Document:

<PAGE>

                              TERRA INDUSTRIES INC.

                           INCENTIVE AWARD PROGRAM FOR
                            OFFICERS & KEY EMPLOYEES

                                      2002
                                      ----

I.   Purpose of the Plan
     -------------------

     The purpose of this Incentive Award Program is to motivate and reward
     officers and key employees of the Company toward achievement of goals and
     improved results.

II.  Eligibility in the Plan
     -----------------------

     Participation in this Incentive Award Program is limited to officers and
     key employees of Terra Industries Inc. and subsidiaries whose efforts are
     expected to contribute significantly to the success and accomplishment of
     the Company's goals.

III. Special Provisions and Considerations
     -------------------------------------

     Terra's incentive plan year coincides with the Company's fiscal year. The
     Chief Executive Officer will establish corporate financial goals, which are
     approved by the Board of Directors, which will be used to establish the
     2002 incentive pool. Each officer and key employee participating in this
     plan will be assigned a target incentive expressed as a percentage of
     year-end base salary.

     The Chief Executive Officer and his direct reports are responsible for
     approving each plan participant's individual goals as soon as practicable
     in 2002 (See Section IV below). The importance of each goal is reflected in
     the weight assigned to it; each participant's goals will sum to one hundred
     percent (100%). These individual goals will be used in determining the
     participant's final incentive payment. Each plan participant must
     periodically report on his/her goal achievement to the Chief Executive
     Officer.

<PAGE>

IV.  Funding the Officers and Key Employees Incentive Award Program
     --------------------------------------------------------------

     The 2002 Plan divides the incentive awards between a portion based upon
     Company financial performance and a portion based upon individual
     performance on personal goals (up to 34% of each participant's target
     bonus). However, awards for achieving individual performance goals may not
     be paid if the Personnel Committee of the Board of Directors and the Chief
     Executive Officer determine that the Company's financial performance does
     not justify such awards.

     The funding for the Company's financial performance portion of the
     incentive award pool is based on Terra Industries Inc.'s actual 2002
     results. Budgeted 2002 results, which is based on forecasts of nitrogen
     products and methanol selling prices and natural gas costs, does not
     justify an award. Consequently, the Company`s financial performance portion
     of the pool starts to fund at fifty percent (50%) when the Company's actual
     2002 income from continuing operations ("income") is $20 million and
     increases by one percent (1%) for each additional $0.5 million of net
     income. Any funding for actual 2002 income which is more than $95 million
     is at the discretion of the Personnel Committee of the Board of Directors
     and the Chief Executive Officer.

     Each participant will develop up to five goals that will be used as the
     measurement in determining payments under the personal goals section. These
     goals should be reviewed and approved by the Chief Executive Officer and,
     where applicable, his direct reports. Accordingly, a participant could earn
     the portion of his or her bonus based on achieving personal goals even if
     there is no funding of the Company performance portion of the pool.
     However, funding of the individual performance awards pool is at the
     discretion of the Personnel Committee of the Board of Directors and the
     Chief Executive Officer.

V.   Basis of the Incentive Award
     ----------------------------

     The starting point in determining each participant's incentive award is the
     evaluation of the individual goals. The participant's individual raw award
     is calculated by taking each participant's year-end salary times his/her
     targeted incentive percentage and then times his/her individual goal
     achievement.

                                       2

<PAGE>

     The sum of all participants' adjusted raw awards creates an adjusted raw
     pool. This adjusted raw pool is compared with the sum of the plan
     participant's year-end salary, times their targeted percentage award (or a
     portion of his/her index used to calculate this pool) which is then
     adjusted by the Company's financial performance to form the incentive pool.
     This adjusted raw pool is adjusted up or down to match the incentive pool.
     All participant incentives are paid from the incentive pool.

     The Chief Executive Officer has the discretion to adjust any individual's
     participation up or down to reflect unusual or unplanned events or to
     reflect the degree of difficulty of the goals. He may adjust amounts
     between plan participants and may add amounts from any discretionary part
     of the pool. The Chief Executive Officer may also choose to award less than
     the full amount of the pool or add as much as 20% to the pool.

VI.  Review, Revision and Modification of the Goals
     ----------------------------------------------

     Under normal business conditions, the Company goals or individual
     objectives will not be altered or revised once established for the year.
     Unexpected and unforeseen developments during the course of the year may
     prompt re-examination of an officer's or key employee's established goals.
     It is the responsibility of each officer and key employee to note the
     conditions of change which would prompt such a review and take timely
     action. Such action would include review with the Chief Executive Officer
     for the need for revision of an established goal as soon as possible after
     the detected change. All changes are subject to final approval of the Chief
     Executive Officer.

VII. Payment of Award
     ----------------

     The incentive award will be paid to each officer and key employee by check
     as soon as possible after the close of the fiscal year and after approval
     of the Chief Executive Officer's recommendations by the Personnel Committee
     of the Board of Directors.

     To be eligible for full payment, the officer or key employee must have been
     in the employ of Terra Industries Inc. or one of its subsidiaries as of
     January 1 of the incentive plan year and must be actively employed by the
     Company on the date the incentive award is paid.

                                       3

<PAGE>

VIII. Special Provisions
      ------------------

     A newly elected officer or key employee will participate in this incentive
     program in proportion to the number of full months worked as an officer or
     key employee during the incentive program year.

     A participant who retires, becomes permanently disabled or dies shall cease
     to participate in this program as of the end of the month coincident with
     retirement, disability or death. The proportionate incentive award will be
     paid as soon as possible after the close of the fiscal year. While it is
     the intent of the Company to make awards under this plan and to continue
     the plan from year to year, it reserves the right to amend or terminate the
     plan entirely at its discretion.

                                       4<PAGE>

                                                                   EXHIBIT 10.2
--------------------------------------------------------------------------------

                       THE INTERNATIONAL RETIREMENT PLAN
                                      OF
                           BAXTER INTERNATIONAL INC.

<PAGE>

              THE INTERNATIONAL PLAN OF BAXTER INTERNATIONAL INC.

                               TABLE OF CONTENTS

<TABLE>
   <S>                                                                   <C>
   ARTICLE I INTRODUCTION...............................................  1

   ARTICLE II DEFINITIONS...............................................  1

   ARTICLE III SERVICE RULES............................................  5

   ARTICLE IV PARTICIPATION.............................................  5

   ARTICLE V RETIREMENT BENEFITS........................................  7

   ARTICLE VI RETIREMENT BENEFIT OPTIONS................................  8

   ARTICLE VII BENEFITS PAYABLE UPON THE DEATH OF A PARTICIPANT PRIOR TO
     RETIREMENT.........................................................  8

   ARTICLE VIII FORFEITURE OF BENEFITS..................................  8

   ARTICLE IX PLAN ADMINISTRATION.......................................  9

   ARTICLE X GENERAL PROVISIONS......................................... 10
</TABLE>

i

<PAGE>

                                   ARTICLE I

                                 INTRODUCTION

   1.1  The program for provision of benefits hereunder shall be known as the
International Retirement Plan of Baxter International Inc.

   1.2  The objective of the Plan is to provide retirement income, and other
benefits, based on the employee's service with the Company to those
international employees specifically named by the Administrative Committee as
Participants under the Plan who, by reason of special circumstances including,
but not limited to, transfer of employment from one country to another, are
unable to accumulate such benefits through regular private and statutory plans.
This Plan is designed to provide Participants under the Plan with a level of
benefits consistent with the employee benefits philosophy of Baxter
International Inc.

                                  ARTICLE II

                                  DEFINITIONS

   2.1  "Administrative Committee", also referred to as the "Committee", means
the committee appointed by the Board responsible for the administration,
interpretation, and control of the Plan, pursuant to the Provisions of the
Article IX.

   2.2  "Affiliate" means any corporation (other than the Company) more than
50% of the outstanding stock of which is owned, directly or indirectly, by
Baxter International Inc. or any other business organization of which Baxter
International Inc. owns more than 50% of the profit or capital interest.

   2.3  "Beneficiary" means the person or persons designated in writing by a
Participant to receive death benefits, if any, provided for in Article VI
and/or Article VII and, if and to the extent that such a designation shall not
be in force, the Participant's spouse, or if he has no spouse, his estate.

   2.4  "Board" means the Board of Directors of the Company.

   2.5  "Company" means Baxter International Inc., a Delaware corporation, or
its successors.

   2.6  "Compensation" means

   (a) for employees other than fully commissioned sales representatives
described in Section 2.6(b) below, Compensation shall include the amounts paid
by the Company or any of its Affiliates during the Plan Year to a Participant
for services as an employee which is included in such Compensation under the
rules set forth in Section 2.6(a)(i) below, other than such Compensation which
is excluded under the rules set forth in Section 2.6(a)(ii) below.

      (i) Included Pay. For purposes of this subsection 2.6(a), a Participant's
   Compensation will include the items described in (A) and (B), below:

          (A) The portion of such earnings of an Employee which is or would be
       required to be reported as taxable income on United States Internal
       Revenue Service Form W-2 but for the fact that such Compensation is not
       US source income or is not paid by an Employer subject to US income tax
       reporting rules, including:

              1. bonuses, including Management Incentive

             Compensation Plan bonuses and Christmas bonuses; payments in lieu
          of salary increases; bonuses paid to sales representatives if
          included in the compensation plan; and other bonuses under bonus
          plans approved by the Company or its delegate as constituting
          Compensation hereunder, other than bonuses described in Section
          2.6(a)(ii)(C)(7);

              2. call-in pay;

              3. commission pay;

                                                                             1

<PAGE>

              4. double time pay;

              5. draws toward commissions;

              6. funeral pay;

              7. holiday pay;

              8. jury duty pay;

              9. lead pay;

             10. mileage pay for long haul truckers;

             11. military pay;

             12. on-call (beeper) pay;

             13. overtime pay;

             14. paid absences;

             15. retroactive pay;

             16. salary or other regular pay;

             17. shift differentials;

             18. sick pay or other short-term disability pay;

             19. straight time pay;

             20. vacation pay.

          (B)  the amount of any salary reduction or cash or deferred
       contributions made by such Participant under any plan maintained by the
       Employer which is similar to a plan that is described in US Internal
       Revenue Code Section 125 or Section 401(k), other than the amounts
       described in Sections 2.6(a)(ii)(C)(11) and (12) below.

      (ii) Excluded Pay. For purposes of this Section 2.6, a Participant's
   Compensation will exclude:

          (A)  Amounts which might be considered as imputed income arising from
       the Participant's employer's moving expense reimbursement policies, the
       Participant's employer's life insurance plans or the Participant's
       employer's other fringe benefit plans;

          (B)  Amounts paid to replace benefits not provided under any
       retirement plan due to the contribution or benefit limitations or
       non-discrimination restrictions; and

          (C)  The following amounts paid, accrued or imputed:

              1. attendance awards;

              2. automobile allowances;

              3. business expense reimbursements;

              4. cash prizes or awards;

              5. gifts;

              6. contest pay;

              7. deferred compensation, including deferred bonuses;

              8. discretionary awards;

              9. employee referral awards;

             10. executive perquisite allowances;

             11. flex credits;

2

<PAGE>

             12. flex cash;

             13. hiring bonuses;

             14. income from sale of stock;

             15. income from the exercise of stock options;

             16. interest earnings on deferred compensation, including deferred
                 bonuses;

             17. invention fees and awards;

             18. long term disability pay;

             19. mortgage differential payments;

             20. non cash prizes or awards;

             21. pay for unused sick time;

             22. performance shares;

             23. promotional awards;

             24. relocation expense reimbursements;

             25. restricted stock rights;

             26. retention bonuses;

             27. severance pay;

             28. stock appreciation rights;

             29. tax equalization payments to expatriates;

             30. technical achievement awards;

             31. travel allowances;

             32. tuition reimbursements; and

             33. workers' compensation benefits.

   (b) for Participants who are fully commissioned sales representatives who do
not receive reimbursement for expenses, Compensation shall be as defined in
Section 2.6(a), except that only eighty-five percent (85%) of the amounts
included in Compensation under the rules of Section 2.6(a) shall be recognized.

   2.7  "Continuous Service" means the period of continuous full-time
employment by the Company or any Affiliate by any Participant from his most
recent date of hire by the Company or any Affiliate. Continuous Service shall,
in all cases, be determined by the Administrative Committee under the rules set
forth in Article III and shall include completed calendar years of such
service. For purposes of a Participant who becomes a Participant pursuant to
Section 4.4, Continuous Service shall mean the period of continuous full-time
employment by the Company or any Affiliate by any Participant from his most
recent date of rehire by the Company or any Affiliate.

   2.8  "Credited Service" means the portion of Continuous Service that is used
to determine benefit levels under this Plan, calculated in accordance with the
rules set forth in Article III.

   2.9  "Country" means a self-governing jurisdiction recognized as a separate
country by the Administrative Committee. The Commonwealth of Puerto Rico shall
not be considered a separate Country for the purposes of this Plan.

   2.10  "Effective Date" means January 1, 1999.

   2.11  "Entry Date" means January 1, April 1, July 1 and October 1 of each
calendar year.

                                                                             3

<PAGE>

   2.12  "Final Average Compensation" means the average of Compensation for the
period of three (3) consecutive full calendar years of Continuous Service
immediately preceding the Retirement Date. The average shall be calculated by
converting Compensation earned in a year into U.S. dollars using the exchange
rate in effect as of December 31 of that year, as determined below or has
determined by the Administrative Committee, and then calculating the average
based on such dollar amounts. The Participant shall be considered to have
incurred a full calendar year of Continuous Service for a year if the
Participant has not terminated employment prior to December 31 of such year.
Exchange rates shall be determined by using the currency trading exchange rates
published in the Wall Street Journal. If such rates are not published, the
Administrative Committee may select an alternative or successor publication
that shall most closely reflect such currency trading rates.

   2.13  "Former Plan" shall mean the Baxter World Trade Corporation
International Retirement Plan.

   2.14  "Normal Retirement Benefit" shall mean the lump sum benefit to which
the Participant would be entitled at his Retirement Date, calculated in
accordance with Article V of this Plan.

   2.15  "Normal Retirement Date" means the first day of the month coinciding
with or next following the sixty-fifth (65/th) birthday of a Participant. /

   2.16  "Participant" means a person who has met the requirements for
participation as set forth in Article IV.

   2.17  "Past Service" shall mean the period of Continuous Service that has
been previously been performed by an employee as of the date he becomes a
Participant in this Plan.

   2.18  "Plan" means the "International Retirement Plan of Baxter
International Inc." as set forth in this document and as it may be amended from
time to time.

   2.19  "Retirement Date" means the first day of the month immediately
following the date that the Participant terminates employment with the Company
and its Affiliates.

   2.20  "Social Security Benefits" means all benefits sponsored by a
government (including lump sum payments) for which the Participant and the
Company or Affiliate contribute, or for which the Company or an Affiliate has
contributed, other than benefits payable in the event of death of the
Participant, to which a Participant is entitled, as a single male or female,
and which he collects, or could collect, upon proper application, at total
disability or at a deemed retirement age from any Social Security benefit
program in any Country in which the Participant has been employed.

   2.21  "Social Security Transfer" means a transfer of employment from one
Country to another at the request of the Company or an Affiliate under
circumstances that cause the employee to cease to accrue Social Security
Benefits under the Social Security benefit program of the Country from which he
transfers. A Social Security Transfer shall be deemed to occur only after the
completion of twelve (12) months Continuous Service in the Country to which the
employee has been transferred.

   2.22  "Termination for Cause" shall mean the involuntary termination of an
employee by the Company or any Affiliate because of conviction of a crime or
because of theft, embezzlement or other actions involving an intentional desire
to damage the business of the Company or any of its Affiliates.

   2.23  "Total Disability" and "Totally Disabled" mean disability during any
period for which the Participant is considered to be totally and permanently
disabled by the Administrative Committee.

   2.24  "U.S./P.R. Expatriate Employee" shall mean an employee who is assigned
to work outside the United States or Puerto Rico but who remains on a United
States or Puerto Rican payroll and who is a participant in the United States or
Puerto Rican qualified retirement plans of the Company.

4

<PAGE>

                                  ARTICLE III

                                 SERVICE RULES

   3.1  Subject to the approval of the Administrative Committee, Continuous
Service of a Participant shall not be deemed broken by any of the following
events:

      (a) temporary absence because of vacation, illness or accidental injury
   within the normal duration of absence permitted by the Employer in such
   cases;

      (b) absence while on a leave granted with the consent of the Employer;

      (c) transfer of employment from one employer to another among the Company
   and its Affiliates.

   3.2  If a Participant is deemed to be Totally Disabled pursuant to Section
2.23, he shall remain a Participant in the Plan during such disability and be
entitled to accumulate Continuous Service for retirement income purposes, and
be entitled to eligibility for death benefits according to the provisions of
Article VII for so long as he remains Totally Disabled. For purposes of Section
2.12 and Section 3.2, a Participant's Retirement Date shall be the date the
earlier of the date his employment actually terminates or the date he is first
deemed to be Totally Disabled.

   3.3  If a Participant ceases to be Totally Disabled prior to his Normal
Retirement Date and fails to return to active employment with the Company or an
Affiliate, he shall be considered, for the purposes of the Plan, as having
terminated his employment at the time he became Totally Disabled.

   3.4  Any breaks in Continuous Service with the Company other than those
described in Sections 3.1 and 3.2 constitute a termination of employment.

   3.5  Credited Service shall include all Continuous Service performed after
the date an employee becomes a Participant in the Plan plus one fifth ( 1/5) of
the Participant's Past Service for each of the first five (5) full years of
Continuous Service performed after the date the employee became a Participant
in the Plan. Notwithstanding the foregoing, a person who was a participant
under the Former Plan and who is employed by the Company on the Effective Date
shall immediately be granted full credit for the Participant's Past Service.
Furthermore, this Section 3.5 shall not apply to a Participant who again
becomes a Participant pursuant to Section 4.4.

   3.6  In the event that the Participant is terminated from service
involuntarily (other than a Termination for Cause) Credited Service shall
include all Continuous Service.

                                  ARTICLE IV

                                 PARTICIPATION

   4.1  A person who was a participant under the Former Plan and who is
employed by the Company on the Effective Date shall become a Participant under
the Plan on the Effective Date. Each other person who is a regular full-time
employee of the Company or an Affiliate shall become a Participant under the
Plan on an Entry Date coincident with or following the Effective Date on which
he has met the requirements of either Section 4.2 or Section 4.3 below.

   4.2  On a quarterly basis, the Administrative Committee shall name an
employee to become a Participant if he has:

      (a) Incurred a Social Security Transfer after having incurred a previous
   Social Security Transfer, provided that the second Social Security Transfer
   does not result in his transfer of employment back to the Country from which
   he transferred employment in the previous Social Security Transfer,

      (b) He is earning pay in Broad Pay Groupings E or above (as defined by
   the Baxter compensation scheme), and

      (c) He is not a U.S./P.R. Expatriate Employee.

                                                                             5

<PAGE>

   4.3  On a quarterly basis, the Administrative Committee may name an employee
who has not satisfied the criteria set forth in Section 4.2, but who has
satisfied such other criteria as the Committee may from time to time establish,
such as incurring a Social Security Transfer to a location where it is not
expected that the employee will ever qualify for Social Security benefits. The
Committee shall not exercise such discretion unless the executive management
team of his business unit has nominated the employee, and delivered such
nomination to the Committee at least two (2) calendar months prior to the
employee's proposed Entry Date.

   4.4  A former Participant who is subsequently rehired by the Company or an
Affiliate shall automatically become a Participant again as of the Entry Date
coincident with or following the Participant's rehire date.

   4.5  Participants shall not be required or permitted to contribute to the
Plan.

6

<PAGE>

                                   ARTICLE V

                              RETIREMENT BENEFITS

   5.1  The Normal Retirement Benefit shall be a lump sum amount that shall
depend upon the Participant's Final Average Compensation and number of whole
years of Credited Service at the Participant's Retirement Date in accordance
with the following table:

<TABLE>
<CAPTION>
                     Whole Years           Percentage of
                 of Credited Service Final Average Compensation
                 ------------------- --------------------------
                 <S>                 <C>
                          1                       0%
                          2                       0%
                          3                       0%
                          4                       0%
                          5                       0%
                          6                      10%
                          7                      20%
                          8                      30%
                          9                      40%
                         10                      50%
                         11                      70%
                         12                      90%
                         13                     110%
                         14                     130%
                         15                     150%
                         16                     170%
                         17                     190%
                         18                     210%
                         19                     230%
                         20                     260%
                         21                     290%
                         22                     320%
                         23                     350%
                         24                     380%
                         25                     410%
                         26                     440%
                         27                     470%
                         28                     500%
                         29                     530%
                     30 or more                 560%
</TABLE>

   5.2  The Normal Retirement Benefit of a Participant who was a participant in
the Former Plan shall be the Normal Retirement Benefit calculated under the
terms of Section 5.1.

   5.3  A Participant shall receive his Normal Retirement Benefit if he shall
cease employment with the Company and all of its Affiliates, unless the
Administrative Committee shall determine that his Normal Retirement Benefit
shall be deferred or forfeited in accordance with the provisions of Article
VIII below.

                                                                             7

<PAGE>

   5.4  All benefits payable under the Plan shall be calculated in United
States dollars and shall be payable from and in the currency of the last
country from which the Participant was paid prior to the Participant's
Retirement Date. The benefit shall be converted to local currency using the
exchange rate in effect as of the Participant's Retirement Date, as determined
below or has determined by the Administrative Committee. Exchange rates shall
be determined by using the currency trading exchange rates published in the
Wall Street Journal. If such rates are not published, the Administrative
Committee may select an alternative or successor publication that shall most
closely reflect such currency trading rates.

   5.5  Notwithstanding any of the provisions of this Article, the retirement
of any Participant under this Plan shall not become effective while he is
employed by the Company or an Affiliate.

                                  ARTICLE VI
                          RETIREMENT BENEFIT OPTIONS

   6.1  In lieu of the lump sum benefit described in Article V, a Participant
may elect, prior to his Retirement Date, an optional form of payment described
in Section 6.2. Notwithstanding any election by the Participant, if the
Participant's Retirement Date is on or after his Normal Retirement Date the
optional form of payment described in Section 6.2 is not available.

   6.2  A Participant may elect to have his Normal Retirement Benefit paid in
annual installments over a period no longer than four (4) years, without
interest, commencing as soon as administratively feasible after his Retirement
Date. In the event that the Participant dies, his Beneficiary shall receive any
remaining installments. If his Beneficiary shall die before receiving all
payments to which he is entitled, the remaining payments shall be paid to the
estate of the Beneficiary.

   6.3  A participant must elect a form of benefit upon his entry into the
Plan. A Participant may change his form of benefit at any time; however,
provided that if the Participant desires to elect an optional form of
retirement benefit according to Section 6.2, he must do so not less than one
year prior to his Retirement Date, unless permission is obtained from the
Administrative Committee for an election at a later date.

   6.4  An elected option may be changed, provided that the revised election is
made not less than one year prior to the Participant's Retirement Date.

   6.5  Payment under Section 6.1 or the first payment under 6.2, whichever is
applicable, shall occur no more than 45 days after the Participant's Retirement
Date.

                                  ARTICLE VII
               BENEFITS PAYABLE UPON THE DEATH OF A PARTICIPANT
                              PRIOR TO RETIREMENT

   7.1  In the event of a Participant's death prior to his retirement while
still employed by the Company or any Affiliate, a death benefit equal to his
Normal Retirement Benefit, calculated as if he had terminated employment on the
date of his death, shall be paid in a lump sum to his designated Beneficiary.

   7.2  Proof of the death of the Participant and of eligibility of the
Beneficiary for benefit must be furnished, in a form satisfactory to the
Administrative Committee, before any benefits are payable hereunder.

                                 ARTICLE VIII
                            FORFEITURE OF BENEFITS

   8.1  Benefits otherwise payable hereunder shall be nonforfeitable except in
accordance with this Article and, if applicable, Section 10.12. In the event of
forfeiture in accordance with the provisions of this Article, the Participant
shall receive solely the benefits, if any, allowed under this Article and shall
have no further rights to payments under this Plan.

8

<PAGE>

   8.2  A Participant shall forfeit his entire Normal Retirement Benefit and
shall have no right to any benefit hereunder if the Administrative Committee
determines that he incurs a Termination for Cause. If a Participant who was a
participant in the Former Plan elects to exercise any contractual rights he may
have under the Former Plan and receives a benefit under the terms of the Former
Plan he shall forfeit his Normal Retirement Benefit under the Plan and shall
have no rights under this Plan, except as may be granted under Section 8.3.

   8.3  In the event of a complete forfeiture described in Section 8.2, the
Administrative Committee may, in its discretion, nevertheless pay a benefit to
the Participant, calculated by assuming that the Participant's Credited Service
equals the amount determined under Section 3.5, or such lesser amount that the
Committee shall deem reasonable. The Administrative Committee shall not be
obligated to make such a payment, and the Participant shall have no rights
under this plan to contest a decision of the Committee.

                                  ARTICLE IX
                              PLAN ADMINISTRATION

   9.1  The Plan shall be administered by the Administrative Committee, which
shall have the power to administer and construe the Plan, determine questions
of law and fact arising under the Plan, establish a funding policy if deemed
appropriate, determine the amount and authorize payment of benefits under the
Plan, and exercise the other rights and powers specified herein. The Committee
shall consist of at least three members appointed by the Board.

   9.2  Any member of the Committee may at any time resign by giving written
notice of such resignation to the Committee and to the Company. The Board may
at any time remove one or more of the members of the Committee by giving
written notice of such removal to the Committee and to each member so removed.
In the event of the resignation, removal or death of any member of the
Committee, the Board shall designate the successor of such member.

   9.3  A quorum for the transaction of business by the Committee shall consist
of a majority of the members of the Committee then in office. All action taken
by the Committee at any meeting shall be by the vote of a majority of those
present. No member of the Committee shall participate in any decision, which
constitutes an exercise of discretion by the Committee, relating specifically
to such member. Any action may be taken by the Committee without a meeting upon
the written approval of a majority of the members then acting. The Committee
may at any time adopt rules, not inconsistent with the provisions of the Plan
for the administration of the Plan and the transaction of its business, and may
at any time revoke or amend any such rules theretofore adopted.

   9.4  The Committee may retain auditors, accountants, actuaries and legal
counsel and the Committee may retain such other persons as it deems appropriate
in connection with administering the Plan. Any member of the Committee may
himself act in any such capacity, and any such auditors, accountants,
actuaries, and legal counsel may be persons acting in a similar capacity for
the Company or any Affiliate and may be employees of the Company or any
Affiliate. To the extent permitted by the law, the opinion of any such auditor,
accountant, actuary or legal counsel shall be full and complete authority and
protection in respect of any action taken, suffered, or omitted by the
Committee in good faith and in accordance with such opinion.

   9.5  The Committee members may allocate responsibility among themselves, and
the Committee may designate other persons to carry out its responsibilities
under the Plan. All of the members of the Committee at any time acting
hereunder may, by a written instrument, designate each or any of such members
severally, or any two or more of them, jointly, and/or any one or more other
persons, severally or jointly, to execute on behalf of the Committee all
documents and other instruments proper, necessary or desirable in order to
effectuate the purposes of the Plan, and any member of the Committee at any
time acting hereunder may similarly revoke any such designation.

   9.6  To the extent permitted by law, all determinations hereunder by the
Committee shall be made in the sole and absolute discretion of the Committee.
In the event that any disputed matter shall arise hereunder, including, without
any matter limiting the generality of the foregoing, any matter relating to the
eligibility of any

                                                                             9

<PAGE>

person therein, the amounts payable to any person hereunder and the
applicability and interpretation of the provisions hereof, the decision of the
Committee upon such matter shall be binding and conclusive upon all persons,
including without in any manner limiting the generality of the foregoing, the
Company, its Affiliates, all persons at any time in the employ of the Company
or an Affiliate, the Participants, the former Participants, the Vested Former
Participants, and their respective beneficiaries, and upon the respective
successors, assigns, executors and administrators of all the foregoing.

   9.7  No member of the Committee shall receive any compensation for his
services as such.

                                   ARTICLE X
                              GENERAL PROVISIONS

   10.1  The Company reserves the right by action of the Board to amend,
modify, terminate, or discontinue the Plan in whole or in part at any time. No
such amendment shall adversely affect the retirement benefits applicable to a
Participant who has already retired or shall reduce the Normal Retirement
Benefit that a Participant would receive if he were to incur a Retirement Date
on the date of such amendment, without such Participant's prior consent. Any
amendment so proposed shall be authorized or ratified by the Board and shall be
evidenced in writing, executed by the Company, and directed to the
Administrative Committee.

   10.2  While the Company intends to continue the Plan indefinitely,
nevertheless, subject to the provision of Section 10.1, it assumes no
contractual obligations as to its continuance or the making of any
contributions thereunder. The Company reserves the right at any time to
terminate the Plan for any reason.

   10.3  The Plan is unfunded and no Participant shall have any right or claim
against any assets or pool of assets held by any person or entity. The Company
or any Affiliate may establish such funds or book reserves as it deems
necessary or desirable, but all such reserves or funds shall be considered
assets of the Company or its Affiliate. The Company and its Affiliates shall be
under no obligation to establish any such funds or book reserves. Nothing
contained in this Plan shall be deemed to create a trust or create a fiduciary
relationship with respect to benefits hereunder or with respect to any funds or
reserves established by the Company or any Affiliate. The right of a
Participant or Beneficiary to receive payment under the Plan shall be no
greater than the right of any unsecured creditor of the Company or Affiliate.

   10.4  The Company shall pay the entire costs of the Plan, provided that its
Affiliates may be required to share in such cost on an equitable basis.

   10.5  No benefit payable under the Plan shall be subject in any manner to
alienation, anticipation, assignment, garnishment or pledge; and any attempt to
alienate, anticipate, assign, garnish or pledge the same shall be void. No
person or entity paying benefits under the Plan shall be in any manner liable
for or subject to the debts, liabilities, engagements or torts of any person
entitled to such benefits. If any person entitled to benefits under the Plan is
adjudicated bankrupt or attempts to alienate, anticipate, assign or pledge any
benefits, then such benefits shall, in the discretion of the Committee, cease.
In this event, the Committee shall have the authority to hold or apply such
benefits, or any part of them, to or for the benefit of the person entitled to
them, his spouse, his children or other dependents, in such manner and in such
proportion as the Committee may deem proper.

   10.6  Nothing in the Plan shall restrict the right of an employer to
terminate the service or reduce the compensation of a Participant; neither
shall the benefits to which a Participant might claim to be entitled to under
the Plan, be used as a ground for increasing damages in any action brought by
him, against the Company or any Affiliate, in respect to the termination of
service.

   10.7  If the Administrative Committee determines that any person to whom a
payment is due hereunder is unable to care for his affairs by reason of
physical or mental disability, or if a minor, the Committee shall have the
power to direct that any benefit payment due or becoming due to such person, be
paid to a member of his immediate family or any duly qualified legal
representative, without any responsibility of the Committee to see to the
application of such payment, and any such payment so made, shall be a complete
discharge of the liabilities of the Plan therefor.

10

<PAGE>

   10.8  If the Committee for any reason deems it advisable, any or all of the
retirement benefits payable under the Plan may be provided through the purchase
of annuities from such insurance company or companies as may be approved by the
Committee.

   10.9  No person, whether a Participant or otherwise, shall have any claim,
right or interest upon, to, or in respect of the benefits from this Plan except
under and in accordance with the provisions of the Plan as contained herein.

   10.10  If a Participant covered under this Plan is considered to be in
receipt of taxable emoluments under the personal income tax laws of any country
in which he is employed during his career by virtue of his coverage under this
Plan, the benefits provided herein are withdrawn as they apply to such employee
as long as he is considered to be in constructive receipt of such benefits by
such laws.

   10.11  The Company hereby indemnifies each member of the Administrative
Committee, each officer, and each employee of the Company or any Affiliate
against any liabilities or expenses, including attorneys' fees, reasonably
incurred by him in connection with any actual or threatened legal action to
which he might become a party by reason of being a fiduciary with respect to
the Plan, except to the extent that he shall be judged in such action to be
liable for gross negligence or willful misconduct in the performance of this
duties as a fiduciary.

   10.12  If the Committee cannot make payment of any amounts payable hereunder
within five (5) years after such amount becomes payable because the identity or
whereabouts of the person entitled to such payment cannot be ascertained, the
Committee, at the end of such 5-year period, may direct that such unpaid amount
be forfeited.

   10.13  Copies of the Plan shall be maintained by the Company and shall be
subject to inspection by Participants upon request to the Administrative
Committee.

   10.14  The masculine pronoun, whenever used herein, shall include the
feminine, and the singular includes the plural unless the context indicates
otherwise.

   IN WITNESS WHEREOF, the company has caused this instrument to be executed on
the        day of       , 1999.

                                          BAXTER INTERNATIONAL INC.

                                          By: /S/  MICHAEL TUCKER

                                          Its: Senior Vice President of Human
                                            Resources

                                ACKNOWLEDGEMENT

   The undersigned, as Secretary of the Administrative Committee under the
International Retirement Plan of Baxter International Inc. and on behalf of the
other members of such Committee, acknowledges receipt of the foregoing amended
and restated instrument and approves thereof.

   Dated this        day of       , 1999.

                                          ADMINISTRATIVE COMMITTEE UNDER
                                          THE INTERNATIONAL RETIREMENT PLAN
                                          OF BAXTER INTERNATIONAL INC.

                                          By: _______________________________

                                          Its: Secretary

                                                                             11

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