Document:

EX-10.17

Exhibit 10.17

AMENDED AND RESTATED SEVERANCE AGREEMENT

          THIS AGREEMENT, dated December 19, 2006 (the “Effective Date”), as amended and restated as of
December 18, 2008, is made by and between Baxter International Inc., a Delaware corporation (the
“Company”), and                      (the “Executive”).

          WHEREAS, the Company considers it essential to the best interests of its stockholders to
foster the continued employment of key management personnel; and

          WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the
possibility of a Change in Control exists and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders;

          WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the Company’s management, including
the Executive, to their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control; and

          NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the Company and the Executive hereby agree as follows:

     1. Defined Terms. The definitions of capitalized terms used in this Agreement are
provided in the last Section hereof.

     2. Term of Agreement. The Term of this Agreement shall commence on the Effective Date
and shall continue in effect through the second anniversary of the Effective Date;
provided, however, that commencing on the first anniversary of the Effective Date
and on each anniversary thereafter, the Term shall automatically be extended for one additional
year unless, not later than one year before the end of the then-existing Term, the Company or the
Executive shall have given notice not to extend the Term; and further provided,
however, that if a Change in Control shall have occurred during the Term, the Term shall
expire no earlier than twenty-four (24) months beyond the date on which such Change in Control
occurred.

     3. Company’s Covenants Summarized. In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive’s covenants set forth in Section 4
hereof, the Company agrees, under the conditions described herein, to pay the Executive the
Severance Payments and the other

 

 

payments and benefits described herein. No Severance Payments shall be payable under this
Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1
hereof, there shall be deemed to have been) a termination of the Executive’s employment with the
Company following a Change in Control and during the Term, all subject to the terms and conditions
set forth herein and provided that such termination of employment constitutes a “separation from
service” for purposes of Section 409A of the Code. This Agreement shall not be construed as
creating an express or implied contract of employment and, except as otherwise agreed in writing
between the Executive and the Company, the Executive shall not have any right to be retained in the
employ of the Company.

     4. The Executive’s Covenants. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control during the Term, the
Executive will remain in the employ of the Company until the earliest of (i) the last day of the
Potential Change in Control Period, (ii) the date of a Change in Control, (iii) the date of
termination by the Executive of the Executive’s employment for Good Reason or by reason of death,
Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for
any reason.

     5. Compensation Other Than Severance Payments.

          5.1 Following a Change in Control and during the Term, during any period that the Executive
fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to
physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at
the rate in effect at the commencement of any such period, together with all compensation and
benefits payable to the Executive under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company during such period (other than any disability plan), until
the Executive’s employment is terminated by the Company for Disability.

          5.2 If the Executive’s employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay the Executive’s full salary to the Executive
through the Date of Termination at the rate in effect immediately prior to the Date of Termination
or, if higher, the rate in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of the Company’s compensation and benefit
plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if
more favorable to the Executive, as in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason.

 

 

          5.3 If the Executive’s employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay to the Executive the Executive’s normal
post-termination compensation and benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in accordance with, the Company’s
retirement, insurance and other compensation or benefit plans, programs and arrangements as in
effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in
effect immediately prior to the occurrence of the first event or circumstance constituting Good
Reason.

          5.4 Upon the occurrence of a change in the ownership or effective control of the Company or in
the ownership of a substantial portion of the assets of the Company (in any case within the meaning
of Section 409A of the Code), notwithstanding any provision of any non-qualified defined
contribution deferred compensation plans to the contrary, in lieu of any other benefit under such
plans attributable to the period before 2009 or for a year commencing after the date of this
Agreement, the Company shall pay to the Executive a lump sum amount, in cash, equal to the then
present value of the deferred compensation otherwise payable to the Executive pursuant to the terms
of such plans. The payments required by this Section 5.4 shall be made not later than the fifth
day following the date of such change in ownership or control of the Company or change in asset
ownership. The provisions of this Section 5.4 shall survive the termination of this Agreement.

          5.5 For the two-year period commencing immediately following a Change in Control, the Company
agrees: (A) to continue in effect any compensation plan in which the Executive participates
immediately prior to the Change in Control which is material to the Executive’s total compensation,
including but not limited to the Company’s equity-based long term incentive plans and annual
incentive plans, or any substitute plans adopted prior to the Change in Control, unless an
equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan; (B) to continue the Executive’s participation in the plans described in the
foregoing paragraph (A) (or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount or timing of payment of benefits provided and the level of
the Executive’s participation relative to other participants, as existed immediately prior to the
Change in Control; and (C) to continue to provide the Executive with benefits substantially similar
to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance,
medical, health and accident, or disability plans in which the Executive was participating
immediately prior to the Change in Control (except for across the board changes similarly affecting
all senior executives of the Company and all senior executives of any Person in control of the
Company), not to take any other action which would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at
the time of

 

 

the Change in Control, and to provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service with the Company in accordance
with the Company’s normal vacation policy in effect at the time of the Change in Control.

     6. Severance Payments.

          6.1 Subject to Section 6.2 hereof, if the Executive’s employment is terminated following a
Change in Control and during the Term (provided that such termination of employment constitutes a
“separation from service” within the meaning of Section 409A of the Code), other than (A) by the
Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good
Reason, then the Company shall pay the Executive the amounts, and provide the Executive the
benefits, described in this Section 6.1 (“Severance Payments”) and Section 6.2 hereof, in addition
to any payments and benefits to which the Executive is entitled under Section 5 hereof, provided
that the Executive shall have properly executed, within forty-seven (45) days of his Date of
Termination, and not revoked a customary release of claims in a form reasonably acceptable to the
Company. For purposes of this Agreement, the Executive’s employment shall be deemed to have been
terminated following a Change in Control by the Company without Cause or by the Executive with Good
Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a
Change in Control (whether or not a Change in Control ever occurs) and such termination was at the
request or direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive terminates his
employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever
occurs) and the circumstance or event which constitutes Good Reason occurs at the request or
direction of such Person, or (iii) the Executive’s employment is terminated by the Company without
Cause or by the Executive for Good Reason and such termination or the circumstance or event which
constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control
(whether or not a Change in Control ever occurs). For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the Executive shall be
presumed to be correct unless the Company establishes to the Board by clear and convincing evidence
that such position is not correct.

               (A) In lieu of any further salary payments to the Executive for periods subsequent to the Date
of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company
shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i)
the Executive’s base salary as in effect immediately prior to the Date of Termination or, if
higher, in effect immediately prior to the first occurrence of an event or

 

 

circumstance constituting Good Reason, and (ii) the Executive’s target annual bonus under any
annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which
occurs the Date of Termination or, if higher, the highest target annual bonus in respect of the
fiscal year in which occurs the Change in Control or the first event or circumstance constituting
Good Reason.

               (B) (I) For the twenty-four (24) month period immediately following the Date of Termination,
the Company shall arrange to provide the Executive and his dependents life, accident and health
insurance benefits substantially similar to those provided to the Executive and his dependents
immediately prior to the Date of Termination or, if more favorable to the Executive, those provided
to the Executive and his dependents immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, at no greater after-tax cost to the Executive than the
after-tax cost to the Executive immediately prior to such date or occurrence; provided,
however, that such health and welfare benefits shall be provided, as applicable, through an
arrangement that satisfies the requirements of Section 105 or 106 of the Code and, to the extent
the payments represent a reimbursement of expenses incurred by the Participant, shall be paid not
later than the last day of the year following the year in which the underlying expenses were
incurred. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be
eliminated if benefits of the same type are received by or made available to the Executive during
the twenty-four (24) month period following the Executive’s termination of employment (and any such
benefits received by or made available to the Executive shall be reported to the Company by the
Executive). If the Severance Payments shall be decreased pursuant to Section 6.2 hereof, and the
Section 6.1(B) benefits which remain payable after the application of Section 6.2 hereof are
thereafter reduced pursuant to the immediately preceding sentence, the Company shall, no later than
five (5) business days following such reduction, pay to the Executive the least of (a) the amount
of the decrease made in the Severance Payments pursuant to Section 6.2 hereof, (b) the amount of
the subsequent reduction in these Section 6.1(B) benefits, or (c) the maximum amount which can be
paid to the Executive without being, or causing any other payment to be, nondeductible by reason of
section 280G of the Code.

                    (II) In addition, if the Executive would have become entitled to benefits under the Company’s
post-retirement health care or life insurance plans, as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, had the Executive’s employment
terminated at any time during the period of twenty-four (24) months after the Date of Termination,
the Company shall provide such post-retirement health care or life insurance benefits to the
Executive and the Executive’s dependents commencing on

 

 

the later of (i) the date on which such coverage would have first become available and (ii) the
date on which benefits described in subsection (I) terminate.

                    (III) To the extent the benefits to be made available under this subsection 6.1(B) are not
medical expenses within the meaning of Treas. Reg. § 1.409A-1(b)(9)(v)(B) and are not short-term
deferrals within the meaning of Section 409A of the Code, then during the first six months
following the Date of Termination the Executive shall pay to the Company, at the time such benefits
are provided, the fair market value of such benefits, and the Company shall reimburse the Executive
for any such payment not later than the fifth day following the expiration of such six-month period
unless the Company reasonably determines, based on the advice of counsel, that the benefits can be
provided during such six-month period without causing the Executive to be subject to an “additional
tax” under Section 409A(a)(2) of the Code.

               (C) Notwithstanding any provision of any annual or long term incentive plan to the contrary,
the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any
unpaid incentive compensation which has been allocated or awarded to the Executive for a completed
fiscal year or other measuring period preceding the Date of Termination under any such plan and
which, as of the Date of Termination, is contingent only upon the continued employment of the
Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the
aggregate value of all contingent incentive compensation awards to the Executive for all then
uncompleted periods under any such plan, calculated as to each such award by multiplying the award
that the Executive would have earned on the last day of the performance award period, assuming the
achievement, at the target level, of the individual and corporate performance goals established
with respect to such award, by the fraction obtained by dividing the number of full months and any
fractional portion of a month during such performance award period through the Date of Termination
by the total number of months contained in such performance award period. The provisions of this
Section 6.1(C) shall survive the termination of this Agreement in respect of awards granted under
any such annual or long-term incentive plans before the date of such termination.

               (D) In addition to the retirement benefits to which the Executive is entitled under each DB
Pension Plan or any successor plan thereto, the Company shall pay the Executive a lump sum amount,
in cash, equal to the excess of (i) the actuarial equivalent of the aggregate retirement pension
(taking into account any early retirement subsidies associated therewith and determined as a
straight life annuity commencing at the date (but in no event earlier than the second anniversary
of the Date of Termination) as of which the actuarial equivalent of such annuity is greatest) which
the Executive would have accrued under the terms of all DB Pension

 

 

Plans (without regard to any amendment to any DB Pension Plan made subsequent to a Change in
Control and on or prior to the Date of Termination, which amendment adversely affects in any manner
the computation of retirement benefits thereunder), determined as if the Executive were fully
vested thereunder and had accumulated (after the Date of Termination) twenty-four (24) additional
months of age and service credit thereunder and had been credited under each DB Pension Plan during
such period with compensation equal to the Executive’s compensation (as defined in such DB Pension
Plan) during the twelve (12) months immediately preceding Date of Termination or, if higher, during
the twelve months immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, over (ii) the actuarial equivalent of the aggregate retirement pension
(taking into account any early retirement subsidies associated therewith and determined as a
straight life annuity commencing at the date (but in no event earlier than the Date of Termination)
as of which the actuarial equivalent of such annuity is greatest) which the Executive had accrued
pursuant to the provisions of the DB Pension Plans as of the Date of Termination. For purposes of
this Section 6.1(D), “actuarial equivalent” shall be determined using the same assumptions utilized
under the Baxter International Inc. and Subsidiaries Pension Plan immediately prior to the Date of
Termination or, if more favorable to the Executive, immediately prior to the first occurrence of an
event or circumstance constituting Good Reason. In addition to the benefits to which the Executive
is entitled under each DC Pension Plan, the Company shall pay the Executive a lump sum amount, in
cash, equal to the sum of (i) the amount that would have been contributed thereto by the Company on
the Executive’s behalf during the two years immediately following the Date of Termination,
determined (x) as if the Executive made the maximum permissible contributions thereto during such
period, (y) as if the Executive earned compensation during such period at a rate equal to the
Executive’s compensation (as defined in the DC Pension Plan) during the twelve (12) months
immediately preceding the Date of Termination or, if higher, during the twelve months immediately
prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without
regard to any amendment to the DC Pension Plan made subsequent to a Change in Control and on or
prior to the Date of Termination, which amendment adversely affects in any manner the computation
of benefits thereunder, and (ii) the excess, if any, of (x) the Executive’s account balance under
the DC Pension Plan as of the Date of Termination over (y) the portion of such account balance that
is nonforfeitable under the terms of the DC Pension Plan.

               (E) The Company shall provide the Executive with outplacement services suitable to the
Executive’s position for a period of two years or, if earlier, until the first acceptance by the
Executive of an offer of employment, in an aggregate amount not exceeding $50,000. Subject to the
foregoing, in no event shall any payment described in this Section 6.1(E) be made after the end of
the calendar year following the calendar year in which the services were provided.

 

 

               (F) The lump-sum cash payments required pursuant to the preceding provisions of this Section
6.1 hereof shall be made not later than the fifth day following the Date of Termination.
Notwithstanding the above, the Executive shall not be considered to have terminated employment with
the Company for purposes of this Agreement and no payments shall be due to the Executive under this
Agreement unless the Executive would be considered to have incurred a “separation from service”
from the Company within the meaning of Section 409A of the Code. Each amount to be paid or benefit
to be provided under this Agreement shall be construed as a separate identified payment for
purposes of Section 409A of the Code. Any payments described in this Agreement that are due within
the “short term deferral period” within the meaning of Section 409A of the Code or that are
otherwise exempt from application of Section 409A of the Code, shall not be treated as deferred
compensation unless applicable law requires otherwise. If the Executive, at the Date of
Termination, is a “specified employee” as defined in the Baxter International Inc. and Subsidiaries
Deferred Compensation Plan, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this Agreement during the six-month period immediately following
the Executive’s termination of employment shall instead be paid on the first business day after the
date that is six months following the Executive’s termination of employment (or upon the
Executive’s death, if earlier) unless the Company reasonably determines, based on the advice of
counsel, that such delayed commencement is not required to avoid an “additional tax” under Section
409A(a)(2) of the Code. In addition, to the extent required in order to avoid accelerated taxation
and/or tax penalties under Section 409A of the Code, in the event that the Executive’s termination
of employment occurs within fifty-five (55) days prior to the end of a calendar year, amounts that
would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement
on or before December 31 of the year in which the termination of employment occurs
shall, subject to the previous sentence of this section, instead be paid on the first business day
following January 1 of the first calendar year beginning after the Executive’s
termination of employment.

 

 

          6.2 The following special payment provisions shall apply:

               (A) Whether or not the Executive becomes entitled to the Severance Payments, if any payment or
benefit received or to be received by the Executive in connection with a Change in Control or the
termination of the Executive’s employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any Person whose actions result in a Change
in Control or any Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called “Total Payments”) will be
subject (in whole or part) to the Excise Tax, then, subject to the provisions of subsection (B) of
this Section 6.2, the Company shall pay to the Executive an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax on
the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon
the Gross-Up Payment, shall be equal to the Total Payments. For purposes of determining the amount
of the Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive’s residence on the Date of Termination (or if there is no Date of
Termination, then the date on which the Gross-up Payment is calculated for purposes of this Section
6.2), net of the maximum reduction in federal income tax which could be obtained from deduction of
such state and local taxes.

               (B) In the event that the amount of the Total Payments does not exceed 110% of the largest
amount that would result in no portion of the Total Payments being subject to the Excise Tax (the
“Safe Harbor”), then subsection (A) of this Section 6.2 shall not apply and the noncash Severance
Payments shall first be reduced (if necessary, to zero), and the cash Severance Benefits shall
thereafter be reduced (if necessary, to zero) so that the amount of the Total Payments is equal to
the Safe Harbor; provided, however, that, to the extent it would not result in the
imposition of an additional tax under Section 409A of the Code, the Executive may elect to have the
cash Severance Payments reduced (or eliminated) prior to any reduction of the noncash Severance
Payments.

               (C) For purposes of determining whether any of the Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as
“parachute payments” within the meaning of section 280G(b)(2) of the Code, unless in the opinion of
tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting
firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the
“Auditor”), such other payments or benefits (in whole or in part)

 

 

do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the
Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code
shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) represent reasonable compensation for services actually
rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount
allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and
(iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by
the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Prior to
the payment date set forth in Section 6.3 hereof, the Company shall provide the Executive with its
calculation of the amounts referred to in this Section 6.2(C) and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company’s calculations. If the Executive
disputes the Company’s calculations (in whole or in part), the reasonable opinion of Tax Counsel
with respect to the matter in dispute shall prevail.

               (D) (I) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A)
hereof, (2) there is a Final Determination that the Excise Tax is less than the amount taken into
account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final
Determination, the Severance Payments are to be reduced pursuant to Section 6.2(B) hereof, the
Executive shall repay to the Company, within five (5) business days following the date of the Final
Determination, the Gross-Up Payment, the amount of the reduction in the Severance Payments, plus
interest on the amount of such repayments at 120% of the rate provided in section 1274(b)(2)(B) of
the Code.

                    (II) In the event that (1) amounts are paid to the Executive pursuant to Section 6.2(A)
hereof, (2) there is a Final Determination that the Excise Tax is less than the amount taken into
account hereunder in calculating the Gross-Up Payment, and (3) after giving effect to such Final
Determination, the Severance Payments are not to be reduced pursuant to Section 6.2(B) hereof, the
Executive shall repay to the Company, within five (5) business days following the date of the Final
Determination, the portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income
and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent
that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in
the Executive’s taxable income and wages for purposes of federal, state and local income and
employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in
section 1274(b)(2)(B) of the Code.

 

 

                    (III) Except as otherwise provided in clause (IV) below, in the event there is a Final
Determination that the Excise Tax exceeds the amount taken into account hereunder in determining
the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall pay to the Executive, within
five (5) business days following the date of the Final Determination, the sum of (1) a Gross-Up
Payment in respect of such excess and in respect of any portion of the Excise Tax with respect to
which the Company had not previously made a Gross-Up Payment, including a Gross-Up Payment in
respect of any Excise Tax attributable to amounts payable under clauses (2) and (3) of this
paragraph (III) (plus any interest, penalties or additions payable by the Executive with respect to
such excess and such portion), (2) if Severance Payments were reduced pursuant to Section 6.2(B)
hereof but after giving effect to such Final Determination, the Severance Payments should not have
been reduced pursuant to Section 6.2(B), the amount by which the Severance Payments were reduced
pursuant to Section 6.2(B) hereof, and (3) interest on such amounts at 120% of the rate provided in
section 1274(b)(2)(B) of the Code.

                    (IV) In the event that (1) Severance Payments were reduced pursuant to Section 6.2(B) hereof
and (2) the aggregate value of Total Payments which are considered “parachute payments” within the
meaning of section 280G(b)(2) of the Code is subsequently redetermined in a Final Determination,
but such redetermined value still does not exceed 110% of the Safe Harbor, then, within five (5)
business days following such Final Determination, (x) the Company shall pay to the Executive the
amount (if any) by which the reduced Severance Payments (after taking the Final Determination into
account) exceeds the amount of the reduced Severance Payments actually paid to the Executive, plus
interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of
the Code, or (y) the Executive shall pay to the Company the amount (if any) by which the reduced
Severance Payments actually paid to the Executive exceeds the amount of the reduced Severance
Payments (after taking the Final Determination into account), plus interest on the amount of such
repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code.

          6.3 The payments provided in subsections (A) (C) and (D) of Section 6.1 hereof and in Section
6.2 hereof shall be made not later than the fifth day following the Date of Termination (or if
there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for
purposes of Section 6.2 hereof), but in any event not later than the end of the taxable year
following the year in which the Excise Tax is incurred; provided, however, that if
the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof,
cannot be finally determined on or before such day, the Company shall pay to the Executive on such
day an estimate, as determined in good faith by the Executive or, in the case

 

 

of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum
amount of such payments to which the Executive is clearly entitled and shall pay the remainder of
such payments (together with interest on the unpaid remainder (or on all such payments to the
extent the Company fails to make such payments when due) at 120% of the rate provided in section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due, such excess shall
be paid by the Executive to the Company on the fifth (5th) business day after demand by the Company
(together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the
time that payments are made under this Agreement, the Company shall provide the Executive with a
written statement setting forth the manner in which such payments were calculated and the basis for
such calculations including, without limitation, any opinions or other advice the Company has
received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or
advice which are in writing shall be attached to the statement). If the Executive at the time of
such separation from service is a “specified employee” as defined in the Baxter International Inc.
and Subsidiaries Deferred Compensation Plan, no payments shall be made to the Executive prior to
the earlier of (a) the expiration of the six (6) month period measured from the date of the
Executive’s “separation from service” (as such term is defined in Section 409A of the Code), or (b)
the date of the Executive’s death unless the Company reasonably determines, based on the advice of
counsel, that such delayed commencement is not required to avoid an “additional tax” under Section
409A(a)(2) of the Code.

          6.4 The Company also shall pay to the Executive all legal fees and expenses incurred by the
Executive in disputing any issue hereunder relating to the termination of the Executive’s
employment (provided the Executive shall prevail in such dispute), in seeking to obtain or enforce
any benefit or right provided by this Agreement (provided the Executive shall obtain or
successfully enforce such benefit or right) or in connection with any tax audit or proceeding to
the extent attributable to the application of Section 409A of the Code or Section 4999 of the Code
to any payment or benefit provided hereunder. Such payments shall be made within five (5) business
days after delivery of the Executive’s written requests for payment accompanied with such evidence
of fees and expenses incurred as the Company reasonably may require; provided that no such payment
shall be made in respect of fees or expenses incurred by the Executive after the later of the tenth
anniversary of the Date of Termination or the Executive’s death, and provided further, that, upon
the Executive’s separation from service with the Company, in no event shall any additional such
payments be made prior to the date that is six months after the date of the Executive’s separation
from service unless the Company reasonably determines, based on the advice of counsel, that such
delay is not required to avoid an “additional tax” under Section 409A(a)(2) of the Code.

 

 

     7. Termination Procedures.

          7.1 Notice of Termination. After a Change in Control and during the Term, any
purported termination of the Executive’s employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the other party hereto in
accordance with Section 11 hereof. For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of
the Board which was called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the
Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.

          7.2 Date of Termination. “Date of Termination,” with respect to any purported
termination of the Executive’s employment after a Change in Control and during the Term, shall mean
(i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the full-time
performance of the Executive’s duties during such thirty (30) day period), and (ii) if the
Executive’s employment is terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively,
from the date such Notice of Termination is given); provided that Executive shall not be considered
to have terminated employment with the Company for purposes of this Agreement and no payments shall
be due to the Executive under this Agreement unless the Executive would be considered to have
incurred a “separation from service” from the Company within the meaning of Section 409A of the
Code.

          7.3 Dispute Concerning Termination. If within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as determined without regard
to this Section 7.3), the party receiving such Notice of Termination notifies the other party that
a dispute exists concerning the termination, the Date of Termination shall be extended until the
earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally
resolved, either by

 

 

mutual written agreement of the parties or by a final judgment, order or decree of an
arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been perfected); provided,
however, that the Date of Termination shall be extended by a notice of dispute given by the
Executive only if such notice is given in good faith and the Executive pursues the resolution of
such dispute with reasonable diligence; and further provided, however, that
the provisions of this Section 7.3 shall apply only to the extent that, pursuant to Treas. Reg. §
1.409A-3(g), they will not cause an additional tax under Section 409A of the Code.

     8. No Mitigation. The Company agrees that, if the Executive’s employment with the
Company terminates during the Term, the Executive is not required to seek other employment or to
attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to
Section 6 hereof or Section 7.4 hereof. Further, except as specifically provided in Section 6.1(B)
hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation
earned by the Executive as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

     9. Certain Restrictive Covenants.

          9.1 Noncompetition. The Executive understands that any entrusting of Confidential
Information to him by the Company is done in reliance on a confidential relationship arising out of
his employment with the Company. The Executive understands that Confidential Information may
include, for example, Trade Secrets, inventions, know-how and products, customer, patient, supplier
and competitor information, sales, pricing, cost, and financial data, research, development,
marketing and sales programs and strategies, manufacturing, marketing and service techniques,
processes and practices, and regulatory strategies. The Executive understands that Confidential
Information also includes all information received by the Company or the Subsidiaries under an
obligation of confidentiality to a third party. The Executive further understands that
Confidential Information that the Executive may acquire or to which the Executive may have access,
especially with regard to research and development projects and findings, formulae, designs,
formulation, processes, the identity of suppliers, customers and patients, methods of manufacture,
and cost and pricing data is of great value to the Company. In consequence of such entrusting and
such consideration, the Executive shall not, directly or indirectly, for a period of two years
after the Date of Termination: (i) render services to any Competing Organization in connection with
any Competing Product within such geographic limits as the Company and such Competing Organization
are, or would be, in actual competition when such rendering of services might potentially involve
the disclosure or use of confidential information

 

 

or trade secrets; or (ii) provide advice as to investment in a Competitive Business
(including, without limitation, advice with respect to the purchase, sale, or operation of such
business, or advice with respect to financing or other economic structuring of such business). The
Executive understands that services described in the preceding sentence, including without
limitation those rendered to such Competing Organization in an executive, scientific,
administrative, or consulting capacity in connection with Competing Products are in support of
actual competition in various geographic areas and thus fall within the prohibition of this
Agreement regardless of where such services physically are rendered.

          9.2 Solicitation of Customers, Suppliers and Employees. While Executive is employed by
the Company, and for a period of twenty-four (24) months after the Date of Termination for any
reason:

               (A) The Executive shall not solicit or attempt to solicit any party who is then or, during the
12-month period prior to such solicitation or attempt by the Executive was (or was solicited to
become), a customer or supplier of the Company or Affiliate, provided that the restriction in this
Section 9.2 shall not apply to any activity on behalf of a business that is not a Competing
Organization.

               (B) The Executive shall not solicit, entice, persuade or induce any individual who is employed
by the Company or the Subsidiaries (or was so employed within 90 days prior to the Executive’s
action) to terminate or refrain from renewing or extending such employment or to become employed by
or enter into contractual relations with any other individual or entity other than the Company or
the Subsidiaries, and the Executive shall not approach any such employee for any such purpose or
authorize or knowingly cooperate with the taking of any such actions by any other individual or
entity.

          9.3 Nondisparagement. The Executive agrees that, while he is employed by the Company,
and after his Date of Termination, he shall not make any false, defamatory or disparaging
statements about the Company, the Subsidiaries, or the officers or directors of the Company or the
Subsidiaries that are reasonably likely to cause material damage to the Company, the Subsidiaries,
or the officers or directors of the Company or the Subsidiaries. While the Executive is employed by
the Company, and after his Date of Termination, the Company agrees, on behalf of itself and the
Subsidiaries, that neither the officers nor the directors of the Company or the Subsidiaries shall
make any false, defamatory or disparaging statements about the Executive that are reasonably likely
to cause material damage to the Executive. Notwithstanding the foregoing, nothing in
this paragraph will prevent either the Company or any Executive from (i) responding to incorrect,
disparaging or derogatory public statement by the other to the extent necessary to correct or
refute such public statement or (ii) making any truthful statement to the extent (x)

 

 

necessary in connection with any litigation, arbitration or mediation involving this Agreement
or (y) required by law, by any court order or by any arbitrator or mediator in a legal proceeding.

     10. Successors; Binding Agreement.

          10.1 In addition to any obligations imposed by law upon any successor to the Company, the
Company will require any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.

          10.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive’s estate.

     11. Notices. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed, if to the Executive, to the address inserted below the Executive’s signature on the
final page hereof and, if to the Company, to the address set forth below, or to such other address
as either party may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:

To the Company:

Baxter International Inc.

One Baxter Parkway

Deerfield, Illinois 60015

Attention: General Counsel

     12. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board. No waiver by either
party hereto at any time of any breach by the other

 

 

party hereto of, or of any lack of compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes
any other agreements or representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party; provided, however, that
this Agreement shall supersede any agreement setting forth the terms and conditions of the
Executive’s employment with the Company only in the event that the Executive’s employment with the
Company is terminated on or following a Change in Control, by the Company other than for Cause or
by the Executive for Good Reason. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Illinois. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding to which the Executive
has agreed. The obligations of the Company and the Executive under this Agreement which by their
nature may require either partial or total performance after the expiration of the Term (including,
without limitation, those under Sections 6, 7 and 9 hereof) shall survive such expiration. To the
extent applicable, it is intended that the Agreement comply with the provisions of Section 409A of
the Code. The Agreement will be administered and interpreted in a manner consistent with this
intent, and any provision that would cause the Agreement to fail to satisfy Section 409A of the
Code will have no force and effect until amended to comply therewith (which amendment may be
retroactive to the extent permitted by Section 409A of the Code).

     13. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.

     14. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.

     15. Settlement of Disputes; Arbitration.

          15.1 All claims by the Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits
under this Agreement shall be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of this Agreement relied upon. The
Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a
claim and shall further allow the Executive to appeal to the Board a decision of the Board

 

 

within sixty (60) days after notification by the Board that the Executive’s claim has been
denied. Notwithstanding the above, in the event of any dispute, any decision by the Board
hereunder shall be subject to a de novo review by the arbitrator in accordance with Section 15.2
hereof.

          15.2 Any further dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in Chicago, Illinois in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the
contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to
be paid until the Date of Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement.

          15.3 The Executive acknowledges that the Company would be irreparably injured by a violation
of Section 9 hereof, and he agrees that the Company, notwithstanding the foregoing provisions of
this Section 15 and in addition to any other remedies available to it for such breach or threatened
breach, shall be entitled to a preliminary injunction, temporary restraining order, or other
equivalent relief, restraining the Executive from any actual or threatened breach of Section 9. If
a bond is required to be posted in order for the Company to secure an injunction or other equitable
remedy, the parties agree that said bond need not be more than a nominal sum.

     16. Definitions. For purposes of this Agreement, the following terms shall have the
meanings indicated below:

               (A) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Exchange Act.

               (B) “Auditor” shall have the meaning set forth in Section 6.2 hereof.

               (C) “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

               (D) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

               (E) “Board” shall mean the Board of Directors of the Company.

 

 

               (F) “Cause” for termination by the Company of the Executive’s employment shall mean (i) the
willful and continued failure by the Executive to substantially perform the Executive’s duties with
the Company (other than any such failure resulting from the Executive’s incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance of a Notice of
Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been
cured within 30 days after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the Executive’s duties or (ii) the willful
engaging by the Executive in conduct which is demonstrably and materially injurious to the Company
or its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by the Executive not in good faith and without reasonable belief that
the Executive’s act, or failure to act, was in the best interest of the Company and (y) in the
event of a dispute concerning the application of this provision, no claim by the Company that Cause
exists shall be given effect unless the Company establishes to the Board by clear and convincing
evidence that Cause exists.

               (G) A “Change in Control” shall be deemed to have occurred if the event set forth in any one
of the following paragraphs shall have occurred:

               (I) any Person is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its Affiliates) representing
30% or more of the combined voting power of the Company’s then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection with a merger or
consolidation of the Company or any direct or indirect subsidiary of the Company with any
other corporation immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board of directors of (a)
any parent of the Company or the entity surviving such merger or consolidation (b) if there
is no such parent, of the Company or such surviving entity;

               (II) the following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date hereof, constitute the Board
and any new director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the

 

 

Company) whose appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or recommended;

               (III) there is consummated a merger or consolidation of the Company or any direct or
indirect subsidiary of the Company with any other corporation or other entity, other than a
merger or consolidation immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board of directors of (a)
any parent of the Company or the entity surviving such merger or consolidation or (b) if
there is no such parent, of the Company or such surviving entity; or

               (IV) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets, other than a sale or
disposition by the Company of all or substantially all of the Company’s assets immediately
following which the individuals who comprise the Board immediately prior thereto constitute
at least a majority of the board of directors of (a) any parent of the Company or of the
entity to which such assets are sold or disposed or (b) if there is no such parent, of the
Company or such entity.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions immediately following
which the record holders of the common stock of the Company immediately prior to such transaction
or series of transactions continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the Company immediately following such
transaction or series of transactions.

               (H) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

               (I) “Company” shall mean Baxter International Inc. and, except in determining under Section
16(G) hereof whether or not any Change in Control of the Company has occurred, shall include any
successor to its business and/or assets which assumes this Agreement by operation of law, or
otherwise.

 

 

               (J) “Competing Products” shall mean products, processes, or services of any person or
organization other than the Company, in existence or under development, which are substantially the
same, may be substituted for, or applied to substantially the same end use as the products,
processes or services with which the Executive works during the time of his employment with the
Company or about which the Executive acquires Confidential Information through his work with the
Company.

               (K) “Competing Organization” shall mean persons or organizations engaged in, or about to
become engaged in, research or development, production, distribution, marketing, providing or
selling of a Competing Product.

               (L) “Competitive Business” means any business in which the Company or any of the Subsidiaries
was engaged during the 12-month period prior to the Executive’s Date of Termination, any business
if the Company or any Subsidiary has devoted material resources to entering into such business
during such 12-month period prior to the Date of Termination, and any business to the extent that
it is engaged in the investing in or acquisition of all or a portion of the assets or stock of the
Company or the Subsidiaries.

               (M) “Confidential Information” means information relating to the present or planned business
of the Company or the Subsidiaries which has not been released publicly by authorized
representatives of the Company or the Subsidiaries.

               (N) “DB Pension Plan” shall mean any tax-qualified, supplemental or excess defined benefit
pension plan maintained by the Company and any other defined benefit plan or agreement entered into
between the Executive and the Company which is designed to provide the Executive with supplemental
retirement benefits.

               (O) “DC Pension Plan” shall mean any tax-qualified, supplemental or excess defined
contribution plan maintained by the Company and any other defined contribution plan or agreement
entered into between the Executive and the Company which is designed to provide the Executive with
supplemental retirement benefits.

               (P) “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

               (Q) “Disability” shall be deemed the reason for the termination by the Company of the
Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have

 

 

been absent from the full-time performance of the Executive’s duties with the Company for a
period of six (6) consecutive months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days after such Notice of Termination is given,
the Executive shall not have returned to the full-time performance of the Executive’s duties.

               (R) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.

               (S) “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

               (T) “Executive” shall mean the individual named in the first paragraph of this Agreement.

               (U) “Good Reason” for termination by the Executive of the Executive’s employment shall mean
the occurrence (without the Executive’s express written consent which specifically references this
Agreement) after any Change in Control, or prior to a Change in Control under the circumstances
described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating all
references in paragraphs (I) through (V) below to a “Change in Control” as references to a
“Potential Change in Control”), of any one of the following acts by the Company, or failures by the
Company to act, unless such act or failure to act is corrected prior to the Date of Termination
specified in the Notice of Termination given in respect thereof:

                    (I) the assignment to the Executive of any duties inconsistent with the Executive’s
status as a senior executive officer of the Company or a substantial adverse alteration in
the nature or status of the Executive’s responsibilities from those in effect immediately
prior to the Change in Control;

                    (II) a material reduction by the Company in the Executive’s annual base salary as in
effect on the date hereof or as the same may be increased from time to time;

                    (III) a material change in the location of the Executive’s principal place of
employment, including for this purpose any relocation more than fifty (50) miles from the
Executive’s principal place of employment immediately prior to the Change in Control or the
Company’s requiring the Executive to be based anywhere other than such principal place of
employment (or permitted relocation thereof) except for required travel on

 

 

the Company’s business to an extent substantially consistent with the Executive’s
present business travel obligations; or

                    (IV) the failure by the Company to pay to the Executive any portion of the Executive’s
current compensation, or to pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company, within seven (7) days
of the date such compensation is due;

                    (V) any other action or inaction that constitutes a material breach of this Agreement,
including without limitation Sections 5.5 and 10.1.

The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected
by the Executive’s incapacity due to physical or mental illness. The Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder. For purposes of any determination regarding the
existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to
be correct unless the Company establishes to the Board by clear and convincing evidence that Good
Reason does not exist.

               (V) “Gross-Up Payment” shall have the meaning set forth in Section 6.2 hereof.

               (W) “Items” include documents, reports, drawings, photographs, designs, specifications,
formulae, plans, samples, research or development information, prototypes, tools, equipment,
proposals, marketing or sales plans, customer information, customer lists, patient lists, patient
information, regulatory files, financial data, costs, pricing information, supplier information,
written, printed or graphic matter, or other information and materials that concern the Company’s
or the Subsidiaries’ business that come into his possession or about which the Executive has
knowledge by reason of his employment.

               (X) “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

               (Y) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a corporation

 

 

owned, directly or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.

               (Z) “Potential Change in Control Period” shall mean the period commencing on the occurrence of
a Potential Change in Control and ending upon the occurrence of a Change in Control or, if earlier
(I) with respect to a Potential Change in Control occurring pursuant to Section 16(AA)(I) hereof,
immediately upon the abandonment or termination of the applicable agreement, (ii) with respect to a
Potential Change in Control occurring pursuant to Section 16(AA)(II) hereof, immediately upon a
public announcement by the applicable party that such party has abandoned its intention to take or
consider taking actions which if consummated would result in a Change in Control or (iii) with
respect to a Potential Change in Control occurring pursuant to Section 16(AA)(III) or (IV) hereof,
upon the eighteen month anniversary of the occurrence of such Potential Change in Control (or such
earlier date as may be determined by the Board).

               (AA) “Potential Change in Control” shall be deemed to have occurred if the event set forth in
any one of the following paragraphs shall have occurred:

               (I) the Company enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;

               (II) the Company or any Person publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change in Control;

               (III) any Person becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing 15% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company’s then outstanding
securities (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its affiliates); or

               (IV) the Board adopts a resolution to the effect that, for purposes of this Agreement,
a Potential Change in Control has occurred.

               (BB) “Retirement” shall be deemed the reason for the termination by the Executive of the
Executive’s employment if such employment is terminated in accordance with the Company’s retirement
policy, including early retirement, generally applicable to its salaried employees.

 

 

               (CC) “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

               (DD) “Subsidiary,” for purposes of Section 9 hereof, shall mean any corporation, partnership,
joint venture or other entity during any period in which at least fifty percent in such entity is
owned, directly or indirectly, by the Company.

               (EE) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

               (FF) “Term” shall mean the period of time described in Section 2 hereof (including any
extension, continuation or termination described therein).

               (GG) “Total Payments” shall mean those payments so described in Section 6.2 hereof.

               (HH) “Trade Secrets” include all information encompassed in all Items, and in all
manufacturing processes, methods of production, concepts or ideas, to the extent that such
information has not been released publicly by duly authorized representatives of the Company or the
Subsidiaries.

 

 

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	BAXTER INTERNATIONAL INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Robert L. Parkinson, Jr.
	 	 
	 

	 	Title:
	 	Chairman and Chief Executive
Officer	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	 	 	Address:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	(Please print carefully)EX-10.18

Exhibit 10.18

Baxter International Inc. And Subsidiaries

Supplemental Pension Plan

(Amended and Restated Effective January 1, 2009)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article I General
	 	 	1	 
	1.1 Purpose and Effective Date
	 	 	1	 
	1.2 Plan Administration; Source of Benefit Payments
	 	 	1	 
	1.3 Limitation on Provisions
	 	 	1	 
	1.4 Inactive Participation
	 	 	1	 
	1.5 Plan Supplements
	 	 	1	 
	 
	 	 	 	 
	Article II Definitions
	 	 	3	 
	2.1 Accrued Benefit
	 	 	3	 
	2.2 Administrative Committee
	 	 	3	 
	2.3 Beneficiary
	 	 	3	 
	2.4 Benefit
	 	 	3	 
	2.5 Code
	 	 	3	 
	2.6 Controlled Group
	 	 	3	 
	2.7 Corporation
	 	 	3	 
	2.8 Deferred Compensation Plan
	 	 	3	 
	2.9 Effective Date
	 	 	3	 
	2.10 ERISA
	 	 	3	 
	2.11 Excess Benefit
	 	 	3	 
	2.12 Non-Participating Employer
	 	 	3	 
	2.13 Participant
	 	 	3	 
	2.14 Participating Employer
	 	 	3	 
	2.15 Pension Make-Whole Benefit
	 	 	4	 
	2.16 Pension Plan
	 	 	4	 
	2.17 Plan
	 	 	4	 
	2.18 Points
	 	 	4	 
	2.19 Qualified Benefit
	 	 	4	 
	2.20 Section 409A
	 	 	4	 
	2.21 Special Supplemental Benefit
	 	 	4	 
	2.22 Termination of Employment
	 	 	4	 
	 
	 	 	 	 
	Article III Participation In The Plan
	 	 	6	 
	3.1 Eligibility
	 	 	6	 
	3.2 Restricted Participation
	 	 	6	 
	3.3 No Contract of Employment
	 	 	6	 
	3.4 Participation Freeze
	 	 	6	 
	 
	 	 	 	 
	Article IV Amount And Payment Of Plan Benefits
	 	 	8	 
	4.1 Plan Benefits
	 	 	8	 
	4.2 Excess Benefit
	 	 	8	 
	4.3 Pension Make-Whole Benefit
	 	 	8	 
	4.4 Special Supplemental Benefits
	 	 	8	 
	4.5 Actuarial Equivalence
	 	 	9	 
	4.6 Time and Form of Payment
	 	 	9	 
	4.7 Death Benefits
	 	 	12	 
	4.8 Withholding Taxes
	 	 	13	 
	4.9 Compliance with Section 409A
	 	 	13	 
	 
	 	 	 	 
	Article V Administration
	 	 	14	 
	5.1 Administrative Committee
	 	 	14	 

-i-

 

	 	 	 	 	 
	5.2 Administrative Committee Powers
	 	 	14	 
	5.3 Effect of Administrative Committee Decisions
	 	 	15	 
	5.4 Claims Procedure
	 	 	15	 
	5.5 Action by Administrative Committee
	 	 	16	 
	5.6 Indemnity
	 	 	16	 
	 
	 	 	 	 
	Article VI Amendment And Termination
	 	 	17	 
	6.1 Amendment and Termination
	 	 	17	 
	6.2 Successors and Assigns
	 	 	17	 
	 
	 	 	 	 
	Article VII Miscellaneous
	 	 	18	 
	7.1 Unfunded Plan
	 	 	18	 
	7.2 Unsecured General Creditor
	 	 	18	 
	7.3 Nonassignability
	 	 	18	 
	7.4 Not a Contract of Employment
	 	 	18	 
	7.5 Protective Provisions
	 	 	18	 
	7.6 Governing Law
	 	 	19	 
	7.7 Severability
	 	 	19	 
	7.8 Notice
	 	 	19	 
	7.9 Successors
	 	 	19	 
	7.10 Action by Corporation
	 	 	19	 
	7.11 Effect on Benefit Plans
	 	 	19	 
	7.12 Participant Litigation
	 	 	19	 

-ii-

 

BAXTER INTERNATIONAL INC. AND SUBSIDIARIES

SUPPLEMENTAL PENSION PLAN

(Amended and Restated Effective January 1, 2009)

ARTICLE I — GENERAL

1.1 Purpose and Effective Date.

Baxter International Inc. (the “Corporation”) established the Baxter International Inc. and
Subsidiaries Supplemental Pension Plan (the “Plan”), effective as of January 1, 1989, to assist in
providing retirement and other benefits to certain employees of the Corporation and its affiliates
which are in addition to those provided under the Baxter International Inc. and Subsidiaries
Pension Plan (the “Pension Plan”). The Plan was previously amended effective January 1, 2005. The
following provisions constitute an amendment and restatement of the Plan effective as of January 1,
2009, the “Effective Date” of the Plan set forth herein. The Plan is intended to constitute an
unfunded plan maintained primarily for the purpose of providing deferred compensation to a select
group of management or highly compensated employees for purposes of ERISA.

1.2 Plan Administration; Source of Benefit Payments.

The authority to control and manage the operation and administration of the Plan shall be
vested in the Administrative Committee, as set forth in Article V. A Participating Employer’s
obligation under the Plan shall be reduced to the extent that any amounts due under the Plan are
paid from one or more trusts, the assets of which are subject to the claims of general creditors of
the Participating Employer or any affiliate thereof, provided, however, that nothing in the Plan
shall require the Corporation or any Participating Employer to establish any trust to provide
benefits under the Plan.

1.3 Limitation on Provisions.

Any benefit payable under the Pension Plan shall be paid solely in accordance with the terms
and conditions of the Pension Plan and nothing in the Plan shall operate or be construed in any way
to modify, amend or affect the terms and provisions of the Pension Plan.

1.4 Inactive Participation.

Except as otherwise specifically provided herein, the benefits, if any, payable to or on
behalf of Participants who terminated employment with the Corporation and its affiliates prior to
the Effective Date shall be determined in accordance with the terms of the Plan as in effect on
such Termination of Employment; 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.

1.5 Plan Supplements.

The provisions of the Plan as applied to any Participating Employer or Participant may be
modified and/or supplemented from time to time by the adoption of one or more Supplements. In the
event of any inconsistency between a Supplement and the Plan document, the terms of the Supplement
shall govern; provided that no Supplement shall alter the provisions of Section 4.9 (except that a
Supplement may provide that the portion of any Special Supplemental Benefit is not subject to the
provisions of the Plan intended to comply with Section 409A to the extent such portion was accrued
and vested on December 31, 2004, and

1

 

that the Special Supplemental Benefit is not materially
modified after October 3, 2004) or otherwise cause the Plan to be administered in a manner that
does not comply with Section 409A.

2

 

ARTICLE II — DEFINITIONS

2.1 Accrued Benefit.

Accrued Benefit shall have the meaning ascribed to such term under the Pension Plan.

2.2 Administrative Committee.

Administrative Committee shall have the meaning ascribed to such term under the Pension Plan.

2.3 Beneficiary.

A Participant’s Beneficiary shall be the Participant’s beneficiary under the Pension Plan (or
the person who would be the Participant’s beneficiary under the Pension Plan if the Participant’s
Qualified Benefit were paid in the same form and at the same time as his Benefit hereunder).

2.4 Benefit.

A Participant’s Benefit means the sum of the Participant’s Excess Benefit, Make-Whole Benefit,
and Special Supplemental Benefit, if any, unless otherwise provided.

2.5 Code.

Code means the Internal Revenue Code of 1986, as amended.

2.6 Controlled Group.

Controlled Group means the Corporation and all other business entities, whether or not
incorporated, which, together with the Corporation, would be considered a single employer under
section 414(b) or (c) of the Code.

2.7 Corporation.

Corporation has the meaning ascribed to such term in Section 1.1.

2.8 Deferred Compensation Plan.

Deferred Compensation Plan means Baxter International Inc. and Subsidiaries Deferred
Compensation Plan.

2.9 Effective Date.

Effective Date means the effective date of this amendment and restatement of the Plan, which
January 1, 2009. The original effective date of the Plan was January 1, 2002.

2.10 ERISA.

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

2.11 Excess Benefit.

Excess Benefit means the benefit determined under Section 4.2.

2.12 Non-Participating Employer.

A Non-Participating Employer means any Employer
which is not a Participating Employer.

2.13 Participant.

Participant means an employee of a Participating Employer who is eligible for an Excess
Benefit, Pension Make-Whole Benefit or Special Supplemental Benefit, as set forth in Section 3.1.

2.14 Participating Employer.

Participating Employer means the Corporation and any affiliate of the Corporation, which is a
Participating Employer under the Pension Plan.

3

 

2.15 Pension Make-Whole Benefit.

Pension Make-Whole Benefit means the benefit determined under Section 4.3.

2.16 Pension Plan.

Pension Plan has the meaning ascribed to such term in Section 1.1.

2.17 Plan.

Plan has the meaning ascribed to such term in Section 1.1.

2.18 Points.

A Participant’s Points shall be equal to the number of Points the Participant has accumulated
as of any date under the terms of the Pension Plan as in effect on December 31, 2008, without
regard to any amendments to the Pension Plan adopted after such date which directly or indirectly
affect the Participant’s Points.

2.19 Qualified Benefit.

Qualified Benefit means the Participant’s actual Accrued Benefit payable under the Pension
Plan.

2.20 Section 409A.

Section 409A means Section 409A of the Internal Revenue Code of 1986, as enacted by the
American Jobs Creation Act of 2004 and as subsequently amended, and including all Treasury
Regulations and other authoritative guidance issued pursuant thereto.

2.21 Special Supplemental Benefit.

Special Supplement Benefit means the benefit determined under Section 4.4.

2.22 Termination of Employment.

     A Termination of Employment occurs on the date on which a 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
Administrative Committee as required to comply with 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.

4

 

	 	(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 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.

5

 

ARTICLE III — PARTICIPATION IN THE PLAN

3.1 Eligibility.

An employee of a Participating Employer shall become a Participant in the Plan on the first
date such employee is eligible for an Excess Benefit, Pension Make-Whole Benefit or Special
Supplemental Benefit, in accordance with the following:

	 	(a)	 	Each participant in the Pension Plan who has a fully vested interest in his or
her Accrued Benefit under the Pension Plan and whose benefit under the Pension Plan is
limited by reason of the application of Section 415 or Section 401(a)(17) of the Code
shall be eligible for an Excess Benefit, determined in accordance with Section 4.2.
	 
	 	(b)	 	Each participant in the Pension Plan who has a fully vested interest in his or
her Accrued Benefit under the Pension Plan and who also is a participant in the
Deferred Compensation Plan shall be eligible for a Pension Make-Whole Benefit,
determined in accordance with Section 4.3.
	 
	 	(c)	 	The Administrative Committee (or the person or persons delegated such authority
by the Administrative Committee), in its sole discretion, shall designate the
individuals, if any, who shall be eligible for Special Supplemental Benefits.

3.2 Restricted Participation.

Notwithstanding any other provision of the Plan to the contrary, if the Administrative
Committee determines that participation by one or more Participants shall cause the Plan as applied
to any Participating Employer to be subject to Part 2, 3 or 4 of Subtitle B of Title I of ERISA,
the entire interest of such Participants under the Plan shall be segregated from the Plan, and such
Participants shall cease to have any interest under the Plan. In the event the Participant has
died, the foregoing provisions of this Section 3.2 shall apply to the Participant’s interest, if
any, which is payable to the Participant’s surviving spouse or other beneficiary.

3.3 No Contract of Employment.

The Plan does not constitute a contract of employment, and participation in the Plan will not
give any employee the right to be retained in the employ of the Corporation or any Participating
Employer nor any right or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan.

3.4 Participation Freeze.

Participation in the Plan is frozen effective December 31, 2006, and no Employees shall become
Participants after such date, subject to the following:

	 	(a)	 	No Employee who is hired by a Participating Employer after December 31, 2006,
or who was hired by a Non-Participating Employer prior to January 1, 2007, and
transferred to a Participating Employer after December 31, 2006, shall be eligible to
Participate in the Plan.
	 
	 	(b)	 	An Eligible Employee who was employed by a Participating Employer on December
31, 2006, but who had not satisfied the requirements of Section 3.1(b) 

6

 

	 	 	 	of the Pension
Plan on such date, shall become a Participant on the first Entry Date after he
satisfies such requirements, unless he elects not to become a Participant as provided
in subparagraph (c) below.

	 	(c)	 	The election of a Participant or Eligible Employee (as defined in the Pension
Plan) to either cease accruing benefits as of December 31, 2006, under the Pension
Plan, or not to become a Participant in the Pension Plan after December 31, 2006, shall
also apply under this Plan. The Plan Benefit of a Participant who elects under the
Pension Plan to cease accruing benefits shall thereafter be equal to his Plan Benefit
as of December 31, 2006, which shall not be adjusted for subsequent changes in his
Average Monthly Compensation, Years of Service, Projected Benefit Service, or Primary
Social Security Benefit, but such Participant shall continue to earn Years of Service
for purposes of vesting, and Points, and his Benefit shall be payable as otherwise
provided herein. An Eligible Employee who elects not to become a Participant in the
Pension Plan shall thereafter be ineligible to become a Participant in this Plan.
	 
	 	(d)	 	Notwithstanding the foregoing, an Employee hired prior to December 31, 2006,
and who did not elect to cease accruing benefits under the Pension Plan as of December
31, 2006, but who was not eligible for either an Excess Benefit or a Make-Whole Benefit
prior to December 31, 2006, solely because his Qualified Benefit was not limited by the
application of Section 415 or Section 401(a)(17) of the Code and he had not deferred
any compensation under the Deferred Compensation Plan, shall be eligible to participate
beginning with the first year in which he is eligible for either an Excess Benefit or a
Make-Whole Benefit.
	 
	 	(e)	 	To the extent permitted by Section 4.4, an Employee not otherwise eligible to
participate in the Plan may be eligible to receive a Special Supplemental Benefit.

7

 

ARTICLE IV — AMOUNT AND PAYMENT OF PLAN BENEFITS

4.1 Plan Benefits.

Eligible Participants under the Plan shall receive an Excess Benefit, Pension Make-Whole
Benefit or Special Supplemental Benefit, in the amount and payable at the times set forth in the
following provisions of this Article 4. Effective January 1, 2009, the amount of a Participant’s
Excess Benefit and Pension Make-Whole Benefit shall be calculated as if the Participant’s Qualified
Benefit had commenced as of the same date, and in the same form, as the Participant’s Excess
Benefit and Pension Make-Whole Benefit, regardless of when and in what form the Qualified Benefit
is paid, and no adjustment shall be made to the Excess Benefit or Pension Make-Whole Benefit when
the Qualified Benefit commences. To the extent a Supplemental Benefit is defined in whole or part
by reference to the Qualified Benefit, the preceding sentence shall apply unless the terms of the
Supplemental Benefit clearly provide for a different method of calculation.

4.2 Excess Benefit.

As of any date, an eligible Participant’s “Excess Benefit” under the Plan shall be an amount
equal to the Qualified Benefit the Participant would be eligible for under the Pension Plan as of
such date if such Qualified Benefit were determined without regard to limitations of Section 415
and Section 401(a)(17) of the Code, reduced by the Participant’s Qualified Benefit as of such date.
A Participant’s Excess Benefit, if any, shall be paid at the time and in the form provided in
Section 4.6.

4.3 Pension Make-Whole Benefit.

As of any date, an eligible Participant’s “Pension Make-Whole Benefit” under the Plan shall be
an amount equal to:

	 	(a)	 	the Qualified Benefit the Participant would be eligible for under the Pension
Plan as of such date if such Qualified Benefit were determined (i) without exclusion of
compensation deferred under the Deferred Compensation Plan, and (ii) without regard to
the limitations of Code Sections 415 and 401(a)(17),
	 
	 	 	 	reduced by
	 
	 	(b)	 	the sum of (i) the Participant’s actual Qualified Benefit under the Pension
Plan as of such date, and (ii) the amount of any Excess Benefit determined under
Section 4.2 without regard to such deferred compensation.

A Participant’s Pension Make-Whole Benefit, if any, shall be paid at the time and in the form
provided in Section 4.6.

4.4 Special Supplemental Benefits.

The amount, if any, of a Participant’s “Special Supplemental Benefit” shall be determined by
the Administrative Committee, shall be subject to such terms and conditions as the Administrative
Committee may establish, and shall be payable at the times and in the form determined by the
Administrative Committee. Effective as of January 1, 2005, the time and form of payment of any
Special Supplemental Benefit shall be specified by the Administrative Committee at the time the
Administrative Committee establishes the Participant’s right to the Special Supplemental Benefit.
In the event that any right to a Special Supplemental Benefit was not fully vested on December 31,
2004, and is not amended

8

 

not later than December 31, 2008 to specify the time and form of payment
in a manner that satisfies the requirements of Section 409A, such Special Supplemental Benefit
shall be paid in the form specified in Section 4.6. The Administrative Committee, in its sole
discretion, may delegate its authority under this Section 4.4 to any person or persons in
connection with the award of Special Supplemental Benefits to a particular Participant, a class of
Participants, or all Participants. All rights to Special Supplemental Benefits shall be set forth
in writing, which writing may include an employment contract or similar agreement, and a copy of
all actions taken by the Administrative Committee or its delegate with respect to Special
Supplemental Benefits under the Plan shall be sent to the Corporate Counsel in charge of the
Company’s employee benefit plans. Anything else contained herein to the contrary notwithstanding,
no person shall have any right to a Special Supplemental Benefit in the absence of a written
instrument setting forth the terms of such Special Supplemental Benefit.

4.5 Actuarial Equivalence.

To the extent applicable, the benefits payable to any person under the Plan shall be
determined by applying the appropriate interest rate and other actuarial assumptions set forth in
the Pension Plan.

4.6 Time and Form of Payment.

	 	(a)	 	The Benefit (excluding for all purposes of this Section 4.6 any Special
Supplemental Benefit unless otherwise provided in Section 4.4) of a Participant whose
Qualified Benefit commences not later than December 31, 2008, shall commence at the
same time and be paid in the same manner as the Participant’s Qualified Benefit.
	 
	 	(b)	 	The Benefit of a Participant whose Qualified Benefit commences after December
31, 2008 shall become payable upon the later of the occurrence of the first day of the
month following the Participant’s Termination of Employment or, in the case of a
Participant who was a Participant prior to December 31, 2008, a specified date, if any,
elected by the Participant in accordance with paragraph (c) (in either case, the
“Commencement Date”). Such Benefit shall be paid in the following form:

	 	(i)	 	If the actuarial present value of the Benefit as of the
Commencement Date does not exceed $50,000, the Benefit shall be paid in a lump
sum equal to the actuarial present value, which payment shall be in full
satisfaction of the Participant’s right to the Benefit. Such payment shall be
made not
later than 90 days following the Commencement Date, subject to paragraph
(d). For purposes of determining whether the present value of the Benefit
exceeds $50,000, any Special Supplemental Benefit shall be included if and
only if the terms of the agreement creating the Special Supplemental Benefit
provided for the Special Supplemental Benefit to be paid at the same time
and in the same form as remainder of the Benefit not later than the later of
the date the Participant first had a legally binding right to the Special
Supplemental Benefit or December 31, 2008, and in such event the Special
Supplemental Benefit shall be included notwithstanding any change in the
terms of the Special Supplemental 

9

 

	 	 	 	Benefit after such date. If the preceding
sentence does not apply, the Special Supplemental Benefit shall not be
included in determining whether the present value exceeds $50,000, and the
provisions of this paragraph (b) shall be applied separately to the Special
Supplemental Benefit.

	 	(ii)	 	If the actuarial present value of the Benefit exceeds $50,000
as of the Commencement Date, Benefit shall be paid in a monthly life annuity of
the type set forth below. The first annuity payment shall be paid, subject to
paragraph (d), on the first day of the month following the first month
beginning with month that includes the Commencement Date in which the
Participant’s has accumulated at least 65 Points (the “Annuity Start Date.”)

	 	(A)	 	If the Participant’s Qualified Benefit
commences as of or prior to the Annuity Start Date, his Benefit shall
be paid in the same form of annuity as the Qualified Benefit.
	 
	 	(B)	 	If the Participant’s Qualified Benefit has not
yet commenced by the Annuity Start Date, and the Participant is not
married on the Annuity Start Date, his Benefit shall be paid in an
annuity for the life of the Participant with no survivor benefits.
	 
	 	(C)	 	If the Participant’s Qualified Benefit has not
yet commenced by the Annuity Start Date, and the Participant is married
on Annuity Start Date, his Benefit shall be paid in an annuity that
pays an actuarially reduced benefit to the Participant during the
Participant’s life, and pays 50% of such annuity to the Participant’s
spouse for the balance of the spouse’s life if the spouse survives the
Participant. No adjustment to such annuity shall be made if the
Participant’s spouse predeceases the Participant or the Participant and
this spouse are divorced after the Annuity Start Date.
	 
	 	(D)	 	The Administrative Committee may permit a
Participant to elect a different form of annuity that is treated as a
life annuity for purposes of Section 409A. Anything else contained
herein to the contrary notwithstanding, all forms of life annuity shall
be
actuarially equivalent as defined in Section 409A, and any procedures
adopted by the Administrative Committee to permit Participant’s to
elect different forms of annuity shall comply with the requirements
of Section 409A.

	 	(c)	 	Each person who was a Participant prior to January 1, 2009, and who is
anticipated to have a Benefit accrued under this Plan as of December 31, 2008 (as
determined by the Administrative Committee in its sole discretion) may elect a
Commencement Date, which shall be either the first day of a specific month or the first
day of the month following the date on which the Participant attains a

10

 

	 	 	 	specified age.
Such elections shall apply to the Participant’s entire Benefit (including any Special
Supplemental Benefit to be paid in the same form as the Benefit), and shall be made, in
writing, in accordance with procedures specified by the Administrative Committee, not
later than December 31, 2008, and shall not thereafter be revoked or changed; 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. An agreement (including
a provision of an employment agreement) entered into between a Participant and the
Corporation not later than December 31, 2008, that refers specifically to this Plan and
specifies a time and/or form of payment of the Participant’s Benefit shall constitute
an election for purposes of this paragraph (c), and, in lieu of a specific date, may
provide for the Participant’s Commencement Date to occur upon the Participant’s
separation from service or the occurrence of any other event that satisfies the
requirements of Section 409A.
	 
	 	(d)	 	If a Participant’s Commencement Date is the first day of the month following
his Termination of Employment, and the Participant is a specified employee as
hereinafter defined on the Commencement Date, payment of his Benefit shall be deferred
until six months after his Termination of Employment, as described below. If payment
is to be made in a lump sum (based on actuarial present value as of the Commencement
Date), the lump sum shall be paid on the first day of the seventh month following the
month that includes the Termination of Employment, and the amount shall be recalculated
as of such date even if such recalculated amount exceeds $50,000. If payment is to be
made in an annuity, the first annuity payment shall be paid on the later of the first
day of the seventh month following the month that includes the Termination of Employment
or the Annuity Start Date, but if such date is later than the Annuity Start Date the
annuity payments shall be calculated as of the Annuity Start Date, and the Participant
shall receive a supplemental payment, with or following the first annuity payment,
equal to the sum, without interest, of the annuity payments that would have been paid
prior to such date but for this paragraph (d). For purposes of this paragraph (d), the
term “specified employee” shall have the same meaning as in the Baxter International
Inc. and Subsidiaries Deferred Compensation Plan.
	 
	 	(e)	 	Anything else contained herein to the contrary notwithstanding, the
Administrative Committee at any time in its sole discretion may distribute to any
Participant the entire actuarial present value of his Benefit (including any Special
Supplemental Benefit) in a single lump sum in full satisfaction of his rights under the
Plan, provided that the entire interest of the Participant in all other plans required
to be aggregated with the Plan pursuant to Treas. Reg. §1.409A-1(c)(2) is also
distributed and that the total amount distributed does not exceed the limit in effect
under Section 402(g) of the Code at the time of distribution.

11

 

4.7 Death Benefits.

	 	(a)	 	If a Participant whose Benefit is payable in an annuity dies after the Annuity
Start Date, the only death benefit payable shall be the survivorship benefit, if any,
payable under the applicable form of annuity.
	 
	 	(b)	 	If a Participant whose Benefit is payable in a lump sum dies after his
Commencement Date but before actual payment of his Benefit (including but not limited
to a Participant whose benefit is deferred pursuant to Section 4.6(d)), the lump sum
payment shall be made to his Beneficiary as soon as practical, but not more than 90
days after the date of his death.
	 
	 	(c)	 	If a Participant either dies prior to his Commencement Date, or after his
Commencement Date but prior to his Annuity Start Date if his Benefit is payable as an
annuity, and if his Beneficiary is entitled to a pre-retirement survivor annuity under
the Pension Plan (or would be entitled to a preretirement survivorship benefit but for
the fact that payment of his Qualified Benefit had commenced at the time of his death),
his Beneficiary shall be entitled to a preretirement survivor benefit (the “Survivor
Benefit”) under the terms of this paragraph (c). The Survivor Benefit shall be paid on
the first day of the first month following the month that includes the Participant’s
death in which the Participant either had completed 65 Points, or would have completed
65 Points had he not died. The Survivor Benefit shall be paid in a single lump sum
equal to the actuarial present value of the excess of (i) the amount of the
preretirement survivor annuity that would be paid to the Beneficiary under the Pension
Plan if the Participant’s Benefit were calculated with the adjustments described in
Sections 4.2 and 4.3 (and included the Special Supplemental Benefit, if applicable),
over (ii) the amount of pretirement survivor annuity actually payable under the Pension
Plan, in both cases calculated as if payment of the preretirement survivor annuity
under the Pension Plan commenced on the date of payment of the Survivor Benefit.
	 
	 	(d)	 	Notwithstanding the foregoing, if a Participant whose benefit is paid in the
form of an annuity and whose Benefit is deferred pursuant to Section 4.6(d) dies after
his Annuity Start Date but before the date to which payment of his benefit is deferred,
his Beneficiary shall not receive a Survivor Benefit under paragraph (c), but shall
instead receive whatever survivorship benefits are provided by the Participant’s form
of annuity, determined as if payment had commenced on the
Annuity Start Date, and in addition shall receive a payment equal to the annuity
payments that would have been paid prior to the Participant’s death but for the
requirement of Section 4.6(d).
	 
	 	(e)	 	Except as otherwise provided in this Section 4.7, no person shall receive any
form of death or survivorship benefits following the death of a Participant, whether
before or after his Commencement Date.

12

 

4.8 Withholding Taxes.

Benefits and payments under the Plan are subject to the withholding of all applicable taxes.
Notwithstanding any provision of the Plan to the contrary, a Participant’s initial benefit payment
under the Plan shall be in an amount sufficient pay any remaining employment tax required to be
withheld with respect to Plan benefits. To the extent such amount is in excess of the first
distribution that would otherwise have been made based on the form of benefit elected by the
Participant, subsequent payments will not begin until the aggregated payments that would have been
made under the form of benefit elected by the Participant exceed the amount of such initial
distribution.

4.9 Compliance with Section 409A.

Anything else in this Plan to the contrary notwithstanding, effective January 1, 2005, the
Plan is intended to comply in all regards with Section 409A and shall be so construed and
administered. Without limiting the generality of the preceding sentence, (i) in no event shall any
benefit under the Plan be paid at any time other than under the terms of the Plan as in effect on
the date on which the Participant first acquires a legal right to such benefit (whether or not
vested), whether by amendment of the Plan, exercise of the Administrative Committee’s discretion,
or otherwise, except as permitted by Section 409A, and (ii) in the event that the Administrative
Committee, in its sole discretion, determines that any time or form of payment provided for in the
Plan, or the existence of a right to elect a time or form of distribution (including without
limitation the payment of benefits in the same form elected by a Participant under the Pension
Plan), 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, such provision shall to
the maximum extent permitted by law be deemed amended to the extent required to comply with Section
409A, or the Plan shall be construed as if such provision were not included therein. The
restrictions of Section 409A shall apply to the entire benefit of a Participant if any portion of
the Participant’s benefit was accrued or vested on or after January 1, 2005, but shall not apply to
a Participant whose entire benefit was accrued and vested prior to such date.

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ARTICLE V — ADMINISTRATION

5.1 Administrative Committee.

The Plan is administered by the Administrative Committee, which is the “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.

5.2 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, 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.
	 
	 	(e)	 	Plan Amendments. The Administrative Committee has the power and right,
at any time, to amend or supplement the Plan. Notwithstanding the foregoing provisions
of this Section 5.2(e), no amendment of the Plan shall reduce the benefit to which a
Participant would be entitled if he had terminated employment immediately prior to the
adoption of the resolution amending the Plan; provided,
however, the Administrative Committee or Corporation, as applicable, may

14

 

	 	 	 	amend the
Plan at any time to take effect retroactively or otherwise, as deemed necessary or
advisable for purposes of conforming the Plan to any present or future law,
regulations or rulings relating to plans of this or a similar nature.

5.3 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 5.4
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.

5.4 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 payment of the
distribution commences. The Administrative Committee may, in its sole discretion 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 5.4. Such notice will further describe that
the Applicant has a right to bring a civil action under Section 502 of ERISA if his 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.

Any Applicant whose claim is denied under the provisions described above, or who has not
received from the Administrative Committee a response to his 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

15

 

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 filing a claim for benefits and exhausting all of his rights under this Section
5.4, or more than 180 days after he receives the Administrative Committee’s decision on review of
the denial of his claim. Although not required to do so, an Applicant, or his 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 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.

5.5 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.

5.6 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.

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ARTICLE VI — AMENDMENT AND TERMINATION

6.1 Amendment and Termination.

As indicated in Section 5.2 above, the Administrative Committee may, at any time, amend or
supplement the Plan. The Board of Directors of the Corporation may, at any time, terminate the
Plan. Notwithstanding the foregoing provisions of Sections 5.2 or 6.1, neither an amendment or
termination of the Plan shall reduce the benefit to which a Participant would be entitled if he had
terminated employment immediately prior to the adoption of the resolution amending or terminating
the Plan; provided, however, the Administrative Committee or Corporation, as applicable, may amend
or terminate the Plan at any time to take effect retroactively or otherwise, as deemed necessary or
advisable for purposes of conforming the Plan to any present or future law, regulations or rulings
relating to plans of this or a similar nature. Upon termination of the Plan, all benefits accrued
through the date of termination shall be paid as provided herein; provided that the Administrative
Committee may, to the extent permitted under Section 409A, provide for the payment of actuarially
equivalent lump sums in full satisfaction of some or all of the accrued benefits.

6.2 Successors and Assigns.

The obligations of the Corporation and the Participating Employers under the Plan shall be
binding upon any assignee or successor in interest thereto.

17

 

ARTICLE VII — MISCELLANEOUS

7.1 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 Participating 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 a
Participating Employer, are uniquely informed as to such Participating Employer’s operations and
have the ability to affect materially Participating Employer’s profitability and operations.

7.2 Unsecured General Creditor.

In the event of a Participating 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 Participating 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 Participating Employer (the “Policies”) greater
than those of any other unsecured general creditors. In that event, any and all of the
Participating Employer’s assets and Policies will be, and remain, the general, unpledged,
unrestricted assets of Participating Employer. Participating Employer’s obligation under the Plan
will be merely that of an unfunded and unsecured promise of Participating Employer to pay money in
the future.

7.3 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.

7.4 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 Participating Employer, and neither the
Participant nor the Participant’s beneficiary will have any rights against such Participant’s
Participating 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 Participating Employer or to interfere with the right of such Participating Employer to
discipline or discharge him or her at any time.

7.5 Protective Provisions.

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

18

 

7.6
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.

7.7 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 the
Corporation 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.

7.8 Notice.

Any notice or filing required or permitted to be given to the Corporation 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 the
Corporation’s Chief Financial Officer and, if mailed, will be addressed to the principal executive
offices of the Corporation. 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 the Corporation. 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.

7.9 Successors.

The obligations of the Corporation and the Participating Employers under the Plan shall be
binding upon any assignee or successor in interest thereto. The provisions of this Plan will bind
and inure to the benefit of the Corporation and the Participating Employers, 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 the Corporation, and successors of any such corporation or other business entity.

7.10 Action by Corporation.

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

7.11 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 Participating Employer. The
treatment of such amounts under other employee benefit plans will be determined pursuant to the
provisions of such plans.

7.12 Participant Litigation.

In any action or proceeding regarding the Plan, employees or former employees of the
Corporation or a Participating 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 the Corporation, a

19

 

Participating 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 the Corporation, each Participating
Employer, the 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 29th day of December, 2008.

	 	 	 	 	 
	 	BAXTER INTERNATIONAL INC. ADMINISTRATIVE COMMITTEE

 	 
	 	By:  	/s/ Jeanne K. Mason
 	 
	 	 	Jeanne K. Mason 	 
	 	 	Corporate Vice President of Human Resources
and Administrative Committee Member 	 
	 

20

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