EXHIBIT 10.9
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES
DEFERRED COMPENSATION PLAN
(Amended and restated effective January 1, 2002)
BAXTER INTERNATIONAL INC. AND SUBSIDIARIES DEFERRED
COMPENSATION PLAN
(Amended and Restated Effective January 1, 2002)
ARTICLE I
PURPOSE, EFFECTIVE DATE, EMPLOYER
1.1 Purpose. The Baxter International Inc. and Subsidiaries Deferred
Compensation Plan (the "Plan") has been adopted by Baxter International Inc.
("Baxter"). The Plan is intended to be an unfunded arrangement to provide
deferred compensation for the benefit of a select group of management and highly
compensated employees. The Plan is designed to enable eligible participants to
defer compensation and receive matching contributions under the provisions of
the Baxter International Inc. and Subsidiaries Incentive Investment Plan
("IIP"), a tax-qualified defined contribution plan, in excess of the limitations
imposed by the Internal Revenue Code("Code").Effective January 1, 1998, Baxter
amended and restateed the Plan in part to combine the Plan and the Baxter
International Inc. and Subsidiaries Incentive Investment Excess Plan. Effective
January 1, 2002, the Plan is hereby further amended and restated. Capitalized
terms not defined in this Plan are deemed to have the meaning given them in the
IIP.
1.2 Effective Date. The effective date of this restatement is
January 1, 2002.
1.3 Employer. The Plan is adopted for the benefit of a select group of
management or highly compensated employees of Baxter or of any subsidiaries or
affiliates of Baxter, as set forth below. The Plan may be adopted by any
subsidiaries or affiliates of Baxter with the consent of the Administrative
Committee. Adopting Employers are listed on Appendix A as attached and updated
from time to time.
ARTICLE II
DEFINITIONS
2.1 Accounts. Accounts means the sum of the Participant's Excess Matching
Contribution Account balance, the Participant's Bonus Deferral Account balance
and the Participant's Pay Deferral Account balance.
2.2 Administrative Committee. For purposes of the Plan, Administrative
Committee has the same meaning as the
Administrative Committee in the IIP.
2.3 Beneficiary. A Participant's Beneficiary, as defined in Article VI,
is the Beneficiary designated to receive the Participant's Accounts, if any,
from the Plan, upon the death of the Participant.
2.4 Bonus. The term Bonus means those bonuses that are included in the
definition of Compensation in the IIP and also includes any other bonus which is
approved by the Administrative Committee and listed on Attachment A to this
Plan. Attachment A may be
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updated from time to time to accurately reflect the approved bonuses for purpose
of this definition.
2.5 Bonus Deferral. The Bonus Deferral is the amount of the Participant's
Bonus which the Participant elected to defer and contribute to the Plan which,
but for such election, would have otherwise been paid to him/her.
2.6 Compensation. For purposes of the Plan, Compensation has the same
meaning as Compensation in the IIP without regard to Section 401(a)(17) of the
Code, except that the Bonuses deferred under the Plan are included in
Compensation in the Plan Year in which such amounts would be paid if they were
not deferred and not in the Plan Year in which such amounts are actually paid.
2.7 Compensation Committee. The Compensation Committee of the Board of
Directors of Baxter.
2.8 Deferral Election Form. The form which a Participant must complete
and return to the Administrative Committee, in accordance with the rules and
procedures as may be established by the Administrative Committee, in order to
elect to defer aportion of his or her Bonus into the Plan and to designate his
Pay Deferral Election.
2.9 Distribution Election Form. The form which a Participant must
complete and return to the Administrative Committee, in accordance with the
rules and procedures as may be established by the Administrative Committee. This
form is to be used by both (a) Participants who are not eligible to defer a
portion of their Bonus or make a Pay Deferral Contribution to the Plan; and
(b)Participants who are electing distributions with respect to a Deferred
Compensation Account. Only one election form shall be filed with respect to
distribution of a Participant's Deferred Compensation Account following
termination of employment. A Participant may also file a Distribution Election
Form to request a scheduled in-service distribution of his or her Deferred
Compensation Account, provided that such form is filed at least 24 months prior
to the date distribution is to commence. If the Participant has a Termination of
Employment prior to the date the in-service distribution is scheduled to
commence, the Distribution Election Form requesting such in-service distribution
shall be ignored. To be effective, a Distribution Election Form must be filed
within the time prescribed by the Administrative Committee.
2.10 Eligible Employee. An Eligible Employee is anyone who:
(a) is a participant in the Baxter International Inc. Long Term
Incentive Plan for the Plan Year to which deferrals relate
(or was a participant in the Baxter International Inc. Long
Term Incentive Plan in a prior Plan Year and who is a
participant in a different Long Term Incentive Plan,
sponsored by Baxter or one of its affiliates, for the
current Plan Year) who has contributed the maximum annual
contribution limit under Sections 401(k) and 402(g) of the
Code to the IIP;
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(b) is a participant in the IIP whose Matching Contributions to
the IIP for the Plan Year are limited because of the
application of the Code,
provided he or she has met the eligibility rules set forth
in Section 3.1 below; or
(c) is designated by the Administrative Committee to be a
Participant in the Plan and eligible to receive
discretionary benefits under Section 3.5 of the Plan for
the Plan Year, subject to the terms and conditions
imposed by the Administrative Committee in accordance with
Section 3.5.
2.11 Excess Matching Contribution. The Excess Matching Contribution is the
difference between the Matching Contributions allocated to a Participant's IIP
Account during the Plan Year and the amount that would have been allocated if
the limitations of Sections 415, 401(k), 402(g) and 401(m) of the Code, as well
as the limitations of Section 401(a)(17) of the Code, were disregarded.
2.12 Matching Contribution. The term Matching Contribution has the same
meaning in the Plan as it does in the IIP.
2.13 Participant. A Participant is any Eligible Employee who has an Account
balance in the Plan.
2.14 Pay Deferral Contribution. The term Pay Deferral Contribution has the
same meaning as Pay Deferral Contribution in the IIP. The Pay Deferral
Contribution is the amount of the Participant's Compensation which the
Participant elected to defer into the Plan which, but for such election, would
have otherwise been paid to him/her.
2.15 Plan Year. The Plan Year is the calendar year.
2.16 Termination of Employment. For purposes of the Plan, Termination of
Employment has the same meaning as Termination of Employment in the IIP.
2.17 Unforeseeable Emergency. A severe financial hardship resulting from a
sudden or unexpected illness or accident of the Participant or one of his or her
dependents, loss of the Participant's property due to casualty or similar
extraordinary and unforeseeable circumstances arising as a result of one or more
recent events beyond the control of the Participant, as determined by the
Administrative Committee.
2.18 Vesting. For purposes of the Plan, Vesting has the same meaning as
Vesting in the IIP.
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ARTICLE III
ELIGIBILITY FOR EXCESS MATCHING CONTRIBUTIONS, BONUS DEFERRALS
AND PAY DEFERRALS
3.1 Eligibility for Excess Matching Contribution. An Eligible Employee is
a Participant in the Plan and eligible to receive a contribution to his or her
Excess Matching Contribution Account in the Plan for a Plan Year if such
Participant's allocation of Matching Contributions in the IIP during the Plan
Year is less than three percent (3%) of Compensation because of the application
of the Code.
3.2 Bonus Deferral Elections. An Eligible Employee is a Participant in the
Plan if he or she defers the maximum amount of Compensation allowed under the
Code to the IIP for the Plan Year and he or she elects to defer all or a portion
of his or her Bonus through the Plan until his or her Termination of Employment,
or such other time as specified on his or her Deferral Election Form, by
completing a Deferral Election Form in accordance with applicable rules and
procedures established by the Administrative Committee. A Participant may elect
to defer up to 100% of his or her Bonus, in whole percentages. Beginning January
1 of the year to which the Deferral Election Form applies, the Deferral Election
Form is irrevocable, except as provided in Section 5.6. The Deferral Election
Form must be filed with the Administrative Committee in accordance with the
rules established by the Administrative Committee before January 1 of the Plan
Year to which the Deferral Election Form applies. For purposes of Bonus Deferral
Elections, eligible employees are those employees who are participants in the
Long Term Incentive Plan for the Plan Year to which deferrals relate.
3.3 Pay Deferral Elections. An Eligible Employee is a Participant in the
Plan if he or she elects to defer a portion of his or her Compensation in excess
of the annual contribution limit under Sections 401(k) and 402(g) of the Code
(as contributed to the IIP) as set forth on his or her Deferral Election Form,
in accordance with applicable rules and procedures established by the
Administrative Committee. A Participant may elect to defer up to a total of 12%
of his or her Compensation (effective for deferrals on or after January 1, 2003,
a total of 20% of his or her Compensation); to the IIP and the Plan however,
such election must be the same election as the Participant made for the IIP for
such Plan Year, and the Participant may not change his/her IIP election for the
Plan Year.Notwithstanding the prior sentence, effective April 1, 2002, a
Participant may elect to make an additional annual "catch-up contribution" to
the IIP in accordance with the terms of the IIP, which shall be disregarded for
purposes of the Plan. For purposes of Pay Deferral Elections, eligible employees
are those employees who are participants in the Long Term Incentive Plan for the
Plan Year to which deferrals relate. Notwithstanding the foregoing provisions of
this Section 3.3, the Administrative Committee, in its sole discretion, may
permit a Participant to defer in excess of 12% of his or her Compensation (and,
effective for deferrals on or after January 1, 2003, in excess of 20% of his or
her Compensation) to the Plan for any Plan Year (a "Supplemental Pay Deferral").
To the extent that the Administrative Committee exercises its discretionary
authority under the prior sentence, such exercise shall be reflected in Appendix
B to the Plan which shall identify each Participant designated as eligible to
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make Supplemental Pay Deferrals, specify the Plan Year(s) for which Supplemental
Pay Deferrals may be made, and reflect any other conditions and limitations
applicable with respect to such Supplemental Pay Deferrals. In no event shall
Supplemental Pay Deferrals be eligible for Excess Matching Contributions
3.4 Somatogen Acquisition Deferral Election. Any former employee of
Somatogen, Inc. who is acquired by Baxter International Inc. as of the closing
date of the merger agreement between Baxter and Somatogen and who completed a
Special Deferral Enrollment Form shall have such form recognized as a valid
election under the Plan. Deferrals authorized under this section shall be
treated as deferrals authorized under Section 3.2 for purposes of accounting and
distribution.
3.5 Discretionary Contributions. The Administrative Committee may, in its
sole discretion, specify such additional amounts in the form of employer
contributions to be credited to the Account of a Participant or another employee
who is a member of a select group of management and highly compensated
employees, subject to such terms and conditions as the Administrative Committee
may establish. To the extent that the Administrative Committee exercises its
discretionary authority under this Section 3.5, such exercise shall be reflected
in Appendix C to the Plan, which shall identify each Participant credited with
such discretionary employer contributions, specify the Plan Year(s) for which
contributions relate, and reflect any other limitations applicable with respect
to such discretionary contributions. Discretionary employer contributions
authorized under this section shall be treated as deferrals authorized under
Section 3.2 for purposes of accounting and distribution.
ARTICLE IV
CREDITING OF ACCOUNTS
4.1 Crediting of Accounts.
A. Excess Matching Contribution Account. An account equal to the
Excess Matching Contributions, if any, of each Participant made for Plan Years
prior to 2002, as adjusted for investment return under Section 4.2 and
distributions under Article V.
B. Bonus Deferral Account. An account equal to the Bonus Deferrals,
if any, of each Participant made for Plan Years prior to 2002, as adjusted for
investment return under Section 4.2 and distributions under Article V.
C. Pay Deferral Account. An account equal to the Pay Deferral
Contributions and Supplemental Pay Deferrals, if any, of each Participant made
for Plan Years prior to 2002, as adjusted for investment return under Section
4.2 and distributions under Article V.
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D. Deferred Compensation Account. An account equal to the Excess
Matching Contributions, Pay Deferral Contributions, Bonus Deferrals and
Supplemental Pay Deferrals made for the 2002 Plan Year and thereafter, as
adjusted for investment return under Section 4.2 and distributions under
Article V.
Notwithstanding the foregoing provisions of this Section 4.1,
if elected by the Participant in accordance with rules established by the
Administrative Committee, the Participant may elect to have his or her Excess
Matching Contributions, Pay Deferral Contributions, Bonus Deferrals and
Supplemental Pay Deferrals made for the 2001 Plan Year, if any, credited to his
or her Deferred Compensation Account under paragraph D, instead of to the Excess
Matching Contribution Account, Bonus Deferral Account and Pay Deferral Account
described in paragraphs A, B and C.
Further, effective January 1, 2002, notwithstanding the
forgoing provisions of this Section 4.1, if elected by the Participant in
accordance with rules established by the Administrative Committee, the
Participant may make a one-time election to have amounts credited to his or her
Excess Matching Contribution Account, Bonus Deferral Account and Pay Deferral
Account (including Supplemental Pay Deferrals) credited to his or her Deferred
Compensation Account under paragraph D, provided however, that such election is
made prior to 2002 and such amounts are not scheduled to be distributed in 2001.
4.2 Earnings. Each Participant's Accounts will be adjusted for investment
return, on a weekly basis, in accordance with the following provisions of this
Section 4.2:
A. Amounts in a Participant's Excess Matching Account, Bonus
Deferral Account and Pay Deferral Account will be credited with earnings at a
rate determined by the Administrative Committee from time to time. Until the
Administrative Committee determines otherwise, such earnings will be credited at
the same rate as the Stable Income Fund in the IIP.
B. Amounts in a Participant's Deferred Compensation Account
shall be adjusted upward or downward to reflect the investment return that would
have been realized had such amounts been invested in one or more investments
selected by the Participant from among the assumed investment alternatives
designated by the Administrative Committee for use under the Plan. Prior to the
first day of each Plan Year, Participants may change the assumed investment
alternatives in which their Deferred Compensation Account will be deemed
invested for such Plan Year. Participant elections of assumed investment
alternatives shall be made at the time and in the form determined by the
Administrative Committee, and shall be subject to such other restrictions and
limitations as the Administrative Committee shall determine.
4.3 Account Statements. Account Statements will be generated effective as
of the last day of each calendar quarter and mailed to each Participant as soon
as administratively feasible. Account Statements will reflect all Account
activity during the reporting quarter, including Account contributions,
distributions and earnings credits.
4.4 Vesting. Subject to Sections 9.1 and 9.2, a Participant is always
100% Vested in his or her Accounts in the Plan at all times.
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ARTICLE V
DISTRIBUTION OF BENEFITS
5.1 Distribution of Benefits. Subject to Section 5.2, distribution of a
Participant's Accounts, if any, will commence in accordance with the
Participant's Distribution Election Form or Deferral Election Form as soon as
administratively feasible after the Participant's Termination of Employment. Any
spousal consent requirements under the IIP will not apply to distributions under
the Plan.
5.2 Distribution.
A. Deferral Election Form. A Participant's Excess Matching
Contribution Account, Bonus Deferral Account and Pay Deferral Account will be
paid in accordance with the form of payment designated in the Participant's
Deferral Election Form. The Deferral Election Form shall not be used to elect
forms of distribution with respect to deferrals for Plan Years after 2001 (or
2000, with respect to a Participant electing to have his or her deferrals
credited to the Deferred Compensation Account for Plan Year 2000 under
Section 4.1).
B. Distribution Election Form - Termination of Employment. A
Participant's Deferred Compensation Account and, if the Participant is not
eligible for Pay Deferrals or Bonus Deferrals, his or her Excess Matching
Contribution Account, will be paid after the Participant's Termination of
Employment, in accordance with the form of payment designated in such
Participant's Distribution Election Form. Only one Distribution Election Form
may be submitted with respect to distribution of a Participant's Deferred
Compensation Account following Termination of Employment, and such election
shall apply to the Participant's entire Deferred Compensation Account balance at
his or her Termination of Employment.
C. In-Service Distribution of Deferred Compensation Account. A
Participant may also elect to receive a distribution of all or a portion of his
or her Deferred Compensation Account at a specified future date, by filing a
Distribution Election Form with the Administrative Committee, specifying the
dollar amount of the distribution, at least 24 months prior to the distribution
date. If the balance in the Participant's Deferred Compensation Account on the
specified distribution date is less than the dollar amount requested, the entire
balance of the Deferred Compensation Account shall be distributed. If the
Participant has a Termination of Employment prior to the specific date requested
on such Distribution Election Form, such form shall be ignored and the
Participant's distribution election with respect to Termination of Employment
shall be followed.
D. Forms of Distribution. The forms of distribution are:
(a) a lump sum payment, or
(b) annual installments of at least 2 years, but not to
exceed 15 years.
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Annual installments will commence in the first quarter of the Plan Year as
specified in the Participant's Deferral Election Form or Distribution Election
Form. Subsequent installments will be paid annually in the first quarter of
subsequent Plan Years. Lump sum payments will be made in the first quarter of
the Plan Year as specified in the Participant's Deferral Election Form. Lump sum
payments pursuant to a Distribution Election Form relating to payments following
Termination of Employment will be made in the first quarter following the Plan
Year in which the Participant incurs a Termination of Employment or any
subsequent Plan Year as indicated on the Distribution Election Form. All
distributions of a Participant's Deferred Compensation Account prior to
Termination of Employment will be paid in a lump sum as soon as administratively
feasible after the date elected by the Participant in the Distribution Election
Form.
If a Participant does not elect a form of distribution by the time the Deferral
Election Form or the Distribution Election Form is required to be completed, the
Participant's election will default to a lump sum payment in the first quarter
of the Plan Year following the Plan Year in which the Participant incurs a
Termination of Employment.
Notwithstanding the above, a Participant whose Accounts under the Plan total
less than $50,000 as of the last day of the Plan Year in which he or she incurs
a Termination of Employment will receive lump sum payment of his or her Accounts
in the first quarter of the Plan Year following the Plan Year in which the
Participant incurs a Termination of Employment.
The Administrative Committee has the right to postpone the payment of any
Account for up to one year from the date on which the credits would otherwise be
paid.
5.3 Effect of Payment. Payment to the person or trust reasonably and in
good faith determined by the Administrative Committee to be the Participant's
Beneficiary will completely discharge any obligations Baxter or any other
Employer may have under the Plan. If a Plan benefit is payable to a minor or a
person declared to be incompetent or to a person the Administrative Committee in
good faith believes to be incompetent or incapable of handling the disposition
of property, the Administrative Committee may direct payment of such Plan
benefit to the guardian, legal representative or person having the care and
custody of such minor and such decision by the Administrative Committee is
binding on all parties. The Administrative Committee may initiate whatever
action it deems appropriate to ensure that benefits are properly paid to an
appropriate guardian.
The Administrative Committee may require proof of incompetence, minority,
incapacity or guardianship as it may deem appropriate prior to distribution of
the Plan benefit. Such distribution will completely discharge the Administrative
Committee and the Employer from all liability with respect to such benefit.
5.4 Taxation of Plan Benefits. It is intended that each Participant will
be taxed on amounts credited to him or her under the Plan at the time such
amounts are received, and the provisions of the Plan will be interpreted
consistent with that intention.
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5.5 Withholding and Payroll Taxes. Baxter will withhold from payments made
hereunder any taxes required to be withheld for the payment of taxes to the
Federal, or any state or local government.
5.6 Distribution Due to Unforeseeable Emergency. Upon written request of a
Participant and the showing of Unforeseeable Emergency, the Administrative
Committee may authorize distribution of all or a portion of the Participant's
Accounts, and or the acceleration of any installment payments being made from
the Plan, but only to the extent reasonably necessary to relieve the
Unforeseeable Emergency. In any event, payment may not be made to the extent
such Unforeseeable Emergency is or may be satisfied through reimbursement by
insurance or otherwise, including, but not limited to, liquidation of the
Participant's assets, to the extent that such liquidation would not in and of
itself cause severe financial hardship. In addition, such Participant is
precluded from enrolling in the Plan for the entire Plan Year beginning January
1 after the request is approved.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Each Participant has the right to designate
one or more persons or trusts as the Participant's Beneficiary, primary as well
as secondary, to whom benefits under this Plan will be paid in the event of the
Participant's death prior to complete distribution to the Participant of the
benefits due under the Plan. Each Beneficiary designation will be in a written
form prescribed by the Administrative Committee and will be effective only when
filed with the Administrative Committee during the Participant's lifetime.
6.2 Amendments to Beneficiary Designation. Any Beneficiary designation may
be changed by a Participant without the consent of any Beneficiary by the filing
of a new Beneficiary designation with the Administrative Committee. Filing a
Beneficiary designation as to any benefits available under the Plan revokes all
prior Beneficiary designations effective as of the date such Beneficiary
designation is received by the Administrative Committee. If a Participant's
Accounts are community property, any Beneficiary designation will be valid or
effective only as permitted under applicable law.
6.3 No Beneficiary Designation. In the absence of an effective Beneficiary
designation, or if all Beneficiaries predecease the Participant, the
Participant's estate will be the Beneficiary. If a Beneficiary dies after the
Participant and before payment of benefits under this Plan has been completed,
and no secondary Beneficiary has been designated to receive such Beneficiary's
share, the remaining benefits will be payable to the Beneficiary's estate.
ARTICLE VII
ADMINISTRATION
7.1 Administrative Committee. The Plan is administered by the
Administrative Committee, which is the Plan Administrative purposes of Section
3(16)(A) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Baxter has appointed the
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members of the Administrative Committee to administer the Plan. Members of the
Administrative Committee may be Participants in the Plan.
7.2 Administrative Committee Powers. The Administrative Committee has such
powers as may be necessary to discharge its duties hereunder, including, but not
by way of limitation, the following powers, rights and duties:
(a) Interpretation of Plan. The Administrative Committee has the
power, right and duty to construe, interpret and enforce the
Plan provisions and to determine all questions arising under
the Plan including, but not by way of limitation, questions
of Plan participation, eligibility for Plan benefits and the
rights of employees, Participants, Beneficiaries and other
persons to benefits under the Plan and to determine the
amount, manner and time of payment of any benefits
hereunder;
(b) Plan Procedures. The Administrative Committee has the power,
right and duty to adopt procedures, rules, regulations and
forms to be followed by employees, Participants,
Beneficiaries and other persons or to be otherwise utilized
in the efficient administration of the Plan which may alter
any procedural provision of the Plan without the necessity
of an amendment;
(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.
7.3 Uniform Application of Rules. The Administrative Committee will apply
all rules, regulations, procedures and decisions uniformly and consistently to
all Participants similarly situated. Any ruling, regulation, procedure or
decision of the Administrative Committee will be conclusive and binding upon all
persons affected by it. There will be no appeal from any ruling by the
Administrative Committee which is within its authority, except as provided
in Section 7.4 below. When making a determination or a calculation, the
Administrative Committee will be entitled to rely on information supplied by any
Employer, accountants and other professionals including, but not by way of
limitation, legal counsel for Baxter or any Employer.
7.4 Claims Procedure. If a claim for benefits by a Participant or his
or her beneficiary or beneficiaries (the "applicant") is denied, the
applicant within 90 days after receipt of such claim (or within 180 days after
receipt if the
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Administrative Committee will furnish the applicant within 90 days after receipt
of such claim (or within 180 days after receipt if the Administrative Committee
notifies the applicant prior to the end of the 90 day period that special
circumstances require an extension of time), a written notice which specifies
the reason for the denial, refers to the pertinent provisions of the Plan on
which the denial is based, describes any additional material or information
necessary for properly completing the claim and explains why such material or
information is necessary, and explains the claim review procedures of this
Section 7.4. If, within 60 days after receipt of such notice, the applicant so
requests in writing, the Administrative Committee will review its earlier
decision. The Administrative Committee's decision on review will be in writing,
and will include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and will include specific
references to the pertinent provisions of the Plan on which the decision is
based. It will be delivered to the claimant within 60 days after the request for
review is received, unless extraordinary circumstances require a longer period,
but in no event more than 120 days after the request for review is received.
7.5 Action by Administrative Committee. Action by the Administrative
Committee will be subject to the following special rules:
(a) Meetings and Documents. The Administrative Committee may
act by meeting or by document signed without meeting and
documents may be signed through the use of a single document
or concurrent documents.
(b) Action by Majority. The Administrative Committee will act by
a majority decision which action will be as effective as if
such action had been taken by all Administrative Committee
members, provided that by majority action one or more
Administrative Committee members or other persons may be
authorized to act with respect to particular matters on
behalf of all Administrative Committee members.
(c) Resolving Deadlocks. If there is an equal division among the
Administrative Committee members with respect to any
question a disinterested party may be selected by a majority
vote to decide the matter. Any decision by such
disinterested party will be binding.
7.6 Indemnity. To the extent permitted by applicable law and to the extent
that they are not indemnified or saved harmless under any liability insurance
contracts, any present or former Administrative Committee members, officers, or
directors of Baxter, the Employers or their subsidiaries or affiliates, if any,
will be indemnified and saved harmless by the Employers from and against any and
all liabilities or allegations of liability to which they may be subjected by
reason of any act done or omitted to be done in good faith in the administration
of the Plan, including all expenses reasonably incurred in their defense in the
event that Baxter fails to provide such defense after having been requested in
writing to do so.
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
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8.1 Amendment. The Compensation Committee may amend the Plan at any time,
except that no amendment will decrease or restrict the Accounts of Participants
and Beneficiaries at the time of the amendment. Notwithstanding the foregoing,
the Compensation Committee may delegate certain authority to amend the Plan to
the Administrative Committee.
8.2 Right to Terminate. The Compensation Committee may at any time
terminate the Plan. Any Employer may terminate its participation in the Plan
by notice to Baxter.
8.3 Payment at Termination. If the Plan is terminated payment of each
affected Participant's Accounts to the Participant or Beneficiary for whom they
are held will commence within 60 days of such termination in the form determined
under Article 5.
ARTICLE IX
MISCELLANEOUS
9.1 Unfunded Plan. This Plan is intended to be an unfunded retirement plan
maintained primarily to provide retirement benefits for a select group of
management or highly compensated employees. All credited amounts are unfunded,
general obligations of the appropriate Employer. This Plan is not intended to
create an investment contract, but to provide retirement benefits to eligible
employees who participate in the Plan. Eligible employees are members of a
select group of management or are highly compensated employees, who, by virtue
of their position with an Employer, are uniquely informed as to such Employer's
operations and have the ability to affect materially Employer's profitability
and operations.
9.2 Unsecured General Creditor. In the event of an Employer's insolvency,
Participants and their Beneficiaries, heirs, successors and assigns will have no
legal or equitable rights, interest or claims in any property or assets of such
Employer, nor will they be Beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by such Employer (the "Policies")
greater than those of any other unsecured general creditors. In that event, any
and all of the Employer's assets and Policies will be, and remain, the general,
unpledged, unrestricted assets of Employer. Employer's obligation under the Plan
will be merely that of an unfunded and unsecured promise of Employer to pay
money in the future.
9.3 Nonassignability. Neither a Participant nor any other person will have
any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be nonassignable and nontransferable.
No part of the amounts payable will, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency. Nothing contained herein will preclude an
Employer from offsetting any amount owed to it by a Participant against payments
to such Participant or his or her Beneficiary.
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9.4 Not a Contract of Employment. The terms and conditions of this Plan
will not be deemed to constitute a contract of employment between a Participant
and such Participant's Employer, and neither the Participant nor the
Participant's Beneficiary will have any rights against such Participant's
Employer except as may otherwise be specifically provided herein. Moreover,
nothing in this Plan is deemed to give a Participant the right to be retained in
the service of his or her Employer or to interfere with the right of such
Employer to discipline or discharge him or her at any time.
9.5 Protective Provisions. A Participant will cooperate with Baxter by
furnishing any and all information requested by Baxter, in order to facilitate
the payment of benefits hereunder.
9.6 Governing Law. The provisions of this Plan will be construed and
interpreted according to the laws of the State of Illinois, to the extent not
preempted by ERISA.
9.7 Severability. In the event any provision of the Plan is held invalid
or illegal for any reason, any illegality or invalidity will not affect the
remaining parts of the Plan, but the Plan will be construed and enforced as if
the illegal or invalid provision had never been inserted, and Baxter will have
the privilege and opportunity to correct and remedy such questions of illegality
or invalidity by amendment as provided in the Plan, including, but not by way of
limitation, the opportunity to construe and enforce the Plan as if such illegal
and invalid provision had never been inserted herein.
9.8 Notice. Any notice or filing required or permitted to be given to
Baxter or the Administrative Committee under the Plan will be sufficient if in
writing and hand delivered, or sent by registered or certified mail to any
member of the Administrative Committee, or to Baxter's Chief Financial Officer
and, if mailed, will be addressed to the principal executive offices of Baxter.
Notice to a Participant or Beneficiary may be hand delivered or mailed to the
Participant or Beneficiary at his or her most recent address as listed in the
employment records of Baxter. Notices will be deemed given as of the date of
delivery or mailing or, if delivery is made by certified or registered mail, as
of the date shown on the receipt for registration or certification. Any person
entitled to notice hereunder may waive such notice.
9.9 Successors. The provisions of this Plan will bind and inure to the
benefit of Baxter, each Employer, the Participants and Beneficiaries, and their
respective successors, heirs and assigns. The term successors as used herein
will include any corporate or other business entity, which, whether by merger,
consolidation, purchase or otherwise acquires all or substantially all of the
business and assets of Baxter, and successors of any such corporation or other
business entity.
9.10 Action by Baxter. Except as otherwise provided herein, any action
required of or permitted by Baxter under the Plan will be by resolution of the
Compensation Committee or any person or persons authorized by resolution of the
Compensation Committee.
9.11 Effect on Benefit Plans. Amounts paid under this Plan, will not by
operation of this Plan be considered to be compensation for the purposes of any
benefit plan maintained by
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any Employer. The treatment of such amounts under other employee benefit plans
will be determined pursuant to the provisions of such plans.
9.12 Participant Litigation. In any action or proceeding regarding the
Plan, employees or former employees of Baxter or an Employer, Participants,
Beneficiaries or any other persons having or claiming to have an interest in
this Plan will not be necessary parties and will not be entitled to any notice
or process. Any final judgment which is not appealed or appealable and may be
entered in any such action or proceeding will be binding and conclusive on the
parties hereto and all persons having or claiming to have any interest in this
Plan. To the extent permitted by law, if a legal action is begun against Baxter,
an Employer, the Administrative Committee, or any member of the Administrative
Committee by or on behalf of any person and such action results adversely to
such person or if a legal action arises because of conflicting claims to a
Participant's or other person's benefits, the costs to such person of defending
the action will be charged to the amounts, if any, which were involved in the
action or were payable to the Participant or other person concerned. To the
extent permitted by applicable law, acceptance of participation in this Plan
will constitute a release of Baxter, each Employer, the 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 12th day of March, 2002.
BAXTER INTERNATIONAL INC.
By /s/ Karen J. May
------------------------------------
Its Corporate Vice President of Human Resources
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APPENDIX A
PARTICIPATING EMPLOYERS
Participating Employers in the Plan include all participating Employers in the
Baxter International Inc. and Subsidiaries Incentive Investment Plan.
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APPENDIX B
PARTICIPANTS ELIGIBLE FOR SUPPLEMENTAL PAY DEFERRALS
Name Plan Year(s) Terms and Conditions
Alan Heller 2001 Up to 80% of Compensation
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