Document:

Exhibit 10.1

 

ADVANCED INHALATION THERAPIES (AIT)
LTD.

 

THE AMENDED AND RESTATED 2013 EQUITY
INCENTIVE PLAN

 

		1.	NAME

 

This Amended and Restated 2013
Equity Incentive Plan, as amended from time to time, shall be known as the Advanced Inhalation Therapies (AIT) Ltd. 2013 Equity
Incentive Plan (the “Incentive Plan” or the “Plan”).

 

		2.	PURPOSE OF THE INCENTIVE PLAN

 

		2.1.	The Incentive Plan is intended to provide an incentive to retain, in the employ or service or directorship
of Advanced Inhalation Therapies (AIT) Ltd. (the “Company”), and its worldwide Related Entities, persons of
training, experience, and ability, to attract new employees, directors or consultants whose services are considered valuable, to
encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development
and financial success of the Company by providing them with opportunities to purchase Shares in the Company pursuant to an Incentive
Plan approved by the Board of Directors of the Company (the “Board”).

 

		2.2.	Options granted hereunder to non Israeli Participants under the Incentive Plan may or may not contain
such terms as will qualify such options as Incentive Stock Options (“ISOs”) within the meaning of Section 422
(b) of the United States Internal Revenue Code of 1986, as amended (the “Code”). Options that do not contain
terms that will qualify them as ISOs shall be referred to herein as Non-Qualified Stock Options (“NQSOs”). Each
Award Agreement shall state whether such Option will or will not be treated as an ISO. No ISO shall be granted unless such Option,
when granted, qualifies as an “incentive stock option” under Section 422 of the Code. Any ISO granted under the Incentive
Plan shall contain such terms and conditions, consistent with the Incentive Plan, as the Company may determine to be necessary
to qualify such Option as an “incentive stock option” under Section 422 of the Code. Any ISO granted under the Incentive
Plan may be modified by the Company to disqualify such Option from treatment as an “incentive stock option” under Section
422 of the Code. Each person granted Options hereunder shall be referred to as an “Participant”.

 

		2.3.	Awards granted to Israeli Participants under the Incentive Plan may or may not contain such terms
as will qualify such options for the special tax treatment under Section 102(b) of the Israeli Tax Ordinance (New Version), 5721-1961,
as amended (the “Ordinance”), and the Income Tax Rules (Tax Benefits in Share Issuances to Employees) 5763-2003
(the “Rules”) (“102 Awards”).

 

		2.4.	Awards granted to non Israeli Participants, excluding American Participants, shall be granted in
accordance with the applicable laws of each Participant’s nationality state and with the terms and conditions set forth in
its respective Award Agreement (as defined below) as prescribed by the Committee (as defined below).

 

     

     

    

  

		2.5.	For the purposes of the Plan, the following terms shall have the following meanings:

 

“Award”
means either an Option or a Restricted Share Unit.

 

“3(i) Award”
means an Award granted under the terms of Section 3(i) of the Ordinance to persons which do not qualify as “Employees”
under the provisions of Section 102.

 

“102(b)
Track Election” means the right of the Company to prefer either the “Capital Track” (as set under Section
102(b)(2)), or the “Ordinary Income Track” (as set under Section 102(b)(1)), but subject to the provisions of Section
102(g) of the Ordinance.

 

“102(b)
Award” means an Award intended to qualify, under the provisions of Section 102(b) of the Ordinance (including the Section
102(b) Choice of Track), as either:

 

(i)     “102(b)(2)
Award” for the special tax treatments under the “Capital Track”, or

 

(ii)     “102(b)(1)
Award” for the special tax treatments under the “Ordinary Income Track”.

 

“Controlling Person”
shall have the meaning ascribed to such definition under Section 102 to the Ordinance, as may be amended from time to time.

 

“Employee”
or "employee" for the purposes of Section 102 to the Ordinance shall include an officer of a company, but excluding a
Controlling Person, as such definition may be amended from time to time under the Ordinance.

 

“Option”
means an option to purchase one or more Shares of the Company pursuant to this Incentive Plan.

 

“Other 102 Award”
means an Award granted under the terms of Section 102 of the Ordinance, excluding Section 102(b) Options.

 

“Related Entity”
means, with respect to the Company, (i) any entity which is a Controlling Person of the Company, or (ii) any entity for which the
Company is a Controlling Person, or (iii) any entity that is controlled by the same Controlling Person of the Company and such
entity.

 

“Restricted Share
Unit” means an Award which may be settled for Shares or other securities under Section 5 of this Incentive Plan.

 

“Restriction Period”
means the period during which Restricted Share Units awarded under Section 5 of this Incentive Plan are subject to forfeiture.

 

“Rights”
means rights issued or distributed in respect of Shares issued pursuant to exercise of Options or Restricted Share Units hereunder,
including bonus shares but excluding cash dividends.

 

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“Share” means
the ordinary shares, NIS 0.01 par value each, of the Company.

 

		3.	ADMINISTRATION OF THE INCENTIVE PLAN

 

		3.1.	The Board or a compensation committee appointed and maintained by the Board for such purpose (the
“Committee”) shall have the power to administer the Incentive Plan. Notwithstanding the above, the Board shall
automatically have a residual authority if no Committee shall be constituted or if such Committee shall cease to operate for any
reason whatsoever, and shall also have any authority granted to the Committee hereunder.

 

		3.2.	The Committee shall consist of such number of members (not less than two (2) in number) as may
be fixed by the Board. Subject to the provisions of the Company’s Articles of Association, the Board shall appoint the members
of the Committee, and may, from time to time, remove members from, or add members to, the Committee and shall fill vacancies in
the Committee however caused. Subject to the provisions of the Company’s Articles of Association, the Committee shall select
one of its members as its chairman (the “Chairman”) and shall hold its meetings at such times and places as
the Chairman shall determine. The Committee shall keep records of its meetings and shall make such rules and regulations for the
conduct of its business, as it shall deem advisable.

 

		3.3.	Subject to applicable laws, any member of such Committee shall be eligible to receive Awards under
the Incentive Plan while serving on the Committee, unless otherwise specified herein.

 

		3.4.	Subject to the provisions of applicable law and the Company’s Articles of Association, the
Board or the Committee shall have full power and authority to (i) designate participants in the Incentive Plan; (ii) determine
the terms and provisions of respective Award agreements (which need not be identical) including, but not limited to, the number
of Shares to be covered by each Award, provisions concerning the time or times when, and the extent to which, the Awards may be
exercised and the nature and duration of restrictions as to transferability, vesting or other terms and conditions of the Award;
(iii) accelerate the right of a Participant to exercise, in whole or in part, any previously granted Award; (iv) determine the
Fair Market Value of the Shares pursuant to Section 7.1 below; (v) designate Awards as 102(b)(1) Awards, as 102(b)(2) Awards, as
Other 102 Awards, as 3(i) Awards, as ISOs or as NQSO; (vi) interpret the provisions and supervise the administration of the Incentive
Plan; (vii) amend the Incentive Plan from time to time in order to qualify for tax benefits applicable under U.S. and Israel laws;
(viii) make a 102(b) Track Election (subject to the limitations set under Section 102(g) to the Ordinance); and (ix) determine
any other matter which is necessary or desirable for, or incidental to administration of the Incentive Plan. In determining the
number of Shares covered by the Awards to be granted to each recipient, the Board or the Committee may consider, among other things,
the nature of services provided by the recipient, the recipient’s salary and/or duration of his service or employment by
the Company.

 

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		3.5.	Subject to the provisions of the Articles of Association of the Company, all decisions and selections
made by the Board or the Committee pursuant to the provisions of the Incentive Plan shall be made by a majority of its members
except that no member of the Board or the Committee shall vote on, or be counted for quorum purposes, with respect to any proposed
action of the Board or the Committee relating to any Award to be granted to that member. Any decision reduced to writing and signed
by all of the members who are authorized to make such decision shall be fully effective as if it had been made by a majority at
a meeting duly held.

 

		3.6.	The interpretation and construction by the Committee of any provision of the Incentive Plan or
of any Award thereunder shall be final and conclusive unless otherwise determined by the Board.

 

		3.7.	Subject to the provisions of applicable law and the Company’s Articles of Association, each
member of the Board or the Committee may be indemnified and held harmless by the Company against any cost or expense (including
counsel fees) reasonably incurred by him, or any liability (including any sum paid in settlement of a claim with the approval of
the Company) arising out of any act or omission to act in connection with the Incentive Plan unless arising out of such member's
own fraud or bad faith, to the extent permitted by applicable law, and in such amounts and subject to such conditions, as may be
decided by the Company's Board. Such indemnification, if applicable, shall be in addition to any rights of indemnification the
member may have as a director or otherwise under the Company's Articles of Association, any agreement, any vote of shareholders
or disinterested directors, insurance policy or otherwise.

 

		4.	DESIGNATION OF PARTICIPANTS

 

		4.1.	The persons eligible for participation in the Incentive Plan as recipients of Awards shall include
any employees (including officers), directors and consultants of the Company or of any Related Entity of the Company, provided,
however, that following an IPO (as defined below) a non-Israeli consultant shall not be eligible to receive ISOs or NQSO hereunder
unless such consultant is a natural person, renders bona fide services to the Company or any Related Entity, and such
services are not in connection with the offer or sale of securities in a capital raising transaction and do not directly or indirectly
promote or maintain a market for the Company’s securities. The grant of an Award hereunder shall neither entitle the recipient
thereof to participate nor disqualify him from participating in, any other grant of Awards pursuant to this Incentive Plan or any
other option or share plan of the Company or any of its affiliates. Notwithstanding any provisions to the contrary herein, no ISO
shall be granted to any individual otherwise eligible to participate in the Incentive Plan who is not an employee of the Company
or a “subsidiary” of the Company, within the meaning of Section 424(f) of the Code, on the date of granting of such
ISO. No 102 Awards shall be granted to any individual who is not an employee of the Company or of a Related Entity of the Company,
or who otherwise would not qualify as an "employee" under Section 102(a) to the Ordinance.

 

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		4.2.	To the extent applicable and anything in the Incentive Plan to the contrary notwithstanding, all
grants of Awards to directors and office holders (“Nosei Misra” - as such term is defined in the Israeli Companies
Law, 5759-1999 (the “Companies Law”)) shall be authorized and implemented only in accordance with the provisions
of the Companies Law, as in effect from time to time.

 

4A.         RESTRICTED SHARE UNITS

 

4A.1.An Award of Restricted
Share Units is an Award which may be settled for Shares or other securities or a combination of Shares or other securities as established
by the Board or the Committee (as applicable). Such an Award shall be subject to the following terms and conditions.

 

4A.2.Restricted Share Units
shall be evidenced by Restricted Share Unit agreements. Such agreements shall conform to the requirements of this Plan and may
contain such other provisions, as the Board or the Committee (as applicable) shall deem advisable.

 

4A.3Upon determination of
the number of Restricted Share Units to be awarded to a Participant, the Board or the Committee (as applicable) shall direct that
the same be credited to the Trustee (as defined below), for the benefit of the Participant or to Participant’s account (as
applicable) on the books of the Company but the underlying Shares or other securities shall be delivered only upon vesting of the
Restricted Share Units as provided in Section 10.2 hereof. If Shares will be issued upon the vesting of the Restricted Share Units,
the Participant shall have no rights as a shareholder with respect to any Shares underlying the Restricted Share Units prior to
issuance and delivery of the Shares upon vesting of the Restricted Share Units.

 

4A.4The Restriction Period
shall be determined at the discretion of the Board or the Committee (as applicable). At the end of the Restriction Period (unless
the Participant elects a longer period for distribution, if permitted by the Committee) the restrictions imposed hereunder shall
lapse with respect to the number of Restricted Share Units as determined by the Board or the Committee (as applicable).

 

5.           TRUSTEE

 

		5.1.	The 102(b) Awards which shall be granted to Participants and/or any Shares issued upon exercise
of such Awards and/or any other Shares received subsequently following any realization of rights resulting from a 102(b) Award
or Rights resulting from Shares issued upon exercise of a 102(b) Award, shall be issued to a Trustee nominated by the Board and
approved in accordance with the provisions of Section 102 of the Ordinance (the “Trustee”). The Board shall
determine and approve the terms of engagement of the Trustee, and shall be authorized to designate from time to time a new Trustee
and replace either of them at its sole discretion, and in the event of replacement of any existing Trustee, to instruct the transfer
of all Awards and Shares held by such Trustee at such time to its successor. The 102(b) Awards and/or any Shares issued upon exercise
of such Options will be held by the Trustee for the benefit of the Participants for a period of not less than the minimum period
permitted by applicable law without disqualifying such 102(b) Awards from treatment under Section 102(b) of the Ordinance. The
Trustee will hold such Awards or Shares resulting from the exercise thereof in accordance with the provisions of the Ordinance
and the Rules promulgated thereunder, the trust agreement and any other instructions the Board may issue to him/it from time to
time (so long as they do not contradict the Ordinance and the Rules promulgated thereunder). Thereafter, the Trustee will transfer
the Awards or the Shares, as the case may be, to the Participants upon his/her demand, subject to any deduction or withholding
required under the Ordinance, the Rules or any other applicable law.

 

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		5.2.	Anything to the contrary notwithstanding, the Trustee shall not release any Awards which were not
already exercised into Shares by the Participant or release any Shares issued upon exercise of such Awards prior to the full payment
of the Participant’s tax liabilities arising from such Awards which were granted to him and/or any Shares issued upon exercise
of such Awards.

 

		5.3.	Upon receipt of an Award, the Participant will sign an Award Agreement or an applicable option
award which shall be deemed as Participant’s undertaking to exempt the Trustee from any liability in respect of any action
or decision duly taken and bona fide executed in relation with the Incentive Plan, or any Award or Share granted to him thereunder.

 

		5.4.	Subject to applicable law, the Board shall be entitled to revise, amend or replace the terms of
the trust agreement with the Trustee, to the extent that same (i) does not adversely affect any rights of Participant under any
valid and outstanding Award, which are expressly provided for in the respective Award Agreement with such Participant, or (ii)
is necessary or desirable in the light of any change or replacement of Section 102 of the Ordinance.

 

		5.5.	Any and all Rights resulting from the 102(b) Awards and/or any Shares issued upon exercise of such
Awards and/or any other Shares received subsequently following any realization of rights resulting from a 102(b) Award, shall be
issued or distributed, as the case may be, to the Trustee and held thereby. Such Rights will not be sold or transferred until the
lapse of the minimum period permitted by applicable law, and such Rights shall be subject to the taxation track which is applicable
to such Shares issued pursuant to the exercise of Awards hereunder. Notwithstanding the aforesaid, Shares issued pursuant to the
exercise of 102(b) Awards hereunder or Rights resulting from such 102(b) Awards may be sold or transferred, and the Trustee may
release such Shares issued pursuant to the exercise of Awards hereunder (or the applicable option award) or Rights from trust,
prior to the lapse of the minimum period permitted by applicable law, provided however, that tax is paid or withheld in accordance
with Section 102 of the Ordinance and/or Section 7 of the Rules, and/or any other provision in any other section of the Ordinance
and any regulation, ruling, procedure and clarification promulgated thereunder, that will be relevant, from time to time.

 

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		6.	SHARES RESERVED FOR THE INCENTIVE PLAN; RESTRICTION THEREON

 

		6.1.	Subject to adjustments as set forth in Section 8 below, a total of 3,746,680 authorized but unissued
Ordinary Shares, par value NIS 0.01 per share of the share capital of the Company (the “Shares”) shall be reserved
for and subject to the Incentive Plan. Notwithstanding the aforesaid, in the event that any outstanding options to purchase Ordinary
Shares of the Company or Restricted Share Units granted hereunder shall for any reason expire or be canceled prior to its exercise
or relinquishment in full, such number of expired or terminated Awards shall automatically increase the number of Shares available
for allocation hereunder, and such increase shall not be deemed as amendment to this Plan. The Shares shall bear such rights and
restrictions as set forth under the Company’s Articles of Association, as currently in effect and as may from time to time
be amended or replaced in accordance with the Companies Law, without the consent of any Participant (notwithstanding anything else
here to the contrary). Any of such Shares which may remain unissued and which are not subject to outstanding Awards at the termination
of the Incentive Plan shall cease to be reserved for the purpose of the Incentive Plan, but until termination of the Incentive
Plan the Company shall at all times reserve a sufficient number of Shares to meet the requirements of the Incentive Plan. Should
any Award for any reason expire or be canceled prior to its exercise or relinquishment in full, the Shares therefore subject to
such Award may again be subjected to an Award under the Incentive Plan.

 

		6.2.	Each Award granted pursuant to the Incentive Plan, shall be evidenced by a written agreement or
an award between the Company and the Participant (the “Award Agreement”), in such form as the Board or the Committee
shall from time to time approve. Each Award Agreement shall state a number of the Shares to which the Award relates to and the
type of Award granted thereunder (whether a 102(b)(1) Award, 102(b)(2) Award, Other 102 Award, a 3(i) Award, an ISO or an NQSO),
the purchase price per Share and the vesting schedule to which such Award shall become exercisable. Notwithstanding any other provision
of the Plan, the aggregate Fair Market Value (determined as of the date an ISO is granted) of the Shares with respect to which
ISOs are exercisable for the first time by a Participant during any calendar year (under the Plan and any other “incentive
stock option” plans of the Company, any “subsidiary” of the Company within the meaning of Section 424(f) of the
Code, and any “parent corporation” of the Company within the meaning of Section 424(e) of the Code) shall not exceed
$100,000 (or such other amount as may be prescribed by the Code from time to time); provided, however, that if the exercisability
or vesting of an ISO is accelerated as permitted under the provisions of this Plan and such acceleration would result in a violation
of the limit imposed by this Section 6.2, such acceleration shall be of full force and effect but the number of Shares that exceed
such limit shall be treated as having been granted pursuant to a NQSO; and provided, further, that the limits imposed by this Section
6.2 shall be applied to all outstanding ISOs (under the Plan and any other “incentive stock option” plans of the Company,
any “subsidiary” of the Company within the meaning of Section 424(f) of the Code, and any “parent corporation”
of the Company within the meaning of Section 424(e) of the Code) in chronological order according to the dates of grant. In the
event a Participant receives an Award intended to be an Incentive Stock Option which is subsequently determined not to comply with
the requirements of the Code for Incentive Stock Options, the Award shall be amended, if necessary, in accordance with the Code
and applicable Treasury Regulations and rulings to preserve, as the first priority, to the maximum possible extent, the status
of an Option as an ISO (as defined in the Code) and to preserve, to the maximum possible extent, the number of Shares subject to
the Award. Awards may be granted at any time after this Incentive Plan has been approved by the Company, subject to any further
approval or consent required under Section 102 of the Ordinance or the Rules, in case of 102(b) Awards, or of the U.S. Treasury,
in case of ISOs and other applicable law.

 

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		6.3.	Each Award Agreement evidencing 102(b) Awards shall include (i) an approval and acknowledgment
by the Participant of the agreement of the Company with the Trustee (as may be amended from time to time), (ii) a declaration that
the Participant is familiar with the provisions of Section 102 and the “Capital Track” (if applicable) and (iii) an
undertaking not to sell or transfer the Awards and/or the Shares issued pursuant to the exercise of Awards prior to the lapse of
the period in which the Awards and/or such Shares are held in trust, unless the Participant pays all taxes, which may arise in
connection with such sale and/or transfer (as provided in Section 5.5 above).

 

		6.4.	By executing an Award Agreement, the Participant approves and acknowledges, and each Award Agreement
may include an approval and acknowledgement by a Participant, that the grant of Awards, constitutes inter alia, without derogating
from other benefits or remuneration, adequate consideration for 'service inventions' ('hamtzaat sherut', as such term in
defined under Section 132 of the Israeli Patents Law, 5727-1967) for the purposes of Section 134 thereof, to the extent applicable.

 

		7.	PURCHASE PRICE

 

		7.1.	The purchase price of each Share subject to a new Award to be granted or any portion thereof shall
be determined by the Board or the Committee in its sole and absolute discretion in accordance with applicable law, subject to any
guidelines as may be determined by the Board from time to time. The purchase price per Share covered by each ISO shall be not less
than the Fair Market Value of the Company's shares on the date the Option is granted; provided, however, that no ISO shall be granted
to an individual otherwise eligible to participate in the Option Plan who owns (within the meaning of Section 424(d) of the Code),
at the time the Option is granted, more than ten percent (10%) of the total combined voting power of all classes of shares of the
Company, any “subsidiary” of the Company within the meaning of Section 424(f) of the Code, or any “parent corporation”
of the Company within the meaning of Section 424(e) of the Code, unless, at the time such ISO is granted, the exercise price per
Share subject to the Option is at least 110% of the Fair Market Value of a Share on the date such ISO is granted, and the ISO by
its terms is not exercisable after the expiration of five years from such date of grant. For purposes of the foregoing, if the
Company's shares are publicly traded on the Over-the-Counter Market or a recognized share exchange on the date the Option is granted,
"Fair Market Value" shall mean, for any particular date, the last sale price of a Company's share on the applicable
share exchange or, if no reported sales take place on the applicable date, the average of the high bid and low asked price of a
Company's share as reported for such date or, if no such quotation is made on such date, on the next preceding day on which there
were quotations, provided that such quotations shall have been made within the ten (10) business days preceding the applicable
date. In the event that the Company's shares are not publicly traded on a share exchange, the Fair Market Value of a Share shall
be determined in good faith by the Board or the Committee. Notwithstanding the preceding provision to the contrary, solely with
respect to Shares granted pursuant to an ISO under the Incentive Plan, Fair Market Value shall be determined in accordance with
Section 422(c)(7) of the Code.

 

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		7.2.	Unless otherwise specifically set forth under the Award Agreement, the purchase price shall be
payable upon the exercise of the Award in a form satisfactory to the Board or the Committee, including without limitation, by cash,
cheque, or wire transfer.

 

		8.	ADJUSTMENTS

 

Upon the occurrence
of any of the following described events, Participant's rights to purchase or receive Shares under the Incentive Plan shall be
adjusted as hereafter provided:

 

		8.1.	If the Company is separated, reorganized, merged, acquired or consolidated with or into another
corporation while Awards which were not yet vested remain outstanding under the Incentive Plan, then, subject to any applicable
law, the Board may resolve (in its sole discretion), that the vesting period defined in each Participant’s Award Agreement
shall be accelerated so that any unvested Award shall be immediately vested in full prior to the effective date of such transaction
(or any other date as shall be resolved by the Board).

 

		8.2.	If the outstanding shares of the Company shall at anytime be changed or exchanged by declaration
of a share dividend, share split, combination or exchange of shares, recapitalization, or any other like event of the Company,
then in such event only and as often as the same shall occur, the number, class and kind of shares (including Shares issuable pursuant
to the Incentive Plan, as set forth in Section 6 hereof, in respect of which Awards have not yet been exercised) subject to this
Incentive Plan or subject to any Awards therefore granted, and the purchase prices of the Awards, shall be appropriately and equitably
adjusted so as to maintain the proportionate number of Shares without changing the aggregate purchase price of the Awards.

 

		8.3.	Anything herein to the contrary notwithstanding, if prior to the completion of an initial public
offering of the Company’s securities pursuant to which the securities of the Company are listed for trade in any Over-The-Counter
Market or recognized stock exchange or otherwise registered under the United States Securities Act of 1933 or the United States
Securities Exchange Act of 1934 (“IPO”), all or substantially all of the shares of the Company are to be sold,
or upon a merger or reorganization or the like, the shares of the Company, or any class thereof, are to be exchanged for securities
of another Company, then in such event, each Participant shall be obliged to sell, assign or exchange (in accordance with the value
of his/her Shares pursuant to such transaction), as the case may be, the Shares such Participant purchased under the Incentive
Plan and any Awards or portion to the extent then vested and exercisable, in accordance with any instructions then to be issued
by the Board whose determination shall be final, and which may authorize any officer of the Company to execute such instructions
on behalf of the Participant. For the avoidance of doubt, the Board or Committee may decide in its sole discretion that an Award
cannot be exercised, and shall automatically expire, following each of the transactions specified in this Section 8.3 above, to
the extent not vested at the effective date of such transaction. Each Participant, upon executing an Award Agreement, shall be
deemed to have authorized the Company and each of its officers and to have granted the Company and each of its officers an irrevocable
power of attorney to execute in his/her behalf such instruments and documents mentioned in this Section 8.3, inter alia through
the Proxy. The Company and its shareholders shall each be deemed as a third party beneficiary of this Section 8.3 with rights to
enforce same against the Participant.

 

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		8.4.	Notwithstanding the foregoing adjustments, any changes to ISOs pursuant to this Section 8 shall,
unless the Company determines otherwise, only be effective to the extent such adjustments or changes do not cause a “modification”
(within the meaning of Section 424(h)(3) of the Code) of such ISOs or adversely affect the tax status of such ISOs.

 

		8.5.	Notwithstanding the foregoing adjustments, any changes to NQSOs pursuant to this Section 8 shall,
unless the Company determines otherwise, only be effective to the extent such adjustments or changes do not cause a “modification”
(within the meaning of Section 409A of the Code) of such NQSOs or adversely affect the tax status of such NQSOs.

 

		9.	TERM OF AWARD AND EXERCISE OF OPTIONS

 

		9.1.	Options shall be exercised by the Participant by giving written notice to the Company, in such
form and method as may be determined by the Company and the Trustee, which exercise shall be effective upon receipt of such notice
by the Company at its principal office and the applicable payment of the exercise price of the exercised options. The notice shall
specify the number of Shares with respect to which the Option is being exercised.

 

		9.2.	Vesting of Awards may be time-based or performance-based, in the discretion of the Committee or
the Board. Unless otherwise prescribed by the Committee or the Board and specified in the Award Agreement, an Award will not be
exercisable before the first anniversary of the date of grant, with respect to the 331⁄3% of the Shares subject to the Award,
and with respect to the remaining 662⁄3% of the Shares subject to the Awards, on a quarterly basis, such that 81⁄3% of
such Awards shall become vested upon the lapse of each quarter (3-month period) after the first anniversary of the date of grant,
respectively. The Board shall have the exclusive authority to accelerate the periods for exercising an Award.

 

		9.3.	Subject to the provisions of Section 9.7 below, no Option shall be exercisable after the expiration
of ten (10) years from the "Date of Grant" (i.e., the date on which such Participant was issued the applicable Award
Agreement), or in the event of grant of ISOs, five years from the Date of Grant in the case of an Option held by a Participant
who holds more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or of the shares
of any “subsidiary” of the Company within the meaning of Section 424(f) of the Code or any “parent corporation”
of the Company within the meaning of Section 424(e) of the Code (the “Expiration Date”); and then such Options,
or such unexercised part thereof, as the case may be, shall terminate and all interests and rights of the Participant thereunder
shall automatically and conclusively expire.

 

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		9.4.	Awards granted under the Incentive Plan shall not be transferable by Participants other than by
will or laws of descent and distribution and during an Participant's lifetime shall be exercisable only by that Participant.

 

		9.5.	Options may be exercised by the Participant in whole at any time or in part from time to time,
and Restricted Share Units shall continue to vest, to the extent that the Awards become vested and exercisable, prior to the Expiration
Date, and provided that, subject to the provisions of Section 9.7 below and unless the Board or Committee resolves otherwise, the
Participant is an employee of the Company or any of its Related Entities or continuing to provide services to such entities, at
all times during the period beginning with the granting of the Award and ending upon the date of exercise.

 

		9.6.	Subject to the provisions of Section 9.7 below, in the event of termination of Participant’s
employment with the Company or any of its Related Entities, or if applicable, the termination of services given by the Participant
to the Company or any of its Related Entities, all Awards granted to him will immediately expire and all Restricted Share Units
that have not vested shall automatically be forfeited by the Company. Unless otherwise determined by the Board, a notice of termination
of employment or services shall be deemed to constitute termination of employment or services.

 

		9.7.	Notwithstanding anything to the contrary in Section 9.6 above, and unless otherwise prescribed
by the Committee or the Board and specified in the Award Agreement, an Option may be exercised after the date of termination of
Participant's service or employment with the Company or any Related Entity of the Company only with respect to the number of Options
already vested and unexpired at the time of such termination according to the vesting and expiration periods of the Options set
forth in this Incentive Plan, or under a different period prescribed by the Committee or by the Board and specified in Participant’s
Award Agreement, provided however, that;

 

		9.7.1.	such termination is without Cause (as defined below) in which case the Options shall be exercisable
within not more than 90 days from the effective date of such termination; or

 

		9.7.2.	such termination is the result of death or disability of the Participant, in which case the Options
shall be exercisable within 12 months.

 

The term
"Cause" shall mean: (i) conviction of any felony involving moral turpitude or affecting the Company or the Related
Entities; (ii) any continuing refusal to carry out a reasonable directive of the CEO or the Board which involves the business of
the Company or its Related Entities and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or
its Related Entities; (iv) any breach of the Participant's fiduciary duties or duties of care of the Company or any Related Entity;
including, without limitations, disclosure of confidential information of such entity; and (v) any conduct (other than conduct
in good faith) reasonably determined by the Board of Directors to be materially detrimental to the Company or any Related Entity.

 

    	 	- 11 -	 

     

    

 

9.8.             (a)       The
holders of Awards shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable
upon the exercise of any part of an Option unless and until, following exercise of such Option, and in the event of Restricted
Share Units – following the completion of the Restriction Period, and in all cases, following registration of the Participant
as holder of such Shares in the Company’s register of shareholders, but in case of Awards and Shares held by the Trustee,
subject always to the provisions of Section 5 of the Incentive Plan.

 

(b)          Notwithstanding
the foregoing, until completion of an IPO, no Shares will be issued upon exercise of any Option, or upon vesting of any Restricted
Stock Unit, unless and until the Participant shall have executed and delivered a proxy in the form of Exhibit A hereto,
or such other form as the Board or the Committee may designate from time to time, to a person designated by the Board or the Committee,
pursuant to which the Participant shall authorize and empower such person to vote such Shares and exercise or waive any and all
rights thereunder, and to authorize a sale or exchange in accordance with the provisions of the Plan, pursuant to the instructions
of the Board or the Committee (the "Proxy"). Such person shall have no liability to any Participant, and each
Participant upon acceptance of an Award shall be deemed to have waived any right or claim against such person and release such
person from any liability, if any, to such Participant, for any loss or damage of any kind which may occur to such Participant
as a result of any act or omission of such person in his capacity as proxy, and to the extent that the Participant may have any
such right or claim, he shall look solely for the Company for any remedy that may be available to him by virtue of such right or
claim.

 

(c)          Notwithstanding
the foregoing no Shares will be issued pursuant to any Award unless and until the Participant shall have executed and delivered
to the Company any document or instrument required in accordance with the Articles of Association of the Company, any shareholders
agreement of the Company or applicable law.

 

		9.9.	Any form of Award Agreement authorized pursuant to this Incentive Plan may contain such other provisions
as the Board may, from time to time, deem advisable. Without limiting the foregoing, the Board may, subject to applicable law and
with the consent of the Participant, from time to time, cancel all or any portion of any Award then subject to exercise or vesting
in the case of Restricted Stock Unit, and the Company's obligation in respect of such Award may be discharged by (i) payment to
the Participant of an amount in cash equal to the excess, if any, of the Fair Market Value of the Shares at the date of such cancellation
subject to the portion of the Award so canceled over the aggregate purchase price of such Shares, (ii) the issuance or transfer
to the Participant of Shares of the Company with a Fair Market Value at the date of such transfer equal to any such excess, or
(iii) a combination of cash and shares with a combined value equal to any such excess, all as determined by the Board in its sole
discretion.

 

    	 	- 12 -	 

     

    

 

		10.	PURCHASE FOR INVESTMENT

 

		10.1.	The Company’s obligation to issue Shares pursuant to an Award granted under the Plan is expressly
conditioned if so required under the applicable law, as supported by the opinion of the Company’s counsel, upon the following
terms: (a) the Company’s completion of any registration or other qualifications of such Shares under any state and/or federal
law, rulings or regulations or (b) representations and undertakings by the Participant (or his legal representative, heir or legatee,
in the event of the Participant’s death) to assure that the sale of the Shares complies with any registration exemption requirements
which the Company in its sole discretion shall deem necessary or advisable. Such required representations and undertakings may
include representations and agreements that such Participant (or his legal representative, heir, or legatee): (a) is purchasing
such Shares for investment and not with any present intention of selling or otherwise disposing thereof; and (b) agrees to have
placed upon the face and reverse of any certificates evidencing such Shares a legend setting forth (i) any representations and
undertakings which such Participant has given to the Company or a reference thereto, (ii) that, prior to effecting any sale or
other disposition of any such Shares, the Participant must furnish to the Company an opinion of counsel, satisfactory to the Company,
that such sale or disposition will not violate the applicable requirements of State and federal laws and regulatory agencies, and
(iii) any other legend deemed reasonably necessary or appropriate by the Company.

 

		10.2.	As a further condition to the grant of any Award or the issuance of Shares to an Participant, each
Participant agrees that in the event the Company advises Participant that it plans an underwritten public offering of any of its
shares of capital stock in compliance with the Securities Act of 1933, as amended, and the underwriter(s) for such offering seek
to impose restrictions under which certain shareholders may not sell or contract to sell or grant any option to buy or otherwise
dispose of part or all of their stock purchase rights of the Shares underlying Awards, Participant will not, for a period not to
exceed 180 days from the date of the prospectus, sell or contract to sell or grant an option to buy or otherwise dispose of any
Award granted to Participant pursuant to the Plan or any of the underlying Shares without the prior written consent of the underwriter(s)
or its representative(s).

 

		11.	DIVIDENDS

 

		11.1.	With respect to all Shares (in contrary to Options not exercised into Shares and Restricted Share
Units during the Restriction Period) issued pursuant to any Award, the Participant shall be entitled to receive dividends in accordance
with the quantity of such Shares, and subject to any applicable taxation on distribution of dividends.

 

		11.2.	During the period in which Shares, issued to the Trustee on behalf of an Participant upon exercise
of a 102(b) Award, are held by the Trustee, the cash dividends paid with respect thereto shall be paid directly to the Participant
(through the Trustee, who shall be responsible for deduction of applicable tax); all subject to the provisions of applicable law
and Section 5.2 above.

 

    	 	- 13 -	 

     

    

 

		12.	ASSIGNABILITY AND SALE OF AWARDS

 

		12.1.	No Award, whether fully paid or not, shall be assignable, transferable or given as collateral or
any right with respect to them given to any third party whatsoever, and during the lifetime of the Participant each and all of
such Participant's rights to purchase Shares hereunder shall be exercisable only by the Participant.

 

		12.2.	As long as Shares are held by the Trustee in favor of the Participant, then all rights the last
possesses over the Shares are personal, can not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent
and distribution.

 

		13.	TERM OF THE INCENTIVE PLAN

 

The
Plan shall become effective on the date that it is adopted by the Board. Subject to Section 14
below the Incentive Plan shall terminate at the end of 10 years from such day of adoption provided, however, that Awards theretofore
issued under an applicable Award Agreement may extend beyond such date in accordance with their terms. No ISOs will be granted
unless the Incentive Plan shall have been approved by the shareholders of the Company within 12 months after this Plan is adopted
by the Board of Directors of the Company. 

 

		14.	AMENDMENTS OR TERMINATION

 

		14.1.	The Board may, at any time and from time to time, amend, alter or discontinue the Incentive Plan,
except that no amendment or alteration shall be made which would impair the rights of the holder of any Award granted, if and to
the extent such rights are specifically set forth under the applicable Award Agreement, without such Participant's consent.

 

		14.2.	The following changes to the Incentive Plan shall be made subject to the approval of the shareholders
of the Company, if such approval is required and necessary to satisfy (i) with regard to ISOs, any requirements under the Code
relating to ISOs, or (ii) any applicable law, regulation or rule:

 

		(a)	except as is provided in Section 8, increase the maximum number
of Shares which may be sold or awarded under the Incentive Plan;

 

		(b)	except as is provided in Section 8, decrease the minimum Option
exercise price requirements under the Incentive Plan;

 

		(c)	change the class of persons eligible to receive Awards under the Plan; or

 

		(d)	extend the duration of the Plan under Section 13 or the period
during which ISOs may be exercised under Section 9.

 

		14.3.	Notwithstanding any provision of this Incentive Plan to the contrary, the Company (and the Participants)
intend that this Incentive Plan shall satisfy the applicable requirements of Section 409A of the Internal Revenue Code of 1986,
as amended ("Code Section 409A") in a manner that will preclude the imposition of penalties described in Code
Section 409A. The Company shall have the right to amend the Incentive Plan to the extent necessary to comply with Code Section
409A and the regulations, notices and other guidance of general applicability issued thereunder.

 

    	 	- 14 -	 

     

    

 

		15.	GOVERNMENT REGULATIONS

 

Subject
to Section 17 below, the Incentive Plan, the granting of Options and Restricted Share Units
and exercise of Options, hereunder, and the obligation of the Company to sell and deliver Shares under such Awards, shall be subject
to all applicable laws, rules, and regulations, whether of the State of Israel or of the United States or any other State having
jurisdiction over the Company and the Participant, including the United States Securities Act of 1933, and to such approvals by
any governmental agencies or national securities exchanges as may be required.

 

		16.	CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

 

Neither the Incentive Plan
nor the Award Agreement with the Participant shall impose any obligation on the Company or a Related Entity thereof, to continue
any Participant in its employ, or the hiring by the Company of the Participant’s services and nothing in the Incentive Plan
or in any Award granted pursuant thereto shall confer upon any Participant any right to continue in the employ or service of the
Company or a Related Entity thereof or restrict the right of the Company or a Related Entity thereof to terminate such employment
or service hiring at any time.

 

		17.	GOVERNING LAW & JURISDICTION

 

This Incentive Plan shall
be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to
be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall
have sole jurisdiction in any matters pertaining to this Incentive Plan.

 

		18.	TAX CONSEQUENCES

 

		18.1.	To the extent permitted by applicable law, any tax consequences arising from the grant or exercise
of any Award, from the payment for Shares covered thereby or from any other event or act (of the Company, the Trustee or the Participant)
hereunder shall be borne solely by the Participant. The Company and/or the Trustee (where applicable) shall withhold taxes according
to the requirements under the applicable laws, rules, and regulations, including the withholding of taxes at source. Furthermore,
the Participant shall agree to indemnify the Company and the Trustee (where applicable) and hold them harmless against and from
any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the
necessity to withhold, or to have withheld, any such tax from any payment made to the Participant.

 

    	 	- 15 -	 

     

    

 

		18.2.	The Board, the Committee and/or the Trustee shall not be required to release any Share certificate
issued upon exercise of a 102 Award and/or a 3(i) Award to an Participant until all required payments have been fully made.

 

		18.3.	If the Option is intended to qualify as an ISO, then if the Participant makes a disposition, within
the meaning of Section 424(c) of the Code and the regulations promulgated thereunder, of any Share issued to the Participant pursuant
to his exercise of the Option within the two-year period commencing on the Date of Grant or within the one-year period commencing
on the date after the date of transfer of such Share to the Participant pursuant to such exercise, the Participant shall, within
ten (10) days after such disposition, notify the Company thereof, by delivery of a written notice to the Secretary of the Company,
and immediately deliver to the Company the amount of all applicable withholding taxes and any other information as may be prescribed
by the Committee or the Company.

 

		19.	SPECIAL PROVISIONS FOR INCENTIVE PLAN PARTICIPANTS WHO ARE ISRAELI RESIDENTS

 

		19.1.	This Section 19 shall apply only to Participants who are residents
of the State of Israel or those who are deemed to be residents of the State of Israel for the payment of tax.

 

		19.2.	Notwithstanding anything herein to the contrary, the Incentive Plan shall be governed by the provisions
of the Ordinance, the rules promulgated thereunder, and any other applicable Israeli laws with respect to service providers or
employees who are Israeli residents.

 

		19.3.	Following the grant of Awards under the Incentive Plan and in any case in which the Participant
shall stop being considered as an “Israeli Resident”, as defined in the Ordinance, the Company may, if and to the extent
the Ordinance and/or the rules promulgated thereunder shall impose such obligation on the Company, to withhold all applicable taxes
from the Participant, to remit the amount withheld to the appropriate Israeli tax authorities and to report to such Participant
the amount so withheld and paid to said tax authorities.

 

		20.	NON-EXCLUSIVITY OF THE INCENTIVE PLAN

 

The adoption of the Incentive
Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or
as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of Awards otherwise than under the Incentive Plan, and such arrangements may be either applicable
generally or only in specific cases.

 

    	 	- 16 -	 

     

    

 

		21.	MULTIPLE AGREEMENTS

 

The terms of each Award may
differ from other Awards granted under the Incentive Plan at the same time, or at any other time. The Committee or the Board may
also grant more than one Award to a given Participant during the term of the Incentive Plan, in addition to one or more Awards
previously granted to that Participant.

 

    	 	- 17 -	 

     

    

 

Exhibit A

 

IRREVOCABLE PROXY

 

Advanced Inhalation Therapies (AIT) Ltd.

7 Imbar St., P.O Box # 3542

Petah Tiqwa 49511 Israel

 

The undersigned hereby appoints the Chairman
of the Board of Directors or his substitute, or any other officer designated for the purpose of this Irrevocable Proxy by the Board
of Directors, as proxy of the undersigned, with full power of substitution, to (i) vote all of the shares of Advanced Inhalation
Therapies (AIT) Ltd. (the "Company"), which the undersigned may be entitled to vote at any General Meeting or
Class Meeting of Shareholders of the Company, granted under the Company’s Amended and Restated 2013 Share Incentive Plan
(the "Plan"), and to execute any resolutions or consents in lieu of meetings, to the extent undersigned is entitled
to any of the foregoing voting rights, and (ii) to waive or exercise, on the undersigned’s behalf, any and all rights or
privileges conferred upon the undersigned by virtue or in respect of any such shares owned beneficially or of record by the undersigned,
and (iii) to execute on behalf of the undersigned any documents and instruments related to any sale or exchange of any such shares
to the extent such sale or exchange is made in accordance with the provisions of the Plan.

 

Subject to the approval
of the Company’s Board of Directors, this Irrevocable Proxy may be assigned by the original proxy or any of his assignees
to any other person(s) approved by the Board of Directors.

 

This Irrevocable Proxy
is granted by the undersigned pursuant to the provisions of the Company’s Amended and Restated 2013 Share Incentive Plan
and is intended to secure the rights and interests of third parties, including the Company and certain of its other shareholders,
and accordingly is coupled with interest and irrevocable.

 

I hereby acknowledge
that I have read and understood the provisions of the Plan, including without limitations, the provisions of Section 9.9 of the
Plan, and fully agree therewith.

 

This Irrevocable Proxy
will terminate automatically upon completion of the Company’s IPO (as defined in the Plan).

 

Date: ___________

 

	 	Very truly yours,
	 	 
	 	 
	 	(Participant)

 

    	 	- 18 -EX-10.1

 Exhibit 10.1 

EXECUTION COPY 
 Baxter
International Inc. 
 One Baxter Parkway 

Deerfield, Illinois 60015 

January 11, 2016 
 Shire plc 

5 Riverwalk, Citywest Business Campus 
 Dublin 24 

Republic of Ireland 
 Attention: Bill Mordan, General Counsel 

Baxalta Incorporated 
 1200 Lakeside Drive 

Bannockburn, Illinois 60015 
 Attention: Peter G. Edwards 

Ladies and Gentlemen: 
 This letter agreement is
entered into on the date first set forth above by and among Shire plc, a company incorporated in Jersey (“Parent”), Baxalta Incorporated, a Delaware corporation (“Baxalta”), and Baxter International Inc., a Delaware corporation
(“Baxter”) (this “Letter Agreement”). Reference is made to that certain Tax Matters Agreement, dated as of June 30, 2015, by and among Baxter, by and on behalf of itself and each Affiliate of Baxter, and Baxalta, by and on
behalf of itself and each Affiliate of Baxalta (the “Tax Matters Agreement”) and that certain Shareholder’s and Registration Rights Agreement, dated as of June 30, 2015, by and between Baxter and Baxalta (the “Registration
Rights Agreement”). Pursuant to a merger agreement to be entered into among Parent, BearTracks, Inc., a Delaware corporation, and Baxalta (the “Merger Agreement”), Parent will, directly or indirectly, acquire all of the outstanding
shares of Baxalta Common Stock (the “Merger”), subject to the satisfaction of certain closing conditions as described in the Merger Agreement. Capitalized terms used but not defined herein have the meanings given to them in the Tax Matters
Agreement. 
 Parent, Baxalta and Baxter hereby agree as follows: 

1. Support of Baxter; Waiver of Appraisal Rights. 

(a) Baxter hereby consents to the inclusion of a statement, attributed to its chief executive officer, expressing its support for the Merger
in the form attached hereto as Annex I (the “Baxter Support Statement”) in any Baxalta or Parent press release announcing the entry into the Merger Agreement. Each of Parent and Baxalta agrees that, except as required by applicable law or
in the discharge of its obligations hereunder, it will not make any public statement (other than the Baxter Support Statement) of non-public information regarding Baxter’s support for the Merger or any statement regarding Baxter’s plans
with respect to, or the anticipated timing or sizing of, any Retained Shares Transaction (as defined below), in each case, 

 
without Baxter’s prior consent; provided that, Parent and Baxalta may publish, make, repeat or otherwise use the Baxter Support Statement unless and until Baxter objects in writing to the
use thereof. 
 (b) Baxter hereby waives, and agrees not to exercise or assert, any appraisal rights under applicable law, including
Section 262 of the General Corporation Law of the State of Delaware, in connection with the Merger. 
 2. Opinion Matters. 

(a) Immediately prior to the closing of the Merger (the “Merger Closing”), Baxter shall execute and deliver representation letters
(the “Baxter Closing Representation Letters”) to Cravath, Swaine & Moore LLP and KPMG LLP substantially in the form of the representation letters (the “Baxter Signing Representation Letters”) executed and delivered by
Baxter on the date immediately prior to the date that the Merger Agreement is entered into by Parent and Baxalta (the “Merger Signing Date”) with such changes as are necessary to reflect any changes in facts prior to the Merger Closing.

 (b) Immediately prior to the Merger Closing, Parent shall execute and deliver representation letters (the “Parent Closing
Representation Letters”) to Cravath, Swaine & Moore LLP and KPMG LLP substantially in the form of the representation letters (the “Parent Signing Representation Letters”) executed and delivered by Parent on the date
immediately prior to the Merger Signing Date with such changes as are necessary to reflect any changes in facts prior to the Merger Closing. 

(c) Immediately prior to the Merger Closing, Baxalta shall execute and deliver representation letters (the “Baxalta Closing
Representation Letters” and, together with the Baxter Closing Representation Letters and the Parent Closing Representation Letters, the “Closing Representation Letters”) to Cravath, Swaine & Moore LLP and KPMG LLP
substantially in the form of the representation letters (together with the Baxter Signing Representation Letters and Parent Signing Representation Letters, the “Signing Representation Letters” and together with the Closing Representation
Letters, the “Representation Letters”) executed and delivered by Baxalta on the date immediately prior to the Merger Signing Date with such changes as are necessary to reflect any changes in facts prior to the Merger Closing. 

(d) Baxter hereby represents and warrants that the Baxter Signing Opinion (as defined below) has been furnished to Baxter, such that the
condition set forth in Section 2(g)(ii)(A) is satisfied. Baxter shall (i) use its reasonable best efforts to cause KPMG LLP to deliver the Baxter Closing Opinion (as defined below) immediately prior to the Merger Closing, such that the
condition set forth below in Section 2(g)(ii)(B) is satisfied and (ii) certify in writing to Parent and Baxalta immediately upon receipt of such opinion that such opinion has been furnished. As of the date immediately prior to the Merger
Signing Date, Baxter knows of no reason (x) why it would not be able to deliver the Baxter Closing Representation Letters, or (y) why it would not be able to obtain the Baxter Closing Opinion. 

  
 2 

 (e) Parent shall use its reasonable best efforts to cause Cravath, Swaine & Moore LLP to
deliver the Parent Closing Opinion (as defined below) immediately prior to the Merger Closing, such that the condition set forth below in Section 2(g)(i)(B) is satisfied. As of the date immediately prior to the Merger Signing Date, Parent knows
of no reason (i) why it would not be able to deliver the Parent Closing Representation Letters or (ii) why it would not be able to obtain the Parent Closing Opinion. 

(f) As of the date immediately prior to the Merger Signing Date, Baxalta knows of no reason why it would not be able to deliver the Baxalta
Closing Representation Letters. 
 (g) Section 4.02(c) of the Tax Matters Agreement shall be waived with respect to the Merger Closing
if: 
 (i) (A) A tax opinion of Cravath, Swaine & Moore LLP is furnished to Parent, and a true, correct and complete copy of
such opinion is provided to Baxter and Baxalta, on the date immediately prior to the Merger Signing Date, and (B) Cravath, Swaine & Moore LLP furnishes a tax opinion to Parent immediately prior to the Merger Closing that is a tax
opinion substantially the same in form and substance as the opinion referenced in clause (i)(A) (the “Parent Closing Opinion”), a true, correct and complete copy of which shall be provided by Parent to Baxter and Baxalta. In each case,
such opinion may rely on the applicable Representation Letters. 
 (ii) (A) A tax opinion of KPMG LLP is furnished to Baxter on the
date immediately prior to the Merger Signing Date (the “Baxter Signing Opinion”), and (B) KPMG LLP furnishes a tax opinion to Baxter immediately prior to the Merger Closing that is a tax opinion substantially the same in form and
substance as the opinion referenced in clause (ii)(A) above (the “Baxter Closing Opinion”). In each case, such opinion may rely on the applicable Representation Letters. Neither Baxalta nor Parent shall (in writing or otherwise) publicly
refer to or describe non-public information regarding the Baxter Signing Opinion or the Baxter Closing Opinion without the prior written consent of KPMG LLP or Baxter, except that the parties may disclose this Letter Agreement and describe its terms
in any Form 8-K, registration statement, proxy statement or circular relating to the Merger Agreement or the Merger.
 (h) Prior to the
earlier of (i) the Merger Closing and (ii) the termination of the Merger Agreement, each of Parent, Baxalta, and Baxter shall cooperate in good faith with the reasonable requests of the other parties in connection with matters related to
the opinions referred to in this Section 2 (including the preparation of materials by Parent, Baxalta, Baxter and their respective agents documenting diligence and other matters related to the Retained Shares Transactions). From and after the
execution of this Letter Agreement, at such time or times as may be reasonably requested by Baxter, each of Baxalta and Parent shall use its reasonable best efforts to execute certificates reasonably requested by Baxter containing appropriate
representations that Baxalta or Parent, as applicable, is, in good faith, able to make at such time, in connection with KPMG LLP’s delivery to Baxter of a tax opinion or opinions rendered in connection with the initial distribution of Baxalta
Common Stock on July 1, 2015, 

  
 3 

 
one or more Debt-for-Equity Exchanges, one or more Exchange Offers (as defined in the Registration Rights Agreement), one or more contributions of Retained Shares to Baxter’s U.S. pension
fund or any dividend of Retained Shares to Baxter’s shareholders. Upon Baxter’s reasonable request, Baxalta (or, after the Merger Closing, Parent) shall use reasonable best efforts to cause any person who is at the time of such request an
executive officer of such party and who was an executive officer of Baxter prior to the initial distribution of Baxalta Common Stock on July 1, 2015 to assist Baxter in confirming such facts as are within the knowledge of such executive
officer. Each party shall make any such requests for cooperation with reasonable advance notice and under reasonable circumstances so as to minimize any disruption to or impairment of the applicable party’s business. 

(i) Baxter acknowledges and agrees that Section 4.02(c) of the Tax Matters Agreement has been waived with respect to the execution of the
Merger Agreement. 
 3. Indemnification and Guarantee. 

(a) Notwithstanding anything in the Tax Matters Agreement, the Merger Agreement or the Distribution Agreement to the contrary, 

(i) Baxalta agrees that from and after the Merger Closing, subject to Section 3(b) hereof and clause (ii) below, Baxalta shall
indemnify and hold harmless Baxter and each of its Affiliates and each of their respective officers, directors and employees from and against, one hundred percent (100%) of any Tax-Related Losses attributable to or resulting from (in whole or
in part) the Merger; and 
 (ii) Baxalta shall not be obligated to indemnify Baxter for any Tax-Related Losses attributable to or resulting
from (in whole or in part) any disposition of Baxalta Common Stock by Baxter (including through Debt-for Equity Exchanges and Subsequent Distributions) other than: 

(A) the initial distribution of Baxalta Common Stock on July 1, 2015; 

(B) the transactions described in Section 4 (which for the avoidance of doubt include one or more Debt-for-Equity Exchanges, one or more
Exchange Offers, one or more contributions of Retained Shares to Baxter’s U.S. pension fund and any dividend of Retained Shares to Baxter’s shareholders) that in each case conclude prior to any Parent or Baxalta shareholder vote with
respect to the Merger; or 
 (C) the conversion at the Merger Closing of any Retained Shares held by Baxter into the right to receive Parent
American Depositary Shares and cash (it being understood that any Taxes imposed on Baxter with respect to the receipt of Parent American Depositary Shares and cash upon the Merger Closing do not constitute Tax Related Losses subject to
indemnification under Section 3(a)(i)). 

  
 4 

 Parent also agrees that, from and after the Merger Closing, Parent will guarantee the payment and
performance by Baxalta of its obligations and agreements under this Letter Agreement, the Tax Matters Agreement, the Distribution Agreement and the Ancillary Agreements (as defined in the Distribution Agreement).  
 (b) Notwithstanding anything in the Tax Matters Agreement, the Merger Agreement, the
Distribution Agreement, or this Letter Agreement to the contrary, if Baxter intentionally misrepresents any fact in either the Baxter Signing Representation Letters or the Baxter Closing Representation Letters, the indemnification obligation of
Baxalta under Section 3(a) hereof and the indemnification obligation of Baxalta under Section 4.05 of the Tax Matters Agreement shall not apply to the extent any Tax-Related Losses are attributable to or resulting from any such intentional
misrepresentations. 
 (c) From and after the Merger Closing, Parent shall be afforded the same rights and have the same obligations as
Baxalta under Section 3.04 of the Tax Matters Agreement. 
 4. Retained Shares Transactions. Each of Parent and Baxalta
understands and acknowledges that Baxter (a) intends to effectuate (or cause to be effectuated) two Debt-for-Equity Exchanges (and related Underwritten Offerings (as defined in the Registration Rights Agreement)), one Exchange Offer and a
contribution of Retained Shares (as defined in the Registration Rights Agreement) to Baxter’s U.S. pension fund, and (b) may potentially effectuate a dividend of Retained Shares to Baxter’s shareholders, in each case, in connection
with the offer, sale, exchange, placement, transfer, distribution or other disposition of Baxter’s 131,902,719 Retained Shares by Baxter or the then holders of such shares (each such Debt-for-Equity Exchange and Exchange Offer (but not, for the
avoidance of doubt, any U.S. pension fund contribution or any dividend of Retained Shares to Baxter’s shareholders), a “Retained Shares Transaction”), in each case, prior to any Parent or Baxalta shareholder vote with respect to the
Merger. Baxter shall use its reasonable best efforts to complete all Retained Shares Transactions prior to any Parent or Baxalta shareholder vote with respect to the Merger. 

5. Cooperation and Support of Parent and Baxalta. 

(a) Parent shall cooperate with and support Baxter and Baxalta to enable Baxalta to comply with the terms of, and fulfill Baxalta’s
obligations under, the Registration Rights Agreement, including, without limitation, Baxalta’s obligation to use its reasonable best efforts to prepare and file Registration Statements (as defined in the Registration Rights Agreement) on an
appropriate form with the Securities Exchange Commission (“SEC”) as expeditiously as possible upon receipt of a Demand Registration (as defined in the Registration Rights Agreement), it being acknowledged and agreed that Baxter delivered
notice of a Demand Registration on August 10, 2015 and, as of the date hereof, no Retained Shares have been registered or sold in connection therewith. Notwithstanding the foregoing or anything to the contrary in the Registration Rights
Agreement (including, without limitation, Section 2.01(b) thereof), Baxter shall be entitled to make at least three additional Demand Registrations in connection with the Retained Shares Transactions contemplated hereby. 

  
 5 

 (b) (i) Baxalta shall use its reasonable best efforts to provide or update all information on an
appropriate registration form under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, all financial data (including selected financial data or “flash” numbers with respect to recently
completed periods), that (A) the SEC would require in a registered offering of the Baxalta Common Stock or (B) is reasonably requested by the underwriter(s) or dealer manager(s) in any Underwritten Offering or Exchange Offer to ensure
compliance with applicable laws (including, without limitation, disclosure obligations under applicable federal securities laws), respectively, in connection with each Retained Shares Transaction (collectively, the “Offering Information”),
in each case, as soon as practicable after (x) the date hereof and (y) each such request by the underwriter(s) or dealer manager(s) in such Underwritten Offering or Exchange Offer. 

In furtherance of the foregoing, Baxalta shall use its reasonable best efforts to cause to be prepared: 

(1) if and to the extent required or requested by the SEC or reasonably requested by such underwriter(s) or dealer manager(s) to ensure
compliance with applicable laws (including, without limitation, disclosure obligations under applicable federal securities laws), pro forma financial statements regarding the Merger prepared in accordance with, or reconciled to, generally accepted
accounting principles in the United States and prepared in accordance with Regulation S-X under the Securities Act in a Registration Statement in a form ready for filing with the SEC (collectively, “Pro Forma Financial Information”): 

(I) would be required in (x) a Registration Statement that includes interim financial information of Parent and Baxalta as of and for the
nine-month period ended September 30, 2015, (y) a Registration Statement that includes annual financial information of Parent and Baxalta as of and for the year ended December 31, 2015 or (z) a Registration Statement that
includes interim financial information of Parent and Baxalta as of and for the three-month period ending March 31, 2016, in each case, to be delivered to Baxter and the underwriter(s) or dealer manager(s), as applicable, by no later than
January 25, 2016 (the “First PFFI Deadline”) in the case of clause (x), by no later than March 18, 2016 (the “Second PFFI Deadline”) in the case of clause (y), and by no later than May 12, 2016 (the “Third
PFFI Deadline”) in the case of clause (z); or 
 (II) is otherwise required or requested by the SEC or reasonably requested by such
underwriter(s) or dealer manager(s) to ensure compliance with applicable laws (including, without limitation, disclosure obligations under applicable federal securities laws), in each case, to be delivered to Baxter and such underwriter(s) or dealer
manager(s) as soon as practicable after such requirement or request (including, without limitation, requirements or requests for updated Pro Forma Financial Information). 

(2) all Baxalta executive compensation disclosure for fiscal year 2015 required to be included in a Registration Statement filed or amended
between January 1, 2016 and 

  
 6 

 
December 31, 2016 (x) prepared in accordance with all applicable rules and regulations of the SEC and (y) delivered to Baxter and such underwriter(s) or dealer manager(s) (the
“Baxalta 2015 ECD”) by no later than January 25, 2016; and 
 (3) Baxalta’s Annual Report on Form 10-K for the year
ended December 31, 2015 (the “Baxalta 2015 10-K”) to be filed with the SEC by no later than March 11, 2016 (the “Baxalta 10-K Deadline”) and, if less than three Marketing Periods have been completed as of May 11,
2016, Baxalta’s Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2016 (the “Baxalta 2016 Q1 10-Q”) to be filed with the SEC by no later than May 12, 2016 (the “Baxalta Q1 10-Q Deadline”). 

(ii) Parent shall use its reasonable best efforts to cause to be prepared: 

(A) if and to the extent required or requested by the SEC or reasonably requested by such underwriter(s) or dealer manager(s) to ensure
compliance with applicable laws (including, without limitation, disclosure obligations under applicable federal securities laws), Pro Forma Financial Information that: 

(1) would be required in (x) a Registration Statement that includes interim financial information of Parent and Baxalta as of and for the
nine-month period ended September 30, 2015, (y) a Registration Statement that includes annual financial information of Parent and Baxalta as of and for the year ended December 31, 2015 or (z) a Registration Statement that
includes interim financial information of Parent and Baxalta as of and for the three-month period ending March 31, 2016, in each case, to be delivered to Baxter and the underwriter(s) or dealer manager(s), as applicable, in any Underwritten
Offering or Exchange Offer by no later than the First PFFI Deadline in the case of clause (x), by no later than the Second PFFI Deadline in the case of clause (y) and by no later than the Third PFFI Deadline in the case of clause (z); or 

(2) is otherwise required or requested by the SEC or reasonably requested by such underwriter(s) or dealer manager(s) to ensure compliance
with applicable laws (including, without limitation, disclosure obligations under applicable federal securities laws) to be delivered to Baxter and such underwriter(s) or dealer manager(s) as soon as practicable after such requirement or request
(including, without limitation, requirements or requests for updated Pro Forma Financial Information); and 
 (B) Parent’s Annual
Report on Form 10-K for fiscal year 2015 to be filed with the SEC by no later than March 11, 2016 and, if less than three Marketing Periods have been completed as of May 11, 2016, Parent’s Quarterly Report on Form 10-Q for the fiscal
quarter ending March 31, 2016 to be filed with the SEC no later than May 12, 2016. 
 Notwithstanding the foregoing, without
Parent’s prior consent, the financial information (other than Pro Forma Financial Information) or other business information (other than information related to the Merger) of Parent shall not be included in a Registration Statement for an
Underwritten Offering or Exchange Offer in connection with a Retained Shares Transaction unless required or requested by the SEC. 

  
 7 

 (c) (i) Baxalta shall (A) use its reasonable best efforts to cause its independent
accounting firm to deliver customary “comfort” and bring-down “comfort” letters (including, without limitation, customary “negative assurance” comfort) to Baxter and such underwriter(s) or dealer manager(s) in
connection with Baxalta’s financial information required to be included in the applicable Registration Statement, and (B) if reasonably requested by such underwriter(s) or dealer manager(s), cause its principal financial or accounting
officer to deliver certificate(s) certifying as to the accuracy of Baxalta’s financial information in the applicable Registration Statement as such underwriter(s) or dealer manager(s) may reasonably request (together with such comfort letters,
the “Baxalta Comfort Documents”), including customary Baxalta Comfort Documents with respect to any Pro Forma Financial Information required or requested as provided above to be included in any Registration Statement pursuant to
Section 5(b) hereof and as may be necessary to enable the provision of the Baxalta Comfort Documents described in subclause (A) above. 

(ii) Parent shall (A) use its reasonable best efforts to cause its independent accounting firm to deliver customary “comfort”
and bring-down “comfort” letters (including, without limitation, customary “negative assurance” comfort) to Baxter and such underwriter(s) or dealer manager(s) in connection with Parent’s financial information required by
the SEC to be included in the applicable Registration Statement, and (B) if reasonably requested by such underwriter(s) or dealer manager(s), cause its principal financial or accounting officer to deliver certificate(s) certifying as to the
accuracy of Parent’s financial information required by the SEC to be included in the applicable Registration Statement as such underwriter(s) or dealer manager(s) may reasonably request (together with such comfort letters, the “Parent
Comfort Documents”), including customary Parent Comfort Documents with respect to any Pro Forma Financial Information required or requested as provided above to be included in any Registration Statement pursuant to Section 5(b) and as may
be necessary to enable the provision of the Parent Comfort Documents described in subclause (A) above. 
 (d) (i) Baxalta shall
use its reasonable best efforts to cause its senior executive officers (including, without limitation, its chief executive officer and chief financial officer) and other members of management to participate at reasonable times and for reasonable
periods in any customary due diligence sessions and “road show” presentations that may be reasonably requested by the managing underwriter(s) or dealer manager(s), as applicable, in any Underwritten Offering or Exchange Offer, including,
if reasonably requested by the applicable underwriter(s) or dealer manager(s), in-person participation of the chief executive officer and chief financial officer of Baxalta in customary “road show” presentations for not more than two
consecutive Business Days (as defined in the Registration Rights Agreement) during each Marketing Period (as defined below), at such times and locations as may be reasonably requested by such underwriter(s) or dealer manager(s), and otherwise to use
its reasonable best efforts to facilitate, cooperate with, and participate in each Underwritten Offering or Exchange Offer in connection with a Retained Shares Transaction and customary due diligence and selling efforts related thereto, except to
the extent that such participation materially interferes with the management of Baxalta’s business (collectively, “Required Baxalta Management Participation”). 

  
 8 

 (ii) Parent shall use its reasonable best efforts to cause at least one senior executive officer
familiar with the financial and business affairs of Parent and the Merger to participate at reasonable times and for reasonable periods in any customary due diligence sessions and “road show” presentations that may be reasonably requested
by the managing underwriter(s) or dealer manager(s), as applicable, in any Underwritten Offering or Exchange Offer, including, if reasonably requested by the applicable underwriter(s) or dealer manager(s), in-person participation of members of
management of Parent in customary “road show” presentations for not more than two consecutive Business Days during each Marketing Period (as defined below), at such times and locations as may be reasonably requested by such underwriter(s)
or dealer manager(s), and otherwise use its reasonable best efforts to facilitate, cooperate with, and participate in each Underwritten Offering or Exchange Offer in connection with a Retained Shares Transaction and customary due diligence and
selling efforts related thereto, except to the extent that such participation materially interferes with the management of Parent’s business (collectively, together with Required Baxalta Management Participation, “Required Management
Participation”). Baxter acknowledges and agrees that any request for participation by Parent or any Parent executive will take into account due consideration of efforts Parent has taken and intends to take during the applicable Marketing Period
to promote the Merger. 
 (e) In connection with each Retained Shares Transaction: 

(i) Baxalta shall use its reasonable best efforts to prepare, assist in the preparation of, deliver and/or complete all of the following, as
applicable (collectively, the “Baxalta Marketing Period Deliverables”) at least two Business Days prior to the commencement of each Marketing Period: (A) a preliminary prospectus (including all Offering Information and Pro Forma
Financial Information required or requested to be included therein pursuant to Section 5(b) hereof) for the applicable Registration Statement, (B) investor presentation(s) or other marketing materials, (C) (x) substantially final
draft underwriting agreement(s) or exchange agreement(s), in the case of a Debt-for-Equity Exchange and the related Underwritten Offering, or (y) substantially final draft dealer manager agreement(s), and related documents, in the case of an
Exchange Offer, in each case, including substantially final forms of all applicable legal opinions, (D) substantially final draft Baxalta Comfort Documents, (E) all legal, business and accounting due diligence of Baxalta in a manner
reasonably satisfactory to Baxter and the applicable underwriter(s) or dealer manager(s), as the case may be, (F) executed lock-up agreements from Baxalta and its directors and executive officers in the form contemplated in Section 8
hereof and (G) such other customary documents, certificates, agreements and instruments reasonably requested by such underwriter(s) or dealer manager(s), Baxter or third parties (including, without limitation, any trustee, administrative agent,
transfer agent, exchange agent or information agent) involved in any Retained Shares Transaction and, in the case of subclauses (A), (B), (C), (D) and (G), in a form reasonably satisfactory to Baxalta, Baxter and such underwriter(s) or dealer
manager(s), as applicable; and 
 (ii) Parent shall use its reasonable best efforts to prepare, assist in the preparation of, deliver and/or
complete all of the following, as applicable (collectively, the “Parent Marketing Period Deliverables”) at least two Business Days prior to the commencement 

  
 9 

 
of each Marketing Period: (A) Pro Forma Financial Information required or requested to be included in the Registration Statement pursuant to Section 5(b) hereof for the applicable
Registration Statement, (B) substantially final draft Parent Comfort Documents, if applicable, (C) all legal business and accounting due diligence of Parent in a manner reasonably satisfactory to Baxter and the applicable underwriter(s) or
dealer manager(s), as the case may be, (D) executed lock-up agreements from Parent in the form contemplated in Section 8 hereof and (E) such other customary documents, certificates, agreements and instruments reasonably requested by
such underwriter(s) or dealer manager(s), Baxter or third parties (including, without limitation, any trustee, administrative agent, transfer agent, exchange agent or information agent) involved in any Retained Shares Transaction and, in the case of
subclauses (A), (B) and (E), in a form reasonably satisfactory to Parent, Baxter and such underwriter(s) or dealer manager(s), as applicable. 

6. Marketing Periods. For each Underwritten Offering or Exchange Offer in connection with a Retained Shares Transaction, Baxter, the
underwriter(s) or dealer manager(s), as applicable, and the applicable selling shareholders shall be afforded a period of time (each, a “Marketing Period”) to publicly offer, sell, exchange, place, transfer or otherwise dispose of Retained
Shares in connection with which the following conditions (the “Marketing Period Conditions”) shall have been satisfied: 
 (a) all
of the Baxalta Marketing Period Deliverables and, to the extent required, the Parent Marketing Period Deliverables, in each case, that have been requested with reasonable advance notice have been completed and/or delivered, as applicable, prior to
the commencement of the Marketing Period as set forth in Section 5(e) hereof and to the extent applicable, executed prior to or during (as applicable) the Marketing Period; 

(b) the applicable Registration Statement has been, or could be (without an amendment thereto, as applicable), declared effective under the
Securities Act (“SEC Clearance”) prior to the commencement of the Marketing Period (with the exception of a Marketing Period with respect to an Exchange Offer, with respect to which the Registration Statement must have been declared
effective prior to the expiration of the Exchange Offer), and if declared effective, such Registration Statement continues to be effective for the remainder of the Marketing Period; 

(c) the Required Management Participation has been provided or made available as set forth in Section 5(d) above; 

(d) each of Parent and Baxalta has complied with Section 8 hereof, with respect to any Underwritten Offering in connection with a
Debt-for-Equity Exchange, and no Restricted Period (as defined below) relating to a prior Debt-for-Equity Exchange, if any, shall be in effect; 

(e) in the case of an Underwritten Offering in connection with a Debt-for-Equity Exchange in connection with which a tender offer is not being
made for outstanding notes of Baxter, such period continues for at least four consecutive Business Days; 

  
 10 

 (f) in the case of an Underwritten Offering in connection with a Debt-for-Equity Exchange in
connection with which a tender offer is made for outstanding notes of Baxter, such period continues until the later of four consecutive Business Days following (i) SEC Clearance and (ii) 14 calendar days after the early settlement date for
such tender offer; and 
 (g) in the case of an Exchange Offer, such period continues until such Exchange Offer has been held open for the
greater of (i) at least 20 consecutive Business Days and (ii) up to 40 consecutive calendar days, as directed by Baxter in consultation with Parent, Baxalta and the dealer manager(s) for such Exchange Offer. 

If a lead managing underwriter(s) or dealer manager(s), as applicable, in consultation with Baxter, Parent and Baxalta, reasonably determines
that the occurrence of any calamity or crisis or change in financial, political or economic conditions in the United States or elsewhere has caused a market disruption such that the public offer, sale, exchange or placement, as applicable, of
Retained Shares at such time is impracticable or inadvisable, the respective periods described in clauses (e), (f) and (g) above shall be tolled during such period. 

In addition, each of Parent and Baxalta shall use its reasonable best efforts to cause one Marketing Period with respect to a Debt-for-Equity
Exchange not involving a tender offer to be completed in full by no later than February 8, 2016; provided, that, if such Marketing Period is not completed in full by February 8, 2016, then each of Parent and Baxalta shall use its
reasonable best efforts to cause such Marketing Period to be completed in full by no later than March 23, 2016, provided that no Pro Forma Financial Information is required or requested in connection therewith. In addition, Parent and Baxalta
shall use their respective reasonable best efforts to cause one Marketing Period with respect to all of the Marketing Period Conditions to be separately satisfied with respect to two Debt-for-Equity Exchanges (whether only one Registration Statement
is filed in connection therewith or otherwise) and one Exchange Offer prior to the Early Outside Date (as defined below) or the Outside Date (as defined below), as applicable. 

The parties hereto shall use their respective reasonable best efforts to cause one Marketing Period for a Debt-for-Equity Exchange not
involving a tender offer to be completed prior to February 8, 2016. If one Debt-for-Equity Exchange Marketing Period is completed prior to February 8, 2016, (a) Baxter shall demand that a Registration Statement for an Underwritten
Offering in connection with a Debt-for-Equity Exchange be filed by no later than as promptly as practicable after the Second PFFI Deadline, (b) the parties purchasing notes in the related tender offer shall use their reasonable best efforts to
commence such tender offer for outstanding notes of Baxter by no later than the Second PFFI Deadline and (c) each party shall use reasonable best efforts to cause SEC Clearance for such Registration Statement to occur prior to or as promptly as
practicable after the date that is 14 calendar days after the early settlement date for such tender offer, which early settlement date shall occur no later than 13 Business Days after the commencement of such tender offer. 

If one Debt-for-Equity Exchange Marketing Period is not completed prior to February 8, 2016, (a) Baxter shall demand that an amended
Registration Statement for an 

  
 11 

 
Underwritten Offering in connection with a Debt-for-Equity Exchange not involving a tender offer be filed as promptly as practicable after the Second PFFI Deadline and (b) the parties hereto
shall use their respective reasonable best efforts to cause the associated Marketing Period to begin by no later than the date of SEC Clearance of the associated Registration Statement. Thereafter, (i) Baxter shall demand that another
Registration Statement for an Underwritten Offering in connection with a second Debt-for-Equity Exchange be filed by no later than as promptly as practicable after the expiration of the Restricted Period with respect to the preceding Debt-for-Equity
Exchange (or, if the offering is not completed, as soon as practicable after the expiration of the Marketing Period), (ii) the parties purchasing notes in the related tender offer for outstanding notes of Baxter shall use their reasonable best
efforts to commence such tender offer by no later than as promptly as practicable after the expiration of the Restricted Period with respect to the preceding Debt-for-Equity Exchange and (iii) each party shall use reasonable best efforts to
cause SEC Clearance for such Registration Statement to occur prior to or as promptly as practicable after the date that is 14 calendar days after the early settlement date for such tender offer, which early settlement date shall occur no later than
13 Business Days after the commencement of such tender offer. 
 Thereafter, (a) Baxter shall demand that a Registration Statement for
an Exchange Offer be filed by no later than as promptly as practicable following fifteen calendar days after the public offering date set forth on the final prospectus with respect to the second Debt-for-Equity Exchange transaction (or, if the
offering is not completed, as soon as practicable after the expiration of the Marketing Period) and (b) the parties hereto shall use their respective reasonable best efforts to commence such Exchange Offer as promptly as practicable after the
expiration of the Restricted Period with respect to the preceding Debt-for-Equity Exchange. 
 7. Standstill. Neither Baxalta nor
Parent will conduct any shareholder vote with respect to, or consummate, the Merger (the “Standstill”) until the earliest to occur of the following: (a) the date that all of the Marketing Period Conditions have been separately
satisfied with respect to two Debt-for-Equity Exchanges (whether only one Registration Statement is filed in connection therewith or otherwise) and one Exchange Offer, (b) the date that Baxter has disposed of all its Retained Shares and
(c) May 26, 2016, as such date may be extended as set forth below (the “Early Outside Date”), or, if one Marketing Period with respect to a Debt-for-Equity Exchange not involving a tender offer has not been completed in full by
February 8, 2016 and Baxter has complied with its obligation to use its reasonable best efforts to cause such completion, June 17, 2016, as such date may be extended as set forth below (the “Outside Date”). 

Each of the Early Outside Date and the Outside Date, as applicable, shall be extended (in the case of each clause below but without
duplication) by the time periods indicated below: 
 (i) the number of days that the Baxalta 2015 10-K is filed with the SEC after the
Baxalta 10-K Deadline; 
 (ii) the number of days that the Baxalta 2016 Q1 10-Q is filed with the SEC after the Baxalta Q1 10-Q Deadline;

  
 12 

 (iii) the number of days that any requested or required (in accordance with Section 5(b))
Pro Forma Financial Information is delivered after the Second PFFI Deadline or the Third PFFI Deadline, as applicable, if Pro Forma Financial Information is required or requested to be included in any Registration Statement pursuant to
Section 5(b) hereof; 
 (iv) (A) if Pro Forma Financial Information is not required or requested to be included in any
Registration Statement pursuant to Section 5(b) hereof, the number of days that the Baxalta 2015 ECD is delivered after the Baxalta 10-K Deadline or (B) if Pro Forma Financial Information is required or requested to be included in any
Registration Statement pursuant to Section 5(b) hereof, the number of days that the Baxalta 2015 ECD is delivered after March 18, 2016; 

(v) the number of days for which Parent or Baxalta determines that maintaining the effectiveness of any Registration Statement in connection
with an Underwritten Offering or Exchange Offer or filing an amendment or supplement to any Registration Statement (or, if a Registration Statement has not yet been filed, filing such a Registration Statement) would require the public disclosure of
material nonpublic information and refuses to maintain such effectiveness or make any filing of such amendment, supplement or Registration Statement, if each of the Marketing Period Conditions could otherwise have been satisfied during such period
and any failure to satisfy such conditions is not due to Parent’s or Baxalta’s failure to comply with its respective obligations hereunder; and 

(vi) solely in the case of the Early Outside Date, if less than two Marketing Periods have been completed as of the Early Outside Date (as it
may be extended pursuant to clauses (i)-(v) above), and Baxter has complied with its obligations hereunder with respect to such Marketing Periods, the number of days until the completion of two Marketing Periods; provided that the Early Outside
Date (as it may be extended pursuant to clauses (i)-(v) above) shall not be extended by more than 30 days pursuant to this clause (vi). 

8. Clear Market; Lock-Up. 

(a) During each Marketing Period described in Section 6(e) above and each additional period of time for which Baxter agrees (with the
lead underwriter in connection with any Underwritten Offering) to similar restrictions with respect to the Retained Shares in connection with any Underwritten Offering contemplated hereby not to exceed (x) 30 days or (y) such shorter
period as is appropriate for such offering as determined in the good faith judgment of the lead underwriter after consultation with Baxalta’s and Parent’s advisors (each such period, a “Restricted Period”), Baxalta agrees that it
will not, and it will cause its executive officers and directors not to, directly or indirectly, (i) pledge, issue, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, Baxalta Common Stock or any other equity or equity-linked securities of, or any securities convertible into or exercisable or exchangeable for any equity or
equity-linked securities of, Baxalta (collectively, the “Baxalta Subject Securities”), (ii) subject to Section 1(a) hereof, publicly disclose or engage in discussions concerning the intention to make any issuance, sale, pledge,
disposition or registration with 

  
 13 

 
respect to the Baxalta Subject Securities, (iii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Baxalta
Subject Securities or (iv) file with the SEC or cause to become effective any registration statement under the Securities Act relating to, or make any demand for or exercise any right with respect to the registration with the SEC of, any
Baxalta Subject Securities, whether any such transaction described in clause (i), (ii), (iii) or (iv) above is to be settled by delivery of any Baxalta Subject Securities, in cash or otherwise, without Baxter’s prior written consent,
which may be given, conditioned or withheld in Baxter’s sole discretion. Baxalta shall enter into an agreement evidencing the restrictions in this Section 8 in customary form, which form is reasonably satisfactory to Baxalta and Baxter and
a single lead underwriter in any Underwritten Offering; provided that such restrictions may be included in the applicable underwriting agreement; provided, further, that any of the foregoing restrictions may be waived by a single lead underwriter.

 The restrictions contained in the preceding paragraph shall not apply to: 

(i) the filing of any Registration Statement contemplated by this Letter Agreement in connection with a Retained Shares Transaction
(including, without limitation, pursuant to a demand made by Baxter in accordance with Section 6 hereof) and any sale, transfer or other disposition of any Baxalta Subject Securities in connection with any Retained Shares Transaction; 

(ii) subject to the terms hereof (including, without limitation, Sections 2 and 7 hereof), the consummation of the Merger; 

(iii) the issuance by Baxalta of any Baxalta Subject Securities upon the exercise of any option or warrant or the conversion of any Baxalta
Subject Security, in each case, outstanding on the date hereof, or the vesting of any previously issued Baxalta Subject Security, including, without limitation, any restricted stock, restricted stock units or performance stock units; 

(iv) the grant of stock options, stock, restricted stock units or performance stock units pursuant to employee benefit plans in effect on the
date hereof; 
 (v) the filing of one or more registration statements on Form S-8 with the SEC with respect to any Baxalta Subject
Securities issued or issuable under any equity compensation plan in effect on the date hereof; 
 (vi) the sale or forfeiture of any Baxalta
Subject Security to satisfy any income, employment or social tax withholding and remittance obligations of an officer, a director or Baxalta in connection with any options of such officer or director that are expiring within 90 days or any
restricted stock units or performance share units that vest during any Restricted Period; or 
 (vii) the filing of the registration
statement required to be filed by Baxalta pursuant to the Registration Rights Agreement, dated as of June 23, 2015, by and among Baxalta, Baxter and Citigroup Global Markets Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC and
UBS Securities LLC as representatives of the initial purchasers. 

  
 14 

 (b) During each Marketing Period described in Section 6(e) above and each Restricted Period,
Parent agrees that it will not, directly or indirectly, (i) pledge, issue, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, Parent American Depositary Shares or any other equity or equity-linked securities of, or any securities convertible into or exercisable or exchangeable for any equity or equity-linked securities of,
Parent (collectively, the “Parent Subject Securities”), (ii) subject to Section 1(a) hereof, publicly disclose or engage in discussions concerning the intention to make any issuance, sale, pledge, disposition or registration with
respect to the Parent Subject Securities, (iii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Parent Subject Securities or (iv) file with the SEC or cause
to become effective any registration statement under the Securities Act relating to, or make any demand for or exercise any right with respect to the registration with the SEC of, any Parent Subject Securities, whether any such transaction described
in clause (i), (ii), (iii) or (iv) above is to be settled by delivery of any Parent Subject Securities, in cash or otherwise, without Baxter’s prior written consent, which may be given, conditioned or withheld in Baxter’s sole
discretion. Parent shall enter into an agreement evidencing the restrictions in this Section 8 in customary form, which form is reasonably satisfactory to Parent and Baxter and a single lead underwriter in any Underwritten Offering; provided
that such restrictions may be included in the applicable underwriting agreement; provided, further, that any of the foregoing restrictions may be waived by a single lead underwriter. 

The restrictions contained in the preceding paragraph shall not apply to: 

(i) subject to the terms hereof (including, without limitation, Sections 2 and 7 hereof), the filing of the Registration Statement on Form S-4
with respect to the Merger and the consummation of the Merger; 
 (ii) the issuance by Parent of any equity awards or of any Parent Subject
Securities upon the exercise or settlement of equity awards of Parent; or 
 (iii) the filing of one or more registration statements on Form
S-8 with the SEC with respect to any Parent Subject Securities issued or issuable under any equity compensation plan in effect on the date hereof. 

9. Certain Acknowledgments and Agreements of Parent, Baxter and Baxalta. 

(a) Baxter and Baxalta hereby acknowledge and agree that, (i) except as contemplated by this Letter Agreement, their obligations under
the Tax Matters Agreement, the Distribution Agreement and the Ancillary Agreements are and will be unaffected by the 

  
 15 

 
transactions contemplated by the Merger Agreement in the form reviewed on the date hereof); and (ii) if the Merger is not completed, nothing in this Letter Agreement shall operate to modify
Baxter’s and Baxalta’s obligations under the Tax Matters Agreement. 
 (b) Baxter hereby acknowledges and agrees that,
notwithstanding anything to the contrary in the Registration Rights Agreement, the Registration Rights Agreement shall terminate upon the Merger Closing; provided that the provisions of Section 2.06, Section 2.07 and Article IV of the
Registration Rights Agreement shall survive any such termination; provided, further, that, if in the reasonable judgment of Baxter’s external counsel, Baxter will be, or will be deemed to be, an “affiliate” of Parent for purposes of
Rule 405 under the Securities Act upon Merger Closing, then (i) any Retained Shares held by Baxter will constitute “Registrable Securities” under the Registration Rights Agreement upon any conversion or exchange of such shares into
equity securities of Parent and (ii) the obligations for registration of the Registrable Securities (and Baxter’s rights relating thereto) will be obligations of Parent. 

(c) Each party hereto agrees that, if legally permissible and reasonably practicable, (i) each of Parent and Baxalta shall notify Baxter
at least five Business Days prior to the mailing of the Merger proxy statement to its shareholders (with respect to its shareholder vote with respect to the Merger) and (ii) prior to any public disclosure, description or filing of any provision
of this Letter Agreement, it will consult with each other party hereto and provide each other party hereto with reasonable advance notice of such disclosure, description or filing and the proposed form and substance thereof. Each party hereto
acknowledges that (A) this Letter Agreement will be filed with, and a description of its terms included in, a Form 8-K of each of Baxter, Baxalta and Parent to be filed in connection with the entering into of this Letter Agreement, the
announcement of the entering into of the Merger Agreement and with each Registration Statement, (B) this Letter Agreement will be incorporated by reference into, and a description of its terms included in, the registration statement on Form S-4
of Parent related to the Merger and (C) a description of the terms of this Letter Agreement will be included in the prospectus to be made available by Parent in connection with the listing of new ordinary shares to be offered to Baxalta
shareholders, the circular to be provided to Parent shareholders in connection with Parent’s shareholder vote with respect to the Merger and other documents filed or made publicly available pursuant to the listing, prospectus and disclosure and
transparency rules maintained by the UK Financial Conduct Authority. 
 10. Termination. This Letter Agreement may be terminated
(a) by mutual written consent of Baxalta, Baxter and Parent, provided that the provisions of Section 9(a) and Sections 11-15 hereof shall survive such termination, (b) by Parent or Baxalta upon termination of the Merger Agreement,
provided that, the provisions of Section 8 (solely with respect to any Restricted Period then in effect for Baxalta or its directors and executive officers), Section 9(a) and Sections 11-15 hereof shall survive such termination or
(c) subject to compliance with Section 7 hereof, upon Merger Closing, provided that the provisions of Section 2(g), Section 2(h), Section 3, Section 8 (solely with respect to any Restricted Period then in effect),
Section 9 and Sections 11-16 hereof shall survive such termination. If this Letter Agreement is terminated under clause (a), (b) or (c) above, Baxter acknowledges and agrees that Section 4.02(c) of the Tax Matters Agreement has
been waived with respect to the execution of the Merger Agreement (and this sentence shall survive the termination of this Letter Agreement). 

  
 16 

 11. Notices. All notices, requests, claims, demands or other communications under this
Letter Agreement shall be in writing and shall be given, and shall be deemed to have been duly given, upon delivery by hand, sending by registered or certified mail (postage prepaid, return receipt requested) or sending by email to the respective
parties at the following addresses (or at such other address for a party as shall be specified by like notice): 
 (a) if to Parent: 

Shire plc 
 5 Riverwalk, Citywest
Business Campus 
 Dublin 24 

Republic of Ireland 
 Attention:
Bill Mordan, General Counsel 
 Email: wrmordan@shire.com 

with a copy to (which shall not constitute notice): 

Ropes & Gray LLP 

Prudential Tower 
 800 Boylston
Street 
 Boston, Massachusetts 02199 

Attention:    Christopher D. Comeau 

                    Paul M. Kinsella 

Email:    christopher.comeau@ropesgray.com 

               paul.kinsella@ropesgray.com 

(b) if to Baxalta: 
 Baxalta
Incorporated 
 1200 Lakeside Drive 

Bannockburn, Illinois 60015 

Attention: General Counsel 

Email: peter.edwards@baxalta.com 

with copies to (which shall not constitute notice):  

Mayer Brown LLP 
 71 South Wacker
Drive 
 Chicago, Illinois 60606 

Attention: David A. Schuette 

Email: dschuette@mayerbrown.com 

  
 17 

 Kirkland & Ellis LLP 

300 North LaSalle Street 

Chicago, Illinois 60654 

Attention: R. Scott Falk, P.C. 

Email: scott.falk@kirkland.com 

(c) if to Baxter: 
 Baxter
International Inc. 
 One Baxter Parkway 

Deerfield, Illinois 60015 

Attention: General Counsel 

Email: general_counsel@baxter.com 

with a copy to (which shall not constitute notice): 

Skadden, Arps, Slate, Meagher & Flom LLP 

4 Times Square 
 New York, New
York 10036 
 Attention: David J. Goldschmidt 

Email: David.Goldschmidt@skadden.com 

Skadden, Arps, Slate, Meagher & Flom LLP 

155 North Wacker Drive 
 Chicago,
Illinois 60606 
 Attention:    Charles W. Mulaney, Jr. 

                    Joseph Miron 

Email:  Charles.Mulaney@skadden.com 

                     Joseph.Miron@skadden.com 

12. Headings. Section headings used herein are for convenience of reference only, are not part of this Letter Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting, this Letter Agreement. 
 13. Counterparts. This
Letter Agreement may be executed in one or more counterparts, all of which counterparts shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each party and delivered to the
other party. This Letter Agreement may be executed by facsimile or PDF signature and a facsimile or PDF signature shall constitute an original signature for all purposes. 

14. Governing Law. This Letter Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of
Delaware, irrespective of the choice of laws and principles of the State of Delaware, as to all matters, including, without limitation, matters of validity, construction, effect, enforceability, performance and remedies. 

  
 18 

 15. Jurisdiction; Waiver of Jury Trial. Each of the parties hereto irrevocably submits to
the exclusive jurisdiction of the Court of Chancery of the State of Delaware, or, in the event (but only in the event) that such court does not have subject matter jurisdiction over any action, suit or proceeding (each, a “Proceeding”),
the federal courts of the United States of America located in the State of Delaware, in respect of all matters arising out of or relating to this Letter Agreement, the interpretation and enforcement of the provisions of this Letter Agreement, and of
the documents referred to in this Letter Agreement, and hereby waives, and agrees not to assert, as a defense in any Proceeding for the interpretation or enforcement hereof or of any such document, that (i) it is not subject thereto,
(ii) such Proceeding may not be brought or is not maintainable in said courts, (iii) the venue thereof may not be appropriate or (iv) this Letter Agreement or any such document may not be enforced in or by such courts, and each of the
parties hereto irrevocably agrees that all claims with respect to such Proceeding shall be heard and determined exclusively in such courts. The parties hereto irrevocably consent and submit to the personal jurisdiction of such courts in respect of
the interpretation and enforcement of the provisions of this Letter Agreement. Each party hereto acknowledges and agrees that any controversy that may arise under this Letter Agreement is likely to involve complicated and difficult issues, and
therefore each party hereto irrevocably and unconditionally waives any right such party may have to a trial by jury in respect of any Proceeding directly or indirectly arising out of or relating to this Letter Agreement. 

16. Specific Enforcement. The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the
provisions of this Letter Agreement were not performed in accordance with its specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions, or any other appropriate form of equitable relief, to prevent breaches of this Letter Agreement and to enforce specifically the performance of the terms and provisions of this Letter
Agreement in any court referred to in the preceding paragraph, without proof of damages or otherwise (and each party hereto hereby waives any requirement for the securing or posting of any bond in connection with such remedy), this being in addition
to any other remedy to which any party hereto may be entitled at law or in equity. Each of the parties hereto acknowledges and agrees that the right to specific enforcement is an integral part of this Letter Agreement and without such right, none of
the parties hereto would have entered into this Letter Agreement. The parties hereto further agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to law or inequitable for any reason, nor to assert that a
remedy of monetary damages would provide an adequate remedy. 
 *    *    * 

  
 19 

 
			
	Very truly yours,
	
	BAXTER INTERNATIONAL INC.
		
	By:	 	 /s/ James K. Saccaro

		 	Name: James K. Saccaro
		 	Title: Corporate Vice President and Chief           Financial Officer

 If the above correctly reflects our understanding and agreement with respect to the foregoing
matters, please confirm by endorsing this Letter Agreement below. 
 Acknowledged and agreed to 

as of the date first written above: 
  

			
	SHIRE PLC
		
	By:	 	 /s/ Flemming Ornskov

		 	Name: Flemming Ornskov
		 	Title: Chief Executive Officer

  
 21 

 If the above correctly reflects our understanding and agreement with respect to the foregoing
matters, please confirm by endorsing this Letter Agreement below. 
 Acknowledged and agreed to 

as of the date first written above: 
  

			
	BAXALTA INCORPORATED
		
	By:	 	 /s/ Robert J. Hombach

		 	Name: Robert J. Hombach
		 	Title: Chief Financial Officer and Chief           Operations Officer

  
 22 

 Annex I: 

Baxter Support Statement 

“Baxter fully supports the proposed combination of Shire and Baxalta, which will create a major biotechnology company and global leader
in rare diseases. Baxter is pleased to support this value enhancing transaction.”

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