter Indemnified
Parties) in connection with or arising out of or due to, directly or indirectly:


         (i)  any claim that the information included in the Registration
    Statement or Information Statement which relates to the Allegiance Business
    is false or misleading with respect to any material fact or omits to state
    any material fact required to be stated therein or necessary in order to
    make the statements therein, in light of the circumstances under which they
    were made, not misleading, regardless or whether the occurrence, action or
    other event


                                        - 60 -

<PAGE>

    giving rise to the applicable matter took place prior to or subsequent to
    the Spin-Off Date;

         (ii)  the Allegiance Business as conducted by Baxter or its
    Subsidiaries, Affiliates or predecessors on or at any time prior to the
    Spin-Off Date;

         (iii)  the Transferred Assets;

         (iv)  the Assumed BHC Liabilities;

         (v)  the Transferred Subsidiaries;

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

         (vii)  the employee benefits provided or the actions taken or omitted
    to be taken with respect thereto in connection with this Agreement or
    otherwise relating to the provision of employee benefits to employees or
    former employees of Allegiance (or its Subsidiaries), their beneficiaries,
    alternate payees or any other person claiming benefits through them (except
    to the extent such Claims or Losses are specifically allocated to Baxter
    pursuant to SECTION 13.2(a)(vi)), including without limitation Claims or
    Losses arising in connection with (1) Allegiance's reduction, elimination
    or failure to provide any benefit previously provided to its employees or
    employees of any of its Subsidiaries and (2) the transfer of account
    balances from the Baxter Savings Plan to the Allegiance Retirement Plan
    where such Claims or Losses are incurred as a result of (1) any act or
    omission by Allegiance (or Allegiance's representative) or (2) a
    determination by the Internal Revenue Service that the Allegiance
    Retirement Plan is not a tax-qualified plan;

         (viii)  the indemnifiable matters set forth in SECTIONS 6.3, 7.4 and
    7.11(iii); or

         (ix)  the Contracts set forth on SCHEDULE 4.2(viii)(A) and noted as
    being subject to indemnity by Allegiance.

         (c)  EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATION
UNDER THIS SECTION 13.2 SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR
ON BEHALF OF ANY INDEMNIFIED PARTY AND SHALL APPLY WITHOUT REGARD TO WHETHER THE
LOSS, LIABILITY, CLAIM, DAMAGE, COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED


                                        - 61 -

<PAGE>

HEREUNDER IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY OR ARISES AS AN
OBLIGATION FOR CONTRIBUTION.

         (d)  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL BAXTER BE LIABLE TO ALLEGIANCE (OR ANY ALLEGIANCE INDEMNIFIED
PARTY), OR ALLEGIANCE BE LIABLE TO BAXTER (OR ANY BAXTER INDEMNIFIED PARTY),
UNDER THIS AGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS OF ANTICIPATED PROFITS OR
LOSS OR DIMINUTION OF REVENUES, REGARDLESS OF THE FORM OF ACTION, WHETHER IN
CONTRACT, TORT OR OTHERWISE, EXCEPT TO THE EXTENT THAT SUCH LIABILITY HAS BEEN
ASSERTED BY A THIRD PARTY AGAINST A PARTY ENTITLED TO INDEMNIFICATION HEREUNDER.

         Section 13.3  PROCEDURE FOR INDEMNIFICATION.  (a)  If any third party
shall make any claim or commence any arbitration proceeding or suit against any
one or more of the Indemnified Parties with respect to which an Indemnified
Party intends to make any claim for indemnification against Allegiance under
SECTION 13.2(b) or against Baxter under SECTION 13.2(a), such Indemnified
Parties shall promptly give written notice to the Indemnifying Party of such
third party claim, arbitration proceeding or suit and the following provisions
shall apply.

         (b)  The Indemnifying Party shall have 20 business days after receipt
of the notice referred to in SECTION 13.3(a) to notify the Indemnified Party
that it elects to conduct and control the defense of such claim, proceeding or
suit.  If the Indemnifying Party does not give the foregoing notice, the
Indemnified Party shall have the right to defend, contest, settle or compromise
such claim, proceeding or suit in the exercise of its exclusive discretion
subject to the provisions of SECTION 13.3(c), and the Indemnifying Party shall,
upon request from any of the Indemnified Parties, promptly pay to such
Indemnified Parties in accordance with the other terms of this SECTION 13.3(b)
the amount of any Claim or Loss resulting from their liability to the third
party claimant.  If the Indemnifying Party gives the foregoing notice, the
Indemnifying Party shall have the right to undertake, conduct and control,
through counsel reasonably acceptable to the Indemnified Party, and at its sole
expense, the conduct and settlement of such claim, proceeding or suit, and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith, PROVIDED that (i) the Indemnifying Party shall not thereby permit any
lien, encumbrance or other adverse charge to thereafter attach to any asset of
any Indemnified Party; (ii) the Indemnifying Party shall not thereby permit any
injunction against any Indemnified Party; (iii) the Indemnifying Party shall
permit the Indemnified Party and counsel chosen by the Indemnified Party and
reasonably acceptable to the Indemnifying Party to monitor such conduct or
settlement and shall provide the Indemnified Party and such counsel with such
information regarding such claim, proceeding or suit as either of


                                        - 62 -

<PAGE>

them may reasonably request (which request may be general or specific), but the
fees and expenses of such counsel shall be borne by the Indemnified Party unless
(1) the Indemnifying Party and the Indemnified Party shall have mutually agreed
to the retention of such counsel or (2) the named parties to any such claim,
proceeding or suit include the Indemnified Party and the Indemnifying Party and
in the reasonable opinion of counsel to the Indemnified Party representation of
both parties by the same counsel would be inappropriate due to actual or likely
conflicts of interest between them, in either of which cases the reasonable fees
and disbursements of counsel for such Indemnified Party shall be reimbursed by
the Indemnifying Party to the Indemnified Party); and (iv) the Indemnifying
Party shall agree promptly to reimburse to the extent required under this
ARTICLE XIII the Indemnified Party for the full amount of any Claim or Loss
resulting from such claim, proceeding or suit and all related expenses incurred
by the Indemnified Party.  In no event shall the Indemnifying Party without the
prior written consent of the Indemnified Party, settle or comprise any claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the Indemnified
Party a release from all liability in respect of such claim.

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

         (c)  So long as the Indemnifying Party is contesting any such claim,
suit or proceeding in good faith, the Indemnified Party shall not pay or settle
any such claim, proceeding or suit.  Notwithstanding the foregoing, the
Indemnified Party shall have the right to pay or settle any such claim,
proceeding or suit, PROVIDED that in such event the Indemnified Party shall
waive any right to indemnity therefor by the Indemnifying Party, and no amount
in respect thereof shall be claimed as a Claim or Loss under this SECTION
13.3(C).

         If the Indemnifying Party shall have undertaken the conduct and
control of the defense of any claim, suit or proceeding as provided above, the
Indemnified Party, on not less than 30 days' prior written notice to the
Indemnifying Party, may make settlement (including payment in full) of such
claim and


                                        - 63 -

<PAGE>

such settlement shall be binding upon the Parties hereto for the purposes
hereof, unless within said 30-day period the Indemnifying Party shall have
requested the Indemnified Party to contest such claim at the expense of the
Indemnifying Party.  In such event, the Indemnified Party shall promptly comply
with such request and the Indemnifying Party shall have the right to direct the
defense of such claim or any litigation based thereon subject to all of the
conditions of SECTION 13.3(b).  Anything in this SECTION 13.3(c) to the contrary
notwithstanding, if the Indemnified Party, in the belief that a claim may
materially and adversely affect it other than as a result of money damages or
other money payments, advises the Indemnifying Party that it has determined to
make settlement of a claim, the Indemnified Party shall have the right to do so
at its own cost and expense, without any requirement to contest such claim at
the request of the Indemnifying Party, but without any right under the
provisions of this SECTION 13.3(c) for indemnification by the Indemnifying
Party.

         Section 13.4  DIRECT CLAIMS.  Any claim for indemnity on account of an
Indemnifiable Loss made directly by the Indemnified Party against the
Indemnifying Party and which does not result from a third party claim shall be
asserted by written notice from the Indemnified Party to the Indemnifying Party.
Such Indemnifying Party shall have a period of 20 business days within which to
respond thereto.  If such Indemnifying Party does not respond within such 20
business-day period, such Indemnifying Party shall be deemed to have accepted
responsibility to make payment and shall have no further right to contest the
validity of such claim.  If such Indemnifying Party does respond within such 20
business-day period and rejects such claim in whole or in part, such Indemnified
Party shall be free to pursue resolution as provided in ARTICLE XIV.

         Section 13.5  ADJUSTMENT OF INDEMNIFIABLE LOSSES.  (a) The amount
which an Indemnifying Party is required to pay to an Indemnified Party shall be
reduced (including, without limitation, retroactively) by any insurance proceeds
and other amounts actually recovered by such Indemnified Party in reduction of
the related Claim or Loss.  If an Indemnified Party shall have received an
Indemnity Payment in respect of a Claim or Loss and shall subsequently actually
receive insurance proceeds or the other amounts in respect of such Claim or
Loss, then such Indemnified Party shall pay to such Indemnifying Party a sum
equal to the lesser of (1) the amount of such insurance proceeds or other
amounts actually received and (2) the net amount of Indemnity Payments actually
received previously.  The Indemnified Party agrees that the Indemnifying Party
shall be subrogated to such Indemnified Party under any insurance policy.  An
insurer who would otherwise be obligated to pay any claim shall not be relieved
of the responsibility with respect thereto, or, solely by virtue of the
indemnification provisions hereof, have any


                                        - 64 -

<PAGE>

subrogation rights with respect thereto, it being expressly understood and
agreed that no insurer or any other third party shall be entitled to a
"windfall" (I.E., a benefit they would not be entitled to receive in the absence
of the indemnification provisions) by virtue of the indemnification provisions
hereof.

         (b)  If any Indemnified Party realizes a Tax benefit or detriment in
one or more Tax periods by reason of having incurred a Claim or Loss for which
such Indemnified Party receives an Indemnity Payment from an Indemnifying Party,
then such Indemnified Party shall pay to such Indemnifying Party an amount equal
to the Tax benefit or such Indemnifying Party shall pay to such Indemnified
Party an additional amount equal to the Tax detriment (taking into account any
Tax detriment resulting from the receipt of such additional amounts), as the
case may be.  The amount of any Tax benefit or any Tax detriment for a Tax
period realized by an Indemnified Party by reason of having incurred a Claim or
Loss shall be deemed to equal the product obtained by multiplying (i) the amount
of any deduction or inclusion in income for such period resulting from such
Claim or Loss or the payment thereof, as the case may be, by (ii) the highest
applicable marginal Tax rate for such period (PROVIDED, HOWEVER, that the amount
of any Tax benefit attributable to an amount that is creditable shall be deemed
to equal the amount of such creditable item).  Any payment due under this
SECTION 13.5(b) with respect to a Tax benefit or Tax detriment realized by an
Indemnified Party in a Tax period shall be due and payable within 30 days from
the time the return for such Tax period is due, without taking into account any
extension of time granted to the Party filing such return.

         (c)  In the event that an Indemnity Payment shall be denominated in a
currency other than United States dollars, the amount of such payment shall be
translated into United States dollars using the Foreign Exchange Rate for such
currency determined in accordance with the following rules:

         (i)  with respect to a Claim or Loss arising from payment by a
    financial institution under a guarantee, comfort letter, letter of credit,
    foreign exchange contract or similar instrument, the Foreign Exchange Rate
    for such currency shall be determined as of the date on which such
    financial institution shall have been reimbursed;

         (ii)  with respect to a Claim or Loss covered by insurance, the
    Foreign Exchange Rate for such currency shall be the Foreign Exchange Rate
    employed by the insurance company providing such insurance in settling such
    Claim or Loss with the Indemnifying Party; and

         (iii)  with respect to a Claim or Loss not covered by clause (i) or
    (ii) above, the Foreign Exchange Rate for such


                                        - 65 -

<PAGE>

    currency shall be determined as of the date that notice of the claim with
    respect to such Claim or Loss shall be given to the Indemnified Party.

         Section 13.6  CONTRIBUTION.  If the indemnification provided for in
SECTION 13.2 is unavailable to an Indemnified Party in respect of any Claim or
Loss arising out of or related to information contained in the Registration
Statement or the Information Statement, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Claim or Loss in such
proportion as is appropriate to reflect the relative fault of Allegiance or the
Allegiance Indemnified Parties (an "Allegiance Party"), on the one hand, or
Baxter or the Baxter Indemnified Parties (a "Baxter Party"), on the other hand,
in connection with the statements or omissions which resulted in such Claim or
Loss.  The relative fault of any Allegiance Party, on the one hand, and of any
Baxter Party, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission of a material fact or the omission or
alleged omission of a material fact relates to information about or supplied by
the Allegiance Business or an Allegiance Party, on the one hand, or about or by
the Retained Business or a Baxter Party, on the other hand.

         Section 13.7  NO THIRD PARTY BENEFICIARIES.  Except to the extent
expressly provided otherwise in this ARTICLE XIII, the indemnification provided
for in this Agreement, the Tax Sharing Agreement or any Operating Agreement
shall not inure to the benefit of any third party or parties and shall not
relieve any insurer or other third party who would otherwise be obligated to pay
any claim or the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, provide any subrogation rights with respect
thereto, and each Party agrees to waive such rights against the other to the
fullest extent permitted.

         Section 13.8  RELEASE OF PRE-DIVESTITURE LIABILITIES.  Each of Baxter
and Allegiance does hereby for itself, its Affiliates, successors and assigns,
remise, release and forever discharge each other Party, its Affiliates,
successors and assigns [and all Persons who at any time prior to the Spin-Off
Date have been shareholders, directors, officers, agents or employees of any
such other Party or Affiliate, their heirs, executors, administrators and
assigns], any and all claims, debts, demands, actions, causes of action, suits,
sum or sums of money, accounts, reckonings, bonds, specialties, indemnities,
exonerations, covenants, contracts, controversies, agreements, obligations,
promises, doings, omissions, variances, damages, executions and liabilities
whatsoever, both at law and in equity, arising from any events in the ordinary
course of business on or


                                        - 66 -

<PAGE>

prior to the Spin-Off Date and relating to the operations of the Retained
Business or the Allegiance Business, including the transactions and all other
activities to implement the Spin-Off (each of the foregoing being hereinafter
referred to as a "liability"), PROVIDED, HOWEVER, that nothing in this SECTION
13.8 shall release (a) any Party from (i) any liability, contingent or
otherwise, transferred, assigned or allocated and assumed in accordance with
this Agreement, the Tax Sharing Agreement or any Operating Agreement, or
(ii) any liability provided in or resulting from this Agreement, the Tax Sharing
Agreement, any Operating Agreement or any agreement between any of Baxter and
its Subsidiaries, on the one hand, and Allegiance and its Subsidiaries, on the
other hand, not terminated pursuant to the Spin-Off or any other agreement
between any of the Parties entered into in contemplation that such agreement
would remain in effect after the Spin-Off, or (b) any Party for any liability
for unpaid amounts for the sale, lease, construction or receipt of goods,
property or services purchased, obtained or used by it in the ordinary course of
business prior to the Spin-Off Date, or (c) any liability for unpaid amounts for
products or services or refunds owing on products or services due on a value-
received basis for work done at one Party's request or done on such Party's
behalf, or (d) any liability the release of which would result in the release of
any party other than a Person released pursuant to this SECTION 13.8.


                           ARTICLE XIV.  DISPUTE RESOLUTION

         Section 14.1  ESCALATION.  The Parties agree that they will attempt to
settle any claim or controversy arising out of this Agreement through good faith
negotiations in the spirit of mutual cooperation between business executives
with authority to resolve the controversy.  Subject to the provisions set forth
in SECTION 7.7, prior to taking action as provided in SECTION 14.2, the Parties
first shall submit such claim or controversy to the appropriate [divisional or
business unit chief executives] of each Party for resolution, and if such
[divisional or business unit chief executives] are unable to resolve such claim
or controversy, either Party may request that their respective chief executive
officers, or their respective delegees, attempt to resolve the dispute.  The
officers or delegees to whom any such claim or controversy is submitted shall
attempt to resolve the dispute through good faith negotiations over a reasonable
period, not to exceed 30 days in the aggregate unless otherwise agreed.  Such 30
day period shall be deemed to commence on the date of a notice from either Party
describing the particular claim or controversy.

         Section 14.2  ARBITRATION.  Subject to the provisions set forth in
SECTION 7.7, any dispute that is not resolved by negotiations pursuant to
SECTION 14.1 will, upon the written


                                        - 67 -

<PAGE>

request of either Party, be resolved by binding arbitration conducted in
accordance with the Rules of the CPR Institute for Dispute Resolution by a sole
arbitrator who is a former federal judge or other mutually agreed upon
individual.  Such arbitrator shall set a schedule for determination of such
dispute that is reasonable under the circumstances.  Such arbitrator shall
determine the dispute in accordance with this Agreement and the substantive
rules of law (but not the rules of procedure) that would be applied by a federal
court sitting in Illinois.  The arbitration shall take place in Lake County,
Illinois.  The arbitration will be governed by the United States Arbitration
Act, 9 U.S.C. Sections 1-16 and the Patent Arbitration Act, 35 U.S.C. Section
294.  Judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction.  Where this Agreement provides for future agreement
by the parties, failure to reach such agreement shall not constitute a dispute
subject to the provisions of this SECTION 14.2 except as expressly provided
otherwise.

         Section 14.3  INJUNCTIVE RELIEF.  Nothing contained in this ARTICLE
XIV shall prevent either Party from resorting to judicial process if injunctive
or other equitable relief from a court is necessary to prevent serious and
irreparable injury to one Party or to others.  The use of arbitration procedures
will not be construed under the doctrine of laches, waiver or estoppel to affect
adversely either Party's right to assert any claim or defense.


                        ARTICLE XV.  MISCELLANEOUS PROVISIONS

         Section 15.1  ENTIRE AGREEMENT.  This Agreement, the Tax Sharing
Agreement and the Operating Agreements constitute the only agreements between
the Parties with respect to the subject matters hereof, there being no prior
written or oral promises or representations not incorporated herein or therein.

         Section 15.2  CHOICE OF LAW.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Illinois and
the federal laws of the United States of America applicable therein, as though
all acts and omissions related hereto occurred in Illinois.  Any lawsuit arising
from or related to this Agreement shall only be brought in the United States
District Court for the Northern District of Illinois or the Circuit Court of
Lake County, Illinois.  To the extent permissible by law, the Parties hereby
consent to the jurisdiction and venue of such courts.  Each Party hereby waives,
releases and agrees not to assert, and agrees to cause its Affiliates to waive,
release and not assert, any rights such Party or its Affiliates may have under
any foreign law or regulation that would be inconsistent with the terms of this
Agreement as governed by Illinois law.


                                        - 68 -

<PAGE>


         Section 15.3  AMENDMENT; WAIVER.  No amendment or modification of the
terms of this Agreement shall be binding on either Party unless reduced to
writing and signed by an authorized representative of the Party to be bound.
The waiver by either Party of any particular default by the other Party shall
not affect or impair the rights of the Party so waiving with respect to any
subsequent default of the same or a different kind; nor shall any delay or
omission by either Party to exercise any right arising from any default by the
other affect or impair any rights which the nondefaulting Party may have with
respect to the same or any future default.

         Section 15.4  SEVERABILITY.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall be ineffective in such
jurisdiction to the extent of such prohibition or unenforceability without
affecting, impairing or invalidating the remaining provisions or the
enforceability of this Agreement.

         Section 15.5  COUNTERPARTS.  For convenience of the Parties, this
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original for all purposes.

         Section 15.6  RECORDS RETENTION.  Each Party will retain all
information obtained or created in the course of performance hereunder in
accordance with the records retention policy of the other Party existing from
time to time; PROVIDED, HOWEVER, that such information shall be retained for a
period of at least ten years following the date hereof.  Each Party has advised
the other of its respective policy as in effect on the Spin-Off Date and will
advise the other Party of any subsequent changes therein.  Each Party shall
provide 30 days' prior notice to the other Party before destroying any such
information.

         Section 15.7  BENEFICIARIES.  Except for the provisions of SECTIONS
12.3 and 13.2 hereof, this Agreement is solely for the benefit of the Parties
and their respective Affiliates, successors and permitted assigns and shall not
confer upon any other Person any remedy, claim, liability, reimbursement or
other right in excess of those existing without reference to this Agreement.
Nothing in this Agreement shall obligate Baxter, Allegiance or any of their
respective direct or indirect Subsidiaries to assist any Allegiance Employee to
enforce any rights such employee may have with respect to any of the employee
benefits described in this Agreement.

         Section 15.8  NOTICES.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, telex, facsimile or other standard form of telecommunications, or by


                                        - 69 -

<PAGE>

registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

         If to Baxter:

              Baxter International Inc.
              One Deerfield Parkway
              Deerfield, IL  60015
              Attention:  General Counsel
              Facsimile:  (847) 948-4000

         with copies to:

              ______________________________
              ______________________________
              ______________________________
              ______________________________

         If to Allegiance:

              Allegiance Corporation
              1450 Waukegan Road
              McGaw Park, IL  60085
              Attention:  General Counsel
              Facsimile:  (847) 689-6812

         with copies to:

              ______________________________
              ______________________________
              ______________________________
              ______________________________

         Section 15.9  TERMINATION.  Notwithstanding any provision hereof, this
Agreement may be terminated and the Spin-Off abandoned at any time prior to the
Spin-Off Date by and in the sole discretion of the Board of Directors of Baxter
without the approval of any Person.  In the event of such termination, no Party
shall have any liability to any Person by reason of this Agreement, except that
Baxter shall be liable for any costs and expenses, including attorneys' fees,
incurred by Allegiance or its Subsidiaries prior to or arising out of such
termination.

         Section 15.10  PERFORMANCE.  Each Party shall cause to be performed,
and hereby guarantee the performance of, all actions, agreements and obligations
set forth herein to be performed by any Subsidiary or Affiliate of such Party.


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<PAGE>



         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be signed by their authorized representatives as of the date first above
written.


                             BAXTER INTERNATIONAL INC.



                             By:  ______________________________
                                  Name:
                                  Title:




                             ALLEGIANCE CORPORATION



                             By:  ______________________________
                                  Name:
                                  Title:


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