EXHIBIT 10.1
[Amended]
BAXTER INTERNATIONAL INC.
Non-Employee Director Compensation Plan
adopted May 6, 2003
Terms and Conditions

1.   Purpose       This Non-Employee Director Compensation Plan (the “Plan”) is
adopted by the Board of Directors (the “Board”) of Baxter International Inc.
(“Baxter”). This Plan is adopted pursuant to the Baxter International Inc. 2003
Incentive Compensation Program (the “Program”), for the purposes stated in the
Program. Capitalized terms defined in the Program that are used without being
defined in the Plan will have the same meaning as in the Program.   2.  
Participants       Each member of the Board who is not an employee of Baxter or
any of its subsidiaries shall participate in the Plan (a “Participant”).   3.  
Restricted Stock

  3.1   On the date of Baxter’s annual meeting of stockholders (the “Annual
Meeting”) in each year beginning with the Annual Meeting on May 6, 2003, and
subject to availability of shares of Common Stock under the Program, each
Participant upon completion of the Annual Meeting shall, automatically and
without necessity of any action by the Board or any committee thereof, receive
the number of shares of Restricted Stock equal to the quotient of (A) $60,000
divided by (B) the Fair Market Value of a share of Common Stock on the date of
grant (rounded to the nearest whole number which is a multiple of ten) (the
“Annual Restricted Stock Grant Amount”).     3.2   Each Participant elected or
appointed on a date other than the date of an Annual Meeting shall, on the date
of such election or appointment and automatically and without necessity of any
action by the Board or any committee thereof, receive the number of shares of
Restricted Stock equal to the product of (A) the Annual Restricted Stock Grant
Amount (as defined in Section 3.1, subject to adjustment in accordance with the
Program) for the Restricted Stock awarded on the date of the immediately
preceding Annual Meeting, multiplied by (B) the quotient of (i) the number of
full calendar months before the next Annual Meeting divided by (ii) 12 (rounded
to the nearest whole number which is a multiple of ten). The number of shares of
Restricted Stock granted under this Section 3.2 shall not exceed the number
available under the Program on the date of grant.

 

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  3.3   Restricted Stock may not be sold, transferred, assigned, pledged,
hypothecated or otherwise encumbered or disposed of, whether voluntarily,
involuntarily or by operation of law, until vested pursuant to the terms hereof.
    3.4   Subject to Section 11.10 of the Program and except as expressly
provided in Sections 3.6 and 3.7, all shares of Restricted Stock shall vest on
the date of and immediately prior to the next Annual Meeting following the date
of grant.     3.5   Except as provided in Sections 3.6 and 3.7, if a Participant
ceases service as a member of the Board before his or her Restricted Stock
vests, the Participant will forfeit his or her unvested Restricted Stock
immediately upon ceasing service as a member of the Board.     3.6   If a
Participant dies while serving as a member of the Board, his or her unvested
Restricted Stock will not be forfeited and will be fully vested immediately.    
3.7   If a Participant becomes disabled and unable to continue service as a
member of the Board, his or her Restricted Stock will not be forfeited and will,
when the Participant ceases to serve as member of the Board, be fully vested.  
  3.8   Each Participant receiving Restricted Stock shall have all of the rights
of a stockholder with respect to the shares of Restricted Stock during any
period in which the shares of Restricted Stock are subject to forfeiture or
restrictions on transfer, including the right to vote the shares of Restricted
Stock and to receive dividends and other distributions thereon, unless and until
such shares are forfeited pursuant to Section 3.5; provided, however, that a
dividend or other distribution with respect to Restricted Stock (including,
without limitation, a stock dividend or stock split), other than a cash
dividend, shall be delivered to Baxter (and the Participant shall, if requested
by Baxter, execute and return one or more irrevocable stock powers related
thereto) and shall be subject to the same restrictions as the Restricted Stock
with respect to which such dividend or other distribution was made. Cash
dividends paid on the Restricted Stock will be reinvested in shares of Common
Stock, unless the Participant elects otherwise. Common Stock purchased with
reinvested cash dividends shall not be restricted.     3.9   If requested by
Baxter, each Participant receiving Restricted Stock shall enter into an
agreement with Baxter incorporating the terms and conditions of this Plan. A
stock certificate for the shares of Restricted Stock awarded will be issued in
the name of each Participant and deposited, together with a stock power endorsed
in blank by Participant, with Baxter. Each such certificate shall bear a legend
in substantially the following form:

The transferability of this certificate and the shares of Common Stock
represented by it are subject to the terms and conditions (including conditions
of forfeiture) contained in the Baxter International Inc. Non-Employee Director
Compensation Plan

 

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adopted May 6, 2003. A copy of this Plan is available from the Corporate
Secretary of Baxter International Inc.

      Subject to the terms of the Program, after the Restricted Stock vests,
shares of Common Stock free and clear of all restrictions will be delivered to
the Participant (or to the Participant’s legal representative, beneficiary or
heir).

4.   Stock Options

  4.1   On the date of Baxter’s Annual Meeting in each year beginning with the
Annual Meeting on May 6, 2003, and subject to availability of shares of Common
Stock under the Program, upon completion of the Annual Meeting each Participant
shall be granted Stock Options having a value equal to $60,000, to be determined
by the Board or the Compensation Committee of the Board (the “Committee”) based
on a Black-Scholes or other option valuation model in the discretion of the
Board or the Committee (rounded to the nearest whole number which is a multiple
of ten) (the “Annual Stock Option Grant Amount”).     4.2   Each Participant
elected or appointed on a date other than the date of an Annual Meeting shall,
on the date of such election or appointment and automatically and without
necessity of any action by the Board or any committee thereof, be granted a
Stock Option to purchase that number of shares of Common Stock equal to the
product of (A) the Annual Stock Option Grant Amount (as defined in Section 4.1,
subject to adjustment in accordance with the Program) for each Stock Option
granted on the date of the immediately preceding Annual Meeting, multiplied by
(B) the quotient of (i) the number of full calendar months before the next
Annual Meeting divided by (ii) 12 (rounded to the nearest whole number which is
a multiple of ten). The number of shares of Common Stock subject to any Stock
Option granted under this Section 4.2 shall not exceed the number available
under the Program on the date of grant.     4.3   The purchase price for each
share of Common Stock subject to a Stock Option shall be the Fair Market Value
of a share of Common Stock on the date of grant. The terms of each Stock Option
will be as set forth in this Plan and the Program. To the extent that any
provision of the Plan is inconsistent with the Program, the Program shall
control. The Stock Options are not intended to qualify as Incentive Stock
Options within the meaning of Section 422 of the United States Internal Revenue
Code.     4.4   Subject to Section 11.10 of the Program and except as expressly
provided in Sections 4.8, 4.9 and 4.10, Stock Options shall first become
exercisable on the date of and immediately prior to the next Annual Meeting
following the date of grant.     4.5   After a Stock Option becomes exercisable
and until it expires, it may be exercised in whole or in part, in the manner
specified by the Company. Under no circumstances may a Stock Option be exercised
after it has expired. Shares of Common Stock may be used to pay the purchase
price for shares of Common Stock to be acquired

 

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      upon exercise of a Stock Option or fulfill any tax withholding obligation,
subject to any requirements or restrictions specified by the Company.     4.6  
Except as provided in Sections 4.8, 4.9 and 4.10, if a Participant ceases
service as a member of the Board before his or her Stock Option becomes
exercisable, the Stock Option will expire when the Participant ceases service as
a member of the Board.     4.7   If a Participant ceases service as a member of
the Board after his or her Stock Option becomes exercisable, the Stock Option
will not expire but will remain exercisable. Subject to Sections 4.8, 4.9, 4.10
and 4.11, the Stock Option will expire three months after the Participant ceases
service as a member of the Board, unless the Participant dies or becomes
disabled during such three month period in which case the Stock Option will
expire on the first anniversary of the date the Participant ceased serving as a
member of the Board.     4.8   If a Participant dies while serving as a member
of the Board, his or her Stock Option will not expire and will remain, or
immediately become, fully exercisable, as the case may be. Subject to
Sections 4.10 and 4.11, the Stock Option will expire on the first anniversary of
the Participant’s death.     4.9   If a Participant becomes disabled and unable
to continue service as a member of the Board, his or her Stock Option will not
expire and will remain, or when the Participant ceases to serve as member of the
Board become, fully exercisable, as the case may be. Subject to Sections 4.10
and 4.11, the Stock Option will expire on the first anniversary of the date the
Participant ceases service as a member of the Board.     4.10   If a Participant
who has served as a member of the Board for a continuous period of at least ten
years or who is at least 72 years of age ceases to serve as a member of the
Board (including without limitation by reason of death or disability), his or
her Stock Option will not expire and will remain, or when the Participant ceases
to serve as member of the Board become, fully exercisable, as the case may be.
Subject to Section 4.11, the Stock Option will expire on the fifth anniversary
of the date the Participant ceases service as a member of the Board.     4.11  
Stock Options that have not previously expired will expire at the close of
business on the tenth anniversary of the date of grant. If a Stock Option would
expire on a date that is not a Business Day, it will expire at the close of
business on the last Business Day preceding that date. A “Business Day” is any
day on which the Common Stock is traded on the New York Stock Exchange.     4.12
  An exercisable Stock Option may only be exercised by the Participant, his or
her legal representative, or a person to whom the Participant’s rights in the
Stock Option are transferred by will or the laws of descent and distribution or
in accordance with rules and procedures established by the Committee.

 

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5.   Cash Compensation

  5.1   Baxter shall pay each Participant a meeting fee of $1,000 for each
meeting of the Board or any committee thereof attended, and a Participant acting
as the chairperson of any meeting of a committee of the Board shall receive an
additional $1,000 for each meeting chaired by him or her. Fees shall be paid
quarterly in arrears and are payable if the Participant attends in person, by
conference telephone, or by any other means permitted by the Delaware General
Corporation Law and Baxter’s Bylaws.     5.2   Baxter shall pay each Participant
a total annual cash retainer of $45,000 per calendar year (“Annual Cash
Retainer”). The Annual Cash Retainer shall be paid quarterly in arrears. For
purposes of determining the amount of such quarterly payment, a Participant must
be a member of the Board on or prior to the 15th day of a month in order to be
entitled to receive payment of the Annual Cash Retainer with respect to that
month.     5.3   Participants shall be eligible to defer payment of cash
compensation otherwise payable under this Section 5 pursuant to the terms and
conditions of the Baxter Non-Employee Director Deferred Compensation Plan.

6.   Availability of Shares       If on any grant date, the number of shares of
Common Stock which would otherwise be granted in the form of Restricted Stock or
subject to Stock Options granted under the Plan shall exceed the number of
shares of Common Stock then remaining available under the Program, the available
shares shall be allocated among the Stock Options and Restricted Stock to be
granted Participants in proportion to the number of shares subject to Stock
Options and shares of Restricted Stock that Participants would otherwise be
entitled to receive, and allocated evenly between Restricted Stock and Stock
Options.   7.   General Provisions

  7.1   Subject to the limitations contained in Section 11.9 of the Program, the
Board or the Committee may, at any time and in any manner, amend, suspend, or
terminate the Plan or any Stock Option outstanding under the Plan.     7.2  
Participation in the Plan does not give any Participant any right to continue as
a member of the Board for any period of time or any right or claim to any
benefit unless such right or claim has specifically accrued hereunder.

 

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Amendment No. 1
to
Baxter International Inc.
Non-Employee Director Compensation Plan
     Effective as of May 4, 2004, the Baxter International Inc. Non-Employee
Director Compensation Plan is amended to add the following subsection 4.13 to
read in its entirety as follows:

4.13   The Board or the Committee may, in its sole discretion and without
receiving permission from any Participant, substitute stock appreciation rights
(“SARs”) for any or all outstanding Stock Options granted on or after May 4,
2004. Upon the grant of substitute SARs, the related Stock Options replaced by
the substitute SARs shall be cancelled. The grant price of the substitute SAR
shall be equal to the Option Price of the related Stock Option, the term of the
substitute SAR shall not exceed the term of the related Stock Option, and the
terms and conditions applicable to the substitute SAR shall otherwise be
substantially the same as those applicable to the related Stock Option replaced
by the substitute SAR.

Amendment No. 2
to
Baxter International Inc.
Non-Employee Director Compensation Plan
     Effective as of July 26, 2005, subsection 5.2 of the Baxter International
Inc. Non-Employee Director Compensation Plan is amended to read in its entirety
as follows:

5.2   Baxter shall pay each Participant a total annual cash retainer of $45,000
per calendar year (“Annual Cash Retainer”). Baxter shall pay an additional
annual cash retainer of $25,000 per calendar year to the Lead Director (“Lead
Director Retainer”). Both the Annual Cash Retainer and Lead Director Retainer
shall be paid quarterly in arrears. For purposes of determining the amount of
such quarterly payment(s), a Participant and/or the Lead Director must be a
member of the Board on or prior to the 15th day of a month in order to be
entitled to receive such payment(s) with respect to that month.

 

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Amendment No. 3
to
Baxter International Inc.
Non-Employee Director Compensation Plan
     Effective as of January 1, 2007, the Baxter International Inc. Non-Employee
Director Compensation Plan (the “Plan”) is amended as follows:

  1.   Section 3 shall be amended to read in its entirety as follows:

  3.   Restricted Stock Units     3.1   On the date of Baxter’s annual meeting
of stockholders (the “Annual Meeting”) in each year beginning with the Annual
Meeting held in May 2007, and subject to availability of shares of Common Stock
under the Program, each Participant upon completion of the Annual Meeting shall,
automatically and without necessity of any action by the Board or any committee
thereof, receive the number of Restricted Stock Units equal to the quotient of
(A) $60,000 divided by (B) the Fair Market Value of a share of Common Stock on
the date of grant (rounded to the nearest whole number which is a multiple of
ten) (the “Annual Restricted Stock Unit Grant Amount”).     3.2   Each
Participant elected or appointed on a date other than the date of an Annual
Meeting shall, on the date of such election or appointment and automatically and
without necessity of any action by the Board or any committee thereof, receive
the number of Restricted Stock Units equal to the product of (A) the Annual
Restricted Stock Unit Grant Amount (as defined in Section 3.1, subject to
adjustment in accordance with the Program) for the Restricted Stock Units
awarded on the date of the immediately preceding Annual Meeting, multiplied by
(B) the quotient of (i) the number of full calendar months before the next
Annual Meeting divided by (ii) 12 (rounded to the nearest whole number which is
a multiple of ten). The number of Restricted Stock Units granted under this
Section 3.2 shall not exceed the number available under the Program on the date
of grant.     3.3   Restricted Stock Units may not be sold, transferred,
assigned, pledged, hypothecated or otherwise encumbered or disposed of, whether
voluntarily, involuntarily or by operation of law.

 

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  3.4   Subject to Section 11.10 of the Program and except as expressly provided
in Sections 3.6 and 3.7, all Restricted Stock Units shall vest on the date of
and immediately prior to the next Annual Meeting following the date of grant.  
  3.5   Except as provided in Sections 3.6 and 3.7, if a Participant ceases
service as a member of the Board before his or her Restricted Stock Units vest,
the Participant will forfeit his or her unvested Restricted Stock Units
immediately upon ceasing service as a member of the Board.     3.6   If a
Participant dies while serving as a member of the Board, his or her unvested
Restricted Stock Units will not be forfeited and will be fully vested
immediately.     3.7   If a Participant becomes disabled and unable to continue
service as a member of the Board, his or her Restricted Stock Units will not be
forfeited and will, when the Participant ceases to serve as member of the Board,
be fully vested.     3.8   No Participant receiving Restricted Stock Units shall
have the rights of a stockholder with respect to those shares of Common Stock
underlying the Restricted Stock Units. Participants shall not be permitted to
vote the Restricted Stock Units. Participants shall be permitted to receive cash
payments equal to the dividends and distributions paid on shares of stock to the
same extent as if each Restricted Stock Unit was a share of stock, and those
shares were not subject to the restrictions imposed by this Plan; provided,
however, that no dividends or distributions shall be payable to or for the
benefit of the Participant with respect to the record dates for such dividends
or distributions occurring on or after the date, if any, on which the
Participant has forfeited the Restricted Stock Units. Cash dividend and
distribution equivalents paid on those shares of Common Stock underlying the
Restricted Stock Units pursuant hereto shall be reinvested in additional
Restricted Stock Units.     3.9   Participants shall be eligible to defer
payment and taxation of those shares of Common Stock underlying the Restricted
Stock Units otherwise payable under this Section 3 pursuant to the terms and
conditions of the Baxter Directors' Deferred Compensation Plan.

 

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  3.10   If requested by Baxter, each Participant receiving Restricted Stock
Units shall enter into an agreement with Baxter incorporating the terms and
conditions of this Plan. Subject to the terms of the Program, after the
Restricted Stock Units vest, shares of Common Stock free and clear of all
restrictions will be delivered to the Participant (or to the Participant’s legal
representative, beneficiary or heir).

  2.   Subsection 5.1 of the Plan is amended to read in its entirety as follows:

  5.1   Baxter shall pay each Participant a meeting fee of $1,500 for each
meeting of the Board or any committee thereof attended, and a Participant acting
as the chairperson of any meeting of a committee of the Board shall receive an
additional $1,500 for each meeting chaired by him or her. Fees shall be paid
quarterly in arrears and are payable if the Participant attends in person, by
conference telephone, or by any other means permitted by the Delaware General
Corporation Law and Baxter’s Bylaws, as amended.

  3.   Subsection 5.2 of the Plan is amended to read in its entirety as follows:

  5.2   Baxter shall pay each Participant a total annual cash retainer of
$50,000 per calendar year (“Annual Cash Retainer”). Baxter shall pay an
additional annual cash retainer of $25,000 per calendar year to the Lead
Director (“Lead Director Retainer”). Both the Annual Cash Retainer and Lead
Director Retainer shall be paid quarterly in arrears. For purposes of
determining the amount of such quarterly payment(s), a Participant and/or the
Lead Director must be a member of the Board on or prior to the 15th day of a
month in order to be entitled to receive such payment(s) with respect to that
month.

  4.   Section 6 of the Plan is amended to read in its entirety as follows:

  6.   Availability of Shares

      If on any grant date, the number of shares of Common Stock which would
otherwise be granted in the form of Restricted Stock Units or subject to Stock
Options granted under the Plan shall exceed the number of shares of Common Stock
then remaining available under the Program, the available shares shall be
allocated among the Stock Options and Restricted Stock Units to be granted
Participants in proportion to the number of shares subject to Stock Options and
Restricted Stock Units that Participants would

 

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      otherwise be entitled to receive, and allocated evenly between Restricted
Stock Units and Stock Options.