Document:

10.4

    
2007 EMPLOYEE STOCK
INCENTIVE PLAN
OF
AMTECH SYSTEMS, INC.
As Amended Effective April 9, 2015
Section 1. Purpose of Plan
     The purpose of this 2007 Employee Stock Incentive Plan (this “Plan”) of Amtech Systems, Inc., an Arizona corporation (the “Company”), is to enable the Company and any subsidiary corporation (as the term is defined in Code Section 424(f), hereinafter each a “Subsidiary” or the plural “Subsidiaries”) to attract, retain and motivate their officers and other key employees, and to further align the interests of such persons with those of the stockholders of the Company by providing for or increasing the proprietary interest of such persons in the Company.  The Plan is intended to fall within an exception to coverage under Section 409A of the Internal Revenue Code. 
Section 2. Administration of Plan
     2.1 Composition of Committee. This Plan shall be administered by the Compensation and Option Committee of the Board of Directors (the “Committee”), as appointed from time to time by the Board of Directors. The Committee shall act pursuant to a majority vote or unanimous written consent. The Board of Directors, in its sole discretion, may exercise any authority of the Committee under this Plan in lieu of the Committee’s exercise thereof. Notwithstanding the foregoing, with respect to any Award that is intended to satisfy the conditions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended (the “Code”), the Committee may appoint one or more separate committees (any such committee, a “Subcommittee”) composed of one or more directors of the Company (who may but need not be members of the Committee) and may delegate to any such Subcommittee(s) the authority to grant Awards, as defined in Section 5.1 hereof, under the Plan to Eligible Employees, to determine all terms of such Awards, and/or to administer the Plan or any aspect of it. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken by the Committee. The Committee may designate the Secretary of the Company or other Company employees to assist the Committee in the administration of the Plan, and may grant authority to such persons to execute agreements or other documents evidencing Awards made under this Plan or other documents entered into under this Plan on behalf of the Committee or the Company.
     2.2 Powers of the Committee. Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things necessary or desirable, in its sole discretion, in connection with the administration of this Plan, including, without limitation, the following: 
     (a) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; provided that, unless the Committee specifies otherwise, for purposes of this Plan (i) the term “fair market value” shall mean, as of any date, the closing price for a Share (as defined in Section 3.1) reported for the last trading day prior to such date by the NASDAQ Stock Market (or such other stock exchange or quotation system on which Shares are then listed or quoted) or, if no Shares are traded on the NASDAQ Stock Market (or such other stock exchange or quotation system) on the date in question, then for the next preceding date for which Shares traded on the NASDAQ Stock Market (or such other stock exchange or quotation system); and (ii) the term “Company” shall mean the Company and its Subsidiaries, unless the context otherwise requires; 

     (b) to determine which persons are Eligible Employees (as defined in Section 4), to which of such Eligible Employees, if any, Awards shall be granted hereunder and the timing of any such Awards, and to grant Awards; 
     (c) to grant Awards to Eligible Employees and determine the terms and conditions thereof, including the number of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events (including events which the Board or the Committee determine constitute a change of control), whether such Award complies with Code Section 409A, Treasury Regulations Sections 1.409A-1 through 1.409A-6) or other factors; 
     (d) to establish, verify the extent of satisfaction of, adjust, reduce or waive any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award and to consider the effect of such actions on the qualification of an Award as an Incentive Stock Option (“ISO”).
     (e) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical); 
     (f) to determine whether, and the extent to which, adjustments are required pursuant to Section 9;
     (g) to interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions in good faith and for the benefit of the Company; and 
     (h) to make all other determinations deemed necessary or advisable for the administration of this Plan.
     2.3 Determinations of the Committee. All decisions, determinations and interpretations by the Committee regarding this Plan shall be final and binding on all Eligible Employees. The Committee shall consider such factors as it deems relevant to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any director, officer or employee of the Company and such attorneys, consultants and accountants as it may select. 
Section 3. Stock Subject to Plan 
     3.1 Aggregate Limits. The aggregate number of shares of the Company’s Common Stock, par value $0.01 per share (“Shares”), issued pursuant to all Awards granted under this Plan shall not exceed Three Million (3,000,000). The aggregate number of Shares available for issuance under this Plan and the number of Shares subject to outstanding Awards shall be subject to adjustment as provided in Section 9. The Shares issued pursuant to this Plan may be Shares that either were reacquired by the Company, including Shares purchased in the open market, or authorized but unissued Shares. 
     3.2 Additional Limits. The aggregate number of Shares subject to Options granted under this Plan during any calendar year to any one Eligible Employee shall not exceed 250,000 (taking into account the number of shares associated with an Option granted and then cancelled during such calendar year). The aggregate number of Shares issued or issuable under all Awards granted under this Plan, other than Options, during any calendar year to any one Eligible Employee shall not exceed 250,000 (taking into account the number of shares associated with the Awards other than Options granted and then cancelled during such calendar year). The foregoing limitations of this Section 3.2 shall not apply to the extent that they are no longer required in order for compensation in connection with grants of Awards under this Plan to be treated as “performance-based compensation” under Code Section 162(m) and, if no longer required, a change in such limitation shall not be subject to stockholder approval as required under Section 12 hereof. The aggregate number of Shares that may be issued pursuant to the exercise of ISOs granted under this Plan shall not exceed 3,000,000, which number shall be calculated and adjusted pursuant to Section 3.3 and Section 9 only to the extent that such calculation or adjustment will not (i) require shareholder approval under Reg. § 1.422- 2(b)(3) or (ii) affect 

the status of any Option intended to qualify as an ISO under Code Section 422, or whether this Plan meets the requirements under Code Section 422(b)(1).
     3.3 Issuance of Shares. For purposes of Section 3.1, the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award and shall not include Shares subject to Awards that have been canceled, expired or forfeited or Shares subject to Awards that have been delivered (either actually or constructively by attestation) to or retained by the Company in payment or satisfaction of the purchase price or exercise price of an Award.
Section 4. Persons Eligible Under Plan
     Any person who is an employee or prospective employee of the Company or any of its Subsidiaries shall be eligible to be considered for the grant of Awards hereunder; provided that the Award to such prospective employee is conditioned on the prospective employee’s commencement of employment (an “Eligible Employee”); provided, however, with respect to ISOs granted under this Plan, the aggregate fair market value (determined at the time the ISO is granted) of the Shares with respect to which the ISOs are exercisable for the first time by the optionee during any calendar year (under the plans of the Company) shall not exceed $100,000.00. If any ISO is granted that exceeds the limitations of this Section 4 at the first time it is exercisable, it shall not be invalid, but shall constitute, and be treated as, a Nonqualified Option to the extent of such excess. The status of the chairman of the Board of Directors as an “employee” shall be determined by the Committee. 
Section 5. Plan Awards 
     5.1 Award Types. The Committee, on behalf of the Company, is authorized under this Plan to enter into certain types of arrangements with Eligible Employees and to confer certain benefits on them. The following arrangements or benefits are authorized under this Plan if their terms and conditions are not inconsistent with the provisions of this Plan: Options and Restricted Stock. Such arrangements and benefits are sometimes referred to herein as “Awards.” The authorized types of arrangements and benefits for which Awards may be granted are defined as follows: 
     (a) Options. An Option is a right granted under Section 6 to purchase a number of Shares at such exercise price, at such times, and on such other terms and conditions as are specified in the agreement or terms and conditions or other document evidencing the Award (the “Option Document”). Options intended to qualify as Incentive Stock Options (“ISOs”) pursuant to Code Section 422 and Options not intended to qualify as ISOs (“Nonqualified Options”) may be granted under Section 6. 
     (b) Restricted Stock. Restricted Stock is an award or issuance of Shares under Section 7, subject to certain restrictions and the risk of forfeiture and terms as are expressed in the agreement or other document evidencing the Award.
     5.2 Grants of Awards. An Award may consist of one such arrangement or benefit or two or more of them in tandem, and the terms as established by the Committee for all Awards granted hereunder may include performance standards derived from the Qualifying Performance Criteria (as defined in Section 8.2 hereof), and the receipt of any Award may be contingent on performance standards derived from the Qualifying Performance Criteria. 
Section 6. Options 
     6.1 The Committee may grant an Option or provide for the grant of an Option, either from time to time in the discretion of the Committee or automatically upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the satisfaction of an event or condition within the control of the recipient of the Award or within the control of others. 
     6.1 Option Document. Each Option Document shall contain provisions regarding (a) the number of Shares that may be issued upon exercise of the Option, (b) the purchase price of the Shares and the means of payment 

for the Shares, (c) the term of the Option, (d) such terms and conditions on the vesting and/or exercisability of an Option as may be determined from time to time by the Committee, (e) restrictions on the transfer of the Option and forfeiture provisions and (f) such further terms and conditions, in each case not inconsistent with this Plan as may be determined from time to time by the Committee. Option Documents evidencing ISOs shall contain such terms and conditions as may be necessary to qualify, to the extent determined desirable by the Committee, with the applicable provisions of Section 422 of the Code. 
     6.2 Option Price. Subject to the restriction set forth in the following sentence, the purchase price per share of the Shares subject to each Option granted under this Plan shall equal or exceed 100% of the fair market value of a Share on the date the Option is granted. The previous sentence notwithstanding, if, immediately before an Award intended to qualify as an ISO, an individual owns (or is treated as owning under the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company (or any related corporation within the meaning of Reg. § 1.421-1(i)(2)) employing the optionee, the purchase price shall be in no event less than one hundred ten percent (110%) of the stock’s fair market value on the date of grant. 
     6.3 Option Term. The “Term” of each Option granted under this Plan, including any ISOs, shall be ten (10) years from the date of its grant, unless (i) the Company makes an Award intended to qualify as an ISO to an individual who owns (or is treated as owning under the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company (or any related corporation within the meaning of Reg. § 1.421-1(i)(2)) employing the optionee, in which case, the term shall be five (5) years from the date of its grant or (ii) the Committee provides for a lesser term. 
     6.4 Option Vesting. Options granted under this Plan shall be exercisable at such time and in such installments during the period prior to the expiration of the Option’s Term as determined by the Committee. The Committee shall have the right to make the timing of the ability to exercise any Option granted under this Plan subject to continued employment, the passage of time and/or such performance requirements as deemed appropriate by the Committee. 
     6.5 Termination of Status as an Employee.
     (a) Termination of Employment. Unless otherwise provided in an Award Agreement relating to an Option, if the employment of an Eligible Employee by the Company is terminated, whether voluntary or for cause, except if such termination occurs due to retirement, death or disability, the Option, to the extent not exercised, shall cease on the date on which Eligible Employee’s employment by the Company is terminated. For purposes of this Section 6.5, an Eligible Employee who leaves the employ of the Company to become an employee of a subsidiary or parent corporation of the Company or a corporation which has assumed the Option of the Company as a result of a corporate reorganization, etc., shall not be considered to have terminated his employment. For purposes of this Section 6.5, the employment relationship of an employee of the Company or of a subsidiary corporation of the Company will be treated as continuing intact while he is on military or sick leave or other bona fide leave of absence (such as temporary employment by the government) if such leave does not exceed ninety (90) days, or, if longer, so long as his right to reemployment is guaranteed either by statute or by contract. 
     (b) Retirement. For purposes of the Plan, the retirement of an individual either pursuant to a pension or retirement plan adopted by the Company or at the normal retirement date prescribed from time to time by the Company, shall be deemed to be a termination of such individual's employment other than voluntary or for cause. If an Eligible Employee’s termination is due to retirement, then the Eligible Employee may, but only within ninety (90) days after the date he ceases to be an employee of the Company, exercise his Option to the extent that he was entitled to exercise it at the date of such termination. To the extent that he was not entitled to exercise the Option at the date of such termination, or if he does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate. 

     (c) Disability. Unless otherwise provided in an Award Agreement relating to an Option, in the event an Eligible Employee is unable to continue his employment with the Company as a result of his permanent and total disability (as defined in Section 22(e)(3) of the Code), he may, but only within one (1) year from the date of termination, exercise his Option to the extent he was entitled to exercise it at the date of such termination. To the extent that he was not entitled to exercise the Option at the date of termination, or if he does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate. 
     (d) Death of Eligible Employee. Unless otherwise provided in an Award Agreement relating to an Option, if an Eligible Employee dies during the term of the Option and is at the time of his death an employee of the Company who shall have been in continuous status as an employee since the date of grant of the Option, the Option may be exercised at any time within one (1) year following the date of death (or such other period of time as is determined by the Committee), by the Eligible Employee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that Eligible Employee was entitled to exercise the Option on the date of death. To the extent that decedent was not entitled to exercise the Option on the date of death, or if the Eligible Employee’s estate, or person who acquired the right to exercise the Option by bequest or inheritance, does not exercise such Option (which he was entitled to exercise) within the time specified herein, the Option shall terminate. 
     6.6 Payment of Exercise Price. The exercise price of an Option shall be paid in the form of one of more of the following, as the Committee shall specify, either through the terms of the Option Document or at the time of exercise of an Option: (a) cash or certified or cashiers’ check, (b) payment under an arrangement with a broker selected or approved by the Company where payment is made pursuant to an irrevocable commitment by the broker to deliver to the Company proceeds from the sale of the Shares issuable upon exercise of the Option, or (c) a combination of (a) and (b). 
6.7 No Deferral Feature. No Option shall have any feature that would allow for the deferral of compensation (within the meaning of Internal Revenue Code Section 409A) other than the deferral of recognition of income until the later of the exercise or disposition of the Option or the time the shares of Stock acquired subject to the exercise of the Option first become substantially vested (as defined in Treasury Regulation section 1.83-3(b)).
     6.8 No Option Repricing. Without the approval of stockholders, the Company shall not reprice any Options. For purposes of this Plan, the term “reprice” shall mean lowering the exercise price of previously awarded Options within the meaning of Item 402(i) under Securities and Exchange Commission Regulation S-K (including canceling previously awarded Options and regranting them with a lower exercise price). 
Section 7. Restricted Stock Awards 
     The Committee is authorized to make Awards of Restricted Stock to Eligible Employees in such amounts and subject to such terms and conditions as may be determined by the Committee. All Awards of Restricted Stock shall be evidenced by a Restricted Stock Award Agreement. 
     7.1 Issuance and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination of such times, under such circumstances, in such installments, upon the satisfaction of continued employment, standards derived from the Qualifying Performance Criteria, lapse of time, certain acceleration events like death or disability or otherwise, as the Committee determines at the time of the grant of the Award or thereafter. 
     7.2 Forfeiture. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment during the applicable restriction period or upon failure to satisfy a standard derived from the Qualifying Performance Criteria during the applicable restriction period, 

Restricted Stock that is at that time subject to restrictions shall be forfeited and re-acquired by the Company; provided, however, that the Committee may provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock. 
     7.3 Certificates for Restricted Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing shares of Restricted Stock are registered in the name of the Eligible Employee, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock. 
Section 8. Other Provisions Applicable to Awards 
     8.1 Transferability. Unless the agreement or other document evidencing an Award (or an amendment thereto authorized by the Committee) expressly states that the Award is transferable as provided hereunder and the transferability of such Award complies with Reg. § 1.422-2(a)(2)(v), no Award granted under this Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner prior to the vesting or lapse of any and all restrictions applicable thereto.
     8.2 Qualifying Performance Criteria. For purposes of this Plan, the term “Qualifying Performance Criteria” shall mean any one or more of the following performance criteria, either individually, alternatively or in any combination, applied to either the Company as a whole, to a business unit or subsidiary, or based on comparisons of any of the performance measures relative to other companies, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee in the Award: (a) cash flow, (b) earnings per share or increases of same, (c) earnings before interest, taxes and amortization, (d) return on equity, (e) total stockholder return, (f) share price performance, (g) return on capital or investment, (h) return on assets or net assets, (i) revenue, (j) income or net income, (k) operating income or net operating income, (l) operating profit or net operating profit, (m) operating margin or profit margin, (n) return on operating revenue, (o) pre-tax or after-tax profit levels expressed in either absolute dollars, (p) revenues or revenue growth, (q) economic or cash value added, (r) results of customer satisfaction surveys, (s) other measures of performance, quality, safety, productivity or process improvement, (t) market share and (u) overhead or other expense reduction. These factors may have a minimum performance standard, a target performance standard and a maximum performance standard. The Committee shall appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year. 
     8.3 Dividends. Unless otherwise provided by the Committee, no adjustment shall be made in Shares issuable under Awards on account of cash dividends that may be paid or other rights that may be issued to the holders of Shares prior to their issuance under any Award. The Committee shall specify whether dividends or dividend equivalent amounts shall be paid to any Eligible Employee with respect to the Shares subject to any Award that have not vested or been issued or that are subject to any restrictions or conditions on the record date for dividends.
     8.4 Documents Evidencing Awards. The Committee shall, subject to applicable law, determine the date an Award is deemed to be granted, which for purposes of this Plan shall not be affected by the fact that an Award is contingent on subsequent stockholder approval of this Plan. The Committee or, except to the extent 

prohibited under applicable law, its delegate(s) may establish the terms of agreements or other documents evidencing Awards under this Plan and may, but need not, require as a condition to any such agreement’s or document’s effectiveness that such agreement or document be executed by the Eligible Employee and that such Eligible Employee agrees to such further terms and conditions as specified in such agreement or document. The grant of an Award under this Plan shall not confer any rights upon the Eligible Employee holding such Award other than such terms, and subject to such conditions, as are specified in this Plan as being applicable to such type of Award (or to all Awards) or as are expressly set forth in the agreement or other document evidencing such Award. 
     8.5 Financing. Unless prohibited by federal and state law, or the rules or regulations thereunder, the Committee may in its discretion provide financing to an Eligible Employee in a principal amount sufficient to pay the purchase price of any Award and/or to pay the amount of taxes required by law to be withheld with respect to any Award. Any such loan shall be subject to all applicable legal requirements and restrictions pertinent thereto, including Regulation U promulgated by the Federal Reserve Board. The grant of an Award shall in no way obligate the Company or the Committee to provide any financing whatsoever in connection therewith.
     8.6 Compliance with Code Section 409A. Notwithstanding any language to the contrary in this Plan, the Committee will ensure that the terms and conditions of any Awards issued will comply with the applicable provision of Code Section 409A or the regulations or other pronouncements thereunder.
     8.7 Additional Restrictions on Awards. Either at the time an Award is granted or by subsequent action, the Committee may, but need not, impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by an Eligible Employee or other subsequent transfers by an Eligible Employee of any Shares issued under an Award, including without limitation (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Eligible Employees, and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
Section 9. Changes in Capital Structure 
     9.1 Corporate Actions Unimpaired. The existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, exchanges, or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of Shares or other securities or subscription rights thereto, or any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares or other securities of the Company or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. Further, except as expressly provided herein or by the Committee, (a) the issuance by the Company of shares of stock of any class of securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, (b) the payment of a dividend in property other than Shares, or (c) the occurrence of any similar transaction, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to Awards theretofore granted or the purchase price per Share, unless the Committee shall determine in its sole discretion that an adjustment is necessary to provide equitable treatment to an Eligible Employee.
     9.2 Adjustments Upon Certain Events. If the outstanding Shares or other securities of the Company, or both, for which the Award is to be settled shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination of shares, recapitalization, or reorganization, the Committee may appropriately and equitably adjust the number and kind of Shares or other securities which are subject to the Plan or subject to any Awards theretofore granted, and the exercise or settlement prices of such Awards, so 

as to maintain the proportionate number of Shares or other securities without changing the aggregate exercise or settlement price, provided, however, that such adjustment shall be made so as not to affect the status of any Award intended to qualify as an ISO or as “performance based compensation” under Section 162(m) of the Code.
Section 10. Mergers and Liquidation 
     Except as limited by the provisions of Code Section 422 of the Code and the terms of any individual Award, if the company is the surviving corporation in any merger or consolidation, all Awards shall remain in force, and any: (1) Option granted under the Plan shall remain outstanding pursuant to the terms of the Plan and the Award; and (2) Restricted Stock granted under the Plan shall continue to be outstanding pursuant to the terms of the Award and this Plan. Except to the extent otherwise provided in an Award document, by the Board, or as limited by Code Section 422, dissolution or liquidation of the Company shall cause every unvested Option, Restricted Stock or other Award for which there remains contingencies, conditions and unmet performance standards to terminate. Except as limited by Code Section 422, a merger or consolidation in which the Company is not the surviving corporation shall also cause every unvested Option or Restricted Stock for which there remains contingencies, conditions and unmet performance standards to terminate unless specifically provided otherwise in an Award document or by the Board. 
Section 11. Taxes 
     11.1 Withholding Requirements. The Committee may make such provisions or impose such conditions as it may deem appropriate for the withholding or payment by an Eligible Employee of any taxes that the Committee determines are required in connection with any Award granted under this Plan, and an Eligible Employee’s rights in any Award are subject to satisfaction of such conditions. 
     11.2 Payment of Withholding Taxes. Notwithstanding the terms of Section 11.1, the Committee may provide in the agreement or other document evidencing an Award or otherwise that all or any portion of the taxes required to be withheld by the Company or, if permitted by the Committee, desired to be paid by the Eligible Employee, in connection with the exercise, vesting, settlement or transfer of any Award shall be paid or, at the election of the Eligible Employee, may be paid by the Company by withholding shares of the Company’s capital stock otherwise issuable or subject to such Award, or by the Eligible Employee delivering previously owned shares of the Company’s capital stock, in each case having a fair market value equal to the amount required by law to be withheld or paid, or by a broker selected or approved by the Company paying such amount pursuant to an irrevocable commitment by the broker to deliver to the Company proceeds from the sale of the Shares issuable under the Award. Any such election is subject to such conditions or procedures as may be established by the Committee and may be subject to approval by the Committee.
Section 12. Amendments or Termination 
     The Board may amend, alter or discontinue this Plan or any agreement or other document evidencing an Award made under this Plan but, except as provided pursuant to the anti-dilution adjustment provisions of Section 9.2, no such amendment shall, without the approval of the stockholders of the Company: 
     (a) change the maximum number of shares of Common Stock for which Awards may be granted under this Plan; 
     (b) extend the term of this Plan; or 
     (c) change the class of persons eligible to be Eligible Employees.
     The Board may amend, alter or discontinue the Plan or any agreement evidencing an Award made under the Plan, but no amendment or alteration shall be made which would impair the rights of any Award holder, without such holder’s consent, under any Award theretofore granted; provided that no such consent shall be required if the Committee determines in its sole discretion and prior to the date of any change in control, recapitalization, stock dividend, stock split, reorganization, merger, consolidation or similar type transaction 

that such amendment or alteration either is required or advisable in order for the Company, the Plan, or any Award granted, to satisfy any law or regulation or to meet the requirements of any accounting standard. 
Section 13. Compliance with Other Laws and Regulations 
     This Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable federal, state and foreign laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in an Eligible Employee’s name or deliver any Shares prior to the completion of any registration or qualification of such Shares under any federal, state or foreign law or any ruling or regulation of any government body which the Committee shall determine to be necessary or advisable. This Plan is intended to constitute an unfunded arrangement for the Eligible Employees. 
     Unless the Awards and Shares covered by this Plan have been registered under the Securities Act of 1933, as amended, or the Company has determined that such registration is unnecessary, each person receiving an Award and/or Shares pursuant to any Award may be required by the Company to give a representation in writing that such person is acquiring such Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. 
Section 14. No Right to Company Employment 
     Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual’s employment at any time. The agreements or other documents evidencing Awards may contain such provisions as the Committee may approve with reference to the effect of approved leaves of absence. 
Section 15. Liability of Company 
     The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to an Eligible Employee or other persons as to: 
     (a) The Non-Issuance of Shares. The non-issuance or sale of shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares hereunder; and 
     (b) Tax Consequences. Any tax consequence expected, but not realized, by any Eligible Employee or other person due to the receipt, exercise or settlement of any Award granted hereunder.
Section 16. Effectiveness and Expiration of Plan 
     This Plan shall be effective on the date the Company’s Board of Directors adopts this Plan, and no ISOs shall be granted prior to such date. All Awards granted under this Plan are subject to, and may not be exercised before the approval of this Plan by the stockholders. If such approval by the stockholders of the Company is not forthcoming, all Awards previously granted under this Plan shall be void. No Awards shall be granted pursuant to this Plan after March 11, 2020.
Section 17. Incentive Stock Options 
     Notwithstanding anything in the Plan to the contrary, it is the intention of the Company and the Committee that all terms and provisions relating to ISOs of this Plan shall be consistent with the requirements of Code Section 422 and the applicable regulations thereunder, as of the effective date of this plan, and to the extent any term or provision of this Plan relating to ISOs is inconsistent with Code Section 422 and the applicable regulations thereunder at that date, the term or provision shall be read, interpreted or substituted so as to be consistent with the applicable provision of Code Section 422 or the regulations thereunder.
Section 18. Non-Exclusivity of Plan 

     Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of restricted stock or stock options otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases. 
Section 19. Governing Law 
     This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the State of Arizona and applicable federal law. The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration. Any reference in this Plan or in the agreement or other document evidencing any Award to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability. 
Section 20. Miscellaneous Matters 
     20.1 Annulment of Awards. The grant of any Award payable in Shares is provisional until the Eligible Employee becomes entitled to the certificates in settlement thereof. In the event the employment of an Eligible Employee is terminated for cause (as defined below), any Award which is provisional shall be annulled as of the date of such termination for cause. For the purpose of this Section 20.1, the term “terminated for cause” means any discharge for violation of the policies and procedures of the Company or any Subsidiary or for other job performance or conduct which is detrimental to the best interests of the Company or a Subsidiary. 
     20.2 Securities Law Restrictions. No Shares shall be issued under the Plan unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable Federal and state securities laws. Certificates for Shares delivered under the Plan may be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares is then listed, and any applicable Federal or state securities law. The Committee may cause a legend or legends to be put on any such certificates to refer to those restrictions. Further, without limiting the foregoing, each person exercising an Option or receiving Restricted Stock may be required by the Company to give a representation in writing that he or she is acquiring Shares for his or her own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof (regardless of whether such option and Shares covered by the Plan are registered under the Securities Act of 1933, as amended). As a condition of transfer of the certificate evidencing Shares, the Committee may obtain such other agreements or undertakings, if any, that it may deem necessary or appropriate to assume compliance with any provisions of the Plan or any law or regulation. Certificates for Shares delivered under the Plan may be subject to such stock transfer orders and other restrictions as the Board may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable Federal or state securities laws. The Board may cause a legend or legends to be put on any such certificate to refer to those restrictions. 
     20.3 Award Agreement. Each Eligible Employee receiving an Award under the Plan shall enter into an Award Agreement (“Award Agreement”) with the Company in a form specified by the Committee agreeing to the terms and conditions of the Award and such related matters as the Committee, in its sole discretion, shall determine. 
     20.4 Costs of Plan. The costs and expenses of administering the Plan shall be borne by the Company.
     20.5 Tax Reimbursement Payments to Eligible Employees. Unless prohibited by federal and state law, or the rules and regulations thereunder, the Committee, pursuant to the terms of the agreements or other documents pursuant to which specific Awards are made under the Plan, may agree to reimburse Eligible Employees for some or all of the federal, state and local income taxes associated with the grant or exercise 

of an Award or the receipt of the cash or Shares from an Award (including any additional tax imposed due to Code Section 409A), or the 20% excise tax on any “excess parachute payments” under Code Sections 280G and Code Section 4999, and may agree to reimburse such Eligible Employees for some or all the additional federal, state and local income tax associated with the payments made under this Section 20.5. 
     20.6 Government Regulations. The Plan and the granting and exercise of Options and Shares hereunder, and the obligations of the Company to sell and deliver Shares under Options, shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 
     20.7 Interpretation. If any provision of the Plan is held invalid for any reason, such holding shall not affect the remaining provisions of the Plan, but instead the Plan shall be construed and enforced as if such provisions had never been included in the Plan. Headings contained in the Plan are for convenience only and shall in no manner be construed as part of this Plan. Any reference to the masculine, feminine or neuter gender shall be a reference to such other gender as is appropriate.
***EX-4.1

 Exhibit 4.1 

Shareholder’s and Registration Rights Agreement 

by and between 
 Baxter
International Inc. 
 and 

Baxalta Incorporated 
 Dated as of
[—], 2015 

 Exhibit 4.1 

TABLE OF CONTENTS 
  

							
	 ARTICLE I Definitions
		 	1	  
			
	 Section 1.01
		 Definitions
		 	1	  
			
	 Section 1.02
		 Interpretation
		 	6	  
		
	 ARTICLE II Registration Rights
		 	7	  
			
	 Section 2.01
		 Registration
		 	7	  
			
	 Section 2.02
		 Piggyback Registrations
		 	10	  
			
	 Section 2.03
		 Registration Procedures
		 	12	  
			
	 Section 2.04
		 Underwritten Offerings or Exchange Offers
		 	18	  
			
	 Section 2.05
		 Registration Rights Agreement with Participating Banks
		 	19	  
			
	 Section 2.06
		 Registration Expenses Paid by Baxalta
		 	19	  
			
	 Section 2.07
		 Indemnification
		 	19	  
			
	 Section 2.08
		 Reporting Requirements; Rule 144
		 	22	  
			
	 Section 2.09
		 Registration Rights Covenant
		 	22	  
		
	 ARTICLE III Voting Restrictions
		 	22	  
			
	 Section 3.01
		 Voting of Baxalta Common Stock
		 	22	  
		
	 ARTICLE IV Miscellaneous
		 	23	  
			
	 Section 4.01
		 Term
		 	23	  
			
	 Section 4.02
		 Counterparts; Entire Agreement; Corporate Power
		 	23	  
			
	 Section 4.03
		 Disputes
		 	24	  
			
	 Section 4.04
		 Amendment
		 	24	  
			
	 Section 4.05
		 Waiver of Default
		 	24	  
			
	 Section 4.06
		 Successors, Assigns and Transferees
		 	25	  
			
	 Section 4.07
		 Further Assurances
		 	26	  
			
	 Section 4.08
		 Performance
		 	26	  
			
	 Section 4.09
		 Notices
		 	26	  
			
	 Section 4.10
		 Severability
		 	27	  
			
	 Section 4.11
		 No Reliance on Other Party
		 	27	  
			
	 Section 4.12
		 Registrations, Exchanges. etc.
		 	27	  
			
	 Section 4.13
		 Mutual Drafting
		 	27	  
		
	 Exhibit A          Form of Agreement to be Bound
				

  
 -i- 

 SHAREHOLDER’S AND REGISTRATION RIGHTS AGREEMENT 

This Shareholder’s and Registration Rights Agreement (this “Agreement”) is made as of
[—], 2015, by and between Baxter International Inc., a Delaware corporation (“Baxter”), and Baxalta Incorporated, a Delaware corporation and wholly owned subsidiary of Baxter
(“Baxalta”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Section 1.01. 

RECITALS 
 A. Pursuant to the Separation and
Distribution Agreement, dated as of [—], 2015 (the “Separation and Distribution Agreement”), by and between Baxter and Baxalta, Baxter will distribute more than 80% of the
outstanding shares of common stock, par value $0.01 per share, of Baxalta (the “Common Stock”) to Baxter’s shareholders (the “Distribution”). 

B. Baxter may Sell those shares of Common Stock that are not distributed in the Distribution (such shares not distributed in the Distribution, the
“Retained Shares”) through one or more transactions, including pursuant to one or more transactions registered under the Securities Act. 

C. Baxalta desires to grant to the Baxter Group the Registration Rights for the Retained Shares and other Registrable Securities, subject to the terms and
conditions of this Agreement. 
 D. Baxter Group desires to grant Baxalta a proxy to vote the Retained Shares in proportion to the votes cast by
Baxalta’s other shareholders, subject to the terms and conditions of this Agreement. 
 AGREEMENTS 

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: 
 ARTICLE I 

Definitions 
 Section 1.01
Definitions. 
 As used in this Agreement, the following terms shall have the following meanings: 

“Affiliate” means, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified Person. As used in this definition, the term “control” (including with correlative meanings, “controlled by” and “under common control
with”), when used with respect to any specified Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting
securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or 

 
otherwise. It is expressly agreed that, from and after the Distribution Date, no member of the Baxalta Group shall be deemed to be an Affiliate of any member of the Baxter Group, and no member of
the Baxter Group shall be deemed to be an Affiliate of any member of the Baxalta Group. 
 “Agreement” has the meaning set forth in the
preamble. 
 “Ancillary Filings” has the meaning set forth in Section 2.03(a)(i). 

“Baxalta” has the meaning set forth in the preamble and shall include Baxalta’s successors by merger, acquisition, reorganization or
otherwise. 
 “Baxalta Group” means Baxalta, each Subsidiary of Baxalta and each Affiliate of Baxalta (in each case other than any member
of the Baxter Group). 
 “Baxalta Public Sale” has the meaning set forth in Section 2.02(a). 

“Baxter” has the meaning set forth in the preamble and shall include Baxter’s successors by merger, acquisition, reorganization or
otherwise. 
 “Baxter Group” means Baxter, each Subsidiary of Baxter and each Affiliate of Baxter (in each case other than any member of
the Baxalta Group). 
 “Blackout Notice” has the meaning set forth in Section 2.01(d). 

“Blackout Period” has the meaning set forth in Section 2.01(d). 

“Board” means the board of directors of Baxalta. 

“Business Day” means any day that is not a Saturday, Sunday or other day on which banking institutions doing business in New York, New York
are authorized or obligated by law or required by executive order to be closed. 
 “Common Stock” has the meaning set forth in the
recitals. 
 “Debt” means any indebtedness of any member of the Baxter Group, including debt securities, notes, credit facilities, credit
agreements and other debt instruments, including, in each case, any amounts due thereunder. 
 “Demand Registration” has the meaning set
forth in Section 2.01(a). 
 “Disadvantageous Condition” has the meaning set forth in Section 2.01(d). 

“Dispute” has the meaning set forth in Section 4.03(a). 

“Distribution” has the meaning set forth in the recitals. 

“Distribution Date” means the date and time at which the Distribution occurs. 

  
 -2- 

 “Exchanges” means one or more Public Exchanges or Private Exchanges. 

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and any successor thereto, and any rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time. 
 “Exchange Offer” means an exchange offer of Registrable
Securities for outstanding securities of a Holder. 
 “Governmental Authority” means any nation or government, any state, municipality or
other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign or multinational, exercising executive, legislative,
judicial, regulatory, administrative or other similar functions of, or pertaining to, government and any executive official thereof. 

“Holder” means any member of the Baxter Group, so long as such Person holds any Registrable Securities, and any Permitted Transferee, so long
as such Person holds any Registrable Securities. 
 “Indemnifying Party” has the meaning set forth in Section 2.07(c). 

“Indemnitee” has the meaning set forth in Section 2.07(c). 

“Initiating Holder” has the meaning set forth in Section 2.01(a). 

“Limited Transferee” has the meaning set forth in Section 4.06(b). 

“Loss” and “Losses” have the meaning set forth in Section 2.07(a). 

“Offering Confidential Information” means, with respect to a Piggyback Registration, (i) Baxalta’s plan to file the relevant
Registration Statement and engage in the offering so registered, (ii) any information regarding the offering being registered (including the potential timing, price, number of shares, underwriters or other counterparties, selling stockholders
or plan of distribution) and (iii) any other information (including information contained in draft supplements or amendments to offering materials) provided to any Holders by Baxalta (or by third parties) in connection with a Piggyback
Registration; provided, that Offering Confidential Information shall not include information that (x) was or becomes generally available to the public (including as a result of the filing of the relevant Registration Statement) other than as a
result of a disclosure by any Holder, (y) was or becomes available to any Holder from a source not bound by any confidentiality agreement with Baxalta or (z) was otherwise in such Holder’s possession prior to it being furnished to
such Holder by Baxalta or on Baxalta’s behalf. 
 “Other Holders” has the meaning set forth in Section 2.01(f). 

“Participating Banks” means such investment banks or other Persons that are not part of the Baxter Group that engage in any Exchange with one
or more members of the Baxter Group. 

  
 -3- 

 “Permitted Transferee” means any Transferee, any Subsequent Transferee and, for the limited
purposes set forth in Section 4.06(b), any Limited Transferee. 
 “Person” means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority. 

“Piggyback Registration” has the meaning set forth in Section 2.02(a). 

“Private Exchange” means a private exchange pursuant to which one or more members of the Baxter Group shall Sell some or all of their
Registrable Securities to one or more Participating Banks in exchange, directly or indirectly, for any equity interest of Baxter or the satisfaction of Debt, in a transaction or series of transactions not required to be registered under the
Securities Act. 
 “Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such
prospectus, including post-effective amendments, and all other material incorporated by reference in such prospectus. 
 “Public Exchange”
means a public exchange pursuant to which one or more members of the Baxter Group shall Sell some or all of their Registrable Securities to one or more Participating Banks in exchange, directly or indirectly, for any equity interest of Baxter or the
satisfaction of Debt, in a transaction or series of transactions registered under the Securities Act. 
 “Registrable Securities” means the
Retained Shares and any shares of Common Stock or other securities issued with respect to, in exchange for, or in replacement of such Retained Shares; provided that the term “Registrable Securities” excludes any security
(i) the offering and Sale of which has been effectively registered under the Securities Act and which has been Sold in accordance with a Registration Statement, (ii) that has been Sold by a Holder in a transaction or transactions exempt
from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof (including transactions pursuant to Rule 144) such that the further Sale of such securities by the transferee or assignee is not
restricted under the Securities Act or (iii) that has been Sold by a Holder in a transaction in which such Holder’s rights under this Agreement are not, or cannot be, assigned. 

“Registration” means a registration with the SEC of the offer and Sale to the public of any Registrable Securities under a Registration
Statement. The terms “Register” and “Registering” shall have correlative meanings. 
 “Registration
Expenses” means all expenses incident to the Baxalta Group’s performance of or compliance with this Agreement, including all (i) registration, qualification and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications within the United States of any Registrable Securities being registered), (iii) printing expenses, messenger,
telephone and delivery expenses, (iv) internal expenses of Baxalta Group (including all salaries and expenses of employees of members of Baxalta Group performing legal or accounting duties), (v) fees and disbursements of counsel for
Baxalta and customary fees and expenses for independent certified public accountants retained by the Baxalta Group (including the expenses of any comfort letters 

  
 -4- 

 
or costs associated with the delivery by Baxalta Group members’ independent certified public accountants of comfort letters customarily requested by underwriters) and (vi) fees and
expenses of listing any Registrable Securities on any securities exchange on which the shares of Common Stock are then listed and Financial Industry Regulatory Authority registration and filing fees; but excluding any fees or disbursements of any
Holder, all expenses incurred in connection with the printing, mailing and delivering of copies of any Registration Statement, any Prospectus, any other offering documents and any amendments and supplements thereto to any underwriters and dealers;
any underwriting discounts, fees or commissions attributable to the offer and Sale of any Registrable Securities, any fees and expenses of the underwriters or dealer managers, the cost of preparing, printing or producing any agreements among
underwriters, underwriting agreements and blue sky or legal investment memoranda, any selling agreements and any other similar documents in connection with the offering, Sale, distribution or delivery of the Registrable Securities or other shares of
Common Stock to be Sold, including any fees of counsel for any underwriters in connection with the qualification of the Registrable Securities or other shares of Common Stock to be Sold for offering and Sale or distribution under state securities
laws, any stock transfer taxes, out-of-pocket costs and expenses relating to any investor presentations on any “road show” presentations undertaken in connection with marketing of the Registrable Securities and any fees and expenses of any
counsel to the Holder or the underwriters or dealer managers. 
 “Registration Period” has the meaning set forth in Section 2.01(c).

 “Registration Rights” means the rights of the Holders to cause Baxalta to Register Registrable Securities pursuant to Article II.

 “Registration Statement” means any registration statement of Baxalta filed with, or as the context permits to be filed with, the SEC
under the rules and regulations promulgated under the Securities Act, including the related Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by
reference into such registration statement. For the avoidance of doubt, it is acknowledged and agreed that such Registration Statement may be on any form that shall be applicable, including Form S-1, Form S-3 or Form S-4 and may be a Shelf
Registration Statement. 
 “Retained Shares” has the meaning set forth in the recitals. 

“Sale” means the direct or indirect transfer, sale, assignment or other disposition of a security. The terms “Sell” and
“Sold” shall have correlative meanings. 
 “SEC” means the U.S. Securities and Exchange Commission. 

“Securities Act” means the U.S. Securities Act of 1933, as amended, and any successor thereto, and any rules and regulations promulgated
thereunder, all as the same shall be in effect from time to time. 
 “Separation and Distribution Agreement” has the meaning set forth in
the recitals. 

  
 -5- 

 “Shelf Registration Statement” means a Registration Statement of Baxalta for an offering of
Registrable Securities to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act (or similar provisions then in effect). 

“Subsequent Transferee” has the meaning set forth in Section 4.06(b). 

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person
(i) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (x) the total combined voting power of all classes of voting securities of such Person, (y) the total combined equity interests or
(z) the capital or profit interests, in the case of a partnership, or (ii) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body. 

“Transferee” has the meaning set forth in Section 4.06(b). 

“Underwritten Offering” means a Registration in which Registrable Securities are Sold to an underwriter or underwriters on a firm commitment
basis for reoffering to the public. 
 Section 1.02 Interpretation. 

In this Agreement, unless the context clearly indicates otherwise: 

(a) words used in the singular include the plural, and words used in the plural include the singular; 

(b) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and a reference to such Person’s “Affiliates” or “Subsidiaries” shall be deemed to mean such Person’s Affiliates or Subsidiaries, as applicable, following the Distribution; 

(c) any reference to any gender includes the other gender and the neuter; 

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without
limitation”; 
 (e) the words “shall” and “will” are used interchangeably and have the same meaning; 

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”; 

(g) any reference to any Article, Section, Exhibit or Schedule means such Article or Section of, or such Exhibit or Schedule to, this
Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition; 

  
 -6- 

 (h) the words “herein,” “hereunder,” “hereof,” “hereto”
and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement; 

(i) any reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented
and modified from time to time to the extent permitted by the provisions thereof and by this Agreement; 
 (j) any reference to any law
(including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

 (k) relative to the determination of any period of time, “from” means “from and including,” “to” means
“to but excluding” and “through” means “through and including”; 
 (l) the table of contents and titles to
Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; 

(m) any portion of this Agreement obligating a party to take any action or refrain from taking any action, as the case may be, shall mean that
such party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be; 

(n) the language of this Agreement shall be deemed to be the language the parties hereto have chosen to express their mutual intent, and no
rule of strict construction shall be applied against any party; and 
 (o) except as otherwise indicated, all periods of time referred to
herein shall include all Saturdays, Sundays and holidays; provided, however that if the date to perform the act or give any notice with respect to this Agreement shall fall on a day other than a Business Day, such act or notice may be
performed or given timely if performed or given on the next succeeding Business Day. 
 ARTICLE II 

Registration Rights 
 Section 2.01
Registration. 
 (a) Prior to the fifth anniversary of the Distribution Date, any Holder(s) of 10% or more of the then outstanding
Registrable Securities (and any Holders acting together which collectively hold 10% or more of the then outstanding Registrable Securities) (collectively, the “Initiating Holder”; provided that the 10% ownership threshold
shall not apply to any Holder that is a member of the Baxter Group) shall have the right to request that Baxalta file a Registration Statement, on behalf of itself or, in the case of the Baxter Group, on behalf of the Participating Banks, with the
SEC on the appropriate registration form for all or part of the Registrable Securities held 

  
 -7- 

 
by such Initiating Holder, by delivering a written request thereof to Baxalta specifying the number of shares of Registrable Securities such Initiating Holder wishes to register (a
“Demand Registration”). Baxalta shall (i) within five days of the receipt of a Demand Registration, give written notice of such Demand Registration to all Holders of Registrable Securities, (ii) use its reasonable best
efforts to prepare and file the Registration Statement as expeditiously as possible but in any event within 30 days of such request, and (iii) use its reasonable best efforts to cause the Registration Statement to become effective in respect of
each Demand Registration in accordance with the intended method of distribution set forth in the written request delivered by the Initiating Holder. Baxalta shall include in such Registration all Registrable Securities with respect to which Baxalta
receives, within the 10 days immediately following the receipt by the Holder(s) of such notice from Baxalta, a request for inclusion in the Registration from the Holder(s) thereof. Each such request from a Holder of Registrable Securities for
inclusion in the Registration shall also specify the aggregate amount of Registrable Securities proposed to be Registered. The Initiating Holder may request that the Registration Statement be on any appropriate form, including Form S-4 in the case
of an Exchange Offer or a Shelf Registration Statement, and Baxalta shall effect the Registration on the form so requested. 
 (b) The
Holder(s) may collectively make a total of five Demand Registration requests pursuant to Section 2.01(a) (including any exercise of rights to Demand Registration transferred pursuant to Section 4.06 and including any exercise
of rights to Demand Registration made pursuant to any registration rights agreement entered into pursuant to Section 2.05); provided that the Holder(s) may not make more than two Demand Registration requests in any 365-day period.
In addition, and notwithstanding anything to the contrary, the Baxter Group shall be permitted on a one-time basis to engage in up to four Private Exchanges within any nine-month period during the first twenty-four months following the date hereof,
and all Demand Registration requests made by the Participating Banks in such Private Exchanges pursuant to one or more registration rights agreements with Baxalta pursuant to Section 2.05 shall collectively count only as one Demand
Registration request (with such request date deemed to be the date of the first of the requests made pursuant to the applicable Private Exchanges) for purposes of the limitation on the number of Demand Registration requests set forth in the first
sentence of this Section 2.01(b) (it being understood that the Baxter Group shall be permitted to engage in additional Private Exchanges outside such nine-month period, but each Demand Registration request by the Participating Banks for
such Private Exchange pursuant to its registration rights agreement with Baxalta pursuant to Section 2.05 shall count as an additional Demand Registration request for purposes of the limitation on the number of Demand Registration
requests set forth in the first sentence of this Section 2.01(b)). 
 (c) Baxalta shall be deemed to have effected a
Registration for purposes of this Section 2.01 if the Registration Statement is declared effective by the SEC or becomes effective upon filing with the SEC and remains effective until the earlier of (i) the date when all Registrable
Securities thereunder have been Sold and (ii) 60 days from the effective date of the Registration Statement (or from the date the applicable Prospectus is filed with the SEC if Baxalta is satisfying a request for a Demand Registration by filing
a Prospectus under an effective Shelf Registration Statement) (the “Registration Period”). No Registration shall be deemed to have been effective if the conditions to closing specified in the underwriting agreement or dealer manager
agreement, if any, entered into in connection with such Registration are not satisfied by reason of a wrongful act, misrepresentation or breach of such 

  
 -8- 

 
applicable underwriting agreement or dealer manager agreement by any member of the Baxalta Group. If during the Registration Period, such Registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other Governmental Authority or the need to update or supplement the Registration Statement, the Registration Period shall be extended on a day-for-day basis for any period in which the Holders)
is unable to complete an offering as a result of such stop order, injunction or other order or requirement of the SEC or other Governmental Authority. 

(d) With respect to any Registration Statement, whether filed or to be filed pursuant to this Agreement, if Baxalta shall reasonably
determine, upon the advice of legal counsel, that maintaining the effectiveness of such Registration Statement or filing an amendment or supplement thereto (or, if no Registration Statement has yet been filed, filing such a Registration Statement)
would require the public disclosure of material nonpublic information concerning any transaction or negotiations involving Baxalta or any of its consolidated Subsidiaries that would materially interfere with such transaction or negotiations (a
“Disadvantageous Condition”), Baxalta may, for the shortest period reasonably practicable, and in any event for not more than 30 consecutive calendar days (a “Blackout Period”), notify the Holders whose offers and
Sales of Registrable Securities are covered (or to be covered) by such Registration Statement (a “Blackout Notice”) that such Registration Statement is unavailable for use (or will not be filed as requested). Upon the receipt of any
such Blackout Notice, the Holders shall forthwith discontinue use of the Prospectus contained in any effective Registration Statement; provided, that, if at the time of receipt of such Blackout Notice any Holder shall have Sold its
Registrable Securities (or have signed a firm commitment underwriting agreement with respect to the purchase of such shares) and the Disadvantageous Condition is not of a nature that would require a post-effective amendment to the Registration
Statement, then Baxalta shall use its commercially reasonable efforts to take such action as to eliminate any restriction imposed by federal securities laws on the timely delivery of such Registrable Securities. When any Disadvantageous Condition as
to which a Blackout Notice has been previously delivered shall cease to exist, Baxalta shall as promptly as reasonably practicable notify the Holders and take such actions in respect of such Registration Statement as are otherwise required by this
Agreement. The effectiveness period for any Demand Registration for which Baxalta has given notice of a Blackout Period shall be increased by the length of time of such Blackout Period. Baxalta shall not impose, in any 365-day period, Blackout
Periods lasting, in the aggregate, in excess of 60 calendar days. If Baxalta declares a Blackout Period with respect to a Demand Registration for a Registration Statement that has not yet been declared effective, (i) the Holders may by notice
to Baxalta withdraw the related Demand Registration request without such Demand Registration request counting against the number of Demand Registration requests permitted to be made under Section 2.01(b) and (ii) the Holders shall
not be responsible for any of Baxalta’s related Registration Expenses. 
 (e) If the Initiating Holder so indicates at the time of its
request pursuant to Section 2.01(a), such offering of Registrable Securities shall be in the form of an Underwritten Offering or an Exchange Offer, and Baxalta shall include such information in the written notice to the Holders required
under Section 2.01(a). In the event that the Initiating Holder intends to Sell the Registrable Securities by means of an Underwritten Offering or Exchange Offer, the right of any Holder to include Registrable Securities in such
registration shall be conditioned upon such Holder’s participation in such Underwritten Offering or Exchange Offer and the 

  
 -9- 

 
inclusion of such Holder’s Registrable Securities in the Underwritten Offering or the Exchange Offer to the extent provided herein. The Holders of a majority of the outstanding Registrable
Securities being included in any Underwritten Offering or Exchange Offer shall select the underwriter(s) in the case of an Underwritten Offering or the dealer manager(s) in the case of an Exchange Offer, provided that such underwriter(s) or dealer
manager(s) are reasonably acceptable to Baxalta. Baxalta shall be entitled to designate counsel for such underwriter(s) or dealer manager(s) (subject to their approval), provided that such designated underwriters’ counsel shall be a firm of
national reputation representing underwriters or dealer managers in capital markets transactions. 
 (f) If the managing underwriter or
underwriters of a proposed Underwritten Offering of Registrable Securities included in a Registration pursuant to this Section 2.01 inform(s) in writing the Holders participating in such Registration that, in its or their opinion, the
number of securities requested to be included in such Registration exceeds the number that can be Sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the
market for the securities offered, the number of Registrable Securities to be included in such Registration shall be reduced to the maximum number recommended by the managing underwriter or underwriter and allocated pro rata among the Holders,
including the Initiating Holder, in proportion to the number of Registrable Securities each Holder has requested to be included in such Registration; provided, that the Initiating Holder may notify Baxalta in writing that the Registration
Statement shall be abandoned or withdrawn, in which event Baxalta shall abandon or withdraw such Registration Statement. In the event the Initiating Holder notifies Baxalta that such Registration Statement shall be abandoned or withdrawn, such
Holder shall not be deemed to have requested a Demand Registration pursuant to Section 2.01(a), and Baxalta shall not be deemed to have effected a Demand Registration pursuant to Section 2.01(b). If the amount of Registrable
Securities to be underwritten has not been limited in accordance with the first sentence of this Section 2.01(f), Baxalta and the holders of Common Stock or, if the Registrable Securities include securities other than Common Stock, the
holders of securities of the same class of those securities included in the Registrable Securities, in each case, other than the Holders (“Other Holders”), may include such securities for their own account or for the account of
Other Holders in such Registration if the underwriter(s) so agree and to the extent that, in the opinion of such underwriter(s), the inclusion of such additional amount will not adversely affect the offering of the Registrable Securities included in
such Registration. 
 Section 2.02 Piggyback Registrations. 

(a) Prior to the earlier to occur of the fifth anniversary of the Distribution Date or the date on which the Registrable Securities then held
by the Holder(s) represents less than 1% of Baxalta’s then-issued and outstanding Common Stock (or, if the Registrable Securities include securities other than Common Stock, less than 1% of Baxalta’s then-issued and outstanding securities
of the same class as the securities included in the Registrable Securities), if Baxalta proposes to file a Registration Statement (other than a Shelf Registration) or a Prospectus supplement filed pursuant to a Shelf Registration Statement under the
Securities Act with respect to any offering of such securities for its own account and/or for the account of any Other Holders (other than (i) a Registration under Section 2.01, (ii) a Registration pursuant to a Registration
Statement on Form S-8 or Form S-4 or similar form that relates to a transaction subject to Rule 145 

  
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under the Securities Act, (iii) any form that does not include substantially the same information, other than information relating to the selling holders or their plan of distribution, as
would be required to be included in a Registration Statement covering the sale of the Registrable Securities, (iv) in connection with any dividend reinvestment or similar plan, (v) for the sole purpose of offering securities to another
entity or its security holders in connection with the acquisition of assets or securities of such entity or any similar transaction or (vi) a Registration in which the only Common Stock being registered is Common Stock issuable upon conversion
of debt securities that are also being registered) (a “Baxalta Public Sale”), then, as soon as practicable, but in any event not less than 15 days prior to the proposed date of filing such Registration Statement, Baxalta shall
give written notice of such proposed filing to each Holder, and such notice shall offer such Holders the opportunity to Register under such Registration Statement such number of Registrable Securities as each such Holder may request in writing (a
“Piggyback Registration”). Subject to Section 2.02(b) and Section 2.02(c), Baxalta shall use its commercially reasonable efforts to include in a Registration Statement with respect to a Baxalta Public Sale
all Registrable Securities that are requested to be included therein within five Business Days after the receipt of any such notice; provided, however, that if, at any time after giving written notice of its intention to Register any
securities and prior to the effective date of the Registration Statement filed in connection with such Registration, Baxalta shall determine for any reason not to Register or to delay Registration of the Baxalta Public Sale, Baxalta may, at its
election, give written notice of such determination to each such Holder and, thereupon, (x) in the case of a determination not to Register, shall be relieved of its obligation to Register any Registrable Securities in connection with such
Registration, without prejudice, however, to the rights of any Holder to request that such Registration be effected as a Demand Registration under Section 2.01 and (y) in the case of a determination to delay Registration, shall be
permitted to delay Registering any Registrable Securities for the same period as the delay in Registering such other shares of Common Stock in the Baxalta Public Sale. No Registration effected under this Section 2.02 shall relieve
Baxalta of its obligation to effect any Demand Registration under Section 2.01. For purposes of clarification, Baxalta’s filing of a Shelf Registration Statement shall not be deemed to be a Baxalta Public Sale; provided,
however, that any prospectus supplement filed pursuant to a Shelf Registration Statement with respect to an offering of Baxalta’s Common Stock for its own account and/or for the account of any other Persons will be a Baxalta Public Sale
unless such offering qualifies for an exemption from the Baxalta Public Sale definition in this Section 2.02(a). 
 (b) In the
case of any Underwritten Offering, each Holder shall have the right to withdraw such Holder’s request for inclusion of its Registrable Securities in such Underwritten Offering pursuant to Section 2.02(a) at any time prior to the
execution of an underwriting agreement with respect thereto by giving written notice to Baxalta of such Holder’s request to withdraw and, subject to the preceding clause, each Holder shall be permitted to withdraw all or part of such
Holder’s Registrable Securities from a Piggyback Registration at any time prior to the effective date thereof. 
 (c) If the managing
underwriter or underwriters of any proposed Underwritten Offering of a class of Registrable Securities included in a Piggyback Registration informs Baxalta and each Holder in writing that, in its or their opinion, the number of securities of such
class that such Holder and any other Persons intend to include in such offering exceeds the number that can be Sold in such offering without being likely to have an adverse effect on the 

  
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price, timing or distribution of the securities offered or the market for the securities offered, then the securities to be included in such Registration shall be (i) first, all securities
of Baxalta and any other Persons (other than Baxalta’s executive officers and directors) for whom Baxalta is effecting the Registration, as the case may be, proposes to Sell, (ii) second, the number, if any, of Registrable Securities of
such class that, in the opinion of such managing underwriter or underwriters, can be Sold without having such adverse effect, with such number to be allocated pro rata among the Holders that have requested to participate in such Registration based
on the relative number of Registrable Securities of such class requested by such Holder to be included in such Sale, (iii) third, the number of securities of executive officers and directors of Baxalta for whom Baxalta is effecting the
Registration, as the case may be, with such number to be allocated pro rata among the executive officers and directors and (iv) fourth, any other securities eligible for inclusion in such Registration, allocated among the holders of such
securities in such proportion as Baxalta and those holders may agree. 
 (d) After a Holder has been notified of its opportunity to include
Registrable Securities in a Piggyback Registration, such Holder (i) shall treat the Offering Confidential Information as confidential information, (ii) shall not use any Offering Confidential Information for any purpose other than to
evaluate whether to include its Registrable Securities (or other shares of Common Stock) in such Piggyback Registration and (iii) shall not disclose any Offering Confidential Information to any Person other than such of its agents, employees,
advisors and counsel as have a need to know such Offering Confidential Information, and to cause such agents, employees, advisors and counsel to comply with the requirements of this Section 2.02(d); provided, that any such Holder
may disclose Offering Confidential Information if such disclosure is required by legal process, but such Holder shall cooperate with Baxalta to limit the extent of such disclosure through protective order or otherwise, and to seek confidential
treatment of the Offering Confidential Information. 
 Section 2.03 Registration Procedures. 

(a) In connection with Baxalta’s Registration obligations under Section 2.01 and Section 2.02, Baxalta shall use
its reasonable best efforts to effect such Registration to permit the offer and Sale of such Registrable Securities in accordance with the intended method or methods of distribution thereof as expeditiously as reasonably practicable, and in
connection therewith, Baxalta shall, and shall cause the members of the Baxalta Group to: 
 (i) prepare and file the
required Registration Statement, including all exhibits and financial statements and, in the case of an Exchange Offer, any document required under Rule 425 or Rule 165 with respect to such Exchange Offer (collectively, the “Ancillary
Filings”) required under the Securities Act to be filed therewith, and before filing with the SEC a Registration Statement or Prospectus, or any amendments or supplements thereto, (A) furnish to the underwriters or dealer managers, if
any, and to the Holders, copies of all documents prepared to be filed, which documents shall be subject to the review and comment of such underwriters or dealer managers and such Holders and their respective counsel, and provide such underwriters or
dealers managers, if any, and such Holders and their respective counsel reasonable time to review and comment thereon and (B) not file with the SEC any Registration Statement or Prospectus or amendments or supplements thereto or any Ancillary
Filing to which the Holders or the underwriters or dealer managers, if any, shall reasonably object; 

  
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 (ii) prepare and file with the SEC such amendments and post-effective amendments
to such Registration Statement and supplements to the Prospectus and any Ancillary Filing as may be reasonably requested by the participating Holders; 

(iii) promptly notify the participating Holders and the managing underwriters or dealer managers, if any, and, if requested,
confirm such advice in writing and provide copies of the relevant documents, as soon as reasonably practicable after notice thereof is received by any member of the Baxalta Group (A) when the applicable Registration Statement or any amendment
thereto has been filed or becomes effective, the applicable Prospectus or any amendment or supplement to such Prospectus has been filed, or any Ancillary Filing has been filed, (B) of any comments (written or oral) by the SEC or any request
(written or oral) by the SEC or any other Governmental Authority for amendments or supplements to such Registration Statement, such Prospectus or any Ancillary Filing, or for any additional information, (C) of the issuance by the SEC of any
stop order suspending the effectiveness of such Registration Statement, any order preventing or suspending the use of any preliminary or final Prospectus or any Ancillary Filing, or the initiation or threatening of any proceedings for such purposes,
(D) if, at any time, the representations and warranties (written or oral) in any applicable underwriting agreement or dealer manager agreement cease to be true and correct in all material respects and (E) of the receipt by any member of
the Baxalta Group of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or Sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; 

(iv) (A) promptly notify each participating Holder and the managing underwriter(s) or dealer manager(s), if any, when
Baxalta becomes aware of the occurrence of any event as a result of which the applicable Registration Statement, the Prospectus included in such Registration Statement (as then in effect) or any Ancillary Filing contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements therein (in the case of such Prospectus and any preliminary Prospectus, in light of the circumstances under which they were made) not misleading, or if for any other
reason it shall be necessary during such time period to amend or supplement such Registration Statement, Prospectus or any Ancillary Filing in order to comply with the Securities Act, and (B) in either case, as promptly as reasonably
practicable thereafter, prepare and file with the SEC, and furnish without charge to each participating Holder and the underwriter(s) or dealer manager(s), if any, an amendment or supplement to such Registration Statement, Prospectus or Ancillary
Filing that will correct such statement or omission or effect such compliance; 
 (v) use its reasonable best efforts to
prevent or obtain the withdrawal of any stop order or other order suspending the use of any preliminary or final Prospectus; 

(vi) promptly (A) incorporate in a Prospectus supplement or post-effective amendment such information as the managing
underwriter(s) or dealer manager(s), if 

  
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any, and the Holders agree should be included therein relating to the plan of distribution with respect to such Registrable Securities and (B) make all required filings of such Prospectus
supplement or post-effective amendment as soon as reasonably practicable after being notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; 

(vii) furnish to each participating Holder and each underwriter or dealer manager, if any, without charge, as many conformed
copies as such Holder or underwriter or dealer manager may reasonably request of the applicable Registration Statement and any amendment or post-effective amendment thereto, including financial statements and schedules, but excluding all documents
and exhibits (i) incorporated therein by reference or (ii) that are available via the SEC’s EDGAR system; 

(viii) deliver to each participating Holder and each underwriter or dealer manager, if any, without charge, as many copies of
the applicable Prospectus (including each preliminary Prospectus) and any amendment or supplement thereto as such Holder or underwriter or dealer manager may reasonably request (it being understood that Baxalta consents to the use of such Prospectus
or any amendment or supplement thereto by each participating Holder and the underwriter(s) or dealer manager(s), if any, in connection with the offering and Sale of the Registrable Securities covered by such Prospectus or any amendment or supplement
thereto) and such other documents as such participating Holder or underwriter or dealer manager may reasonably request in order to facilitate the Sale of the Registrable Securities by such Holder or underwriter or dealer manager; 

(ix) on or prior to the date on which the applicable Registration Statement is declared effective or becomes effective, use its
reasonable best efforts to register or qualify, and cooperate with each participating Holder, the managing underwriter(s) or dealer manager(s), if any, and their respective counsel, in connection with the registration or qualification of, such
Registrable Securities for offer and Sale under the securities or “blue sky” laws of each state and other jurisdiction of the United States as any participating Holder or managing underwriter(s) or dealer manager(s), if any, or their
respective counsel reasonably request, and in any foreign jurisdiction mutually agreeable to Baxalta and the participating Holders, and do any and all other acts or things reasonably necessary or advisable to keep such registration or qualification
in effect for so long as such Registration Statement remains in effect and so as to permit the continuance of offers and Sales and dealings in such jurisdictions for so long as may be necessary to complete the distribution of the Registrable
Securities covered by the Registration Statement; provided that Baxalta will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, to take any action which would subject it to taxation or general
service of process in any such jurisdiction where it is not then so subject or conform its capitalization or the composition of its assets at the time to the securities or blue sky laws of any such jurisdiction; 

(x) in connection with any Sale of Registrable Securities that will result in such securities no longer being Registrable
Securities, cooperate with each participating Holder and the managing underwriter(s) or dealer manager(s), if any, to (A) facilitate the 

  
 -14- 

 
timely preparation and delivery of certificates representing Registrable Securities to be Sold and not bearing any restrictive Securities Act legends and (B) register such Registrable
Securities in such denominations and such names as such participating Holder or the underwriter(s) or dealer manager(s), if any, may request at least two Business Days prior to such Sale of Registrable Securities; provided that Baxalta may satisfy
its obligations hereunder without issuing physical stock certificates through the use of the Depository Trust Company’s Direct Registration System; 

(xi) cooperate and assist in any filings required to be made with the Financial Industry Regulatory Authority and each
securities exchange, if any, on which any of Baxalta’s securities are then listed or quoted and on each inter-dealer quotation system on which any of Baxalta’s securities are then quoted, and in the performance of any due diligence
investigation by any underwriter or dealer manager (including any “qualified independent underwriter”) that is required to be retained in accordance with the rules and regulations of each such exchange, and use its reasonable best efforts
to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other Governmental Authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s) or dealer
manager(s), if any, to consummate the Sale of such Registrable Securities; 
 (xii) not later than the effective date of the
applicable Registration Statement, provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with the Depository
Trust Company; provided, that Baxalta may satisfy its obligations hereunder without issuing physical stock certificates through the use of the Depository Trust Company’s Direct Registration System; 

(xiii) obtain for delivery to and addressed to each participating Holder and to the underwriter(s) or dealer manager(s), if
any, opinions from the general counsel or deputy general counsel for Baxalta, in each case dated the effective date of the Registration Statement or, in the event of an Underwritten Offering, the date of the closing under the underwriting agreement
or, in the event of an Exchange Offer, the date of the closing under the dealer manager agreement or similar agreement or otherwise, and in each such case in customary form and content for the type of Underwritten Offering or Exchange Offer, as
applicable; 
 (xiv) in the case of an Underwritten Offering or Exchange Offer, obtain for delivery to and addressed to
Baxalta and the managing underwriter(s) or dealer manager(s), if any, and, to the extent requested, each participating Holder, a cold comfort letter from Baxalta’s independent registered public accounting firm in customary form and content for
the type of Underwritten Offering or Exchange Offer, dated the date of execution of the underwriting agreement or dealer manager agreement or, if none, the date of commencement of the Exchange Offer, and brought down to the closing, whether under
the underwriting agreement or dealer manager agreement, if applicable, or otherwise; 

  
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 (xv) in the case of an Exchange Offer that does not involve a dealer manager,
provide to each participating Holder such customary written representations and warranties or other covenants or agreements as may be requested by any participating Holder comparable to those that would be included in an underwriting or dealer
manager agreement; 
 (xvi) use its reasonable best efforts to comply with all applicable rules and regulations of the SEC
and make generally available to its security holders, as soon as reasonably practicable, but in any event no later than 90 days, after the end of the 12-month period beginning with the first day of
Baxalta’s first quarter commencing after the effective date of the applicable Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and covering the period of at least 12 months, but
not more than 18 months, beginning with the first month after the effective date of the Registration Statement; 
 (xvii)
provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by the applicable Registration Statement from and after a date not later than the effective date of such Registration Statement; 

(xviii) cause all Registrable Securities covered by the applicable Registration Statement to be listed on each securities
exchange on which any of Baxalta’s securities are then listed or quoted and on each inter-dealer quotation system on which any of Baxalta’s securities are then quoted; 

(xix) provide (A) each Holder participating in the Registration, (B) the underwriters (which term, for purposes of
this Agreement, shall include any Person deemed to be an underwriter within the meaning of Section 2(11) of the Securities Act), if any, of the Registrable Securities to be registered, (C) the Sale or placement agent therefor, if any,
(D) the dealer manager therefor, if any, (E) counsel for such Holder, underwriters, agent, or dealer manager and (F) any attorney, accountant or other agent or representative retained by such Holder or any such underwriter or dealer
manager, as selected by such Holder, in each case, the opportunity to participate in the preparation of such Registration Statement, each Prospectus included therein or filed with the SEC, and each amendment or supplement thereto; and for a
reasonable period prior to the filing of such Registration Statement, upon execution of a customary confidentiality agreement, make available for inspection upon reasonable notice at reasonable times and for reasonable periods, by the parties
referred to in clauses (A) through (F) above, all pertinent financial and other records, pertinent corporate and other documents and properties of the Baxalta Group that are available to Baxalta, and cause all of the Baxalta Group’s
officers, directors and employees and the independent public accountants who have certified its financial statements to make themselves available at reasonable times and for reasonable periods to discuss the business of Baxalta and to supply all
information available to Baxalta reasonably requested by any such Person in connection with such Registration Statement as shall be necessary to enable them to exercise their due diligence or other responsibility, subject to the foregoing;
provided, that in no event shall any member of the Baxalta Group be required to make available any information which the Board determines in good faith to be competitively sensitive or confidential.

  
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The recipients of such information shall coordinate with one another so that the inspection permitted hereunder will not unnecessarily interfere with the Baxalta Group’s conduct of business.
Each Holder agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of Baxalta or its Affiliates unless and until such
information is made generally available to the public by Baxalta or such Affiliate or for any reason not related to the Registration of Registrable Securities; 

(xx) in the case of an Underwritten Offering or Exchange Offer registering 25% or more of the Retained Shares, cause the senior
executive officers of Baxalta to participate at reasonable times and for reasonable periods in the customary “road show” presentations that may be reasonably requested by the managing underwriter(s) or dealer manager(s), if any, and
otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto, except to the extent that such participation materially interferes with the management of
Baxalta’s business; provided that the effectiveness period for any Demand Registration shall be increased on a day-for-day basis by the period of time that management cannot participate; 

(xxi) comply with all requirements of the Securities Act, Exchange Act and other applicable laws, rules and regulations, as
well as all applicable stock exchange rules; and 
 (xxii) take all other customary steps reasonably necessary or advisable
to effect the Registration and distribution of the Registrable Securities contemplated hereby. 
 (b) As a condition precedent to any
Registration hereunder, Baxalta may require each Holder as to which any Registration is being effected to furnish to Baxalta such information regarding the distribution of such securities and such other information relating to such Holder, its
ownership of Registrable Securities and other matters as Baxalta may from time to time reasonably request in writing. Each such Holder agrees to furnish such information to Baxalta and to cooperate with Baxalta as reasonably necessary to enable
Baxalta to comply with the provisions of this Agreement. 
 (c) Each Holder shall, as promptly as reasonably practicable, notify Baxalta, at
any time when a Prospectus is required to be delivered (or deemed delivered) under the Securities Act, of the occurrence of an event, of which such Holder has knowledge, relating to such Holder or its Sale of Registrable Securities thereunder
requiring the preparation of a supplement or amendment to such Prospectus so that, as thereafter delivered (or deemed delivered) to the purchasers of such Registrable Securities, such Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. 

(d) Baxter agrees (on behalf of itself and each member of the Baxter Group), and any other Holder agrees by acquisition of such Registrable
Securities, that, upon receipt of any written notice from Baxalta of the occurrence of any event of the kind described in 

  
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Section 2.03(a)(iv) such Holder will forthwith discontinue Sale of Registrable Securities pursuant to such Registration Statement until such Holder’s receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 2.03(a)(iv), or until such Holder is advised in writing by Baxalta that the use of the Prospectus may be resumed, and if so directed by Baxalta, such Holder will deliver to
Baxalta, at Baxalta’s expense, all copies of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event Baxalta shall give any such notice, the period during which the applicable Registration
Statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice through the date when each seller of Registrable Securities covered by such
Registration Statement either receives the copies of the supplemented or amended Prospectus contemplated by Section 2.03(a)(iv) or is advised in writing by Baxalta that the use of the Prospectus may be resumed. 

Section 2.04 Underwritten Offerings or Exchange Offers. 

(a) If requested by the managing underwriter(s) for any Underwritten Offering or dealer manager(s) for any Exchange Offer that is requested by
Holders pursuant to a Demand Registration under Section 2.01, Baxalta shall enter into an underwriting agreement or dealer manager agreement, as applicable, with such underwriter(s) or dealer manager(s) for such offering, such agreement
to be reasonably satisfactory in substance and form to Baxalta and the underwriter(s) or dealer manager(s) and, if Baxter Group is a participating Holder, to Baxter Group. Such agreement shall contain such representations and warranties by Baxalta
and such other terms as are generally prevailing in agreements of that type. Each Holder with Registrable Securities to be included in any Underwritten Offering or Exchange Offer by such underwriter(s) or dealer manager(s) shall enter into such
underwriting agreement or dealer manager agreement at the request of Baxalta, which agreement shall contain such reasonable representations and warranties by the Holder and such other reasonable terms as are generally prevailing in agreements of
that type. 
 (b) In the event of a Baxalta Public Sale involving an offering of Common Stock or other equity securities of Baxalta in an
Underwritten Offering (whether in a Demand Registration or a Piggyback Registration, whether or not the Holders participate therein), the Holders hereby agree, and, in the event of a Baxalta Public Sale of Common Stock or other equity securities of
Baxalta in an Underwritten Offering or an Exchange Offer, Baxalta shall agree, and it shall cause its executive officers and directors to agree, if requested by the managing underwriter or underwriters in such Underwritten Offering or by the Holder
or the dealer manager or dealer managers, in an Exchange Offer, not to effect any Sale or distribution (including any offer to Sell, contract to Sell, short Sale or any option to purchase) of any securities (except, in each case, as part of the
applicable Registration, if permitted hereunder) that are of the same type as those being Registered in connection with such public offering and Sale, or any securities convertible into or exchangeable or exercisable for such securities, during the
period beginning five days before, and ending 90 days (or such lesser period as may be permitted by Baxalta or the participating Holder(s), as applicable, or such managing underwriter or underwriters) after, the effective date of the Registration
Statement filed in connection with such Registration (or, if later, the date of the Prospectus), to the extent timely notified in writing by such selling Person or the managing underwriter or underwriters or dealer manager or dealer managers. The
participating Holders and Baxalta, as applicable, also agree to execute an 

  
 -18- 

 
agreement evidencing the restrictions in this Section 2.04(b) in customary form, which form is reasonably satisfactory to Baxalta or the participating Holder(s), as applicable, and
the underwriter(s) or dealer manager(s), as applicable; provided that such restrictions may be included in the underwriting agreement or dealer manager agreement, if applicable. Baxalta may impose stop-transfer instructions with respect to
the securities subject to the foregoing restriction until the end of the required stand-off period. 
 (c) No Holder may participate in any
Underwritten Offering or Exchange Offer hereunder unless such Holder (i) agrees to Sell such Holder’s securities on the basis provided in any underwriting arrangements or dealer manager agreements approved by Baxalta or other Persons
entitled to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, dealer manager agreements and other documents reasonably required under the terms of such
underwriting arrangements or dealer manager agreements or this Agreement. 
 Section 2.05 Registration Rights Agreement with Participating
Banks. 
 If one or more members of the Baxter Group decides to engage in a Private Exchange with one or more Participating Banks, Baxalta shall enter
into a registration rights agreement with the Participating Banks in connection with such Private Exchange on terms and conditions consistent with this Agreement (other than the voting provisions contained in Article III hereof) and reasonably
satisfactory to Baxalta and the Baxter Group. 
 Section 2.06 Registration Expenses Paid by Baxalta. 

In the case of any Registration of Registrable Securities required pursuant to this Agreement, Baxalta shall pay all Registration Expenses regardless of
whether the Registration Statement becomes effective; provided, however, that Baxalta shall not be required to pay for any expenses of any Registration begun pursuant to Section 2.01 if the Demand Registration request is
subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be Registered (in which case all participating Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to one Demand Registration to which they have the right pursuant to Section 2.01(b). 
 Section 2.07
Indemnification. 
 (a) Baxalta agrees to indemnify and hold harmless, to the full extent permitted by law, each Holder whose shares
are included in a Registration Statement, such Holder’s Affiliates and their respective officers, directors, agents, advisors, employees and each Person, if any, who controls (within the meaning of the Securities Act or the Exchange Act) such
Holder, from and against any and all losses, claims, damages, liabilities (or actions or proceedings in respect thereof, whether or not such indemnified party is a party thereto) and expenses, joint or several (including reasonable costs of
investigation and legal expenses) (each, a “Loss” and collectively “Losses”) arising out of or based upon (i) any untrue or alleged untrue statement of a material fact contained in any Registration Statement
under which the offering and Sale of such Registrable Securities was Registered under the Securities Act (including any final or preliminary Prospectus contained therein or any amendment thereof or supplement thereto or any

  
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documents incorporated by reference therein), or any such statement made in any free writing prospectus (as defined in Rule 405 under the Securities Act) that Baxalta has filed or is required to
file pursuant to Rule 433(d) of the Securities Act or any Ancillary Filing, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a
Prospectus, preliminary Prospectus or free writing prospectus, in light of the circumstances under which they were made) not misleading; provided, that with respect to any untrue statement or omission or alleged untrue statement or omission made in
any Prospectus, the indemnity agreement contained in this paragraph shall not apply to the extent that any such liability or Loss results from or arises out of (A) the fact that a current copy of the Prospectus was not sent or given to the
Person asserting any such liability at or prior to the written confirmation of the Sale of the Registrable Securities concerned to such Person if it is determined by a court of competent jurisdiction in a final and non-appealable judgment that
Baxalta has provided such Prospectus and it was the responsibility of such Holder or its agents to provide such Person with a current copy of the Prospectus and such current copy of the Prospectus would have cured the defect giving rise to such
liability, (B) the use of any Prospectus by or on behalf of any Holder after Baxalta has notified such Person (x) that such Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, (y) that a stop order has been issued by the SEC with respect to a Registration Statement or (z) that a
Disadvantageous Condition exists, or (C) information furnished in writing by such Holder or on such Holder’s behalf, in either case expressly for use in such Registration Statement, Prospectus, free writing prospectus or Ancillary Filing
relating to such Holder’s Registrable Securities. This indemnity shall be in addition to any liability Baxalta may otherwise have, including under the Separation and Distribution Agreement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Holder or any indemnified party and shall survive the Sale of such securities by such Holder. 

(b) Each participating Holder whose Registrable Securities are included in a Registration Statement agrees (severally and not jointly) to
indemnify and hold harmless, to the full extent permitted by law, Baxalta, its directors, officers, agents, advisors, employees and each Person, if any, who controls (within the meaning of the Securities Act and the Exchange Act) Baxalta from and
against any and all Losses (i) arising out of or based upon information furnished in writing by such Holder or on such Holder’s behalf, in either case expressly for use in a Registration Statement, Prospectus, free writing prospectus or
Ancillary Filing relating to such Holder’s Registrable Securities or (ii) resulting from (A) the fact that a current copy of the Prospectus was not sent or given to the Person asserting any such liability at or prior to the written
confirmation of the Sale of the Registrable Securities concerned to such Person if it is determined by a court of competent jurisdiction in a final and non-appealable judgment that it was the responsibility of such Holder or its agent to provide
such Person with a current copy of the Prospectus and such current copy of the Prospectus would have cured the defect giving rise to such liability, or (B) the use of any Prospectus by or on behalf of any Holder after Baxalta has notified such
Person (x) that such Prospectus contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading, (y) that a stop order has been issued by the SEC with respect to a Registration Statement or (z) that a Disadvantageous Condition exists. This indemnity shall be in addition to any liability the

  
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participating Holder may otherwise have, including under the Separation and Distribution Agreement. In no event shall the liability of any participating Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by such holder under the Sale of the Registrable Securities giving rise to such indemnification obligation. Such indemnity shall remain in full force and effect regardless of any investigation made by
or on behalf of Baxalta or any indemnified party. 
 (c) Any claim or action with respect to which a party (an “Indemnifying
Party”) may be obligated to provide indemnification to any Person entitled to indemnification hereunder (an “Indemnitee”) shall be subject to the procedures for indemnification set forth in Article IV of the Separation and
Distribution Agreement. 
 (d) If for any reason the indemnification provided for in Section 2.07(a) or
Section 2.07(b) is unavailable to an Indemnitee or insufficient to hold it harmless as contemplated by Section 2.07(a) or Section 2.07(b), then the Indemnifying Party shall contribute to the amount paid or payable
by the Indemnitee as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnitee on the other hand. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or the Indemnitee and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. For the avoidance of doubt, the establishment of such relative fault, and any disagreements or disputes relating thereto,
shall be subject to Section 4.03. Notwithstanding anything in this Section 2.07(d) to the contrary, no Indemnifying Party (other than Baxalta) shall be required pursuant to this Section 2.07(d) to contribute any
amount in excess of the amount by which the net proceeds received by such Indemnifying Party from the Sale of Registrable Securities in the offering to which the Losses of the Indemnitees relate (before deducting expenses, if any) exceeds the amount
of any damages which such Indemnifying Party has otherwise been required to pay by reason of such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this
Section 2.07(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 2.07(d). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by an Indemnitee hereunder shall
be deemed to include, for purposes of this Section 2.07(d), any legal or other expenses reasonably incurred by such Indemnitee in connection with investigating, preparing to defend or defending against or appearing as a third party
witness in respect of, or otherwise incurred in connection with, any such loss, claim, damage, expense, liability, action, investigation or proceeding. If indemnification is available under this Section 2.07, the Indemnifying Parties
shall indemnify each Indemnitee to the full extent provided in Section 2.07(a) and Section 2.07(b) without regard to the relative fault of said Indemnifying Parties or Indemnitee. Any Holders’ obligations to contribute
pursuant to this Section 2.07(d) are several and not joint. 

  
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 Section 2.08 Reporting Requirements; Rule 144. 

Until the earlier of (a) the expiration or termination of this Agreement in accordance with its terms and (b) the date upon which the Baxter Group
ceases to own any Registrable Securities, Baxalta shall use its commercially reasonable efforts to be and remain in compliance with the periodic filing requirements imposed under the SEC’s rules and regulations, including the Exchange Act, and
any other applicable laws or rules, and thereafter shall timely file such information, documents and reports as the SEC may require or prescribe under Sections 13, 14 and 15(d), as applicable, of the Exchange Act so that Baxalta will qualify for
registration on Form S-3 and to enable the Baxter Group to Sell Registrable Securities without registration under the Securities Act consistent with the exemptions from registration under the Securities Act provided by (i) Rule 144 or
Regulation S under the Securities Act, as amended from time to time, or (ii) any similar SEC rule or regulation then in effect. From and after the date hereof through the earlier of the expiration or termination of this Agreement in accordance
with its terms and the date upon which the Baxter Group ceases to own any Registrable Securities, Baxalta shall forthwith upon request furnish any Holder (x) a written statement by Baxalta as to whether it has complied with such requirements
and, if not, the specifics thereof, (y) a copy of the most recent annual or quarterly report of Baxalta and (z) such other reports and documents filed by Baxalta with the SEC as such Holder may reasonably request in availing itself of an
exemption for the offering and Sale of Registrable Securities without registration under the Securities Act. 
 Section 2.09 Registration Rights
Covenant. 
 Baxalta covenants that it will not, and it will cause the members of the Baxalta Group not to, grant any right of registration under the
Securities Act relating to any of its shares of Common Stock or other securities to any Person other than pursuant to this Agreement, unless the rights so granted to another Person do not limit or restrict the right of the Holder(s) hereunder. 

ARTICLE III 
 Voting
Restrictions 
 Section 3.01 Voting of Baxalta Common Stock. 

(a) From the date of this Agreement and until the date that the Baxter Group ceases to own any Retained Shares, Baxter shall, and shall cause
each member of the Baxter Group to (in each case, to the extent that they own any Retained Shares), be present, in person or by proxy, at each and every Baxalta shareholder meeting, and otherwise to cause all Retained Shares owned by them to be
counted as present for purposes of establishing a quorum at any such meeting, and to vote or consent on any matter (including waivers of contractual or statutory rights), or cause to be voted or consented on any such matter, all such Retained Shares
in proportion to the votes cast by the other holders of Common Stock on such matter. 
 (b) From the date of this Agreement and until the
date that the Baxter Group ceases to own any Retained Shares, Baxter hereby grants, and shall cause each member of the Baxter Group (in each case, to the extent that they own any Retained Shares) to grant, an irrevocable proxy, which shall be deemed
coupled with an interest sufficient in law to support an irrevocable proxy to Baxalta or its designees, to vote, with respect to any matter (including waivers of 

  
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contractual or statutory rights), all Retained Shares owned by them, in proportion to the votes cast by the other holders of Common Stock on such matter; provided that (i) such proxy
shall automatically be revoked as to a particular Retained Share upon any Sale of such Retained Share from a member of the Baxter Group to a Person other than a member of the Baxter Group and (ii) nothing in this Section 3.01(b)
shall limit or prohibit any such Sale. 
 (c) Baxter acknowledges and agrees (on behalf of itself and each member of the Baxter Group) that
Baxalta will be irreparably damaged in the event any of the provisions of this Article III are not performed by Baxter in accordance with their terms or are otherwise breached. Accordingly, it is agreed that Baxalta shall be entitled to an
injunction to prevent breaches of this Article III and to specific enforcement of the provisions of this Article III in any action instituted in any court of the United States or any state having subject matter jurisdiction over such
action. 
 ARTICLE IV 

Miscellaneous 
 Section 4.01
Term. 
 This Agreement shall terminate upon the earlier of (a) five years after the Distribution Date, (b) the time at which all
Registrable Securities are held by Persons other than Holders and (c) the time at which all Registrable Securities have been Sold in accordance with one or more Registration Statements; provided, that the provisions of
Section 2.06 and Section 2.07 and this Article IV shall survive any such termination. 
 Section 4.02 Counterparts;
Entire Agreement; Corporate Power. 
 (a) This Agreement may be executed in one or more counterparts, all of which 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 each other party. 

(b) This Agreement and the exhibit hereto contain the entire agreement between the parties with respect to the subject matter hereof,
supersedes all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties with respect to such subject
matter other than those set forth or referred to herein. 
 (c) Baxter represents on behalf of itself and each other member of the Baxter
Group, and Baxalta represents on behalf of itself and each other member of the Baxalta Group, as follows: (i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in
order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and (ii) this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in
accordance with the terms hereof. 
 (d) Each party hereto acknowledges that it and each other party hereto may execute this Agreement by
facsimile, stamp or mechanical signature. Each party hereto expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as 

  
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if it were a manual signature, agrees that it shall not assert that any such signature is not adequate to bind such party to the same extent as if it were signed manually and agrees that at the
reasonable request of any other party hereto at any time it shall as promptly as reasonably practicable cause this Agreement to be manually executed (any such execution to be as of the date of the initial date thereof). 

Section 4.03 Disputes. 
 (a) Any
dispute, controversy or claim arising out of or relating to this Agreement, including the validity, interpretation, breach or termination hereof (a “Dispute”), shall be resolved in accordance with the procedures set forth in Article
VII of the Separation and Distribution Agreement, which shall be the sole and exclusive procedures for the resolution of any such Dispute unless otherwise specified in this Agreement or in Article VII of the Separation and Distribution Agreement;
provided that the initial discussions and negotiations with respect to any such Dispute shall occur at the Transition Committee (as defined in the Separation and Distribution Agreement) without the requirement for the preceding steps
described in Article VII of the Separation and Distribution Agreement. 
 (b) This Agreement (and any claims or disputes arising out of or
related hereto or to the transactions contemplated hereby or to the inducement of any party to enter herein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed
by and construed and interpreted in accordance with the laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware, including all matters of validity, construction, effect, enforceability, performance and
remedies. 
 (c) THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO TRIAL BY JURY. 

Section 4.04 Amendment. 
 No provisions of this
Agreement shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of Baxalta, if such waiver, amendment, supplement
or modification is sought to be enforced against Baxalta, or the Holders of a majority of the Registrable Securities, if such waiver, amendment, supplement or modification is sought to be enforced against a Holder. 

Section 4.05 Waiver of Default. 
 Waiver by any party
of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of such party. No failure or delay by any party in
exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

  
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 Section 4.06 Successors, Assigns and Transferees. 

(a) This Agreement and all provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Baxalta may assign this Agreement to any member of the Baxalta Group or at any time in connection with a sale or acquisition of Baxalta, whether by merger, consolidation, sale of all or substantially all of
Baxalta’s assets, or similar transaction, without the consent of the Holders; provided, that the successor or acquiring Person agrees in writing to assume all of Baxalta’s rights and obligations under this Agreement. Baxter may
assign this Agreement to any member of the Baxter Group or at any time in connection with a sale or acquisition of Baxter, whether by merger, consolidation, sale of all or substantially all of Baxter’s assets, or similar transaction, without
the consent of Baxalta. 
 (b) In connection with the Sale of Registrable Securities, Baxter may assign its Registration-related rights and
obligations under this Agreement relating to such Registrable Securities to the following transferees in such Sale: (i) a member of the Baxter Group to which Registrable Securities are Sold, (ii) one or more Participating Banks to which
Registrable Securities are Sold, (iii) the Baxter International Inc. and Subsidiaries Pension Plan or any other defined benefit plan of which Baxter is the sponsor to which Registrable Securities are Sold, (iv) any other transferee to
which Registrable Securities are Sold, if Baxalta provides prior written consent to the transfer of such Registration-related rights and obligations along with the Sale of Registrable Securities or (v) any other transferee to which Registrable
Securities are Sold, unless such Sale consists of Registrable Securities representing less than 1% of Baxalta’s then-issued and outstanding securities of the same class as the Registrable Securities and
such Registrable Securities are eligible for Sale pursuant to an exemption from the registration and prospectus delivery requirements of the Securities Act under Section 4(a) thereof (including transactions pursuant to Rule 144);
provided, that in the case of clauses (i), (ii), (iii), (iv) or (v), (x) Baxalta is given written notice prior to or at the time of such Sale stating the name and address of the transferee and identifying the securities with respect
to which the Registration-related rights and obligations are being Sold and (y) the transferee executes a counterpart in the form attached hereto as Exhibit A and delivers the same to Baxalta (any such transferee in such Sale, a
“Transferee”). In connection with the Sale of Registrable Securities, a Transferee or Subsequent Transferee (as defined below) may assign its Registration-related rights and obligations under this Agreement relating to such
Registrable Securities to the following subsequent transferees: (A) an Affiliate of such Transferee to which Registrable Securities are Sold, (B) any subsequent transferee to which Registrable Securities are Sold, if Baxalta provides prior
written consent to the transfer of such Registration-related rights and obligations along with the Sale of Registrable Securities or (C) any other subsequent transferee to which Registrable Securities are Sold, unless such Sale consists of
Registrable Securities representing less than 1% of Baxalta’s then-issued and outstanding securities of the same class as the Registrable Securities and such Registrable Securities are eligible for Sale pursuant to an exemption from the
registration and prospectus delivery requirements of the Securities Act under Section 4(a) thereof (including transactions pursuant to Rule 144); provided, that in the case of clauses (A), (B) or (C), (x) Baxalta is given
written notice prior to or at the time of such Sale stating the name and address of the subsequent transferee and identifying the securities with respect to which the Registration-related rights and obligations are being assigned and (y) the
subsequent transferee executes a counterpart in the form attached hereto as Exhibit A and delivers the same to Baxalta (any such subsequent transferee, a “Subsequent Transferee”). 

  
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 Section 4.07 Further Assurances. 

In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto shall use its commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable on its part under applicable laws, regulations and agreements, to consummate and make effective the transactions
contemplated by this Agreement. 
 Section 4.08 Performance. 

Baxter shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be
performed by any member of the Baxter Group. Baxalta shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement to be performed by any member of the Baxalta Group. Each
party (including its permitted successors and assigns) further agrees that it shall (a) give timely notice of the terms, conditions and continuing obligations contained in this Section 4.08 to all of the other members of its Group
and (b) cause all of the other members of its Group not to take, or omit to take, any action which action or omission would violate or cause such party to violate this Agreement. 

Section 4.09 Notices. 
 All notices, requests,
claims, demands or other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by e-mail (followed
by delivery of an original via overnight courier service) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified
in such communication): 
 If to Baxter, to: 

Baxter International Inc. 
 One
Baxter Parkway 
 Deerfield, Illinois 60015 

Attention: General Counsel 

E-mail: general_counsel@baxter.com 
 If to
Baxalta, to: 
 Baxalta Incorporated 

One Baxter Parkway 
 Deerfield,
Illinois 60015 
 Attention: General Counsel 

E-mail: general_counsel@baxter.com 
 Any party
may, by notice to the other party, change the address and contact person to which any such notices are to be given. 

  
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 Section 4.10 Severability. 

If any provision of this Agreement or the application hereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the
parties. 
 Section 4.11 No Reliance on Other Party. 

The parties hereto represent to each other that this Agreement is entered into with full consideration of any and all rights which the parties hereto may have.
The parties hereto have relied upon their own knowledge and judgment and have conducted such investigations they and their in-house counsel have deemed appropriate regarding this Agreement and their rights in connection with this Agreement. The
parties hereto are not relying upon any representations or statements made by any other party, or any such other party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are
expressly set forth or incorporated in this Agreement. The parties hereto are not relying upon a legal duty, if one exists, on the part of any other party (or any such other party’s employees, agents, representatives or attorneys) to disclose
any information in connection with the execution of this Agreement or its preparation, it being expressly understood that no party hereto shall ever assert any failure to disclose information on the part of any other party as a ground for
challenging this Agreement or any provision hereof. 
 Section 4.12 Registrations, Exchanges. etc. 

Notwithstanding anything to the contrary that may be contained in this Agreement, the provisions of this Agreement shall apply to the full extent set forth
herein with respect to (a) any shares of Common Stock, now or hereafter authorized to be issued, (b) any and all securities of Baxalta into which the shares of Common Stock are converted, exchanged or substituted in any recapitalization or
other capital reorganization by Baxalta and (c) any and all securities of any kind whatsoever of Baxalta or any successor or permitted assign of Baxalta (whether by merger, consolidation, sale of assets or otherwise) which may be issued on or
after the date hereof in respect of, in conversion of, in exchange for or in substitution of, the shares of Common Stock, and shall be appropriately adjusted for any stock dividends, or other distributions, stock splits or reverse stock splits,
combinations, recapitalizations, mergers, consolidations, exchange offers or other reorganizations occurring after the date hereof. 
 Section 4.13
Mutual Drafting. 
 This Agreement shall be deemed to be the joint work product of the parties, and any rule of construction that a document shall be
interpreted or construed against a drafter of such document shall not be applicable. 
 [The remainder of this page has been left blank
intentionally.] 

  
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 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
authorized representatives as of the date first above written. 
  

			
	BAXTER INTERNATIONAL INC.
		
	By:		  

	Name:		
	Title:		
	
	BAXALTA INCORPORATED
		
	By:		  

	Name:		
	Title:

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