Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-11083
BOSTON SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
04-2695240
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
300 BOSTON SCIENTIFIC WAY, MARLBOROUGH, MASSACHUSETTS 01752-1234
(Address of principal executive offices) (zip code)
(508) 683-4000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer o
Non-Accelerated filer o
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 
 
Shares outstanding
Class
 
as of April 29, 2016
Common Stock, $.01 par value
 
1,356,866,856

Table of Contents

TABLE OF CONTENTS

 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2
Table of Contents

PART I
FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 
Three Months Ended
March 31,
in millions, except per share data
2016
 
2015
 
 
 
 
Net sales
$
1,964

 
$
1,768

Cost of products sold
573

 
520

Gross profit
1,391

 
1,248

 
 
 
 
Operating expenses:
 
 
 
Selling, general and administrative expenses
716

 
668

Research and development expenses
210

 
192

Royalty expense
19

 
17

Amortization expense
136

 
113

Contingent consideration expense (benefit)
4

 
27

Restructuring charges
3

 
6

Litigation-related charges (credits)
10

 
193

Pension termination charges
—

 
8

 
1,098

 
1,224

Operating income (loss)
293

 
24

 
 
 
 
Other income (expense):
 
 
 
Interest expense
(59
)
 
(60
)
Other, net
(6
)
 
(15
)
Income (loss) before income taxes
228

 
(51
)
Income tax expense (benefit)
26

 
(50
)
Net income (loss)
$
202

 
$
(1
)
 
 
 
 
Net income (loss) per common share — basic
$
0.15

 
$
(0.00
)
Net income (loss) per common share — assuming dilution
$
0.15

 
$
(0.00
)
 
 
 
 
Weighted-average shares outstanding
 
 
 
Basic
1,350.4

 
1,333.7

Assuming dilution
1,369.9

 
1,333.7








See notes to the unaudited condensed consolidated financial statements.


3
Table of Contents

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

 
Three Months Ended
March 31,
(in millions)
2016
 
2015
Net income (loss)
$
202

 
$
(1
)
Other comprehensive income (loss):
 
 
 
Foreign currency translation adjustment
16

 
(35
)
Net change in unrealized gains and losses on derivative financial instruments, net of tax
(69
)
 
28

Net change in certain retirement plans, net of tax
—

 
5

Total other comprehensive income (loss)
(53
)
 
(2
)
Total comprehensive income (loss)
$
149

 
$
(3
)

See notes to the unaudited condensed consolidated financial statements.


4
Table of Contents

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
As of
 
March 31,
 
December 31,
in millions, except share and per share data
2016
 
2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
338

 
$
319

Trade accounts receivable, net
1,291

 
1,275

Inventories
1,022

 
1,016

Deferred and prepaid income taxes
76

 
496

Other current assets
437

 
365

Total current assets
3,164

 
3,471

Property, plant and equipment, net
1,464

 
1,490

Goodwill
6,477

 
6,473

Other intangible assets, net
6,062

 
6,194

Other long-term assets
551

 
505

TOTAL ASSETS
$
17,718

 
$
18,133

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current debt obligations
$
253

 
$
3

Accounts payable
232

 
209

Accrued expenses
1,792

 
1,970

Other current liabilities
331

 
248

Total current liabilities
2,608

 
2,430

Long-term debt
5,424

 
5,674

Deferred income taxes
295

 
735

Other long-term liabilities
2,934

 
2,974

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Stockholders’ equity
 
 
 
Preferred stock, $.01 par value - authorized 50,000,000 shares,
none issued and outstanding


 


Common stock, $.01 par value - authorized 2,000,000,000 shares -
 issued 1,602,133,758 shares as of March 31, 2016 and
1,594,213,786 shares as of December 31, 2015
16

 
16

Treasury stock, at cost - 247,566,270 shares as of March 31, 2016
and 247,566,270 shares as of December 31, 2015
(1,717
)
 
(1,717
)
Additional paid-in capital
16,848

 
16,860

Accumulated deficit
(8,725
)
 
(8,927
)
Accumulated other comprehensive income (loss), net of tax
35

 
88

Total stockholders’ equity
6,457

 
6,320

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
17,718

 
$
18,133


See notes to the unaudited condensed consolidated financial statements.

5
Table of Contents

BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 
Three Months Ended
March 31,
in millions
2016
 
2015
 
 
 
 
Cash provided by (used for) operating activities
$
116

 
$
(197
)
 
 
 
 
Investing activities:
 
 
 
Purchases of property, plant and equipment
(60
)
 
(46
)
Proceeds from disposal of property, plant and equipment
30

 
—

Purchases of privately held securities
(13
)
 
—

Purchases of notes receivable
(5
)
 
(3
)
Payments for investments and acquisitions of certain technologies
—

 
(2
)
 
 
 
 
Cash provided by (used for) investing activities
(48
)
 
(51
)
 
 
 
 
Financing activities:
 
 
 
Payment of contingent consideration
(21
)
 
(87
)
Proceeds from borrowings on credit facilities
40

 
—

Payments on borrowings from credit facilities
(40
)
 
—

Cash used to net share settle employee equity awards
(57
)
 
(61
)
Proceeds from issuances of shares of common stock
27

 
54

 
 
 
 
Cash provided by (used for) financing activities
(51
)
 
(94
)
 
 
 
 
Effect of foreign exchange rates on cash
2

 
(3
)
 
 
 
 
Net increase (decrease) in cash and cash equivalents
19

 
(345
)
Cash and cash equivalents at beginning of period
319

 
587

Cash and cash equivalents at end of period
$
338

 
$
242

 
 
 
 
Supplemental Information
 
 
 
Stock-based compensation expense
$
28

 
$
26


See notes to the unaudited condensed consolidated financial statements.


6
Table of Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016 . For further information, refer to the consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.

Subsequent Events

We evaluate events occurring after the date of our most recent accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in our financial statements. We did not identify any material subsequent events requiring adjustment to our accompanying unaudited condensed consolidated financial statements (recognized subsequent events) for the three months ended March 31, 2016 . Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note I - Commitments and Contingencies for more information.

Pension Termination Charges

Following our 2006 acquisition of Guidant Corporation, we sponsored the Guidant Retirement Plan, a frozen noncontributory defined benefit plan covering a select group of current and former employees. The plan was partially frozen as of September 25, 1995 and completely frozen as of May 31, 2007. The plan was subsequently terminated effective December 1, 2014. During 2015, we finalized the termination process and settled the plan’s obligations, and as a result, we recorded pension termination charges of $8 million during the first quarter of 2015 and an additional $36 million during the third quarter of 2015 for a total of $44 million of pension termination charges in the year ended December 31, 2015. We do not expect to record any additional pension termination charges in 2016 related to the termination of the Guidant Retirement Plan.
NOTE B – ACQUISITIONS AND STRATEGIC INVESTMENTS

We did not close any material acquisitions during the first quarter of 2016 and 2015.

Contingent Consideration

Certain of our acquisitions involve contingent consideration arrangements. Payment of additional consideration is generally contingent on the acquired company reaching certain performance milestones, including attaining specified revenue levels, achieving product development targets and/or obtaining regulatory approvals. In accordance with U.S. GAAP, we recognize a liability equal to the fair value of the contingent payments we expect to make as of the acquisition date. We re-measure this liability each reporting period and record changes in the fair value through a separate line item within our condensed consolidated statements of operations.

We recorded net expense s related to the changes in fair value of our contingent consideration liabilities of $4 million and $27 million during the first quarter of 2016 and the first quarter of 2015 , respectively. We paid contingent consideration of $63 million during the first quarter of 2016 and $99 million during the first quarter of 2015 .

Changes in the fair value of our contingent consideration liabilities were as follows (in millions):
Balance as of December 31, 2015
$
246

Other amounts recorded related to prior acquisitions
1

Fair value adjustments
4

Contingent payments related to prior period acquisitions
(63
)
Balance as of March 31, 2016
$
188


As of March 31, 2016 , the maximum amount of future contingent consideration (undiscounted) that we could be required to pay was approximately $1.586 billion .

7


Contingent consideration liabilities are remeasured to fair value each reporting period using projected revenues, discount rates, probabilities of payment and projected payment dates. The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs:
Contingent Consideration Liabilities
Fair Value as of March 31, 2016
Valuation Technique
Unobservable Input
Range
R&D, regulatory and commercialization-based Milestones
$20 million
Discounted Cash Flow
Discount Rate
2.1% - 3.7%
Probability of Payment
32% - 95%
Projected Year of Payment
2017 - 2021
Revenue-based Payments
$62 million
Discounted Cash Flow
Discount Rate
11% - 15%
Projected Year of Payment
2016 - 2022
$106 million
Monte Carlo
Revenue Volatility
15%
Risk Free Rate
LIBOR Term Structure
Projected Year of Payment
2016 - 2018

Increases or decreases in the fair value of our contingent consideration liabilities can result from changes in discount periods and rates, as well as changes in the timing and amount of revenue estimates or in the timing or likelihood of achieving R&D, regulatory commercialization-based and revenue-based milestones. Projected contingent payment amounts related to certain R&D, regulatory and commercialization-based and certain revenue-based milestones are discounted back to the current period using a discounted cash flow (DCF) model. Other revenue-based payments are valued using a Monte Carlo valuation model, which simulates future revenues during the earn-out period using management's best estimates. Projected revenues are based on our most recent internal operational budgets and long-range strategic plans. Increases in projected revenues and probabilities of payment may result in higher fair value measurements. Increases in discount rates and the time to payment may result in lower fair value measurements. Increases or decreases in any of those inputs together, or in isolation, may result in a significantly lower or higher fair value measurement.

Strategic Investments

We did not close any material strategic investments during the first quarter of 2016 and 2015.

We account for certain of our strategic investments, as equity method investments, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 323, Investments - Equity Method and Joint Ventures. The book value of investments that we accounted for under the equity method of accounting was $184 million as of March 31, 2016 and $173 million as of December 31, 2015 . The aggregate value of our cost method investments was $46 million as of March 31, 2016 and $45 million as of December 31, 2015 . In addition we had notes receivable from certain companies that we account for under the cost method of $32 million as of March 31, 2016 and $30 million as of December 31, 2015 .

As of March 31, 2016 , the book value of our equity method investments exceeded our share of the book value of the investees’ underlying net assets by approximately $100 million , which represents amortizable intangible assets and in-process research and development, corresponding deferred tax liabilities, and goodwill. During the three months ended March 31, 2016 and March 31, 2015 , the net losses from our equity method adjustments, presented within the Other, net caption of our condensed consolidated statement of operations, were immaterial.


8

NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS

The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated write-offs of goodwill as of March 31, 2016 and December 31, 2015 are as follows:
 
As of
 
March 31, 2016
 
December 31, 2015
 
Gross Carrying
 
Accumulated
Amortization/
 
Gross
Carrying
 
Accumulated
Amortization/
(in millions)
Amount
 
Write-offs
 
Amount
 
Write-offs
Amortizable intangible assets
 
 
 
 
 
 
 
Technology-related
$
8,948

 
$
(4,155
)
 
$
8,948

 
$
(4,054
)
Patents
520

 
(362
)
 
520

 
(358
)
Other intangible assets
1,531

 
(639
)
 
1,529

 
(610
)
 
$
10,999

 
$
(5,156
)
 
$
10,997

 
$
(5,022
)
Unamortizable intangible assets
 
 
 
 
 
 
 
Goodwill
$
16,377

 
$
(9,900
)
 
$
16,373

 
$
(9,900
)
In-process research and development (IPR&D)
99

 
 
 
99

 
 
Technology-related
120

 
—

 
120

 
—

 
$
16,596

 
$
(9,900
)
 
$
16,592

 
$
(9,900
)

Our technology-related intangible assets that are not subject to amortization represent technical processes, intellectual property and/or institutional understanding acquired through business combinations that are fundamental to the on-going operations of our business and have no limit to their useful life. Our technology-related intangible assets that are not subject to amortization are comprised primarily of certain acquired balloon and other technology, which is foundational to our continuing operations within the Cardiovascular market and other markets within interventional medicine. We assess our indefinite-lived intangible assets at least annually for impairment and reassess their classification as indefinite-lived assets. We assess qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that our indefinite-lived intangible assets are impaired. If we conclude that it is more likely than not that the asset is impaired, we then determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with ASC Topic 350, Intangibles - Goodwill and Other.

The following represents our goodwill balance by global reportable segment:
(in millions)
Cardiovascular
 
Rhythm Management
 
MedSurg
 
Total
Balance as of December 31, 2015
$
3,451

 
$
292

 
$
2,730

 
$
6,473

Purchase price adjustments
—

 
—

 
4

 
4

Balance as of March 31, 2016
$
3,451

 
$
292

 
$
2,734

 
$
6,477


Goodwill Impairment Testing

We test our goodwill balances during the second quarter of each year for impairment, or more frequently if indicators are present or changes in circumstances suggest that an impairment may exist. Refer to Note D - Goodwill and Other Intangible Assets contained in Item 8 of our most recent Annual Report filed on Form 10-K for discussion of our most recent goodwill impairment test.

The following is a rollforward of accumulated goodwill write-offs by global reportable segment:
(in millions)
Cardiovascular
 
Rhythm Management
 
MedSurg
 
Total
Accumulated write-offs as of December 31, 2015
$
(1,479
)
 
$
(6,960
)
 
$
(1,461
)
 
$
(9,900
)
Goodwill written off
—

 
—

 
—

 
—

Accumulated write-offs as of March 31, 2016
$
(1,479
)
 
$
(6,960
)
 
$
(1,461
)
 
$
(9,900
)


9

Intangible Asset Impairment Testing

On a quarterly basis, we monitor for events or other potential indicators of impairment that would warrant an interim impairment test of our intangible assets. We did not record any intangible asset impairment charges during the three months ended March 31, 2016 and March 31, 2015.
 
 
 
 
 
 
NOTE D – FAIR VALUE MEASUREMENTS

Derivative Instruments and Hedging Activities

We address market risk from changes in foreign currency exchange rates and interest rates through a risk management program that includes the use of derivative financial instruments, and we operate the program pursuant to documented corporate risk management policies. Our derivative instruments do not subject our earnings or cash flows to material risk, as gains and losses on these derivatives generally offset losses and gains on the item being hedged. We do not enter into derivative transactions for speculative purposes, and we do not have any non-derivative instruments that are designated as hedging instruments pursuant to FASB ASC Topic 815, Derivatives and Hedging (Topic 815).

Currency Hedging

We are exposed to currency risk consisting primarily of foreign currency denominated monetary assets and liabilities, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We manage our exposure to changes in foreign currency exchange rates on a consolidated basis to take advantage of offsetting transactions. We use derivative instruments, and non-derivative transactions to reduce the risk that our earnings and cash flows associated with these foreign currency denominated balances and transactions will be adversely affected by foreign currency exchange rate changes.

Currently or Previously Designated Foreign Currency Hedges

All of our designated currency hedge contracts outstanding as of March 31, 2016 and December 31, 2015 were cash flow hedges under Topic 815 intended to protect the U.S. dollar value of our forecasted foreign currency denominated transactions. We record the effective portion of any change in the fair value of foreign currency cash flow hedges in other comprehensive income (OCI) until the related third-party transaction occurs. Once the related third-party transaction occurs, we reclassify the effective portion of any related gain or loss on the foreign currency cash flow hedge to earnings. In the event the hedged forecasted transaction does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. We had currency derivative instruments designated as cash flow hedges outstanding in the contract amount of $2.197 billion as of March 31, 2016 and $1.458 billion as of December 31, 2015 .

We recognized net gains of $48 million in earnings on our cash flow hedges during the first quarter of 2016 , as compared to net gains of $49 million during the first quarter of 2015 . All currency cash flow hedges outstanding as of March 31, 2016 mature within 36  months. As of March 31, 2016 , $77 million of net gains, net of tax, were recorded in accumulated other comprehensive income (AOCI) to recognize the effective portion of the fair value of any currency derivative instruments that are, or previously were, designated as foreign currency cash flow hedges, as compared to net gains, net of tax, of $145 million as of December 31, 2015 . As of March 31, 2016 , $70 million of net gains, net of tax, may be reclassified to earnings within the next twelve months.

The success of our hedging program depends, in part, on forecasts of transaction activity in various currencies (primarily Japanese yen, British pound sterling, Australian dollar and Canadian dollar). We may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in foreign currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.

Non-designated Foreign Currency Contracts

We use currency forward contracts as a part of our strategy to manage exposure related to foreign currency denominated monetary assets and liabilities. These currency forward contracts are not designated as cash flow, fair value or net investment hedges under Topic 815; are marked-to-market with changes in fair value recorded to earnings; and are entered into for periods consistent with currency transaction exposures, generally less than one year. We had currency derivative instruments not designated as hedges under Topic 815 outstanding in the contract amount of $2.257 billion as of March 31, 2016 and $2.090 billion as of December 31, 2015 .

10


Interest Rate Hedging

Our interest rate risk relates primarily to U.S. dollar borrowings, partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates by converting floating-rate debt into fixed-rate debt or fixed-rate debt into floating-rate debt.

We designate these derivative instruments either as fair value or cash flow hedges under Topic 815. We record changes in the value of fair value hedges in interest expense, which is generally offset by changes in the fair value of the hedged debt obligation. Interest payments made or received related to our interest rate derivative instruments are included in interest expense. We record the effective portion of any change in the fair value of derivative instruments designated as cash flow hedges as unrealized gains or losses in OCI, net of tax, until the hedged cash flow occurs, at which point the effective portion of any gain or loss is reclassified to earnings. We record the ineffective portion of our cash flow hedges in interest expense. In the event the hedged cash flow does not occur, or it becomes no longer probable that it will occur, we reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.

In the fourth quarter of 2013, we entered into interest rate derivative contracts having a notional amount of $450 million to convert fixed-rate debt into floating-rate debt, which we designated as fair value hedges. During the first quarter of 2015, we terminated these hedges, and we received total proceeds of approximately $35 million , which included approximately $7 million of net accrued interest receivable. We assessed at inception, and re-assessed on an ongoing basis, whether the interest rate derivative contracts were highly effective in offsetting changes in the fair value of the hedged fixed-rate debt. During the first quarter of 2015 , we recognized, in interest expense, an $8 million loss on our hedged debt and an $8 million gain on the related interest rate derivative contract.

We are amortizing the gains and losses on previously terminated interest rate derivative instruments, including fixed-to-floating interest rate contracts designated as fair value hedges, and forward starting interest rate derivative contracts and treasury locks designated as cash flow hedges upon termination into earnings as a component of interest expense over the remaining term of the hedged debt, in accordance with Topic 815. The carrying amount of certain of our senior notes included unamortized gains of $60 million as of March 31, 2016 and $63 million as of December 31, 2015 , and unamortized losses of $1 million as of March 31, 2016 and $1 million as of December 31, 2015 related to the fixed-to-floating interest rate contracts. In addition, we had pre-tax net gains within AOCI related to terminated forward starting interest rate derivative contracts and treasury locks of $10 million as of March 31, 2016 and $10 million as of December 31, 2015 . The net gains that we recognized as a reduction of interest expense in earnings related to previously terminated interest rate derivatives were approximately $3 million during the first quarter of 2016 and $2 million during the first quarter of 2015 . As of March 31, 2016 , $13 million of pre-tax net gains may be reclassified to earnings within the next twelve months as a reduction to interest expense from amortization of our terminated interest rate derivative contracts.

Counterparty Credit Risk

We do not have significant concentrations of credit risk arising from our derivative financial instruments, whether from an individual counterparty or a related group of counterparties. We manage the concentration of counterparty credit risk on our derivative instruments by limiting acceptable counterparties to a diversified group of major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to each counterparty, and actively monitoring their credit ratings and outstanding fair values on an ongoing basis. Furthermore, none of our derivative transactions are subject to collateral or other security arrangements, and none contain provisions that are dependent on our credit ratings from any credit rating agency.

We also employ master netting arrangements that reduce our counterparty payment settlement risk on any given maturity date to the net amount of any receipts or payments due between us and the counterparty financial institution. Thus, the maximum loss due to counterparty credit risk is limited to the unrealized gains in such contracts net of any unrealized losses should any of these counterparties fail to perform as contracted. Although these protections do not eliminate concentrations of credit risk, as a result of the above considerations, we do not consider the risk of counterparty default to be significant.

Fair Value of Derivative Instruments

The following presents the effect of our derivative instruments designated as cash flow hedges under Topic 815 on our accompanying unaudited condensed consolidated statements of operations during the first quarter of 2016 and 2015 (in millions):

11

 
Amount of Pre-tax
Gain (Loss)
Recognized in OCI
(Effective Portion)
 
Amount of Pre-tax Gain (Loss) Reclassified from AOCI into Earnings
(Effective Portion)
 
Location in Statement of
Operations
Three Months Ended March 31, 2016
 
 
 
 
 
Currency hedge contracts
$
59

 
$
48

 
Cost of products sold
 
$
59

 
$
48

 
 
Three Months Ended March 31, 2015
 
 
 
 
 
Currency hedge contracts
$
93

 
$
49

 
Cost of products sold
 
$
93

 
$
49

 
 

The amount of gain (loss) recognized in earnings related to the ineffective portion of hedging relationships was immaterial for all periods presented.

Net gains and losses on currency hedge contracts not designated as hedging instruments were offset by net losses and gains from foreign currency transaction exposures, as shown in the following table:
in millions
 
Location in Statement of Operations
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Gain (loss) on currency hedge contracts
 
Other, net
 
$
(39
)
 
$
23

Gain (loss) on foreign currency transaction exposures
 
Other, net
 
34

 
(33
)
Net foreign currency gain (loss)
 
Other, net
 
$
(5
)
 
$
(10
)

Topic 815 requires all derivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (Topic 820), by considering the estimated amount we would receive or pay to transfer these instruments at the reporting date and by taking into account current interest rates, foreign currency exchange rates, the creditworthiness of the counterparty for the assets and our creditworthiness for liabilities. In certain instances, we may utilize financial models to measure fair value. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. As of March 31, 2016 , we have classified all of our derivative assets and liabilities within Level 2 of the fair value hierarchy prescribed by Topic 820, as discussed below, because these observable inputs are available for substantially the full term of our derivative instruments.


12

The following are the balances of our derivative assets and liabilities as of March 31, 2016 and December 31, 2015 :
 
 
As of
 
 
March 31,
 
December 31,
(in millions)
Location in Balance Sheet (1)
2016
 
2015
Derivative Assets:
 
 
 
 
Currently or Previously Designated Hedging Instruments
 
 
 
Currency hedge contracts
Other current assets
$
101

 
$
138

Currency hedge contracts
Other long-term assets
34

 
66

 
 
135

 
204

Non-Designated Hedging Instruments
 
 
 
 
Currency hedge contracts
Other current assets
29

 
33

Total Derivative Assets
 
$
164

 
$
237

 
 
 
 
 
Derivative Liabilities:
 
 
 
 
Currently or Previously Designated Hedging Instruments
 
 
 
Currency hedge contracts
Other current liabilities
$
6

 
$
1

Currency hedge contracts
Other long-term liabilities
22

 
—

 
 
28

 
1

Non-Designated Hedging Instruments
 
 
 
 
Currency hedge contracts
Other current liabilities
62

 
22

Total Derivative Liabilities
 
$
90

 
$
23


(1)
We classify derivative assets and liabilities as current when the remaining term of the derivative contract is one year or less.

Other Fair Value Measurements

Recurring Fair Value Measurements

On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices, where available. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:

•
Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.

•
Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.

•
Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.

13

Assets and liabilities measured at fair value on a recurring basis consist of the following as of March 31, 2016 and December 31, 2015 :
 
March 31, 2016
 
As of December 31, 2015
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 

 
 
 
 
 
 
 
 

 
 
 
 
Money market and government funds
$
91

 
$
—

 
$
—

 
$
91

 
$
118

 
$
—

 
$
—

 
$
118

Currency hedge contracts
—

 
164

 
—

 
164

 
—

 
237

 
—

 
237

 
$
91

 
$
164

 
$
—

 
$
255

 
$
118

 
$
237

 
$
—

 
$
355

Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Currency hedge contracts
$
—

 
$
90

 
$
—

 
$
90

 
$
—

 
$
23

 
$
—

 
$
23

Accrued contingent consideration
—

 
—

 
188

 
188

 
—

 
—

 
246

 
246

 
$
—

 
$
90

 
$
188

 
$
278

 
$
—

 
$
23

 
$
246

 
$
269


Our investments in money market and government funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. These investments are classified as cash and cash equivalents within our accompanying unaudited condensed consolidated balance sheets, in accordance with U.S. GAAP and our accounting policies. In addition to $91 million invested in money market and government funds as of March 31, 2016 , we had $15 million in short-term time deposits and $232 million in interest bearing and non-interest bearing bank accounts. In addition to $118 million invested in money market and government funds as of December 31, 2015 , we had $31 million in short-term deposits and $170 million in interest bearing and non-interest bearing bank accounts.

Our recurring fair value measurements using significant unobservable inputs (Level 3) relate solely to our contingent consideration liabilities. Refer to Note B - Acquisitions and Strategic Investments for a discussion of the changes in the fair value of our contingent consideration liabilities.

Non-Recurring Fair Value Measurements

We hold certain assets and liabilities that are measured at fair value on a non-recurring basis in periods subsequent to initial recognition. The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. Refer to Note B – Acquisitions and Strategic Investments for a discussion of our cost method investments.

The fair value of our outstanding debt obligations was $6.037 billion as of March 31, 2016 and $5.887 billion as of December 31, 2015 , which was determined by using primarily quoted market prices for our publicly registered senior notes, classified as Level 1 within the fair value hierarchy. Refer to Note E – Borrowings and Credit Arrangements for a discussion of our debt obligations.

NOTE E – BORROWINGS AND CREDIT ARRANGEMENTS

We had total debt of $5.677 billion as of March 31, 2016 and December 31, 2015 . The debt maturity schedule for the significant components of our debt obligations as of March 31, 2016 is as follows:
 
 
 
 
(in millions)
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
Senior Notes
$
—

 
$
250

 
$
600

 
$
—

 
$
1,450

 
$
2,350

 
$
4,650

Term Loans
—

 
85

 
390

 
150

 
375

 
—

 
1,000

 
$
—

 
$
335

 
$
990

 
$
150

 
$
1,825

 
$
2,350

 
$
5,650

Note:
The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

14

Revolving Credit Facility

On April 10, 2015, we entered into a new $2.000 billion revolving credit facility (the 2015 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billion revolving credit facility. The 2015 Facility matures on April 10, 2020. Eurodollar and multicurrency loans under the 2015 Facility bear interest at LIBOR plus an interest margin of between 0.900 percent and 1.500 percent , based on our corporate credit ratings and consolidated leverage ratio ( 1.300 percent as of March 31, 2016 ). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio and the total amount of revolving credit commitment, regardless of usage, under the credit agreement ( 0.200 percent per year as of March 31, 2016 ). The 2015 Facility contains covenants which, among other things, require that we maintain a minimum interest coverage ratio of 3.0 times consolidated EBITDA and a maximum leverage ratio of 4.5 times consolidated EBITDA for the first four fiscal quarter-ends following the closing of the AMS Portfolio Acquisition on August 3, 2015, and decreasing to 4.25 times , 4.0 times , and 3.75 times consolidated EBITDA for the next three fiscal quarter-ends after such four fiscal quarter-ends, respectively, and then to 3.50 times for each fiscal quarter-end thereafter. There were no amounts borrowed under our current and prior revolving credit facilities as of March 31, 2016 or December 31, 2015 .
 
Covenant Requirement
as of March 31, 2016
 
Actual as of
March 31, 2016
Maximum leverage ratio (1)
4.5 times
 
2.9 times
Minimum interest coverage ratio (2)
3.0 times
 
7.0 times

(1)
Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.
(2)
Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

The credit agreement for the 2015 Facility provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through the credit agreement maturity, of any non-cash charges and up to $620 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of March 31, 2016 , we had $547 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments not exceed $2.000 billion in the aggregate. As of March 31, 2016 , we had $1.680 billion of the combined legal and debt exclusion remaining.

As of and through March 31, 2016 , we were in compliance with the required covenants.

Term Loans

As of March 31, 2016 , we had an aggregate of $1.000 billion outstanding under our unsecured term loan facilities and $1.000 billion outstanding as of December 31, 2015 . These facilities include an unsecured term loan facility entered into in August 2013 (2013 Term Loan) which had $250 million outstanding as of March 31, 2016 and December 31, 2015 , along with an unsecured term loan credit facility entered into in April 2015 (2015 Term Loan) which had $750 million outstanding as of March 31, 2016 and December 31, 2015 .

Borrowings under the 2013 Term Loan bear interest at LIBOR plus an interest margin between 1.00 percent and 1.75 percent (currently 1.50 percent ) based on our corporate credit ratings and consolidated leverage ratio. We repaid $150 million of our 2013 Term Loan facility in 2015. As a result and in accordance with the credit agreement, the remaining outstanding balance is payable with $10 million due in the fourth quarter of 2017, $20 million due in each of the first and second quarters of 2018 and the remaining principal amount due at the final maturity date in August 2018. The 2013 Term Loan borrowings are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with the 2015 Term Loan facility. The maximum leverage ratio requirement is 4.5 times , and our actual leverage ratio as of March 31, 2016 is 2.9 times . The minimum interest coverage ratio requirement is 3.0 times , and our actual interest coverage ratio as of March 31, 2016 is 7.0 times .

On April 10, 2015, we entered into a new $750 million unsecured term loan credit facility (2015 Term Loan) which matures on August 3, 2020. The 2015 Term Loan was funded on August 3, 2015 and was used to partially fund the AMS Portfolio Acquisition, including the payment of fees and expenses. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent ), based on our corporate credit ratings and consolidated leverage ratio. The 2015 Term Loan requires quarterly principal payments of $38 million commencing in the third quarter of 2017,

15

and the remaining principal amount is due at the final maturity date of August 3, 2020. The 2015 Term Loan agreement requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times , and our actual leverage ratio as of March 31, 2016 is 2.9 times . The minimum interest coverage ratio requirement is 3.0 times , and our actual interest coverage ratio as of March 31, 2016 is 7.0 times .

Senior Notes

We had senior notes outstanding of $4.650 billion as of March 31, 2016 and December 31, 2015 . In May 2015, we completed the offering of $1.850 billion in aggregate principal amount of senior notes consisting of $600 million in aggregate principal amount of 2.850% notes due 2020, $500 million in aggregate principal amount of 3.375% notes due 2022 and $750 million in aggregate principal amount of 3.850% notes due 2025. The net proceeds from the offering of the notes, after deducting underwriting discounts and estimated offering expenses, were approximately $1.831 billion . We used a portion of the net proceeds from the senior notes offering to redeem $400 million aggregate principal amount of our 5.500% notes due November 2015 and $600 million aggregate principal amount of our   6.400% notes due June 2016. The remaining senior notes offering proceeds, together with the 2015 Term Loan, were used to fund the AMS Portfolio Acquisition. We recorded a charge of $45 million in interest expense, during the second quarter of 2015, for premiums, accelerated amortization of debt issuance costs, and investor discount costs net of interest rate hedge gains related to the early debt extinguishment.

Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility, to the extent if borrowed by our subsidiaries and to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We maintain a $300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. The credit and security facility requires that we maintain a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times , and our actual leverage ratio as of March 31, 2016 is 2.9 times . We had no borrowings outstanding under this facility as of March 31, 2016 and December 31, 2015 .

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $411 million as of March 31, 2016 . We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $178 million of receivables as of March 31, 2016 at an average interest rate of 1.7 percent , and $151 million as of December 31, 2015 at an average interest rate of 2.4 percent .

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 21.000 billion Japanese yen (approximately $187 million as of March 31, 2016 ). We de-recognized $146 million of notes receivable and factored receivables as of March 31, 2016 at an average interest rate of 1.6 percent and $132 million of notes receivable as of December 31, 2015 at an average interest rate of 1.6 percent . De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.

As of March 31, 2016 we had outstanding letters of credit of $43 million , as compared to $44 million as of December 31, 2015 , which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2016 and December 31, 2015 , none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of March 31, 2016 or December 31, 2015 . We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.

NOTE F – RESTRUCTURING-RELATED ACTIVITIES

On an ongoing basis, we monitor the dynamics of the economy, the healthcare industry, and the markets in which we compete. We continue to assess opportunities for improved operational effectiveness and efficiency, and better alignment of expenses with revenues, while preserving our ability to make the investments in research and development projects, capital and our people that we believe are essential to our long-term success. As a result of these assessments, we have undertaken various restructuring initiatives in order to enhance our growth potential and position us for long-term success. These initiatives are described below.

16


2014 Restructuring Plan

On October 22, 2013, our Board of Directors approved, and we committed to, a restructuring initiative (the 2014 Restructuring Plan). The 2014 Restructuring Plan is intended to build on the progress we have made to address financial pressures in a changing global marketplace, further strengthen our operational effectiveness and efficiency and support new growth investments. Key activities under the plan include continued implementation of our ongoing Plant Network Optimization (PNO) strategy, continued focus on driving operational efficiencies and ongoing business and commercial model changes. The PNO strategy is intended to simplify our manufacturing plant structure by transferring certain production lines among facilities. Other activities involve rationalizing organizational reporting structures to streamline various functions, eliminate bureaucracy, increase productivity and better align resources to business strategies and marketplace dynamics. These activities were initiated in the fourth quarter of 2013 and were substantially completed by the end of 2015, except for certain ongoing actions associated with our PNO strategy, which we expect to be substantially completed by the end of 2016.

The implementation of the 2014 Restructuring Plan will result in total pre-tax charges of approximately $255 million to $270 million , and approximately $240 million to $255 million of these charges are estimated to result in cash outlays, of which we have made payments of $212 million through March 31, 2016 . We have recorded related costs of $242 million since the inception of the plan, and recorded a portion of these expenses as restructuring charges and the remaining portion through other lines within our consolidated statements of operations.

The following table provides a summary of our estimates of costs associated with the 2014 Restructuring Plan by major type of cost:
Type of cost
Total estimated amount expected to be incurred
Restructuring charges:
 
Termination benefits
$95 million to $100 million
Other (1)
$30 million to $35 million
Restructuring-related expenses:
 
Other (2)
$130 million to $135 million
 
$255 million to $270 million

(1) Consists primarily of consulting fees and costs associated with contract cancellations.
(2) Comprised of other costs directly related to the 2014 Restructuring Plan, including program management, accelerated depreciation, and costs to transfer product lines among facilities.

We recorded net restructuring charges pursuant to our restructuring plans of $3 million in the first quarter of 2016 and $6 million in the first quarter of 2015 . In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $10 million in the first quarter of 2016 and $16 million in the first quarter of 2015 .

The following presents these costs (credits) by major type and line item within our accompanying unaudited condensed consolidated statements of operations, as well as by program:
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
(in millions)
Termination
Benefits
 
Accelerated
Depreciation
 
Transfer
Costs
 
Other
 
Total
Restructuring charges
$
1

 
$
—

 
$
—

 
$
2

 
$
3

Restructuring-related expenses:
 
 
 
 
 
 
 
 
 
Cost of products sold
—

 
—

 
5

 
—

 
5

Selling, general and administrative expenses
—

 
1

 
—

 
4

 
5

 
—

 
1

 
5

 
4

 
10

 
$
1

 
$
1

 
$
5

 
$
6

 
$
13


All charges incurred in the first quarter of 2016 are related to the 2014 Restructuring Plan.


17

Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
(in millions)
Termination
Benefits
 
Accelerated
Depreciation
 
Transfer
Costs
 
Other
 
Total
Restructuring charges
$
5

 
$
—

 
$
—

 
$
1

 
$
6

Restructuring-related expenses:
 
 
 
 
 
 
 
 
 
Cost of products sold
—

 
—

 
8

 
—

 
8

Selling, general and administrative expenses
—

 
1

 
—

 
7

 
8

 
—

 
1

 
8

 
7

 
16

 
$
5

 
$
1

 
$
8

 
$
8

 
$
22

 
 
 
 
 
 
 
 
 
 
(in millions)
Termination
Benefits
 
Accelerated
Depreciation
 
Transfer
Costs
 
Other
 
Total
2014 Restructuring Plan
$
8

 
$
1

 
$
8

 
$
8

 
$
25

Substantially completed restructuring programs
(3
)
 
—

 
—

 
—

 
(3
)
 
$
5

 
$
1

 
$
8

 
$
8

 
$
22

 
 
 
 
 
 
 
 
 
 
Termination benefits represent amounts incurred pursuant to our ongoing benefit arrangements and amounts for “one-time” involuntary termination benefits, and have been recorded in accordance with FASB ASC Topic 712, Compensation – Non-retirement Postemployment Benefits and FASB ASC Topic 420, Exit or Disposal Cost Obligations (Topic 420). We expect to record additional termination benefits related to our restructuring initiatives throughout 2016 as we complete our 2014 Restructuring Plan. Other restructuring costs, which represent primarily consulting fees and costs related to contract cancellations, are being recorded as incurred in accordance with Topic 420. Accelerated depreciation is being recorded over the adjusted remaining useful life of the related assets, and production line transfer costs are being recorded as incurred.

As of March 31, 2016 , we incurred cumulative restructuring charges related to our 2014 Restructuring Plan of $128 million and restructuring-related costs of $114 million since we committed to the plan. The following presents these costs by major type (in millions):
Termination benefits
$
97

Fixed asset write-offs
—

Other
31

Total restructuring charges
128

Accelerated depreciation
9

Transfer costs
60

Other
45

Restructuring-related expenses
114

 
$
242



18

We made cash payments of $23 million in the first quarter of 2016 associated with our restructuring initiatives and as of March 31, 2016 , we had made total cash payments of $212 million related to our 2014 Restructuring Plan since committing to the plan. These payments were made using cash generated from operations, and are comprised of the following:
(in millions)
2014 Restructuring Plan
Three Months Ended March 31, 2016
 
Termination benefits
$
14

Transfer costs
5

Other
4

 
$
23

 
 
Program to Date
 
Termination benefits
$
83

Transfer costs
60

Other
69

 
$
212


Our restructuring liability is primarily comprised of accruals for termination benefits. The following is a rollforward of the termination benefit liability associated with our 2014 Restructuring Plan, which is reported as a component of accrued expenses included in our accompanying unaudited condensed balance sheets (in millions):
Accrued as of December 31, 2015
$
29

Charges (credits)
1

Cash payments
(14
)
Accrued as of March 31, 2016
$
16


In addition to our accrual for termination benefits, we had a $4 million liability as of March 31, 2016 and a $3 million liability as of December 31, 2015 for other restructuring-related items.

NOTE G – SUPPLEMENTAL BALANCE SHEET INFORMATION

Components of selected captions in our accompanying unaudited condensed consolidated balance sheets are as follows:

Trade accounts receivable, net
 
 
As of
(in millions)
 
March 31, 2016
 
December 31, 2015
Accounts receivable
 
$
1,413

 
$
1,394

Less: allowance for doubtful accounts
 
(80
)
 
(75
)
Less: allowance for sales returns
 
(42
)
 
(44
)
 
 
$
1,291

 
$
1,275


The following is a rollforward of our allowance for doubtful accounts for the first quarter of 2016 and 2015 :
 
 
Three Months Ended
March 31,
(in millions)
 
2016
 
2015
Beginning balance
 
$
75

 
$
76

Charges to expenses
 
4

 
2

Utilization of allowances
 
1

 
(6
)
Ending balance
 
$
80

 
$
72


19


Inventories
 
 
As of
(in millions)
 
March 31, 2016
 
December 31, 2015
Finished goods
 
$
700

 
$
706

Work-in-process
 
107

 
102

Raw materials
 
215

 
208

 
 
$
1,022

 
$
1,016


Property, plant and equipment, net
 
 
As of
(in millions)
 
March 31, 2016
 
December 31, 2015
Land
 
$
83

 
$
86

Buildings and improvements
 
964

 
981

Equipment, furniture and fixtures
 
2,849

 
2,793

Capital in progress
 
185

 
202

 
 
4,081

 
4,062

Less: accumulated depreciation
 
2,617

 
2,572

 
 
$
1,464

 
$
1,490


Depreciation expense was $64 million  for the first quarter of 2016 and $65 million for the first quarter of 2015 .

Accrued expenses
 
 
As of
(in millions)
 
March 31, 2016
 
December 31, 2015
Legal reserves
 
$
788

 
$
773

Payroll and related liabilities
 
403

 
504

Accrued contingent consideration
 
86

 
119

Other
 
515

 
574

 
 
$
1,792

 
$
1,970


Other long-term liabilities
 
 
As of
(in millions)
 
March 31, 2016
 
December 31, 2015
Accrued income taxes
 
$
1,263

 
$
1,253

Legal reserves
 
1,107

 
1,163

Accrued contingent consideration
 
102

 
127

Other long-term liabilities
 
462

 
431

 
 
$
2,934

 
$
2,974



20

Accrued warranties

We offer warranties on certain of our product offerings. The majority of our warranty liability relates to implantable devices offered by our Cardiac Rhythm Management (CRM) business, which include defibrillator and pacemaker systems. Our CRM products come with a standard limited warranty covering the replacement of these devices. We offer a full warranty for a portion of the period post-implant, and a partial warranty for a period of time thereafter. We estimate the costs that we may incur under our warranty programs based on the number of units sold, historical and anticipated rates of warranty claims and cost per claim, and record a liability equal to these estimated costs as cost of products sold at the time the product sale occurs. We reassess the adequacy of our recorded warranty liabilities on a quarterly basis and adjust these amounts as necessary. The current portion of our warranty accrual is included in other accrued expenses in the table above and the non-current portion of our warranty accrual is included in other long-term liabilities in the table above. Changes in our product warranty accrual during the first three months of 2016 and 2015 consisted of the following (in millions):
 
 
Three Months Ended
March 31,
 
 
2016
 
2015
Beginning Balance
 
$
23

 
$
25

Provision
 
4

 
5

Settlements/reversals
 
(6
)
 
(4
)
Ending Balance
 
$
21

 
$
26


NOTE H – INCOME TAXES

Our effective tax rates from continuing operations for the three months ended March 31, 2016 and March 31, 2015 , were 11.4% and 97.5% , respectively. The change in our reported tax rate for the first quarter of 2016 , as compared to the same period in 2015 , relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including acquisition-related items, contingent consideration, litigation-related and restructuring and restructuring-related items, as well as the impact of certain discrete tax items.

As of March 31, 2016 , we had $1.056 billion of gross unrecognized tax benefits, of which a net $901 million , if recognized, would affect our effective tax rate. As of December 31, 2015 , we had $1.056 billion of gross unrecognized tax benefits, of which a net $900 million , if recognized, would affect our effective tax rate.

We have received Notices of Deficiency from the Internal Revenue Service (IRS) reflecting proposed audit adjustments for Guidant Corporation for its 2001 through 2006 tax years and Boston Scientific Corporation for its 2006 and 2007 tax years. The total incremental tax liability asserted by the IRS for the applicable periods is $1.162 billion plus interest. The primary issue in dispute for all years is the transfer pricing associated with the technology license agreements between domestic and foreign subsidiaries of Guidant. In addition, the IRS has proposed adjustments in connection with the financial terms of our Transaction Agreement with Abbott Laboratories pertaining to the sale of Guidant's vascular intervention business to Abbott in April 2006. During 2014, we received a Revenue Agent Report from the IRS reflecting significant proposed audit adjustments to our 2008, 2009, and 2010 tax years based upon the same transfer pricing methodologies that the IRS applied to our 2001 through 2007 tax years.

We do not agree with the transfer pricing methodologies applied by the IRS or its resulting assessment. In addition, we believe that the IRS positions with regard to these matters are inconsistent with the applicable tax laws and the existing Treasury regulations. We believe we have meritorious defenses for our tax filings and we have filed petitions with the U.S. Tax Court contesting the Notices of Deficiency for the 2001 - 2007 tax years in challenge. We currently expect the trial in this matter to occur in the second half of 2016. Furthermore, we have submitted a letter to the IRS protesting the Revenue Agent Report for the 2008 - 2010 tax years and requesting an administrative appeal hearing. We do not believe that the IRS will hear our appeal until the Tax Court case is concluded.

No payments on the net assessments would be required until the dispute is definitively resolved, which, based on experiences of other companies, could take several years. We believe our income tax reserves associated with these matters are adequate as of March 31, 2016 . However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows.

We recognize interest and penalties related to income taxes as a component of income tax expense. We had $516 million accrued for gross interest and penalties as of March 31, 2016 and $500 million as of December 31, 2015 . We recognized net tax expense related to interest and penalties of $10 million during the first quarter of 2016 and $11 million during the first quarter of 2015 .

21


It is reasonably possible that within the next 12 months we will resolve multiple issues including transfer pricing and transactional-related issues with foreign, federal and state taxing authorities, in which case we could record a reduction in our balance of unrecognized tax benefits of up to approximately $15 million .

In November 2015, the FASB issued ASC Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes . This update simplifies the presentation of deferred income taxes by requiring all deferred tax assets and liabilities, along with any related valuation allowance, to be classified as noncurrent on the balance sheet. The new guidance is effective for all public Companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. We have elected to early adopt this standard prospectively at the beginning of 2016.

NOTE I – COMMITMENTS AND CONTINGENCIES

The medical device market in which we primarily participate is largely technology driven. As a result, intellectual property rights, particularly patents and trade secrets, play a significant role in product development and differentiation. Over the years, there has been litigation initiated against us by others, including our competitors, claiming that our current or former product offerings infringe patents owned or licensed by them. Intellectual property litigation is inherently complex and unpredictable. In addition, competing parties frequently file multiple suits to leverage patent portfolios across product lines, technologies and geographies and to balance risk and exposure between the parties. In some cases, several competitors are parties in the same proceeding, or in a series of related proceedings, or litigate multiple features of a single class of devices. These forces frequently drive settlement not only for individual cases, but also for a series of pending and potentially related and unrelated cases. Although monetary and injunctive relief is typically sought, remedies and restitution are generally not determined until the conclusion of the trial court proceedings and can be modified on appeal. Accordingly, the outcomes of individual cases are difficult to time, predict or quantify and are often dependent upon the outcomes of other cases in other geographies.

During recent years, we successfully negotiated closure of several long-standing legal matters and have received favorable rulings in several other matters; however, there continues to be outstanding intellectual property litigation. Adverse outcomes in one or more of these matters could have a material adverse effect on our ability to sell certain products and on our operating margins, financial position, results of operations and/or liquidity.

In the normal course of business, product liability, securities and commercial claims are asserted against us. Similar claims may be asserted against us in the future related to events not known to management at the present time. We maintain an insurance policy providing limited coverage against securities claims, and we are substantially self-insured with respect to product liability claims and fully self-insured with respect to intellectual property infringement claims. The absence of significant third-party insurance coverage increases our potential exposure to unanticipated claims or adverse decisions. Product liability claims, securities and commercial litigation, and other legal proceedings in the future, regardless of their outcome, could have a material adverse effect on our financial position, results of operations and/or liquidity.

In addition, like other companies in the medical device industry, we are subject to extensive regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time we are the subject of qui tam actions and governmental investigations often involving regulatory, marketing and other business practices. These qui tam actions and governmental investigations could result in the commencement of civil and criminal proceedings, substantial fines, penalties and administrative remedies and have a material adverse effect on our financial position, results of operations and/or liquidity.

In accordance with ASC Topic 450, Contingencies , we accrue anticipated costs of settlement, damages, losses for product liability claims and, under certain conditions, costs of defense, based on historical experience or to the extent specific losses are probable and estimable. Otherwise, we expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, we accrue the minimum amount of the range.

Our accrual for legal matters that are probable and estimable was $1.895 billion as of March 31, 2016 and $1.936 billion as of December 31, 2015 , and includes certain estimated costs of settlement, damages and defense. We recorded $10 million of litigation-related charges during the first three months of 2016 and $193 million of litigation-related charges during the first three months of 2015 . We continue to assess certain litigation and claims to determine the amounts, if any, that management believes will be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact our operating results, cash flows and/or our ability to comply with our debt covenants.


22

In management's opinion, we are not currently involved in any legal proceedings other than those disclosed in our most recent Annual Report on Form 10-K and those specifically identified below, which, individually or in the aggregate, could have a material adverse effect on our financial condition, operations and/or cash flows. Unless included in our legal accrual or otherwise indicated below, a range of loss associated with any individual material legal proceeding cannot be estimated.

Patent Litigation

On September 22, 2014, The Board of Trustees for the University of Alabama filed a complaint in the United States District Court for the Northern District of Alabama alleging that the sale of our cardiac resynchronization therapy devices infringe a patent owned by the University of Alabama. On August 21, 2015, the court ordered a stay pending our requests for inter partes review of all claims related to the patent before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office (USPTO). Our requests were rejected on September 24, 2015 and October 19, 2015. On March 7, 2016, the USPTO granted our reconsideration motion and initiated an inter partes review and, on March 29, 2016, the District Court stayed the case pending a decision in the inter partes review.

On October 30, 2015, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation and Edwards Lifesciences Services GmbH in Düsseldorf District Court in Germany for patent infringement. We allege that Edwards’ SAPIEN 3 heart valve infringes our patent related to adaptive sealing technology. On February 25, 2016, we extended the action to allege infringement of a second patent related to adaptive sealing technology.

On November 9, 2015, Edwards Lifesciences, LLC filed an invalidity claim against one of our subsidiaries, Sadra Medical, Inc., in the High Court of Justice, Chancery Division Patents Court in the United Kingdom, alleging that a European patent owned by Sadra relating to a repositionable heart valve is invalid. On January 15, 2016, we filed our defense and counterclaim for a declaration that our European patent is valid and infringed by Edwards. On February 25, 2016, we amended our counterclaim to allege infringement of a second patent related to adaptive sealing technology.

On April 7, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation, Edwards Lifesciences LLC and Edwards Lifesciences SAS in the Grand Tribunal, Paris France for patent infringement. We allege that Edwards’ SAPIEN 3 heart valve infringes two of our patents related to adaptive sealing technology.

On April 19, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation in the United States District Court for the District of Delaware for patent infringement. We allege that Edwards’ SAPIEN 3 valve infringes a patent related to adaptive sealing technology.

On April 19, 2016, a subsidiary of Boston Scientific filed suit against Edwards Lifesciences Corporation in the United States District Court for the Central District of California for patent infringement. We allege that Edwards’ aortic valve delivery systems infringe eight of our catheter related patents.

On April 26, 2016, Edwards Lifesciences PVT, Inc. filed a patent infringement action against us and one of our subsidiaries, Boston Scientific Medizintechnik GmbH, in the District Court of Düsseldorf, Germany alleging a European patent (Spenser) owned by Edwards is infringed by our Lotus™ transcatheter heart valve system.

Product Liability Litigation

As of May 2, 2016 , over 36,000 product liability cases or claims related to transvaginal surgical mesh products designed to treat stress urinary incontinence and pelvic organ prolapse have been asserted against us. The pending cases are in various federal and state courts in the United States and include eight putative class actions. There were also fewer than 20 cases in Canada, inclusive of four putative class actions, and fewer than 15 claims in the United Kingdom. Generally, the plaintiffs allege personal injury associated with use of our transvaginal surgical mesh products. The plaintiffs assert design and manufacturing claims, failure to warn, breach of warranty, fraud, violations of state consumer protection laws and loss of consortium claims. Over 3,100 of the cases have been specially assigned to one judge in state court in Massachusetts. On February 7, 2012, the Judicial Panel on Multi-District Litigation (MDL) established MDL-2326 in the U.S. District Court for the Southern District of West Virginia and transferred the federal court transvaginal surgical mesh cases to MDL-2326 for coordinated pretrial proceedings. During the fourth quarter of 2013, we received written discovery requests from certain state attorneys general offices regarding our transvaginal surgical mesh products. We have responded to those requests. As of May 2, 2016 , we have entered into master settlement agreements with certain plaintiffs' counsel to resolve an aggregate of approximately 11,000 cases and claims of which approximately 6,000 have been settled. Each master settlement agreement was entered into solely by way of compromise and without any admission or concession by us of any liability or wrongdoing and provides that the settlement and the distribution of settlement funds to

23

participating claimants are conditioned upon, among other things, achieving minimum required claimant participation thresholds. If the participation thresholds under a master settlement agreement are not satisfied, we may terminate that agreement. In addition, we continue to engage in discussions with various plaintiffs’ counsel regarding potential resolution of pending cases and claims.

On or about January 12, 2016, Teresa L. Stevens filed a claim against us and three other defendants asserting for herself, and on behalf of a putative class of similarly-situated women, that she was harmed by a vaginal mesh implant that she alleges contained a counterfeit or adulterated resin product that we imported from China. The complaint was filed in the United States District Court for the Southern District of West Virginia, before the same Court that is hearing the mesh MDL. The complaint, which alleges Racketeer Influenced and Corrupt Organizations Act (RICO) violations, fraud, misrepresentation, deceptive trade practices and unjust enrichment, seeks both equitable relief and damages under state and federal law. On January 26, 2016, the Court issued an order staying the case and directing the plaintiff to submit information to allow the FDA to issue a determination with respect to her allegations. In addition, we are in contact with the U.S. Attorney’s Office for the Southern District of West Virginia, and are responding voluntarily to their requests in connection with that office’s review of the allegations concerning the use of mesh resin in the complaint. We deny the plaintiff’s allegations and intend to defend ourselves vigorously.

We have established a product liability accrual for known and estimated future cases and claims asserted against us as well as with respect to the actions that have resulted in verdicts against us and the costs of defense thereof associated with our transvaginal surgical mesh products. While we believe that our accrual associated with this matter is adequate, changes to this accrual may be required in the future as additional information becomes available. While we continue to engage in discussions with plaintiffs’ counsel regarding potential resolution of pending cases and claims and intend to vigorously contest the cases and claims asserted against us; that do not settle, the final resolution of the cases and claims is uncertain and could have a material impact on our results of operations, financial condition and/or liquidity. Initial trials involving our transvaginal surgical mesh products have resulted in both favorable and unfavorable judgments for us. We do not believe that the judgment in any one trial is representative of potential outcomes of all cases or claims related to our transvaginal surgical mesh products.

Other Proceedings

On September 28, 2011, we served a complaint against Mirowski Family Ventures LLC in the U.S. District Court for the Southern District of Indiana for a declaratory judgment that we have paid all royalties owed and did not breach any contractual or fiduciary obligations arising out of a license agreement. Mirowski answered and filed counterclaims requesting damages. On May 13, 2013, Mirowski Family Ventures served us with a complaint alleging breach of contract in Montgomery County Circuit Court, Maryland, and they amended this complaint on August 1, 2013. On July 29, 2013, the Indiana case was dismissed. On September 10, 2013, we removed the case to the United States District Court for the District of Maryland. On June 5, 2014, the District Court granted Mirowski’s motion to remand the case to the Montgomery County Circuit Court. On September 24, 2014, following a jury verdict against us, the Montgomery County Circuit Court entered a judgment that we breached our license agreement with Mirowski and awarded damages of $308 million. On October 28, 2014, the Montgomery County Circuit Court denied our post-trial motions seeking to overturn the judgment. On November 19, 2014, we filed an appeal with the Maryland Court of Special Appeals. On January 29, 2016, the Maryland Court of Special Appeals affirmed the decision of the Montgomery County Circuit Court. On February 2, 2016, we filed a motion for reconsideration.
On April 24, 2014, Dr. Qingsheng Zhu and Dr. Julio Spinelli, acting jointly on behalf of the stockholder representative committee of Action Medical, Inc. (Action Medical), filed a lawsuit against us and our subsidiary, Cardiac Pacemakers, Inc. (CPI), in the U.S. District Court for the District of Delaware. The stockholder representatives allege that we and CPI breached a contractual duty to pursue development and commercialization of certain patented heart pacing methods and devices and to return certain patents. On March 15, 2016, the Court granted summary judgment in our favor as to all of plaintiffs’ claims for damages. A trial on the single remaining claim, and our counterclaim, for specific performance, is scheduled for July 8, 2016.

Refer to Note H - Income Taxes for information regarding our tax litigation.

Matters Concluded Since December 31, 2015

On March 12, 2010, we received a Civil Investigative Demand (CID) from the Civil Division of the U.S. Department of Justice (DOJ) requesting documents and information relating to reimbursement advice offered by us relating to certain CRM devices. On February 9, 2016, the DOJ informed us that we are no longer required to retain documents and information relating to the CID.

On July 11, 2014, we were served with a subpoena from the U.S. Attorney for the District of New Jersey. The subpoena seeks information relating to BridgePoint Medical, Inc., which we acquired in October 2012, including information relating to its sale of CrossBoss® and Stingray® products, educational and training activities that relate to those sales and our acquisition of BridgePoint Medical. On August 20, 2015, the court unsealed a qui tam lawsuit brought by a former employee named Robin Levy

24

against the company as well as a decision by the U.S. Attorney for New Jersey declining to intervene in the lawsuit. The lawsuit alleges that the company violated the federal and various state false claims acts through seeking to upcode Chronic Total Occlusion (“CTO”) procedures and requiring in-patient treatment and purchases of coronary stents in order for physicians to receive training on the CTO procedure. On January 26, 2016, the Court dismissed the qui tam lawsuit.

On March 18, 2015, Denise Fretter and Maria Korsgaard, claiming to represent a class of current and former female field sales employees at Boston Scientific Neuromodulation Corporation (BSNC), filed a lawsuit against BSNC in the U.S. District Court for the Central District of California. The plaintiffs allege gender discrimination in pay, promotions and differential treatment against them and the putative class. On February 6, 2016, the parties entered into a confidential settlement agreement, and the case has been dismissed.

NOTE J – WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
Three Months Ended
March 31,
 
(in millions)
 
2016

2015
 
Weighted average shares outstanding - basic
 
1,350.4

 
1,333.7

 
Net effect of common stock equivalents
 
19.5

 
—

*
Weighted average shares outstanding - assuming dilution
 
1,369.9

 
1,333.7

 

*We generated a net loss in the first quarter of 2015 . Our weighted-average shares outstanding for earnings per share calculations exclude common stock equivalents of 24.0 million for the first quarter of 2015 due to our net loss.

Weighted average shares outstanding, assuming dilution, excludes the impact of one million stock options for the first quarter of 2016 , and 10 million stock options for the first quarter of 2015 , due to the exercise prices of these stock options being greater than the average fair market value of our common stock during the period.

We issued approximately eight million shares of our common stock in the first quarter of 2016 and 13 million shares of our common stock in the first quarter of 2015 , following the exercise of underlying stock options or vesting of deferred stock units, or purchases under our employee stock purchase plan. We did not repurchase any shares of our common stock during the first quarter of 2016 or 2015 .

NOTE K – SEGMENT REPORTING

We have three reportable segments comprised of Cardiovascular, Rhythm Management, and MedSurg.

Each of our reportable segments generates revenues from the sale of medical devices. We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency. Sales generated from reportable segments, as well as operating results of reportable segments, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits. As needed, we restate segment information for the prior period based on our internally-derived standard currency exchange rates used for the current period in order to remove the impact of foreign currency exchange fluctuation. We exclude from segment operating income certain corporate-related expenses and certain charges or credits that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to acquisition- and divestiture-, litigation-, restructuring- and restructuring-related net charges and credits; pension termination charges; and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation below.

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A reconciliation of the totals reported for the reportable segments to the applicable line items in our accompanying unaudited condensed consolidated statements of operations is as follows:
 
 
Three Months Ended
March 31,
(in millions)
 
2016
 
2015
 
 
 
 
 
Net sales
 
 
 
 
Interventional Cardiology
 
$
613

 
$
541

Peripheral Interventions
 
264

 
232

Cardiovascular
 
877

 
773

 
 
 
 
 
Cardiac Rhythm Management
 
471

 
483

Electrophysiology
 
64

 
61

Rhythm Management
 
535

 
544

 
 
 
 
 
Endoscopy
 
365

 
328

Urology and Pelvic Health
 
243

 
130

Neuromodulation
 
125

 
116

MedSurg
 
733

 
574

Net sales allocated to reportable segments
 
2,145

 
1,891

Impact of foreign currency fluctuations
 
(181
)
 
(123
)
 
 
$
1,964

 
$
1,768

 
 
 
 
 
Income (loss) before income taxes
 
 
 
 
Cardiovascular
 
$
299

 
$
236

Rhythm Management
 
90

 
78

MedSurg
 
239

 
166

Operating income allocated to reportable segments
 
628

 
480

Corporate expenses and currency exchange
 
(134
)
 
(82
)
Acquisition- and divestiture-, litigation-, restructuring- and restructuring-related net charges, and pension termination charges
 
(65
)
 
(261
)
Amortization expense
 
(136
)
 
(113
)
Operating income (loss)
 
293

 
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Other expense, net
 
(65
)
 
(75
)
Income (loss) before income taxes
 
$
228

 
$
(51
)


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NOTE L – CHANGES IN OTHER COMPREHENSIVE INCOME

The following table provides the reclassifications out of other comprehensive income for the three months ended March 31, 2016 and March 31, 2015 . Amounts in the chart below are presented net of tax.

Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
(in millions)
 
Foreign currency translation adjustments
 
Unrealized gains/losses on derivative financial instruments
 
Defined benefit pension items / Other
 
Total
Balance as of December 31, 2015
 
$
(54
)
 
$
152

 
$
(10
)
 
$
88

Other comprehensive income (loss) before reclassifications
 
16

 
(38
)
 
(2
)
 
(24
)
Amounts reclassified from accumulated other comprehensive income
 
—

 
(31
)
 
2

 
(29
)
Net current-period other comprehensive income
 
16

 
(69
)
 
—

 
(53
)
Balance as of March 31, 2016
 
$
(38
)
 
$
83

 
$
(10
)
 
$
35

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
(in millions)
 
Foreign currency translation adjustments
 
Unrealized gains/losses on derivative financial instruments
 
Defined benefit pension items / Other
 
Total
Balance as of December 31, 2014
 
$
(38
)
 
$
219

 
$
(37
)
 
$
144

Other comprehensive income (loss) before reclassifications
 
(35
)
 
59

 
(3
)
 
21

Amounts reclassified from accumulated other comprehensive income
 
—

 
(31
)
 
8

 
(23
)
Net current-period other comprehensive income
 
(35
)
 
28

 
5

 
(2
)
Balance as of March 31, 2015
 
$
(73
)
 
$
247

 
$
(32
)
 
$
142

 
 
 
 
 
 
 
 
 

The income tax impact of the amounts in other comprehensive income for unrealized gains and losses on derivative financial instruments before reclassifications was a benefit of $21 million in the first quarter of 2016 and an expense of $34 million in the first quarter of 2015 . The gains and losses on derivative financial instruments reclassified were reduced by income tax impacts of $17 million in the first quarter of 2016 and $18 million in the first quarter of 2015 . Refer to Note D – Fair Value Measurements in this Quarterly Report on Form 10-Q for further detail on the reclassifications related to derivatives.

The income tax impact of the amounts in other comprehensive income for defined benefit and pension items before reclassification was an immaterial benefit for the first quarter of 2016 and the first quarter of 2015 . The losses on defined benefit and pension related items reclassified from accumulated other comprehensive income were reduced by immaterial income tax impacts in the first quarter of 2016 and by $4 million of income tax impacts in the first quarter of 2015 .

NOTE M – NEW ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. Recently issued standards typically do not require adoption until a future effective date. Prior to their effective date, we evaluate the pronouncements to determine the potential effects of adoption on our consolidated financial statements.


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Standards Implemented

ASC Update No. 2015-05

In April 2015, the FASB issued ASC Update No. 2015-05, Intangibles- Goodwill and Other - Internal -Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. Update No. 2015-05 provides accounting guidance on how customers should treat cloud computing arrangements. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. Update No. 2015-05 is effective for annual reporting periods beginning after December 15, 2015 and interim periods within those reporting periods. We elected to adopt the amendments prospectively to all arrangements entered into or materially modified after the effective date. The adoption of Update No. 2015-05 did not have a material impact on our financial position or results of operations.

ASC Update No. 2015-12

In July 2015, the FASB issued ASC Update No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). Update No. 2015-12 has three parts. Part I designates contract value as the only required measure for fully benefit-responsive investment contracts. Part II simplifies the investment disclosure requirements under Topics 820, 960, 962, and 965 for employee benefits plans and Part III provides an alternative measurement date for fiscal periods that do not coincide with a month-end date. Update No. 2015-12 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-12 did not have a material impact on our financial position or results of operations.

ASC Update No. 2015-16

In September 2015, the FASB issued ASC Update No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement - Period Adjustments . Update No. 2015-16 eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. Update No. 2015-16 requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the income statement or disclosed in the notes. Update No. 2015-16 is effective for fiscal years beginning after December 15, 2015. The adoption of Update No. 2015-16 did not impact on our financial position or results of operations.

ASC Update No. 2015-17

In November 2015, the FASB issued ASC Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. Update No. 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. It is effective for fiscal years beginning after December 15, 2016; however, earlier application is permitted. We elected to early adopt Update No. 2015-17 on a prospective basis; as such, prior periods were not retrospectively adjusted. The adoption of Update No. 2015-17 did not have a material impact on our financial position or results of operations.

ASC Update No. 2016-07

In March 2016, the FASB issued ASC Update No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323) . When a previously held investment qualifies for equity method accounting due to an increase in ownership interest or influence, Update 2016-07 eliminates the requirement for investors to adjust results retroactively as if the equity method had been in effect during prior periods the investment was held. Instead, it requires investors to adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. We elected to early adopt Update No. 2016-07 on a prospective basis.
The adoption of Update No. 2016-07 did not impact on our financial position or results of operations.

Standards to be Implemented

ASC Update No. 2014-09

In May 2014, the FASB issued ASC Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). Update No. 2014-09 provides enhancements to the quality and consistency of how revenue is reported while also improving comparability in the financial statements of companies using International Financial Reporting Standards and U.S. GAAP. The core principle requires entities to recognize revenue in a manner that depicts the transfer of goods or services to customers in amounts that reflect

28

the consideration an entity expects to be entitled to in exchange for those goods or services. In July 2015, the FASB voted to approve a one year deferral, making the standard effective for public entities for annual and interim periods beginning after December 15, 2017. As such, the standard will be effective for us on January 1, 2018. Under the deferral, early application is still permitted but not before the original public organization effective date, which is for annual reporting periods beginning after December 15, 2016. We expect to adopt Update No. 2014-09 effective January 1, 2018. We are in the process of determining the effect that the adoption of this standard will have on our financial position and results of operations.

ASC Update No. 2016-01

In January 2016, the FASB issued ASC Update No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. It is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application of certain provisions is permitted. Update 2016-01 requires entities to measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with changes recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. It also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. Update 2016-01 also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset and liability. The adoption of Update No. 2016-01 is not expected to have a material impact on our financial position or results of operations.

ASC Update No. 2016-02

In February 2016, the FASB issued ASC Update No. 2016-02, Leases (Topic 842). It is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Earlier application is permitted. Update 2016-02 is intended to increase the transparency and comparability among organizations by recognizing lease asset and lease liabilities on the balance sheet, including those previously classified as operating leases under current GAAP, and disclosing key information about leasing arrangements. We are in the process of determining the effect that the adoption of this standard will have on our financial position and results of operations.

ASC Update No. 2016-08

In March 2016, the FASB issued ASC Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) . The effective date and transition requirements are consistent with Update 2014-09. The purpose of Update No. 2016-08 is to clarify the guidance on principal versus agent considerations. It includes indicators that help to determine whether an entity controls the specified good or service before it is transferred to the customer and to assist in determining when the entity satisfied the performance obligation and as such, whether to recognize a gross or a net amount of consideration in their consolidated statement of operations. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

ASC Update No. 2016-09

In March 2016, the FASB issued ASC Update No. 2016-09, Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This update is effective for annual reporting periods after December 15, 2016, including interim periods within those fiscal periods. Early adoption is permitted. The purpose of the update is to simplify several areas of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.

ASC Update No. 2016-10

In April 2016, the FASB issued ASC Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The effective date and the transition requirements are consistent with Update 2014-09. The guidance clarifies that entities are not required to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract. Update 2016-10 also addresses how to determine whether promised goods or services are separately identifiable and permits entities to make a policy election to treat shipping and handling costs as fulfillment activities. In addition, it clarifies key provisions in Topic 606 related to licensing. We are in the process of determining the effect that the adoption will have on our financial position and results of operations.


29

No other new accounting pronouncements, issued or effective, during the period had, or is expected to have, a material impact on our condensed consolidated financial statements.


30

ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

Boston Scientific Corporation is a worldwide developer, manufacturer and marketer of medical devices that are used in a broad range of interventional medical specialties. Our mission is to transform lives through innovative medical solutions that improve the health of patients around the world. Our products and technologies are used to diagnose or treat a wide range of medical conditions, including heart, vascular, digestive, pulmonary, urological, pelvic health, and chronic pain conditions. We continue to innovate in these areas and are intent on extending our innovations into new geographies and high-growth adjacency markets.
AMS Portfolio Acquisition
On August 3, 2015, we completed the acquisition of the American Medical Systems male urology portfolio (AMS Portfolio Acquisition), which includes the men's health and prostate health businesses, from Endo International plc. Total consideration was comprised of $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million in consideration based on 2016 sales. The AMS male urology portfolio is being integrated with our formerly named Urology and Women's Health business, and the joint businesses have become Urology and Pelvic Health.

Financial Summary

Three Months Ended March 31, 2016

Our net sales for the first quarter of 2016 were $1.964 billion , as compared to net sales of $1.768 billion for the first quarter of 2015 , an increase of $196 million , or 11 percent . Our adjusted net sales, which excludes a negative impact of $58 million in the first quarter 2016 due to changes in foreign currency exchange rates, increased $254 million , or 13 percent , as compared to the same period in the prior year. 1 This increase included adjusted net sales of approximately $98 million in the first quarter 2016 , with no prior year period related net sales, due to the acquisition of the AMS Portfolio Acquisition, which included the men's health and prostate health businesses, from Endo International plc, during the third quarter of 2015. Refer to Quarterly Results and Business Overview for a discussion of our net sales by global business.

Our reported net income for the first quarter of 2016 was $202 million , or $0.15 per share . Our reported results for the first quarter of 2016 included acquisition- and divestiture-related net charges, restructuring and restructuring-related net charges, litigation-related net charges and amortization expense totaling $176 million (after-tax), or $0.13 per share. Adjusted net income , which excludes these items, for the first quarter of 2016 was $378 million , or $0.28 per share. 1 Our reported net loss for the first quarter of 2015 was $1 million , or $(0.00) per share . Our reported results for the first quarter of 2015 included acquisition- and divestiture-related net charges, restructuring and restructuring-related net charges, litigation-related net charges, pension termination charges and amortization expense totaling $287 million (after-tax), or $0.21 per share. Adjusted net income , which excludes these items, for the first quarter of 2015 was $286 million , or $0.21 per share. 1  















1 Adjusted net sales growth rates, which exclude the impact of changes in foreign currency exchange rates, and adjusted net income and adjusted net income per share, which exclude certain items required by GAAP, are not prepared in accordance with U.S. GAAP. Refer to Additional Information for a discussion of management’s use of these non-GAAP financial measures.

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The following is a reconciliation of our results of operations prepared in accordance with U.S. GAAP to those adjusted results considered by management. Refer to Quarterly Results and Business Overview for a discussion of each reconciling item:

 

Three Months Ended March 31, 2016
 
in millions, except per share data

Pre-Tax

Tax Impact
 
After-Tax
 
Impact per share
 
GAAP net income (loss)

$
228

 
$
(26
)

$
202


$
0.15

 
Non-GAAP adjustments:


 


 

 
 
Acquisition- and divestiture-related net charges

42

 
2


44

 
0.03


Restructuring and restructuring-related net charges

13

 
(4
)

9

 
0.01


Litigation-related net charges

10

 
(4
)

6

 
0.00


Amortization expense

136

 
(19
)

117

 
0.09


Adjusted net income

$
429

 
$
(51
)

$
378

 
$
0.28

 
 
 
 
 
 
 
 
 
 
 

 
 
Three Months Ended March 31, 2015
 
in millions, except per share data
 
Pre-Tax
 
Tax Impact
 
After-Tax
 
Impact per share
 
GAAP net income (loss)
 
$
(51
)
 
$
50

 
$
(1
)
 
$
(0.00
)
 
Non-GAAP adjustments:
 
 
 
 
 
 
 
 
 
Acquisition- and divestiture-related net charges
 
42

 
1

 
43

 
0.03

*
Restructuring and restructuring-related net charges
 
22

 
(4
)
 
18

 
0.01

*
Litigation-related net charges
 
193

 
(70
)
 
123

 
0.10

*
Pension termination charges
 
8

 
(3
)
 
5

 
0.00

*
Amortization expense
 
113

 
(15
)
 
98

 
0.07

*
Adjusted net income
 
$
327

 
$
(41
)
 
$
286

 
$
0.21

 
 
 
 
 
 
 
 
 
 
 
* Assumes dilution of 24.0 million shares for the three months ended March 31, 2015 for all or a portion of these non-GAAP adjustments.

Cash provided by operating activities was $116 million in the first quarter of 2016 , as compared to cash used for operating activities of $197 million in the first quarter of 2015 . As of March 31, 2016 , we had total debt of $5.677 billion , cash and cash equivalents of $338 million and working capital of $556 million . Refer to Liquidity and Capital Resources for further discussion.



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Quarterly Results and Business Overview

Net Sales

The following table provides our net sales by business and the relative change on an as reported and constant currency basis. The constant currency growth rates in the tables below can be recalculated from our net sales presented in Note K – Segment Reporting to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q. Constant currency growth rates, which exclude the impact of changes in foreign currency exchange rates, are not financial measures prepared in accordance with U.S. GAAP and should not be considered in isolation from, or as a replacement for, the most directly comparable GAAP financial measure. Refer to Additional Information for a further discussion of management’s use of this non-GAAP financial measure.
 
 
 
 
Change
 
Three Months Ended
March 31,
 
As Reported
Currency
Basis
 
Constant
Currency
Basis
(in millions)
2016
2015
 
 
 
 

 
 
 
 
 
 
Interventional Cardiology
$
548

$
495

 
11

%
 
13

%
Peripheral Interventions
242

217

 
12

%
 
14

%
Cardiovascular
790

712

 
11

%
 
14

%
Cardiac Rhythm Management
433

456

 
(5
)
%
 
(3
)
%
Electrophysiology
59

58

 
3

%
 
5

%
Rhythm Management
492

514

 
(4
)
%
 
(2
)
%
Endoscopy
333

305

 
9

%
 
11

%
Urology and Pelvic Health
228

123

 
85

%
 
87

%
Neuromodulation
121

114

 
6

%
 
8

%
MedSurg
682

542

 
26

%
 
28

%
 
 
 
 
 
 
 
 
 
Net Sales
$
1,964

$
1,768

 
11

%
 
13

%

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

Cardiovascular

Interventional Cardiology

Our Interventional Cardiology business develops, manufactures and markets technologies for diagnosing and treating coronary artery disease and other cardiovascular disorders. Product offerings include coronary stents, including drug-eluting and bare metal stent systems, balloon catheters, rotational atherectomy systems, guide wires, guide catheters, embolic protection devices, crossing and re-entry devices for the treatment of chronically occluded coronary vessels, diagnostic catheters used in percutaneous transluminal coronary angioplasty procedures, and intravascular ultrasound (IVUS) imaging systems. We also offer structural heart products in certain markets, which include a device for transcatheter aortic valve replacement (TAVR) and a device designed to close the left atrial appendage in patients with atrial fibrillation that are at risk for ischemic stroke.

Our drug-eluting stent systems include our next generation SYNERGY™ Everolimus-Eluting Platinum Chromium Coronary Stent System and our Promus PREMIER™ Everolimus-Eluting Platinum Chromium Coronary Stent System, both of which are designed to provide physicians with improved drug-eluting stent performance in treating patients with coronary artery disease. SYNERGY™ features an ultra-thin abluminal (outer) bioabsorbable polymer coating, while PREMIER™ features a unique customized platinum chromium alloy stent architecture and an enhanced stent delivery system. We received FDA and Japanese regulatory approval of the SYNERGY™ technology in the fourth quarter of 2015 and we launched SYNERGY™ in Japan in the first quarter of 2016.


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Our structural heart product offerings include our Lotus™ Valve System, a device for TAVR, and our WATCHMAN ® device designed to close the left atrial appendage in patients with non-valvular atrial fibrillation who are at risk for ischemic stroke. The Lotus™ Valve System consists of a stent-mounted tissue valve prosthesis and catheter delivery system for guidance and placement of the valve. The Lotus™ Valve System is CE-marked in the EU, and in the U.S., it is an investigational device and not available for sale. At the end of 2015, we completed enrollment in our REPRISE III clinical trial and expect FDA approval of the Lotus Valve System in late 2017. The WATCHMAN ® Left Atrial Appendage Closure Technology (WATCHMAN ® ) is the first device studied in a randomized clinical trial to offer an alternative to warfarin, and is marketed in CE-mark countries and other international countries, as well as the U.S. following FDA approval in March 2015. We believe that Watchman ® will be the only LAAC technology commercially available in the U.S. for multiple years. In November 2015, we received CE Mark for our next generation device, Watchman FLX™. Shortly after approval, we began a European initial market release of Watchman FLX. The initial market release was suspended near the end of the first quarter of 2016 due to a higher than expected rate of device embolization. We are evaluating data from the initial market release.

Our net sales of Interventional Cardiology products of $548 million represented 28 percent of our consolidated net sales for the first quarter of 2016 . Our Interventional Cardiology net sales increase d $53 million , or 11 percent , in the first quarter of 2016 , as compared to the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $19 million in the first quarter of 2016 due to changes in foreign currency exchange rates, increase d $72 million , or 13 percent , as compared to the same period in the prior year. This year-over-year increase was primarily related to sales of our drug-eluting stents, led by our ongoing global launch of the SYNERGY™ stent, our WATCHMAN ® device following the U.S. commercial launch during the first quarter of 2015, and our Lotus™ Valve System in the EU; along with operational growth in our other cardiology product lines, including our OptiCross™ Coronary Imaging Catheter and our iLab ® Polaris PCI Guidance System product offerings.

Peripheral Interventions

Our Peripheral Interventions (PI) product offerings include stents, balloon catheters, wires, peripheral embolization devices and other devices used to diagnose and treat peripheral vascular disease, along with certain products to treat, diagnose and ease various forms of cancer.

Our net sales of PI products of $242 million represented 12 percent of our consolidated net sales for the first quarter of 2016 . Our PI net sales increase d $25 million , or 12 percent , in the first quarter of 2016 , as compared to the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $7 million in the first quarter of 2016 due to changes in foreign currency exchange rates, increase d $32 million , or 14 percent , as compared to the same period in the prior year. This year-over-year increase was primarily driven by revenues from products acquired as part of our 2014 acquisition of the Interventional Division of Bayer AG, as well as growth in our core PI franchises, particularly our stent franchise following FDA approval and launch of our Innova™ Vascular self-expanding stent system in the U.S., our interventional oncology franchise and our drug-eluting product franchise.

On December 31, 2015, we acquired the interventional radiology portfolio of CeloNova Biosciences (CeloNova). The acquisition includes drug-eluting microspheres designed to be loaded with chemotherapy drugs for delivery to cancerous tumors, and spherical embolic products used to treat uterine fibroids and other conditions. We believe the CeloNova team and technologies will help advance our position and growth profile within the interventional oncology market.

Rhythm Management

Cardiac Rhythm Management

Our Cardiac Rhythm Management (CRM) business develops, manufactures and markets a variety of implantable devices including implantable cardioverter defibrillator (ICD) systems and implantable cardiac resynchronization therapy defibrillators, including the world's first and only commercially available subcutaneous implantable cardioverter defibrillator, the S-ICD® System, and pacemaker systems that monitor the heart and deliver electricity to treat cardiac abnormalities. In addition, in most geographies, our implantable device systems include our remote LATITUDE® Patient Management System, which enables physicians to monitor device performance remotely, allowing for more frequent monitoring in order to guide treatment decisions.

Our net sales of CRM products of $433 million represented 22 percent  of our consolidated net sales for the first quarter of 2016 . Our net sales of CRM products decrease d $23 million , or five percent , in the first quarter of 2016 , as compared to the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $11 million in the first quarter of 2016 due to changes in foreign currency exchange rates, decrease d $12 million , or three percent , as compared to the same period in the prior year. This year-over-year decrease was primarily driven by lower volumes of replacement procedures for our defibrillators due to their longevity and cardiac resynchronization therapy defibrillator (CRT-D) sales declines in certain regions due to competitive technology offerings. In addition, our transvenous implantable cardioverter defibrillator business experienced denovo share loss

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to magnetic resonance imaging (MRI) technologies in select geographies. Our global pacemaker revenue increased on a constant currency basis driven by the continued adoption of the ACCOLADE™ family of pacemakers and cardiac resynchronization therapy pacemakers, and the Ingevity™ MRI pacing lead in select markets, and benefits from our sales collaboration agreement with Preventice, Inc.

The following are the components of our CRM net sales:
 
 
Three Months Ended
March 31,
(in millions)
 
2016
 
2015
Defibrillator systems
 
$
311

 
$
335

Pacemaker systems
 
122

 
121

CRM products
 
$
433

 
$
456


We market several lines of ICD’s, including our DYNAGEN™ EL , DYNAGEN™ MINI, INOGEN™ EL and INOGEN™ MINI. MINI is the world’s smallest, thinnest ICD, and EL (extended longevity) is the world’s longest lasting ICD due to our proprietary EnduraLife™ battery technology. In addition, we offer our EMBLEM™ S-ICD system, which affords physicians the ability to treat patients who are at risk for sudden cardiac arrest without touching the heart or invading the vasculature. Our EMBLEM™ S-ICD system offers greater longevity, LATITUDE® Patient Management remote monitoring technology and smaller size as compared to the prior generation. We also offer several lines of CRT-D systems, including our X4 line of quadripolar systems and X4 quadripolar LV leads, and the ACUITY™ PRO lead delivery system. We initiated the full launch of our X4 quadripolar CRT-D systems in Japan and Australia in the first quarter of 2015 and in February of 2016 we received FDA approval for the Acuity™ X4 Quadripolar lead. The U.S. launch was initiated late in the first quarter of 2016.
We market our ACCOLADE™ family of pacemaker systems in the U.S., Europe, and Japan. Approval of our ACCOLADE™ pacemaker family in Europe and Japan also includes approval for use of these products in patients undergoing magnetic resonance imaging (MRI) scans. We received FDA approval of our ACCOLADE™ MRI-compatible pacemaker in April 2016 and we expect FDA approval of our EMBLEM MRI-compatible system in mid-2016. In April 2016, we received CE Mark approval for the new EMBLEM™ MRI S-ICD System, as well as magnetic resonance conditional labeling for all previously implanted EMBLEM S-ICD Systems. Our cardiac resynchronization therapy pacemaker product offerings include our newest generation VISIONIST™ and VALITUDE X4 quadripolar CRT-P devices, which are built on the same platform as our high voltage cardiac resynchronization therapy defibrillator, are enabled for remote patient monitoring, and include features that promote ease of use.

Electrophysiology

Our Electrophysiology business develops less-invasive medical technologies used in the diagnosis and treatment of rate and rhythm disorders of the heart. Our leading products include the Blazer™ line of ablation catheters, designed to deliver enhanced performance and responsiveness, and the Rhythmia™ Mapping System, a next-generation, catheter-based, 3-D cardiac mapping and navigation solution designed to help diagnose and treat a variety of arrhythmias.

Our net sales of Electrophysiology products of $59 million represented three percent of our consolidated net sales for the first quarter of 2016 . Our Electrophysiology net sales increase d $1 million , or three percent , in the first quarter of 2016 , as compared to the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $2 million in the first quarter of 2016 due to changes in foreign currency exchange rates, increase d $3 million , or five percent , as compared to the same period in the prior year. This year-over-year increase was primarily driven by increased sales of our Rhythmia™ Mapping System and related products. In the first quarter of 2016, we initiated a full European launch of our Blazer IntellaNav OI catheter which is used with our Rhythmia™ Mapping System. In May of 2016, we received FDA approval for IntellaNav™ XP and the IntellaNav MiFi™ XP navigation-enabled ablation catheters that will be used with the Rhythmia™ Mapping System. We also received FDA approval for our Blazer™ Open Irrigated System with Atrial Flutter indication with the full commercialization expected in the second quarter of 2016.

MedSurg

Endoscopy

Our Endoscopy business develops and manufactures devices to treat a variety of medical conditions including diseases of the digestive and pulmonary space.


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Our net sales of Endoscopy products of $333 million represented 17 percent of our consolidated net sales for the first quarter of 2016 . Our Endoscopy net sales increase d $28 million , or nine percent , in the first quarter of 2016 , as compared to the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $9 million in the first quarter of 2016 due to changes in foreign currency exchange rates, increase d $37 million , or 11 percent , as compared to the same period in the prior year. This year-over-year increase was primarily driven by growth across several of our key product franchises, including our biliary device franchise with the launch of SpyGlass™ DS Direct Visualization System and our AXIOS Stent and Electrocautery-Enhanced Delivery System for endoscopic ultrasound-guided transmural drainage of pancreatic pseudocysts; our metal stent franchise driven by our Biliary WallFlex® product family; and our biopsy and polypectomy franchises, featuring our industry leading products such as forceps and snares.

On April 2, 2015, we acquired Xlumena, Inc. (Xlumena), a medical device company that developed minimally invasive devices for Endoscopic Ultrasound (EUS) guided transluminal drainage of targeted areas within the gastrointestinal tract.

Urology and Pelvic Health

Our Urology and Pelvic Health business develops and manufactures devices to treat various urological and pelvic conditions. Our net sales of Urology and Pelvic Health products of $228 million represented 12 percent of our consolidated net sales for the first quarter of 2016 . Urology and Pelvic Health net sales increase d $105 million , or 85 percent , in the first quarter of 2016 , as compared to the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $8 million in the first quarter of 2016 due to changes in foreign currency exchange rates, increase d $113 million , or 87 percent , as compared to the same period in the prior year. This year-over-year increase was primarily attributable to revenue of approximately $98 million from sales of products acquired with the AMS Portfolio Acquisition along with growth across all of our other global franchises.

On August 3, 2015, we completed the AMS Portfolio Acquisition, which included the men's health and prostate health businesses, from Endo International plc., for $1.616 billion in up-front cash plus related fees and expenses, and a potential additional $50 million in consideration based on 2016 sales. The AMS Portfolio Acquisition includes the procurement of leading products for the treatment of a variety of urologic conditions, including the minimally invasive GreenLight XPS™ and HPS™ Laser Therapy Systems for treating benign prostatic hyperplasia, the AMS 700™ Inflatable Penile Prosthesis for treating erectile dysfunction, and the AMS 800™ Urinary Control System for treating male stress urinary incontinence.

Neuromodulation

Our Neuromodulation business offers the Precision™ and Precision Spectra™ Spinal Cord Stimulator (SCS) Systems and, in Europe, the Precision Novi™ SCS System, used for the management of chronic pain. The Precision Spectra System is the world's first and only SCS system with 32 contacts and 32 dedicated power sources and is designed to provide improved pain relief to a wide range of patients who suffer from chronic pain. The Precision Novi™ SCS System offers patients and physicians with the smallest 16-contact high capacity primary cell (PC), also referred to as non-rechargeable, device for the treatment of chronic pain. We have CE mark approval for Vercise™ Deep Brain Stimulation (DBS) System in Europe for the treatment of Parkinson's disease, tremor and intractable primary and secondary dystonia, a neurological movement disorder characterized by involuntary muscle contractions. In September 2015, we gained CE mark approval for the Vercise™ PC DBS System with its Neural Navigator™ programming software and Vercise Cartesia™ Directional Lead. The system allows for programming flexibility, designed to treat a greater range of patients throughout their disease progression. The Cartesia™ Directional Lead uses multi-directional stimulation for greater precision, intended to minimize side effects for patients.  We are currently in U.S. pivotal trial with our Vercise™ DBS System for the treatment of Parkinson’s disease.  

Our net sales of Neuromodulation products of $121 million represented six percent of our consolidated net sales for the first quarter of 2016 . Our Neuromodulation net sales increase d $7 million , or six percent , in the first quarter of 2016 , as compared the same period in the prior year. Our adjusted net sales, which excludes a negative impact of $2 million in the first quarter of 2016 due to changes in foreign currency exchange rates, increase d $9 million , or eight percent , as compared to the same period in the prior year. This the year-over-year increase was primarily driven by share gains from our CoverEdge™ 32-contact Paddle Lead and continued adoption of the Precision Spectra™ SCS System in the U.S. and increased net sales in Europe driven by our Vercise™ DBS Systems and non-rechargeable Precision Novi™ SCS System.

Emerging Markets

As part of our strategic imperatives to drive global expansion, described in our most recent Annual Report on Form 10-K, we are seeking to grow net sales and market share by expanding our global presence, including in Emerging Markets. We define Emerging Markets as 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors, and our global capabilities. We are seeking to expand our presence and strengthen relationships in order to grow net sales and market

36
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share within our Emerging Markets, and we have increased our investment in infrastructure in these countries in order to maximize opportunities. Our Emerging Markets net sales represented approximately 10 percent of our consolidated net sales in the first quarter of 2016 and 2015 .

Gross Profit

Our gross profit was $1.391 billion for the first quarter of 2016 and $1.248 billion for the first quarter of 2015 . As a percentage of net sales, our gross profit increase d to 70.8 percent in the first quarter of 2016 , as compared to 70.6 percent in the first quarter of 2015 . The following is a reconciliation of our gross profit margins and a description of the drivers of the change from period to period:

Three Months
Gross profit margin - period ended March 31, 2015
70.6
 %
Manufacturing cost reductions
1.8

Sales pricing and mix
(0.1
)
Inventory step-up due to acquisition accounting
(1.1
)
Net impact of foreign currency
(0.2
)
All other, including other inventory charges and other period expense
(0.2
)
Gross profit margin - period ended March 31, 2016
70.8
 %

The primary factor contributing to the increase in our gross profit margin during the first quarter of 2016 , as compared to the same period in 2015 , was the positive impact of cost reductions as a result of our restructuring and other process improvement programs. Partially offsetting these factors was the net negative impact of pricing declines combined with the step-up of inventory acquired as part of the AMS Portfolio acquisition from manufacturing cost to fair value. The step-up in value is amortized through gross profit over an average estimated inventory turnover period. In the first quarter of 2016, we recorded charges of $22 million associated with the step-up.

Operating Expenses

The following table provides a summary of certain of our operating expenses:
 
 
Three Months Ended March 31,
 
 
 
2016
 
2015
 
 
 
 
% of Net
 
 
% of Net
 
(in millions)
 
$
Sales
 
$
Sales
 
Selling, general and administrative expenses
 
716

36.5
%
 
668

37.8
%
 
Research and development expenses
 
210

10.7
%
 
192

10.9
%
 
Royalty expense
 
19

1.0
%
 
17

1.0
%
 

Selling, General and Administrative (SG&A) Expenses

In the first quarter of 2016 , our SG&A expenses increase d $48 million , or seven percent , as compared to the first quarter of 2015 , and were 130 basis points lower as a percentage of net sales. The decrease in SG&A as a percentage of sales was primarily driven by the recent suspension of the medical device tax, as well as our targeted initiatives that have been focused on reducing SG&A.

Research and Development (R&D) Expenses

In the first quarter of 2016 , our R&D expenses increase d $18 million , or nine percent , as compared to the first quarter of 2015 , but were 20 basis points lower as a percentage of net sales. We remain committed to advancing medical technologies and investing in meaningful research and development projects across our businesses in order to maintain a healthy pipeline of new products that we believe will contribute to profitable sales growth and increased costs related to recent acquisitions and alliances.

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Royalty Expense

In the first quarter of 2016 , our royalty expense increase d $2 million , or 12 percent , as compared to the first quarter of 2015 ; however, the expense remained flat at one percent of net sales in the first quarter of 2016 and 2015. The consistency year-over-year relates primarily to a renegotiation of a royalty agreement in 2014 that resulted in a lower royalty rate structure.

Amortization Expense

Our amortization expense was $136 million in the first quarter of 2016 , as compared to $113 million in the first quarter of 2015 . This increase was primarily due to amortizable intangible assets acquired as part of the AMS portfolio acquisition during the third quarter of 2015. Amortization expense is excluded by management for purposes of evaluating operating performance.

Contingent Consideration Expense

We recorded a net expense of $4 million during the first quarter of 2016 , and a net expense of $27 million during the first quarter of 2015 , related to the change in fair value of our contingent consideration liabilities. Refer to Note B - Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our contingent consideration expenses. Contingent consideration expense is excluded by management for purposes of evaluating operating performance.

Restructuring Charges and Restructuring-related Activities

We have one active restructuring program, our 2014 Restructuring Plan, which was approved on October 22, 2013 and substantially completed by the end of 2015, with the exception of certain actions associated with our Plant Network Optimization strategy, which we expect to complete by the end of 2016. We estimate that the 2014 Restructuring Plan will reduce our gross annual expenses by approximately $200 million by the end of 2016, and we expect a substantial portion of the savings to be reinvested in growth initiatives. We estimate that the implementation of the 2014 Restructuring Plan will result in total pre-tax charges of approximately $255 million to $270 million , of which approximately $240 million to $255 million is expected to result in cash outlays. We have recorded costs of $242 million since the inception of the 2014 Restructuring Plan.

We recorded restructuring charges pursuant to our restructuring plans of $3 million in the first quarter of 2016 and $6 million in the first quarter of 2015 . In addition, we recorded expenses within other lines of our accompanying unaudited condensed consolidated statements of operations related to our restructuring initiatives of $10 million in the first quarter of 2016 and $16 million in the first quarter of 2015 . Restructuring and restructuring-related costs are excluded by management for purposes of evaluating operating performance.

We made cash payments of $23 million during the first three months of 2016 and $26 million during the first three months of 2015 , associated with our restructuring initiatives.

Refer to Note F - Restructuring Related Activities to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for additional details related to our restructuring plans.
Litigation-related charges and credits

We recorded litigation-related net charges of $10 million in the first quarter of 2016 and net charges of $193 million in the first quarter of 2015 . Litigation-related charges and credits are excluded by management for purposes of evaluating operating performance. Refer to Note I – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for discussion of our material legal proceedings.

Pension termination charges

We recorded pension termination charges of $8 million during the first quarter of 2015 and an additional $36 million during the third quarter of 2015 for a total of $44 million of pension termination charges in the year ended December 31, 2015. These charges were associated with the termination of the Guidant Retirement Plan, a frozen defined benefit plan. No pension termination charges were recorded during the first three months of 2016 , and we do not expect to incur any additional charges in the future related to the termination of the Guidant Retirement Plan. The pension termination charges are excluded by management for purposes of evaluating operating performance.

Interest Expense


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Our interest expense was $59 million in the first quarter of 2016 , as compared to $60 million in the first quarter of 2015 . Our average borrowing rate was 3.9 percent in the first quarter of 2016 and 5.1 percent the first quarter of 2015 . Refer to Liquidity and Capital Resources and Note D - Fair Value Measurements and Note E – Borrowings and Credit Arrangements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our debt obligations and related derivative instruments and hedging activities.

Other, net

Our other, net reflected expense of $6 million and $15 million in the first quarter of 2016 and 2015 , respectively. The following are the components of other, net:
 
 
Three Months Ended
March 31,
 
 
(in millions)
 
2016
 
2015
Interest income
 
$
3

 
$
—

Foreign currency losses
 
(5
)
 
(10
)
Net gains (losses) on investments
 
(3
)
 
(1
)
Other income (expense), net
 
(1
)
 
(4
)
 
 
$
(6
)
 
$
(15
)

Tax Rate

Our effective tax rates from continuing operations for the three months ended March 31, 2016 and March 31, 2015 , were 11.4% and 97.5% , respectively. The change in our reported tax rate for the first quarter of 2016 , as compared to the same period in 2015 , relates primarily to the impact of certain receipts and charges that are taxed at different rates than our effective tax rate, including acquisition-related, contingent consideration, litigation- and restructuring and restructuring-related items and pension termination charges, as well as the impact of certain discrete tax items.

During 2014, we received a Revenue Agent Report from the Internal Revenue Services (IRS) reflecting significant proposed audit adjustments for our 2008, 2009 and 2010 tax years based upon the same transfer pricing methodologies that are currently being contested in U.S. Tax Court for our tax years from 2001 to 2007. We disagree with the transfer pricing methodologies being applied by the IRS and we expect to contest any adjustments received through applicable IRS and judicial procedures, as appropriate. We believe that our income tax reserves associated with these matters are adequate as of March 31, 2016 . However, final resolution is uncertain and could have a material impact on our financial condition, results of operations, or cash flows. Also, in connection with the IRS issues, a number of agreed adjustments were contained in the IRS report. However, no tax was paid on these amounts as there are outstanding tax receivables from the IRS that are currently being withheld due to the pending U.S. Tax Court case.

Refer to  Note H – Income Taxes to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for information regarding our tax litigation.

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Critical Accounting Policies and Estimates
Our financial results are affected by the selection and application of accounting policies and methods. In the three months ended March 31, 2016 , there were no material changes to the application of critical accounting policies and estimates as described in our most recent Annual Report on Form 10-K.


Liquidity and Capital Resources

Based on our current business plan, we believe our existing balance of cash and cash equivalents, future cash generated from operations and access to capital markets and our revolving credit facility will be sufficient to fund our operations, invest in our infrastructure, pay our legal-related liabilities, fund possible mergers and/or acquisitions and service our existing debt for the next twelve months. As of March 31, 2016 , we had $338 million of cash and cash equivalents on hand, comprised of $91 million invested in money market and government funds, $15 million invested in short-term time deposits, and $232 million in interest bearing and non-interest bearing bank accounts. We invest excess cash on hand in short-term financial instruments that earn market interest rates while mitigating principal risk through instrument and counterparty diversification, as well as what we believe to be prudent instrument selection. We limit our direct exposure to securities in any one industry or issuer. We also have full access to our $2.000 billion revolving credit facility and our $300 million credit and security facility secured by our U.S. trade receivables, both described below.

The following provides a summary and description of our net cash inflows (outflows) for the three months ended March 31, 2016 and 2015 :
 
 
Three Months Ended
March 31,
(in millions)
 
2016
 
2015
Cash provided by (used for) operating activities
 
$
116

 
$
(197
)
Cash provided by (used for) investing activities
 
(48
)
 
(51
)
Cash provided by (used for) financing activities
 
(51
)
 
(94
)

Operating Activities

During the first three months of 2016 , cash provided by operating activities was $116 million , as compared to cash used for operating activities of $197 million during the first three months of 2015 , an increase of $313 million . This increase was primarily driven by a payment of $300 million made to Johnson & Johnson in the first quarter of 2015 as a result of the aggregate $600 million settlement agreement signed on February 13, 2015 to settle the breach of merger agreement lawsuit brought by Johnson & Johnson against Guidant, stemming from our acquisition of Guidant in 2006. As a result of the settlement agreement, Johnson & Johnson dismissed permanently its action without acknowledgment of liability by Guidant. In exchange, we paid $600 million to Johnson & Johnson during the first half of 2015.

Investing Activities

During the first three months of 2016 , cash used for investing activities primarily included purchases of privately held equity securities of $13 million and purchases of property, plant and equipment of $60 million , partially offset by proceeds from the sale of one of two buildings located in Quincy, Massachusetts of $30 million . During the first three months of 2015 , cash used for investing activities primarily included purchases of property, plant and equipment of $46 million .

Financing Activities

Our cash flows from financing activities in the first three months of 2016 and first three months of 2015 reflect payments of acquisition-related contingent consideration, proceeds from, and cash used to net share settle and stock issuances related to our equity incentive programs.

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Debt

We had total debt of $5.677 billion as of March 31, 2016 and $5.677 billion as of December 31, 2015 . The debt maturity schedule for the significant components of our debt obligations as of March 31, 2016 is as follows:
(in millions)
 
2016
 
2017
 
2018
 
2019
 
2020
 
Thereafter
 
Total
Senior Notes
 
$
—


$
250


$
600


$
—


$
1,450


$
2,350


$
4,650

Term Loans
 
—

 
85

 
390

 
150

 
375

 
—

 
1,000

 
 
$
—


$
335


$
990


$
150


$
1,825


$
2,350


$
5,650

Note:
The table above does not include unamortized discounts associated with our senior notes, or amounts related to interest rate contracts used to hedge the fair value of certain of our senior notes.

Revolving Credit Facility

On April 10, 2015, we entered into a new $2.000 billion revolving credit facility (the 2015 Facility) with a global syndicate of commercial banks and terminated our previous $2.000 billion revolving credit facility. The 2015 Facility matures on April 10, 2020. Eurodollar and multicurrency loans under the 2015 Facility bear interest at LIBOR plus an interest margin of between 0.900 percent and 1.500 percent , based on our corporate credit ratings and consolidated leverage ratio ( 1.300 percent as of March 31, 2016 ). In addition, we are required to pay a facility fee based on our credit ratings, consolidated leverage ratio and the total amount of revolving credit commitment, regardless of usage, under the credit agreement ( 0.200 percent per year as of March 31, 2016 ). The 2015 Facility contains covenants which, among other things, require that we maintain a minimum interest coverage ratio of 3.0 times consolidated EBITDA and a maximum leverage ratio of 4.5 times consolidated EBITDA for the first four fiscal quarter-ends following the closing of the AMS Portfolio Acquisition on August 3, 2015, and decreasing to 4.25 times , 4.0 times , and 3.75 times consolidated EBITDA for the next three fiscal quarter-ends after such four fiscal quarter-ends, respectively, and then to 3.50 times for each fiscal quarter-end thereafter. There were no amounts borrowed under our current and prior revolving credit facilities as of March 31, 2016 or December 31, 2015 .

 
Covenant Requirement
as of March 31, 2016
 
Actual as of
March 31, 2016
Maximum leverage ratio (1)
4.5 times
 
2.9 times
Minimum interest coverage ratio (2)
3.0 times
 
7.0 times
(1)
Ratio of total debt to consolidated EBITDA, as defined by the credit agreement, for the preceding four consecutive fiscal quarters.
(2)
Ratio of consolidated EBITDA, as defined by the credit agreement, to interest expense for the preceding four consecutive fiscal quarters.

The credit agreement for the 2015 Facility provides for an exclusion from the calculation of consolidated EBITDA, as defined by the credit agreement, through the credit agreement maturity, of any non-cash charges and up to $620 million in restructuring charges and restructuring-related expenses related to our current or future restructuring plans. As of March 31, 2016 , we had $547 million of the restructuring charge exclusion remaining. In addition, any cash litigation payments (net of any cash litigation receipts), as defined by the agreement, are excluded from the calculation of consolidated EBITDA and any new debt issued to fund any tax deficiency payments is excluded from consolidated total debt, as defined in the agreement, provided that the sum of any excluded net cash litigation payments and any new debt issued to fund any tax deficiency payments not exceed $2.000 billion in the aggregate. As of March 31, 2016 , we had $1.680 billion of the combined legal and debt exclusion remaining.

As of and through March 31, 2016 , we were in compliance with the required covenants.
 
Term Loans

As of March 31, 2016 , we had an aggregate of $1.000 billion outstanding under our unsecured term loan facilities and $1.000 billion outstanding as of December 31, 2015 . These facilities include an unsecured term loan facility entered into in August 2013 (2013 Term Loan) which had $250 million outstanding as of March 31, 2016 and December 31, 2015 , along with an unsecured term loan credit facility entered into in April 2015 (2015 Term Loan) which had $750 million outstanding as of March 31, 2016 and December 31, 2015 .


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Borrowings under the 2013 Term Loan bear interest at LIBOR plus an interest margin between 1.00 percent and 1.75 percent (currently 1.50 percent ) based on our corporate credit ratings and consolidated leverage ratio. We repaid $150 million of our 2013 Term Loan facility in 2015. As a result and in accordance with the credit agreement, the remaining outstanding balance is payable with $10 million due in the fourth quarter of 2017, $20 million due in each of the first and second quarters of 2018 and the remaining principal amount due at the final maturity date in August 2018. The 2013 Term Loan borrowings are repayable at any time without premium or penalty. Our term loan facility requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with the 2015 Term Loan facility. The maximum leverage ratio requirement is 4.5 times and our actual leverage ratio as of March 31, 2016 is 2.9 times . The minimum interest coverage ratio requirement is 3.0 times and our actual interest coverage ratio as of March 31, 2016 is 7.0 times .

Our 2015 Term Loan for $750 million was funded on August 3, 2015 and was used to partially fund the AMS Portfolio Acquisition, including the payment of fees and expenses. Term loan borrowings under this facility bear interest at LIBOR plus an interest margin of between 1.00 percent and 1.75 percent (currently 1.50 percent ), based on our corporate credit ratings and consolidated leverage ratio. The 2015 Term Loan requires quarterly principal payments of $38 million commencing in the third quarter of 2017, and the remaining principal amount is due at the final maturity date of August 3, 2020. The 2015 Term Loan agreement requires that we comply with certain covenants, including financial covenants with respect to maximum leverage and minimum interest coverage, consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times and our actual leverage ratio as of March 31, 2016 is 2.9 times . The minimum interest coverage ratio requirement is 3.0 times and our actual interest coverage ratio as of March 31, 2016 is 7.0 times .

Senior Notes

We had senior notes outstanding of $4.650 billion as of March 31, 2016 and December 31, 2015 . In May 2015, we completed the offering of $1.850 billion in aggregate principal amount of senior notes consisting of $600 million in aggregate principal amount of 2.850% notes due 2020, $500 million in aggregate principal amount of 3.375% notes due 2022 and $750 million in aggregate principal amount of 3.850% notes due 2025. The net proceeds from the offering of the notes, after deducting underwriting discounts and estimated offering expenses, were approximately $1.831 billion . We used a portion of the net proceeds from the senior notes offering to redeem $400 million aggregate principal amount of our 5.500% notes due November 2015 and $600 million aggregate principal amount of our   6.400% notes due June 2016. The remaining senior notes offering proceeds, together with the 2015 Term Loan, were used to fund the AMS Portfolio Acquisition. We recorded a charge of $45 million in interest expense, during the second quarter of 2015, for premiums, accelerated amortization of debt issuance costs, and investor discount costs net of interest rate hedge gains related to the early debt extinguishment.

Our senior notes were issued in public offerings, are redeemable prior to maturity and are not subject to any sinking fund requirements. Our senior notes are unsecured, unsubordinated obligations and rank on parity with each other. These notes are effectively junior to borrowings under our credit and security facility, to the extent if borrowed by our subsidiaries and to liabilities of our subsidiaries (see Other Arrangements below).

Other Arrangements

We maintain a $300 million credit and security facility secured by our U.S. trade receivables maturing on June 9, 2017. The credit and security facility requires that we maintain a maximum leverage covenant consistent with our revolving credit facility. The maximum leverage ratio requirement is 4.5 times and our actual leverage ratio as of March 31, 2016 is 2.9 times . We had no borrowings outstanding under this facility as of March 31, 2016 and December 31, 2015 .

We have accounts receivable factoring programs in certain European countries that we account for as sales under FASB ASC Topic 860, Transfers and Servicing. These agreements provide for the sale of accounts receivable to third parties, without recourse, of up to approximately $411 million as of March 31, 2016 . We have no retained interests in the transferred receivables, other than collection and administrative responsibilities and, once sold, the accounts receivable are no longer available to satisfy creditors in the event of bankruptcy. We de-recognized $178 million of receivables as of March 31, 2016 at an average interest rate of 1.7 percent , and $151 million as of December 31, 2015 at an average interest rate of 2.4 percent .

In addition, we have uncommitted credit facilities with a commercial Japanese bank that provide for borrowings, promissory notes discounting and receivables factoring of up to 21.000 billion Japanese yen (approximately $187 million as of March 31, 2016 ). We de-recognized $146 million of notes receivable and factored receivables as of March 31, 2016 at an average interest rate of 1.6 percent and $132 million of notes receivable as of December 31, 2015 at an average interest rate of 1.6 percent . De-recognized accounts and notes receivable are excluded from trade accounts receivable, net in the accompanying unaudited condensed consolidated balance sheets.


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As of March 31, 2016 we had outstanding letters of credit of $43 million , as compared to $44 million as of December 31, 2015 , which consisted primarily of bank guarantees and collateral for workers' compensation insurance arrangements. As of March 31, 2016 and December 31, 2015 , none of the beneficiaries had drawn upon the letters of credit or guarantees; accordingly, we did not recognize a related liability for our outstanding letters of credit in our consolidated balance sheets as of March 31, 2016 or December 31, 2015 . We believe we will generate sufficient cash from operations to fund these arrangements and intend to fund these arrangements without drawing on the letters of credit.
Equity
During the first three months of 2016 and 2015 , we received $27 million and $54 million , respectively, in proceeds from stock issuances related to our stock option and employee stock purchase plans. Proceeds from the exercise of employee stock options and employee stock purchases vary from period to period based upon, among other factors, fluctuations in the trading price of our common stock and in the exercise and stock purchase patterns of our employees.
We did not repurchase any shares of our common stock during the three months ended March 31, 2016 and March 31, 2015 . As of March 31, 2016 , the remaining authorization to repurchase shares under our 2013 share repurchase program was $535 million .
Stock-based compensation expense related to our stock ownership plans was approximately $28 million for the first three months of 2016 and $26 million for the first three months of 2015 .
Contractual Obligations and Commitments

Certain of our acquisitions involve the payment of contingent consideration. See Note B - Acquisitions and Strategic Investments to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further details regarding the estimated potential amount of future contingent consideration we could be required to pay associated with our acquisitions. There have been no other material changes to our contractual obligations and commitments as reported in our most recent Annual Report filed on Form 10-K.
Legal Matters
For a discussion of our material legal proceedings see Note I - Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q and Note I – Commitments and Contingencies to our audited financial statements contained in Item 8 of our most recent Annual Report on Form 10-K.
Recent Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note M - New Accounting Pronouncements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q.

Additional Information

Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of changes in foreign currency exchange rates. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States.

The GAAP financial measure most directly comparable to adjusted net income is GAAP net income and the GAAP financial measure most directly comparable to adjusted net income per share is GAAP net income per share. To calculate revenue growth rates that exclude the impact of changes in foreign currency exchange rates, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The GAAP financial measure most directly comparable to this non-GAAP financial measure is growth rate percentages using net sales on a GAAP basis. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included elsewhere in this Quarterly Report on Form 10-Q.


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Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors, and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments’ measures of net sales and profit or loss. These adjustments are excluded from the segment measures that are reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of changes in foreign currency exchange rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its financial and operational decision-making and allows investors to see our results “through the eyes” of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

Adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of changes in foreign currency exchange rates, are not in accordance with U.S. GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three months ended March 31, 2016 and 2015 , as well as reasons for excluding each of these individual items:
Adjusted Net Income and Adjusted Net Income per Share
•
Acquisition- and divestiture-related net charges (credits) - These adjustments may consist of (a) contingent consideration fair value adjustments; (b) gains on previously held investments; (c) purchased and/or funded in-process research and development expenses incurred outside of a business combination; and (d) due diligence, other fees, inventory step up amortization, and integration and exit costs. The contingent consideration adjustments represent accounting adjustments to state contingent consideration liabilities at their estimated fair value. These adjustments can be highly variable depending on the assessed likelihood and amount of future contingent consideration payments. Due diligence, other fees, inventory step-up amortization, and integration and exit costs include legal, tax, severance and other expenses associated with prior and potential future acquisitions that can be highly variable and not representative of ongoing operations. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
•
Restructuring and restructuring-related net charges (credits) - These adjustments represent severance and other direct costs associated with our 2014 Restructuring program. These costs are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these costs for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
•
Litigation-related net charges (credits) - These adjustments include certain significant product liability and other litigation-related charges and credits. These amounts are excluded by management in assessing our operating performance, as well as from our operating segments' measures of profit and loss used for making operating decisions and assessing performance. Accordingly, management excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
•
Pension termination charges - This item represents charges associated with the termination of the Guidant Retirement Plan, a frozen defined benefit plan. These charges are not expected to recur after 2015 and do not reflect expected ongoing operating results. Accordingly, management has excluded these amounts for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.
•
Amortization expense - We record intangible assets at historical cost and amortize them over their estimated useful lives. Amortization expense is excluded from management's assessment of operating performance and is also excluded from our operating segments' measures of profit and loss used for making operating decisions and assessing performance.

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Accordingly, management has excluded amortization expense for purposes of calculating these non-GAAP financial measures to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

Revenue Growth Rates Excluding the Impact of Changes in Foreign Currency Exchange Rates
•
The impact of changes in foreign currency exchange rates is highly variable and difficult to predict. Accordingly, management excludes the impact of changes in foreign currency exchange rates for purposes of reviewing revenue growth rates to facilitate an evaluation of our current operating performance and a comparison to our past operating performance.

Safe Harbor for Forward-Looking Statements

Certain statements that we may make from time to time, including statements contained in this Quarterly Report on Form 10-Q and information incorporated by reference herein, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “may,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements. Except as required by law, we do not intend to update any forward-looking statements even if new information becomes available or other events occur in the future.

The forward-looking statements in this Quarterly Report on Form 10-Q are based on certain risks and uncertainties, including the risk factors described in “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q, “Part I, Item 1A. Risk Factors” in our 2015 Annual Report on Form 10-K and the specific risk factors discussed below and in connection with forward-looking statements throughout this Quarterly Report on Form 10-Q, which could cause actual results to vary materially from the expectations and projections expressed or implied by our forward-looking statements. These factors, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the forward-looking statements. These additional factors include, among other things, future political, economic, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation and governmental investigations; financial market conditions; and future business decisions made by us and our competitors, all of which are difficult or impossible to predict accurately and many of which are beyond our control. We caution each reader of this Quarterly Report on Form 10-Q to consider carefully these factors.

The following are some of the important risk factors that could cause our actual results to differ materially from our expectations in any forward-looking statements. For further discussion of these and other risk factors, see “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and “Part I, Item 1A. Risk Factors” in our 2015 Annual Report on Form 10-K.

Our Businesses
 
•
Our ability to increase net sales, expand the market and capture market share;

•
The volatility of the coronary stent market and our ability to increase our drug-eluting stent systems net sales, including with respect to our SYNERGY™, Promus PREMIER™ and PROMUS® Element™ stent systems, and capture market share;

•
The ongoing impact on our business, of physician alignment to hospitals, governmental investigations and audits of hospitals, and other market and economic conditions on the overall number of procedures performed;

•
Competitive offerings and related declines in average selling prices for our products, particularly our drug-eluting coronary stent systems and our CRM products;

•
The performance of, and physician and patient confidence in, our products and technologies, or those of our competitors;

•
The impact and outcome of ongoing and future clinical trials, and market studies undertaken by us, our competitors or other third parties, or perceived product performance of our or our competitors' products;
 

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•
Variations in clinical results, reliability or product performance of our and our competitors' products;

•
Our ability to acquire or develop, launch and supply new or next-generation products and technologies worldwide and across our businesses in line with our commercialization strategies in a timely and successful manner, including our S-ICD® system and the acquisition and integration of the interventional radiology portfolio of CeloNova Biosciences, the American Medical Systems male urology portfolio, Xlumena, Inc., and the Interventional Division of Bayer AG;

•
The effect of consolidation and competition in the markets in which we do business, or plan to do business;

•
Disruption in the manufacture or supply of certain components, materials or products, or the failure to timely secure alternative manufacturing or additional or replacement components, materials or products;

•
Our ability to retain and attract key personnel;

•
The impact of enhanced requirements to obtain regulatory approval in the U.S. and around the world, including the associated timing and cost of product approval;
 
•
The impact of increased pressure on the availability and rate of third-party reimbursement for our products and procedures in the U.S. and around the world, including with respect to the timing and costs of creating and expanding markets for new products and technologies; and

•
Risk associated with counterparty default on our derivative financial instruments.

Regulatory Compliance and Litigation

•
The impact of healthcare policy changes and legislative or regulatory efforts in the U.S. and around the world to modify product approval or reimbursement processes, including a trend toward demonstrating clinical outcomes, comparative effectiveness and cost efficiency, as well as the impact of other healthcare reform legislation;

•
Risks associated with our regulatory compliance and quality systems and activities in the U.S. and around the world, including meeting regulatory standards applicable to manufacturing and quality processes;

•
Our ability to minimize or avoid future field actions or FDA warning letters relating to our products and processes and the ongoing inherent risk of potential physician advisories related to medical devices;

•
The impact of increased scrutiny of and heightened global regulatory enforcement facing the medical device industry arising from political and regulatory changes, economic pressures or otherwise, including under U.S. Anti-Kickback Statute, U.S. False Claims Act and similar laws in other jurisdictions; U.S. Foreign Corrupt Practices Act (FCPA) and/or similar laws in other jurisdictions, and U.S. and foreign export control, trade embargo and customs laws;

•
Costs and risks associated with litigation;

•
The effect of our litigation and risk management practices, including self-insurance, and compliance activities on our loss contingencies, legal provision and cash flows;
 
•
The impact of, diversion of management attention as a result of, and costs to cooperate with, litigate and/or resolve, governmental investigations and our class action, product liability, contract and other legal proceedings; and

•
Risks associated with a failure to protect our intellectual property rights and the outcome of patent litigation.

Innovation and Certain Growth Initiatives

•
The timing, size and nature of our strategic growth initiatives and market opportunities, including with respect to our internal research and development platforms and externally available research and development platforms and technologies, and the ultimate cost and success of those initiatives and opportunities;


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•
Our ability to complete planned clinical trials successfully, obtain regulatory approvals and launch new and next generation products in a timely manner consistent with cost estimates, including the successful completion of in-process projects from in-process research and development;

•
Our ability to identify and prioritize our internal research and development project portfolio and our external investment portfolio on profitable revenue growth opportunities as well as to keep them in line with the estimated timing and costs of such projects and expected revenue levels for the resulting products and technologies;

•
Our ability to successfully develop, manufacture and market new products and technologies in a timely manner and the ability of our competitors and other third parties to develop products or technologies that render our products or technologies noncompetitive or obsolete;

•
The impact of our failure to succeed at or our decision to discontinue, write-down or reduce the funding of any of our research and development projects, including in-process projects from in-process research and development, in our growth adjacencies or otherwise;

•
Dependence on acquisitions, alliances or investments to introduce new products or technologies and to enter new or adjacent growth markets, and our ability to fund them or to fund contingent payments with respect to those acquisitions, alliances and investments; and

•
The failure to successfully integrate and realize the expected benefits from the strategic acquisitions, alliances and investments we have consummated or may consummate in the future.

International Markets

•
Our dependency on international net sales to achieve growth, including in emerging markets;

•
The impact of changes in our international structure and leadership;

•
Risks associated with international operations and investments, including the timing and collectibility of customer payments, political and economic conditions, protection of our intellectual property, compliance with established and developing U.S. and foreign legal and regulatory requirements, including FCPA and similar laws in other jurisdictions and U.S. and foreign export control, trade embargo and customs laws, as well as changes in reimbursement practices and policies;

•
Our ability to maintain or expand our worldwide market positions in the various markets in which we compete or seek to compete, including through investments in product diversification and emerging markets such as Brazil, Russia, India and China;

•
Our ability to execute and realize anticipated benefits from our investments in emerging markets; and

•
The potential effect of foreign currency fluctuations and interest rate fluctuations on our net sales, expenses and resulting margins.

Liquidity

•
Our ability to generate sufficient cash flow to fund operations, capital expenditures, global expansion initiatives, any litigation settlements and judgments, share repurchases and strategic investments and acquisitions as well as maintaining our investment grade ratings and managing our debt levels and covenant compliance;

•
Our ability to access the public and private capital markets when desired and to issue debt or equity securities on terms reasonably acceptable to us;

•
The unfavorable resolution of open tax matters, exposure to additional tax liabilities and the impact of changes in U.S. and international tax laws;

•
The impact of examinations and assessments by domestic and international taxing authorities on our tax provision, financial condition or results of operations;


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•
The impact of goodwill and other intangible asset impairment charges, including on our results of operations; and

•
Our ability to collect outstanding and future receivables and/or sell receivables under our factoring programs.

Cost Reduction and Optimization Initiatives

•
Risks associated with significant changes made or expected to be made to our organizational and operational structure, pursuant to our 2014 Restructuring plan, as well as any further restructuring or optimization plans we may undertake in the future, and our ability to recognize benefits and cost reductions from such programs; and

•
Business disruption and employee distraction as we execute our global compliance program, restructuring and optimization plans and divestitures of assets or businesses and implement our other strategic and cost reduction initiatives.

Rule 10b5-1 Trading Plans by Executive Officers

Periodically, certain of our executive officers adopt written stock trading plans in accordance with Rule 10b5-1 under the Exchange Act and our own Stock Trading Policy (a Rule 10b5-1 Trading Plan). A Rule 10b5-1 Trading Plan is a written document that pre-establishes the amount, prices and dates (or formulas for determining the amounts, prices and dates) of future purchases or sales of our stock, including shares issued upon exercise of stock options or vesting of deferred stock units. These plans are entered into at a time when the person is not in possession of material non-public information about Boston Scientific Corporation.


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ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We develop, manufacture and sell medical devices globally and our earnings and cash flows are exposed to market risk from changes in currency exchange rates and interest rates. We address these risks through a risk management program that includes the use of derivative financial instruments. We operate the program pursuant to documented corporate risk management policies. We do not enter derivative transactions for speculative purposes. Gains and losses on derivative financial instruments substantially offset losses and gains on underlying hedged exposures. Furthermore, we manage our exposure to counterparty risk on derivative instruments by entering into contracts with a diversified group of major financial institutions and by actively monitoring outstanding positions.
Our currency risk consists primarily of foreign currency denominated firm commitments, forecasted foreign currency denominated intercompany and third-party transactions and net investments in certain subsidiaries. We use both nonderivative (primarily European manufacturing operations) and derivative instruments to manage our earnings and cash flow exposure to changes in currency exchange rates. We had currency derivative instruments outstanding in the contract amount of $4.454 billion as of March 31, 2016 and $3.547 billion as of December 31, 2015 . We recorded $164 million of other assets and $90 million of other liabilities to recognize the fair value of these derivative instruments as of March 31, 2016 , as compared to $237 million of other assets and $23 million of other liabilities as of December 31, 2015 . A ten percent appreciation in the U.S. dollar’s value relative to the hedged currencies would increase the derivative instruments’ fair value by $250 million as of March 31, 2016 and $155 million as of December 31, 2015 . A ten percent depreciation in the U.S. dollar’s value relative to the hedged currencies would decrease the derivative instruments’ fair value by $284 million as of March 31, 2016 and by $189 million as of December 31, 2015 . Any increase or decrease in the fair value of our currency exchange rate sensitive derivative instruments would be substantially offset by a corresponding decrease or increase in the fair value of the hedged underlying asset, liability or forecasted transaction, resulting in minimal impact on our consolidated statements of operations.
Our interest rate risk relates primarily to U.S. dollar borrowings partially offset by U.S. dollar cash investments. We have historically used interest rate derivative instruments to manage our earnings and cash flow exposure to changes in interest rates. We entered into interest rate derivative contracts having a notional amount of $450 million in the fourth quarter of 2013 to convert fixed-rate debt associated with certain of our senior notes into floating-rate debt, and subsequently terminated these hedges during the first quarter of 2015. We had no interest rate derivative instruments outstanding as of March 31, 2016 . As of March 31, 2016 , $4.674 billion of our outstanding debt obligations were at fixed interest rates, representing approximately 82 percent of our total debt.
Refer to Note D – Fair Value Measurements to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q for further information regarding our derivative financial instruments.


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ITEM 4.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (CEO), and our Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2016 pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures are designed to ensure that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such material information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on their evaluation, our CEO and CFO concluded that, as of March 31, 2016 , our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
During the quarter ended March 31, 2016 , there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
See Note H – Income Taxes and Note I – Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.

ITEM 1A. RISK FACTORS

In addition to the other information contained elsewhere in this report, you should carefully consider the factors discussed in “Part I, Item 1A. Risk Factors” in our most recent Annual Report filed on Form 10-K, which could materially affect our business, financial condition or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

 
 
 
 
 


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ITEM 6. EXHIBITS (* documents filed or furnished with this report, # compensatory plans or arrangements)
10.1*
 
Form of Offer Letter by and between the Company and Edward Mackey dated December 24, 2014.#
 
 
 
10.2*
 
Form of Global Non-Qualified Stock Option Agreement under the 2011 Long-Term Incentive Plan#
 
 
 
10.3*
 
Form of Global Deferred Stock Unit Award Agreement under the 2011 Long-Term Incentive Plan#
 
 
 
10.4*
 
Form of 2016 Performance Share Unit Award Agreement under the 2011 Long-Term Incentive Plan (Total Shareholder Return)#
 
 
 
10.5*
 
Form of 2016 Performance Share Unit Award Agreement under the 2011 Long-Term Incentive Plan (Free Cash Flow)#
 
 
 
31.1*
 
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
31.2*
 
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
 
32.1*
 
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief Executive Officer
 
 
 
32.2*
 
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Executive Vice President and Chief Financial Officer
 
 
 
101*
 
Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 and 2015, (iii) the Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 and (v) the notes to the Condensed Consolidated Financial Statements.

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on May 4, 2016 .

 
BOSTON SCIENTIFIC CORPORATION
 
 
By:
/s/ Daniel J. Brennan
 
 
 
 
 
 
Name:
Daniel J. Brennan
 
 
Title:
Executive Vice President and
Chief Financial Officer 


53
EXHIBIT 10.1


December 22, 2014

Edward F. Mackey
[ADDRESS]
[ADDRESS]
Dear Ed:
We are pleased to offer you the position of Executive Vice President, Operations, reporting to Michael Mahoney, President and Chief Executive Officer. As part of this offer, you will become a member of Boston Scientific’s Executive Committee, an “executive officer” under the federal securities laws and an “officer” for purposes of Section 16 of the Exchange Act. This letter and the Agreement Concerning Employment summarize our understanding of the terms of your employment.  We look forward to you formally accepting this offer.
COMPENSATION
Boston Scientific’s compensation programs provide our employees with significant compensation opportunities on a pay for performance basis.  The objective of these programs is to recognize and reward both individual and company performance during the performance year (defined as January 1st through December 31st of each year).
Base Salary:   Base salary for this position will be $17,307.70 currently payable bi-weekly, equivalent to $450,000.20 on an annualized basis.  Your performance and base salary will generally be reviewed on an annual basis during the normal executive review process.  Your 2015 performance and base salary will be reviewed during the normal executive review process, expected to commence in the first quarter of 2016. I am pleased to advise you that in your specific case, any merit increase will not be prorated based on your date of hire.
Annual Bonus Plan:   You will be eligible to participate in the Boston Scientific Corporation Annual Bonus Plan starting in 2015, subject to its terms. The Annual Bonus Plan provides employees with the opportunity for a variable financial incentive in recognition of performance in a given year.  Your annual target incentive will be 60% of your base salary.  Typically, any such payment will be prorated based on the number of days of eligible employment in the calendar year.  However, I am pleased to advise you that in your specific case, your 2015 annual bonus will not be pro-rated based on your date of hire. Your actual award will be based on your achievement of individual goals and the company's achievement of corporate performance goals.  Under the plan, generally you must be an employee on the date of payment to be eligible to earn and receive any bonus payment.
Deferred Bonus Plan: You will be eligible to participate in the Boston Scientific Corporation Deferred Bonus Plan starting in 2016, subject to its terms. This plan allows you to save additional tax-deferred money for your future by deferring a portion of your annual bonus awarded under the Annual Bonus Plan. Specifically, under the plan, on an annual basis, you can elect to defer up to 75% of the Annual Bonus Plan bonus awarded to you subject to the provisions of the Plan. The open enrollment will be in June, 2016 for the 2016 plan year and every subsequent year following which you are eligible for.




EXHIBIT 10.1


Cash Sign-On Bonus: To compensate for the anticipated loss of your 2014 annual bonus from your current employer, Boston Scientific would provide you with a one-time sign-on bonus in the amount of $200,000 (gross amount) payable within your first thirty days of employment. If you receive your 2014 annual bonus from your current employer, you are not eligible for this sign-on bonus. In addition, you must be employed by Boston Scientific to receive the cash sign-on bonus.  If you should leave Boston Scientific voluntarily or if you are discharged due to a serious violation of company policy prior to the first anniversary of your start date, you must repay the entire sign-on bonus to the company within 30 days of your departure.

Equity Sign-on Grant:   As part of this offer of employment, we are offering you an equity incentive award having a total value of $2,050,000 on the date of grant.  The equity incentive award could be in the form of Deferred Stock Units (DSUs) or non-qualified stock options or a mix of both DSUs and non-qualified stock options, depending on your preference.  Upon your acceptance of this offer, we will provide you an election form to document your choice.  Your award will be made pursuant to the 2011 Boston Scientific Long Term Incentive Plan. Our Long-Term Incentive Plans are designed to share the rewards of the business with individuals who most significantly contribute to the achievement of the Company’s strategic and operating goals.  The date of grant will be the first trading day of the month following date of hire.
Annual Equity Grant: As part of this offer of employment, during the normal annual review process (scheduled for Q1 2015) you will be recommended to be granted an equity award having a total value of $750,000 on the effective date of grant. This award will constitute your annual equity grant under the 2015 Long Term Incentive Program. This award will be made pursuant to the 2011 Boston Scientific Long Term Incentive Plan. The effective date of grant will be the date on which 2015 long-term incentive awards are made to equity eligible employees of Boston Scientific, which under our policies is generally on the date of approval.. Thereafter, your performance and entitlement to long term incentive compensation grants will be reviewed in the normal course, on an annual basis starting with the annual review process which we expect to have in Q1 of 2016. The current program provides for an equal mix of Total Shareholder Return Performance Shares (TSR PSP), Free Cash Flow Performance Shares (FCF PSP), Deferred Stock Units (DSU’s) and Non-Qualified Stock Options.
Total Shareholder Return Performance Share Program (TSR PSP) Award: A TSR PSP award reflects Boston Scientific’s commitment to grant to you a number of shares of Boston Scientific common stock (less applicable tax and other withholdings), subject to certain performance, eligibility and other conditions, and will fully vest at the end of a three year period beginning on the effective date of the grant.  The target number of Performance Share Units (PSU) to be awarded to you will be calculated using the Fair Market Value (closing price) of Boston Scientific common stock on the effective date of grant. The actual number of shares delivered to you at the end of the vesting period will be based on Boston Scientific's stock performance over the three year period as compared to the S&P HealthCare Index and may be earned at less than, at or greater than the target number of PSUs awarded. The TSR PSP award will be subject to the provisions of the Boston Scientific 2011 Long Term Incentive Plan (2011 LTIP), and the TSR PSP and the PSU Award Agreement.
Free Cash Flow Performance Share Program (FCF PSP) Award: A FCF PSP award reflects Boston Scientific’s commitment to grant to you a number of shares of Boston Scientific common stock (less applicable tax and other withholdings), subject to certain performance, eligibility and other conditions, and will fully vest at the end of a three year period beginning on the effective date of the grant.  The target number of Performance Share Units (PSU) to be awarded to you will be calculated using the Fair Market Value (closing price) of Boston Scientific common stock on the effective date of grant. The actual number of shares delivered to you at the end of the vesting period will be based on Boston Scientific's Free Cash Flow performance against plan in 2015 and may be earned at less than, at or greater than the target number of PSUs awarded. The FCF PSP award will be subject to the provisions of the 2011 LTIP, the FCF PSP and the PSU Award Agreement.





EXHIBIT 10.1


DSU Award: An award of Deferred Stock Units (DSUs) reflects Boston Scientific’s commitment to grant to you a number of shares of Boston Scientific common stock (less applicable tax and other withholdings), to be issued in five equal annual increments beginning on the first anniversary of the date of the grant. The DSU award will be subject to the provisions of the 2011 LTIP and the DSU Award Agreement.

Non-Qualified Stock Options: A stock option grant provides an opportunity to purchase shares of Boston Scientific common stock at the exercise price. The number of stock options granted to you will be calculated using a Black Scholes calculation of the value of the options on the effective date of grant. The exercise price will be equal to the Fair Market Value (closing price) of Boston Scientific common stock on the effective date of grant. The stock option grant will vest in four equal annual installments beginning on the first anniversary of the date of grant and would expire on the 10th anniversary of the grant date. The stock option award will be subject to the provisions of the 2011 LTIP and the Non-Qualified Stock Option Award Agreement.

Thereafter, during the normal executive review process you will be eligible for consideration for an annual equity incentive award, subject to and in accordance with the terms of Boston Scientific’s Long Term Incentive Program. Awards will depend on both company and individual performance. The target value for your level will be evaluated annually by the Executive Compensation and Human Resource Committee of the Boston Scientific Board of Directors.

EXECUTIVE RETIREMENT PLAN
As an Executive Committee Member, if you were to "Retire" from Boston Scientific (as that term is defined in the Boston Scientific Executive Retirement Plan), you may be eligible to receive certain benefits provided under that plan, subject to and in accordance with its terms. A copy of Boston Scientific's Executive Retirement Plan is attached for your information.

CHANGE IN CONTROL AGREEMENT
As an Executive Committee Member, Boston Scientific will provide you an executive-level Change in Control agreement. In general, the Change in Control agreement would entitle you to a lump sum payment of three times your base salary and assumed on-plan incentive bonus if, following a change in control of Boston Scientific, either your employment is terminated other than for “cause” or you resign for “good reason” (each as defined in the Change in Control agreement) all subject to and in accordance with the agreement. A copy of this agreement will be distributed to you in your first week of your new role.
BENEFITS
You will be provided with information regarding Boston Scientific's current benefit programs following your acceptance of this offer.  You should review this information prior to your start date so you are prepared to enroll within your first 31 days of employment.  Boston Scientific reserves the right to change and/or terminate any aspect of our benefit offerings, including employee contributions toward benefits.
RELOCATION
To assist with your move, Boston Scientific is pleased to provide you with a relocation package that would include certain provisions of Boston Scientific’s Tier 5 Executive Officer Domestic Relocation Policy, subject to its terms and conditions.  The provisions we offer are as follows: closing costs on the sale of your principal residence, a guaranteed buyout provision should your principal residence not sell (provided the property meets the eligibility requisites under the Relocation Policy, and you elect to enter into a Guaranteed Sale/Amended Sale Agreement);  closing costs on your purchase of a new home, costs of move of goods to your new home, up to two months of dual housing offset if required, and a miscellaneous allowance of $7,500.  As a condition of receiving relocation benefits, you will be required to sign an Agreement to Reimburse.  A copy of the Relocation Policy is attached; the form Agreement to Reimburse is on the last page of the policy.

To support your transition to your new location, Boston Scientific will provide relocation support through our third party vendor, Weichert Relocation Services.  A representative from Weichert will contact you in January 2015 to discuss the specific provisions of your package.   Please note that you will be required to sign an


EXHIBIT 10.1


Agreement to Reimburse, which requires you to repay expenses in the event you voluntarily resign or are terminated for certain reasons, in accordance with the terms of the Agreement.   

NOTE:    Since Home Sale Assistance is a provision of your relocation, it is required that Weichert be allowed to make the initial call to the realtor of your choice. Therefore, you are encouraged not to contact a realtor directly before speaking with Weichert as doing so may impact your eligibility for relocation services.
AGREEMENT CONCERNING EMPLOYMENT AND NO CONFLICT WITH PRIOR AGREEMENTS
You must enter into an Agreement Concerning Employment with Boston Scientific.  Please read this Agreement before accepting your offer because it contains provisions that affect your legal rights, including obligations regarding protection of confidential and proprietary information and other important covenants.  You will be asked to sign the Agreement Concerning Employment upon accepting the offer. In addition, Boston Scientific expects that you will comply with any valid ongoing obligations to any prior employer, including that you will not bring with you or use during your employment with Boston Scientific any confidential information from any prior employer. By accepting this offer, you represent that your employment with Boston Scientific shall not breach any valid agreement you have with any third party.
EMPLOYMENT AT WILL
Upon acceptance of this offer and your active start of employment, you will become an "at will" employee of Boston Scientific.  This means that you will be free to resign at any time.  Likewise, Boston Scientific will have the right to terminate your employment at any time with or without reason or notice.  Acceptance of this offer acknowledges your understanding and acceptance of the "at will" nature of your employment.
BACKGROUND VERIFICATION AND PRE-EMPLOYMENT DRUG TESTING
Please note that this offer of employment is contingent upon your successful completion of a background check and drug test.  The drug test must be completed within three (3) business days of accepting this offer.  You will be contacted by Boston Scientific’s vendor, HireRight, to provide and receive information necessary to perform the background check and drug test.   By accepting your offer, you acknowledge that you have received and reviewed Boston Scientific’s Pre-Employment Drug Testing Policy and that you consent to pre-employment drug testing under the policy.
AUTHORIZATION TO WORK
This offer of employment is also contingent upon your ability to provide, within three (3) days following your start date, a completed I-9 form with acceptable original documents that will establish your identity and authorization to work in the U.S. in compliance with the Immigration Reform and Control Act of 1986, a federal law.  You will be asked to present these documents on your first day of employment so please remember to bring them. 
ONBOARDING
Upon receipt of your acceptance, you will receive an email with a link to Boston Scientific’s Welcome Portal.   Please create a password and login within 48 hours of receipt.  The portal contains electronic forms that must be completed prior to your start date. You will also find information on how to enroll for benefits.  
ACCEPTANCE
This offer of employment is contingent upon the following:
• Successful completion of background check and drug test;
• An acceptance no later than December 30, 2014;
• A start date to be mutually agreed upon, but no later than February 2, 2015 and
• A signed Agreement Concerning Employment
Please indicate your acceptance by acknowledging below.

Ed, we believe that the opportunity here with Boston Scientific will be a mutually rewarding one and we look forward to your acceptance of this offer.



EXHIBIT 10.1




Sincerely,

/s/ Michael F. Mahoney
Michael F. Mahoney President and Chief Executive Officer

Agreed to and Accepted by:  /s/ Edward F. Mackey __________________________ Date: _ 12/24/2014 __ Edward F. Mackey
Enclosures:
Deferred Bonus Plan
Executive Retirement Plan
Agreement Concerning Employment




EXHIBIT 10.2




Boston Scientific Corporation 2011 Long-Term Incentive Plan
Global Non-Qualified Stock Option Agreement

[Date]




_________________________________
(“Optionee”)























EMPLOYEE COPY
PLEASE RETAIN FOR YOUR RECORDS



EXHIBIT 10.2


Boston Scientific Corporation 2011 Long-Term Incentive Plan
Global Non-Qualified Stock Option Agreement

This Global Non-Qualified Stock Option Agreement (the “Agreement”), dated [ ] (the “Grant Date”), is between you and Boston Scientific Corporation, a Delaware corporation, (the “Company”) in connection with the Non-Qualified Stock Option Award granted to you by the Company. This Agreement sets forth the terms and conditions relating to your Stock Option pursuant to the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used but not defined in this Agreement shall have the same meaning as assigned to them in the Plan. The applicable terms and conditions of the Plan are incorporated into and made a part of this Agreement.

1.     Grant of Stock Option . The Committee hereby grants you a Stock Option to purchase that number of shares of Stock set forth on herein (the “Option Shares”) at the price set forth herein (the “Grant Price”). The Grant Price is equal to the Fair Market Value of the Company’s Stock on the Grant Date.

2.     Term and Vesting of Stock Option . Except as otherwise provided in Section 4 below, your Stock Option shall have a term of ten (10) years from [ ] until [ ] (the “Expiration Date”) and shall vest in accordance with the vesting schedule. If the Expiration Date falls on a date on which the New York Stock Exchange is closed for trading, the Expiration Date shall be the trading day immediately prior to the Expiration Date.

3.     Exercise of Stock Option . While this Stock Option remains exercisable, you may exercise any vested portion of the Option Shares by delivering to the Company or its designee, in the form and at the location specified by the Company, notice stating your intent to exercise a specified number of Option Shares and payment of the full Grant Price for the specified number of Option Shares. Payment in full for the Option Shares being exercised may be paid in such manner as the Committee may specify from time to time, in its sole discretion, including, but not limited to the following: (a) in cash, (b) by certified check or bank draft payable in U.S. dollars ($US) to the order of the Company, (c) in whole or in part in shares of Stock owned by you, valued at Fair Market Value, or (d) if available to you, via cashless exercise, by which you deliver to your securities broker instructions to sell a sufficient number of shares of Stock to cover the Grant Price for the Option Shares, any applicable tax obligations and the brokerage fees and expenses associated therewith. Notwithstanding the foregoing, if you reside in a country where the local foreign exchange rules and regulations either preclude the remittance of currency out of the country for purposes of paying the Grant Price for the Option Shares being exercised, or require the Company and/or you to secure any legal or regulatory approvals, complete any legal or regulatory filings, or undertake any additional steps for remitting currency out of the country, the Company may restrict the method of exercise to a form of cashless exercise (either a cashless “sell all” exercise and/or a cashless “sell to cover” exercise) as it shall determine in its sole discretion.

The exercise date applicable to your exercise of the specified number of Option Shares pursuant to this Section 3 will be deemed to be the date on which the Company receives your irrevocable commitment to exercise the Option Shares in writing, subject to your payment in full of the Option Shares to be exercised within 10 (ten) days of the notice of exercise of the Option


–Rev 1.2016
1
EXHIBIT 10.2


Shares to be exercised. The notice and payment in full of the Option Shares being exercised, must be received by the Company or its designee on or prior to the last day of the Stock Option term, as set forth in Section 2 above, except as provided in Section 4 below.

Upon the Company’s determination that there has been a valid exercise of the Option Shares, the Company shall issue certificates in accordance with the terms of this Agreement or cause the Company’s transfer agent to make the necessary book entries for the shares of Stock subject to the exercised Option Shares. However, the Company shall not be liable to you, your personal representative or your successor(s)-in-interest for damages relating to any delays in issuing the certificates or in making book entries, any loss of the certificates, or any mistakes or errors in the issuance of the certificates or in making book entries, or in the certificates themselves.

4.     Termination of Employment .

a.    Provided that you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date, upon termination of your employment due to death, Disability or Retirement (as such terms are defined in the Plan or determined under local law, as applicable), all remaining unexercised portion(s) of your Stock Option shall immediately vest and become exercisable by you or your appointed representative, as the case may be, until the expiration of the term of the Stock Option or such other term as the Committee may determine at or after grant, provided that such exercise period does not extend beyond the original term of the Stock Option. 

b.    In the event that your employment terminates due to death prior to the first anniversary of the Grant Date, a number of the Option Shares equal to that percentage of year completed (based on the number of full and partial months of employment completed in such vesting year rounded up to the nearest whole month) prior to death shall immediately vest and become exercisable until the expiration of the term of the Stock Option or such other term as the Committee may determine at or after grant, provided that such exercise period does not extend beyond the original term of the Stock Option. All remaining unvested Option Shares shall immediately be forfeited.

c.    In the event that your employment terminates due to Disability or Retirement prior to the first anniversary of the Grant Date, the Option Shares shall immediately be forfeited in their entirety.

d.    Upon termination of your employment for reasons other than for Cause, death, Disability or Retirement, you shall have the shorter of (i) one (1) year from the date of termination and (ii) the remaining term of the Stock Option to exercise all vested Option Shares. Immediately upon termination of your employment for reasons other than for Cause, death, Disability or Retirement, all unvested Option Shares shall be forfeited; provided, however, that the Committee, in its sole discretion, may extend the exercise period and/or accelerate vesting of any unvested Option Shares (provided that such exercise period does not extend beyond the original term of the Stock Option). Your termination date shall be the last day of your active service with the Company or an Affiliate (if applicable).

–Rev 1 2016
2
EXHIBIT 10.2



e.    Immediately upon notice of termination of your employment for Cause, all unexercised Option Shares, whether vested or unvested, shall be forfeited.

f.    The Option Shares, to the extent unexercised on the date following the end of any period described above or the term of the Stock Option set forth above in Section 2, shall thereupon be forfeited.

g.    Notwithstanding anything to the contrary in the Plan or the Agreement, and for purposes of clarity, any termination of employment shall be effective as of the date your active employment ceases and shall not be extended by any statutory or common law notice of termination period.

h.    Any one of your permitted transferee(s) (pursuant to Section 7 below) shall receive the rights herein granted subject to the terms and conditions of this Agreement and any applicable Addendum. No transfer of this Stock Option shall be approved and effected by the Administrator unless (i) the Administrator shall have been timely furnished with written notice of such transfer and any copies of such notice as the Committee may deem, in its sole discretion, necessary to establish the validity of the transfer; (ii) the transferee or transferees shall have agreed in writing to be bound by the terms and conditions of this Agreement and any applicable Addendum; and (iii) such transfer complies with applicable laws and regulations.

i.    If you are a resident or employed in a country that is a member of the European Union, the grant of the Stock Option and this Agreement are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the “Age Discrimination Rules”). To the extent that a court or tribunal of competent jurisdiction determines that any provision of the Stock Option is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

j.    If you reside or work in a country where the local foreign exchange rules and regulations require the repatriation of sale proceeds, the Company may require you to sell any Option Shares you acquire under the Plan within a specified period following your termination of employment (in which case, this Agreement shall give the Company the authority to issue sales instructions on your behalf).

5.     Change in Control . To the extent that you have not entered into a Change in Control Agreement with the Company and except as the Administrator (as defined in the Plan) may otherwise determine, immediately prior to a Change in Control (as defined in the Plan), any unvested portion of the Stock Option shall vest and become exercisable. In addition, the Stock Option shall terminate immediately prior to the Change in Control unless the Stock Option is exercised coincident therewith or assumed in accordance with the immediately following sentence. If there is a surviving or acquiring entity, the Administrator may provide for a substitution or assumption of the Stock Option by the acquiring or surviving entity or an affiliate thereof, on such terms as the Administrator

–Rev 1 2016
3
EXHIBIT 10.2


determines. If there is no surviving or acquiring entity, or if the Administrator does not provide for a substitution or assumption of the Stock Option, any unvested portion of the Stock Option shall vest and become exercisable on a basis that gives you a reasonable opportunity to participate as a stockholder in the Change in Control. If you have entered into a Change in Control agreement with the Company, the Stock Option will vest according to the provisions of the Change in Control agreement.

6.     Recoupment Policy .

(a)     Current Recoupment Policy . Pursuant to the Company’s recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and you, in the judgment of the Board, commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i)     Definitions . The following terms, when used in this Section 6, shall have the meaning set forth below:

(1)    “Current Executive Officer” means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2)    “Executive Officer” means any Current Executive Officer or Former Executive Officer.

(3)    “Former Executive Officer” means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(4)    “Recovery” means the forfeiture or cancellation of unexercised Stock Options, whether vested or unvested.

(b)     Provisions Required by Law . If the Company subsequently determines that it is required by law to apply a “clawback” or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

7.     Restrictions on Shares; Legend on Certificate . Shares of Stock issued to you in certificate form or to your book entry account upon exercise of the Stock Option may be restricted from transfer or sale by th
e Company and evidenced by stop-transfer instructions upon your book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

–Rev 1 2016
4
EXHIBIT 10.2



8.     Transferability . Except as required by law, you shall not sell, transfer, assign, pledge, gift, hypothecate or otherwise dispose of the Stock Option granted under this Agreement other than by will or the laws of descent and distribution or without payment of consideration to your Family Members or to trusts or other entities for the benefit of your Family Members. During your lifetime, the Stock Option is exercisable only by you, subject to Section 4 above.

9.     Satisfaction of Tax Obligations . Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Option, including the grant of the Stock Option, the vesting of the Stock Option, the exercise of the Stock Option, the subsequent sale of any shares of Stock acquired upon exercise of the Stock Option and the receipt of any dividends, and (b) do not commit to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate your liability for Tax-Related Items.

Prior to the delivery of shares of Stock upon exercise of the Stock Option, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may withhold a sufficient whole number of shares of Stock otherwise issuable upon exercise of the Stock Option that has an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the shares of Stock, or to the extent it would not result in adverse accounting treatment, the Company may, in its sole discretion, withhold shares of Stock based on a rate of up to the maximum applicable withholding rate. The cash equivalent of the shares of Stock withheld will be used to settle the obligation to withhold the Tax-Related Items. By accepting the Stock Option, you expressly consent to the withholding of shares of Stock as provided for hereunder.

Alternatively, you hereby authorize the Company (on your behalf and at your direction pursuant to this authorization) to immediately sell a sufficient whole number of shares of Stock acquired upon exercise resulting in sale proceeds sufficient to pay the Tax-Related Items required to be withheld. You agree to sign any agreements, forms and/or consents that reasonably may be requested by the Company (or the Company’s designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds to the Company to satisfy the Tax-Related Items required to be withheld). Further, the Company or the Employer may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from your salary or any other amounts payable to you, with no withholding of shares of Stock or sale of shares of Stock, or may require you to submit a cash payment equivalent to the Tax-Related Items required to be withheld with respect to the exercised Stock Option.

All other Tax-Related Items related to the Stock Option and any shares of Stock delivered in payment thereof are your sole responsibility. In no event, shall whole shares be withheld by or

–Rev 1 2016
5
EXHIBIT 10.2


delivered to the Company in satisfaction of any Tax-Related Items in excess of the maximum statutory tax withholding required by law. You agree to indemnify the Company and its Affiliates against any and all liabilities, damages, costs and expenses that the Company and its Affiliates may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any Tax-Related Items.

The Stock Option is intended to be exempt from the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Agreement is subject to Code Section 409A and that it has failed to comply with the requirements of that Section, the Company may, in its sole discretion, and without your consent, amend this Agreement to cause it to comply with Code Section 409A or be exempt from Code Section 409A.

10.     Repatriation and Legal/Tax Compliance Requirements . If you are a resident or employed outside of the United States, you agree, as a condition of the Stock Option grant, to repatriate all payments attributable to the shares of Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the shares of Stock acquired pursuant to the Stock Option) in accordance with local foreign exchange rules and regulations in your country of residence (and country of employment, if different). In addition, you agree to take any and all actions, and consent to any and all actions taken by the Company and the Employer, as may be required to allow the Company and the Employer to comply with local laws, rules and regulations in your country of residence (and country of employment, if different). Finally, you agree to take any and all actions as may be required to comply with your personal legal and tax obligations under local laws, rules and regulations in your country of residence (and country of employment, if different).

11.     Data Privacy . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Stock Option grant materials by and among, as applicable, the Employer, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.

You understand that the Company and the Employer may hold certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social insurance number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, and details of all Stock Options awarded to you or any other entitlements to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”) for the purpose of implementing, managing and administering the Plan.

You understand that Data may be transferred to any third parties assisting the Company with the implementation, administration and management of the Plan, including but not limited to E*TRADE Corporate Services (“E*TRADE”) or any successor or any other third party that

–Rev 1 2016
6
EXHIBIT 10.2


the Company or E*TRADE (or its successor) may engage to assist with the administration of the Plan from time to time. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative.
You authorize the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any shares of Stock acquired upon vesting of the Stock Options. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consent herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consent herein on a purely voluntary basis. If you do not consent, or if you later revoke your consent, your employment status or service with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that the Company would not be able to grant you Stock Options or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

12.     Nature of Grant . By participating in the Plan, you acknowledge, understand and agree that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Administrator at any time, to the extent permitted by the Plan;

(b) the grant of the Stock Options is voluntary and occasional and does not create any contractual or other right to receive future grants or benefits in lieu of Stock Options, even if Stock Options have been granted in the past;

(c) all decisions with respect to future grants of Stock Options, if any, will be at the sole discretion of the Administrator;

(d) the Stock Option grant and your participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer or Affiliate and shall not interfere with the ability of the Company, the Employer or any Affiliate, as applicable, to terminate your employment or service relationship (if any);


–Rev 1 2016
7
EXHIBIT 10.2


(e) you are voluntarily participating in the Plan;

(f) the Stock Options are not intended to replace any pension rights or compensation;

(g) the Stock Options, the shares of Stock subject to the Stock Options, and the income and value of same are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the shares of Stock subject to the Stock Options is unknown, indeterminable and cannot be predicted with certainty;

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Stock Options resulting from the termination of your employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and in consideration of the grant of the Stock Options to which you are otherwise not entitled, you irrevocably agree never to institute any such claim against the Company, any of its Affiliates or the Employer, waive your ability, if any, to bring any such claim, and release the Company, its Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(j) unless otherwise agreed with the Company in writing, the Stock Options, the shares of Stock subject to the Stock Options, and the income and value of same are not granted as consideration for, or in connection with, any service you may provide as a director of an Affiliate;
 
(k) for purposes of the Stock Options, your employment or other service relationship will be considered terminated as of the date you are no longer actively providing services to the Company or one of its Affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, the period (if any) during which you may exercise the Option will commence as of such date and will not be extended by any notice period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any; the Administrator shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of the Option grant (including whether you may still be considered to be providing services while on an approved leave of absence); and

(l) the following provisions apply only if you are providing services outside the United States: (A) the Stock Options, the shares of Stock subject to the Stock Options, and the income and value of same are not part of normal or expected compensation or salary for any purpose; and (B) neither the Company, the Employer nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the U.S. dollar that may affect the value of the Stock

–Rev 1 2016
8
EXHIBIT 10.2


Options or of any amount due to you pursuant to the exercise of the Stock Options or the subsequent sale of any Shares acquired upon exercise.

13.     Waiver of Entitlement to Compensation or Damages . In consideration of the grant of the Stock Option under this Agreement, no claim or entitlement to compensation or damages shall arise from termination of the Stock Option or diminution in value of the shares of Stock acquired upon vesting of the Stock Option resulting from termination of your employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and the Employer from any such claim that may arise. Notwithstanding the foregoing, if any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, you will be deemed to have irrevocably waived your entitlement to pursue such claim.

14.     Securities Laws . Upon the acquisition of any shares of Stock pursuant to the exercise of the Stock Option, you will make or enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws or with the Plan.

15.     Not a Public Offering . Neither the grant of the Stock Option under the Plan nor the issuance of the underlying shares of Stock upon exercise of the Stock Option is intended to be a public offering of securities in your country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filings to the local securities authorities unless otherwise required under local law.

16.     No Advice Regarding Grant . No Employee of the Company is permitted to advise you regarding whether you should purchase shares of Stock under the Plan. Investment in shares of Stock involves a degree of risk. Before deciding to purchase shares of Stock pursuant to the Stock Option, you should carefully consider all risk factors relevant to the acquisition of shares of Stock under the Plan, and you should carefully review all of the materials related to the Stock Option and the Plan. You are hereby advised to consult with your own personal tax, legal and financial advisors before taking any action related to the Plan.

17.     Insider Trading/Market Abuse Laws . You acknowledge that your country of residence may have insider trading and/or market abuse laws which may affect your ability to acquire or sell shares of Stock under the Plan during such times that you are considered to have “inside information” (as defined in the laws in your country). These laws may be the same or different from any Company insider trading policy. You acknowledge that it is your responsibility to comply with such regulations, and that you are advised to speak to your personal advisor on this matter.

18.     Award Subject to the Plan . The Award to be made pursuant to this Agreement is made subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan, the applicable terms and conditions of the Plan will govern and prevail. However, no amendment of the Plan after the

–Rev 1 2016
9
EXHIBIT 10.2


date hereof may adversely alter or impair the issuance of the shares of Stock to be made pursuant to this Agreement. You hereby accept the Stock Option subject to all the terms and provisions of the Plan and this Agreement and agree that all decisions under, and interpretations of, the Plan and this Agreement by the Administrator, Committee or the Board shall be final, binding and conclusive upon you and your heirs and legal representatives.

19.     Electronic Delivery of Documents . The Company may, in its sole discretion, deliver any documents related to the Stock Option and participation in the Plan, or future grants of Stock Options that may be granted under the Plan, by electronic means unless otherwise prohibited by local law. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party-designated by the Company.

20.     Language . If you are resident outside of the United States, you hereby acknowledge and agree that it is your express intent that this Agreement and any applicable Addendum, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Stock Option, be drawn up in English. If you have received this Agreement and any applicable Addendum, the Plan or any other documents related to the Stock Option translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

21.     Addendum . Notwithstanding any provision of this Agreement to the contrary, the Stock Option shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as are forth in the applicable addendum to the Agreement (the “Addendum”). Further, if you transfer your residence and/or employment to another country reflected in the Addenda to this Agreement, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Any applicable Addendum shall constitute part of this Agreement.

22.     Additional Requirements . The Administrator reserves the right to impose other requirements on the Stock Option, any shares of Stock acquired pursuant to the Stock Option and your participation in the Plan to the extent the Administrator determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws or to facilitate the administration of the Plan. Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

23.     Legal Notices . Any legal notice necessary under this Agreement shall be addressed to the Company in care of its Secretary at the principal executive office of the Company and to you at the address appearing in the personnel records of the Company for you or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.


–Rev 1 2016
10
EXHIBIT 10.2


24.     Choice of Law and Venue . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflicts of laws principles) and applicable federal laws.
For purposes of litigating any dispute under the Agreement, including the Addendum, the parties hereby submit to and consent to the exclusive jurisdiction of The Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the courts of Boston or the federal courts for the United States for the District of Massachusetts, and no other courts where the grant of the Options is made and/or to be performed.


25.     Conflicts .    The Stock Option granted by this Agreement and any applicable Addendum is subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. This Agreement contains terms and provisions established by the Committee specifically for the grant described herein. Unless the Committee has exercised its authority under the Plan to establish specific terms of an Award, the terms of the Plan shall govern. Subject to the limitations set forth in the Plan, the Committee retains the right to alter or modify the Stock Option granted under this Agreement as the Committee may determine are in the best interests of the Company.

26.     Headings . The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

27.     Severability . You agree that the provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable

28.     Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

–Rev 1 2016
11
EXHIBIT 10.2


SIGNATURE PAGE
    
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Optionee have executed and delivered this Agreement effective as of the date and year first above written.

Option Shares of Stock:

Grant Price:

Vesting Schedule:

 
Percent of
Stock Option
Date Vested
25%
[ ]
25%
[ ]
25%
[ ]
25%
[ ]
 
 



BOSTON SCIENTIFIC CORPORATION        
                

                                                     
Michael F. Mahoney
President and Chief Executive Officer


OPTIONEE



By:                                 


BY ELECTRONICALLY ACCEPTING THE AWARD, YOU AGREE THAT (i) SUCH ACCEPTANCE CONSTITUTES YOUR ELECTRONIC SIGNATURE IN EXECUTION OF THIS AGREEMENT; (ii) YOU AGREE TO BE BOUND BY THE PROVISIONS OF THE PLAN, THE AGREEMENT AND THE ADDENDUM; (iii) YOU HAVE REVIEWED THE PLAN, THE AGREEMENT AND THE ADDENDUM IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO ACCEPTING THE AWARD AND FULLY UNDERSTAND ALL OF THE PROVISIONS OF THE PLAN, THE AGREEMENT AND THE ADDENDUM; (iv) YOU HAVE BEEN PROVIDED WITH

–Rev 1 2016
12
EXHIBIT 10.2


A COPY OR ELECTRONIC ACCESS TO A COPY OF THE U.S. PROSPECTUS FOR THE PLAN AND THE TAX SUPPLEMENT TO THE U.S. PROSPECTUS FOR YOUR COUNTRY, IF APPLICABLE; AND (v) YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR UPON ANY QUESTIONS ARISING UNDER THE PLAN, THE AGREEMENT AND THE ADDENDUM.

–Rev 1 2016
13
EXHIBIT 10.2



BOSTON SCIENTIFIC CORPORATION

ADDENDUM TO THE AWARD AGREEMENT
RELATING TO NON-QUALIFIED STOCK OPTIONS GRANTED
PURSUANT TO THE 2011 LONG-TERM INCENTIVE PLAN

In addition to the terms of the Plan and the Agreement, the Stock Option is subject to the following additional terms and conditions. All defined terms contained in this Addendum shall have the same meaning as set forth in the Plan and the Agreement. Pursuant to Section 21 of the Agreement, if you transfer your residence and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.

ARGENTINA

Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

Type of Offering . Neither the grant of the Option, nor the issuance of shares of Common Stock subject to the grant, constitutes a public offering. The offering of the Plan is a private placement and is not subject to the supervision of any Argentine governmental authority.

AUSTRALIA

Limitations on Exercisability Following Termination of Employment . Notwithstanding any provision in the Agreement or the Plan to the contrary, in the event your employment terminates for any reason, your vested Stock Option will no longer be exercisable after the earlier of: (i) thirty (30) days from the date of termination of employment; and (ii) the Expiration Date specified in Section 2 of the Agreement.

Shareholder Approval Requirement . To the extent you are an individual whose termination benefits are subject to Sections 200 to 200J of the Corporations Act 2001, your Stock Option grant is contingent upon the Company’s satisfaction of the shareholder approval requirements thereunder. To the extent the Company does not or is unable to satisfy such requirements, your grant will be null and void, and you will not have any claims against the Company to receive any payment or other benefits in lieu of the grant.

AUSTRIA

No country-specific provisions.


–Rev 1 2016
14
EXHIBIT 10.2


BELGIUM

1.     Acceptance of Stock Options . In order for the Stock Options to be subject to taxation at the time of grant, you must affirmatively accept the Stock Options in writing within 60 days after the offer date by signing below and returning this original executed Addendum to:
Boston Scientific
Green Square,
Lambroekstraat 5D
1831 Diegem
Belgium
Attn.: Carine Depret

I hereby accept the ________ (number) Stock Options granted to me by the Company on the Grant Date.


The undersigned acknowledges that he/she has been encouraged to discuss this matter with a financial and/or tax advisor and that this decision is made in full knowledge.

Employee Signature:        _______________________________

Employee Printed Name:    _______________________________

Date of Acceptance:        _______________________________


If you fail to affirmatively accept the Stock Options in writing within 60 days after the offer date, the Stock Options will not be subject to taxation at the time of grant but instead will be subject to taxation on the date you exercise the Stock Options (or such other treatment as may apply under Belgian tax law at the time of exercise).

2.     Undertaking for Qualifying Options . If you are accepting the Stock Options in writing within 60 days after the offer date and wish to have the Stock Options subject to a lower valuation for Belgium tax purposes pursuant to the article 43, §6 of the Belgian law of 26 March 1999, you may agree and undertake to (a) not exercise the Stock Options before the end of the third calendar year following the calendar year in which the offer date falls, and (b) not transfer the Stock Options under any circumstances (except upon on rights your heir might have in the Stock Options upon your death). If you wish to make this undertaking, you must sign below and return this executed Addendum to the address listed above.
Employee Signature:        _______________________________

Employee Printed Name:    _______________________________
    

–Rev 1 2016
15
EXHIBIT 10.2



BRAZIL

Compliance with Law . By accepting the Stock Options, you acknowledge that you agree to comply with applicable Brazilian laws and to pay any and all applicable taxes associated with the vesting of the Stock Options, the receipt of any dividends, and the sale of shares of Stock acquired under the Plan.

Labor Law Policy and Acknowledgement . This provision supplements Section 12 of the Agreement:

By accepting the Stock Options, you agree that (i) you are making an investment decision, (ii) the Stock Options will vest only if the vesting conditions are met and any necessary services are rendered by you over the vesting period and (iii) the value of the shares of Stock subject to the Stock Options is not fixed and may increase or decrease in value over the vesting period without compensation to you.

CANADA

Use of Previously Owned Shares . Notwithstanding any provision in Section 3 of the Agreement or the Plan to the contrary, if you are resident in Canada, you may not use previously-owned shares of Stock to pay the Grant Price or any Tax-Related Items in connection with the Stock Option.

Personal Data . This provision supplements Section 11 of the Agreement:

You hereby authorize the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company, any Affiliate and the Administrator to disclose and discuss the Plan with their advisors. You further authorize the Company and any Affiliate to record such information and to keep such information in your employee file.

Securities Law Information . You are permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided that the sale of shares of Stock takes place outside Canada through the facilities of a stock exchange on which the shares are listed ( i.e. , the New York Stock Exchange).

Language Consent . The following provision will apply if you are a resident of Quebec:

The parties acknowledge that it is their express wish that the present Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.


–Rev 1 2016
16
EXHIBIT 10.2


CHILE

Private Placement . The offer of Stock Options constitutes a private offering in Chile effective as of the Grant Date. The offer of Stock Options is made subject to General Ruling N° 345 (“NCG 345”) of the Chilean Superintendence of Securities and Insurance (“SVS”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the SVS, and, therefore, such securities are not subject to the oversight of the SVS. Given that the Stock Options are not registered in Chile, the Company is not required to provide public information about the Stock Options or the shares of Stock in Chile. Unless the securities offered are registered with the SVS, a public offering of such securities cannot be made in Chile, unless the offer complies with the conditions set forth in NCG 345.

Esta oferta de Opciones constituye una oferta privada en Chile y se inicia en la Fecha de Otorgamiento (o “Grant Date”, según se define en este documento). Esta oferta de Opciones acoge a las disposiciones de la Norma de Carácter General N° 345 (“NCG 345”) de la Superintendencia de Valores y Seguros de Chile (“SVS”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse las Opciones de valores no registrados en Chile, no existe obligación por parte de la Compañía de entregar en Chile información pública respecto de los Opciones o sus acciones ordinarias. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente, a menos que se cumplan las condiciones establecidas en la NCG 345.

CHINA

The following provisions govern your participation in the Plan if you are a national of the People’s Republic of China (“China”) resident in mainland China, as determined by the Company in its sole discretion:

1.     Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

2.     Limitations on Exercisability Following Termination of Employment . Notwithstanding any provision in the Agreement or the Plan to the contrary, in the event your employment terminates for any reason, your Stock Option will no longer be exercisable after the earlier of: (i) the last day of the six-month period beginning on the date of termination of employment (or such earlier date as may be required by China State Administration of Foreign Exchange (“SAFE”)); and (ii) the Expiration Date specified in Section 2 of the Agreement.

3.     Exchange Control Restrictions . You understand and agree that, pursuant to local exchange control requirements, you will be required immediately to repatriate to China the proceeds from the sale of any shares of Stock acquired under the Plan. You further understand that such repatriation of proceeds may need to be effected through a special bank account established by the Company or its Affiliate, and you hereby consent and agree that proceeds from the sale of shares of Stock

–Rev 1 2016
17
EXHIBIT 10.2


acquired under the Plan may be transferred to such account by the Company on your behalf prior to being delivered to you and that no interest shall be paid with respect to funds held in such account. The proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid to you in U.S. dollars, you understand that a U.S. dollar bank account in China must be established and maintained so that the proceeds may be deposited into such account. If the proceeds are paid to you in local currency, you acknowledge that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You agree to bear any currency fluctuation risk between the time the shares of Stock are sold and the net proceeds are converted into local currency and distributed to you. You further agree to comply with any other requirements that may be imposed by the Company and its Affiliates in the future in order to facilitate compliance with exchange control requirements in China.

4.     Administration . The Company shall not be liable for any costs, fees, lost interest or dividends or other losses you may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Plan, the Agreement and the Award in accordance with Chinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

The above requirements will not apply to non-Chinese nationals, unless otherwise required by the Company or by SAFE.

BY ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, THE AGREEMENT AND THIS ADDENDUM.


–Rev 1 2016
18
EXHIBIT 10.2


COLOMBIA

Nature of Grant . This provision supplements Section 12 of the Agreement:
You acknowledge that, pursuant to Article 128 of the Colombian Labor Code, the Plan and related benefits do not constitute a component of your “salary” for any legal purpose. Therefore, they will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amount which may be payable.

COSTA RICA

No country-specific provisions.

CZECH REPUBLIC

No country-specific provisions.

DENMARK

Treatment of Stock Option Upon Termination of Employment . Notwithstanding any provisions in the Agreement to the contrary, if you are determined to be an “Employee” as defined in section 2 of the Danish Act on stock options (the “Stock Option Act”), the treatment of the Stock Option upon your termination of employment shall be governed by the Stock Option Act.

Danish Stock Option Act . In accepting the Stock Options, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable to you and required to comply with the Stock Option Act, the terms set forth in the Employer Statement will apply to your participation in the Plan.


FINLAND

No country-specific provisions.


FRANCE

Use of English Language . You acknowledge and agree that it is your express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Vous reconnaissez et consentez que c’est votre souhait exprès qui cet accord, de meme que tous documents, toutes notifications et tous procédés légaux est entré dans, donné ou instituté

–Rev 1 2016
19
EXHIBIT 10.2


conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l’anglais.

GERMANY

No country-specific provisions.

GREECE

No country-specific provisions.

HONG KONG

IMPORTANT NOTICE/WARNING . The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of the documents, you should obtain independent professional advice. The Stock Options and shares of Stock issued at vesting do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or its Affiliates. The Agreement, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The Units are intended only for the personal use of each eligible employee of the Employer, the Company or any Affiliate and may not be distributed to any other person.

Nature of Scheme . You understand that the Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”).

INDIA

Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

INDONESIA

No country-specific provisions.

IRELAND

No country-specific provisions.


–Rev 1 2016
20
EXHIBIT 10.2


ITALY

Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

Plan . This provision supplements Section 12 of the Agreement: You further acknowledge that you have read and specifically and expressly approve the following sections of the Agreement: Grant of Stock Option, Exercise of Stock Options, Termination of Employment, Recoupment Policy, Satisfaction of Tax Obligations, Nature of Grant, and Choice of Law and Venue.
JAPAN

No country-specific provisions.

LEBANON

Securities Law Information . The Plan does not constitute the marketing or offering of securities in Lebanon pursuant to Law No. 161 (2011), the Capital Markets Law. Offerings under the Plan are being made only to eligible employees of the Boston Scientific Corporation.

MALAYSIA

1.     Award Conditioned upon Election to Pay Taxes Directly to the Malaysian Inland Revenue Board . You understand and agree that your Award is conditioned upon your completing, signing and submitting a letter to your Employer, indicating your election to pay any income tax or other tax liability arising in connection with taxable income recognized under the Plan directly to the Malaysian Inland Revenue Board. (You may contact your Employer to request a form letter for this purpose.) You understand that if you fail to file such an election letter with your Employer, your Award will be null and void.

2.     Consent to Collection, Processing and Transfer of Personal Data . This provision replaces Section 11 of the Agreement in its entirety:
You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data, as described in this Addendum and any other grant materials by and among, as applicable, the Company and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.

You understand that the Company and Affiliates may hold certain personal information about

 
Anda dengan ini secara eksplisit dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain, data peribadi anda seperti yang diterangkan dalam Lampiran ini dan apa-apa bahan pemberian Opsyen saham terhad yang lain oleh dan di antara, seperti yang berkenaan, Syarikat dan Ahli Gabungan untuk tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan


–Rev 1 2016
21
EXHIBIT 10.2


you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all Stock Options or any other entitlement to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”). The Data is supplied by the Company and also by you through information collected in connection with the Agreement and the Plan.

You understand that Data will be transferred to the current stock plan service providers or a stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. You understand that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative at 65.6418.8859, fax # 65.6418.8899 or   Pauline.Puay@bsci.com  You authorize the Company, the stock plan service provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any transfer of such Data as may be required to a broker, escrow agent or other third party with whom the shares of Stock received upon exercise of the Stock Option may be deposited. You understand that Data will be

 
penyertaan anda di dalam Pelan.
Anda memahami bahawa Syarikat Ahli Gabungan mungkin memegang maklumat peribadi tertentu tentang anda, termasuk, tetapi tidak terhad kepada, nama anda, alamat rumah dan nombor telefon, tarikh lahir, nombor insurans sosial atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan, apa-apa syer saham Biasa atau jawatan pengarah yang dipegang dalam Syarikat, butir-butir semua Opsyen saham terhad, atau apa-apa hak lain atas syer Biasa saham yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagi faedahanda, untuk tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan Pelan tersebut (“Data”). Data tersebut dibekalkan oleh Syarikat dan juga oleh anda berkenaan dengan Perjanjian dan Pelan.
Anda memahami bahawa Data ini akan dipindahkan kepada pembekal perkhidmatan pelan saham semasa atau pembekal perkhidmatan pelan saham yang mungkin dipilih oleh Syarikat pada masa depan, yang membantu Syarikat dengan pelaksanaan, pentadbiran dan pengurusan Pelan. Anda memahami bahawa penerima-penerima Data mungkin berada di Amerika Syarikat atau mana-mana tempat lain, dan bahawa negara penerima-penerima (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza daripada negara anda. Anda memahami bahawa sekiranya anda menetap di luar Amerika Syarikat, anda boleh meminta satu senarai yang mengandungi nama-nama dan alamat-alamat penerima-penerima Data yang berpotensi dengan menghubungi wakil sumber manusia tempatan anda di 65.6418.8859, fax # 65.6418.8899 or   Pauline.Puay@bsci.com . Anda memberi kuasa kepada Syarikat, pembekal perkhidmatan pelan saham dan


–Rev 1 2016
22
EXHIBIT 10.2


held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consent herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Company will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Company may not be able to grant you Stock Options or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
Please take note that by electronically accepting this Agreement, you have confirmed that you explicitly, voluntarily and unambiguously consent to the collection, use and transfer of your personal data in accordance with the terms in this notification. However, if for any reason you do not consent to the processing of your personal data, you have the right to reject such consent by contacting your local human resources representative at 65.6418.8859, fax # 65.6418.8899 or   Pauline.Puay@bsci.com

 
mana-mana penerima-penerima kemungkinan lain yang mungkin akan membantu Syarikat (pada masa sekarang atau pada masa depan) dengan melaksanakan, mentadbir dan menguruskan Pelan untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, bagi tujuan melaksanakan, mentadbir dan menguruskan penyertaan anda di dalam Pelan, termasuk segala pemindahan Data tersebut sebagaimana yang dikehendaki kepada broker, egen eskrow atau pihak ketiga dengan siapa syer Biasa saham diterima semasa peletakhakan saham terhad Opsyen mungkin didepositkan. Anda memahami bahawa Data hanya akan disimpan selagi ia adalah diperlukan untuk melaksanakan, mentadbir, dan menguruskan penyertaan anda dalam Pelan. Anda memahami bahawa sekiranya anda menetap di luar Amerika Syarikat, anda boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatan. Selanjutnya, anda memahami bahawa anda memberikan persetujuan di sini secara sukarela semata-mata. Sekiranya anda tidak bersetuju, atau sekiranya anda kemudian membatalkan persetujuan anda, status pekerjaan atau perkhidmatan dan kerjaya anda dengan Syarikat tidak akan terjejas; satu-satunya akibat buruk sekiranya anda tidak bersetuju atau menarik balik persetujuan andaadalah bahawa Syarikat tidak akan dapat memberikan Opsyen saham terhad anda atau anugerah ekuiti lain atau mentadbir atau mengekalkan anugerah-anugerah tersebut. Oleh itu, anda memahami bahawa keengganan atau penarikan balik persetujuan anda boleh menjejaskan keupayaan anda


–Rev 1 2016
23
EXHIBIT 10.2


 
 
untuk mengambil bahagian dalam Pelan. Untuk maklumat lebih lanjut mengenai akibat-akibat keengganan anda untuk memberikan keizinan atau penarikan balik keizinan, anda memahami bahawa anda boleh menghubungi wakil sumber manusia tempatan.
Sila ambil perhatian bahawa dengan menerima Perjanjian ini secara elektronik, anda mengesahkan bahawa anda secara eksplisit, sukarela, dan tanpa sebarang keraguan bersetuju dengan pengumpulan, penggunaan, dan pemindahan data peribadi anda mengikut terma-terma dalam notis ini. Walaubagaimanapun, jika atas apa-apa sebab-sebab tertentu anda tidak bersetuju dengan pemprosesan data peribadi anda, anda mempunyai hak untuk menolak persetujuan anda dengan menghubungi wakil sumber manusia tempatan anda di 65.6418.8859, fax # 65.6418.8899 or   Pauline.Puay@bsci.com


MEXICO

Acknowledgement of the Agreement . By accepting the Option, you acknowledge that have received a copy of the Plan and the Agreement, including this Addendum, which you have reviewed. You further acknowledge that you accept all the provisions of the Plan and the Agreement, including this Addendum. You also acknowledge that you have read and specifically and expressly approve the terms and conditions set forth in Section 12 of the Agreement, which clearly provide as follows:
(1)
Your participation in the Plan does not constitute an acquired right;
(2)
The Plan and your participation in it are offered by the Company on a wholly discretionary basis;
(3)
Your participation in the Plan is voluntary; and
(4)
The Company and its Affiliates are not responsible for any decrease in the value of any shares of Common Stock acquired at exercise of the Option.
Reconocimiento del Contrato . Al aceptar la Opción, Usted reconoce que ha recibido una copia del Plan y del contrato, incluyendo este Apéndice, mismos que ha revisado. Usted reconoce, además, que acepta todas las disposiciones del Plan, y del contrato, incluyendo este Apéndice.

–Rev 1 2016
24
EXHIBIT 10.2


También reconoce que ha leído y aprueba de forma expresa los términos y condiciones establecidos en la sección doce 12 del contrato que claramente dispone lo siguiente:
(1)
Su participación en el Plan no constituye un derecho adquirido;
(2)
El Plan su participación en el mismo son ofrecidos por la Compañía de forma totalmente discrecional;
(3)
Su participación en el Plan es voluntaria; y
(4)
La Compañía y sus afiliados no son responsables por cualquier disminución en el valor de las Acciones adquiridas al momento de tener derecho conforme a la Opción.
Labor Law Acknowledgement and Policy Statement . By accepting the Option, you acknowledge that Boston Scientific Corporation, with registered offices at 300 Boston Scientific Way, Marlborough, Massachusetts 01752 , United States of America, is solely responsible for the administration of the Plan. You further acknowledge your participation in the Plan, the grant of Options and any acquisition of shares of Stock under the Plan do not constitute an employment relationship between you and Boston Scientific Corporation because you are participating in the Plan on a wholly commercial basis and your sole employer is a Mexican legal entity (“Boston Scientific-Mexico”). Based on the foregoing, you expressly acknowledge that the Plan and the benefits that you may derive from participation in the Plan do not establish any rights between you and your Employer, Boston Scientific-Mexico, and do not form part of the employment conditions and/or benefits provided by Boston Scientific-Mexico, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.
You further understand that your participation in the Plan is the result of a unilateral and discretionary decision of Boston Scientific Corporation, therefore, Boston Scientific Corporation reserves the absolute right to amend and/or discontinue your participation in the Plan at any time, without any liability to you.
Finally, you hereby declare that you do not reserve to yourself any action or right to bring any claim against Boston Scientific Corporation for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and that you therefore grant a full and broad release to Boston Scientific Corporation its Affiliates, branches, representation offices, shareholders, officers, agents and legal representatives, with respect to any claim that may arise.
Reconocimiento de Ley Laboral y Declaración de la Política . Al aceptar el Otorgamiento de la Opciónes, Usted reconoce que Boston Scientific Corporation, con oficinas registradas en 300 Boston Scientific Way, Marlborough, Massachusetts 01752 , Estados Unidos de América, es únicamente responsable de la administración del Plan. Usted además reconoce que su participación en el Plan, la concesión de Opciónes y cualquier adquisición de acciones de conformidad con el Plan no constituyen una relación de trabajo entre Usted y Boston Scientific Corporation, ya que Usted está participando en el Plan sobre una base totalmente comercial y su único patrón es una sociedad mercantil Mexicana (“Boston Scientific-México”). Derivado

–Rev 1 2016
25
EXHIBIT 10.2


de lo anterior, Usted expresamente reconoce que el Plan y los beneficios que pueden derivarle de la participación en el Plan no establecen ningún derecho entre Usted y su Patrón, Boston Scientific-México, y no forman parte de las condiciones de trabajo y/o prestaciones otorgadas por Boston Scientific-México, y cualquier modificación al Plan o su terminación no constituirá un cambio o perjuicio de los términos y condiciones de su trabajo.
Usted además entiende que su participación en el Plan es resultado de una decisión unilateral y discrecional de Boston Scientific Corporation, por lo tanto Boston Scientific Corporation se reserva el derecho absoluto de modificar el Plan y/o discontinuar su participación en el Plan en cualquier momento, sin responsabilidad alguna para hacia Usted.
Finalmente, Usted declara que no se reserva acción o derecho alguno para presentar una reclamación o demanda en contra de Boston Scientific Corporation por cualquier compensación o daño o perjuicio en relación con cualquier disposición del Plan o los beneficios derivados del Plan y, por lo tanto, otorga un amplio y total finiquito a Boston Scientific Corporation, sus afiliados, afiliadas, sucursales, oficinas de representación, accionistas, directores, funcionarios, agentes y representantes con respecto a cualquier reclamación o demanda que pudiera surgir.

NETHERLANDS

Waiver of Termination Rights . As a condition to the grant of the Stock Options, you hereby waive any and all rights to compensation or damages as a result of the termination of employment with Boston Scientific Corporation and the Employer for any reason whatsoever, insofar as those rights result or may result from (i) the loss or diminution in value of such rights or entitlements under the Plan, or (ii) your ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.

PHILIPPINES

Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.

POLAND

No country-specific provisions.

PORTUGAL

Language Consent . You hereby expressly declare that you have full knowledge of the English language and have read, understood and fully accepted and agreed with the terms and conditions established in the Plan and the Agreement.

–Rev 1 2016
26
EXHIBIT 10.2


Conhecimento da Lingua . Por meio do presente, eu declaro expressamente que tem pleno conhecimento da língua inglesa e que li, compreendi e livremente aceitei e concordei com os termos e condições estabelecidas no Plano e no Acordo.

PUERTO RICO

No country-specific provisions.

RUSSIA

U.S. Transaction . You understand that the Stock Options shall be valid and this Agreement shall be concluded and become effective only when the Agreement is received by the Company in the United States. Upon exercise of the Stock Options, any shares of Stock to be issued to you shall be delivered to you through a bank or brokerage account in the United States. In no event will shares of Stock be delivered to you in Russia; instead, all shares of Stock acquired upon exercise of the Stock Options will be maintained on your behalf in the United States. You are not permitted to sell shares of Stock acquired at vesting directly to a Russian legal entity or resident.
Cashless Exercise Provision . Notwithstanding anything to the contrary in the Agreement, depending on the development of local regulatory requirements, the Company reserves the right to restrict exercise of your Stock Options to a cashless exercise through a licensed securities broker acceptable to the Company, such that all shares of Stock subject to the exercised Stock Option will be sold immediately upon exercise and the proceeds of sale, less the Grant Price, any Tax-Related Items and broker’s fees or commissions, will be remitted to you in accordance with any applicable exchange control laws and regulations.

SINGAPORE

Private Placement . The grant of the Stock Option under the Plan is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“ SFA ”) and is not made to you with a view to the Stock Option being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. You should note that the Stock Option is subject to section 257 of the SFA and you will not be able to make any subsequent sale of the shares of Stock in Singapore, or any offer of such subsequent sale of the shares of Stock subject to the Stock Options in Singapore, unless such sale or offer in is made (i) after six months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

SOUTH AFRICA

Securities Law Notice . In compliance with South African Securities Law, he Company’s most recent Annual Report (Form 10-K): from the investor relations section of the Company's website at www.bostonscientific.com is available for your review on the Company's public site or intranet site, as applicable.

–Rev 1 2016
27
EXHIBIT 10.2



You acknowledge that you may have copies of the above documents sent to you, at no charge, on written request being mailed to Boston Scientific Corporation, Investor Relations, 300 Boston Scientific Way, Mailstop M405, Marlborough, MA 01752 . The telephone number at the executive offices is 508-683-5675.

Responsibility for Taxes . This provision supplements Section 9 of the Agreement:
You are responsible for immediately notifying the Employer of the amount of any gain realized at vesting of the Units. If you fail to advise the Employer of such gain, you may be liable for a fine.

SOUTH KOREA

Consent to Collection, Processing and Transfer of Personal Data . By electronically accepting this Agreement:

1.
You agree to the collection, use, processing and transfer of Data as described in Section 11 of the Agreement; and

2.
You agree to the processing of your unique identifying information (resident registration number) as described in Section 11 of the Agreement.

SPAIN

Acknowledgement of Discretionary Nature of the Plan; No Vested Rights . This provision supplements the terms of the Agreement.

In accepting the Stock Option grant, you acknowledge that you consent to participation in the Plan and have received a copy of the Plan.

You understand that the Company has unilaterally, gratuitously and in its sole discretion granted Stock Options under the Plan to individuals who may be employees of the Company or its Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis. Consequently, you understand that the Stock Option is granted on the assumption and condition that the Stock Option and the shares of Stock acquired upon exercise of the Stock Option shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, you understand that this grant would not be made to you but for the assumptions and conditions referenced above; thus, you acknowledge and freely accept that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the Stock Option grant shall be null and void.


–Rev 1 2016
28
EXHIBIT 10.2


You understand and agree that, as a condition of the Stock Option grant, your termination of employment for any reason (including the reasons listed below) will automatically result in the loss of the Stock Option to the extent the Stock Option has not vested as of date you cease active employment. In particular, you understand and agree that any unvested Stock Option as of the date you cease active employment and any vested portion of the Stock Option not exercised within the post-termination exercise period set out in the Agreement will be forfeited without entitlement to the underlying shares of Stock or to any amount of indemnification in the event of the termination of employment by reason of, but not limited to, resignation, disability or retirement prior to the first anniversary of the Grant Date, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. You acknowledge that you have read and specifically accept the conditions referred to in the Agreement regarding the impact of a termination of employment on your Stock Option.

BY ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, THE AGREEMENT AND THIS ADDENDUM.

SWEDEN

No country-specific provisions.

SWITZERLAND

Securities Law Information . The offer of the Stock Option is considered a private offering in Switzerland and is therefore not subject to registration in Switzerland. Neither this document nor any other materials relating to the Stock Option constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither this document nor any other materials relating to the Stock Option may be publicly distributed nor otherwise made publicly available in Switzerland.

TAIWAN

Securities Law Information . This Award and the Shares to be issued pursuant to the Plan are available only for Employees. The Award is not a public offer of securities by a Taiwanese company.

THAILAND

Mandatory Cashless Sell-All Exercise . As permitted under Section 3 of the Agreement and unless and until the Committee determines otherwise, the method of exercise of the Stock Option shall be limited to mandatory cashless, sell-all exercise.


–Rev 1 2016
29
EXHIBIT 10.2


TURKEY

Securities Law Information . Under Turkish law, you are not permitted to sell shares of Stock acquired under the Plan in Turkey. The shares of Stock are currently traded on the New York Stock Exchange, which is located outside Turkey and the shares of Stock may be sold through this exchange.

UNITED KINGDOM

1.      Tax and Social Insurance Contribution Withholding . The following provision shall replace Section 9 of the Agreement:

Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax, primary and secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant or exercise of any Stock Option and the acquisition of shares of Stock, or the release or assignment of any Stock Option for consideration, or the receipt of any other benefit in connection with the Stock Option (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility. Furthermore, the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Option, including the grant or exercise of the Stock Option and the acquisition of shares of Stock, the subsequent sale of any shares of Stock acquired upon exercise and the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate your liability for Tax-Related Items.

As a condition of the issuance of shares of Stock upon exercise of the Stock Option, the Company and/or the Employer shall be entitled to withhold and you agree to pay, or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy, all obligations of the Company and/or the Employer to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you from any wages or other cash compensation paid to you by the Company and/or the Employer. Alternatively, or in addition, if permissible under local law, you authorize the Company and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by you by one or a combination of the following: (a) withholding a sufficient number of whole shares of Stock otherwise deliverable; (b) arranging for the sale of a sufficient number of whole shares of Stock otherwise deliverable to you (on your behalf and at your direction pursuant to this authorization); or (c) withholding from the proceeds of the sale of shares of Stock acquired upon exercise of the Stock Option. If the obligation for Tax-Related Items is satisfied by withholding a whole number of shares of Stock as described herein, you are deemed to have been issued the full number of shares of Stock subject to the Stock Option, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Stock Option.


–Rev 1 2016
30
EXHIBIT 10.2


If, by the date on which the event giving rise to the Tax-Related Items occurs (the “Chargeable Event”), you have relocated to another country, you acknowledge that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one country.

You also agree that the Company and the Employer may determine the amount of Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right which you may have to recover any overpayment from the relevant tax authorities. You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to account to HMRC with respect to the Chargeable Event that cannot be satisfied by the means previously described. If payment or withholding is not made within 90 days after the end of the U.K. tax year in which the Chargeable Event occurs, (the “Due Date”), you agree that the amount of any uncollected Tax-Related Items shall (assuming you are not a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), constitute a loan owed by you to the Employer, effective on the Due Date. You agree that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to above. If any of the foregoing methods of collection are not allowed under applicable laws or if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, the Company may refuse to deliver the shares of Stock acquired under the Plan.

2.      Exclusion of Claim . You acknowledge and agree that you will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from your ceasing to have rights under or to be entitled to the Award, whether or not as a result of your termination of employment (whether the termination is in breach of contract or otherwise), or from the loss or diminution in value of the Award. Upon the grant of your Award, you shall be deemed irrevocably to have waived any such entitlement.
  

6641658-v5\GESDMS

–Rev 1 2016
31

EXHIBIT 10.3




Boston Scientific Corporation 2011 Long-Term Incentive Plan
Global Deferred Stock Unit Award Agreement

[Date]




__________________________________
(“Participant”)






















EMPLOYEE COPY
PLEASE RETAIN FOR YOUR RECORDS





EXHIBIT 10.3


Boston Scientific Corporation 2011 Long-Term Incentive Plan
Global Deferred Stock Unit Award Agreement

This Global Deferred Stock Unit Award Agreement (the “Agreement”), dated [ ] (the “Grant Date”), is between you and Boston Scientific Corporation, a Delaware corporation, (the “Company”) in connection with the Award of Deferred Stock Units by the Committee under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms used but not defined in this Agreement shall have the same meaning as assigned to them in the Plan. The applicable terms and conditions of the Plan are incorporated into and made a part of this Agreement.

1.     Grant of Units . The Committee hereby grants you that number of Deferred Stock Units as set forth in this Agreement (the “Units”). Each Unit represents the Company’s commitment to issue to you one share of Stock subject to the conditions set forth in this Agreement. This Award is granted pursuant to and is subject to the provisions of the Plan and the terms and conditions of this Agreement and any applicable Addendum.

2.     Vesting . The Units shall vest and shares of Stock will be issued to you according to the vesting schedule set forth in this Agreement. Except as otherwise provided in Sections 4, 5, 6, 7 and 8 below, the Units will vest, subject to the conditions described in Section 7 below, in approximately equal annual installments on each of the five (5) consecutive anniversaries of the Grant Date, beginning on the first anniversary of the Grant Date. No shares of Stock shall otherwise be issued to you prior to the date on which the Units vest. Notwithstanding anything in the Agreement to the contrary, the Company may, in its sole discretion, settle the Units in the form of a cash payment to the extent that settlement in shares of Stock is prohibited under local law or would require the Company and/or any of its Affiliates to obtain the approval of any governmental and/or regulatory body in your country of residence (or country of employment, if different). Alternatively, the Company may, in its sole discretion, settle the Units in the form of shares of Stock but require you to immediately sell such Stock (in which case, this Agreement shall give the Company the authority to issue sales instructions on your behalf).

3.     Participant’s Rights in Stock . The shares of Stock, if and when issued to you pursuant to this Agreement, shall be registered in your name and evidenced in a manner as determined by the Company, in its sole discretion. Under no circumstance will you be deemed, by virtue of the granting of the Units, to be a holder of any shares of Stock underlying the Units or be entitled to the rights or privileges of a holder of such shares of Stock (including the right to receive dividends or vote the shares of Stock), unless and until the Units have vested with respect to such shares of Stock and the shares of Stock have been issued to you.

4.     Death . In the event you terminate employment by reason of death, any Units that have not vested prior to the date of your death shall immediately vest and shares of Stock shall be issued in accordance with your will or the laws of descent and distribution; provided that you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date. In the event that your death occurs prior to the first anniversary of the Grant Date, a number of the Units equal to the percentage of the


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year completed (based on the number of full and partial months of employment completed in such vesting year, rounded up to the nearest whole month) prior to death shall immediately vest and shares of Stock shall be issued in accordance with your will or the laws of descent and distribution and all remaining unvested Units shall immediately terminate and be forfeited.

5.     Retirement . If you terminate employment by reason of your Retirement (as the term is defined in the Plan or determined under local law), any Units that have not vested prior to the date of your Retirement shall immediately vest and shares of Stock shall be issued to you, provided you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date. In the event that your Retirement occurs prior to the first anniversary of the Grant Date, all unvested Units shall immediately terminate and be forfeited in their entirety.

In this regard, if you are a local national of and employed in a country that is a member of the European Union, the grant of the Units and the terms and conditions governing the Units are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the “Age Discrimination Rules”). To the extent that a court or tribunal of competent jurisdiction determines that any provision of the Units is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.

6.      Disability . If you terminate employment by reason of your Disability (as the term is defined in the Plan or determined under local law), any Units that have not vested prior to the date of your Disability shall immediately vest and shares of Stock shall be issued to you; provided you have remained in continuous service with the Company or an Affiliate through the first anniversary of the Grant Date. In the event that your Disability occurs prior to the first anniversary of the Grant Date, all unvested Units shall immediately terminate and be forfeited in their entirety.

7.     Other Termination of Employment; Certain Vesting Conditions . If your employment terminates for any reason other than death, Retirement or Disability, any Units that have not vested prior to the date of your termination shall terminate and be forfeited on the effective date of such termination, except if your employment terminates for Cause, in which case, all unvested Units shall be forfeited upon notice of your termination for Cause. The issuance of shares of Stock is conditioned on your continuous employment with the Company or an Affiliate through and on the applicable anniversary of the Grant Date as set forth in Section 2 above. For purposes of the vesting conditions set forth in this Agreement, the effective date of your termination shall be deemed to be the last day of your active service with the Company or an Affiliate (if applicable). Notwithstanding anything to the contrary in the Plan or this Agreement, and for purposes of clarity, the date of your termination of employment shall not be extended by any statutory or common law notice of termination period.

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8.     Change in Control of the Company . In the event of a Change in Control of the Company, any Units that have not vested prior to the Change in Control shall immediately vest and shares of Stock will be issued to you; provided, however, that if you have entered into a Change in Control agreement with the Company, the Units will vest according to the provisions of the Change in Control agreement.

9.     Recoupment Policy .

(a)     Current Recoupment Policy . Pursuant to the Company’s recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and you, in the judgment of the Board, commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i)     Definitions . The following terms, when used in this Section 9, shall have the meaning set forth below:

(1)    “Current Executive Officer” means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2)    “Executive Officer” means any Current Executive Officer or Former Executive Officer.

(3)    “Former Executive Officer” means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(4)    “Recovery” means the forfeiture or cancellation of unvested Units.

(b)     Provisions Required by Law . If the Company subsequently determines that it is required by law to apply a “clawback” or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

10.     Consideration for Stock . The shares of Stock subject to the Units are intended to be issued for no cash consideration.

11.     Issuance of Stock . The Company shall not be obligated to issue any shares of Stock until (a) all federal, state and local laws and regulations, as the Company may deem applicable, have been complied with; (b) the shares have been listed or authorized for listing

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upon official notice to the New York Stock Exchange, Inc. or have otherwise been accorded trading privileges; and (c) all other legal matters in connection with the issuance and delivery of the shares have been approved by the Company’s legal department.

12.     Transferability; Restrictions on Shares; Legend on Certificate . Until the vesting conditions of this Award have been satisfied and shares of Stock have been issued in accordance with the terms of this Agreement and any applicable Addendum or by action of the Committee, the Units awarded under this Agreement are not transferable and you shall not sell, transfer, assign, pledge, gift, hypothecate or otherwise dispose of or encumber the Units awarded under this Agreement. Transfers of shares of Stock by you are subject to the Company’s Stock Trading Policy and applicable securities laws. Shares of Stock issued to you in certificate form or to your book entry account upon satisfaction of the vesting and other conditions of this Award may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon your book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

13.     Satisfaction of Tax Obligations . Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units or the shares of Stock issued upon vesting of the Units, and (b) do not commit to structure the terms of the Award (or any aspect of the Units) to reduce or eliminate your liability for Tax-Related Items.

Upon the issuance of shares of Stock or the satisfaction of any vesting condition with respect to the shares of Stock to be issued hereunder, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may hold back from the total number of shares of Stock to be delivered to you, and shall cause to be transferred to the Company, whole shares of Stock that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the shares of Stock, or to the extent it would not result in adverse accounting treatment, the Company may, in its sole discretion, hold back shares of Stock based on a rate of up to the maximum applicable withholding rate. The cash equivalent of the shares of Stock withheld will be used to settle the obligation to withhold the Tax-Related Items. By accepting the grant of Units, you expressly consent to the withholding of shares of Stock and/or cash as provided for hereunder.

Alternatively, you hereby authorize the Company (on your behalf and at your direction pursuant to this authorization) to immediately sell a sufficient whole number of shares of Stock acquired upon vesting resulting in sale proceeds sufficient to pay the Tax-Related Items required to be withheld. You agree to sign any agreements, forms and/or consents that reasonably may be requested by the Company (or the Company’s designated

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brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds to the Company to satisfy the Tax-Related Items required to be withheld). Further, the Company or the Employer may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from your salary or any other amounts payable to you, with no withholding of shares of Stock or sale of shares of Stock, or may require you to submit a cash payment equivalent to the Tax-Related Items required to be withheld with respect to the Units.     

All other Tax-Related Items related to the grant of Units and any shares of Stock delivered in settlement thereof are your sole responsibility. In no event shall whole shares be withheld by or delivered to the Company in satisfaction of any Tax-Related Items in excess of the maximum statutory tax withholding required by law. You agree to indemnify the Company and its Affiliates against any and all liabilities, damages, costs and expenses that the Company and its Affiliates may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any Tax-Related Items.

The Units are intended to be exempt from the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Agreement is subject to Code Section 409A and that it has failed to comply with the requirements of that Section, the Company may, in its sole discretion, and without your consent, amend this Agreement to cause it to comply with Code Section 409A or be exempt from Code Section 409A.

14.     Repatriation and Legal/Tax Compliance Requirements . If you are resident or employed outside of the United States, you agree, as a condition of the grant of Units, to repatriate all payments attributable to the shares of Stock and/or cash acquired under the Plan (including, but not limited to, dividends and any proceeds derived from the sale of the shares of Stock acquired pursuant to the Units) in accordance with local foreign exchange rules and regulations in your country of residence (and country of employment, if different). In addition, you agree to take any and all actions, and consent to any and all actions taken by the Company and the Employer, as may be required to allow the Company and the Employer to comply with local laws, rules and regulations in your country of residence (and country of employment, if different). Finally, you agree to take any and all actions as may be required to comply with your personal legal and tax obligations under local laws, rules and regulations in your country of residence (and country of employment, if different).
    
15.     Data Privacy . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.

You understand that the Company and the Employer may hold certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social insurance number or other identification number

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(e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, and details of all Units awarded to you or any other entitlements to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”) for the purpose of implementing, managing and administering the Plan.

You understand that Data may be transferred to any third parties assisting the Company with the implementation, administration and management of the Plan, including but not limited to E*TRADE Corporate Services (“E*TRADE”) or any successor or any other third party that the Company or E*TRADE (or its successor) may engage to assist with the administration of the Plan from time to time. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative.
You authorize the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect to deposit any shares of Stock acquired upon vesting of the Units. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later revoke your consent, your employment status or service with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that the Company would not be able to grant you Units or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

16.     Nature of Grant . By participating in the Plan, you acknowledge, understand and agree that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Administrator at any time, to the extent permitted by the Plan;

(b) the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants or benefits in lieu of Units, even if Units have been granted in the past;

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(c) all decisions with respect to future grants of Units, if any, will be at the sole discretion of the Administrator;

(d) the Unit grant and your participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer or Affiliate and shall not interfere with the ability of the Company, the Employer or any Affiliate, as applicable, to terminate your employment or service relationship (if any);

(e) you are voluntarily participating in the Plan;

(f) the Units are not intended to replace any pension rights or compensation;

(g) the Units, the underlying Shares, and the income and value of same are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the underlying shares of Stock is unknown, indeterminable and cannot be predicted with certainty;

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from the termination of your employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and in consideration of the grant of the Units to which you are otherwise not entitled, you irrevocably agree never to institute any such claim against the Company, any of its Affiliates or the Employer, waive your ability, if any, to bring any such claim, and release the Company, its Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(j) unless otherwise agreed with the Company in writing, the Units, the underlying shares of Stock and the income and value of same are not granted as consideration for, or in connection with, any service you may provide as a director of an Affiliate;

(k) for purposes of the Units, your employment or other service relationship will be considered terminated as of the date you are no longer actively providing services to the Company or one of its Affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, your right to vest in the Units under this Agreement, if any, will terminate as of such date and will not be extended

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by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of the Unit grant (including whether you may still be considered to be providing services while on an approved leave of absence); and

(l) the following provisions apply only if you are providing services outside the United States: (A) the Units, the underlying shares of Stock, and the income and value of same are not part of normal or expected compensation or salary for any purpose; and (B) neither the Company, the Employer nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the U.S. dollar that may affect the value of the Units or of any amount due to you pursuant to the settlement of the Units or the subsequent sale of any shares of Stock acquired upon settlement.

17.     Waiver of Entitlement to Compensation or Damages . In consideration of the grant of the Units under this Agreement, no claim or entitlement to compensation or damages shall arise from termination of the Units or diminution in value of the Units or shares acquired upon vesting of the Units resulting from termination of your employment by the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and you irrevocably release the Company and the Employer from any such claim that may arise. Notwithstanding the foregoing, if any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting this Agreement, you will be deemed to have irrevocably waived your entitlement to pursue such claim.

18.     Not a Public Offering . The grant of the Units under the Plan is not intended to be a public offering of securities in your country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filings to the local securities authorities unless otherwise required under local law, and the grant of the Units is not subject to the supervision of the local securities authorities.

19.     No Advice Regarding Grant . No Employee of the Company is permitted to advise you regarding your participation in the Plan or your acquisition or sale of the shares of Stock subject to the Units. Investment in shares of Stock involves a degree of risk. Before deciding whether to participate in the Plan, you should carefully consider all risk factors relevant to the acquisition of shares of Stock under the Plan, and you should carefully review all of the materials related to the Units and the Plan. You are hereby advised to consult with your own personal tax, legal and financial advisors before taking any action related to the Plan.

20.     Investment Intent . You acknowledge that the acquisition of the shares of Stock to be issued hereunder is for investment purposes without a view to distribution thereof.

21.     Insider Trading/Market Abuse Laws . You acknowledge that your country of residence may have insider trading and/or market abuse laws which may affect your ability to acquire or sell shares of Stock under the Plan during such times that you are considered

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to have “inside information” (as defined in the laws in your country). These laws may be the same or different from any Company insider trading policy. You acknowledge that it is your responsibility to comply with such regulations, and that you are advised to speak to your personal advisor on this matter.

22.     Award Subject to the Plan . The Award to be made pursuant to this Agreement is made subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan, the applicable terms and conditions of the Plan will govern and prevail. However, no amendment of the Plan after the date hereof may adversely alter or impair the issuance of the shares of Stock to be made pursuant to this Agreement. You hereby accept the Units subject to all the terms and provisions of the Plan and this Agreement and agree that all decisions under, and interpretations of, the Plan and this Agreement by the Administrator, Committee or the Board shall be final, binding and conclusive upon you and your heirs and legal representatives.

23.     Electronic Delivery of Documents . The Company may, in its sole discretion, deliver any documents related to the Units and participation in the Plan or future grants of Units that may be granted under the Plan, by electronic means unless otherwise prohibited by local law. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party-designated by the Company.
    
24.     Language . If you are resident outside of the United States, you hereby acknowledge and agree that it is your express intent that this Agreement and any applicable Addendum, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Units, be drawn up in English. If you have received this Agreement and any applicable Addendum, the Plan or any other documents related to the Units translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control.

25.     Addendum . Notwithstanding any provision of this Agreement to the contrary, the Units shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as are forth in the applicable addendum to the Agreement (the “Addendum”). Further, if you transfer your residence and/or employment to another country reflected in the Addenda to these Agreements, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Any applicable Addendum shall constitute part of this Agreement.

26.     Additional Requirements . The Administrator reserves the right to impose other requirements on the Units, any shares of Stock acquired pursuant to the Units and your participation in the Plan to the extent the Administrator determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local laws

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or to facilitate the administration of the Plan. Such requirements may include (but are not limited to) requiring you to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

27.     Legal Notices . Any legal notice necessary under this Agreement shall be addressed to the Company in care of its General Counsel at the principle executive offices of the Company and to you at the address appearing in the personnel records of the Company for you or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

28.     Conflicts . The Units granted pursuant to this Agreement and any applicable Addendum is subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. This Agreement contains terms and provisions established by the Committee specifically for the grant described herein. Unless the Committee has exercised its authority under the Plan to establish specific terms of an Award, the terms of the Plan shall govern. Subject to the limitations set forth in the Plan, the Committee retains the right to alter or modify the Stock Units granted pursuant to this Agreement as the Committee may determine are in the best interests of the Company.

29.     Governing Law and Venue The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflict of laws principles thereof) and applicable federal laws. For purposes of litigating any dispute under the Agreement, including the Addendum, the parties hereby submit to and consent to the exclusive jurisdiction of The Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the courts of Boston, or the federal courts for the United States for the District of Massachusetts and no other courts where the grant of the Units is made and/or to be performed.

30.     Headings . The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

31.     Severability . You agree that the provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

32.     Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be the one and the same instrument.

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SIGNATURE PAGE

IN WITNESS WHEREOF, the Company, by its duly authorized officer, and the Participant have executed and delivered this Agreement as a sealed instrument as of the date and year first above written.


Number of Deferred Stock Units:

Vesting Schedule

20%

[ ]
 
 
20%
[ ]

20%
[ ]

20%
[ ]

20%
[ ]



                    BOSTON SCIENTIFIC CORPORATION        
                
                                                 
Michael F. Mahoney
President and Chief Executive Officer


PARTICIPANT



By:                             


BY ELECTRONICALLY ACCEPTING THE AWARD, YOU AGREE THAT (i) SUCH ACCEPTANCE CONSTITUTES YOUR ELECTRONIC SIGNATURE IN EXECUTION OF THIS AGREEMENT; (ii) YOU AGREE TO BE BOUND BY THE PROVISIONS OF THE PLAN, THE AGREEMENT AND THE ADDENDUM; (iii) YOU HAVE REVIEWED THE PLAN, THE AGREEMENT AND THE ADDENDUM IN THEIR ENTIRETY, HAVE HAD AN OPPORTUNITY TO OBTAIN THE ADVICE OF COUNSEL PRIOR TO ACCEPTING THE AWARD AND FULLY UNDERSTAND ALL OF THE PROVISIONS OF THE PLAN, THE AGREEMENT AND THE ADDENDUM; (iv) YOU HAVE BEEN PROVIDED WITH A COPY OR

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ELECTRONIC ACCESS TO A COPY OF THE U.S. PROSPECTUS FOR THE PLAN AND THE TAX SUPPLEMENT TO THE U.S. PROSPECTUS FOR YOUR COUNTRY, IF APPLICABLE; AND (v) YOU HEREBY AGREE TO ACCEPT AS BINDING, CONCLUSIVE AND FINAL ALL DECISIONS OR INTERPRETATIONS OF THE ADMINISTRATOR UPON ANY QUESTIONS ARISING UNDER THE PLAN, THE AGREEMENT AND THE ADDENDUM.

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BOSTON SCIENTIFIC CORPORATION

ADDENDUM TO THE AWARD AGREEMENT
RELATING TO DEFERRED STOCK UNITS GRANTED
PURSUANT TO THE 2011 LONG-TERM INCENTIVE PLAN

In addition to the terms of the Plan and the Agreement, the Units are subject to the following additional terms and conditions. All defined terms contained in this Addendum shall have the same meaning as set forth in the Plan and the Agreement. Pursuant to Section 25 of the Agreement, if you transfer your residence and/or employment to another country reflected in an Addenda, the additional terms and conditions for such country (if any) will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.

ARGENTINA

Type of Offering . Neither the grant of the Units, nor the issuance of shares of Stock subject to the grant, constitutes a public offering. The offering of the Plan is a private placement and is not subject to the supervision of any Argentine governmental authority.

AUSTRALIA

Shareholder Approval Requirement . To the extent you are an individual whose termination benefits are subject to Sections 200 to 200J of the Corporations Act 2001, the Award is contingent upon the Company’s satisfaction of the shareholder approval requirements thereunder. To the extent the Company does not or is unable to satisfy such requirements, your Award will be null and void, and you will not have any claims against the Company to receive any payment or other benefits in lieu of the Award.

AUSTRIA

No country-specific provisions.

BELGIUM

No country-specific provisions.

BRAZIL

Compliance with Law . By accepting the Units, you acknowledge that you agree to comply with applicable Brazilian laws and to pay any and all applicable taxes associated with the vesting of the Units, the receipt of any dividends, and the sale of shares of Stock acquired under the Plan.


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Labor Law Policy and Acknowledgement . This provision supplements Section 16 of the Agreement:

By accepting the Units, you agree that (i) you are making an investment decision, (ii) the Units will vest only if the vesting conditions are met and any necessary services are rendered by you over the vesting period and (iii) the value of the shares of Stock subject to the Units is not fixed and may increase or decrease in value over the vesting period without compensation to you.

CANADA

Settlement in Shares . Notwithstanding anything to the contrary in the Agreement or the Plan, all Units shall be settled only in shares of Stock (and shall not be settled in cash).

Personal Data . This provision supplements Section 15 of the Agreement:

You hereby authorize the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan. You further authorize the Company, any Affiliate and the Administrator to disclose and discuss the Plan with their advisors. You further authorize the Company and any Affiliate to record such information and to keep such information in your employee file.

Securities Law Information . You are permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided that the sale of shares of Stock takes place outside Canada through the facilities of a stock exchange on which the shares are listed ( i.e. , the New York Stock Exchange).

Language Consent . The following provision will apply if you are a resident of Quebec:

The parties acknowledge that it is their express wish that the present Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de la présente convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

CHILE

Private Placement . The offer of Units constitutes a private offering in Chile effective as of the Grant Date. The offer of Units is made subject to General Ruling N° 345 (“NCG 345”) of the Chilean Superintendence of Securities and Insurance (“SVS”). The offer refers to securities not registered at the securities registry or at the foreign securities registry of the SVS, and, therefore, such securities are not subject to the oversight of the SVS. Given that the Units are not registered in Chile, the Company is not required to provide public information about the Units or the shares of Stock in Chile. Unless the securities offered

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are registered with the SVS, a public offering of such securities cannot be made in Chile, unless the offer complies with the conditions set forth in NCG 345.

Esta oferta de Unidades constituye una oferta privada en Chile y se inicia en la Fecha de Otorgamiento (o “Grant Date”, según se define en este documento). Esta oferta de Unidades se acoge a las disposiciones de la Norma de Carácter General N° 345 (“NCG 345”) de la Superintendencia de Valores y Seguros de Chile (“SVS”). Esta oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que tales valores no están sujetos a la fiscalización de ésta. Por tratarse las Unidades de valores no registrados en Chile, no existe obligación por parte de la Compañía de entregar en Chile información pública respecto de los Unidades o sus acciones ordinarias. Estos valores no podrán ser objeto de oferta pública en Chile mientras no sean inscritos en el Registro de Valores correspondiente, a menos que se cumplan las condiciones establecidas en la NCG 345.

CHINA

The following provisions govern your participation in the Plan if you are a national of the People’s Republic of China (“China”) resident in mainland China, as determined by the Company in its sole discretion:

1.     Shares of Stock Must Be Held with Designated Broker . All shares of Stock issued upon settlement of your DSUs will be deposited into a personal brokerage account established with the Company’s designated broker, E*TRADE (or any successor broker designated by the Company), on your behalf. You understand that you may sell the shares of Stock at any time after they are deposited in such account, however, you may not transfer the shares of Stock out of the brokerage account.

2.     Mandatory Sale of Shares Following Termination of Employment . You are required to sell all shares of Stock acquired upon vesting of the Units no later than 90 days following your termination of employment with the Company and its Affiliates (or no later than such earlier date as may be required by the China State Administration of Foreign Exchange (“SAFE”)), in which case, this Addendum shall give the Company the authority to issue sales instructions on your behalf). If any shares remain outstanding on the 90th day following your employment termination date (or such earlier date as may be required by SAFE), you hereby direct, instruct and authorize the Company to issue sale instructions on your behalf.

You agree to sign any additional agreements, forms and/or consents that reasonably may be requested by the Company (or the Company’s designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds and other exchange control matters noted below) and shall otherwise cooperate with the Company with respect to such matters. You acknowledge that neither the Company nor the designated brokerage firm is under any obligation to arrange for such sale of shares of Stock at any particular price (it being understood that the sale will occur in the market) and that broker’s fees and similar expenses may be incurred in any such sale. In any event, when

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the shares of Stock are sold, the sale proceeds, less any tax withholding, any broker’s fees or commissions, and any similar expenses of the sale will be remitted to you in accordance with applicable exchange control laws and regulations.

3.     Exchange Control Restrictions . You understand and agree that, pursuant to local exchange control requirements, you will be required immediately to repatriate to China the proceeds from the sale of any shares of Stock acquired under the Plan. You further understand that such repatriation of proceeds may be effected through a special bank account established by the Company or its Affiliate, and you hereby consent and agree that proceeds from the sale of shares of Stock acquired under the Plan may be transferred to such account by the Company on your behalf prior to being delivered to you and that no interest shall be paid with respect to funds held in such account. The proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. If the proceeds are paid to you in U.S. dollars, you understand that a U.S. dollar bank account in China must be established and maintained so that the proceeds may be deposited into such account. If the proceeds are paid to you in local currency, you acknowledge that the Company is under no obligation to secure any particular exchange conversion rate and that the Company may face delays in converting the proceeds to local currency due to exchange control restrictions. You agree to bear any currency fluctuation risk between the time the shares of Stock are sold and the net proceeds are converted into local currency and distributed to you. You further agree to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.

4.     Administration . The Company shall not be liable for any costs, fees, lost interest or dividends or other losses you may incur or suffer resulting from the enforcement of the terms of this Addendum or otherwise from the Company’s operation and enforcement of the Plan, the Agreement and the Award in accordance with Chinese law including, without limitation, any applicable SAFE rules, regulations and requirements.

The above requirements will not apply to non-Chinese nationals, unless otherwise required by the Company or by SAFE.

BY ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, THE AGREEMENT AND THIS ADDENDUM.


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COLOMBIA

Nature of Grant . This provision supplements Section 16 of the Agreement:
You acknowledge that, pursuant to Article 128 of the Colombian Labor Code, the Plan and related benefits do not constitute a component of your “salary” for any legal purpose. Therefore, they will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amount which may be payable.

COSTA RICA

No country-specific provisions.

CZECH REPUBLIC

No country-specific provisions.

DENMARK

Treatment of Units upon Termination of Service . Notwithstanding any provisions in the Agreement to the contrary, if you are determined to be an “Employee” as defined in section 2 of the Danish Act on stock options(the “Stock Option Act”), the treatment of the Units upon your termination of employment shall be governed by the Stock Option Act.

Danish Stock Option Act . In accepting the Units, you acknowledge that you have received an Employer Statement translated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable to you and required to comply with the Stock Option Act, the terms set forth in the Employer Statement will apply to your participation in the Plan.

FINLAND

No country-specific provisions.

FRANCE

Use of English Language . You acknowledge and agree that it is your express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Vous reconnaissez et consentez que c’est votre souhait exprès qui cet accord, de meme que tous documents, toutes notifications et tous procédés légaux est entré dans, donné ou instituté conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l’anglais.

GERMANY

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No country-specific provisions.

GREECE

No country-specific provisions.

HONG KONG

IMPORTANT NOTICE/WARNING . The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of the documents, you should obtain independent professional advice. The Units and shares of Stock issued at vesting do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or its Affiliates. The Agreement, the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. The Units are intended only for the personal use of each eligible employee of the Employer, the Company or any Affiliate and may not be distributed to any other person.

INDIA

No country-specific provisions.

INDONESIA

No country-specific provisions.

IRELAND

No country-specific provisions.

ITALY

Plan . This provision supplements Section 16 of the Agreement:
You further acknowledge that you have read and specifically and expressly approve the following sections of the Agreement: Vesting, Other Termination of Employment, Certain Vesting Conditions, Recoupment Policy, Issuance of Stock, Satisfaction of Tax Obligations, Nature of Grant, and Choice of Law and Venue.
JAPAN

No country-specific provisions.

LEBANON

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Securities Law Information . The Plan does not constitute the marketing or offering of securities in Lebanon pursuant to Law No. 161 (2011), the Capital Markets Law. Offerings under the Plan are being made only to eligible employees of the Boston Scientific Corporation.

MALAYSIA

1.     Award Conditioned upon Election to Pay Taxes Directly to the Malaysian Inland Revenue Board . You understand and agree that your Award is conditioned upon your completing, signing and submitting a letter to your Employer, indicating your election to pay any income tax or other tax liability arising in connection with taxable income recognized under the Plan directly to the Malaysian Inland Revenue Board. (You may contact your Employer to request a form letter for this purpose.) You understand that if you fail to file such an election letter with your Employer, your Award will be null and void.

2.     Consent to Collection, Processing and Transfer of Personal Data . This provision replaces Section 15 of the Agreement in its entirety:

You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data, as described in this Addendum and any other grant materials by and among, as applicable, the Company and Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.
 
Anda dengan ini secara eksplisit dan tanpa sebarang keraguan mengizinkan pengumpulan, penggunaan dan pemindahan, dalam bentuk elektronik atau lain-lain, data peribadi anda seperti yang diterangkan dalam Lampiran ini dan apa-apa bahan pemberian unit saham terhad yang lain oleh dan di antara, seperti yang berkenaan, Syarikat dan Ahli Gabungan untuk tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan penyertaan anda di dalam Pelan.


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You understand that the Company and Affiliates may hold certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all Units or any other entitlement to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in your favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”). The Data is supplied by the Company and also by you through information collected in connection with the Agreement and the Plan.

You understand that Data will be transferred to the current stock plan service providers or a stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan. You understand that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative at 65.6418.8859, fax # 65.6418.8899 or Pauline.Puay@bsci.com .
 
Anda memahami bahawa Syarikat Ahli Gabungan mungkin memegang maklumat peribadi tertentu tentang anda, termasuk, tetapi tidak terhad kepada, nama anda, alamat rumah dan nombor telefon, tarikh lahir, nombor insurans sosial atau nombor pengenalan lain, gaji, kewarganegaraan, jawatan, apa-apa syer saham Biasa atau jawatan pengarah yang dipegang dalam Syarikat, butir-butir semua unit saham terhad, atau apa-apa hak lain atas syer Biasa saham yang dianugerahkan, dibatalkan, dilaksanakan, terletak hak, tidak diletak hak ataupun yang belum dijelaskan bagi faedahanda, untuk tujuan eksklusif bagi melaksanakan, mentadbir dan menguruskan Pelan tersebut (“Data”). Data tersebut dibekalkan oleh Syarikat dan juga oleh anda berkenaan dengan Perjanjian dan Pelan.
Anda memahami bahawa Data ini akan dipindahkan kepada pembekal perkhidmatan pelan saham semasa atau pembekal perkhidmatan pelan saham yang mungkin dipilih oleh Syarikat pada masa depan, yang membantu Syarikat dengan pelaksanaan, pentadbiran dan pengurusan Pelan. Anda memahami bahawa penerima-penerima Data mungkin berada di Amerika Syarikat atau mana-mana tempat lain, dan bahawa negara penerima-penerima (contohnya, Amerika Syarikat) mungkin mempunyai undang-undang privasi data dan perlindungan yang berbeza daripada negara anda. Anda memahami bahawa sekiranya anda menetap di luar Amerika Syarikat, anda boleh meminta satu senarai yang mengandungi nama-nama dan alamat-alamat penerima-penerima Data yang berpotensi dengan menghubungi wakil sumber manusia tempatan anda di 65.6418.8859, fax # 65.6418.8899 or Pauline.Puay@bsci.com


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You authorize the Company, the stock plan service provider and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing your participation in the Plan, including any transfer of such Data as may be required to a broker, escrow agent or other third party with whom the shares of Stock received upon vesting of the Units may be deposited. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consent herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your consent, your employment status or service and career with the Company will not be adversely affected; the only adverse consequence of refusing or withdrawing your consent is that the Company may not be able to grant you Units or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.

 
Anda memberi kuasa kepada Syarikat, pembekal perkhidmatan pelan saham dan mana-mana penerima-penerima kemungkinan lain yang mungkin akan membantu Syarikat (pada masa sekarang atau pada masa depan) dengan melaksanakan, mentadbir dan menguruskan Pelan untuk menerima, memiliki, menggunakan, mengekalkan dan memindahkan Data, dalam bentuk elektronik atau lain-lain, bagi tujuan melaksanakan, mentadbir dan menguruskan penyertaan anda di dalam Pelan, termasuk segala pemindahan Data tersebut sebagaimana yang dikehendaki kepada broker, egen eskrow atau pihak ketiga dengan siapa syer Biasa saham diterima semasa peletakhakan saham terhad unit mungkin didepositkan. Anda memahami bahawa Data hanya akan disimpan selagi ia adalah diperlukan untuk melaksanakan, mentadbir, dan menguruskan penyertaan anda dalam Pelan. Anda memahami bahawa sekiranya anda menetap di luar Amerika Syarikat, anda boleh, pada bila-bila masa, melihat Data, meminta maklumat tambahan mengenai penyimpanan dan pemprosesan Data, meminta bahawa pindaan-pindaan dilaksanakan ke atas Data atau menolak atau menarik balik persetujuan dalam ini, dalam mana-mana kes, tanpa kos, dengan menghubungi secara bertulis wakil sumber manusia tempatan. Selanjutnya, anda memahami bahawa anda memberikan persetujuan di sini secara sukarela semata-mata. Sekiranya anda tidak bersetuju, atau sekiranya anda kemudian membatalkan persetujuan anda, status pekerjaan atau perkhidmatan dan kerjaya anda dengan Syarikat tidak akan terjejas; satu-satunya akibat buruk sekiranya anda tidak bersetuju atau menarik balik persetujuan andaadalah bahawa Syarikat tidak akan dapat memberikan unit saham terhad anda atau anugerah ekuiti lain atau mentadbir atau mengekalkan anugerah-anugerah tersebut. Oleh itu, anda memahami bahawa keengganan atau penarikan balik persetujuan anda boleh menjejaskan keupayaan anda untuk mengambil bahagian dalam Pelan. Untuk maklumat lebih lanjut mengenai akibat-akibat keengganan anda untuk memberikan keizinan atau penarikan balik keizinan, anda memahami bahawa anda boleh menghubungi wakil sumber manusia tempatan.






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Please take note that by electronically accepting this Agreement, you have confirmed that you explicitly, voluntarily and unambiguously consent to the collection, use and transfer of your personal data in accordance with the terms in this notification. However, if for any reason you do not consent to the processing of your personal data, you have the right to reject such consent by contacting your local human resources representative at 65.6418.8859, fax # 65.6418.8899 or Pauline.Puay@bsci.com .

 
Sila ambil perhatian bahawa dengan menerima Perjanjian ini secara elektronik, anda mengesahkan bahawa anda secara eksplisit, sukarela, dan tanpa sebarang keraguan bersetuju dengan pengumpulan, penggunaan, dan pemindahan data peribadi anda mengikut terma-terma dalam notis ini. Walaubagaimanapun, jika atas apa-apa sebab-sebab tertentu anda tidak bersetuju dengan pemprosesan data peribadi anda, anda mempunyai hak untuk menolak persetujuan anda dengan menghubungi wakil sumber manusia tempatan anda di 65.6418.8859, fax # 65.6418.8899 or Pauline.Puay@bsci.com .


MEXICO

Acknowledgement of the Agreement . By accepting the Units, you acknowledge that you have received a copy of the Plan and the Agreement, including this Addendum, which you have reviewed. You further acknowledge that you accept all the provisions of the Plan and the Agreement, including this Addendum. You also acknowledge that you have read and specifically and expressly approve the terms and conditions set forth in the “Nature of Grant” section of the Agreement, which clearly provide as follows:
(1)
Your participation in the Plan does not constitute an acquired right;
(2)
The Plan and your participation in it are offered by the Company on a wholly discretionary basis;
(3)
Your participation in the Plan is voluntary; and
(4)
The Company and its Affiliates are not responsible for any decrease in the value of any Shares acquired at vesting of the Units.
Reconocimiento del Contrato . Al aceptar los Unidades, usted reconoce que ha recibido una copia del Plan y del Contrato con inclusión de este Apéndice, que le ha examinado. Usted reconoce, además, que usted acepta todas las disposiciones del Plan y del Contrato. Usted también reconoce que ha leído y, concretamente, y aprobar de forma expresa los términos y condiciones establecidos en la “Naturaleza del Otorgamiento” que claramente dispone lo siguiente:
(1)
Su participación en el Plan no constituye un derecho adquirido;
(2)
El Plan y su participación en el Plan se ofrecen por Boston Scientific Corporation en su totalidad sobre una base discrecional;
(3)
Su participación en el Plan es voluntaria; y

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(4)
Boston Scientific Corporation y sus afiliadas no son responsables de ninguna disminución en el valor de las acciones adquiridas en la adquisición de los Unidades.
Labor Law Acknowledgement and Policy Statement . By accepting the Units, you acknowledge that Boston Scientific Corporation, with registered offices at 300 Boston Scientific Way, Marlborough, Massachusetts 01752 , United States of America, is solely responsible for the administration of the Plan. You further acknowledge that your participation in the Plan, the grant of Units and any acquisition of shares of Stock under the Plan do not constitute an employment relationship between you and Boston Scientific Corporation because you are participating in the Plan on a wholly commercial basis and your sole employer is a Mexican legal entity (“Boston Scientific-Mexico”). Based on the foregoing, you expressly acknowledge that the Plan and the benefits that you may derive from participation in the Plan do not establish any rights between you and the Employer, Boston Scientific -Mexico, and do not form part of the employment conditions and/or benefits provided by Boston Scientific-Mexico, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of your employment.
You further understand that your participation in the Plan is the result of a unilateral and discretionary decision of Boston Scientific Corporation, therefore, Boston Scientific Corporation reserves the absolute right to amend and/or discontinue your participation in the Plan at any time, without any liability to you.
Finally, you hereby declare that you do not reserve to you any action or right to bring any claim against Boston Scientific Corporation for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and that you therefore grant a full and broad release to Boston Scientific Corporation, its Affiliates, branches, representation offices, shareholders, officers, agents and legal representatives, with respect to any claim that may arise.
Reconocimiento de Ausencia de Relación Laboral y Declaración de la Política . Al aceptar los Unidades, usted reconoce que Boston Scientific Corporation, con oficians registradas on 300 Boston Scientific Way, Marlborough, Massachusetts 01752 , Estados Unidos de América, es el único responsable de la administración del Plan. Además, usted acepta que su participación en el Plan, la concesión de los Unidades y cualquier adquisición de acciones en el marco del Plan no constituyen una relación laboral entre usted y Boston Scientific Corporation porque usted está participando en el Plan en su totalidad sobre una base comercial y su único empleador es una sociedad mercantil Mexicana (“Boston Scientific-Mexico”). Derivado de lo anterior, usted expresamente reconoce que el Plan y los beneficios que pueden derivarse de la participación en el Plan no establece ningún derecho entre usted y su Empleador, Boston Scientific-Mexico, y que no forman parte de las condiciones de empleo y / o prestaciones previstas por Boston Scientific-Mexico, y cualquier modificación del Plan o la terminación de su contrato no constituirá un cambio o deterioro de los términos y condiciones de su empleo.

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Además, usted entiende que su participación en el Plan es causada por una decisión discrecional y unilateral de Boston Scientific Corporation, por lo que Boston Scientific Corporation se reserva el derecho absoluto a modificar y/o suspender su participación en el Plan en cualquier momento, sin responsabilidad alguna para con usted.
Finalmente, usted manifiesta que no se reserva ninguna acción o derecho que origine una demanda en contra de Boston Scientific Corporation, por cualquier compensación o daño en relación con cualquier disposición del Plan o de los beneficios derivados del mismo, y en consecuencia usted otorga un amplio y total finiquito a Boston Scientific Corporation, sus afiliadas, sucursales, oficinas de representación, sus accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.

NETHERLANDS

Waiver of Termination Rights . As a condition to the grant of the Units, you hereby waive any and all rights to compensation or damages as a result of the termination of employment with the Company and the Employer for any reason whatsoever, insofar as those rights result or may result from (a) the loss or diminution in value of such rights or entitlements under the Plan, or (b) your ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.

PHILIPPINES

Settlement in Cash . Pursuant Section 2 of the Agreement, the Company shall settle your Units in the form of a cash payment unless, at the time of vesting, share settlement does not trigger the need for any approval from and/or filing with the Philippines Securities and Exchange Commission.

POLAND

No country-specific provisions.

PORTUGAL

Language Consent . You hereby expressly declare that you have full knowledge of the English language and have read, understood and fully accepted and agreed with the terms and conditions established in the Plan and the Agreement.
Conhecimento da Lingua. Por meio do presente, eu declaro expressamente que tem pleno conhecimento da língua inglesa e que li, compreendi e livremente aceitei e concordei com os termos e condições estabelecidas no Plano e no Acordo.

PUERTO RICO

No country-specific provisions.

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RUSSIA
U.S. Transaction . You understand that the Units shall be valid and this Agreement shall be concluded and become effective only when the Agreement is received by the Company in the United States. Upon vesting of the Units, any shares of Stock to be issued to you shall be delivered to you through a bank or brokerage account in the United States. In no event will shares of Stock be delivered to you in Russia; instead, all shares of Stock acquired upon vesting of the Units will be maintained on your behalf in the United States. You are not permitted to sell shares of Stock acquired at vesting directly to a Russian legal entity or resident.
Depending on the development of local regulatory requirements, the Company reserves the right to settle the Units in cash and/or to pay any proceeds related to the Units to you through local payroll.
SINGAPORE

Private Placement . The grant of the Units is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“ SFA ”) and is not made to you with a view to the Units being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. You should note that the Unit is subject to section 257 of the SFA and you will not be able to make any subsequent sale of the shares of Stock in Singapore, or any offer of such subsequent sale of the shares of Stock subject to the Grants in Singapore, unless such sale or offer in is made (i) after six months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.

SOUTH AFRICA

Responsibility for Taxes . This provision supplements Section 13 of the Agreement:
You are responsible for immediately notifying the Employer of the amount of any gain realized at vesting of the Units. If you fail to advise the Employer of such gain, you may be liable for a fine.
Securities Law Notice . In compliance with South African Securities Law, the Company’s most recent Annual Report (Form 10-K) from the investor relations section of the Company's website at www.bostonscientific.com is available for your review.

You acknowledge that you may have copies of the above documents sent to you, at no charge, on written request being mailed to Boston Scientific Corporation, Investor Relations, 300 Boston Scientific Way, Mailstop M405, Marlborough, MA 01752 . The telephone number at the executive offices is 508-683-5675.

SOUTH KOREA

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Consent to Collection, Processing and Transfer of Personal Data . By electronically accepting this Agreement:

1.
You agree to the collection, use, processing and transfer of Data as described in Section 15 of the Agreement; and

2.
You agree to the processing of your unique identifying information (resident registration number) as described in Section 15 of the Agreement.

SPAIN

Acknowledgement of Discretionary Nature of the Plan; No Vested Rights . This provision supplements the terms of the Agreement.

In accepting the grant of Units, you acknowledge that you consent to participation in the Plan and have received a copy of the Plan.

You understand that the Company has unilaterally, gratuitously and in its sole discretion granted Units under the Plan to individuals who may be employees of the Company or its Affiliates throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or any of its Affiliates on an ongoing basis. Consequently, you understand that the Units are granted on the assumption and condition that the Units and the shares of Stock acquired upon vesting of the Units shall not become a part of any employment contract (either with the Company or any of its Affiliates) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, you understand that this grant would not be made to you but for the assumptions and conditions referenced above; thus, you acknowledge and freely accept that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, the grant of Units shall be null and void.


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You understand and agree that, as a condition of the grant of Units, your termination of employment for any reason (including the reasons listed below) will automatically result in the loss of the Units to the extent the Units have not vested as of date the you cease active employment. In particular, you understand and agree that any unvested Units as of the date you cease active employment will be forfeited without entitlement to the underlying shares of Stock or to any amount of indemnification in the event of the termination of employment by reason of, but not limited to, resignation, disability or retirement prior to the first anniversary of the Grant Date, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. You acknowledge that you have read and specifically accept the conditions referred to in the Agreement regarding the impact of a termination of employment on your Award.

BY ELECTRONICALLY ACCEPTING THIS AGREEMENT, YOU ACKNOWLEDGE, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS OF THE PLAN, THE AGREEMENT AND THIS ADDENDUM.

SWEDEN

No country-specific provisions.

SWITZERLAND

Securities Law Information . The offer of the Units is considered a private offering in Switzerland and is therefore not subject to registration in Switzerland. Neither this document nor any other materials relating to the Unit constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither this document nor any other materials relating to the Unit may be publicly distributed nor otherwise made publicly available in Switzerland.

TAIWAN

Securities Law Information . This Award and the Shares to be issued pursuant to the Plan are available only for Employees. The Award is not a public offer of securities by a Taiwanese company.


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THAILAND

No country-specific provisions.

TURKEY

Securities Law Information . Under Turkish law, you are not permitted to sell shares of Stock acquired under the Plan in Turkey. The shares of Stock are currently traded on the New York Stock Exchange, which is located outside Turkey and the shares of Stock may be sold through this exchange.

UNITED KINGDOM

1.      Income Tax and Social Insurance Contribution Withholding . The following provision shall replace Section 13 of the Agreement:

Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax, primary and secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant or vesting of the Award and the acquisition of Stock, or the release or assignment of the Award for consideration, or the receipt of any other benefit in connection with the Award (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility. Furthermore, the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Award, including the grant of the Award, the vesting of the Award, and the issuance of Stock in settlement, the subsequent sale of any Stock acquired and the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate your liability for Tax-Related Items.

As a condition of the issuance of Stock upon vesting of the Award, the Company and/or the Employer shall be entitled to withhold and you agree to pay, or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy, all obligations of the Company and/or the Employer to account to HM Revenue & Customs (“HMRC”) for any Tax-Related Items. In this regard, you authorize the Company and/or the Employer to withhold all applicable Tax-Related Items legally payable by you by withholding a sufficient number of whole shares of Stock having a fair market value (determined in the Company’s reasonable discretion) on the applicable withholding date equal to the minimum amount of Tax-Related Items required to be withheld. Alternatively, or in addition, if permissible under local law, you authorize the Company and/or the Employer, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by you by one or a combination of the following: (a) withholding from any wages or other cash compensation paid to you by the Company and/or the Employer; (b) arranging for the sale of a sufficient number of whole shares of Stock otherwise deliverable to you (on your behalf and at your direction pursuant to this

–Rev 1.2016
28




authorization); or (c) withholding from the proceeds of the sale of a sufficient number of whole shares of Stock acquired upon vesting of the Award. If the obligation for Tax-Related Items is satisfied by withholding a whole number of shares of Stock as described herein, you will be deemed to have been issued the full number of shares subject to the Award, notwithstanding that a number of the shares of stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Award.

If, by the date on which the event giving rise to the Tax-Related Items occurs (the “Chargeable Event”), you have relocated to another country, you acknowledge that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one country.

You also agree that the Company and the Employer may determine the amount of Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right which you may have to recover any overpayment from the relevant tax authorities. You shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to account to HMRC with respect to the Chargeable Event that cannot be satisfied by the means previously described. If payment or withholding is not made within 90 days after the end of the U.K. tax year in which the Chargeable Event occurs or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, (the “Due Date”), you agree that the amount of any uncollected Tax-Related Items shall (assuming you are not a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), constitute a loan owed by you to the Employer, effective on the Due Date. You agree that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company and/or the Employer may recover it at any time thereafter by any of the means referred to above. If any of the foregoing methods of collection are not allowed under applicable laws or if you fail to comply with your obligations in connection with the Tax-Related Items as described in this section, the Company may refuse to deliver the Stock acquired under the Plan.

2.      Exclusion of Claim . You acknowledge and agree that you will have no entitlement to compensation or damages insofar as such entitlement arises or may arise from your ceasing to have rights under or to be entitled to the Award, whether or not as a result of your termination of employment (whether the termination is in breach of contract or otherwise), or from the loss or diminution in value of the Award. Upon the grant of your Award, you shall be deemed irrevocably to have waived any such entitlement.

 




–Rev 1.2016
29
EXHIBIT 10.4



Boston Scientific Corporation
 
 
Participant:
Employee ID:
Award Type: Performance Share Unit Award Agreement
Plan Name: TSR PERFORMANCE SHARE PROGRAM  -
 
 
Award Date:
 
 
Total Granted:

BOSTON SCIENTIFIC

INTENT TO GRANT

PERFORMANCE SHARE UNIT AWARD AGREEMENT


This Agreement, dated as of the [ ] (the “Grant Date”), is between you and Boston Scientific Corporation, a Delaware corporation (the “Company”), in connection with the Award of Performance Share Units by the Company under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in either the Plan or in the Total Shareholder Return Performance Share Program (the “Program”) for the period beginning January 1, 2016 and ending on December 31, 2018 (the “Performance Period”).
 
1.     Grant and Acceptance of Award . The Company hereby indicates its award to you that number of Performance Share Units (the “Units”) set forth herein this Agreement (the “Award”). Each Unit represents the Company’s commitment to issue to you shares of the Company’s common stock, par value $.01 per share (the “Stock”), subject to certain eligibility, performance and other conditions set forth herein. The Award is intended to be granted pursuant to and is subject to the terms and conditions of this Agreement and the provisions of the Plan and the Program.

2.     Eligibility Conditions upon Award of Units . You hereby acknowledge the intent of the Company to award Units subject to certain eligibility, performance and other conditions set forth herein.


TSR Program
EXHIBIT 10.4



3.     Satisfaction of Performance-Based Conditions . Subject to the eligibility conditions described in Section 7 of this Agreement, except as otherwise provided in Section 8 of this Agreement and Appendix B , and the satisfaction of the performance conditions set forth on Appendix A to this Agreement during the Performance Period, the Company intends to award shares of Stock hereunder to you at the end of the Performance Period. Except as set forth in Section 8 of this Agreement, no shares of Stock in settlement of the Units shall be issued to you prior to the end of the Performance Period.

4.     Participant’s Rights in Stock . The shares of Stock, if and when issued hereunder, shall be registered in your name and evidenced in the manner as the Company may determine. During the period prior to the issuance of Stock, you will have no rights of a stockholder of the Company with respect to the Stock, including no right to receive dividends or vote the shares of Stock underlying each Award.

5.     Death . In the event that your employment with the Company or its subsidiaries or affiliates is terminated due to death after December 31, 2016, but prior to the end of the Performance Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following the Performance Period. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that you worked during the Performance Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by (b) the percentile performance amount as calculated in accordance with the terms of the Program. In the event of your death prior to January 1, 2017, the Award shall be forfeited in its entirety.

6.     Retirement or Disability . In the event that your employment with the Company or its subsidiaries or affiliates is terminated due to Retirement or Disability after December 31, 2016, but prior to the end of the Performance Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following the Performance Period. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that you worked during the Performance Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by the percentile performance amount, as calculated in accordance with the terms of the Program. In the event that you terminate your employment due to Retirement or Disability prior to January 1, 2017, the Award shall be forfeited in its entirety.


TSR Program
EXHIBIT 10.4



7.     Other Termination of Employment -- Eligibility Conditions . If your employment o with the Company and its affiliates or subsidiaries is terminated or you separate from the Company and its affiliates or subsidiaries for any reason other than death, Retirement or Disability, any Units that remain subject to eligibility conditions shall be void and no Stock shall be issued. Except as set forth in Sections 5, 6 and 8, eligibility to be issued shares of Stock is conditioned on your continuous employment with the Company through and on the last day of the Performance Period .

8.     Change in Control of the Company . Subject to the terms of any separate Change in Control or similar agreement to which you are bound, in the event of a Change in Control of the Company after December 31, 2016, but prior to the end of the Performance Period, shares of Stock shall be issued on a prorated basis based on actual performance using the last day of the month preceding the date on which the Change in Control is consummated as the ending date of the Performance Period in lieu of December 31, 2018 as determined by the Committee immediately prior to the consummation of the Change in Control. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months during the Performance Period (rounded up to the nearest whole month) prior to the consummation of the Change in Control divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by (b) the percentile performance amount as calculated in accordance with the terms of the Program. In the event that a Change in Control occurs prior to January 1, 2017, the Award shall be forfeited in its entirety.

9.     Recoupment Policy .

(a)     Current Recoupment Policy . Pursuant to the Company's recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and if, in the judgment of the Board, you commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i)     Definitions . The following terms, when used in this Section 9, shall have the meaning set forth below:

(1)    "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2)    "Executive Officer" means any Current Executive Officer or Former Executive Officer.

(3)    "Former Executive Officer" means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

TSR Program
EXHIBIT 10.4



(4)    "Recovery" means the forfeiture or cancellation of unvested Units.

(b)     Provisions Required by Law . If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.

10.     Consideration for Stock . The shares of Stock are intended to be issued for no cash consideration.

11.     Issuance of Stock . The Company shall not be obligated to issue any shares of Stock until (i) all federal and state laws and regulations as the Company may deem applicable have been complied with; (ii) the shares have been listed or authorized for listing upon official notice to the New York Stock Exchange, Inc. or have otherwise been accorded trading privileges; and (iii) all other legal matters in connection with the issuance and delivery of the shares have been approved by the Company’s legal department.

12.     Tax Withholding . Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units or the shares of Stock issued upon vesting of the Units, and (b) do not commit to structure the terms of the Award (or any aspect of the Units) to reduce or eliminate your liability for Tax-Related Items.

Upon the issuance of shares of Stock or the satisfaction of any vesting condition with respect to the shares of Stock to be issued hereunder, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may hold back from the total number of shares of Stock to be delivered to you, and shall cause to be transferred to the Company, whole shares of Stock that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the shares of Stock, or to the extent it would not result in adverse accounting treatment, the Company may, in its sole discretion, decide to hold back shares of Stock based on a rate of up to the maximum applicable withholding rate. The cash equivalent of the shares of Stock withheld will be used to settle the obligation to withhold the Tax-Related Items. By accepting the grant of Units, you expressly consent to the withholding of shares of Stock and/or cash as provided for hereunder.


TSR Program
EXHIBIT 10.4


Alternatively, you hereby authorize the Company (on your behalf and at your direction pursuant to this authorization) to immediately sell a sufficient whole number of shares of Stock acquired upon vesting resulting in sale proceeds sufficient to pay the Tax-Related Items required to be withheld. You agree to sign any agreements, forms and/or consents that reasonably may be requested by the Company (or the Company’s designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds to the Company to satisfy the Tax-Related Items required to be withheld). Further, the Company or the Employer may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from your salary or any other amounts payable to you, with no withholding of shares of Stock or sale of shares of Stock, or may require you to submit a cash payment equivalent to the Tax-Related Items required to be withheld with respect to the Units.     

All other Tax-Related Items related to the grant of Units and any shares of Stock delivered in settlement thereof are your sole responsibility. In no event shall whole shares be withheld by or delivered to the Company in satisfaction of any Tax-Related Items in excess of the maximum statutory tax withholding required by law. You agree to indemnify the Company and its Affiliates against any and all liabilities, damages, costs and expenses that the Company and its Affiliates may hereafter incur, suffer or be required to pay with respect to the payment or withholding of any Tax-Related Items.

The Units are intended to be exempt from the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Agreement is subject to Code Section 409A and that it has failed to comply with the requirements of that Section, the Company may, in its sole discretion, and without your consent, amend this Agreement to cause it to comply with Code Section 409A or be exempt from Code Section 409A.

13.     Investment Intent . You acknowledge that the acquisition of the Stock to be issued hereunder is for investment purposes without a view to distribution thereof.

14.     Limits on Transferability; Restrictions on Shares; Legend on Certificate . Until the eligibility conditions of this Award have been satisfied and shares of Stock have been issued in accordance with the terms of this Agreement or by action of the Committee, the Units awarded hereunder are not transferable and shall not be sold, transferred, assigned, pledged, gifted, hypothecated or otherwise disposed of or encumbered by you. Transfers of shares of Stock by you are subject to the Company’s Stock Trading Policy and applicable securities laws. Shares of Stock issued to you in certificate form or to your book entry account upon satisfaction of the vesting and other conditions of this Award may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon the your book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.


TSR Program
EXHIBIT 10.4


15.     Award Subject to the Plan and the Program . The Award to be made pursuant to this Agreement is made subject to the Plan and the Program. The terms and provisions of the Plan and the Program, as each may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan or the Program, the applicable terms and conditions of the Plan or Program will govern and prevail. However, no amendment of the Plan or the Program after the date hereof may adversely alter or impair the issuance of the Stock to be made pursuant to this Agreement.

16.     No Rights to Continued Employment . The Company’s intent to issue the shares of Stock hereunder shall not confer upon you any right to continued employment or other association with the Company or any of its affiliates or subsidiaries; and this Agreement shall not be construed in any way to limit the right of the Company or any of its subsidiaries or affiliates to terminate your employment or other association with the Company or to change the terms of such employment or association at any time.

17.     Legal Notices . Any legal notice necessary under this Agreement shall be addressed to the Company in care of its General Counsel at the principle executive offices of the Company and to you at the address appearing in the personnel records of the Company for you or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

18.     Appendix . Notwithstanding any provision of this Agreement to the contrary, the Units shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as are forth in the applicable appendix to the Agreement (the “Appendix”). Further, if you transfer your residence and/or employment to another country reflected in the Appendices to these Agreements, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Any applicable Appendix shall constitute part of this Agreement.
19.     Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflict of laws principles thereof) and applicable federal laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the Commonwealth of Massachusetts, or the federal courts for the United States for the District of Massachusetts, and no other courts, where this Award is made and/or to be performed .

20.     Headings . The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.


TSR Program
EXHIBIT 10.4


21.     Severability . You agree that the provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

22.     Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to the one and the same instrument.

[remainder of page intentionally left blank]



TSR Program
EXHIBIT 10.4


APPENDIX A

PLAN: 2011 LONG-TERM INCENTIVE PLAN


The Performance Share Units will pay out in shares of Stock in a range of 0% to 200% of the number of Performance Share Units as follows:

TSR Performance
Percentile Rank
Performance Share Units
as a Percent of Target
90th Percentile or above
200%
80th Percentile
150%
50th Percentile
100%
30th Percentile
40%
Below 30 th  Percentile
0%


TSR Program

EXHIBIT 10.4


APPENDIX B

This Appendix B contains supplemental terms and conditions for awards of Units granted under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”) to Participants who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. Capitalized terms used but not defined herein shall have the same meanings ascribed to them in the Agreement.
Section I of this Appendix B contains special terms and conditions that govern the Units outside of the United States. Section II of this Appendix B includes special terms and conditions in the specific countries listed therein.
This Appendix B may also include information regarding exchange controls, taxation of awards and certain other issues of which you should be aware with respect to participation in the Plan. The information is based on the securities, exchange control, tax and other laws concerning Units in effect as of February 2016. Such laws are often complex and change frequently; the information may be out of date at the time you vest in the Units or sell shares of Stock acquired under the Plan. As a result, the Company strongly recommends that you not rely on the information noted herein as the only source of information relating to the consequences of your participation in the Plan.
In addition, this Appendix B is general in nature, does not discuss all of the various laws, rules and regulations which may apply to your particular situation and the Company does not assure you of any particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country apply to your specific situation.
Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transferred employment after the Award was granted or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to you in the same manner. In addition, the Company shall, in its sole discretion, determine to what extent the terms and conditions contained herein will apply under these circumstances.

Section I.     All Countries Outside the United States

Nature of Grant . In accepting the grant, you acknowledge that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Administrator at any time, to the extent permitted by the Plan;

(b) the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants or benefits in lieu of Units, even if Units have been granted in the past;


TSR Program


EXHIBIT 10.4


(c) all decisions with respect to future grants of Units, if any, will be at the sole discretion of the Administrator;

(d) the Unit grant and your participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer or Affiliate and shall not interfere with the ability of the Company, the Employer or any Affiliate, as applicable, to terminate your employment or service relationship (if any);

(e) you are voluntarily participating in the Plan;

(f) the Units are not intended to replace any pension rights or compensation;

(g) the Units, the underlying shares of Stock, and the income and value of same are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the underlying shares of Stock is unknown, indeterminable and cannot be predicted with certainty;

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from the termination of your employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and in consideration of the grant of the Units to which you are otherwise not entitled, you irrevocably agree never to institute any such claim against the Company, any of its Affiliates or the Employer, waive your ability, if any, to bring any such claim, and release the Company, its Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(j) unless otherwise agreed with the Company in writing, the Units, the underlying shares of Stock and the income and value of same are not granted as consideration for, or in connection with, any service you may provide as a director of an Affiliate;

(k) for purposes of the Units, your employment or other service relationship will be considered terminated as of the date you are no longer actively providing services to the Company or one of its Affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, your right to vest in the Units under this Agreement, if any, will terminate as of such date and will not be extended

TSR Program


EXHIBIT 10.4


by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of the Unit grant (including whether you may still be considered to be providing services while on an approved leave of absence); and

(l) the following provisions apply only if you are providing services outside the United States: (A) the Units, the underlying shares of Stock, and the income and value of same are not part of normal or expected compensation or salary for any purpose; and (B) neither the Company, the Employer nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the U.S. dollar that may affect the value of the Units or of any amount due to you pursuant to the settlement of the Units or the subsequent sale of any shares of Stock acquired upon settlement.
 
Data Privacy . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.
You understand that the Company and the Employer may hold certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social insurance number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, and details of all Units awarded to you or any other entitlements to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”) for the purpose of implementing, managing and administering the Plan.
You understand that Data may be transferred to any third parties assisting the Company with the implementation, administration and management of the Plan, including but not limited to E*TRADE Corporate Services (“E*TRADE”) or any successor or any other third party that the Company or E*TRADE (or its successor) may engage to assist with the administration of the Plan from time to time. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative.
You authorize the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect

TSR Program


EXHIBIT 10.4


to deposit any shares of Stock acquired upon vesting of the Units. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later revoke your consent, your employment status or service with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that the Company would not be able to grant you Units or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
Electronic Delivery of Documents . The Company may, in its sole discretion, decide to deliver any documents related to the option granted under and participation in the Plan or future options that may be granted under the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
Insider Trading/Market Abuse Laws . You acknowledge that your country of residence may have insider trading and/or market abuse laws which may affect your ability to acquire or sell shares of Stock under the Plan during such times that you are considered to have “inside information” (as defined in the laws in your country). These laws may be the same or different from any Company insider trading policy. You acknowledge that it is your responsibility to comply with such regulations, and that you are advised to speak to your personal advisor on this matter.

Section II.     Country-Specific Terms and Conditions

FRANCE

Use of English Language . You acknowledge and agree that it is your express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Vous reconnaissez et consentez que c’est votre souhait exprès qui cet accord, de meme que tous documents, toutes notifications et tous procédés légaux est entré dans, donné ou instituté conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l’anglais.

SINGAPORE


TSR Program


EXHIBIT 10.4


Private Placement . The grant of the Units is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“ SFA ”) and is not made to you with a view to the Units being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. You should note that the Unit is subject to section 257 of the SFA and you will not be able to make any subsequent sale of the shares of Stock in Singapore, or any offer of such subsequent sale of the shares of Stock subject to the Grants in Singapore, unless such sale or offer in is made (i) after six months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.
 

TSR Program


EXHIBIT 10.5


Boston Scientific Corporation
 
 
Participant:
Employee ID:
Award Type: Performance Share Unit Award Agreement
Plan Name:    FCF PERFORMANCE SHARE PROGRAM
 
 
Award Date:
 
 
Total Granted:

BOSTON SCIENTIFIC

INTENT TO GRANT

PERFORMANCE SHARE UNIT AWARD AGREEMENT


This Agreement, dated as of the [ ] (the “Grant Date”), is between you and Boston Scientific Corporation, a Delaware corporation (the “Company”), in connection with the Award of Performance Share Units by the Company under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”). Capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in either the Plan or in the Free Cash Flow Performance Share Program (the “Program”) for the performance period beginning January 1, 2016 and ending on December 31, 2016 (the “Performance Period”) and the three-year service period beginning on January 1, 2016 and ending on December 31, 2018 (the “Service Period”).
 
1.     Grant and Acceptance of Award . The Company hereby indicates its award to you that number of Performance Share Units (the “Units”) set forth herein this Agreement (the “Award”). Each Unit represents the Company’s commitment to issue to you shares of the Company’s common stock, par value $.01 per share (the “Stock”), subject to certain eligibility, performance and other conditions set forth herein. The Award is intended to be granted pursuant to and is subject to the terms and conditions of this Agreement and the provisions of the Plan and the Program.

2.     Eligibility Conditions upon Award of Units . You hereby acknowledge the intent of the Company to award Units subject to certain eligibility, performance and other conditions set forth herein.

3.     Satisfaction of Performance-Based Conditions and Service Period . Subject to the eligibility conditions described in Section 7 of this Agreement, except as otherwise provided in Sections 5, 6 and 8 of this Agreement and Appendix B , and the satisfaction of

FCF Program




the performance conditions set forth on Appendix A to this Agreement during the Performance Period, the Company intends to award shares of Stock hereunder to you at the end of the Service Period (December 31, 2018). Except as set forth in Sections 5, 6 and 8 of this Agreement, no shares of Stock in settlement of the Units shall be issued to you prior to the end of the Service Period.

4.     Participant’s Rights in Stock . The shares of Stock, if and when issued hereunder, shall be registered in your name and evidenced in the manner as the Company may determine. During the period prior to the issuance of Stock, you will have no rights of a stockholder of the Company with respect to the Stock, including no right to receive dividends or vote the shares of Stock underlying each Award.

5.     Death . In the event that your employment with the Company or its subsidiaries or affiliates is terminated due to death after December 31, 2016, but prior to the end of the Service Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following your death. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that you worked during the Service Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by (b) the percentile performance amount, as calculated in accordance with the terms of the Program. In the event of your death prior to January 1, 2017, the Award shall be forfeited in its entirety.

6.     Retirement or Disability . In the event that your employment with the Company or its subsidiaries or affiliates is terminated due to Retirement or Disability after December 31, 2016, but prior to the end of the Service Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined at the first Committee meeting following your termination of employment due to Retirement or Disability. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months that you worked during the Service Period (rounded up to the nearest whole month) divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by the percentile performance amount, as calculated in accordance with the terms of the Program. In the event that you terminate your employment due to Retirement or Disability prior to January 1, 2017, the Award shall be forfeited in its entirety.

7.     Other Termination of Employment -- Eligibility Conditions . If your employment with the Company and its affiliates or subsidiaries is terminated or you separate from the Company and its affiliates or subsidiaries for any reason other than death, Retirement or Disability, any Units that remain subject to eligibility conditions shall be void and no Stock shall be issued. Except as set forth in Sections 5, 6 and 8, eligibility to be issued shares of Stock is conditioned on your continuous employment with the Company through and on the last day of the Service Period as set forth in Section 3 above.


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8.     Change in Control of the Company . Subject to the terms of any separate Change in Control or similar agreement to which you are bound, in the event of a Change in Control of the Company after December 31, 2016, but prior to the end of the Service Period, shares of Stock shall be issued on a prorated basis based on actual performance as determined by the Committee immediately prior to the consummation of the Change in Control. The number of shares of Stock to be issued under the prorated Award shall be determined by calculating (a)(i) the number of Units set forth herein multiplied by (ii) the quotient of the number of full and partial months during the Service Period (rounded up to the nearest whole month) prior to the consummation of the Change in Control divided by 36, and then multiplying the product of (a)(i) and (a)(ii) by the percentile performance amount, as calculated in accordance with terms of the Program. In the event that Change in Control occurs prior to January 1, 2017, the Award shall be forfeited in its entirety.

9.     Recoupment Policy .

(a)     Current Recoupment Policy . Pursuant to the Company's recoupment policy and to the extent permitted by governing law, the Board, in its discretion, may seek Recovery of the Award granted to you if you are a Current Executive Officer or Former Executive Officer and you, in the judgment of the Board, commit misconduct or a gross dereliction of duty that results in a material violation of Company policy and causes significant harm to the Company while serving in your capacity as Executive Officer.

(i)     Definitions . The following terms, when used in this Section 9, shall have the meaning set forth below:

(1)    "Current Executive Officer" means any individual currently designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(2)    "Executive Officer" means any Current Executive Officer or Former Executive Officer.

(3)    "Former Executive Officer" means any individual previously (but not currently) designated as an “officer” by the Board for purposes of Section 16 of the Securities Exchange Act of 1934, as amended.

(4)    "Recovery" means the forfeiture or cancellation of unvested Units.

(b)     Provisions Required by Law . If the Company subsequently determines that it is required by law to apply a "clawback" or alternate recoupment provision to outstanding Awards, under the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise, then such clawback or recoupment provision also shall apply to this Award, as applicable, as if it had been included on the Grant Date and the Company shall notify you of such additional provision.


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10.     Consideration for Stock . The shares of Stock are intended to be issued for no cash consideration.

11.     Issuance of Stock . The Company shall not be obligated to issue any shares of Stock until (i) all federal and state laws and regulations as the Company may deem applicable have been complied with; (ii) the shares have been listed or authorized for listing upon official notice to the New York Stock Exchange, Inc. or have otherwise been accorded trading privileges; and (iii) all other legal matters in connection with the issuance and delivery of the shares have been approved by the Company’s legal department.

12.     Tax Withholding . Regardless of any action the Company or the Affiliate that employs you (the “Employer”) (if applicable) takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (“Tax-Related Items”), you acknowledge and agree that the ultimate liability for all Tax-Related Items legally due by you is and remains your responsibility and that the Company and/or the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units or the shares of Stock issued upon vesting of the Units, and (b) do not commit to structure the terms of the Award (or any aspect of the Units) to reduce or eliminate your liability for Tax-Related Items.

Upon the issuance of shares of Stock or the satisfaction of any vesting condition with respect to the shares of Stock to be issued hereunder, if your country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company may hold back from the total number of shares of Stock to be delivered to you, and shall cause to be transferred to the Company, whole shares of Stock that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld with respect to the shares of Stock, or to the extent it would not result in adverse accounting treatment, the Company may, in its sole discretion, hold back shares of Stock based on a rate of up to the maximum applicable withholding rate. The cash equivalent of the shares of Stock withheld will be used to settle the obligation to withhold the Tax-Related Items. By accepting the grant of Units, you expressly consent to the withholding of shares of Stock and/or cash as provided for hereunder.

Alternatively, you hereby authorize the Company (on your behalf and at your direction pursuant to this authorization) to immediately sell a sufficient whole number of shares of Stock acquired upon vesting resulting in sale proceeds sufficient to pay the Tax-Related Items required to be withheld. You agree to sign any agreements, forms and/or consents that reasonably may be requested by the Company (or the Company’s designated brokerage firm) to effectuate the sale of the shares of Stock (including, without limitation, as to the transfer of the sale proceeds to the Company to satisfy the Tax-Related Items required to be withheld). Further, the Company or the Employer may, in its discretion, withhold any amount necessary to pay the Tax-Related Items from your salary or any other amounts payable to you, with no withholding of shares of Stock or sale of shares of Stock, or may require you to submit a cash payment equivalent to the Tax-Related Items required to be withheld with respect to the Units.     

FCF Program






All other Tax-Related Items related to the grant of Units and any shares of Stock delivered in settlement thereof are your sole responsibility. In no event shall whole shares be withheld by or delivered to the Company in satisfaction of any Tax-Related Items in excess of the maximum statutory tax withholding required by law. You agree to indemnify the Company and its Affiliates against any and all liabilities, damages, costs and expenses that the Company and its Affiliates may hereafter incur, suffer or be required to pay with respect to the payment or
withholding of any Tax-Related Items.

The Units are intended to be exempt from the requirements of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and this Agreement shall be administered and interpreted in a manner consistent with this intent. If the Company determines that the Agreement is subject to Code Section 409A and that it has failed to comply with the requirements of that Section, the Company may, in its sole discretion, and without your consent, amend this Agreement to cause it to comply with Code Section 409A or be exempt from Code Section 409A.

13.     Investment Intent . You acknowledge that the acquisition of the Stock to be issued hereunder is for investment purposes without a view to distribution thereof.

14.     Limits on Transferability; Restrictions on Shares; Legend on Certificate . Until the eligibility conditions of this Award have been satisfied and shares of Stock have been issued in accordance with the terms of this Agreement or by action of the Committee, the Units awarded hereunder are not transferable and shall not be sold, transferred, assigned, pledged, gifted, hypothecated or otherwise disposed of or encumbered by you. Transfers of shares of Stock by you are subject to the Company’s Stock Trading Policy and applicable securities laws. Shares of Stock issued to you in certificate form or to your book entry account upon satisfaction of the vesting and other conditions of this Award may be restricted from transfer or sale by the Company and evidenced by stop-transfer instructions upon your book entry account or restricted legend(s) affixed to certificates in the form as the Company or its counsel may require with respect to any applicable restrictions on sale or transfer.

15.     Award Subject to the Plan and the Program . The Award to be made pursuant to this Agreement is made subject to the Plan and the Program. The terms and provisions of the Plan and the Program, as each may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan or the Program, the applicable terms and conditions of the Plan or Program will govern and prevail. However, no amendment of the Plan or the Program after the date hereof may adversely alter or impair the issuance of the Stock to be made pursuant to this Agreement.

16.     No Rights to Continued Employment . The Company’s intent to issue the shares of Stock hereunder shall not confer upon you any right to continued employment or other association with the Company or any of its affiliates or subsidiaries; and this Agreement shall not be construed in any way to limit the right of the Company or any of its subsidiaries

FCF Program





or affiliates to terminate your employment or other association with the Company or to change the terms of such employment or association at any time.

17.     Legal Notices . Any legal notice necessary under this Agreement shall be addressed to the Company in care of its General Counsel at the principle executive offices of the Company and to you at the address appearing in the personnel records of the Company for you or to either party at such other address as either party may designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

18.     Appendix . Notwithstanding any provision of this Agreement to the contrary, the Units shall be subject to any special terms and conditions for your country of residence (and country of employment, if different) as are forth in the applicable appendix to the Agreement (the “Appendix”). Further, if you transfer your residence and/or employment to another country reflected in the Appendices to these Agreements, the special terms and conditions for such country will apply to you to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Any applicable Appendix shall constitute part of this Agreement.

19.     Governing Law and Venue . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of The Commonwealth of Massachusetts (without regard to the conflict of laws principles thereof) and applicable federal laws. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the Commonwealth of Massachusetts and agree that such litigation shall be conducted only in the Commonwealth of Massachusetts, or the federal courts for the United States for the District of Massachusetts, and no other courts, where this Award is made and/or to be performed .

20.     Headings . The headings contained in this Agreement are for convenience only and shall not affect the meaning or interpretation of this Agreement.

21.     Severability . You agree that the provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

22.     Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to the one and the same instrument.

[remainder of page intentionally left blank]



FCF Program

EXHIBIT 10.5


APPENDIX A

PLAN: 2011 LONG-TERM INCENTIVE PLAN



The Performance Share Units will pay out in shares of Stock in a range of 0% to 150% of the number of Performance Share Units as follows:

Performance
Percent to Plan
Units Vesting
125% or above
150%
110%
120%
100%
100%
90%
80%
50%
25%
Less than 50%
0%





FCF Program
EXHIBIT 10.5


APPENDIX B

This Appendix B contains supplemental terms and conditions for awards of Units granted under the Boston Scientific Corporation 2011 Long-Term Incentive Plan (the “Plan”) to Participants who reside outside the United States or who are otherwise subject to the laws of a country other than the United States. Capitalized terms used but not defined herein shall have the same meanings ascribed to them in the Agreement.
Section I of this Appendix B contains special terms and conditions that govern the Units outside of the United States. Section II of this Appendix B includes special terms and conditions in the specific countries listed therein.
This Appendix B may also include information regarding exchange controls, taxation of awards and certain other issues of which you should be aware with respect to participation in the Plan. The information is based on the securities, exchange control, tax and other laws concerning Units in effect as of February 2016. Such laws are often complex and change frequently; the information may be out of date at the time you vest in the Units or sell shares of Stock acquired under the Plan. As a result, the Company strongly recommends that you not rely on the information noted herein as the only source of information relating to the consequences of your participation in the Plan.
In addition, this Appendix B is general in nature, does not discuss all of the various laws, rules and regulations which may apply to your particular situation and the Company does not assure you of any particular result. Accordingly, you should seek appropriate professional advice as to how the relevant laws in your country apply to your specific situation.
Finally, if you are a citizen or resident of a country other than the one in which you are currently working, transferred employment after the Award was granted or is considered a resident of another country for local law purposes, the information contained herein may not be applicable to you in the same manner. In addition, the Company shall, in its sole discretion, determine to what extent the terms and conditions contained herein will apply under these circumstances.

Section I.     All Countries Outside the United States

Nature of Grant . In accepting the grant, you acknowledge that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and may be modified, amended, suspended or terminated by the Administrator at any time, to the extent permitted by the Plan;

(b) the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants or benefits in lieu of Units, even if Units have been granted in the past;


FCF Program

EXHIBIT 10.5


(c) all decisions with respect to future grants of Units, if any, will be at the sole discretion of the Administrator;

(d) the Unit grant and your participation in the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer or Affiliate and shall not interfere with the ability of the Company, the Employer or any Affiliate, as applicable, to terminate your employment or service relationship (if any);

(e) you are voluntarily participating in the Plan;

(f) the Units are not intended to replace any pension rights or compensation;

(g) the Units, the underlying shares of Stock, and the income and value of same are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;

(h) the future value of the underlying shares of Stock is unknown, indeterminable and cannot be predicted with certainty;

(i) no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from the termination of your employment or other service relationship (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and in consideration of the grant of the Units to which you are otherwise not entitled, you irrevocably agree never to institute any such claim against the Company, any of its Affiliates or the Employer, waive your ability, if any, to bring any such claim, and release the Company, its Affiliates and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, you shall be deemed irrevocably to have agreed not to pursue such claim and agree to execute any and all documents necessary to request dismissal or withdrawal of such claim;

(j) unless otherwise agreed with the Company in writing, the Units, the underlying shares of Stock and the income and value of same are not granted as consideration for, or in connection with, any service you may provide as a director of an Affiliate;

(k) for purposes of the Units, your employment or other service relationship will be considered terminated as of the date you are no longer actively providing services to the Company or one of its Affiliates (regardless of the reason for such termination and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, your right to vest in the Units under this Agreement, if any, will terminate as of such date and will not be extended

FCF Program

EXHIBIT 10.5


by any notice period (e.g., your period of service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where you are employed or the terms of your employment agreement, if any); the Committee shall have the exclusive discretion to determine when you are no longer actively providing services for purposes of the Unit grant (including whether you may still be considered to be providing services while on an approved leave of absence); and

(l) the following provisions apply only if you are providing services outside the United States: (A) the Units, the underlying shares of Stock, and the income and value of same are not part of normal or expected compensation or salary for any purpose; and (B) neither the Company, the Employer nor any Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the U.S. dollar that may affect the value of the Units or of any amount due to you pursuant to the settlement of the Units or the subsequent sale of any shares of Stock acquired upon settlement.
 
Data Privacy . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Affiliates for the exclusive purpose of implementing, administering and managing your participation in the Plan.
You understand that the Company and the Employer may hold certain personal information about you, including (but not limited to) your name, home address and telephone number, date of birth, social insurance number or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, and details of all Units awarded to you or any other entitlements to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in your favor (“Data”) for the purpose of implementing, managing and administering the Plan.
You understand that Data may be transferred to any third parties assisting the Company with the implementation, administration and management of the Plan, including but not limited to E*TRADE Corporate Services (“E*TRADE”) or any successor or any other third party that the Company or E*TRADE (or its successor) may engage to assist with the administration of the Plan from time to time. You understand the recipients of the Data may be located in your country, in the United States or elsewhere, and that the recipients’ country may have different data privacy laws and protections than your country. You understand that you may request a list with the names and addresses of any potential recipients of the Data by contacting your local human resources representative.
You authorize the Company and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom you may elect

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EXHIBIT 10.5


to deposit any shares of Stock acquired upon vesting of the Units. You understand that you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later revoke your consent, your employment status or service with the Employer will not be adversely affected; the only consequence of refusing or withdrawing your consent is that the Company would not be able to grant you Units or other equity awards or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
Electronic Delivery of Documents . The Company may, in its sole discretion, decide to deliver any documents related to the option granted under and participation in the Plan or future options that may be granted under the Plan by electronic means or to request your consent to participate in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
Insider Trading/Market Abuse Laws . You acknowledge that your country of residence may have insider trading and/or market abuse laws which may affect your ability to acquire or sell shares of Stock under the Plan during such times that you are considered to have “inside information” (as defined in the laws in your country). These laws may be the same or different from any Company insider trading policy. You acknowledge that it is your responsibility to comply with such regulations, and that you are advised to speak to your personal advisor on this matter.

Section II.     Country-Specific Terms and Conditions

FRANCE

Use of English Language . You acknowledge and agree that it is your express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English. Vous reconnaissez et consentez que c’est votre souhait exprès qui cet accord, de meme que tous documents, toutes notifications et tous procédés légaux est entré dans, donné ou instituté conformément ci-annexé ou relatant directement ou indirectement ci-annexé, est formulé dans l’anglais.

SINGAPORE


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EXHIBIT 10.5


Private Placement . The grant of the Units is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“ SFA ”) and is not made to you with a view to the Units being subsequently offered for sale to any other party. The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore. You should note that the Unit is subject to section 257 of the SFA and you will not be able to make any subsequent sale of the shares of Stock in Singapore, or any offer of such subsequent sale of the shares of Stock subject to the Grants in Singapore, unless such sale or offer in is made (i) after six months from the Grant Date or (ii) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA.
 


FCF Program



EXHIBIT 31.1
 
CERTIFICATIONS
 
I, Michael F. Mahoney, certify that:


1
I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
 
 
2
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
 
4
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
 
 
a)    
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
 
 
b)     
 
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
 
 
c)     
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
 
 
d)     
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
 
 
5
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
 
 
a)     
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
 
 
 
b)     
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:
May 4, 2016
 
/s/ Michael F. Mahoney
 
 
Michael F. Mahoney
 
 
President and Chief Executive Officer





EXHIBIT 31.2
 
CERTIFICATIONS
 
I, Daniel J. Brennan, certify that:


1
I have reviewed this Quarterly Report on Form 10-Q of Boston Scientific Corporation;
 
 
2
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
 
3
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
 
4
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
 
 
a)    
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
 
 
 
b)     
 
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
 
 
c)     
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
 
 
d)     
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
 
 
5
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
 
 
 
a)     
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
 
 
 
b)     
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:
May 4, 2016
 
/s/ Daniel J. Brennan
 
 
Daniel J. Brennan
 
 
Executive Vice President and Chief Financial Officer





EXHIBIT 32.1
 
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C.
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ending March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

 
(1)   
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)   
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.
 
 
 
By:
/s/ Michael F. Mahoney
 
Michael F. Mahoney
 
 
President and Chief Executive Officer
 
 
 
 
 
May 4, 2016
 
 





EXHIBIT 32.2
 
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C.
SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Boston Scientific Corporation (the “Company”) for the period ending March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on his knowledge:

 
(1)   
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)   
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Boston Scientific Corporation.

This certification shall not be deemed "filed" for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 regardless of any general incorporation language in such filing.

 
 
 
By:
/s/ Daniel J. Brennan
 
Daniel J. Brennan
 
 
 Executive Vice President and Chief Financial Officer
 
 
 
 
 
May 4, 2016