EX-10.19






Exhibit 10.19




Baxter International Inc. And Subsidiaries



Deferred Compensation Plan




(Amended and restated effective January 1, 2009)




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	Table of Contents
	 	 	1	 
	 
	 	 	 	 
	Article I Purpose, Effective Date, Employer
	 	 	1	 
	1.1 Purpose
	 	 	1	 
	1.2 Effective Date
	 	 	1	 
	1.3 Employer
	 	 	1	 
	 
	 	 	 	 
	Article II Definitions
	 	 	2	 
	2.1 Accounts
	 	 	2	 
	2.2 Administrative Committee
	 	 	2	 
	2.3 Beneficiary
	 	 	2	 
	2.4 Bonus
	 	 	2	 
	2.5 Bonus Deferral
	 	 	2	 
	2.6 Code
	 	 	2	 
	2.7 Compensation
	 	 	2	 
	2.8 Compensation Committee
	 	 	2	 
	2.9 Deferral Election Form
	 	 	2	 
	2.10 Distribution Election Form
	 	 	2	 
	2.11 Eligible Employee
	 	 	3	 
	2.12 Employer
	 	 	3	 
	2.13 Employer Non-Matching Contribution
	 	 	3	 
	2.14 Excess Matching Contribution
	 	 	3	 
	2.15 Matching Contribution
	 	 	4	 
	2.16 Participant
	 	 	4	 
	2.17 Pay Deferral Contribution
	 	 	4	 
	2.18 Plan Year
	 	 	4	 
	2.19 Section 409A
	 	 	4	 
	2.20 Termination of Employment
	 	 	4	 
	2.21 Unforeseeable Emergency
	 	 	5	 
	2.22 Vesting
	 	 	5	 
	 
	 	 	 	 
	Article III Eligibility for Contributions and Deferrals
	 	 	6	 
	3.1 Eligibility for Excess Matching Contribution
	 	 	6	 
	3.2 Bonus Deferral Elections
	 	 	6	 
	3.3 Pay Deferral Elections
	 	 	7	 
	3.4 Somatogen Acquisition Deferral Election
	 	 	7	 
	3.5 Discretionary Contributions
	 	 	8	 
	3.6 Employer Non-Matching Contribution
	 	 	8	 
	3.7 Contributions Following Military Service
	 	 	8	 
	 
	 	 	 	 
	Article IV Crediting of Accounts
	 	 	9	 
	4.1 Crediting of Accounts
	 	 	9	 
	4.2 Earnings
	 	 	9	 
	4.3 Account Statements
	 	 	10	 






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	4.4 Vesting
	 	 	10	 
	 
	 	 	 	 
	Article V Distribution of Benefits
	 	 	11	 
	5.1 Distribution of Benefits
	 	 	11	 
	5.2 Distribution
	 	 	11	 
	5.3 Effect of Payment
	 	 	14	 
	5.4 Taxation of Plan Benefits
	 	 	14	 
	5.5 Withholding and Payroll Taxes
	 	 	14	 
	5.6 Distribution Due to Unforeseeable Emergency
	 	 	14	 
	5.7 Distribution Due to Inclusion in Taxable Income
	 	 	15	 
	5.8 Distribution of De Minimis Amounts
	 	 	15	 
	 
	 	 	 	 
	Article VI Beneficiary Designation
	 	 	16	 
	6.1 Beneficiary Designation
	 	 	16	 
	6.2 Amendments to Beneficiary Designation
	 	 	16	 
	6.3 No Beneficiary Designation
	 	 	16	 
	6.4 Form of Payment to Beneficiary
	 	 	16	 
	 
	 	 	 	 
	Article VII Administration
	 	 	17	 
	7.1 Administrative Committee
	 	 	17	 
	7.2 Administrative Committee Powers
	 	 	17	 
	7.3 Effect of Administrative Committee Decisions
	 	 	18	 
	7.4 Claims Procedure
	 	 	18	 
	7.5 Action by Administrative Committee
	 	 	19	 
	7.6 Indemnity
	 	 	20	 
	 
	 	 	 	 
	Article VIII Amendment and Termination of Plan
	 	 	21	 
	8.1 Amendment
	 	 	21	 
	8.2 Right to Terminate
	 	 	22	 
	8.3 Payment at Termination
	 	 	22	 
	 
	 	 	 	 
	Article IX Miscellaneous
	 	 	23	 
	9.1 Unfunded Plan
	 	 	23	 
	9.2 Unsecured General Creditor
	 	 	23	 
	9.3 Nonassignability
	 	 	23	 
	9.4 Not a Contract of Employment
	 	 	23	 
	9.5 Protective Provisions
	 	 	23	 
	9.6 Governing Law
	 	 	24	 
	9.7 Severability
	 	 	24	 
	9.8 Notice
	 	 	24	 
	9.9 Successors
	 	 	24	 
	9.10 Action by Baxter
	 	 	24	 
	9.11 Effect on Benefit Plans
	 	 	24	 
	9.12 Participant Litigation
	 	 	24	 






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BAXTER
INTERNATIONAL INC. AND SUBSIDIARIES 
DEFERRED COMPENSATION PLAN




(Amended and Restated Effective January 1, 2009)


ARTICLE I — PURPOSE, EFFECTIVE DATE, EMPLOYER




1.1 Purpose.



The Baxter International Inc. and Subsidiaries Deferred Compensation Plan (the “Plan”) has
been adopted by Baxter International Inc. (“Baxter”). The Plan is intended to be an unfunded
arrangement to provide deferred compensation for the benefit of a select group of management and
highly compensated employees. The Plan is designed to enable eligible participants to defer
compensation and receive matching contributions under the provisions of the Baxter International
Inc. and Subsidiaries Incentive Investment Plan (“IIP”), a tax-qualified defined contribution plan,
in excess of the limitations imposed by the Internal Revenue Code (“Code”). Baxter amended and
restated the Plan effective January 1, 1998, in part to combine the Plan and the Baxter
International Inc. and Subsidiaries Incentive Investment Excess Plan, and amended and restated the
Plan again effective January 1, 2002, January 1, 2005, and January 1, 2007. The Plan is hereby
further amended and restated effective January 1, 2009, in order to comply with the final
regulations issued by the Internal Revenue Service pursuant to Section 409A of the Code and to make
certain other changes. Capitalized terms not defined in this Plan are deemed to have the meaning
given them in the IIP.




1.2 Effective Date.



The effective date of this restatement is January 1, 2009, except as otherwise provided
herein; provided that any provision of the Plan that is required to be effective as of an earlier
in order to comply with Section 409A of the Code shall be effective as of such date.




1.3 Employer.



The Plan is adopted for the benefit of a select group of management or highly compensated
employees of Baxter or of any subsidiaries or affiliates of Baxter, as set forth below. The Plan
may be adopted by any subsidiaries or affiliates of Baxter with the consent of the Administrative
Committee. Participating Employers are listed on Appendix A as attached and updated from time to
time.




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ARTICLE II — DEFINITIONS




2.1 Accounts.



Accounts means the sum of the Participant’s Excess Matching Contribution Account balance,
Bonus Deferral Account balance, Pay Deferral Account balance, and Deferred Compensation Account
balance.




2.2 Administrative Committee.



For purposes of the Plan, Administrative Committee has the same meaning as the Administrative
Committee in the IIP.




2.3 Beneficiary.



A Participant’s Beneficiary, as defined in Article VI, is the Beneficiary designated to
receive the Participant’s Accounts, if any, from the Plan, upon the death of the Participant.




2.4 Bonus.



The term Bonus means those bonuses that are included in the definition of Compensation in the
IIP and also includes any other bonus which is approved by the Administrative Committee and listed
on Attachment A to this Plan. Attachment A may be updated from time to time to accurately reflect
the approved bonuses for purpose of this definition.




2.5 Bonus Deferral.



The Bonus Deferral is the amount of the Participant’s Bonus which the Participant elected to
defer and contribute to the Plan which, but for such election, would have otherwise been paid to
him/her.




2.6 Code.



The Code shall mean the Internal Revenue Code of 1986, as amended.




2.7 Compensation.



For purposes of the Plan, Compensation has the same meaning as Compensation in the IIP without
regard to Section 401(a)(17) of the Code, except that the Bonuses deferred under the Plan are
included in Compensation in the Plan Year in which such amounts would be paid if they were not
deferred and not in the Plan Year in which such amounts are actually paid. In no event shall
Compensation include any amount payable after a Participant has terminated employment.




2.8 Compensation Committee.



The Compensation Committee of the Board of Directors of Baxter.




2.9 Deferral Election Form.



The form which a Participant must complete and return to the Administrative Committee or its
designee, in accordance with the rules and procedures as may be established by the Administrative
Committee, in order to elect to defer a portion of his or her Bonus into the Plan and to designate
his or her Pay Deferral Election.




2.10 Distribution Election Form.



The form which a Participant must complete and return to the Administrative Committee or its
designee, in accordance with the rules and procedures as may be established by the Administrative
Committee. This form is to be used by both (a) Participants who are not eligible to defer a
portion of their Bonus or make a Pay





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Deferral Contribution to the Plan; and (b) Participants who
are electing distributions with respect to a Deferred Compensation Account.




2.11 Eligible Employee.



For any Plan Year, an Eligible Employee is anyone who:





	 	(a)	 	is a Corporate Officer of Baxter, a member of Baxter’s Global
Leadership Team and/or is participant in the Baxter International Inc. Long
Term Incentive Plan for the Plan Year to which deferrals relate;
	 
	 	(b)	 	is a former participant in the Baxter International Inc. Long
Term Incentive Plan;
	 
	 	(c)	 	for Plan Years prior to 2005, was a participant in the IIP
whose Matching Contributions to the IIP for the Plan Year were limited because
of the application of the Code, provided he or she met the eligibility rules
under Section 3.1 as in effect for such Plan Year;
	 
	 	(d)	 	solely for purposes of Section 3.5, is designated by the
Administrative Committee to be a Participant in the Plan and eligible to
receive discretionary benefits under Section 3.5 of the Plan for the Plan Year,
subject to the terms and conditions imposed by the Administrative Committee in
accordance with Section 3.5; or
	 
	 	(e)	 	for Plan Years subsequent to 2006, and solely for purposes of
Section 3.6, is eligible to receive an Employer Non-Matching Contribution into
the IIP for the Plan Year and has Compensation for the Plan Year in excess of
the limitations of Section 401(a)(17) of the Code. An Employee who has never
previously been an Eligible Employee shall be treated as becoming an Eligible
Employee on the last day of the first Plan Year in which he meets the
requirements of this paragraph (d).





2.12 Employer.



The term Employer means Baxter and any entity that is a member of a controlled group or
affiliated service group that includes Baxter, or is otherwise required to be considered as a
single employer with Baxter under Section 414 of the Code. A “Participating Employer” is an
Employer that has adopted the Plan for the benefit of its Eligible Employees as provided in Section
1.3, and a Non-Participating Employer is an Employer that is not a Participating Employer.




2.13 Employer Non-Matching Contribution.



The term Employer Non-Matching Contribution has the same meaning in the Plan as it does in the
IIP.




2.14 Excess Matching Contribution.



The Excess Matching Contribution is the difference between the Matching Contributions
allocated to a Participant’s IIP Account during the Plan Year and the amount that would have been
allocated if the limitations of Sections 415, 401(k), 402(g), 401(m) or 401(a)(17) of the Code,
were disregarded.





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2.15 Matching Contribution.



The term Matching Contribution has the same meaning in the Plan as it does in the IIP.




2.16 Participant.



A Participant is any Eligible Employee who has an Account balance in the Plan.




2.17 Pay Deferral Contribution.



The term Pay Deferral Contribution has the same meaning as Pay Deferral Contribution in the
IIP. The Pay Deferral Contribution is the amount of the Participant’s Compensation, which the
Participant elected to defer into the Plan which, but for such election, would have otherwise been
paid to him/her.




2.18 Plan Year.



The Plan Year is the calendar year.




2.19 Section 409A.



Section 409A means Section 409A of the Code, as enacted by the American Jobs Creation Act of
2004 and as interpreted by Treasury Regulations or other authority issued thereunder.




2.20 Termination of Employment.



For purposes of the Plan, Termination of Employment has the same meaning as Termination of
Employment in the IIP; provided that for purposes of determining when a Participant’s benefit
becomes payable, Termination of Employment shall not be considered to have occurred until the
Participant incurs a separation from service as defined in Treasury
Regulations issued pursuant to Section 409A. The following rules are intended to implement
the requirements of Section 409A, and may be adjusted by the Administrator as required to comply
with any guidance issued under Section 409A:





	 	(a)	 	The Participant shall not be considered to have separated from service so long
as the Participant is on military leave, sick leave, or other bona fide leave of
absence if the period of such leave does not exceed six months, or if longer, so long
as the Participant retains a right to reemployment with a Participating Employer under
an applicable statute or by contract.
	 
	 	(b)	 	Regardless of whether his employment has been formally terminated, the
Participant will be considered to have separated from service as of the date it is
reasonably anticipated that no further services will be performed by the Participant
for any Participating Employer, or that the level of bona fide services the Participant
will perform after such date will permanently decrease to no more than 20 percent of
the average level of bona fide services performed over the immediately preceding
36-month period (or the full period of employment if the Participant has been employed
for less than 36 months). For purposes of the preceding test, during any paid leave of
absence the Participant shall be considered to have been performing services at the
level commensurate with the amount of compensation received, and unpaid leaves of
absence shall be disregarded.
	 
	 	(c)	 	For purposes of determining whether the Participant has separated from service,
all services provided for any Employer, or for any entity that is a member of the
Controlled Group, shall be taken into account, whether provided as an employee 




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	 	 	 	or as a
consultant or other independent contractor; provided that the Participant shall not be
considered to have not separated from service solely by reason of service as a
non-employee director of the Corporation or any other such entity. Solely for purposes
of this Section 2.19, the term “Controlled Group” shall be modified by substituting “50
percent” for “80 percent” for all purposes of section 414(b) and (c) of the Code (and
Section 1563 to the extent incorporated therein)


	 	(d)	 	A Participant who is employed by a Participating Employer, and continues to be
employed by the Participating Employer following a stock sale, spin-off, or other
transaction that causes the Participant’s employer to cease to be a member of the
Controlled Group, shall not be considered to have incurred a Termination of Employment
as a result of such transaction. A Participant who ceases to be employed by the
Corporation or any member of the Controlled Group as a result of a sale of
substantially all of the assets constituting a division, facility, or separate line of
business, shall be considered to have incurred a Termination of Employment unless the
Corporation (or Participating Employer selling such assets) and the purchaser agree in
writing, not later than the closing date of such transaction, that all Participants
affected by such transaction shall not be considered to have incurred a Termination of
Employment, and that the purchaser
agrees to assume the obligation for payment of the Benefits of all such Participants
in accordance with the Plan.





2.21 Unforeseeable Emergency.



A severe financial hardship resulting from a sudden or unexpected illness or accident of the
Participant or one of his or her dependents, loss of the Participant’s property due to casualty or
similar extraordinary and unforeseeable circumstances arising as a result of one or more recent
events beyond the control of the Participant, as determined by the Administrative Committee.




2.22 Vesting.



For purposes of the Plan, Vesting has the same meaning as Vesting in the IIP.




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ARTICLE III — ELIGIBILITY FOR CONTRIBUTIONS AND DEFERRALS




3.1 Excess Matching Contributions.



The Excess Matching Contributions Account of an Eligible Employee who makes either a Bonus
Deferral or Pay Deferral Election for a Plan Year shall be credited with Excess Matching
Contributions equal to the lesser of the total amount deferred pursuant to Sections 3.2 and 3.3
(not including any Supplemental Pay Deferral) for the Plan Year or three and one half percent
(3.5%) of the excess of the Participant’s total Compensation for the Plan Year over the portion of
the Participant’s Compensation taken into account under the IIP for the Plan Year. Prior to
January 1, 2005, an Employee was an Eligible Employee if the Employee’s Matching Contributions
under the IIP were less than 3% of the Employee’s Compensation for the Plan Year, regardless of
whether the Employee were eligible to make Bonus Deferral and/or Pay Deferral Elections. A
Participant who was an Eligible Employee solely by reason of this Section 3.1 for one or more Plan
Years prior to 2005 shall continue to be a Participant with respect to his Excess Matching
Contribution Account until it is distributed.




3.2 Bonus Deferral Elections.



An Eligible Employee for a Plan Year may elect to defer all or a portion of his or her Bonus
for the Plan Year through the Plan until his or her Termination of Employment, or such other time
as specified on his or her Deferral Election Form, by completing a Deferral Election Form in
accordance with applicable rules and procedures established by the Administrative Committee. A
Participant may elect to defer up to 100% of his or her Bonus, in whole percentages. Beginning
January 1 of the year to which the Deferral Election Form applies, the Deferral Election Form is
irrevocable, except as provided in Section 5.6. The Deferral Election Form must be filed in
accordance with the rules established by the Administrative Committee, at the time set forth below:





	 	(a)	 	Deferral Election Forms must be filed prior before January 1 of
the Plan Year in which the Bonus is earned, except as hereinafter provided.
	 
	 	(b)	 	The Administrative Committee may permit an employee who becomes
an Eligible Employee for the first time during a Plan Year to make an election
to defer his or her Bonus for such Plan Year not more than 30 days after
becoming an Eligible Employee, which Bonus Deferral Election shall apply only
to the portion of the Bonus earned after the election is made. An Eligible
Employee shall not be eligible to make the election within the first 30 days
after becoming an Eligible Employee if the employee has been a participant
(other than through accrual of earnings on amounts previously deferred) in any
account balance deferred compensation arrangement sponsored by any Employer
during the 24 month period prior to the date he or she becomes an Eligible
Employee, unless the employee received a distribution of his or her entire
balance in such plan during such 24 month period, and immediately prior to such
distribution was not eligible to continue to participate in such plan.
	 
	 	(c)	 	The Administrative Committee may also permit Eligible Employees
to make an election to defer their Bonuses not later than six months prior to




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	 	 	 	the end of the Bonus determination period, provided that the Administrative
Committee determines that the Bonus satisfies the requirements for performance
based compensation under Section 409A of the Code.





3.3 Pay Deferral Elections.



An Eligible Employee may make a Pay Deferral Election under the Plan if he or she elects to
defer a portion of his or her Compensation under the IIP for a Plan Year, and the amount of
Compensation that he or she has elected to defer exceeds the amount that is permitted to be
deferred under the IIP by reason of the annual contribution limit under Section 415 or 402(g) of
the Code (as increased, if applicable, by the limit on catch-up contributions pursuant to Section
414(v) of the Code), or the fact that the Eligible Employee’s Compensation exceeds the annual limit
under Section 401(a)(17) of the Code, A Pay Deferral Election shall be made by the last day of the
Plan Year preceding the Plan Year to which it relates, in accordance with applicable rules and
procedures established by the Administrative Committee, and shall thereafter be irrevocable (except
as provided in Section 5.6), except that the Administrative Committee may permit an employee who
first becomes an Eligible Employee during a Plan Year, and who meets the requirements of Section
3.2(b), to make an Pay Deferral Election not more than 30 days after becoming an Eligible Employee,
which Pay Deferral Election shall apply prospectively only. If an Eligible Employee makes a Pay
Deferral Election for a Plan Year, then all amounts that the Eligible Employee elected to defer
under the IIP (based upon the Eligible Employee’s IIP deferral election at the beginning of the
Plan Year, which cannot be changed during the Plan Year) that exceed one or more of the limits
described above shall instead be credited to his or her Account in this Plan, commencing with the
first payment of Compensation that would cause the amount deferred to exceed such limits.
Notwithstanding the foregoing provisions of this Section 3.3, the Administrative Committee, in its
sole discretion, may permit a Participant to defer a percentage of his or her Compensation to the
Plan for any Plan Year that exceeds the percentage that the Participant elects to defer under the
IIP for such Plan Year (a “Supplemental Pay Deferral”), provided that the Supplemental Pay Deferral
election is made when the Participant is otherwise eligible to make a Pay Deferral Election as
described above and is thereafter irrevocable (except as provided in Section 5.6). To the extent
that the Administrative Committee exercises its discretionary authority under the prior sentence,
such exercise shall be reflected in Appendix B to the Plan which shall identify each Participant
designated as eligible to make Supplemental Pay Deferrals, specify the Plan Year(s) for which
Supplemental Pay Deferrals may be made, and reflect any other conditions and limitations applicable
with respect to such Supplemental Pay Deferrals. In no event shall Supplemental Pay Deferrals be
eligible for Excess Matching Contributions.




3.4 Somatogen Acquisition Deferral Election.



Any former employee of Somatogen, Inc. who became an employee of Baxter International Inc. as
of the closing date of the merger agreement between Baxter and Somatogen and who completed a
Special Deferral Enrollment Form shall have such form recognized as a
valid election under the Plan. Deferrals authorized under this section shall be treated as
deferrals authorized under Section 3.2 for purposes of accounting and distribution.




3.5 Discretionary Contributions.



The Administrative Committee may, in its sole discretion, specify such additional amounts in
the form of employer contributions to be credited


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 to the Account of a Participant or another
employee who is a member of a select group of management and highly compensated employees, subject
to such terms and conditions as the Administrative Committee may establish. To the extent that the
Administrative Committee exercises its discretionary authority under this Section 3.5, such
exercise shall be reflected in Appendix C to the Plan, which shall identify each Participant
credited with such discretionary employer contributions, specify the Plan Year(s) for which
contributions relate, and reflect any other limitations applicable with respect to such
discretionary contributions, including any applicable Vesting requirements. Discretionary employer
contributions authorized under this section shall be treated as deferrals authorized under Section
3.2 for purposes of accounting and distribution.




3.6 Employer Non-Matching Contribution.



For any Plan Year after 2006, an Eligible Employee who (i) is eligible to receive an Employer
Non-Matching Contribution into the IIP for the Plan Year and (ii) has Compensation for the Plan
Year in excess of the limitations of Section 401(a)(17) of the Code, shall receive a contribution
equal to 3% of the Eligible Employee’s Compensation in excess of the limitations of Section
401(a)(17) of the Code.




3.7 Contributions Following Military Service.



A Participant who incurs a Termination of Employment, or a leave of absence, in order to serve
in the armed forces of the United States, who is entitled to re-employment rights under the
Uniformed Services Employment and Reemployment Rights Act (“USERRA”), and who is re-employed during
the period in which such re-employment rights are protected, shall be entitled to increase the
percentage of his or her Compensation subject to a Pay Deferral Election in order to make up the
Pay Deferral Contributions missed during the period of military service, in accordance with rules
established by the Administrative Committee in accordance with USERRA and Section 409A. Such a
Participant shall also be entitled to receive the same amount of Excess Matching Contributions he
or she would have received had the additional Pay Deferral Contributions been made during the
period of military service. A Participant who is otherwise eligible for Employer Non-Matching
Contributions shall be entitled to receive the Employer Non-Matching Contributions he or she would
received had he or she been employed at the same rate of Compensation during the period of military
service, which shall be credited to the Deferred Compensation Account not later than 90 days after
re-employment.




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ARTICLE IV — CREDITING OF ACCOUNTS




4.1 Crediting of Accounts.




          A. Excess Matching Contribution Account. An account equal to the Excess Matching
Contributions, if any, of each Participant made for Plan Years prior to 2002, as adjusted for
investment return under Section 4.2 and distributions under Article V.




          B. Bonus Deferral Account. An account equal to the Bonus Deferrals, if any, of each
Participant made for Plan Years prior to 2002, as adjusted for investment return under Section 4.2
and distributions under Article V.




          C. Pay Deferral Account. An account equal to the Pay Deferral Contributions and Supplemental
Pay Deferrals, if any, of each Participant made for Plan Years prior to 2002, as adjusted for
investment return under Section 4.2 and distributions under Article V.




          D. Deferred Compensation Account. An account equal to the Excess Matching Contributions, Pay
Deferral Contributions, Bonus Deferrals, Supplemental Pay Deferrals and Employer Non-Matching
Contributions made for the 2002 Plan Year and thereafter, as adjusted for investment return under
Section 4.2 and distributions under Article V.




          Notwithstanding the foregoing provisions of this Section 4.1, if elected by the Participant in
accordance with rules established by the Administrative Committee, the Participant may elect to
have his or her Excess Matching Contributions, Pay Deferral Contributions, Bonus Deferrals and
Supplemental Pay Deferrals made for the 2001 Plan Year, if any, credited to his or her Deferred
Compensation Account under paragraph D, instead of to the Excess Matching Contribution Account,
Bonus Deferral Account and Pay Deferral Account described in paragraphs A, B and C.




          Further, effective January 1, 2002, notwithstanding the forgoing provisions of this Section
4.1, if elected by the Participant in accordance with rules established by the Administrative
Committee, the Participant may make a one-time election to have amounts credited to his or her
Excess Matching Contribution Account, Bonus Deferral Account and Pay Deferral Account (including
Supplemental Pay Deferrals) credited to his or her Deferred Compensation Account under paragraph D,
provided however, that such election is made prior to 2002 and such amounts are not scheduled to be
distributed in 2001.




4.2 Earnings.



Each Participant’s Accounts will be adjusted for investment return, on a daily basis, in
accordance with the following provisions of this Section 4.2:




          A. Amounts in a Participant’s Excess Matching Account, Bonus Deferral Account and Pay Deferral
Account will be credited with earnings at a rate determined by the Administrative Committee from
time to time. Until the Administrative Committee determines otherwise, such earnings will be
credited at the same rate as the Stable Income Fund in the IIP.




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          B. Amounts in a Participant’s Deferred Compensation Account shall be adjusted upward or
downward to reflect the investment return that would have been realized had such amounts been
invested in one or more investments selected by the Participant from among the assumed investment
alternatives designated by the Administrative Committee for use under the Plan. Prior to the first
day of each month, or at such other times as the Administrative Committee may permit, Participants
may change the assumed investment alternatives in which their Deferred Compensation Account will be
deemed invested for such Plan Year. Participant elections of assumed investment alternatives shall
be made at the time and in the form determined by the Administrative Committee, and shall be
subject to such other restrictions and limitations as the Administrative Committee shall determine.
In the event that a Participant fails to make an investment election, his or her Deferred
Compensation Account shall be credited with earnings in the same manner as provided in paragraph A
above.




4.3 Account Statements.



Account Statements will be generated effective at such intervals as the Administrative
Committee may determine and transmitted to each Participant as soon as administratively feasible.
Account Statements will reflect all Account activity during the reporting period, including Account
contributions, distributions and earnings credits.




4.4 Vesting.



Subject to Sections 9.1 and 9.2, and any Vesting requirements specified by the Administrative
Committee with respect to Discretionary Contributions, a Participant is always 100% Vested in his
or her Accounts in the Plan at all times; provided, however, that if a Participant who incurs a
Termination of Employment is not 100% Vested in his or her Employer Non-Matching Contribution
Account in the IIP, the portion of his or her Deferred Compensation Account attributable to
Employer Non-Matching Contributions and the earnings thereon shall be forfeited, and no
Participating Employer shall have any obligation to the Participant with respect to such portion.





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ARTICLE V — DISTRIBUTION OF BENEFITS




5.1 Distribution of Benefits.




Subject to Section 5.2, distribution of a Participant’s Accounts, if any, will commence in
accordance with the Participant’s Distribution Election Form or Deferral Election Form as
soon as administratively feasible after the Participant’s Termination of Employment. Any
spousal consent requirements under the IIP will not apply to distributions under the Plan.



Anything else in this Plan to the contrary notwithstanding, effective October 22, 2004, (i) in no
event shall the distribution of any Account be accelerated to a time earlier than which it would
otherwise have been paid, whether by amendment of the Plan, exercise of the Administrative
Committee’s discretion, or otherwise, except as permitted by Treasury Regulations issued pursuant
to Section 409A, and (ii) in the event that the Administrative Committee, in its sole discretion,
determines that any time or form of distribution provided for in the Plan, or the existence of a
right to elect a different time or form of distribution, would cause the Plan to fail to meet the
requirements of Section 409A, or otherwise cause Participants to be subject to any adverse federal
income tax consequences, the Administrative Committee shall amend the Plan to modify or remove the
form of distribution or election right. The distribution restrictions under Section 409A shall
apply to Participant’s entire account balances under the Plan, whether deferred before or after
January 1, 2005. Notwithstanding the foregoing, the Administrative Committee may give Participants
a one-time opportunity to change the time and/or form of payment of their Accounts by a written
irrevocable election made not later than December 31, 2008, subject to such terms and conditions as
the Administrative Committee may require; provided that no such election shall cause any amount to
be paid in 2008 that would otherwise have been paid in a later year, or cause any amount that would
otherwise have been paid in 2008 to be paid in a later year, and such elections shall otherwise
comply with the requirements for transitional relief under IRS Notice 2007-86.



5.2 Distribution.




          A. Deferral Election Form. A Participant’s Excess Matching Contribution Account, Bonus
Deferral Account and Pay Deferral Account will be paid in accordance with the form of payment
designated in the Participant’s Deferral Election Form. The Deferral Election Form shall not be
used to elect forms of distribution with respect to deferrals for Plan Years after 2001 (or 2000,
with respect to a Participant electing to have his or her deferrals credited to the Deferred
Compensation Account for Plan Year 2000 under Section 4.1).




          B. Distribution Election Form — Termination of Employment. A Participant’s Deferred
Compensation Account and, if the Participant is not eligible for Pay Deferrals or Bonus Deferrals,
his or her Excess Matching Contribution Account, will be paid after the Participant’s Termination
of Employment, in accordance with the form of payment designated in such Participant’s Distribution
Election Form. Distribution Election Forms shall be filed in accordance with rules established by
the Administrative Committee, subject to the following:




11









 









	 	(a)	 	Prior to January 1, 2007, only one Distribution Election Form
could be submitted with respect to distribution of a Participant’s Deferred
Compensation Account following Termination of Employment. Any such
Distribution Election Form filed prior to January 1, 2007, shall remain in
effect shall apply to the Participant’s entire Deferred Compensation Account
(and Excess Matching Contribution Account if applicable) balance at his or her
Termination of Employment.
	 
	 	(b)	 	Effective January 1, 2007, a Participant who has not previously
been described in paragraph (c) may submit a Distribution Election Form at the
time he or she first makes a Bonus Deferral or Pay Deferral Election pursuant
to Section 3.2 or 3.3. Except as otherwise provided in subparagraph (c) below,
only one Distribution Election Form shall be filed, which shall apply to the
Participant’s entire Deferred Compensation Account balance at his or her
Termination of Employment. A Distribution Election Form must be filed by the
end of the period for making the Participant’s first Bonus Deferral or Pay
Deferral Election, and if the Participant fails to file a Distribution Election
Form at such time his or her entire Deferred Compensation Account balance shall
be distributed in a lump sum at his or her Termination of Employment, or in
accordance with a Distribution Election Form previously filed pursuant to
subparagraph (c) if applicable.
	 
	 	(c)	 	An Employee who first becomes an Eligible Employee pursuant to
Section 3.1, 3.5, or 3.6 on or after January 1, 2007, and who meets the
requirements of Section 3.2(b), may file a Distribution Election Form not
later than 30 days after his or her first day of eligibility. Except as
provided in the following sentence, only one Distribution Election Form shall
be filed, which shall apply to the Participant’s entire Deferred Compensation
Account balance at his or her Termination of Employment, and if the Participant
fails to file a Distribution Election Form at such time his or her entire
Deferred Compensation Account balance shall be distributed in a lump sum at his
or her Termination of Employment. Notwithstanding the foregoing, if such a
Participant subsequently becomes eligible to make a Bonus Deferral or Pay
Deferral Election, he or she may file a new Distribution Election Form pursuant
to subparagraph (b) above. In such event, the portion of the Participant’s
Deferred Compensation Account that represents amounts credited to the Deferred
Compensation Account under all provisions of Article III beginning with the
first Plan Year to which the Bonus Deferral or Pay Deferral Election applies
(and all earnings thereon) shall be distributed in accordance with such
Distribution Election Form, and the remaining portion of the Deferred
Compensation Account shall continue to be governed by this subparagraph (c).




12









 











          C. Forms of Distribution. The forms of distribution are:





	 	(a)	 	a lump sum payment, or
	 
	 	(b)	 	annual installments of at least 2 years, but
not to exceed 15 years.





If annual installments are elected, the amount of each installment will be equal to the remaining
balance in the Participant’s Account prior to payment of the installment, divided by the remaining
number of installments to be paid (including the installment being calculated).



Except as provided below, effective January 1, 2007, lump sum payments will be paid, and annual
installments will commence, in the first quarter of the Plan Year as specified in the Participant’s
Deferral Election Form or Distribution Election Form (or, if the Distribution Election Form
provides for payments following a Termination of Employment, in the first quarter of the Plan Year
following the Plan Year in which the Termination of Employment occurs). Subsequent installments
will be paid annually in the first quarter of subsequent Plan Years. In the case of installment
payments which commenced prior to January 1, 2007, the installment that would otherwise have been
paid in the third quarter of 2007 shall be paid in the first quarter, and all installments shall
thereafter be paid in the first quarter of subsequent years.



If a Participant does not elect a form of distribution by the time the Deferral Election Form or
the Distribution Election Form is required to be completed, the Participant’s election will default
to a lump sum payment in the first quarter of the Plan Year following the Plan Year in which the
Participant incurs a Termination of Employment.



          D. Special Rules. Notwithstanding the foregoing:





	 	(a)	 	A Participant whose Accounts under the Plan total less than
$50,000 as of the last day of the Plan Year in which he or she incurs a
Termination of Employment will receive lump sum payment of his or her Accounts
in the first quarter of the Plan Year following the Plan Year in which the
Participant incurs a Termination of Employment.
	 
	 	(b)	 	If a Participant who has made a Bonus Deferral election for a
Plan Year incurs a Termination of Employment during the Plan Year, but is still
eligible for a Bonus for the Plan Year, the deferred portion of his or her
Bonus shall be distributed during March of the subsequent year, regardless of
the form of distribution otherwise elected, and shall not be taken into account
in determining whether the Participant’s Account Balance is less than $50,000.
Such amount shall not be credited with any earnings unless paragraph (c)
applies.
	 
	 	(c)	 	Anything else contained herein to the contrary notwithstanding,
in no event shall any payment of a benefit made in connection with the
Termination of Employment of a “specified employee”, as hereinafter defined, be
made until at least six months following such Termination of Employment, and
any amounts that would otherwise have been paid




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	 	 	 	during such six month period shall be accumulated and paid in a lump sum,
without interest, on the first business day following the expiration of such
period. For purposes of this Plan, the term “specified employee shall have
the meaning set forth in Treas. Reg. §1.409A-1(i), using the safe harbor
definition of compensation contained in Treas. Reg. §1.415(c)-2(d)(4)
(compensation required to be reported on Form W-2 plus elective deferrals)
and excluding compensation paid to a nonresident alien that is not
effectively connected with the conduct of a trade or business within the
United States shall be excluded. The status of Participants as specified
employees shall be determined as of December 31 of each year, and if a
Participant is determined to be a specified employee on any December 31, the
restriction of clause (ii) shall apply if and only if he incurs a
termination of employment at any time during the twelve month period
commencing on the following February 1.





5.3 Effect of Payment.




Payment to the person or trust reasonably and in good faith determined by the Administrative
Committee to be the Participant’s Beneficiary will completely discharge any obligations Baxter or
any other Employer may have under the Plan. If a Plan benefit is payable to a minor or a person
declared to be incompetent or to a person the Administrative Committee in good faith believes to be
incompetent or incapable of handling the disposition of property, the Administrative Committee may
direct payment of such Plan benefit to the guardian, legal representative or person having the care
and custody of such minor and such decision by the Administrative Committee is binding on all
parties. The Administrative Committee may initiate whatever action it deems appropriate to ensure
that benefits are properly paid to an appropriate guardian.



The Administrative Committee may require proof of incompetence, minority, incapacity or
guardianship as it may deem appropriate prior to distribution of the Plan benefit. Such
distribution will completely discharge the Administrative Committee and the Employer from all
liability with respect to such benefit.



5.4 Taxation of Plan Benefits.




It is intended that each Participant will be taxed on amounts credited to him or her under the
Plan at the time such amounts are received, and the provisions of the Plan will be interpreted
consistent with that intention.



5.5 Withholding and Payroll Taxes.




Baxter will withhold from payments made hereunder any taxes required to be withheld for the
payment of taxes to the Federal, or any state or local government.



5.6 Distribution Due to Unforeseeable Emergency.




Upon written request of a Participant and the showing of Unforeseeable Emergency, the
Administrative Committee may authorize distribution of all or a portion of the Participant’s
Accounts, and or the acceleration of any installment payments being made from the Plan, but only to
the extent reasonably necessary to relieve the Unforeseeable Emergency, taking into account the tax
imposed on such distribution. In any event, payment may not be made to the extent such
Unforeseeable Emergency is or may be satisfied through reimbursement by insurance or otherwise,
including, but not limited to, liquidation of the Participant’s assets, to the extent that such
liquidation would



14









 







not in and of itself cause severe financial hardship. If a Participant has an
Unforeseeable Emergency, the Participant’s Pay Deferral Election and Bonus Deferral Election, if
any, shall be revoked for the Plan Year (and no subsequent Pay Deferral or Bonus Deferral may be
made for the same Plan Year), and the additional income resulting from such revocation shall be
taken into account in determining the amount of distribution reasonably necessary to relieve the
Unforeseeable Emergency. A Participant shall not be required to take any hardship withdrawal or
loan to which he is entitled under the IIP or any other tax qualified retirement plan as a
condition of receiving a distribution pursuant to this Section 5.6, but if a Participant receives a
hardship withdrawal from the IIP or any other tax-qualified §401(k) plan maintained by an Employer
and the terms of such plan require a suspension of the Participant’s deferrals for six months
following the date of the distribution, then the Participant’s Deferral Elections shall be
permanently revoked with respect to any compensation paid or payable to the Participant during such
six month period.



5.7 Distribution Due to Inclusion in Taxable Income.




In the event that any portion of a Participant’s Account is included in his or her taxable
income prior to distribution pursuant to Section 409A, the amount so included shall be distributed
to the Participant as soon as administratively possible.



5.8 Distribution of De Minimis Amounts.




The Administrative Committee may at any time direct that the entire balance of a
Participant’s Account be distributed to the Participant in full liquidation of his or her
benefit under the Plan; provide that the Participant’s entire account balance in all other
separate account nonqualified deferred compensation plans maintained by any Employer is also
distributed at the same time, and that the total amount so distributed (including all such
other plans) does not exceed the limit in effect under Section 402(g) of the Code at the
time of the distribution.



15









 





ARTICLE VI — BENEFICIARY DESIGNATION




6.1 Beneficiary Designation.




Each Participant has the right to designate one or more persons or trusts as the Participant’s
Beneficiary, primary as well as secondary, to whom benefits under this Plan will be paid in the
event of the Participant’s death prior to complete distribution to the Participant of the benefits
due under the Plan. Each Beneficiary designation will be in a written form prescribed by the
Administrative Committee and will be effective only when filed with the Administrative Committee
during the Participant’s lifetime.



6.2 Amendments to Beneficiary Designation.




Any Beneficiary designation may be changed by a Participant without the consent of any
Beneficiary by the filing of a new Beneficiary designation with the Administrative Committee.
Filing a Beneficiary designation as to any benefits available under the Plan revokes all prior
Beneficiary designations effective as of the date such Beneficiary designation is received by the
Administrative Committee. If a Participant’s Accounts are community property, any Beneficiary
designation will be valid or effective only as permitted under applicable law.



6.3 No Beneficiary Designation.




In the absence of an effective Beneficiary designation, or if all Beneficiaries predecease the
Participant, the Participant’s estate will be the Beneficiary. If a Beneficiary dies after the
Participant and before payment of benefits under this Plan has been completed, and no secondary
Beneficiary has been designated to receive such Beneficiary’s share, the remaining benefits will be
payable to the Beneficiary’s estate.



6.4
Form of Payment to Beneficiary.




The Account of a Participant who dies prior to Termination of Employment shall be paid to
his or her Beneficiary in a single lump sum as soon as administratively feasible following
the date of death, regardless of the form of payment elected by the Participant The Account
of a Participant who dies after Termination of Employment, but before his or her Account has
been fully distributed, shall be distributed in the same manner and at the same time as it
would have been distributed to the Participant, except that the six month delay in
distributions to a specified employee pursuant to the last paragraph of Section 5.2 shall
not apply to the Beneficiary of a specified employee who dies during the six month period
following his or her Termination of Employment.



16









 





ARTICLE VII — ADMINISTRATION




7.1 Administrative Committee.




The Plan is administered by the Administrative Committee, which is the Plan Administrator for
purposes of Section 3(16)(A) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”). Baxter has appointed the members of the Administrative Committee to administer the
Plan. Members of the Administrative Committee may be Participants in the Plan.



7.2 Administrative Committee Powers.




The Administrative Committee has such powers as may be necessary to discharge its duties
hereunder, including, but not by way of limitation, the following powers, rights and duties:




	 	(a)	 	Interpretation of Plan. The Administrative Committee
has the power, right and duty to construe, interpret and enforce the Plan
provisions and to determine all questions arising under the Plan including, but
not by way of limitation, questions of Plan participation, eligibility for Plan
benefits and the rights of employees, Participants, Beneficiaries and other
persons to benefits under the Plan and to determine the amount, manner and time
of payment of any benefits hereunder;
	 
	 	(b)	 	Plan Procedures. The Administrative Committee has the
power, right and duty to adopt procedures, rules, regulations and forms to be
followed by employees, Participants, Beneficiaries and other persons or to be
otherwise utilized in the efficient administration of the Plan which may alter
any procedural provision of the Plan without the necessity of an amendment, and
which procedures may provide for any election or consent to be made (including
without limitation the filing of a Deferral Election Form or Distribution
Election Form), or any other action to be taken (including without limitation
filing claims and requesting review of denied claims), by electronic mail,
internet website, telephone or voice response system or other electronic method
to the extent permitted by applicable law;
	 
	 	(c)	 	Benefit Determinations. The Administrative Committee
has the power, right and duty to make determinations as to the rights of
employees, Participants, Beneficiaries and other persons to benefits under the
Plan and to afford any Participant or Beneficiary dissatisfied with such
determination with rights pursuant to a claims procedure adopted by the
Committee; and
	 
	 	(d)	 	Allocation of Duties. The Administrative Committee is
empowered to employ agents (who may also be employees of Baxter) and to
delegate to them any of the administrative duties imposed upon the
Administrative Committee or Baxter.




17









 






	 	(e)	 	Plan Amendments. The Administrative Committee is
empowered to amend the Plan as provided in Section 8.1(b).





7.3 Effect of Administrative Committee Decisions.




Any ruling, regulation, procedure or decision of the Administrative Committee will be
conclusive and binding upon all persons affected by it. There will be no appeal from any ruling by
the Administrative Committee which is within its authority, except as provided in Section 7.4
below. When making a determination or a calculation, the Administrative Committee will be entitled
to rely on information supplied by any Employer, accountants and other professionals including, but
not by way of limitation, legal counsel for Baxter or any Employer.



7.4 Claims Procedure.




Each person entitled to benefits under the Plan (the “Applicant”) must submit a
written claim for benefits to the Administrative Committee. Such claim shall be filed
not more than one year after the Applicant knows, or with the exercise of reasonable
diligence would know, if the basis for the claim. A formal claim shall not be required
for the distribution of a Participant’s Accounts in the ordinary course of business,
but in any case a claim that relates to a dispute over the amount of a distribution
shall be filed not more than one year after the distribution is paid. The
Administrative Committee may, in its sole discretion (and notwithstanding the first
sentence of Section 7.3) accept a claim that is filed late if it determines that
special circumstances warrant acceptance of the claim.



If a claim for benefits by the Applicant is denied, in whole or in part, the Administrative
Committee, or its delegate, shall furnish the Applicant within 90 days after receipt of such claim,
a written notice which specifies the reason for the denial, refers to the pertinent provisions of
the Plan on which the denial is based, describes any additional material or information necessary
for properly completing the claim and explains why such material or information is necessary, and
explains the claim review procedures of this Section 7.4. Such notice will further describe that
the Applicant has a right to bring a civil action under Section 502 of ERISA if his or her claim is
denied after an appeal and review. The 90 day period may be extended by up to an additional 90
days if special circumstances required, in which event the Applicant shall be notified in writing
by the end of the initial 90 day period of the reason for the extension and an estimate of when the
claim will be processed.



18









 





Any Applicant whose claim is denied under the provisions described above, or who has not received
from the Administrative Committee a response to his or her claim within the time periods specified
in the provisions described above may request a review of the denied claim by written request to
the Administrative Committee within 60 days after receiving notice of the denial. If such a
request is made, the Administrative Committee shall make a full and fair review of the denial of
the claim and shall make a decision not later than 60 days after receipt of the request, unless
special circumstances (such as the need to hold a hearing) require an extension of time, in which
case a decision shall be made as soon as possible but not later than 120 days after receipt of the
request for review, and written notice of the reason for the extension and an estimate of when the
review will be complete shall be given to the Applicant before the commencement of the extension.
The decision on review shall be in writing and shall include specific reasons for the decision and
specific references to the pertinent provisions of the Plan on which the decision is based. Such
notice will further describe that the Applicant has a right to bring a civil action under Section
502 of ERISA.



No person entitled to benefits under the Plan shall have any right to seek review of a denial of
benefits, or to bring any action to enforce a claim for benefits, in any court or administrative
agency prior to his or her filing a claim for benefits and exhausting all of his or her rights
under this Section 7.4, or more than 180 days after he receives the Administrative Committee’s
decision on review of the denial of his or her claim. Although not required to do so, an
Applicant, or his or her representative, may choose to state the reason or reasons he believes he
is entitled to benefits, and may choose to submit written evidence, during the initial claim
process or review of claim denial process. However, failure to state any such reason or submit
such evidence during the initial claim process or review of claim denial process, shall permanently
bar the Applicant, and his or her successors in interest, from raising such reason or submitting
such evidence in any forum at any later date. An Applicant whose claim is denied initially or on
review is entitled to receive, on request and free of charge, reasonable access to, and copies of,
all documents, records, and other information relevant to such claim for benefits.



7.5 Action by Administrative Committee.




Action by the Administrative Committee will be subject to the following special rules:




	 	(a)	 	Meetings and Documents. The Administrative Committee
may act by meeting or by document signed without meeting and documents may be
signed through the use of a single document or concurrent documents.
	 
	 	(b)	 	Action by Majority. The Administrative Committee will
act by a majority decision which action will be as effective as if such action
had been taken by all Administrative Committee members, provided that by
majority action one or more Administrative Committee members or other persons
may be authorized to act with respect to particular matters on behalf of all
Administrative Committee members.
	 
	 	(c)	 	Resolving Deadlocks. If there is an equal division
among the Administrative Committee members with respect to any question a
disinterested party may be selected by a majority vote to decide the matter.
Any decision by such disinterested party will be binding.




19









 











7.6 Indemnity.




To the extent permitted by applicable law and to the extent that they are not indemnified or
saved harmless under any liability insurance contracts, any present or former Administrative
Committee members, officers, or directors of Baxter, the Employers or their subsidiaries or
affiliates, if any, will be indemnified and saved harmless by the Employers from and against any
and all liabilities or allegations of liability to which they may be subjected by reason of any act
done or omitted to be done in good faith in the administration of the Plan, including all expenses
reasonably incurred in their defense in the event that Baxter fails to provide such defense after
having been requested in writing to do so.



20









 





ARTICLE VIII — AMENDMENT AND TERMINATION OF PLAN




8.1 Amendment.





	 	(a)	 	The Compensation Committee may amend the Plan at any time,
except that no amendment will decrease or restrict the Accounts of Participants
and Beneficiaries at the time of the amendment. The Company’s authority to
amend the Plan has been delegated to the Administrative Committee to the extent
provided in Section 8.1(b). The authority to amend the Plan in any respect
(whether or not such amendment is within the authority delegated to the
Administrative Committee) may also be exercised by the Board of Directors, the
Compensation Committee or any other person to whom the Board or Compensation
Committee delegates such authority.
	 
	 	(b)	 	The Administrative Committee has been delegated the authority
to adopt any amendments to the Plan as the Administrative Committee may
determine to be necessary or appropriate, except that no amendment shall be
made to any Plan without approval of the Compensation Committee unless the
Administrative Committee determines that such amendment will not significantly
change the overall level of benefits provided by such Plan; significantly
change the requirements for eligibility for participation in the Plan; or add
any material new benefit that would significantly increase the cost of the
Plan. In illustration but not limitation of the foregoing, the Administrative
Committee is authorized to adopt any amendment to a Plan that it determines to
be:






	 	(i)	 	an amendment that provides for the Plan to be
adopted by any business entity acquired by the Company, including
providing any special rules applicable to the employees of such
business entity;
	 
	 	(ii)	 	an amendment that the Administrative Committee
determines to be of an administrative, ministerial or technical nature
only;
	 
	 	(iii)	 	an amendment that the Administrative Committee
determines to be necessary or appropriate to carry out any amendment
approved by, or other resolution adopted by, the Board;
	 
	 	(iv)	 	an amendment that the Administrative Committee
determines to be necessary or appropriate to comply with any applicable
law, or necessary to conform the terms of the Plan to established
administrative practices or procedures; or
	 
	 	(v)	 	an amendment that the Administrative Committee
determines to be necessary or appropriate to clarify or to resolve any
inconsistency or ambiguity in the terms of the Plan.




21









 






	 	 	 	The adoption by the Administrative Committee of any amendment to the Plan shall
constitute conclusive evidence that the Administrative Committee has determined such
amendment to be authorized under the terms of the foregoing resolution, which
determination shall be conclusive and binding on all employees, participants,
beneficiaries and other persons claiming any benefit under the Plan.





8.2 Right to Terminate.




The Compensation Committee may at any time terminate the Plan. Any Employer may terminate its
participation in the Plan by notice to Baxter. The Plan may also be terminated with respect to a
group of Eligible Employees only (including, effective January 1, 2005, Participants who are
Eligible Employees solely by reason of Section 3.1), and the provisions of Section 8.3 shall apply
to such group of Eligible Employees only.



8.3 Payment at Termination.




If the Plan is terminated all Accounts shall continue to be held and distributed in
accordance with the terms of the Plan; provided that the Administrative Committee may, to
the extent permitted under Section 409A, provide for the immediate distribution of Accounts.



22









 





ARTICLE IX — MISCELLANEOUS




9.1 Unfunded Plan.




This Plan is intended to be an unfunded retirement plan maintained primarily to provide
retirement benefits for a select group of management or highly compensated employees. All credited
amounts are unfunded, general obligations of the appropriate Employer. This Plan is not intended
to create an investment contract, but to provide retirement benefits to eligible employees who
participate in the Plan. Eligible employees are members of a select group of management or are
highly compensated employees, who, by virtue of their position with an Employer, are uniquely
informed as to such Employer’s operations and have the ability to affect materially Employer’s
profitability and operations.



9.2 Unsecured General Creditor.




In the event of an Employer’s insolvency, Participants and their Beneficiaries, heirs,
successors and assigns will have no legal or equitable rights, interest or claims in any property
or assets of such Employer, nor will they be Beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or
which may be acquired by such Employer (the “Policies”) greater than those of any other unsecured
general creditors. In that event, any and all of the Employer’s assets and Policies will be, and
remain, the general, unpledged, unrestricted assets of Employer. Employer’s obligation under the
Plan will be merely that of an unfunded and unsecured promise of Employer to pay money in the
future.



9.3 Nonassignability.




Neither a Participant nor any other person will have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in
advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be nonassignable and nontransferable. No part
of the amounts payable will, prior to actual payment, be subject to seizure or sequestration for
the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any
other person, nor be transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency. Nothing contained herein will preclude an Employer from
offsetting any amount owed to it by a Participant against payments to such Participant or his or
her Beneficiary.



9.4 Not a Contract of Employment.




The terms and conditions of this Plan will not be deemed to constitute a contract of
employment between a Participant and such Participant’s Employer, and neither the Participant nor
the Participant’s Beneficiary will have any rights against such Participant’s Employer except as
may otherwise be specifically provided herein. Moreover, nothing in this Plan is deemed to give a
Participant the right to be retained in the service of his or her Employer or to interfere with the
right of such Employer to discipline or discharge him or her at any time.



9.5 Protective Provisions.




A Participant will cooperate with Baxter by furnishing any and all information requested by
Baxter, in order to facilitate the payment of benefits hereunder.



9.6 Governing Law.




The provisions of this Plan will be construed and interpreted according to the laws of the
State of Illinois, to the extent not preempted by ERISA.



23









 





9.7 Severability.




In the event any provision of the Plan is held invalid or illegal for any reason, any
illegality or invalidity will not affect the remaining parts of the Plan, but the Plan will be
construed and enforced as if the illegal or invalid provision had never been inserted, and Baxter
will have the privilege and opportunity to correct and remedy such questions of illegality or
invalidity by amendment as provided in the Plan, including, but not by way of limitation, the
opportunity to construe and enforce the Plan as if such illegal and invalid provision had never
been inserted herein.



9.8 Notice.




Any notice or filing required or permitted to be given to Baxter or the Administrative
Committee under the Plan will be sufficient if in writing and hand delivered, or sent by registered
or certified mail to any member of the Administrative Committee, or to Baxter’s Chief Financial
Officer and, if mailed, will be addressed to the principal executive offices of Baxter. Notice to
a Participant or Beneficiary may be hand delivered or mailed to the Participant or Beneficiary at
his or her most recent address as listed in the employment records of Baxter. Notices will be
deemed given as of the date of delivery or mailing or, if delivery is made by certified or
registered mail, as of the date shown on the receipt for registration or certification. Any person
entitled to notice hereunder may waive such notice.



9.9 Successors.




The provisions of this Plan will bind and inure to the benefit of Baxter, each Employer, the
Participants and Beneficiaries, and their respective successors, heirs and assigns. The term
successors as used herein will include any corporate or other business entity, which, whether by
merger, consolidation, purchase or otherwise acquires all or substantially all of the business and
assets of Baxter, and successors of any such corporation or other business entity.



9.10 Action by Baxter.




Except as otherwise provided herein, any action required of or permitted by Baxter under the
Plan will be by resolution of the Compensation Committee or any person or persons authorized by
resolution of the Compensation Committee.



9.11 Effect on Benefit Plans.




Amounts paid under this Plan, will not by operation of this Plan be considered to be
compensation for the purposes of any benefit plan maintained by any Employer. The treatment of
such amounts under other employee benefit plans will be determined pursuant to the provisions of
such plans.



9.12 Participant Litigation.




In any action or proceeding regarding the Plan, employees or former employees of Baxter or an
Employer, Participants, Beneficiaries or any other persons having or claiming to have an interest
in this Plan will not be necessary parties and will not be entitled to any notice or process. Any
final judgment which is not appealed or appealable and may be entered in any such action or
proceeding will be binding and conclusive on the parties hereto and all persons having or claiming
to have any interest in this Plan. To the extent permitted by law, if a legal action is begun
against Baxter, an Employer, the Administrative Committee, or any member of the Administrative
Committee by or on behalf of any person and such action results adversely to such person or if a
legal action arises because of conflicting claims to a Participant’s or other person’s benefits,
the costs to such person of defending the action will be charged to the amounts, if any, which were
involved in the action or were payable to the Participant or other person concerned. To the extent
permitted by applicable law, acceptance of participation in this Plan will constitute a release of
Baxter, each Employer, the



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Administrative Committee and each member thereof, and their respective
agents from any and all liability and obligation not involving willful misconduct or gross neglect.



*      *      *




IN WITNESS WHEREOF, the undersigned duly authorized officer has caused this Plan to be
executed this 18th day of December 2008.



	 	 	 	 	 	 	 
	 	 	BAXTER INTERNATIONAL INC. ADMINISTRATIVE COMMITTEE
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Jeanne K. Mason
 

Jeanne K. Mason
	 	 
	 

	 	 	 	Administrative Committee Member	 	 






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APPENDIX A




PARTICIPATING EMPLOYERS




Participating Employers in the Plan include all participating Employers in the Baxter International
Inc. and Subsidiaries Incentive Investment Plan.




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