Exhibit 10.1
BAXTER INTERNATIONAL INC.
1999 SHARED INVESTMENT PLAN
1. Purpose. The 1999 Shared Investment Plan ("Plan"), of Baxter International
Inc. ("Baxter"), is adopted pursuant to the Baxter International Inc. 1998
Incentive Compensation Program ("1998 Program") to facilitate the immediate
purchase, by the senior managers of Baxter and its subsidiaries
(collectively, the "Company"), of Baxter's common stock, $1.00 par value
("Common Stock"). The purchases facilitated by the plan are intended to
achieve the following specific purposes:
a) more closely align senior managers' financial rewards with the
financial rewards realized by all other holders of the Common Stock;
b) increase senior managers' motivation to manage the Company as owners;
and
c) increase the ownership of Common Stock among senior managers of the
Company.
2. Eligibility. To be eligible to participate in the Plan, the individual must
have been granted an option to purchase a specified number of shares of
Common Stock ("Stock Option") at a meeting of the Compensation Committee of
Baxter's Board of Directors held on May 3, 1999 ("Eligible Employee").
3. Participation. To become a Plan participant ("Participant"), an Eligible
Employee must satisfy the following requirements:
a) submit a completed, signed and irrevocable agreement to exercise all
or a portion of the Stock Option, subject to the terms and conditions
of the Stock Option Plan adopted on May 3, 1999 by the Compensation
Committee;
b) complete, sign, and submit all necessary agreements and other
documents relating to the loan described in Section 4 below,
including an agreement to reimburse Baxter for amounts it pays on
behalf of the Participant and for the portion of the gain on the sale
of the Purchased Shares (as defined below) which is payable to Baxter
pursuant to such agreement ("Reimbursement Agreement"); and
c) satisfy all other conditions of participation specified in the Plan.
The agreements and other documents specified in subsections 3(a), (b) and
(c) must be in such forms and must be submitted at such times and to such
Company offices as specified by the Committee or its designee(s). No
Eligible Employee is required to participate in the Plan.
4. Payment of Exercise Price. Each Participant must deliver in cash 100% of
the exercise price of the shares, with respect to which the Stock Option is
exercised ("Purchased Shares"), within three days after the option exercise
date ("Exercise Date"). The Purchased Shares will not be issued to the
Participant until Baxter has received such payment. The payment must be
made at the time, place and manner specified by the Committee or its
designee(s).
Baxter has arranged the opportunity for each Participant to obtain a loan
through a syndicate of banks agented by The First National Bank of Chicago
("Banks") to fund the purchase of the Purchased Shares. Each Participant
must sign a letter of direction which directs all loan proceeds to be paid
directly to Baxter in payment of the Purchased Shares. Each Participant is
responsible for satisfying all of the lending requirements specified by the
Banks to qualify for the loan. Each Participant is fully obligated to repay
to the Banks all principal, interest, and any prepayment fees on the loan
when due and payable.
5. Registration of Shares. The Purchased Shares will be registered in the name
of the Participant and held in an uncertificated account.
6. Shareholder Rights. The Purchased Shares may be authorized and unissued
shares or shares issued from treasury shares. Each Participant will have
all of the rights of a shareholder with respect to the Purchased Shares,
including the right to vote the shares and the right to receive all
dividends paid on the shares. Unless otherwise directed by a Participant,
Baxter will deliver all such dividends directly to the Banks for payment of
loan principal or interest.
7. Sale of Purchased Shares. Each Participant is permitted to sell, pledge or
otherwise dispose of all or any portion of the Purchased Shares at any
time. Except for as specified in Sections 9 and 10, no Participant is
entitled to any gain on any of the Purchased Shares sold before the first
anniversary of the Exercise Date. In accordance with the Reimbursement
Agreement, such gain must be paid to Baxter simultaneously with the sale.
If there is any loss on any of the Purchased Shares sold before the first
anniversary of the Exercise Date, the Participant is responsible for 100%
of the loss, except as specified in Section 9.
8. Risk Sharing. In accordance with the Reimbursement Agreement, if the
Participant remains employed by Baxter or one of its subsidiaries until the
first anniversary of the Exercise Date, certain risk sharing provisions
will apply. The risk sharing on the Purchased Shares will be allocated as
follows:
a) if any portion of the Purchased Shares is sold before the third
anniversary of the Exercise Date, the Participant
1) is responsible for 100% of the loss on that portion of the
Purchased Shares; and
2) is entitled to receive 50% of the gain on that portion of the
Purchased Shares.
b) if any portion of the Purchased Shares is sold on or after the third
anniversary of the Exercise Date, the Participant
1) is responsible for 50% of the loss on that portion of the
Purchased Shares; and
2) is entitled to receive 100% of the gain on that portion of the
Purchased Shares.
For purposes of the Plan, gain and loss will be measured by the difference
between the purchase price of the Purchased Shares and the sale price of
the Purchased Shares.
Baxter's agreement to make any payment in respect of losses under this
Section 8 will apply only to such Purchased Shares as are sold by the
Participant and the proceeds from which sale are applied to repayment of
the loan.
9. Death or Disability. If a Participant's employment with the Company
terminates, at any time while his or her loan under Section 4 is
outstanding, because of the Participant's death or disability, the
Participant (or the Participant's representative in the case of death)
remains free to sell all or any portion of the Purchased Shares, subject to
the Participant's Reimbursement Agreement. Upon the death of a Participant,
his or her loan may become immediately due and payable, at the discretion
of the Banks. With respect to the Purchased Shares sold after the
Participant's employment termination due to death or disability, and while
his or her loan under Section 4 is outstanding, the Participant (or the
Participant's estate in the case of death) is not responsible for any loss
on the sale of the Purchased Shares but is entitled to receive 100% of the
gain on the sale of the Purchased Shares, in accordance with the
Reimbursement Agreement. This Section 9 has no effect on a deceased or
disabled Participant's sale of Purchased Shares before the Participant's
employment termination due to death or disability or after the
Participant's loan under Section 4 has been repaid.
10. Employment Termination by Transaction. If a Participant's employment with
the Company terminates because of an acquisition, divestiture, merger,
spin-off or similar transaction ("Transaction"), the Participant will be
deemed to have remained employed by Baxter or one of its subsidiaries until
the first anniversary of the Exercise Date, for purposes of the risk
sharing provisions of Section 8, without regard to his actual employment
termination date. In all other respects, the Participant whose employment
is terminated because of a Transaction will remain subject to all of the
terms and conditions of the Plan.
11. Other Employment Termination. If a Participant's employment with the
Company terminates for any reason other than death or disability under
Section 9, or pursuant to a Transaction or a Change in Control (as defined
in the 1998 Program), the following will apply:
a) if the Participant's employment with the Company terminates on or
after the first anniversary of the Exercise Date, he or she will
remain subject to all of the terms and conditions of the Plan, as if
his or her employment had not terminated, including specifically the
risk sharing provisions of Section 8.
b) if the Participant's employment with the Company terminates before
the first anniversary of the Exercise Date, and the Participant sells
any portion of the Purchased Shares before the first anniversary of
the Exercise Date, he or she is:
1) responsible for 100% of the loss on the sale of the Purchased
Shares; and
2) 100% of the gain must be paid to Baxter simultaneously with the
sale.
12. Risk Sharing Implementation. If a Participant sells any portion of the
Purchased Shares at a loss (as determined by the provisions of Section 8)
while his or her loan under Section 4 is outstanding, and if the
Participant is responsible for less than 100% of that loss under the
provisions of the Plan, Baxter will assume the portion of the loss for
which the Participant is not responsible. Baxter will assume its portion of
the loss by delivering cash equal to such portion ("Risk Sharing Payment")
directly to the Participant simultaneously with the repayment of the
Participant's loan under Section 4. Baxter anticipates that the Risk
Sharing Payment will constitute compensation to the Participant, subject to
applicable tax withholding and reporting. Baxter also intends to take a tax
deduction for the Risk Sharing Payment as compensation in the year in which
it is paid. If Baxter determines that it is not entitled to a current tax
deduction for the Risk Sharing Payment with respect to any Participant, the
Committee has the discretion to implement a deferred compensation agreement
to the extent necessary or desirable to secure Baxter's related tax
deduction.
13. Loan Guarantee. Baxter will guarantee repayment to the Banks of 100% of all
principal, interest, prepayment fees and other obligations of each
Participant under such Participant's loan described in Section 4. The
Baxter loan guarantee is a condition to the loan arrangement Baxter has
made with the Banks. The terms and conditions of the guarantee are as
agreed by Baxter and the Banks. Each Participant is fully obligated to
repay to the Banks all principal, interest, and other amounts on the loan
when due and payable. Baxter may take all action relating to the
Participant and his or her assets, which the Committee deems reasonable and
necessary, to obtain full reimbursement for amounts Baxter pays to the
Banks under its guarantee related to the Participant's loan, in excess of
the Risk Sharing Payment it is obligated to make under Section 12 ("Loan
Default").
14. Change in Control. In the event of a Change in Control, each Participant
employed by the Company immediately before the Change in Control will be
deemed to have been employed by the Company until the first anniversary of
the Exercise Date, for purposes of the risk sharing provisions of Section
8, and the Participant will be deemed to have sold the Purchased Shares
after the third anniversary of the Exercise Date for purposes of Section
8(b).
15. Effect of Program. The Plan is governed by the provisions of the 1998
Program, except as otherwise expressly stated in the Plan.
16. Change of Law. As of May 3, 1999, the United States laws governing the
Banks do not allow Baxter or the Banks to require that possession of the
Purchased Shares be maintained by Baxter or the Banks. Also, those laws
currently do not allow Baxter or the Banks to restrict the timing or the
method of sale of the Purchased Shares. Because Baxter will guarantee
repayment to the Banks of 100% of all principal, interest, prepayment fees
and other obligations of each Participant under such Participant's loan
described in Section 4, Baxter has a legitimate interest in maintaining
possession of the Purchased Shares and restricting their sale until all
Participant obligations under the loan and Reimbursement Agreement are
satisfied. If the applicable laws change to allow Baxter to require its
possession of the Purchased Shares or to restrict the sale of the Purchased
Shares, each Participant with an outstanding loan under Section 4, or an
outstanding obligation under the Reimbursement Agreement, agrees to
surrender possession of such of the Purchased Shares as he or she shall
then own to Baxter and to allow Baxter to restrict the timing and the
method of sale of the Purchased Shares. Such surrender must occur within 14
calendar days after the Participant receives written notice to do so by
Baxter. Surrender of possession of the Purchased Shares, as described in
this Section 16, will not change the Participant's obligations in the Plan,
the loan documents or the Reimbursement Agreement.
17. Amendment. The Committee may amend the Plan at any time subject to the
limitations in Section 11.9 of the 1998 Program.