Non-Employee Director Compensation Plan – Baxter International Inc.

1.

Purpose

This Non-Employee Director Compensation Plan (the “Plan”) is adopted by the
Board of Directors (the “Board”) of Baxter International Inc. (“Baxter”). This
Plan is adopted pursuant to the Baxter International Inc. 2003 Incentive
Compensation Program (the “Program”), for the purposes stated in the Program.
Capitalized terms defined in the Program that are used without being defined in
the Plan will have the same meaning as in the Program.

2.

Participants

Each member of the Board who is not an employee of Baxter or any of its
subsidiaries shall participate in the Plan (a “Participant”).

3.

Restricted Stock Units

3.1

On the date of Baxter153s annual meeting of stockholders (the “Annual Meeting”)
in each year beginning with the Annual Meeting held in May 2007, and subject to
availability of shares of Common Stock under the Program, each Participant upon
completion of the Annual Meeting shall, automatically and without necessity of
any action by the Board or any committee thereof, receive the number of
Restricted Stock Units equal to the quotient of (A) $65,000 divided by (B) the
Fair Market Value of a share of Common Stock on the date of grant (rounded to
the nearest whole number which is a multiple of ten) (the “Annual Restricted
Stock Unit Grant Amount”).

3.2

Each Participant elected or appointed on a date other than the date of an
Annual Meeting shall, on the date of such election or appointment and
automatically and without necessity of any action by the Board or any committee
thereof, receive the number of Restricted Stock Units equal to the product of
(A) the Annual Restricted Stock Unit Grant Amount (as defined in Section 3.1,
subject to adjustment in accordance with the Program) for the Restricted Stock
Units awarded on the date of the immediately preceding Annual Meeting,
multiplied by (B) the quotient of (i) the number of full calendar months before
the next Annual Meeting divided by (ii) 12 (rounded to the nearest whole number
which is a multiple of ten). The number of Restricted Stock Units granted under
this Section 3.2 shall not exceed the number available under the Program on the
date of grant.

3.3

Restricted Stock Units may not be sold, transferred, assigned, pledged,
hypothecated or otherwise encumbered or disposed of, whether voluntarily,
involuntarily or by operation of law.

3.4

Subject to Section 11.10 of the Program and except as expressly provided in
Sections 3.6 and 3.7, all Restricted Stock Units shall vest on the date of and
immediately prior to the next Annual Meeting following the date of grant.

3.5

Except as provided in Sections 3.6 and 3.7, if a Participant ceases service
as a member of the Board before his or her Restricted Stock Units vest, the
Participant will forfeit his or her unvested Restricted Stock Units immediately
upon ceasing service as a member of the Board.

3.6

If a Participant dies while serving as a member of the Board, his or her
unvested Restricted Stock Units will not be forfeited and will be fully vested
immediately.

3.7

If a Participant becomes disabled and unable to continue service as a member
of the Board, his or her Restricted Stock Units will not be forfeited and will,
when the Participant ceases to serve as member of the Board, be fully vested.

3.8

No Participant receiving Restricted Stock Units shall have the rights of a
stockholder with respect to those shares of Common Stock underlying the
Restricted Stock Units. Participants shall not be permitted to vote the
Restricted Stock Units. Participants shall be permitted to receive cash payments
equal to the dividends and distributions paid on shares of Common Stock to the
same extent as if each Restricted Stock Unit was a share of Common Stock, and
those shares were not subject to the restrictions imposed by this Plan;
provided, however, that no dividends or distributions shall be payable to or for
the benefit of the Participant with respect to the record dates for such
dividends or distributions occurring on or after the date, if any, on which the
Participant has forfeited the Restricted Stock Units. Cash dividend and
distribution equivalents paid on those shares of Common Stock underlying the
Restricted Stock Units pursuant hereto shall be reinvested in additional
Restricted Stock Units.

3.9

Participants shall be eligible to defer payment and taxation of those shares
of Common Stock underlying the Restricted Stock Units otherwise payable under
this Section 3 pursuant to the terms and conditions of the Baxter Non-Employee
Director Deferred Compensation Plan.

3.10

If requested by Baxter, each Participant receiving Restricted Stock Units
shall enter into an agreement with Baxter incorporating the terms and conditions
of this Plan. Subject to the terms of the Program, after the Restricted Stock
Units vest, shares of Common Stock free and clear of all restrictions will be
delivered to the Participant (or to the Participant153s legal representative,
beneficiary or heir).

4.

Stock Options

4.1

On the date of Baxter153s Annual Meeting in each year beginning with the Annual
Meeting on May 6, 2003, and subject to availability of shares of Common Stock
under the Program, upon completion of the Annual Meeting each Participant shall
be granted Stock Options having a value equal to $65,000, to be determined by
the Board or the Compensation Committee of the Board (the “Committee”) based on
a Black-Scholes or other option valuation model in the discretion of the Board
or the Committee (rounded to the nearest whole number which is a multiple of
ten) (the “Annual Stock Option Grant Amount”).

4.2

Each Participant elected or appointed on a date other than the date of an
Annual Meeting shall, on the date of such election or appointment and
automatically and without necessity of any action by the Board or any committee
thereof, be granted a Stock Option to purchase that number of shares of Common
Stock equal to the product of (A) the Annual Stock Option Grant Amount (as
defined in Section 4.1, subject to adjustment in accordance with the Program)
for each Stock Option granted on the date of the immediately preceding Annual
Meeting, multiplied by (B) the quotient of (i) the number of full calendar
months before the next Annual Meeting divided by (ii) 12 (rounded to the nearest
whole number which is a multiple of ten). The number of shares of Common Stock
subject to any Stock Option granted under this Section 4.2 shall not exceed the
number available under the Program on the date of grant.

4.3

The purchase price for each share of Common Stock subject to a Stock Option
shall be the Fair Market Value of a share of Common Stock on the date of grant.
The terms of each Stock Option will be as set forth in this Plan and the
Program. To the extent that any provision of the Plan is inconsistent with the
Program, the Program shall control. The Stock Options are not intended to
qualify as Incentive Stock Options within the meaning of Section 422 of the
United States Internal Revenue Code.

4.4

Subject to Section 11.10 of the Program and except as expressly provided in
Sections 4.8, 4.9 and 4.10, Stock Options shall first become exercisable on the
date of and immediately prior to the next Annual Meeting following the date of
grant.

4.5

After a Stock Option becomes exercisable and until it expires, it may be
exercised in whole or in part, in the manner specified by the Company. Under no
circumstances may a Stock Option be exercised after it has expired. Shares of
Common Stock may be used to pay the purchase price for shares of Common Stock to
be acquired upon exercise of a Stock Option or fulfill any tax withholding
obligation, subject to any requirements or restrictions specified by the
Company.

4.6

Except as provided in Sections 4.8, 4.9 and 4.10, if a Participant ceases
service as a member of the Board before his or her Stock Option becomes
exercisable, the Stock Option will expire when the Participant ceases service as
a member of the Board.

4.7

If a Participant ceases service as a member of the Board after his or her
Stock Option becomes exercisable, the Stock Option will not expire but will
remain exercisable. Subject to Sections 4.8, 4.9, 4.10 and 4.11, the Stock
Option will expire three months after the Participant ceases service as a member
of the Board, unless the Participant dies or becomes disabled during such three
month period in which case the Stock Option will expire on the first anniversary
of the date the Participant ceased serving as a member of the Board.

4.8

If a Participant dies while serving as a member of the Board, his or her
Stock Option will not expire and will remain, or immediately become, fully
exercisable, as the case may be. Subject to Sections 4.10 and 4.11, the Stock
Option will expire on the first anniversary of the Participant153s death.

4.9

If a Participant becomes disabled and unable to continue service as a member
of the Board, his or her Stock Option will not expire and will remain, or when
the Participant ceases to serve as member of the Board become, fully
exercisable, as the case may be. Subject to Sections 4.10 and 4.11, the Stock
Option will expire on the first anniversary of the date the Participant ceases
service as a member of the Board.

4.10

If a Participant who has served as a member of the Board for a continuous
period of at least ten years or who is at least 72 years of age ceases to serve
as a member of the Board (including without limitation by reason of death or
disability), his or her Stock Option will not expire and will remain, or when
the Participant ceases to serve as member of the Board become, fully
exercisable, as the case may be. Subject to Section 4.11, the Stock Option will
expire on the fifth anniversary of the date the Participant ceases service as a
member of the Board.

4.11

Stock Options that have not previously expired will expire at the close of
business on the tenth anniversary of the date of grant. If a Stock Option would
expire on a date that is not a Business Day, it will expire at the close of
business on the last Business Day preceding that date. A “Business Day” is any
day on which the Common Stock is traded on the New York Stock Exchange.

4.12

An exercisable Stock Option may only be exercised by the Participant, his or
her legal representative, or a person to whom the Participant153s rights in the
Stock Option are transferred by will or the laws of descent and distribution or
in accordance with rules and procedures established by the Committee.

4.13

The Board or the Committee may, in its sole discretion and without receiving
permission from any Participant, substitute stock appreciation rights (“SARs”)
for any or all outstanding Stock Options granted on or after May 4, 2004. Upon
the grant of substitute SARs, the related Stock Options replaced by the
substitute SARs shall be cancelled. The grant price of the substitute SAR shall
be equal to the Option Price of the related Stock Option, the term of the
substitute SAR shall not exceed the term of the related Stock Option, and the
terms and conditions applicable to the substitute SAR shall otherwise be
substantially the same as those applicable to the related Stock Option replaced
by the substitute SAR.

5.

Cash Compensation

5.1

Baxter shall pay each Participant a meeting fee of $1,500 for each meeting of
the Board or any committee thereof attended, and a Participant acting as the
chairperson of any meeting of a committee of the Board shall receive an
additional $1,500 for each meeting chaired by him or her. Fees shall be paid
quarterly in arrears and are payable if the Participant attends in person, by
conference telephone, or by any other means permitted by the Delaware General
Corporation Law and Baxter153s Bylaws, as amended.

5.2

Baxter shall pay each Participant a total annual cash retainer of $65,000 per
calendar year (“Annual Cash Retainer”). Baxter shall pay an additional annual
cash retainer of $30,000 per calendar year to the Lead Director (“Lead Director
Retainer”). Both the Annual Cash Retainer and Lead Director Retainer shall be
paid quarterly in arrears. For purposes of determining the amount of such
quarterly payment(s), a

Participant and/or the Lead Director must be a member of the Board on or
prior to the 15^th day of a month in order to be entitled to receive
such payment(s) with respect to that month.

5.3

Participants shall be eligible to defer payment of cash compensation
otherwise payable under this Section 5 pursuant to the terms and conditions of
the Baxter Non-Employee Director Deferred Compensation Plan.

6.

Availability of Shares

If on any grant date, the number of shares of Common Stock which would
otherwise be granted in the form of Restricted Stock Units or subject to Stock
Options granted under the Plan shall exceed the number of shares of Common Stock
then remaining available under the Program, the available shares shall be
allocated among the Stock Options and Restricted Stock Units to be granted
Participants in proportion to the number of shares subject to Stock Options and
Restricted Stock Units that Participants would otherwise be entitled to receive,
and allocated evenly between Restricted Stock Units and Stock Options.

7.

General Provisions

7.1

Subject to the limitations contained in Section 11.9 of the Program, the
Board or the Committee may, at any time and in any manner, amend, suspend, or
terminate the Plan or any Stock Option outstanding under the Plan.

7.2

Participation in the Plan does not give any Participant any right to continue
as a member of the Board for any period of time or any right or claim to any
benefit unless such right or claim has specifically accrued hereunder.

5.1

Except as provided in the following sentence, Baxter shall pay each
Participant a meeting fee of $1,500 for each meeting of the Board or any
committee thereof attended, and a Participant acting as the chairperson of any
meeting of a committee of the Board shall receive an additional $1,500 for each
meeting chaired by him or her. Baxter shall pay each Participant a meeting fee
of $3,000 for each meeting of the Science and Technology Committee attended, and
a Participant acting as the chairperson of any meeting of the Science and
Technology Committee shall receive an additional $1,500 for each meeting chaired
by him or her. Fees shall be paid quarterly in arrears and are payable if the
Participant attends in person, by conference telephone, or by any other means
permitted by the Delaware General Corporation Law and Baxter153s Bylaws, as
amended and restated.

3.1

On the date of Baxter153s annual meeting of stockholders (the “Annual Meeting”)
in each year beginning with the Annual Meeting held in May 2011, and subject to
availability of shares of Common Stock under the Program, each Participant upon
completion of the Annual Meeting shall, automatically and without necessity of
any action by the Board or any committee thereof, receive the number of
Restricted Stock Units equal to the quotient of (A) $67,500 divided by (B) the
Fair Market Value of a share of Common Stock on the date of grant (rounded to
the nearest whole number which is a multiple of ten) (the “Annual Restricted
Stock Unit Grant Amount”).

4.1

On the date of Baxter153s Annual Meeting in each year beginning with the Annual
Meeting on May 3, 2011, and subject to availability of shares of Common Stock
under the Program, upon completion of the Annual Meeting each Participant shall
be granted Stock Options having a value equal to $67,500, to be determined by
the Board or the Compensation Committee of the Board (the “Committee”) based on
a Black-Scholes or other option valuation model in the discretion of the Board
or the Committee (rounded to the nearest whole number which is a multiple of
ten) (the “Annual Stock Option Grant Amount”).

5.1

Except as provided in the following sentence, Baxter shall pay each
Participant a meeting fee of $2,000 for each meeting of the Board or any
committee thereof attended. Baxter shall pay each Participant a meeting fee of
$3,000 for each meeting of the Science and Technology Committee attended. Except
as provided in the following section, participants acting as the chairperson of
any committee of the Board shall receive an annual cash retainer of $10,000 for
each committee chaired by him or her. A participant acting as the chairperson of
the Audit Committee shall receive an annual cash retainer of $15,000. Amounts
payable within this Section 5.1 shall be paid quarterly in arrears and are
payable if the Participant attends in person, by conference telephone, or by any
other means permitted by the Delaware General Corporation Law and Baxter153s
Bylaws, as amended and restated. For the purposes of determining the amount of
such quarterly payment(s), a Participant must be a chairperson of a committee of
the Board on or prior to the 15^th day of a month in order to be
entitled to receive such payment(s) with respect to that month.