Document:

EX-4.1

 Exhibit 4.1 

BAXALTA INCORPORATED AND SUBSIDIARIES 

INCENTIVE INVESTMENT PLAN 

(Effective as of May 1, 2015) 

 BAXALTA INCORPORATED AND SUBSIDIARIES 

INCENTIVE INVESTMENT PLAN 

TABLE OF CONTENTS 
  

							
	Article I INTRODUCTION		 	1	  
	 1.1.
		Baxalta Incorporated Spin-Off		 	1	  
	 1.2.
		The Plan		 	1	  
	 1.3.
		Supplements and Appendices		 	1	  
		
	Article II DEFINITIONS		 	2	  
	 2.1
		“Accounting Date”		 	2	  
	 2.2
		“Accounts” or “Account Balances”		 	2	  
	 2.3
		“Beneficiary” or “Beneficiaries”		 	2	  
	 2.4
		“Benefit Committee”		 	2	  
	 2.5
		“Board of Directors”		 	2	  
	 2.6
		“Code”		 	2	  
	 2.7
		“Commonly Controlled Entity”		 	2	  
	 2.8
		“Company Common Stock”		 	2	  
	 2.9
		“Compensation”		 	3	  
	 2.10
		“Disability”		 	6	  
	 2.11
		“Effective Date”		 	6	  
	 2.12
		“Eligible Employee”		 	6	  
	 2.13
		“Employee”		 	7	  
	 2.14
		“Employer”		 	8	  
	 2.15
		“Entry Date”		 	8	  
	 2.16
		“ERISA”		 	8	  
	 2.17
		“Excluded Division”		 	8	  
	 2.18
		“Forfeiture”		 	8	  
	 2.19
		“Highly Compensated Employee”		 	8	  
	 2.20
		“Hour of Service”		 	8	  
	 2.21
		“Investment Manager”		 	10	  
	 2.22
		“Maternity/Paternity Absence”		 	10	  
	 2.23
		“Non-Participating Employer”		 	10	  
	 2.24
		“Normal Retirement Date”		 	10	  
	 2.25
		“One-Year Break In Service”		 	10	  
	 2.26
		“Participant”		 	11	  
	 2.27
		“Plan”		 	11	  
	 2.28
		“Plan Year”		 	11	  
	 2.29
		“Predecessor Employer”		 	11	  
	 2.30
		“Prior Plan”		 	11	  
	 2.31
		“Spin-Off”		 	11	  
	 2.32
		“Spin-Off Date”		 	11	  
	 2.33
		“Spouse”		 	11	  
	 2.34
		“Termination of Employment”		 	11	  
	 2.35
		“Trust”		 	12	  

 TABLE OF CONTENTS (cont’d) 

 

							
	 2.36
		“Trust Agreement”		 	12	  
	 2.37
		“Trust Fund”		 	12	  
	 2.38
		“Trustee”		 	12	  
	 2.39
		“Year of Eligibility Service” or “Eligibility Service”		 	12	  
	 2.40
		“Year of Matching Participation”		 	12	  
	 2.41
		“Year of Vesting Service” or “Vesting Service”		 	12	  
		
	Article III PARTICIPATION		 	13	  
	 3.1.
		Participation		 	13	  
	 3.2.
		Cessation of Participation		 	14	  
	 3.3.
		Reemployment		 	14	  
	 3.4.
		Transfer of Employment		 	14	  
		
	Article IV CONTRIBUTIONS		 	14	  
	 4.1.
		Contributions		 	14	  
	 4.2.
		Certification of Employer Contributions		 	15	  
	 4.3.
		Contribution Limitations		 	15	  
	 4.4.
		Annual Addition		 	16	  
		
	Article V PARTICIPANT CONTRIBUTIONS/CONTRIBUTION LIMITATIONS		 	16	  
	 5.1.
		Pay Deferral Contributions		 	16	  
	 5.2.
		Change in Rate of Pay Deferral Contributions/Reemployment		 	18	  
	 5.3.
		Annual Limitations on Pay Deferral Contributions		 	18	  
	 5.4.
		Safe Harbor Nondiscrimination Test		 	19	  
	 5.5.
		Reemployment of Veterans		 	19	  
	 5.6.
		Catch-Up Contributions		 	20	  
	 5.7.
		Rollover Contributions		 	21	  
	 5.8.
		Employer Non-Matching Contributions		 	21	  
		
	Article VI INVESTMENTS AND PLAN ACCOUNTING		 	21	  
	 6.1.
		Participant Account Balance		 	21	  
	 6.2.
		Investment of Accounts		 	23	  
	 6.3.
		Investment Funds		 	23	  
	 6.4.
		Investment Direction		 	24	  
	 6.5.
		Investment Elections		 	24	  
	 6.6.
		Information Provided		 	28	  
	 6.7.
		Investment Fund Accounting		 	28	  
	 6.8.
		Expenses		 	30	  
	 6.9.
		Accounting Dates		 	30	  
	 6.10.
		Crediting Employer Contributions		 	30	  
	 6.11.
		Crediting Pay Deferral Contributions		 	30	  
	 6.12.
		Adjustment of Account Balances		 	30	  
		
	Article VII DISTRIBUTION OF ACCOUNT BALANCES		 	31	  
	 7.1.
		Retirement, Disability or Death		 	31	  
	 7.2.
		Resignation or Dismissal		 	31	  

  
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 TABLE OF CONTENTS (cont’d) 

 

							
	 7.3.
		Special Vesting Rules Upon Sale of Business		 	32	  
	 7.4.
		Forfeitures		 	32	  
	 7.5.
		Benefit Commencement Date		 	33	  
	 7.6.
		Methods of Benefit Payment		 	36	  
	 7.7.
		Direct Rollovers		 	37	  
	 7.8.
		Maximum Installment Period		 	39	  
	 7.9.
		Minimum Rate of Installment Payments		 	40	  
	 7.10.
		Surviving Spouse or Designated Beneficiaries		 	41	  
	 7.11.
		Missing Beneficiaries of Deceased or Missing Participants		 	41	  
	 7.12.
		Incapacitated Participants or Beneficiaries		 	42	  
	 7.13.
		Reemployment after Distributions Commence		 	42	  
	 7.14.
		Erroneous Payments		 	42	  
	 7.15.
		Finality of Distributions		 	43	  
		
	Article VIII WITHDRAWALS AND LOANS		 	43	  
	 8.1.
		Withdrawals		 	43	  
	 8.2.
		Loans to Participants		 	46	  
	 8.3.
		No Representation Regarding Tax Effect of Withdrawals or Loans		 	49	  
		
	Article IX BENEFIT COMMITTEE		 	50	  
	 9.1.
		Membership of Benefit Committee		 	50	  
	 9.2.
		Administrative Powers and Duties		 	50	  
	 9.3.
		Investment Powers and Duties		 	52	  
	 9.4.
		Conflicts of Interest		 	53	  
	 9.5.
		Compensation; Reimbursement		 	53	  
	 9.6.
		Standard of Care		 	53	  
	 9.7.
		Action by the Benefit Committee		 	54	  
	 9.8.
		Resignation or Removal of Committee Member		 	54	  
	 9.9.
		Uniform Application of Rules by Benefit Committee		 	54	  
	 9.10.
		Claims Procedure		 	54	  
	 9.11.
		Investments in Company Common Stock		 	55	  
		
	Article X AMENDMENT, TERMINATION OR PLAN MERGER		 	56	  
	 10.1.
		Amendments		 	56	  
	 10.2.
		Plan Termination		 	58	  
	 10.3.
		Continuation by a Successor or Purchaser		 	58	  
	 10.4.
		Plan Merger or Consolidation		 	58	  
	 10.5.
		Notice to Participants of Amendments, Terminations or Plan Mergers		 	58	  
	 10.6.
		Vesting and Distribution on Termination		 	58	  
		
	Article XI GENERAL PROVISIONS		 	59	  
	 11.1.
		No Employment Guarantee		 	59	  
	 11.2.
		Nonalienation of Plan Benefits		 	59	  
	 11.3.
		Action by an Employer		 	59	  
	 11.4.
		Applicable Law		 	60	  
	 11.5.
		Participant Litigation		 	60	  

  
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 TABLE OF CONTENTS (cont’d) 

 

							
	 11.6.
		Participant and Beneficiary Duties		 	60	  
	 11.7.
		Individual Account Statements		 	60	  
	 11.8.
		Gender and Number		 	60	  
	 11.9.
		Adequacy of Evidence		 	60	  
	 11.10.
		Notice to Participants and Beneficiaries		 	60	  
	 11.11.
		Waiver of Notice		 	60	  
	 11.12.
		Successors		 	61	  
	 11.13.
		Severability		 	61	  
	 11.14.
		Nonreversion		 	61	  
	 11.15.
		Qualification of Plan and Trust		 	61	  
	 11.16.
		Certain Indemnification		 	61	  
	 11.17.
		Voice Response Unit Deemed Written Election or Consent		 	62	  
	 11.18.
		Source of Benefits		 	62	  
	 11.19.
		Reduction for Overpayment		 	62	  
	 11.20.
		No Duplication of Benefits		 	62	  
		
	Article XII SPECIAL TOP-HEAVY RULES		 	62	  
	 12.1.
		Application		 	62	  
	 12.2.
		Special Terms		 	62	  
	 12.3.
		Vested Percentage		 	65	  
	 12.4.
		Minimum Contribution		 	66	  
	 12.5.
		Termination of Top-Heavy Status		 	66	  
		
	Article XIII ADOPTION AND WITHDRAWAL FROM PLAN		 	66	  
	 13.1.
		Procedure for Adoption		 	66	  
	 13.2.
		Procedure for Withdrawal		 	67	  
	 13.3.
		Adoption of Plan by Unrelated Employers		 	67	  
		
	APPENDIX NO. 1		 	69	  
		
	APPENDIX NO. 2		 	70	  
		
	SUPPLEMENT NO. 1		 	71	  

  
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 BAXALTA INCORPORATED AND SUBSIDIARIES 

INCENTIVE INVESTMENT PLAN 

ARTICLE I 

INTRODUCTION 
 1.1.
Baxalta Incorporated Spin-Off. In connection with Baxter International Inc.’s (“Baxter”) spin-off of its biopharmaceutical business, Baxter underwent an internal reorganization and incorporated the Baxalta Incorporated (the
“Company”) as a subsidiary of Baxter. Baxter anticipates that the Company shall be spun-off on or around July 1, 2015 (the “Spin-Off”) pursuant to a Separation and Distribution Agreement (the “Agreement”).
Effective as of the Spin-Off (the “Spin-Off Date”), the Company shall be an independent, publicly traded corporation which owns and operates the biopharmaceutical business previously owned and operated by Baxter. 

1.2. The Plan. As described in the Agreement and the Employee Matters Agreement, the Company shall establish the Baxalta Incorporated
and Subsidiaries Incentive Investment Plan (the “Plan”), a qualified defined contribution plan that generally mirrors the Baxter International Inc. and Subsidiaries Incentive Investment Plan, as amended and restated effective as of
January 1, 2015 (the “Prior Plan”), to provide for the benefits of the following Employees who were participants in the Prior Plan immediately prior to the date such Employee transfers to employment with the Company from Baxter: 

 

	 	(a)	An Employee (including an Employee who is on an approved leave of absence from Baxter) who transfers to employment with the Company from Baxter on or before the Spin-Off Date; or 

 

	 	(b)	An Employee who transfers to employment with the Company from Baxter in accordance with the Transition Services Agreement. 

As described in the Agreement and the Employee Matters Agreement, the account balances under the Prior Plan of an Employee who transfers to
employment with the Company as described in this Section (a “Baxalta Participant”), shall be transferred to the Plan in accordance with Code Section 414(l) (and the regulations promulgated thereunder) and ERISA Section 208, as
applicable. The transfer of assets shall include outstanding loan balances. 
 As a result of the Spin-Off, a Participant shall cease to
have any benefit under the Prior Plan following his or her transfer of employment to the Company, and shall instead participate under the Plan. For the avoidance of doubt, an Employee who transfers to employment with the Company as described in this
Section and is subsequently rehired by Baxter is not eligible to participate in the Prior Plan. 
 1.3. Supplements and Appendices.
Supplements and appendices to the Plan may be adopted, attached to and incorporated in the Plan at any time. The provisions of any such supplements and appendices shall have the same effect that such provisions would have if they were included
within the basic text of the Plan. Supplements and appendices will specify the persons affected and shall supersede the other provisions of the Plan to the extent necessary to eliminate inconsistencies between the Plan provisions and the provisions
of such supplements and appendices. 

 ARTICLE II 

DEFINITIONS 
 The
following terms, whenever used in the following capitalized form, shall have the meaning set forth below unless the context clearly indicates otherwise, or unless modified by a supplement or appendix attached hereto: 

2.1 “Accounting Date” means each day of the Plan Year that the New York Stock Exchange is open for trading. 

2.2 “Accounts” or “Account Balances” refer to all of the accounts described in Section 6.1 which are
maintained on behalf of a Participant. 
 2.3 “Beneficiary” or “Beneficiaries” means the persons, trusts
or estates validly designated by a Participant or the Plan pursuant to Section 7.10 to receive any benefits payable on behalf of such Participant after his death. 

2.4 “Benefit Committee” means the committee which is responsible for administering the Plan, including directing the
investment of the Trust Fund, in accordance with Article IX. The Benefit Committee may, from time to time, delegate its powers, authorities and duties to any person(s), entity(ies) or another committee, and references to the Benefit Committee shall
include its delegate. Prior to the Spin-Off Date, the Benefit Committee consisted of the administrative committee of the Predecessor Employer under the Prior Plan with general responsibility for administering the Plan and the investment committee of
the Predecessor Employer under the Prior Plan with responsibility for directing the investment of the Trust Fund. 
 2.5 “Board of
Directors” means the Board of Directors of the Company. 
 2.6 “Code” means the Internal Revenue Code of 1986, as
amended from time to time. 
 2.7 “Commonly Controlled Entity” means any corporation, trade or business that, together with
the Company, is a member of a controlled group of corporations as defined in Code Section 414(b), is under common control as defined in Code Section 414(c), is a member of an affiliated service group as defined in Code Section 414(m)
or is required to be aggregated pursuant to Code Section 414(o); provided, however, that solely for purposes of Section 4.3, the standard of control under Code Sections 414(b) and 414(c) shall be deemed to be “more than 50%”
rather than “at least 80%.” 
 2.8 “Company Common Stock” means common stock of Baxalta Incorporated and which
satisfies the definition of employer securities in Code Sections 409(l) and 4975(e)(8). 

  
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 2.9 “Compensation” means the amount determined with respect to a Participant in
accordance with the following alternative definitions: 
  

	 	(a)	Compensation Generally. Except as required by subsections (b), (c) or (d) below, for each Participant, “Compensation” means the amounts paid by the Employers during the Plan Year to such
Participant for services as an Employee which is included in such Compensation under the rules set forth in subparagraph (a)(i) below other than such Compensation which is excluded under the rules set forth in subparagraph (a)(ii) below.

  

	 	(i)	Included Pay. For purposes of this Section 2.9(a), a Participant’s Compensation shall include: 

  

	 	(A)	All earnings as an employee which are required to be reported as taxable income on Form W-2, including: 

  

	 	1.	bonuses paid pursuant to the Management Incentive Compensation Plan bonus or any annual bonus plan adopted in replacement thereof; payments in lieu of salary increases; bonuses paid to sales representatives if included
in the compensation plan; and other bonuses under bonus plans specifically designated by the Benefit Committee as constituting Compensation hereunder, other than bonuses described in Section 2.9(a)(ii)(C)7; 	 

  

	 	2.	call-in pay; 

  

	 	3.	commission pay; 

  

	 	4.	double time pay; 

  

	 	5.	draws toward commissions; 

  

	 	6.	funeral pay; 

  

	 	7.	holiday pay; 

  

	 	8.	jury duty pay; 

  

	 	9.	lead pay; 

  

	 	10.	mileage pay for long haul truckers; 

  

	 	11.	military pay; 

  

	 	12.	overtime pay; 

  

	 	13.	paid absences; 

  

	 	14.	retroactive pay; 

  

	 	15.	salary or other regular pay; 

  

	 	16.	shift differentials; 

  

	 	17.	sick pay or other short-term disability pay; 

  

	 	18.	straight time pay; and 

  

	 	19.	vacation pay. 

  

	 	(B)	 The amount of any salary reduction or cash or deferred contributions made by such Participant for the calendar year which coincides with the Plan Year
under this Plan and under any other plan maintained by the Employers which satisfies the requirements 

  
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of Code Section 125 (other than flex credits or flex cash) or Code Section 401(k), or a qualified transportation plan under Code Section 132(f). 

 

	 	(ii)	Excluded Pay. For purposes of this subsection (a), a Participant’s Compensation shall exclude: 

  

	 	(A)	Amounts constituting imputed income arising from an Employer’s moving expense reimbursement policies, an Employer’s life insurance plans or an Employer’s other fringe benefit plans; 

 

	 	(B)	Amounts paid to replace benefits not provided under this Plan or any other tax-qualified plan due to the contribution or benefit limitations or the nondiscrimination restrictions of the Code; and 

 

	 	(C)	The following amounts paid, accrued or imputed: 

  

	 	1.	attendance awards; 

  

	 	2.	automobile allowances; 

  

	 	3.	business expense reimbursements; 

  

	 	4.	cash prizes or awards; 

  

	 	5.	Christmas gifts; 

  

	 	6.	contest pay; 

  

	 	7.	deferred compensation, including deferred bonuses; 

  

	 	8.	discretionary awards; 

  

	 	9.	employee referral awards; 

  

	 	10.	executive perquisite allowances; 

  

	 	11.	flex credits; 

  

	 	12.	flex cash; 

  

	 	13.	hiring bonuses; 

  

	 	14.	income from sale of stock; 

  

	 	15.	income from the exercise of stock options; 

  

	 	16.	interest earnings on deferred compensation, including deferred bonuses; 

  

	 	17.	invention fees and awards; 

  

	 	18.	long term disability pay; 

  

	 	19.	mortgage differential payments; 

  

	 	20.	non-cash prizes or awards; 

  

	 	21.	pay for unused sick time; 

  

	 	22.	performance shares; 

  

	 	23.	promotional awards; 

  

	 	24.	relocation expense reimbursements; 

  

	 	25.	restricted stock rights; 

  

	 	26.	retention bonuses; 

  

	 	27.	severance pay; 

  

	 	28.	stock appreciation rights; 

  

	 	29.	tax equalization payments to expatriates; 

  
 - 4 - 

	 	30.	technical achievement awards; 

  

	 	31.	travel allowances; 

  

	 	32.	tuition reimbursements; and 

  

	 	33.	workers’ compensation benefits. 

  

	 	(b)	Compensation of Commissioned Sales Representatives. Except as provided in subsections (c) and (d) below, the definition of Compensation set forth in subsection (a) shall apply with respect to a
Participant who is a commissioned sales representative not reimbursed for expenses, except that only 85% of the amounts included in Compensation shall be recognized. 

 

	 	(c)	Compensation For Discrimination Tests. For purposes of the definition of “Highly Compensated Employee,” the “Compensation” of a Participant means the amounts paid by the Employers during the
Plan Year to such Participant for personal services as an Employee which are required to be reported as taxable income on Form W-2, plus the amount described in subparagraph (a)(i)(B) above without the exclusion of flex credits and flex cash.

  

	 	(d)	Compensation For Contribution and Benefit Limitations. For purposes of Sections 4.3, 4.4, and 12.2(g), “Compensation” of a Plan Participant shall have the same meaning as under subsection
(c) above. For purposes of this subsection (d), the Compensation of a Participant shall include all amounts paid to such Participant by a Commonly Controlled Entity of his Employer which is not itself an Employer hereunder which would
constitute Compensation for purposes of this subsection (d) if such Commonly Controlled Entity were an Employer. 

  

	 	(e)	Maximum Amount of Compensation. The amount of a Participant’s Compensation that may be taken into account for any purpose of the Plan including the alternative definitions of “Compensation”
described in subsections (a), (b), (c) and (d) above and the Top-Heavy provisions of Article XII, shall not exceed $265,000, as adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). 

 

	 	(f)	Differential Pay During Periods of Military Service. Compensation shall include any amount paid to a Participant while serving in the armed forces of the United States representing the difference between the
Participant’s regular Compensation and the amount paid by the armed forces, if such amount would constitute Compensation if paid to an active Employee, and the Participant may make Pay Deferral Contributions, and shall receive Matching and
Non-Matching Contributions, as applicable, with respect to such Compensation. If such Participant subsequently returns to service during the period during which his right of re-employment is protected by federal law, the Contributions to which such
Participant is entitled pursuant to Section 5.6 shall be adjusted, as provided in Code Section 414(u), to take such Contributions into account. 

  

	 	(g)	 Compensation Paid After Termination of Employment. Anything else contained herein to the contrary notwithstanding, Compensation shall not
include any 

  
 - 5 - 

	 	
amount paid to an Employee after the Employee’s termination of employment unless (i) such amount is paid by the later of the end of the year in which employment is terminated or two and
one half months after the date of termination, (ii) such amount would otherwise have been included in the applicable definition of Compensation, and (iii) such amount constitutes either salary, wages (including overtime, shift
differentials and similar amounts), commissions or bonuses that would have been paid prior to termination of employment if the Employee’s employment had not terminated, payment for unused sick, vacation or other leave that the Employee would
have been able to use if employment had continued, or payment of nonqualified deferred compensation that would have been paid at the same time had employment not terminated; provided, however, that this sentence shall not be construed to cause any
amount to be included in Compensation that would not otherwise have been included. 

  

	 	(h)	Compensation from the Predecessor Employer. Compensation for periods of time ending immediately before a Participant was transferred to the Company from the Predecessor Employer shall be determined using the
definition of Compensation in effect under the Prior Plan. 

 In computing the Compensation of a Participant for all Plan purposes,
Compensation paid in currency other than United States dollars shall be converted to United States dollars at the rate of exchange used at that time by his Employer for such purpose. Compensation paid to a Participant before he commences
participation in the Plan, and Compensation paid to a Participant after he ceases to receive credit for Hours of Service under the Plan, will not be recognized under the Plan, except where required by applicable law or where the Plan specifically
indicates to the contrary, including Section 5.8. 
 2.10 “Disability” means a mental or physical condition which
renders a Participant eligible for and in actual receipt of a disability benefit under the federal Social Security Act. 
 2.11
“Effective Date” means May 1, 2015. 
 2.12 “Eligible Employee” means an Employee on the payroll of
an Employer incorporated in the United States whose Compensation constitutes wages from employment within the meaning of Sections 3121(a) and (b) of the Federal Insurance Contribution Act on and after the effective date of the adoption of the
Plan by the Employer, but excluding: 
  

	 	(a)	An Employee who is a member of a group of Employees represented by a collective bargaining representative, with respect to which the Plan has not been extended by a currently effective collective bargaining agreement
between his Employer and the collective bargaining representative of the group of Employees of which he is a member after good faith bargaining on the subject of employee benefits; 

  
 - 6 - 

	 	(b)	An Employee who is employed in an Excluded Division or who is otherwise excluded from all of the groups of Employees to whom the Plan is extended by the Employers; 

 

	 	(c)	A leased employee who is considered an Employee under Section 2.13; 

  

	 	(d)	Any other individual who performs services for an Employer pursuant to an agreement (written or oral) that classifies such individual as an independent contractor or as an employee of another entity, or that otherwise
contains a waiver of participation in this Plan, regardless of such individual’s employment status under common law; and 

  

	 	(e)	An Employee who is a bona fide resident of the Commonwealth of Puerto Rico and is subject to Puerto Rico income tax. 

2.13 “Employee” means any person who is a common law employee of an Employer or a Commonly Controlled Entity of an Employer
and who is in active employment or on an approved leave of absence. Notwithstanding the foregoing, the following rules shall apply in determining a person’s status as an Employee: 

 

	 	(a)	Leased Employees. An individual who is considered a “leased employee” of an Employer shall be considered an Employee, but not an Eligible Employee, for all purposes of the Plan; provided, however, that
such individual shall not be considered an Employee if the leasing organization that employs him covers such individual with a plan providing benefits at least as generous as those described in Code Section 414(n)(5). For purposes of this
Section 2.13(a), the term “leased employee” shall mean any person who pursuant to an agreement between the Employer and any other person has performed services for the Employer (or for the Employer and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are performed under the primary direction and control of the Employer. 

 

	 	(b)	United States Citizenship. Individuals employed by an Employer who generally satisfy the requirements of this Section need not be United States citizens to be Employees; provided, however, that individuals who
are not United States citizens and who are employed at an Employer’s facility in the United States or one of its possessions solely on the understanding that such United States employment is temporary for purposes of training or familiarization
with such facility or with such Employer’s operations or practices shall not be considered to be Eligible Employees. 

  

	 	(c)	 Certain Citizens Employed Abroad. Ordinarily an individual must be employed by an Employer and must be employed at one or more of its
facilities in the United States or possessions of the United States to be considered an Eligible Employee. A United States citizen employed by an Employer at one of its facilities outside of the United States and its possessions may become an
Eligible 

  
 - 7 - 

	 	
Employee if he satisfies the other requirements of this Section and if the applicable requirements of Code Sections 401(a) and 404A and Code Section 406 or 407 are satisfied with respect to
such Employee. 

 2.14 “Employer” means the Company or any Commonly Controlled Entity of the Company on and
after the effective date of its adoption of the Plan in accordance with Section 13.1. “Employer” shall also include any organization that is not a Commonly Controlled Entity of the Company if such organization adopts the Plan in
accordance with Section 13.3. 
 2.15 “Entry Date” means the first day of each calendar month. 

2.16 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. 

2.17 “Excluded Division” means a division or unit of an Employer, the Employees of which are not Eligible Employees. The
Excluded Divisions are listed in Appendix No. 1 to the Plan. 
 2.18 “Forfeiture” means the portion of a
Participant’s Accounts which is forfeited pursuant to Section 7.4. 
 2.19 “Highly Compensated Employee” for a
Plan Year means an Employee who: 
  

	 	(a)	is a 5%-owner (as defined in Code Section 416(i)(1)) of an Employer at any time during the Plan Year or the preceding Plan Year; or 

 

	 	(b)	is paid Compensation in excess of $120,000 (as adjusted for increases in the cost of living in accordance with Code Section 414(q)(1)(B)(ii)) from an Employer for the preceding Plan Year. If the Benefit Committee
so elects for a Plan Year, the Employees taken into account under this subsection (b) shall be limited to those Employees who were members of the top-paid group (as defined in Code Section 414(q)(3)) for the preceding Plan Year. Such an
election shall be included in the written minutes of the Benefit Committee. 

 The Plan is intended to satisfy the qualification requirements
of the Code, including the coverage and nondiscrimination provisions of Code Sections 410(b) and 401(a)(4). If the Benefit Committee determines this Plan would violate such restrictions, then the Benefit Committee is authorized to construe the Plan
in a manner necessary to avoid discrimination in favor of Highly Compensated Employees, if the express provisions of the Plan permit such interpretation. 

2.20 “Hour of Service” means: 
  

	 	(a)	Duty Hours. Each hour for which an Employee is directly or indirectly paid or entitled to payment by an Employer for the performance of duties. 

 

	 	(b)	Non-Duty Hours (Paid). Each hour for which an employee is directly or indirectly paid or entitled to payment by an Employer for reasons (such as vacation, holidays, sickness, short-term disability, medical leave,
family medical leave or jury duty) other than the performance of duties. 

  
 - 8 - 

	 	(c)	Non-Duty Hours (Unpaid). Each hour for which an employee is not paid due to medical leave, family medical leave, approved leave of absence or layoff. Up to a total of 501 Hours of Service shall be credited under
this subsection (c) to an Employee in a Computation Period on account of any single continuous period during which the Employee performs no duties, provided, however, that if such continuous period extends into the next Computation Period, up
to 501 additional Hours of Service shall be credited in such Computation Period, and further provided that no Hours of Service shall be credited under this subsection (c) for any period of time after the Employee’s Termination of
Employment. 

  

	 	(d)	Back-Pay Hours. Each hour for which no credit has been given under subsections (a), (b) or (c) above, but for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to
by an Employer. 

  

	 	(e)	Military Service Hours. To the extent not taken into account under another subsection of this Section, each hour of the normally scheduled work week during a period when the Employee is absent from employment
with an Employer for voluntary or involuntary military service with the armed forces of the United States, provided that either such Employee is receiving Compensation from the Employer representing the differential between the Employee’s
normal Compensation and the amount paid to the Employee by the armed forces, or that the Employee returns to work within 90 days after his discharge date or within such other period of time as may be prescribed by USERRA. 

 

	 	(f)	Worker’s Compensation. No Hours of Service will be credited if payment is made solely to comply with applicable worker’s compensation or disability insurance laws. 

 

	 	(g)	Intermittent Family Leave. An Employee shall be credited with Hours of Service for each week in which she/he is on Intermittent Family Leave. Subsection (c) shall not apply to such Employees.
“Intermittent Family Leave” has the meaning given in the Employer’s policies and procedures manual for an Employee who periodically needs time off for the treatment and care of himself or family members due to conditions which require
ongoing medical treatment but which do not require the Employee to take an extended leave of absence to provide or obtain such care. 

The number of Hours of Service to be credited to Employees shall be calculated based on 45 hours for each week for which the Employee would be
entitled to at least one Hour of Service. In the case of a payment which is made or due on account of a period during which an Employee performs no duties and which results in the crediting of Hours of Service under subsections (b), (c) or
(e) above, or in the case of an award or agreement for back pay made with respect to a period described in subsection (d) above, the number of Hours of Service to be credited shall be in accordance with the provisions of the Rules and
Regulations for Minimum 

  
 - 9 - 

 
Standards for Employee Pension Benefit Plans, U.S. Department of Labor, 29 C.F.R. Section 2530.200b-2(b) which are hereby incorporated by reference. Such rules and regulations shall apply to
subsection (c) above as if absences described in such Section were paid absences. Hours of Service shall be credited to a Plan Year in accordance with the provisions of subsection (c) of the above-cited Department of Labor Regulations.
Hours required to be credited for more than one reason under this Section which pertain to the same period of time shall be credited only once. 

For purposes of determining Years of Eligibility Service under Section 2.39 and Years of Vesting Service under Section 2.41, an
Employee employed by a Non-Participating Employer outside the United States (i.e., not on a U.S. payroll) will be credited with 190 Hours of Service for each month during which he is employed in such capacity. 

2.21 “Investment Manager” means any bank, trust company, firm or institution appointed by the Benefit Committee or another
named fiduciary to invest part or all of the Trust Fund in accordance with Article VI. 
 2.22 “Maternity/Paternity
Absence” means a paid or unpaid absence from employment (including an unapproved leave of absence) with an Employer or a Commonly Controlled Entity of an Employer (a) by reason of the pregnancy of the Employee; (b) by reason of
the birth of a child of the Employee; (c) by reason of the placement of a child under age 18 in connection with the adoption of the child by the Employee (including a trial period prior to adoption); and (d) for purposes of caring for a
child immediately following birth or adoption. The Employee must prove to the satisfaction of the Benefit Committee that the absence meets the above requirements and must supply information concerning the length of the absence unless the Benefit
Committee has access to relevant information without the Employee submitting it. 
 2.23 “Non-Participating Employer” means
a Commonly Controlled Entity which is not participating in the Plan, or which is no longer participating in the Plan by reason of the rescission of a prior designation of participation by the Board of Directors or the board of directors of the
Non-Participating Employer. 
 2.24 “Normal Retirement Date” means the date on which a Participant attains age 65. 

2.25 “One-Year Break In Service” means a Plan Year in which an Employee has fewer than 501 Hours of Service; provided,
however, that an Employee shall not have a One-Year Break In Service for any Plan Year if he is an Employee on the last day of the Plan Year. In addition, an Employee who is absent from work due to a Maternity/Paternity Absence or due to an unpaid
leave of absence for which credit is required pursuant to the Family Medical Leave Act of 1993, as amended, to be given for purposes of avoiding a break in service shall be treated as having completed certain Hours of Service for a limited period.
The Employee will be treated as completing either (i) the number of Hours of Service that normally would have been credited but for the absence (i.e., 45 Hours of Service per week) or (ii) if the normal work hours are unknown,
eight Hours of Service for each normal workday during the leave, to a maximum per Plan Year of 501 Hours of Service. The Hours of Service required to be credited under this subsection must be credited only to prevent a One-Year Break in Service in
the Plan Year in which the absence begins for one of the permitted reasons or, if crediting in such year is not necessary to prevent a One-Year Break in Service in the Plan Year, in the following Plan Year. 

  
 - 10 - 

 2.26 “Participant” means an Eligible Employee who elects to make Pay Deferral
Contributions under the Plan pursuant to Section 5.1, or if earlier, elects to make a Rollover Contribution to the Plan pursuant to Section 5.7. The term “Participant” also includes an Eligible Employee who is allocated any
Employer Non-Matching Contributions pursuant to Section 5.8. 
 2.27 “Plan” means the Baxalta Incorporated and
Subsidiaries Incentive Investment Plan. 
 2.28 “Plan Year” means the twelve consecutive month period beginning
January 1 and ending December 31, except the initial Plan Year shall be the period beginning on the Effective Date and ending on December 31, 2015. 

2.29 “Predecessor Employer” means Baxter International Inc. and its subsidiaries that participated in the Prior Plan. 

2.30 “Prior Plan” means the Baxter International Inc. and Subsidiaries Incentive Investment Plan, as amended. 

2.31 “Spin-Off” means the spin-off of the Predecessor Employer’s biopharmaceutical business to the Company effective as
of the Spin-Off Date. 
 2.32 “Spin-Off Date” means the date on which the Spin-Off occurs, which is anticipated to be on or
around July 1, 2015. 
 2.33 “Spouse” means the person who is married to the Participant at the relevant time. If a
Participant was lawfully married under the laws of the state or other jurisdiction in which the marriage ceremony was performed (including a marriage to a person of the same gender), or if a Participant entered into a common law marriage that was
valid in the state or other jurisdiction in which the Participant resided at the time, the person to whom the Participant was married shall continue to be considered the Participant’s Spouse regardless of the laws of the state or other
jurisdiction in which the Participant currently resides. The Benefit Committee is entitled to rely on a Participant’s representation of his marital status. A Participant whose records indicate that he is married may establish that he was
subsequently divorced or abandoned upon delivery of a court order evidencing the same to the Benefit Committee. 
 2.34 “Termination
of Employment” occurs when a person ceases to be an Employee and ceases to be on the payroll of an Employer or a Commonly Controlled Entity of an Employer. Transfer of employment from an Employer to another Employer or Commonly Controlled
Entity or from one Commonly Controlled Entity to another Commonly Controlled Entity or to an Employer, shall not constitute a Termination of Employment for purposes of the Plan. Notwithstanding the foregoing, an individual who has ceased to be an
Employee but who remains for a limited period of time on the payroll of an Employer or a Commonly Controlled Entity of an Employer solely for administrative purposes shall incur a Termination of Employment on the date he ceases to be an Employee.

  
 - 11 - 

 2.35 “Trust” means the legal entity resulting from the Trust Agreement between
the Company and the Trustee, pursuant to which assets of the Plan are received, held, invested and distributed to or for the benefit of Participants, Spouses and Beneficiaries. 

2.36 “Trust Agreement” means the agreement between the Company and the Trustee establishing the Trust, as amended. 

2.37 “Trust Fund” means all assets held by the Trustee, Investment Managers and insurance institutions in accordance with the
Trust Agreement and the Plan. 
 2.38 “Trustee” means any individual(s) or corporation(s) designated in the Trust Agreement
to execute the duties of the Trustee as set forth in the Trust Agreement. 
 2.39 “Year of Eligibility Service” or
“Eligibility Service” means the period credited to an Employee for purposes of determining the Employee’s eligibility to participate in the Plan. Under the Plan, an Employee is credited with a Year of Eligibility Service if the
Employee is employed with an Employer on the first anniversary of the Employee’s date of hire with an Employer. If the Employee is not employed on such anniversary date, but is subsequently rehired by an Employer, the Employee shall be credited
with a Year of Eligibility Service on the date on which the Employee is rehired. If an Employee is credited with one Year of Eligibility Service, he shall never lose such service regardless of when he returns to employment as an Employee. 

2.40 “Year of Matching Participation” means each 12-month period commencing on the date the Employee becomes a Participant in
the Plan for purposes of receiving Matching Contributions and anniversaries thereof during which the Employee is eligible to participate in the Plan. If, immediately prior to the date on which a predecessor plan is merged into this Plan, an Employee
is a participant in such predecessor Plan, such Employee’s period of participation in such predecessor plan shall be taken into account for purposes of this Section. In addition, if, immediately prior to the Spin-Off Date an Employee was a
participant in the Prior Plan, such Employee’s period of participation in the Prior Plan shall be taken into account for purposes of this Section in accordance with the Prior Plan’s records as provided to the Company by the Predecessor
Employer. To the extent required by USERRA, an Employee’s period of qualified military service (as defined in Code Section 414(u)(5)) shall be considered employment with an Employer for purposes of this Section. 

2.41 “Year of Vesting Service” or “Vesting Service” means the period credited to an Employee for purposes of
determining the extent to which the Employee is vested in his Employer Matching Account under the vesting schedule set forth in Section 7.2. Under the Plan, an Employee is credited with a Year of Vesting Service if the Employee completes at
least 1,000 Hours of Service during any Plan Year. A Year of Vesting Service shall also include all service with the Predecessor Employer that is recognized under the Prior Plan in accordance with the Prior Plan’s records as provided to the
Company by the Predecessor Employer. 
 An Employee’s period of service with a corporation that becomes a Commonly Controlled Entity of
an Employer shall be taken into account for purposes of this Section if the Employee is employed on the date the corporation becomes a Commonly Controlled Entity. 

  
 - 12 - 

 
Credit shall be given at the rate of 45 Hours of Service for each week during such period (but not to exceed 1,000 Hours of Service for any twelve month period). If an Employee is credited with
at least one Year of Vesting Service, he shall never lose such service regardless of when he returns to employment as an Employee. 

ARTICLE III 

PARTICIPATION 
 3.1.
Participation. 
  

	 	(a)	Transferred Employees of the Predecessor Employer. An Eligible Employee (including an Employee who is on an approved leave of absence from the Predecessor Employer) who transfers to employment with the Company
from the Predecessor Employer on or before the Spin-Off Date, or an Employee who transfers to employment with the Company from the Predecessor Employer in accordance with the Transition Services Agreement (referred to collectively as a
“Transferred Employee”) shall become a Participant in the Plan as follows: 

  

	 	(i)	A Transferred Employee shall be eligible to become a Participant for purposes of making Pay Deferral Contributions and receiving Matching Contributions on the first day of the payroll period that includes the later of
(A) the Spin-Off Date or (B) the date that the Employee transfers to employment with the Company from the Predecessor Employer in accordance with the Transition Services Agreement. 

 

	 	(ii)	A Transferred Employee shall become a Participant for purposes of being eligible for Non-Matching Contributions on the later of the Spin-Off Date or the date that the Employee transfers to employment with the Company
from the Predecessor Employer in accordance with the Transition Services Agreement, regardless of whether the Eligible Employee makes or is deemed to make an election to make Pay Deferral Contributions. 

 

	 	(b)	New Hires On or After the Spin-Off Date. An Eligible Employee who is not a Transferred Employee described in subsection (a) above and is hired by the Company on or after the Spin-Off Date shall become a
Participant in the Plan as follows: 

  

	 	(i)	An Eligible Employee shall be eligible to become a Participant for purposes of making Pay Deferral Contributions on the Entry Date coincident with or immediately following the Eligible Employee’s completion of 30
days of employment with the Employer, and shall commence participation in the Plan for this purpose upon making an election to make Pay Deferral Contributions to the Plan (or having been deemed to make an election pursuant to Section 5.1(b)) in
the form and manner prescribed by the Benefit Committee. 

  
 - 13 - 

	 	(ii)	An Eligible Employee who has elected to participate in the Plan pursuant to subparagraph (i) above shall become a Participant in the Plan for purposes of receiving Matching Contributions on the Entry Date
coincident with or immediately following his completion of 30 days of employment with the Employer. 

  

	 	(iii)	An Eligible Employee shall become a Participant for purposes of being eligible for Non-Matching Contributions on the Entry Date coincident with or immediately following the Eligible Employee’s date of employment
with the Employer, regardless of whether the Eligible Employee makes or is deemed to make an election to make Pay Deferral Contributions. 

3.2. Cessation of Participation. A Participant shall cease to be a Participant on the later of the date on which such Participant
ceases to be an Eligible Employee or the date on which the Participant’s Accounts are distributed for his benefit in accordance with the Plan. 

3.3. Reemployment. An Eligible Employee who was a Participant or was eligible to participate prior to his Termination of Employment and
is reemployed as an Eligible Employee shall recommence participation in the Plan following the date of his reemployment. 
 3.4. Transfer
of Employment. In the event an Employee transfers from employment with an Employer to employment with a division or unit of the Company or a Commonly Controlled Entity of the Company that has not adopted the Plan in accordance with
Section 13.1, the Employee’s period of employment with such non-participating division, unit or Commonly Controlled Entity shall be treated as employment with a participating Employer solely for purposes of (i) determining the
Participant’s Years of Vesting Service and (ii) determining when the Participant has incurred a Termination of Employment entitling the Participant to a distribution pursuant to Article VII. 

ARTICLE IV 

CONTRIBUTIONS 
 4.1.
Contributions. Each Plan Year each Employer shall contribute to the Trust the following amounts: 
  

	 	(a)	Pay Deferral Contributions made in accordance with Section 5.1 for such Plan Year by its Employees who are Participants; 

  

	 	(b)	Catch-Up Contributions made in accordance with Section 5.6 for such Plan Year by its Employees who are Participants; 

  

	 	(c)	Make Up Deferrals made in accordance with Section 5.5 during such Plan Year by its Employees who are Participants; 

  

	 	(d)	 Matching Contributions in an amount equal to 100% of the portion of each such Participant’s Pay Deferral Contributions made in accordance with
Section 5.1 for 

  
 - 14 - 

	 	
such Plan Year that does not exceed 3% of such Participant’s annual Compensation, plus 50% of the portion of each such Participant’s Pay Deferral Contributions that exceeds 3% but does
not exceed 4% of such Participant’s annual Compensation; and 

  

	 	(e)	Non-Matching Contributions in an amount equal to 3% of the Compensation of each Participant who is entitled to be allocated Non-Matching Contributions pursuant to Section 5.8. 

The Employer may also make contributions in accordance with Sections 6.12 and 7.4(c). The Employer may make such contributions annually or more frequently.
Such contributions may be credited ratably as of each Accounting Date as provided in Section 6.10 whether or not such contributions are actually made ratably during the Plan Year. Pay Deferral Contributions shall be paid by an Employer to the
Trust no later than the 15th business day of the month following the month in which such contributions would have been payable to each Participant in cash but for the Participant’s election to participate herein (or such other time prescribed
by law). Pay Deferral Contributions may not be made prior to the Participant’s performance of the services to which the Pay Deferral Contributions relate, except for occasional payments prior to the end of the pay period during which the
services are performed in order to accommodate bona fide administrative considerations. Matching Contributions shall be determined and paid by an Employer to the Trust no later than the filing date for the Employer’s federal income tax return
for such Plan Year, including extensions. In no event shall the Employer contributions for any Plan Year exceed the amount deductible by the Employer under Code Section 404 for the taxable year during which such Plan Year ends. 

In calculating the Matching Contribution for the initial Plan Year ending on December 31, 2015, the Employer shall take into account an Eligible
Employee’s Compensation, Pay Deferral Contributions and Matching Contributions credited to such Eligible Employee under the Prior Plan for the period commencing on January 1, 2015 and ending on the date the Eligible Employee became a
Participant in this Plan pursuant to Section 3.1(a). 
 4.2. Certification of Employer Contributions. An Employer may in its
discretion obtain a certification of the correctness of any calculations relating to its contributions under the Plan. A certificate of an independent accountant prepared for this purpose shall conclusively determine such issue. 

4.3. Contribution Limitations. The following contribution limitations under the Code shall be applied with respect to a limitation year
which coincides with the Plan Year. Except to the extent permitted under Section 5.5 of the Plan related to Make Up Contributions, Section 5.6 of the Plan related to Catch-Up Contributions or Section 5.7 of the Plan related to
Rollover Contributions, the Annual Addition (as defined in Section 4.4) allocated to any Participant’s Accounts under the Plan and under any other defined contribution plan maintained by his Employer or a Commonly Controlled Entity of his
Employer (“Related Defined Contribution Plans”), shall not exceed the lesser of $53,000 (or such other applicable amount determined under Code Section 415 or regulations thereunder) or 100% of the Participant’s total Compensation
paid during the Plan Year by his Employer or a Commonly Controlled Entity of his Employer. In applying the preceding limitation, the Annual Addition to a Participant’s 

  
 - 15 - 

 
accounts in any Related Defined Contribution Plans constituting money purchase pension plans and the Annual Addition to a Participant’s accounts under any other Related Defined Contribution
Plans (other than money purchase pension plans) shall be limited before the Annual Addition to his Accounts are limited, to the extent such action is not inconsistent with such other plans. In applying the rules in this Section, the Benefit
Committee shall make appropriate adjustments to reflect the proper application of Code Section 415 with respect to Plan Years of less than 12 months. The limitations of Code Section 415 shall be applied in accordance with the final
Treasury Regulations issued April 5, 2007, which are incorporated herein by this reference. 
 4.4. Annual Addition. The Annual
Addition for each Participant for each Plan Year means the sum of the following: 
  

	 	(a)	Employer contributions credited to the Participant’s Accounts under Section 4.1 and employer contributions credited to the Participant’s accounts under any Related Defined Contribution Plans (as defined
in Section 4.3); 

  

	 	(b)	Remainders and forfeitures credited to the Participant’s Accounts and to his accounts under any Related Defined Contribution Plans; 

 

	 	(c)	After-tax contributions made by the Participant to any Related Defined Contribution Plan; and 

  

	 	(d)	Amounts credited for the benefit of a Key Employee (as defined in Section 12.2(g)) to a separate retiree health or life account maintained by an Employer or a Commonly Controlled Entity of that Employer or
maintained under a Funded Welfare Plan to which the Employer or Commonly Controlled Entity contributes. A “Funded Welfare Plan” means a trust fund established under Code Section 501(c)(9) or any other trust, corporation, arrangement
or employer account which is treated as a welfare benefit fund for purposes of Code Section 419(e). 

 ARTICLE V

 PARTICIPANT CONTRIBUTIONS/CONTRIBUTION LIMITATIONS 

5.1. Pay Deferral Contributions. 
  

	 	(a)	Upon satisfaction of the eligibility requirements of Section 3.1, an Eligible Employee may elect in the manner described below to have his Employer reduce his Compensation via payroll deduction in an amount not
less than 1% nor more than 50% of his Compensation, in whole multiples of 1%. Such salary reductions shall constitute Pay Deferral Contributions and shall be contributed to the Trust by the Employer in accordance with Section 4.1. Subject to
the eligibility requirements of Section 3.1, salary reduction elections shall be made in the manner prescribed by the Benefit Committee. Salary reduction elections will become effective as of the first pay period beginning after such elections
are properly made. Salary reduction elections shall continue in effect (with automatic adjustments for any change in Compensation) until the Participant alters such election in accordance with Section 5.2 or until the Participant ceases to be
an Eligible Employee. 

  
 - 16 - 

 Notwithstanding anything in the Plan to the contrary, the salary reduction election in effect
under the Prior Plan immediately prior to the date that a Participant who is a Transferred Employee described in Section 3.1(a) transfers to employment with the Company from the Predecessor Employer shall be effective under the Plan (in
accordance with the Prior Plan’s records as provided to the Company by the Predecessor Employer) unless and until the Participant makes a new salary reduction election in accordance with this Section. 

 

	 	(b)	An Eligible Employee who does not elect to have any portion of his Compensation contributed as Pay Deferral Contributions shall be deemed to have elected to have his Compensation reduced by the percentage set forth
below, and to have such amount contributed as Pay Deferral Contributions, unless and until he makes a different salary reduction election: 

  

	 	(i)	three percent (3%) for all payroll periods that end prior to the first anniversary of the first day of the first payroll period for which a Pay Deferral Contribution is made pursuant to this Section 5.1(b)(i);

  

	 	(ii)	four percent (4%) for all payroll periods that end after the last payroll period described in subparagraph (i) above and prior to the second anniversary of the first day of the first payroll period for which a
Pay Deferral Contribution is made pursuant to this Section 5.1(b)(ii); 

  

	 	(iii)	five percent (5%) for all payroll periods that end after the last payroll period described in subparagraph (ii) above and prior to the third anniversary of the first day of the first payroll period for which a
Pay Deferral Contribution is made pursuant to this Section 5.1(b)(iii); and 

  

	 	(iv)	six percent (6%) for all payroll periods after the last payroll period described in subparagraph (iii) above. 

Such deemed election shall take effect as soon as administratively feasible following the day person becomes an Eligible Employee, unless the
Eligible Employee either affirmatively elects to participate or waives participation prior to such time. If any Eligible Employee makes any affirmative election with respect to the amount of his Compensation to be withheld (including an election to
have no portion withheld), then the provisions of this Section 5.1(b), including the automatic increases in withholding, shall cease to apply to such Eligible Employee, and the portion of his Compensation withheld, if any, shall thereafter be
governed exclusively by his affirmative election. In the case of an Eligible Employee whose employment is terminated while a deemed election under this Section 5.1(b) is in effect and who is subsequently rehired, the anniversaries of the first
day of the first payroll period for which a Pay Deferral Contribution is made pursuant to this Section 5.1(b) shall be based upon the first such payroll 

  
 - 17 - 

 
period prior to the termination of employment, unless a full Plan Year elapses during which no Payroll Deferral Contributions are made pursuant to this Section 5.1(b), in which case the
provisions of this Section 5.1(b) shall apply to such Eligible Employee as if he had never previously been an Eligible Employee. An Eligible Employee who is terminated while an affirmative election is in effect (including an election not to
contribute) and who is subsequently rehired shall be treated as a newly hired Eligible Employee for purposes of this Section 5.1(b). 

5.2. Change in Rate of Pay Deferral Contributions/Reemployment. Within the limitations of Section 5.1, a Participant may elect to
change the rate of his Pay Deferral Contributions once per calendar month, or at such other intervals as the Benefit Committee may determine. Any such election shall be made in the manner prescribed by the Benefit Committee. Election changes shall
become effective as of the pay period beginning after the election is properly made. A Participant may also elect to suspend or resume making Pay Deferral Contributions in the same manner. As provided in Section 3.3, a former Participant who is
reemployed may recommence Pay Deferral Contributions on the Entry Date immediately following his reemployment. If such former Participant is reemployed within one month of his Termination of Employment, his Pay Deferral Contributions will recommence
in accordance with the most recent elections received from such Participant prior to such Termination of Employment. Otherwise, the Participant must make new elections in accordance with Section 5.1. Notwithstanding the foregoing, any
Participant who elects to contribute a portion of his salary to a non-qualified deferred compensation arrangement maintained by his Employer or a Commonly Controlled Entity of such Employer may not change the rate of his Pay Deferral Contributions,
except that he may do so at the end of each Plan Year, to be effective as of the beginning of the following Plan Year. 
 5.3. Annual
Limitations on Pay Deferral Contributions. A Participant’s annual Pay Deferral Contributions (along with deferrals under any other salary reduction arrangement under Code Section 401(k)) shall be limited to the amount specified in Code
Section 402(g) (which in 2015 is $18,000, and shall be adjusted from time to time by the Internal Revenue Service under Code Section 402(g)(i)). Upon reaching this limit in any Plan Year, a Participant’s Pay Deferral Contributions
shall cease for the remainder of such Plan Year. Alternatively, if a Participant’s Pay Deferral Contributions are not ceased and exceed this limit for any Plan Year, such Pay Deferral Contributions and the attributable earnings shall be
returned to the Participant no later than April 15 following the close of such Plan Year. Except to the extent permitted under Section 5.6 of the Plan related to Catch-Up Contributions or Section 5.5 of the Plan related to Make Up
Deferrals, no participant shall be permitted to have Pay Deferral Contributions under the Plan (along with deferrals under any other salary reduction arrangement under any other qualified plan maintained by the Employer) in excess of the dollar
limitation contained in Code Section 402(g). If any Participant notifies the Plan Administrator not later than March 1 following any Plan Year that his total elective deferrals for the Plan Year, including deferrals under a plan not
maintained by an Employer, exceeded the limits of Code Section 402(g), the Plan Administrator may, notwithstanding any other provision of the Plan, distribute the portion of the excess that the Participant allocates to this Plan, and the
attributable earnings, not later than the following April 15. 

  
 - 18 - 

 5.4. Safe Harbor Nondiscrimination Test. The Plan shall satisfy the nondiscrimination
requirements of Code Sections 401(k) and 401(m) by utilizing the safe harbor for plans that include a qualified automatic contribution arrangement pursuant to Code Section 401(k)(13) and 401(m)(12) by providing Matching Contributions
that satisfy the requirements of Code Section 401(k)(13)(d)(i)(I). To the maximum extent permitted by law, the Plan shall be interpreted and administered in accordance with the requirements for a qualified automatic contribution arrangement.

 5.5. Reemployment of Veterans. The provisions of this Section shall apply in the case of the reemployment by an Employer of
an Eligible Employee, within the period prescribed by USERRA, after the Employee’s completion of a period of qualified military service (as defined in Code Section 414(u)(5)). The provisions of this Section are intended to provide
such Employees with the rights required by USERRA and Code Section 414(u), and shall be interpreted in accordance with such intent. For avoidance of doubt, the Plan (rather than the Prior Plan) will provide any additional benefit
and/or service credit to the extent required by Code Section 414(u) in the case of an Eligible Employee who would have become an employee of the Company had he been employed on the Spin-Off Date. 

 

	 	(a)	Make Up of Pay Deferral Contributions. Such Employee shall have the right to make contributions under the Plan (“Make Up Deferrals”), in addition to any Pay Deferral Contributions which the Employee
elects to have made under the Plan pursuant to Section 5.1. From time to time while employed by an Employer, such Employee may elect to make such Make Up Deferrals during the period beginning on the date of such Employee’s reemployment and
ending on the earlier of: 

  

	 	(i)	the end of the period equal to the product of three and such Employee’s period of qualified military service, and 

  

	 	(ii)	the fifth anniversary of the date of such reemployment. 

 Such Employee shall not be permitted to contribute
Make Up Deferrals to the Plan in excess of the amount which the Employee could have elected to have made under the Plan in the form of Pay Deferral Contributions if the Employee had continued in employment with his Employer during such period of
qualified military service. Such Employee shall be deemed to have earned “Compensation” from his Employer during such period of qualified military service for this purpose in the amount prescribed by Code Sections 414(u)(2)(B) and
414(u)(7). The manner in which an Eligible Employee may elect to contribute Make Up Deferrals pursuant to this subsection (a) shall be prescribed by the Benefit Committee. 

 

	 	(b)	 Make Up of Employer Matching Contributions. An Eligible Employee who makes Make Up Deferrals as described in subsection (a) shall be
entitled to an allocation of matching contributions (“Make Up Matching Contributions”) in an amount equal to the amount of Employer Matching Contributions which would have been allocated to the Account of such Eligible Employee under the
Plan if such Make Up Deferrals had been made in the form of Pay Deferral Contributions during the period of such Employee’s qualified military service (as determined 

  
 - 19 - 

	 	
pursuant to Code Section 414(u)). The amounts necessary to make such allocation of Make Up Matching Contributions shall be derived from Forfeitures not yet applied towards Employer Matching
Contributions for the Plan Year in which the Make Up Deferrals are made, and if such Forfeitures are not sufficient for this purpose, then the Eligible Employee’s Employer shall make a special contribution which shall be utilized solely for
purposes of such allocation. 

  

	 	(c)	Make Up of Employer Non-Matching Contributions. Such Participant shall be entitled to receive an allocation of Employer Non-Matching Contributions (“Make Up Employer Non-Matching Contributions”) in an
amount equal to the amount of Employer Non-Matching Contributions which would have been allocated to the Account of such Eligible Employee under the Plan if he had been employed on the last day of each Plan Year during the period of such
Employee’s qualified military service (as determined pursuant to Code Section 414(u)). Such Make Up Employer Non-Matching Contributions shall be credited to the Participant’s Account not later than ninety (90) days after he
returns to employment. The amounts necessary to make such allocation of Make Up Employer Non-Matching Contributions shall be derived from Forfeitures not yet applied towards Employer Non-Matching Contributions for the Plan Year in which the
Participant is re-employed, and if such Forfeitures are not sufficient for this purpose, then the Participant’s Employer shall make a special contribution which shall be utilized solely for purposes of such allocation. The provisions of this
Section 5.5(c) shall also apply to a Participant who dies or becomes Disabled while performing qualified military service, as if such Participant had returned to employed on the day prior to the day on which he died or incurred such Disability.

 Any contributions made by an Eligible Employee or an Employer pursuant to this Section on account of a period of qualified military service
in a prior Plan Year shall not be subject to the limitations prescribed by Sections 4.3 and 5.3 of the Plan (relating to Code Sections 402(g) and 415) for the Plan Year in which such contributions are made. The Plan shall not be treated as failing
to satisfy the nondiscrimination rules of Section 5.4 of the Plan (relating to Code Sections 401(k)(3) and 401(m)) for any Plan Year solely on account of any make up contributions made by an Eligible Employee or an Employer pursuant to this
Section. 
 5.6. Catch-Up Contributions. All Participants who are eligible to make Pay Deferral Contributions under Section 5.1
of this Plan and who have attained age 50 before the close of the Plan Year will be eligible to make “Catch-Up Contributions” in accordance with, and subject to the limitations of Code Section 414(v). Such Catch-Up
Contributions will not be taken into account for purposes of the provisions of the Plan implementing the required limitations of Code Sections 402(g) and 415. The Plan will not be treated as failing to satisfy the provisions of the
Plan implementing the requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of such Catch-Up Contributions. Catch-Up Contributions shall not be eligible for, nor taken into account
in, allocating Matching Contributions. 

  
 - 20 - 

 5.7. Rollover Contributions. On such forms and in such manner as prescribed by the Benefit
Committee, an Eligible Employee may elect to roll over to the Plan amounts credited to his account in an eligible retirement plan (as defined in Code Section 402(c)(8)(B)), other than a rollover of after-tax contributions; provided
that the Trustee may accept rollover amounts on behalf of a Participant only to the extent such amounts constitute “eligible rollover distributions” (as defined in Code Section 402(c)(4)). A Participant who has ceased to be
an Employee may only elect to roll over to the Plan an amount credited on his behalf to the Baxter International Inc. and Subsidiaries Pension Plan and the Baxalta Incorporated and Subsidiaries Pension Plan and only to the extent such amount
constitutes an “eligible rollover distribution” (as provided above). “Rollover Contributions” will be credited to a Rollover Account maintained for the Participant pursuant to Section 6.1(e) as soon as administratively
practicable after such contributions are remitted to the Benefit Committee. No rollover election will become effective unless the Participant properly selects the Plan investment fund or funds to which the Rollover Contribution is to be allocated
(in the manner described in Section 6.5). A Participant who has previously made an investment election applicable to his Pay Deferral Contributions must apply the same election to his Rollover Contributions and any election to the contrary
shall be disregarded. 
 5.8. Employer Non-Matching Contributions. Each participating Employer shall contribute to the Plan on behalf
of each Eligible Employee who (i) either is employed on the last day of the Plan Year or incurs a Termination of Employment during the Plan Year by reason of death or Disability, and (ii) is not entitled to have such Plan Year, or any
portion thereof, treated as a Year of Service for purposes of determining his Accrued Benefit as defined in either the Baxter International Inc. and Subsidiaries Pension Plan, the Baxter Healthcare Corporation of Puerto Rico Pension Plan, the
Baxalta Incorporated and Subsidiaries Pension Plan (or any successor thereto), an automatic amount equal to three percent (3%) of such Eligible Employee’s Compensation paid by such participating Employer for such Plan Year. Such Employer
Non-Matching Contributions shall be contributed not later than the last day for filing the Company’s income tax return for the year that includes the last day of the Plan Year, and shall be allocated among Eligible Employees in proportion to
the Compensation received by them for the Plan Year. “Employer Non-Matching Contributions” will be credited to an Employer Non-Matching Contribution Account maintained for the Participant pursuant to Section 6.1(f) as soon as
administratively practicable after such contributions are remitted to the Trustee. For the initial Plan Year ending on December 31, 2015, an Eligible Employee’s Compensation for such Plan Year shall include Compensation paid by a
participating employer and credited to the Eligible Employee under the Prior Plan for the period commencing on January 1, 2015 and ending on the date the Eligible Employee became a Participant in this Plan pursuant to Section 3.1(a). 

ARTICLE VI 

INVESTMENTS AND PLAN ACCOUNTING 

6.1. Participant Account Balance. The Benefit Committee shall establish and maintain the following separate accounts with respect to
Participants: 
  

	 	(a)	 Before-Tax Account. A “Before-Tax Account” shall be maintained for each Participant. This account shall represent the amount of such
Participant’s (i) Pay 

  
 - 21 - 

	 	
Deferral Contributions, Catch-Up Contributions and Make Up Deferrals under the Plan and (ii) pay deferral contributions, catch-up contributions and make up deferrals transferred to the Plan
from the Prior Plan. This account shall also reflect the expenses, distributions, earnings and losses attributable to such account. 

  

	 	(b)	Employer Matching Account. An “Employer Matching Account” shall be maintained for each Participant. This account shall represent (i) the portion of the Employer Matching Contributions allocated to
a Participant under the Plan and (ii) any employer matching contributions transferred to the Plan from the Prior Plan. This account shall also reflect the expenses, distributions, earnings and losses attributable to such account.

  

	 	(c)	Profit Sharing Account. A “Profit Sharing Account” shall be maintained for each Participant on whose behalf amounts are transferred to the Plan from the Prior Plan which were attributable to transfers
to the Prior Plan from a profit sharing account maintained under a predecessor plan listed on Appendix No. 2. This Profit Sharing Account shall also reflect the expenses, distributions, earnings and losses attributable to such account.

  

	 	(d)	After-Tax Account. An “After-Tax Account” shall be maintained for each Participant on whose behalf amounts are transferred to the Plan from the Prior Plan which were attributable to transfers to the
Prior Plan from an after-tax account maintained under a predecessor plan listed on Appendix No. 2. This After-Tax Account shall also reflect the expenses, distributions, earnings and losses attributable to such account. To the extent
applicable, separate subaccounts shall be established to account for any after-tax contributions made under a predecessor plan prior to 1987, and after-tax contributions made under a predecessor plan after 1986. 

 

	 	(e)	Rollover Account. A “Rollover Account” shall be maintained for each Participant to which are credited (i) his or her Rollover Contributions and (ii) any amounts attributable to rollover
contributions transferred to the Plan from the Prior Plan. This account shall also reflect the expenses, distributions, earnings and losses attributable to such account. 

 

	 	(f)	Employer Non-Matching Contribution Account. An “Employer Non-Matching Contribution Account” shall be maintained for (i) each Participant who is allocated any share of the Employer Non-Matching
Contributions made pursuant to Section 5.8 and (ii) any employer non-matching contributions that were allocated on behalf of a Participant under the Prior Plan or another qualified plan and are transferred to the Plan from the Prior Plan.
This account shall also reflect the expenses, distributions, earnings and losses attributable to such account. 

  

	 	(g)	 Roth Rollover Account. A “Roth Rollover Account” shall be maintained for (i) each Participant whose benefits that are credited
to a designated Roth account, as defined in Code Section 402A(b), under another plan, are transferred to the 

  
 - 22 - 

	 	
Trust Fund in accordance with Section 5.7 for the subsequent payment of such amounts in accordance with this Plan or (ii) a Participant’s Roth rollover account that is transferred
to the Plan from the Prior Plan. This account shall also reflect the expenses, distributions, earnings and losses attributable to such account. For avoidance of doubt, Participants may not designate any portion of their Pay Deferral Contributions as
Roth contributions, or transfer any amount from other Accounts in the Plan to a Roth Rollover Account. 

 The Accounts represent the
Participants’ interests in the Plan and Trust Fund and are intended as bookkeeping account records to assist the Benefit Committee in the administration of the Plan. 

6.2. Investment of Accounts. The Trustee, the Investment Managers and any insurance institutions responsible for investment of the
Trust Fund are permitted to commingle the assets of the Trust Fund for purposes of investment with the assets of other plans or trusts which are intended to qualify for plan qualification and federal tax exemption under Code Sections 401(a) and
501(a), respectively. Any documents which are required to be incorporated in the Plan and the Trust Agreement to permit such commingled investments are hereby incorporated. Except to the extent required by Sections 6.3, 6.4 and 6.5, segregated
investment of Plan and Trust Fund assets shall not be required with respect to any one or more Participants. Each of the Accounts invested in a particular investment fund shall represent an undivided interest in such investment fund which
corresponds to the balance of such Account. 
 6.3. Investment Funds. From time to time the Benefit Committee may cause the Trustee,
an Investment Manager or an insurance institution to establish one or more investment funds for the investment and reinvestment of the Trust Fund. Although the Benefit Committee may arrange with the Trustee, Investment Managers and insurance
institutions for the establishment of investment funds, the continued availability of these funds cannot be assured nor is it possible to assure that the arrangements or the investment funds managed by a particular Investment Manager, by the Trustee
or by an insurance institution will continue to be available on the same or similar terms. Participants may invest the total amount of their Accounts (as provided in Section 6.5) among the investment funds made available by the Benefit
Committee from time to time for such purpose. Such funds shall allow Participants to select from a range of alternatives that offer different types of investments and different risk and return characteristics. Notwithstanding anything in the
foregoing to the contrary, the investment funds shall include the following: 
  

	 	(a)	A Baxalta Common Stock Fund, which shall consist exclusively of shares of Company Common Stock, except as required for liquidity purposes. The Baxalta Common Stock Fund shall be a frozen fund into which no new funds may
be invested. 

  

	 	(b)	Three funds, consisting exclusively of shares of Baxter International Inc., Cardinal Health, Inc. and Edwards Lifesciences Corporation, respectively, except as required for liquidity purposes, which represent frozen
funds resulting from spin-offs from the Predecessor Employer, into which no new funds may be invested. 

  
 - 23 - 

	 	(c)	A separate investment account to be known as a self-managed account. 

  

	 	(d)	One or more of the funds commonly referred to as “lifecycle funds” selected by the Benefit Committee. 

6.4. Investment Direction. If the Benefit Committee determines that Participants shall exercise direction and control over the
investment of their accounts in a manner intended to insulate Plan fiduciaries from liability for investments under Section 404(c) of ERISA, the investment funds established by the Benefit Committee pursuant to Section 6.3 shall afford
Participants with a broad range of investment alternatives whereby each Participant has a reasonable opportunity to: 
  

	 	(a)	Affect materially the potential return on amounts in his Accounts and the degree of risk to which such amounts are subject; 

  

	 	(b)	Choose from at least three investment alternatives (not including any fund composed primarily of stock of a single corporation): 

  

	 	(i)	each of which is diversified and each of which has materially different risk and return characteristics; 

  

	 	(ii)	which, to the extent normally appropriate for Participants, allow them to achieve portfolios with respect to the aggregate of their Accounts which have risk and return characteristics at any point within the range of
all alternatives; and 

  

	 	(iii)	each of which when combined with investments in the other alternatives tends to minimize the overall risk of each Participant’s portfolio with respect to the aggregate of his Accounts through diversification.

  

	 	(c)	Diversify the investments of his Accounts so as to minimize the risk of large losses. 

 6.5.
Investment Elections. Each Participant, in accordance with rules promulgated under the Plan shall direct the investment of his Accounts described in Section 6.1 in one or more of the investment funds available under the Plan. With
respect to the investment funds referred to in Section 6.3 above, such investment elections shall be subject to the following limitations: 
  

	 	(a)	 Initial Investment Election. At the same time and in the same manner that a Participant makes his initial salary reduction election (in
accordance with the requirements of Section 5.1), or if earlier, the same time that an Eligible Employee makes a rollover contribution to the Plan (in accordance with Section 5.7), or is allocated an Employer Non-Matching Contribution (in
accordance with Section 5.8) the Participant must direct the Trustee in the manner prescribed by the Benefit Committee as to the investment funds to which the amounts credited to his Accounts shall be invested. Participants shall invest the
total amount of the Accounts in any combination (in 1% increments) of the available investment 

  
 - 24 - 

	 	
funds. All investment elections shall continue in force until properly changed in accordance with subsection (b) below. The Benefit Committee shall specify the investment funds in which the
Accounts of a Participant who fails to make an initial investment election shall be invested. 

Notwithstanding anything in the Plan to the contrary, a Participant who is a Transferred Employee described in
Section 3.1(a) shall have the amounts credited to his Accounts initially invested in the investment funds that are the same or reasonably similar to the investment funds elected by the Participant for the investment of his accounts under the
Prior Plan, as in effect immediately prior to the Spin-Off Date in accordance with Section 404(c) of ERISA, except that any direction to the Prior Employer stock fund shall instead be invested in a qualified default investment alternative, as
defined in 29 C.F.R. Section 2550.404c-5, selected by the Benefit Committee. 
  

	 	(b)	Changes in Investment Elections. A Participant may change his investment directions no more than one time in each calendar month, or at such other intervals as the Benefit Committee may determine (but in no event
less frequently than once in each 90 day period). A Participant may change his investment direction as to future contributions, as to the amounts already in his Accounts or as to both. Changes in investment elections shall be effected in the manner
prescribed by the Benefit Committee and shall become effective as soon as practical after the election is properly made in accordance with procedures established by the Benefit Committee. 

 

	 	(c)	Single Election. Unless the Benefit Committee prescribes otherwise, a Participant’s investment direction shall apply to all of his Accounts under the Plan and additions thereto. 

 

	 	(d)	Special Limitations and Procedures Applicable to the Baxalta Common Stock Fund. The following limitations and procedures shall be applicable to investment in the Baxalta Common Stock Fund: 

 

	 	(i)	The Baxalta Common Stock Fund is a frozen fund into which no new funds may be invested. In addition, the Baxalta Common Stock Fund shall be limited by the Benefit Committee to the extent the Benefit Committee deems
necessary to prevent the Plan from holding 5% or more of the outstanding Common Stock of the Company or such other amount as shall be necessary to assure that the Plan does not become subject to the provisions of Section 13(d) of the Securities
Exchange Act of 1934. 

  

	 	(ii)	 Voting of Common Stock of the Company. Pursuant to the terms set forth in the Trust Agreement, each Participant having an interest in the
Baxalta Common Stock Fund shall have the right to direct the manner in which the Trustee shall vote the Company Common Stock credited to the Participant’s Accounts. Before each annual or special meeting of shareholders of the Company, the
Trustee, the Company or their delegates 

  
 - 25 - 

	 	
shall mail to each applicable Participant a copy of the proxy solicitation material for such meeting, together with a proxy statement or other form providing instructions to the Trustee on how to
vote the Company Common Stock allocated to such Participant’s Accounts. The Trustee will vote such shares as instructed by the Participant to the extent consistent with ERISA. The Trustee, in its discretion, shall vote Company Common Stock
allocated to Participants’ Accounts for which the Trustee receives no valid voting instructions and Company Common Stock not credited to Participant’s Accounts, if any, held in the Trust Fund in a manner consistent with provisions of the
Trust Agreement and applicable law. The Benefit Committee may, but is not required to, direct the Trustee with respect to the voting of Company Common Stock described in the previous sentence, and the Trustee will follow such directions except where
to do so would be a breach of the Trustee’s duties under the Trust Agreement or applicable law. The Trustee may not divulge information with respect to any Participant’s directions regarding voting of Company Common Stock allocated to his
Accounts. Each Participant, former Participant, alternate payee and Beneficiary who retains an account balance in the Plan is deemed to be a named fiduciary of the Plan with regard to all instructions he or she provides to the Trustee as to the
manner in which it shall vote the Company Common Stock credited to such Participant’s Accounts. 

  

	 	(iii)	Offers for Company Common Stock. Pursuant to the terms set forth in the Trust Agreement, in the event that the stockholders of the Company have received a tender offer, as hereinafter defined, for the purchase or
exchange of their shares of Company Common Stock, the following provisions shall apply: 

  

	 	(A)	Each Participant having an interest in the Baxalta Common Stock Fund shall have the right to direct the Trustee concerning the sale or tendering of the number of shares of Company Common Stock credited to the
Participant’s Accounts. Each Participant, former Participant, alternate payee and Beneficiary who retains an account balance in the Plan is deemed to be a named fiduciary of the Plan with respect to his or her directions to the Trustee
regarding the Company Common Stock credited to such Participant’s Accounts. 

  

	 	(B)	 The Trustee will use its best efforts to communicate or cause to be communicated to all Participants the provisions of the Plan and Trust Agreement
relating to such offer, all communications directed generally to the owners of the securities to whom the offer is made or available, and any communications that the Trustee may receive from persons making the offer or any other interested party
(including the Company) relating to the offer. The Company and the Benefit Committee will provide the Trustee with such information and assistance as the Trustee may reasonably request

  
 - 26 - 

	 	
in connection with these communications to Participants. Neither the Company nor the Trustee may interfere in any manner with any Participant’s investment decision with respect to such an
offer. 

  

	 	(C)	If the offer is for all Company Common Stock held by the Trustee in the Trust Fund, then the Trustee will: 

  

	 	1.	Accept or reject the offer with respect to Company Common Stock allocated to each Participant’s Accounts according to that Participant’s investment decision, except where to do so would be a breach of the
Trustee’s duties under the Trust Agreement or applicable law; and 

  

	 	2.	Accept or reject the offer with respect to Company Common Stock allocated to Participants’ Accounts for which no valid investment decision was received by the Trustee and with respect to unallocated Company Common
Stock held in the Trust Fund in the Trustee’s sole discretion. 

 The Trustee may not divulge information with respect to
any Participant’s investment decision regarding the offer. 
  

	 	(D)	If the offer is for less than all the Company Common Stock held by the Trustee in the Trust Fund, all provisions of paragraphs (A) through (C) will be applied to that offer, except that each Participant will
have the opportunity to make an investment decision for a pro rata portion of the Company Common Stock allocated to his Accounts and the Trustee, after effecting those investment decisions, will make its acceptance or rejection of the offer with
respect to a pro rata portion of the Company Common Stock allocated to Accounts for which it received no valid investment instructions or which is held unallocated in the Trust Fund, so that the offer has been accepted or rejected with respect to
the full amount of Company Common Stock held by the Trustee in the Trust Fund which was subject to the offer. 

  

	 	(E)	Notwithstanding the provisions of paragraphs (C) and (D) above, the Benefit Committee may, but is not required to, direct the Trustee with respect to the acceptance or rejection of any offer described in
paragraph (C) or (D) with respect to Company Common Stock allocated to Participants’ Accounts for which no valid investment instructions are received by the Trustee and with respect to unallocated Company Common Stock held in the
Trust Fund, and the Trustee shall accept or reject any such offer in accordance with any such directions from the Benefit Committee to the Trustee with respect to the offer, except where to do so would be a breach of the Trustee’s duties under
the Trust Agreement or applicable law. 

  
 - 27 - 

	 	(F)	Following the Trustee’s sale or tender of shares pursuant to the terms of this subsection, each affected Participant’s interest in the Baxalta Common Stock Fund shall be eliminated and the proceeds from the
sale or tender of the shares credited to the Participant’s Accounts shall be subject to the Participant’s investment direction. 

  

	 	(G)	For purposes of this Section 6.5(d)(iii), the term “tender offer” shall mean only (1) a tender offer that is subject to Section 14(d) of the Securities Exchange Act of 1934 or any successor
thereto, or (2) any other tender offer if the Benefit Committee determines that the application of the procedures of this Section 6.5(d)(iii) to such tender offer is prudent and in the best interests of the Participants. 

 

	 	(e)	Self-Managed Accounts. Subject to uniform nondiscriminatory rules established by the Benefit Committee, a Participant may transfer amounts from one or more of the other investment funds to a self-managed account
and give orders directly to the broker for the purchases and sales of investments through the Participant’s self-managed account. The value of each Participant’s Accounts invested in the self-managed account shall be measured based solely
on the value of the investments held in such account. Loans, withdrawals and distributions will not be permitted directly from a self-managed account. 

6.6. Information Provided. The Plan Administrator shall provide, or cause to be provided, to each Participant the following: 

 

	 	(a)	A statement that the Plan is intended to constitute a plan described in Section 404(c) of ERISA and that the Plan’s fiduciaries may be relieved of liability for any losses which are the direct and necessary
result of investment instructions given by the Participant, which shall be provided automatically to each Participant; 

  

	 	(b)	A description of the procedures established to provide for the confidentiality of information relating to the purchase, holding and sale of Company Common Stock, and the exercise of voting, tender and similar rights by
Participants through investment in the Baxalta Common Stock Fund, including the name, address and phone number of the fiduciary responsible for monitoring compliance with such procedures, which shall be provided automatically to each Participant;
and 

  

	 	(c)	All information required by Department of Labor Regulations 29 CFR §2550.404a–5, which shall be provided either automatically or on request as required by such regulations. 

6.7. Investment Fund Accounting. The undivided interest of each Participant’s Accounts in an investment fund shall be determined
in accordance with the accounting procedures specified in the Trust Agreement, investment management agreement, insurance 

  
 - 28 - 

 
contract, custodian agreement, appendices or supplements to this Plan or other document under which such investment fund is maintained (the “Investment Fund Document”). To the extent
not inconsistent with such procedures, the following rules shall apply: 
  

	 	(a)	Deposits. Amounts deposited in an investment fund shall be deposited by means of a transfer of such amounts to such investment fund to conform with the investment elections properly received in accordance with
Section 6.5. 

  

	 	(b)	Transfers. Amounts required to be transferred from an investment fund to satisfy benefit payments and required transfers to effectuate investment elections in accordance with Section 6.5 shall be transferred
from such investment funds as soon as practicable following receipt by the Trustee or Investment Manager of proper instructions to complete such transfers. 

  

	 	(c)	Allocation of Fund Earnings. Except as provided in the applicable Investment Fund Document, all amounts deposited in an investment fund shall be invested as soon as practicable following receipt of such deposit.
Notwithstanding the primary purpose or investment policy of an investment fund, assets of any investment fund which are not invested in the primary investment vehicle authorized by the Investment Fund Document shall be invested in such short term
instruments or funds as the Trustee or applicable Investment Manager or insurance institution shall determine pending investment in accordance with such Investment Fund Document. 

 

	 	(d)	Accounting for Sales of Company Common Stock. Sales of Company Common Stock shall be made for the Baxalta Common Stock Fund in accordance with the provisions of the Trust Agreement and in accordance with the
following: 

  

	 	(i)	No commissions shall be paid in connection with sales of Company Common Stock from or to any disqualified person or party in interest (as defined for purposes of Code Section 4975(e)(2) or Section 3(14) of
ERISA). 

  

	 	(ii)	Sales of Company Common Stock other than sales on the New York Stock Exchange (the “Exchange”) shall be at a price not less than the last recorded sales price quoted for such shares on the Exchange on the last
trading day on which there was a recorded sale of such shares immediately preceding the date of such purchases (the “Exchange Trading Price”). 

  

	 	(iii)	In-kind contributions of the Employers, including contributions of Company Common Stock, are valued at fair market value. For this purpose Company Common Stock shall be valued as of the date of such contribution at the
then Exchange Trading Price (as defined in subparagraph (ii) above but determined as of the end of the date on which such contribution is made if such date is a trading day on the Exchange). If there are no sales of Company Common Stock on the
date as of which the Exchange Trading Price is determined, then the fair market value of such common stock shall be the mean of the bid and asked prices for such date. 

  
 - 29 - 

	 	(iv)	If the Benefit Committee is unable to determine the Exchange Trading Price (as defined in subparagraph (ii) above) because sales prices on the Exchange are not so quoted, such quotes are not available to the
Benefit Committee or for any other reason, then the Benefit Committee may utilize a composite index price or other price which is generally accepted for the establishment of fair market value in lieu of the Exchange Trading Price for purposes of the
restrictions of subparagraphs (ii) and (iii) above. 

 6.8. Expenses. Unless paid by the Employers, all costs
and expenses incurred in connection with the general administration of the Plan and Trust shall be allocated among each investment funds in the proportion in which the amount invested in each such fund bears to the amount invested in all funds as of
the Accounting Date preceding the date of allocation. All costs and expenses directly identifiable to one fund shall be allocated to that fund. No commission expenses shall be paid from the Plan with respect to transactions described in
Section 6.7(d)(i). 
 6.9. Accounting Dates. All Accounts shall be adjusted in accordance with Section 6.12 as of each
Accounting Date. 
 6.10. Crediting Employer Contributions. Employer Matching Contributions shall be credited to the appropriate
Accounts of Participants as of the first Accounting Date coincident with or next following the end of the payroll period for which such contributions are made, regardless of the date such contributions are actually made. Expenses, distributions,
earnings or losses attributable to such amounts shall be separately credited pursuant to Sections 6.8 and 6.12. Employer Non-Matching Contributions shall be credited as of the first Accounting Date coincident with or next following the date the
contributions are actually made. 
 6.11. Crediting Pay Deferral Contributions. Pay Deferral Contributions, Catch-Up Contributions
and Make Up Deferrals shall be credited to the appropriate Accounts as of the first Accounting Date coincident with or next following the end of the payroll period for which such contributions are made, regardless of the date such contributions are
actually made. Expenses, distributions, earnings or losses attributable to such amounts shall be separately credited pursuant to Sections 6.8 and 6.12. 

6.12. Adjustment of Account Balances. As of each Accounting Date the Benefit Committee shall cause the Accounts of Participants to be
adjusted to reflect adjustments in the value of the Trust Fund, to reflect contributions (net of Forfeitures) credited in accordance with Sections 6.10 and 6.11 and to reflect distributions of benefits (including transfers and withdrawals) as
follows: 
  

	 	(a)	First, adjust the Accounts as of the last Accounting Date of all Participants to reflect the Adjusted Net Worth (as described below) of the Trust Fund by applying the earnings adjustment rules applicable to each
investment fund and crediting earnings for segregated investments to the appropriate Accounts of the Participants to whom such investments pertain; and 

  
 - 30 - 

	 	(b)	Next, credit Employer Matching Contributions and Employer Non-Matching Contributions, including Forfeitures applied towards such contributions in accordance with Section 7.4, and Participant Pay Deferral
Contributions to the proper Accounts; and 

  

	 	(c)	Finally, charge to the proper Accounts all distributions made since the previous Accounting Date. 

 The
“Adjusted Net Worth” of the Trust Fund as of any date means the fair market value of the Trust Fund as determined by the Trustee. If an error in the adjustment of Accounts under this Section is discovered, the Benefit Committee shall
correct such error either (i) by crediting or changing the adjustment necessary to make such correction to or against income or unclaimed amounts or as an expense of the Trust Fund for the Plan Year in which the correction is made or
(ii) by requiring the Participant’s Employer to make a special contribution to the Plan. 
 ARTICLE VII 

DISTRIBUTION OF ACCOUNT BALANCES 

7.1. Retirement, Disability or Death. If a Participant incurs a Termination of Employment, while employed by an Employer or a Commonly
Controlled Entity of an Employer, on or after his attainment of age 65 or because of his Disability or death, the balance in his Accounts, after all adjustments required under the Plan have been made, shall be determined as soon as practicable and
shall be fully vested and nonforfeitable. Such amount shall be distributable to the Participant or, in the event of the Participant’s death, to his Spouse or Beneficiary in accordance with Section 7.6. The Account of a Participant who dies
or is Disabled while performing qualified military service as defined in Code Section 414(u) shall also be fully vested and nonforfeitable. 

7.2. Resignation or Dismissal. 
  

	 	(a)	If a Participant incurs a Termination of Employment prior to attainment of age 65 for reasons other than Disability or death, the vested portion of his Account, determined as provided in subsection (b) or
Section 7.3, after all adjustments required under the Plan have been made, shall be determined as soon as practicable and shall be fully vested and nonforfeitable. The portion of such Account which is vested, based upon the balances of all such
Accounts as of the Accounting Date coincident with or next preceding the date of distribution (after adjustments required under the Plan as of that date have been made) shall be distributable to the Participant in accordance with Section 7.6.

  

	 	(b)	The vested portion of a Participant’s Account shall be determined as follows: 

  

	 	(i)	The balance in the Participant’s Before-Tax Account, Profit Sharing Account, After-Tax Account, Roth Rollover Account, Rollover Account and Employer Matching Account shall be fully vested and nonforfeitable at all
times. 

  
 - 31 - 

	 	(ii)	No portion of the balance in the Participant’s Employer Non-Matching Contribution Account shall be vested until the Participant has completed three Years of Vesting Service, and thereafter the Participant’s
Employer Non-Matching Contribution Account shall be fully vested and nonforfeitable. 

  

	 	(iii)	A Participant shall be fully vested in and have a non-forfeitable right to any cash dividends that are subject to the provisions of Section 5 of Supplement No. 1 in accordance with the provisions thereof.

  

	 	(iv)	The profit sharing and matching contributions, and their related earnings, that were transferred to the Plan from the Prior Plan which were attributable to transfers to the Prior Plan from the North American Vaccine,
Inc. Retirement and Savings 401(k) Plan effective November 30, 2004 shall be fully vested and nonforfeitable. 

 7.3.
Special Vesting Rules Upon Sale of Business. In the event of a sale by the Company of the stock or substantially all of the assets of an entity that is an Employer, so that the entity ceases to be a participating Employer in this Plan, the
Benefit Committee, in its sole discretion, may determine that all or a portion of the affected Participants of said entity shall be fully vested in their Account Balances, determined on the date as of which the entity is no longer a participating
Employer in this Plan, provided that such Participant is not rehired before actual payment. In lieu of full vesting upon such a sale, the Benefit Committee may direct that, in accordance with an agreement between the Company and the purchaser of
such stock or assets, periods of a Participant’s service following the effective date of such sale be counted towards determination of such Participant’s Vesting Service hereunder. In the absence of Benefit Committee action, no accelerated
vesting or other special vesting rules shall apply to any Participant in connection with any such sale, except as otherwise required by law. The special vesting rules prescribed by this Section shall be applied in a uniform and nondiscriminatory
manner to all similarly situated classes of affected Participants. 
 7.4. Forfeitures. The portion of any Participant’s
Employer Matching Account or Employer Non-Matching Contribution Account which is not vested under Sections 7.2 or 7.3 will become a Forfeiture upon such Participant’s Termination of Employment and, except as provided in subsection
(c) below, will be applied to reduce Employer Matching Contributions and Employer Non-Matching Contributions on a periodic basis. However, if such Participant resumes employment with an Employer or Commonly Controlled Entity of an Employer
before incurring five consecutive One-Year Breaks In Service, the Forfeiture (unadjusted for subsequent earnings or losses) shall be restored to the Participant’s Employer Matching Account or Employer Non-Matching Contribution Account, as
applicable, if the Participant restores to the Plan the amount previously distributed in accordance with subsection (a) below unless such restoration is not required under an applicable supplement or appendix to this Plan.

  
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The restorations of a Participant’s Employer Matching Account and Employer Non-Matching Contribution Account are subject to the following rules: 

 

	 	(a)	Buy-Back Contribution. The Forfeiture shall be restored if within 60 months following such Participant’s resumption of employment, he deposits with the Benefit Committee an amount equal to the portion of his
Employer Matching Account and Employer Non-Matching Contribution Account which was previously distributed. 

  

	 	(b)	Restoration of Forfeitures. As of the first Accounting Date following receipt by the Benefit Committee of the deposit described in subsection (a) above (or as soon as practicable thereafter), the
Participant’s Employer Matching Account and/or Employer Non-Matching Contribution Account shall be credited with the Forfeiture. 

  

	 	(c)	Source of Restoration. The amounts necessary to restore the Forfeiture in accordance with subsection (b) above shall be allocated for such purpose from Forfeitures not yet applied towards Employer Matching
Contributions or Employer Non-Matching Contributions, and if such Forfeitures are not sufficient for this purpose, then, to the extent necessary to satisfy such restoration, the balance of such Forfeitures in accordance with subsection
(b) above shall be restored by a special allocation of Employer Matching Contributions or Employer Non-Matching Contributions which shall reduce the amounts available to credit to all other Participants as of such Accounting Date. In lieu of
such method of restoring the Forfeiture, the Participant’s Employer may make a special contribution which shall be utilized solely for purposes of such restoration. 

If a Participant restores to the Plan, in accordance with this Section, the amount previously distributed from his Employer Matching Account, such Participant
shall be fully vested in the Forfeitures restored to his Employer Matching Account. Otherwise, such Participant shall be fully vested only in future amounts credited to his Employer Matching Account. 

7.5. Benefit Commencement Date. Except as otherwise provided in this Section or Section 10.6, the Accounts of a Participant who
incurs a Termination of Employment shall be distributed in accordance with Section 7.6 as soon as practicable following the Participant’s Normal Retirement Date. Notwithstanding the preceding sentence, the following rules shall apply for
purposes of determining the benefit commencement date for any Participant or Beneficiary: 
  

	 	(a)	Cash-Out of Small Amounts. If the vested portion of a Participant’s Accounts does not exceed $5,000, the Benefit Committee shall direct the Trustee to distribute such amount to the Participant (or to the
Beneficiary, if appropriate) in a single sum without the consent of the Participant, but subject to Section 7.7(c). The remaining portion shall be treated as a Forfeiture. A distribution pursuant to this subsection shall be made as soon as
administratively practicable following the Participant’s Termination of Employment. 

  

	 	(b)	 Restrictions on Immediate Distribution. If the vested portion of a Participant’s Accounts exceeds $5,000, the Participant must consent to
any distribution commencing prior to his Normal Retirement Date; provided, however, that 

  
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consent under this subsection is not required to make distributions necessary to satisfy Code Sections 401(a)(9), 401(k)(3), 401(m), 402(g) or 415. In addition, participant consent
under this subsection is not required with respect to any distribution of dividends to which Code Section 404(k) applies. In order for a distribution to commence prior to a Participant’s Normal Retirement Date, the Participant must elect
such a distribution in the manner prescribed by the Benefit Committee. The Trustee shall forward a federally mandated tax notice to the Participant as described in Code Sections 411(a)(11) and 402(f). The Participant must then telephone the
Trustee to request payment of his distribution no earlier than seven days and no later than 30 days after the date of his distribution election. If the Participant fails to do so within this prescribed time period, the distribution request shall be
canceled. Distributions made pursuant to such Participant election shall be valued as of the date of distribution. 	 

  

	 	(c)	Commencement Date in Absence of Participant Direction. Subject to Section 10.6, unless a Participant elects otherwise (in the time and manner prescribed by the Benefit Committee), distribution of a
Participant’s Accounts which are distributable in accordance with Sections 7.1 or 7.2 shall commence no later than the 60th day after the end of the Plan Year in which the latest of (i), (ii) or (iii) below occurs. 

 

	 	(i)	The Participant’s Normal Retirement Date; 

  

	 	(ii)	The date of the Participant’s Termination of Employment; or 

  

	 	(iii)	The 5th anniversary of his initial Plan participation. 

  

	 	(d)	Benefit Commencement Date of Beneficiary. If a Participant dies prior to the commencement of his benefits, and the vested portion of the Participant’s Accounts exceeds $5,000, benefits payable to his Spouse
or other Beneficiary shall commence in accordance with the election of such Spouse or Beneficiary, pursuant to Section 7.6. Notwithstanding the foregoing, the commencement and duration of benefit payments to Spouses and other Beneficiaries
shall be subject to the requirements of Code Section 401(a)(9), as described in Sections 7.9 and 7.10. In addition, no benefits shall be paid to any Spouse or other Beneficiary prior to the completion by the Benefit Committee of its
determination of the status of such Spouse or other Beneficiary as a proper payee with respect to such Participant. If the Participant’s surviving Spouse dies prior to commencement of such benefits, the benefits payable to any contingent
Beneficiary shall commence no later than December 31 of the calendar year following the calendar year in which such surviving Spouse’s date of death occurs. For purposes of this subsection, a Participant’s benefits shall be deemed to
have commenced on the date the Participant requests payment of his distribution, in accordance with subsection (b). 

  

	 	(e)	 Alternate Payee Commencement Date. Benefits payable to a former Spouse or other member or former member of the Participant’s family
pursuant to a 

  
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Qualified Domestic Relations Order (as defined in Code Section 414(p)) will commence no sooner than the date the Benefit Committee or its delegate completes its determination that the order
satisfies the requirements set forth in Code Section 414(p). If the value of the alternate payee’s distribution does not exceed $5,000, it shall be distributed in a single sum without the consent of the alternate payee as soon as
practicable following the date referred to in the preceding sentence. If the value of the alternate payee’s distribution exceeds $5,000, then the commencement of benefits payable to the alternate payee shall be made at the time prescribed by
the terms of the Qualified Domestic Relations Order, subject, however, to the rules set forth herein as applied to the applicable Participant. For such purpose, the alternate payee shall have the same payment options as are available to
Participants. 

  

	 	(f)	Minimum Required Distribution Rules. The requirements of this subsection are intended to reflect the applicable rules of Code Section 401(a)(9) for pre-death distributions and shall take precedence over any
inconsistent provisions of the Plan. The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant’s “required beginning date.” 

(1) Participants Who Are Not 5%-Owners. The provisions of this paragraph shall apply only to a Participant who was not a
5%-owner (as defined in Code Section 416(i)) at any time during the Plan Year in which the Participant attains age 70 1⁄2. The required beginning date is
April 1 of the calendar year following the later of (i) the calendar year in which the Participant attains age 70 1⁄2 and (ii) subject to
subsection (c) above, the calendar year in which contains the Participant’s Termination of Employment. Notwithstanding the preceding sentence, to the extent required by U.S. Treasury Regulations or other guidance of general applicability
of the Internal Revenue Service, a Participant’s required beginning date shall be April 1 of the calendar year following the calendar year in which the Participant attains age 70 1⁄2, if the Participant so elects. 
 (2) 5%-Owners. The required beginning date of
a Participant who is a 5%-owner (as described above) is April 1 of the calendar year following the calendar year in which the Participant attains age
70 1⁄2. 
 If the Participant’s benefit is to
be distributed pursuant to this subsection in the form of installments, the following minimum distribution rules shall apply on or after the required beginning date: 
  

	 	(i)	If a Participant’s benefit is to be distributed over (A) a period not extending beyond the life expectancy of the Participant or the joint life expectancy of the Participant and Beneficiary or (B) a
period not extending beyond the life expectancy of the Beneficiary, the amount required to be distributed for each calendar year must be at least equal the quotient obtained by dividing the Participant’s benefit by the applicable life
expectancy. 

  
 - 35 - 

	 	(ii)	Life expectancy or joint life expectancy shall be calculated by use of the Uniform Lifetime Table contained in Treasury Regulation Section 1.401(a)(9)-9, Q&A 2, unless the Participant’s sole Beneficiary is
his spouse and the spouse is more than ten years younger than the Participant, in which case the Joint and Last Survivor Table contained in Treasury Regulation Section 1.401(a)(9)-9, Q&A 3 shall be used. Except as provided in
Section 7.9, life expectancy shall not be recalculated. 

 The hierarchy for distributions required to be made pursuant to
this subsection (f) shall be the hierarchy applicable to installment distributions provided in Section 7.6(b). Notwithstanding anything in the Plan or this Section to the contrary, the provisions of the Plan shall be interpreted, construed
and administered in a manner that complies with, and benefits shall be paid in accordance with the requirements of Code Section 401(a)(9) and the regulations thereunder, including the incidental death benefit rule set forth in Code
Section 401(a)(9)(G), which are incorporated herein by reference and shall control over any provision of the Plan to the contrary. 
 The date on which
distribution of a Participant’s Accounts to a Participant or Beneficiary commences under this Section 7.5 is his “Benefit Commencement Date. 

7.6. Methods of Benefit Payment. Participants and, if applicable, Beneficiaries shall make elections regarding the methods of benefit
payments in such manner and at such times as the Benefit Committee shall require. A Participant’s Accounts shall be distributed to him, or in the event of his death to his Beneficiary, in one of the following methods: 

 

	 	(a)	Single Sum Form of Payment. Unless an optional method of payment is elected by the Participant or his Beneficiaries in accordance with subsections (b) or (c) below, this is the normal form of benefit
payment. The Participant’s Accounts will be distributed in a single sum, provided that if the Participant’s Accounts exceed $5,000, distribution thereof in a single sum may not be made prior to certain designated times without the
Participant’s or Beneficiaries’ consent, if required pursuant to Section 7.5. 

  

	 	(b)	Optional Installment Form of Payment. If the Participant’s Accounts exceed $5,000, the Participant or his Beneficiaries, as applicable, may elect to have the Participant’s Accounts distributed in the
form of substantially equal annual, semi-annual, quarterly or monthly installment payments. Such installment payments shall not be payable over a period of time in excess of the “maximum installment period” (as defined in
Section 7.8). Installment distributions shall be deducted from the Participant’s Accounts in the following order (and shall be deducted on a pro rata basis from the investment funds to which amounts in such Accounts are allocated):

  

	 	(i)	The portion of the Participant’s After-Tax Account attributable to after-tax contributions made under a predecessor plan prior to 1987. 

  
 - 36 - 

	 	(ii)	The remaining portion of the Participant’s After-Tax Account attributable to after-tax contributions made after 1986 (if any), and the portion of such account attributable to earnings, in the proportion prescribed
by Code Section 72. 

  

	 	(iii)	Rollover Account. 

  

	 	(iv)	Profit Sharing Account. 

  

	 	(v)	Vested portion of Employer Matching Account and Employer Non-Matching Contribution Account. 

  

	 	(vi)	Before-Tax Account. 

  

	 	(c)	Partial Single Sum Form of Payment. A Participant or his Beneficiaries, as applicable, may elect to have less than 100% of the Participant’s Accounts paid in a single sum. The remainder of the
Participant’s Accounts shall be paid in accordance with subsection (b) above. The hierarchy for distributions made pursuant to this subsection shall be the hierarchy applicable to installment distributions provided in subsection
(b) above. 

  

	 	(d)	Application to Roth Rollover Accounts. A Roth Rollover Account may not be distributed in installments pursuant to subsection (b), and the balance in a Roth Rollover Account shall not be taken into account in
determining whether the total balance in a Participant’s Accounts is at least $5,000 for purposes of subsection (b). A Participant may make a separate election to withdraw a portion of his Roth Rollover Account pursuant to subsection (c).

 Benefits may be distributed in cash or, if applicable, in whole shares of Company Common Stock from the Baxalta Common Stock Fund, provided
that property distributed in Company Common Stock may only be distributed if the requirements of Section 9.11 are satisfied. As part of the distribution election, a Participant or his Beneficiaries, as applicable, must indicate the amount, if
any, of the balance in the Participant’s Accounts invested in the Baxalta Common Stock Fund that he wishes to receive in Company Common Stock. 

Neither the Employers nor the Benefit Committee shall be obligated to consider the tax effects upon a Participant, Spouse, or other
Beneficiary of receipt by that Participant or such Spouse or other Beneficiary of Plan benefits. It shall be the responsibility of Participants to consider the tax effects of the time and manner of benefit distribution and the disposition of
distributions upon receipt by a Participant, Spouse, or other Beneficiary. 
 7.7. Direct Rollovers. Notwithstanding any provision of
the Plan to the contrary that would otherwise limit a distributee’s election hereunder, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct rollover. 

  
 - 37 - 

	 	(a)	Notice of Rights. Each distributee shall be provided with a notice as described in Code Section 402(f) of his or her rights under this subsection no less than 30 days (or such shorter period permitted by
applicable U.S. Treasury regulations) and no more than 90 days before the commencement of an eligible rollover distribution to the distributee from the Plan. Written consent of the distributee to the distribution must not be made before the
distributee receives the notice and must not be made more than 90 days before such commencement. 

  

	 	(b)	Definitions. 

  

	 	(i)	Eligible rollover distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee’s designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); any amount that is distributed on
account of a hardship under Section 8.1(d); and dividends paid on Company Common Stock that are deductible under Code Section 404(k). A portion of a distribution will not fail to be an eligible rollover distribution merely because the
portion consists of after-tax employee contributions which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b), or to a
qualified defined contribution plan described in Code Section 401(a) or 403(a) that agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross
income and the portion of such distribution which is not so includible. 	 

  

	 	(ii)	Eligible retirement plan: An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), a qualified trust described in Code Section 401(a), an annuity contract described in Code Section 403(b), an eligible plan under Code Section 457(b) which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan, and a Roth IRA as defined in Code
Section 408A. In the case of a distribution from a Roth Rollover Account, the term “eligible retirement plan” shall mean only a Roth IRA as defined in Code Section 408A, or a designated Roth account, as defined in Code
Section 402A(b), under another plan. 

  

	 	(iii)	 Distributee: A distributee includes an Employee or former Employee. In addition, the Employee’s or former Employee’s surviving Spouse
and the 

  
 - 38 - 

	 	
Employee’s or former Employee’s divorced Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with
regard to the interest of the Spouse or former Spouse. Any Beneficiary who is a “designated beneficiary” for purposes of Code Section 401(a)(9) and the Regulations thereunder (or, to the extent provided in Regulations, that is a trust
established for the benefit of one or more designated beneficiaries), shall also be a distributee; provided that in the case of a distributee who is not the Participant’s spouse or an alternate payee the term eligible retirement plan shall mean
only an individual retirement account or an individual retirement annuity that is treated as an inherited account or annuity under Code Section 408(c)(3)(B). 

 

	 	(iv)	Direct rollover: A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 

  

	 	(c)	Mandatory Rollovers. In the event the amount of an eligible rollover distribution payable to a distributee who is an Employee or former Employee (but not to a surviving Spouse or alternate payee) prior to the
distributee’s Normal Retirement Date exceeds $1,000 but does not exceed $5,000, if the distributee does not elect to have such distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover or to
receive the distribution directly, then the Plan will pay the distribution in a direct rollover to an eligible retirement plan that is an individual retirement account described in Code Section 408(a) designated by the Benefit Committee.

 7.8. Maximum Installment Period. Except as expressly provided to the contrary in this Article VII, the period over
which installment payments may be made with respect to any person shall be determined by the Participant. In no event will the period over which installment payments are made exceed a Participant’s Maximum Installment Period. A
Participant’s “Maximum Installment Period” shall be determined pursuant to the following rules: 
  

	 	(a)	Life Expectancy Limitation. In no event shall installment payments be made over a period in excess of the life expectancy of the Participant or the life expectancy of the Participant and the Participant’s
designated Beneficiary. The Benefit Committee shall not adjust installment payments to take into account changes in the life expectancy of a Participant or of his Spouse or Beneficiary. 

 

	 	(b)	Death after Commencement of Benefits. If distribution of a Participant’s benefits over a period (“Prior Payment Period”) not in excess of the period described in subsection (a) above has begun
and the Participant dies before the entire balance in his Accounts has been distributed to him, the remaining portion shall be distributed over a period no longer than the remainder of the Prior Payment Period. 

 

	 	(c)	 Death before Commencement of Benefits. If a Participant dies before the distribution of his benefits has begun, distribution of the entire
balance in his 

  
 - 39 - 

	 	
Accounts shall be made no later than December 31 of the calendar year which contains the fifth anniversary of the Participant’s death. However, such five-year limitation shall not apply
in the case of any portion of the Accounts to be distributed to the Participant’s designated Beneficiary if such portion is distributed over the life of such designated Beneficiary or over a period not extending beyond the life expectancy of
such Beneficiary and such distribution begins not later than December 31 of the calendar year following the calendar year which contains the date of the Participant’s death. Notwithstanding the foregoing, if the designated Beneficiary is
the Participant’s surviving Spouse, the date on which distribution must begin as provided in the preceding sentence shall not be earlier than December 31 of the calendar year in which the Participant would have attained age 70 1⁄2, had he survived. If the Participant’s surviving Spouse dies before distribution begins, this subsection shall be applied as if the surviving Spouse were
the Participant except that the provisions applicable to the surviving Spouse of a Participant shall not be applicable to a spouse of the Participant’s surviving Spouse. 

For purposes of this Section, a Participant’s “Designated Beneficiary” means the Participant’s Beneficiary determined in accordance with
Section 7.10. 
 7.9. Minimum Rate of Installment Payments. Except as expressly provided to the contrary in this Article VII, a
Participant who has selected an installment method of payment may select the rate at which his benefits are paid, provided the rate or amount of such installment payments satisfies all of the following rules, to be applied in a uniform and
nondiscriminatory manner: 
  

	 	(a)	Dollar Limitation. The Benefit Committee may establish a minimum dollar amount for any installment payment. 

  

	 	(b)	Frequency of Payment. Installments may be paid monthly, quarterly, semi-annually or annually. 

 

	 	(c)	Equal Payments. Installments must be payable in substantially equal amounts, provided that the Benefit Committee may adjust such amounts annually or more frequently to reflect earnings, losses or other
adjustments to the Participant’s Accounts. 

  

	 	(d)	Rate of Payment Under Code Section 401(a)(9). Notwithstanding the provisions of Section 7.9 or any other provisions of this Section, the frequency, timing and rate at which installment payments are made
to a Participant shall comply with the minimum rate of payment requirements of Code Section 401(a)(9). Solely for purposes of such redetermination, the life expectancy of the Participant and his Spouse or Beneficiary may be adjusted as of such
Plan Year end. The Benefit Committee shall redetermine the amount of such installment as of each subsequent Plan Year to assure continued compliance with such requirements but no further adjustments shall be made to reflect further changes in such
life expectancies. 

  
 - 40 - 

	 	(e)	Death after Commencement of Benefits. If distribution of a Participant’s benefits has begun and the Participant dies before the entire balance in his Accounts has been distributed to him, the remaining
portion shall be distributed at least as rapidly as under the method of distribution being used as of the date of the Participant’s death. 

  

	 	(f)	Death before Commencement of Benefits. If a Participant dies before the distribution of his benefits is required to begin pursuant to Code Section 401(a)(9), regardless of whether distribution has actually
begun, distribution of the entire balance in his Accounts shall be made over the period specified in Section 7.9(d) and shall be payable in an amount and at a rate of payment which complies with the requirements of Code Section 401(a)(9).
The Benefit Committee may redetermine the amount of such payments from time to time to assure continued compliance with such requirements. 

7.10. Surviving Spouse or Designated Beneficiaries. Except as provided in this Section, a Participant’s Spouse shall be his
designated Beneficiary and any benefits remaining to be paid hereunder following a Participant’s death shall be distributed to the Participant’s surviving Spouse, if any. Except as provided below, any such benefits which remain to be paid
following the death of the Participant’s surviving Spouse shall be paid to the estate of the Participant’s surviving Spouse. If there is no surviving Spouse or if the surviving Spouse of such Participant consents in the manner described
below, the benefits remaining to be paid shall be distributed to the Participant’s designated Beneficiary or Beneficiaries. A Beneficiary designation must be completed and filed with the Benefit Committee during the Participant’s lifetime.
A Beneficiary designation properly completed and filed with the Benefit Committee will cancel all such designations dated earlier. A Participant may designate contingent or successive Beneficiaries and may name natural persons, legal persons or
entities, trusts, estates, trustees or legal representatives as the Beneficiaries. If a married Participant designates a Beneficiary or contingent Beneficiary other than his Spouse and the estate of such Spouse, the Participant’s Spouse must
consent in writing to such designation and such consent must be witnessed by a notary public or Plan representative. If the Spouse does not so consent, then such Beneficiary designation shall not be effective unless the Spouse dies before the
Participant unless following the death of the Participant his surviving Spouse disclaims all rights to the Participant’s benefits. Notwithstanding the foregoing, unless a Participant who is a Transferred Employee described in
Section 3.1(a) makes a new Beneficiary election in accordance with this Section, a Beneficiary election in effect for the Participant under the Prior Plan immediately prior to the date such Participant transfers to employment with the Company
(in accordance with the Prior Plan’s records as provided to the Company by the Predecessor Employer) shall be effective under the Plan. 

If the Participant dies leaving no surviving Spouse and either (a) the Participant failed to file a valid beneficiary designation form,
or (b) all persons designated on the beneficiary designation form have predeceased the Participant, the Participant’s benefit shall be paid to the Participant’s estate. 

7.11. Missing Beneficiaries of Deceased or Missing Participants. Subject to all applicable laws relating to unclaimed property, if the
Trustee mails by registered or certified 

  
 - 41 - 

 
mail, postage prepaid, to the last known address of a Participant or Beneficiary, a notification that he is entitled to a Plan distribution, and if the notification is returned by the United
States Postal Service as being undeliverable because the addressee cannot be located at the address indicated, and if the Trustee has no knowledge of such Participant’s or Beneficiary’s whereabouts for three years after the date the
notification was mailed (or if for three years after the date the notification was mailed to the Participant or Beneficiary he does not respond by informing the Trustee of his or her whereabouts), then, subject to the applicable state laws
concerning escheat, the aggregate amount of such Participant’s Accounts shall be treated as a Forfeiture and used to reduce Employer Non-Matching Contributions, subject to the following: 

 

	 	(a)	Restoration of Forfeiture. If following a Forfeiture under this Section 7.11, the Participant or Beneficiary is located, the Forfeiture (unadjusted for subsequent earnings or losses), shall be restored by
crediting such amount to the appropriate Accounts of the Participant as of the next Accounting Date. 

  

	 	(b)	Source of Restoration. The amounts necessary to restore the Forfeiture in accordance with (a) above shall be allocated for such purpose from Forfeitures not yet applied towards Employer Non-Matching
Contributions and if Forfeitures are not sufficient then from an initial allocation of Employer Non-Matching Contributions to the extent necessary to satisfy such restoration, which special allocation shall reduce the amounts available for
allocation to all other Participants in accordance with Section 6.10 as of the relevant Accounting Date. In lieu of such method of restoring the Forfeiture, the Participant’s Employer may make a special contribution which shall be
allocated solely for purposes of such restoration. 

 Participants and Beneficiaries are required to maintain current post office addresses on
file with the Benefit Committee. 
 7.12. Incapacitated Participants or Beneficiaries. If a Participant or Beneficiary is incompetent
or a minor, and a conservator, guardian, or other person legally charged with his care has been appointed, any benefits to which such Participant or Beneficiary is entitled shall be payable to such conservator, guardian, or other person legally
charged with his care. The decision of the Benefit Committee in such matters shall be final, binding, and conclusive upon all affected or interested parties. Neither the Plan nor any representative of the Plan has any duty to see to the proper
application of such payments. 
 7.13. Reemployment after Distributions Commence. If a Participant has elected an installment form of
distribution, all such payments shall cease if the Participant is rehired as an Eligible Employee. The portion of the Accounts not distributed shall remain in such Participant’s Accounts. 

7.14. Erroneous Payments. All benefits under the Plan shall be paid to the Participant, Spouse or Beneficiary entitled thereto
(“Payee”) in cash and/or in Company Common Stock, provided that if any such payment shall be made in error or in excess of the amount due, the Payee shall be required to return any such payment or excessive portion of any payment upon
request of the Benefit Committee. 

  
 - 42 - 

 7.15. Finality of Distributions. Payments made in accordance with this Article shall
discharge all liabilities for such payments under the Plan. 
 ARTICLE VIII 

WITHDRAWALS AND LOANS 

8.1. Withdrawals. Except as provided in an applicable supplement or appendix to this Plan, Accounts of Participants who have not ceased
to be Employees may be withdrawn in accordance with the following rules: 
  

	 	(a)	After-Tax/Rollover Contributions. A Participant may elect to withdraw all or a portion of the total value (determined as of the date described below) of his After-Tax
Account and/or Rollover Account including earnings thereon. 

  

	 	(b)	Employer Matching, Employer Non-Matching Contribution and Profit Sharing Account Withdrawals. A Participant who has completed five or more years of participation may elect to withdraw all or a portion of the
total value (determined as of the date described below) of (i) the portion of his Employer Matching Account that represents matching contributions made under the Prior Plan for plan years prior to 2008 and the earnings thereon, (ii) his
Profit Sharing Account, if any, and (iii) his Employer Non-Matching Contribution Account if such Account is fully Vested. The amount to be withdrawn is satisfied by reducing the value determined for each such Account by the amount requested to
be withdrawn by the Participant, without regard to any distinction between contributions and earnings. 

  

	 	(c)	Withdrawals after Age 59 1⁄2. Except as otherwise provided in an applicable supplement or appendix to this Plan, a
Participant who has attained age 59 1⁄2 and who is fully vested may elect to withdraw all or a portion of the value (determined as of the date described below)
of the Vested portion of his Accounts. Only one withdrawal per calendar year may be made pursuant to this subsection. 

  

	 	(d)	Hardship Withdrawal. A Participant who has withdrawn all amounts permitted to be withdrawn under subsections (a), (b) and (c) above and who has established hardship (as described below) may elect to
withdraw a specified dollar amount from the Accounts listed in subsection (g) (and no other Accounts) (up to the total amounts described therein). Such withdrawals shall be subject to the following: 

 

	 	(i)	 Immediate and Heavy Financial Need. A withdrawal shall be deemed to be made on account of a hardship only if it is made on account of an
immediate and heavy financial need of the Participant and is necessary to satisfy such financial need. A Participant will be considered to have an 

  
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immediate and heavy financial need if and only if the withdrawal is necessary for one of the circumstances described below: 

 

	 	(A)	Expenses for medical care described in Code Section 213(d) incurred by the Participant, the Participant’s Spouse, or any dependents of the Participant; 

 

	 	(B)	The purchase of a principal residence of the Participant (excluding mortgage payments); 

  

	 	(C)	Payment of tuition, room and board, and related educational fees for the next 12 months of post-secondary education for the Participant, or his Spouse, children, or dependents; 

 

	 	(D)	The need to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant’s principal residence; 

 

	 	(E)	Payment of burial or funeral expenses for the Participant’s parent, spouse, children or dependents; 

  

	 	(F)	Payment of expenses for the repair of damage to the Participant’s principal residence that would be deductible as a casualty loss under Code Section 165 (without regarding to whether the loss exceeds 10% of
the Participant’s adjusted gross income); and 

  

	 	(G)	Such other reasons as the Commissioner of Internal Revenue may prescribe. 

 The amount of an
immediate and heavy financial need may include any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the withdrawal. 

For purposes of this Section, a Participant’s dependents shall be those persons who would qualify as dependents under Code
Section 152, without regard to whether a qualifying relative has gross income in excess of the amount permitted by Section 152(d)(1)(B), or, for purposes of subparagraphs (i)(A) and (i)(C), whether the Participant is himself treated as a
dependent of another person (as provided in Section 152(b)(1)) or whether any person who would otherwise be a dependent files a joint return (as provided in Section 152(b)(2)). To the extent provided in Regulations or other guidance issued
by the Internal Revenue Service pursuant to Section 826 of the Pension Protection Act of 2006, the Plan Administrator may permit a Participant’s Beneficiary to be treated as a dependent solely for purposes of this Section 8.1(d)(i).

  

	 	(ii)	 Withdrawal Limited to Need. A withdrawal shall be treated as necessary to satisfy an immediate and heavy financial need if and only if the
withdrawal does not exceed the amount of such need, and the Participant has first obtained all distributions and withdrawals, other than hardship withdrawals, and all nontaxable loans currently available under all plans

  
 - 44 - 

	 	
maintained by the Employers and Commonly Controlled Entities of the Employers. If the Participant requests a hardship withdrawal pursuant to this Section 8.1(d) and is eligible to make an
election to receive cash dividends pursuant to Section 6 of Supplement No. 1 of the Plan, then the Participant must elect to have paid to him or her all cash dividends that are currently available to him or her under the ESOP portion of
the Plan by reason of the dividend election provisions described in Section 6 of Supplement No. 1 of the Plan. 

  

	 	(iii)	Impact of Withdrawal on Future Participation. Upon receiving a hardship withdrawal, a Participant shall be precluded from making any further Pay Deferral Contributions and from having further Employer Matching
Contributions made on his behalf under the Plan or any other plan of deferred compensation maintained by his Employer or any Commonly Controlled Entity until the beginning of the first pay period coincident with or next following the end of a period
of 6 months commencing with the date of such withdrawal. The Participant’s Pay Deferral Contributions shall recommence at the same rate (unless the Participant elects otherwise), or, in the case of a Participant described in
Section 5.1(b), at the rate that would be in effect at the end of the six month period if the Pay Deferral Contributions had not been suspended. The denial of a Participant’s request for a hardship withdrawal shall be treated as a denial
of a claim for a benefit under the Plan, and shall thus be subject to the claim and review procedures set forth under Section 9.10. 

  

	 	(e)	Withdrawals During Active Military Service. A Participant who is on active duty in the armed forces of the United States for a period of 30 days or more shall be permitted to withdraw the balance in his or her
Accounts in the same manner as if his or her employment had terminated, regardless of whether the Participant is still otherwise treated as an Employee. A Participant who receives a withdrawal under this subsection (e) is ineligible to make Pay
Deferral Contributions under Section 5.1 for a period of six months commencing on the first Entry Date following the date on which the Accounts are valued under this subsection for purposes of such withdrawal. Such Participant’s Pay
Deferral Contributions shall recommence at the same rate (unless the Participant elects otherwise) on the sixth Entry Date following the Entry Date on which such Contributions were suspended. 

 

	 	(f)	Requesting Withdrawals. A Participant may request a withdrawal in the manner prescribed by the Benefit Committee. Upon receipt and approval of a withdrawal request, the Trustee shall mail a federally mandated tax
information notice to the Participant. To receive payment of a withdrawal, the Participant must telephone the Trustee (in the manner prescribed by the Benefit Committee) no earlier than seven days and no later than 30 days after the day he requested
the withdrawal. If the Participant fails to telephone the Trustee within this period, the withdrawal request shall be canceled. 

  
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	 	(g)	Hierarchy. Hardship withdrawals shall be deducted from the Participant’s Accounts in the following order (and shall be deducted on a pro rata basis from the investment funds to which amounts in such Accounts
are allocated), or in such other order as the Plan Administrator may provide: 

  

	 	(i)	The portion of the Participant’s After-Tax Account attributable to after-tax contributions made under a predecessor plan prior to 1987. 

 

	 	(ii)	The remaining portion of the Participant’s After-Tax Account and the portion of such account attributable to earnings, in the proportion prescribed by Code Section 72. 

 

	 	(iii)	Rollover Account. 

  

	 	(iv)	Profit Sharing Account. 

  

	 	(v)	The portion of the Participant’s Employer Matching Account attributable to matching contributions made to the Prior Plan for plan years prior to 2008. 

 

	 	(vi)	The remaining vested portion of the Participant’s Employer Non-Matching Account. 

  

	 	(vii)	A portion of the Participant’s Before-Tax Account (but in no event more than the total balance in such Account) equal to the balance of the before-tax account under the Prior Plan on December 31, 1988, plus
all Pay Deferral Contributions made after such date, minus all prior hardship withdrawals charged to the Before-Tax Account. 

  

	 	(h)	Frequency. Except for hardship withdrawals made pursuant to subsection (d) hereof and the limitation in subsection (c) above, only one withdrawal may be made per calendar month pursuant to this Section.

 After a withdrawal in accordance with this Section, amounts remaining in the Participant’s Accounts, if any, shall continue to be
held, invested and adjusted in accordance with the Plan and Trust Agreement until such amounts are subsequently withdrawn or otherwise distributable in accordance with Article VII. Withdrawals under this Section shall ordinarily be based on a
valuation of the applicable Accounts as of the Accounting Date immediately preceding the date on which such request is processed and/or approved by the Trustee or Benefit Committee. Actual distribution of amounts withdrawn shall ordinarily occur as
soon as practicable after the request is processed. 
 8.2. Loans to Participants. Except as provided in an applicable supplement or
appendix to this Plan, loans shall be extended to Participants who are Employees of participating Employers (other than any Participant located outside of the United States who, at the time the 

  
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loan is made, is not receiving regular payments of compensation under a United States payroll system), subject to the following rules: 

 

	 	(a)	Authority. The Benefit Committee, upon request by a Participant in the manner described in subsection (n) below, shall direct the Trustee to make a loan from the Trust Fund to a Participant.

  

	 	(b)	Loan Documents. Each loan shall be evidenced by a written promissory note providing for repayment and interest. As described in subsection (n) below, the promissory note shall consist of a loan agreement, to
which the Participant shall indicate his agreement by endorsing the loan check. The Benefit Committee shall make appropriate arrangements with the Trustee regarding the custody of such notes. 

 

	 	(c)	Applicability. The Benefit Committee shall exercise its authority under this Section in a manner which makes loans available to all eligible Plan Participants on a reasonably equivalent basis. Loans shall also be
made available to any other person who has an account balance under the Plan if the person is a “party in interest” with respect to the Plan, as defined in section 3(14) of ERISA (each such person referred to in this Section as a
“Participant”). 

  

	 	(d)	Frequency and Number. The Benefit Committee may establish conditions on the frequency and number of loans to Participants. As of the Effective Date, no Participant may have more than two loans outstanding at any
given time. 

  

	 	(e)	Term of Loan. The term of the loan will be for a period of time not exceeding five years. Notwithstanding the foregoing, the term of the loan may be for a period of up to ten years if the loan is used to acquire
any dwelling unit which within a reasonable time is to be used as a principal residence of the Participant in accordance with Code Section 72(p)(2). The Benefit Committee shall be entitled to rely on any representation made by a Participant
with regard to the purpose for which a loan is requested. 

  

	 	(f)	Minimum Loan. From time to time the Benefit Committee may establish a minimum loan amount, provided that such limitation shall not exceed $1,000. As of the Effective Date the minimum loan amount is $500.

  

	 	(g)	Maximum Loan. The principal amount of the loan may not exceed the lesser of: 

  

	 	(i)	$50,000, provided that such dollar limit shall be reduced by the highest outstanding balance of loans to the Participant from the Plan and any other “qualified employer plan” (as defined in Code
Section 72(p)(4)) maintained by the Employer or any Commonly Controlled Entity of the Employer at any time in the prior 12 consecutive month period; or 

  

	 	(ii)	50% of the sum of the Participant’s vested Accounts under this Plan, provided that such percentage limit shall be reduced by the percentage of such Participant’s Accounts which is then invested in any other
loans. 

 The limitations of subparagraphs (i) and (ii) above shall be applied as of the Accounting Date immediately
preceding or coincident with the day the loan is 

  
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requested pursuant to the procedures specified in subsection (n) below; provided, however, that the Participant’s vested Accounts as of such request date shall be reduced by the amount
of any withdrawals made to such Participant between the date of the loan request and the date such loan is processed by the Trustee. 
  

	 	(h)	Interest Rate. The interest rate charged to Participants for loans under this Section shall be determined by the Benefit Committee from time to time. The rate selected by the Benefit Committee for this purpose
shall be a rate which the Benefit Committee determines is within the range of prevailing rates which would be charged by commercial lenders for loans of a similar type. For this purpose the Benefit Committee may rely on such evidence as it may deem
reliable concerning such prevailing rates and all decisions of the Benefit Committee regarding such rates shall be conclusive. 

  

	 	(i)	Security. Loans shall be secured by all of the balances in the Participant’s Accounts, together with such additional collateral as the Benefit Committee may require either at the time of the loan or from
time to time thereafter. In determining the adequacy of such security, the Benefit Committee shall not consider any non-vested portion of the Participant’s Accounts and a Participant’s vested Accounts shall not be considered adequate
security unless immediately prior to disbursement of the loan the vested portions of the Participant’s Accounts (as of the most recent Accounting Date) have an aggregate value equal to at least twice the sum of the face amount of such loan and
the then outstanding balances of all prior loans to such Participant. 

  

	 	(j)	Loan Fees. An application fee shall be charged against the Participant’s Account for each loan that is approved. The amount of such fee shall be established by the Benefit Committee from time to time. As of
the Effective Date, such fee is $50. 

  

	 	(k)	Repayment Terms. All Plan loans shall be repaid under a written repayment schedule by payroll deduction and shall be evidenced by a written promissory note payable to the Trustee. If a Participant with an
outstanding loan incurs a Termination of Employment thereby making payroll deductions impossible, such Participant must repay the entire outstanding balance of the loan upon the earlier of (i) the expiration of the term of the loan, taking into
account any acceleration provided for in the loan documents, and (ii) the last day of the quarter following the first quarter in which a payment is missed. In no event shall principal and interest payments be less frequent than quarterly on a
level amortization basis in substantially nonincreasing installments. Loans may be prepaid in full at any time. Loan repayments under this Plan may be suspended with respect to a Participant in military service to the extent required by USERRA and
in accordance with Code Section 414(u)(4). 

  

	 	(l)	Distribution Prior to Loan Repayment. Notwithstanding any other provision of the Plan, any distribution under this Plan to or on behalf of a Participant to whom one or more loans are then outstanding shall first
be applied by the Trustee to reduce the outstanding balances of such loans. For this purpose loan reductions shall first be applied to satisfy any loan installments in default. Payments shall be applied to loans which are not in default pro rata.

  
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	 	(m)	Events of Default. In the event of a default in payment of either principal or interest that is due under the terms of any loan, the Plan Administrator may declare the full amount of the loan due and payable and
may take whatever action may be lawful to remedy the default. With respect to a Participant who terminates employment, default will be deemed to have occurred if any loan is not paid in full within 90 days following his Termination of Employment, as
described in subsection (k) above. With respect to a Participant who is an Employee on an unpaid leave of absence, default will be deemed to have occurred if any payment is not made within one year following the due date for any payment of
principal and/or interest for which no payment is made by the Participant. The Trustee may offset amounts owed by the Participant against Plan benefits owed to him or her without being in violation of Section 11.2. 

 

	 	(n)	Requesting and Processing Loans. A Participant may request a loan in the manner prescribed by the Benefit Committee, and the Benefit Committee shall determine the form of documentation required for each loan.

  

	 	(o)	Hierarchy. Loan amounts shall be deducted from the Participant’s Accounts in the following order (and shall be deducted on a pro rata basis from the investment funds to which amounts in such Accounts are
allocated), or in such other order as the Plan Administrator may provide: 

  

	 	(i)	Profit Sharing Account. 

  

	 	(ii)	Employer Matching Account. 

  

	 	(iii)	Vested portion of Employer Non-Matching Contribution Account. 

  

	 	(iv)	Rollover Account. 

  

	 	(v)	Roth Rollover Account. 

  

	 	(vi)	Before-Tax Account. 

  

	 	(vii)	After-Tax Account. 

 Repayments of loan principal will be credited to the Participant’s
Accounts in the same order as above. Repayments of interest will be credited on a pro rata basis to the Accounts from which the loan was deducted. All loan repayments will be allocated to investment funds in accordance with the Participant’s
existing investment elections for the applicable Accounts. 
 8.3. No Representation Regarding Tax Effect of Withdrawals or Loans.
Neither the Employers, the Benefit Committee, the Trustee nor any other Plan representative shall be construed as representing the tax effects of any withdrawals or loans made in accordance with this Article. It shall be the responsibility of
Participants requesting withdrawals or loans to consider the tax effects of such withdrawals or loans. 

  
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 ARTICLE IX 

BENEFIT COMMITTEE 
 9.1.
Membership of Benefit Committee. The Benefit Committee, consisting of at least three persons, shall be appointed by the Compensation Committee of the Board of Directors or its delegate. The Secretary of the Company shall certify to the
Trustee from time to time the appointment to (and termination from) office of each member of the Benefit Committee and the person, if any, who is selected as secretary of the Benefit Committee. The appointment of a member of the Committee and
acceptance of such appointment by any person constitutes an agreement by and between the Company and such Committee member that the member, acting in concert with the other Committee members, shall have and will exercise the powers and duties
described herein, including the power and duty to interpret this Plan and determine the benefits to which Participants are entitled hereunder. Notwithstanding the foregoing, from the period beginning on and after the Effective Date through the
Spin-Off Date, the Benefit Committee shall consist of the administrative committee of the Predecessor Employer under the Prior Plan with general responsibility for administering the Plan and the investment committee of the Predecessor Employer under
the Prior Plan with responsibility for directing the investment of the Trust Fund. 
 9.2. Administrative Powers and Duties. The
Benefit Committee shall have such powers and duties necessary to discharge its duties hereunder, including, but not limited to, the following: 
  

	 	(a)	Within its complete and unfettered discretion to construe and interpret the terms of the Plan and Trust Agreement provisions and to resolve all questions arising under the Plan including questions of Plan participation,
eligibility for benefits and the rights of Employees, Participants, Beneficiaries and other persons to benefits under the Plan and to determine the amount, manner and time of payment of any benefits hereunder; 

 

	 	(b)	To prescribe procedures, rules and regulations to be followed by Employees, Participants, Beneficiaries and other persons or to be otherwise utilized in the efficient administration of the Plan consistent with the
Trust; 

  

	 	(c)	To make determinations as to the rights of Employees, Participants, Beneficiaries and other persons to benefits under the Plan and to afford any Participant or Beneficiary dissatisfied with such determination with
rights pursuant to a claims procedure adopted by the Benefit Committee; 

  

	 	(d)	To settle or compromise claims against the Plan by Participants, Beneficiaries and other persons; 

  

	 	(e)	To enforce the Plan in accordance with the terms of the Plan and the Trust and to enforce its procedures, rules and regulations; 

  
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	 	(f)	To be responsible for the preparation and maintenance of records necessary to determine the rights and benefits of Employees, Participants and Beneficiaries or other persons under the Plan and the Trust and to request
and receive from the Employers such information necessary to prepare such records; 

  

	 	(g)	To prepare and distribute in such manner as it deems appropriate and to prepare and file with appropriate government agencies information, disclosures, descriptions and reporting documents regarding the Plan, and in the
preparation and review of such reports the Benefit Committee is entitled to rely upon information supplied to it by the Employees, accountants, counsel, actuaries, the Investment Managers and any insurance institutions described in the Trust
Agreement; 

  

	 	(h)	To appoint or employ individuals to assist in the administration of the Plan and other agents (corporate or individual) that the Benefit Committee deems advisable, including legal counsel and such clerical, medical,
accounting, auditing, actuarial and other services as the Benefit Committee may require in carrying out the provisions of the Plan. However, no agent except an Investment Manager or fiduciary named in the Plan shall be appointed or employed in a
position that would require or permit him or her: (i) to exercise discretionary authority or control over the acquisition, disposition or management of Trust assets; (ii) to render investment advice for a fee; or (iii) to exercise
discretionary authority or responsibility for Plan administration; 

  

	 	(i)	To cause to be prepared and to cause to be distributed, in such manner as the Benefit Committee determines to be appropriate, information explaining the Plan and Trust; 

 

	 	(j)	To furnish to the Employers upon request such annual or other reports with respect to the administration of the Plan as are reasonable and appropriate; 

 

	 	(k)	To receive, review and keep on file (as it deems convenient or proper) reports of the financial condition, receipts and disbursements, and assets of the Trust; 

 

	 	(l)	To determine the method by which all notices and other documents required or permitted to be given to a Participant, Beneficiary or other person under the Plan or any applicable law shall be given, and the method by
which Participants and Beneficiaries may exercise any elections permitted by the Plan, which methods may include the use of e-mail, interactive internet sites, voice response systems, and other electronic media to the extent permitted by applicable
regulations; 

  

	 	(m)	To amend the Plan to the extent provided in Section 10.1(d); and 

  

	 	(n)	To discharge all other duties set forth in the Plan. 

 Except as otherwise specifically provided herein, the
Benefit Committee has no power to add to, subtract from or modify any of the terms of the Plan, nor to change or add to any benefits provided by the Plan, nor to waive or fail to apply any requirements of eligibility for benefits

  
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under the Plan; provided, however, that nothing contained herein shall be construed to limit the Benefit Committee’s authority to interpret and construe the Plan. Procedures and policies
adopted by the Benefit Committee may be inconsistent with any provision of the Plan that is ministerial or administrative in nature, and shall be deemed an amendment to the Plan to the extent of the inconsistency. The authority of the
Benefit Committee may also be exercised in routine matters by the Corporate Vice President-Human Resources of the Company or persons acting under her authority, and any action taken by any such person
within the apparent scope of his authority shall be presumed authorized and binding on all Participants, subject to the review of the Benefit Committee. 

9.3. Investment Powers and Duties. The Benefit Committee shall have such powers necessary to discharge its duties hereunder, including,
but not limited to, the following: 
  

	 	(a)	To establish and from time to time revise the investment policy of the Plan, to communicate and consult with the Company and the Trustee and any Investment Manager or insurance institution regarding the investment
policy applicable to the Plan as a whole or to any individual investment fund; 

  

	 	(b)	To supervise the performance by the Trustee and any Investment Manager or insurance institution regarding their responsibilities under the Plan and Trust. The Benefit Committee shall review and analyze performance
information supplied by the Trustee and the Investment Managers or insurance institutions to the Benefit Committee and/or any such performance information obtained independently by the Benefit Committee and shall report the results of such analysis
to the Board of Directors or its delegate from time to time in such form and with such degree of frequency as the Benefit Committee shall determine proper. Such responsibilities of the Benefit Committee with respect to supervision, review and
analysis shall be performed no less frequently than once each Plan Year and shall ordinarily not be required more frequently than once each calendar quarter. The Trustee, Investment Managers and insurance institutions have been allocated the
responsibility for day-to-day investment management of the Plan and Trust and the responsibilities of the Benefit Committee hereunder are not intended to relieve the Trustee, Investment Managers or insurance institutions of such on-going investment
management responsibilities; 

  

	 	(c)	To instruct the Trustee, the Investment Managers and insurance institutions with respect to the proper application of contributions made under the Plan; 

 

	 	(d)	To determine the proper allocation of investment responsibilities with respect to the assets of the Plan between the Trustee and any Investment Manager or insurance institution acting hereunder or under the terms of the
Trust and to allocate fiduciary responsibilities among these parties; 

  

	 	(e)	To the extent not provided to the contrary in the Trust Agreement, to appoint the Trustee and any Investment Managers or insurance institutions, to direct the establishment of any investment fund and to remove the
Trustee and any Investment Managers or insurance institutions or appoint additional Trustees, Investment Managers or insurance institutions; 

  
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	 	(f)	To review any accounts submitted by the Trustee and any Investment Managers or insurance institutions and to report to the Board of Directors or its delegate with respect to any such accounts; 

 

	 	(g)	Following the Benefit Committee’s determination of the benefit rights of any Participant or Beneficiary, to aggregate information concerning such benefits and authorize and direct the Trustee with respect to the
commencement, modification or cessation of such benefit payments; 

  

	 	(h)	To supervise the performance of fiduciary responsibilities by others including the Trustee and any Investment Managers; 

  

	 	(i)	To appoint and utilize the services of administrative staff employees of the Company and the other Employers for the performance of duties delegated to the Benefit Committee hereunder and to rely upon information
received from such staff employees; provided that in both cases the Benefit Committee reasonably believes the performance of such services and the preparation of such information is within the competence of such staff employees; 

 

	 	(j)	To furnish to the Employers, upon reasonable request, such annual or other reports as the Employers deem necessary regarding the administration of the Plan; and 

 

	 	(k)	To employ reputable agents (who may also be Employees) and to delegate to them any of the administrative powers or duties imposed upon the Benefit Committee or the Employers. 

9.4. Conflicts of Interest. No member of the Benefit Committee shall participate in any action on matters involving solely such
member’s rights or benefits as a Participant under the Plan. 
 9.5. Compensation; Reimbursement. No member of the Benefit
Committee shall receive compensation for his services, but the Employers shall reimburse him for any necessary expenses incurred in the discharge of his duties. 

9.6. Standard of Care. The Benefit Committee shall perform its duties under this Plan in accordance with the terms of this document and
the Trust Agreement solely in the interest of the Participants and for the exclusive purposes of providing retirement benefits to Participants and defraying the reasonable expenses of Plan administration and operation. The Benefit Committee shall
also perform its duties under this Plan with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man, acting in a like capacity and familiar with such matters, would use in the conduct of an enterprise of a
like character and with like aims. 

  
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 9.7. Action by the Benefit Committee. Action by the Benefit Committee is subject to the
following special rules: 
  

	 	(a)	The Committee may act by meeting or by document signed without meeting and documents may be signed through the use of a single document or concurrent documents. 

 

	 	(b)	The Committee shall act by a majority, and such action shall be as effective as if such action had been taken by all Committee members, provided that by majority action one or more Committee members or other persons may
be authorized to act with respect to particular matters on behalf of all Committee members. 

  

	 	(c)	The Committee may, but is not required to, select a secretary, who may but need not be a Committee member, and the certificate of such secretary that the Committee has taken or authorized any action shall be conclusive
in favor of any person relying upon such certificate. 

  

	 	(d)	The Committee may act through agents or other delegates and may retain legal counsel, auditors or other specialists (who may also be Employees) to aid in the Committee’s performance of its responsibilities.

  

	 	(e)	The Committee may adopt, and modify from time to time, written operating procedures specifying the manner in which its duties will be performed, which operating procedures, to the extent not inconsistent with the Plan,
shall be deemed a part of the Plan. 

 9.8. Resignation or Removal of Committee Member. Any person serving as a Benefit
Committee member may resign from such Committee at any time by written notice to the Board of Directors or its delegate or may be removed by the Board of Directors or its delegate at any time by written notice to such member. The Company shall fill
any vacancy in the membership of the Benefit Committee as soon as practicable. Until any such vacancy is filled, the remaining members of the Benefit Committee may exercise all of the powers, rights and duties conferred on such Committee. 

9.9. Uniform Application of Rules by Benefit Committee. The Benefit Committee shall apply all rules, regulations, procedures and
decisions uniformly and consistently to all Employees and Participants similarly situated, as determined by the Benefit Committee. Any ruling, regulation, procedure or decision of the Benefit Committee which is not inconsistent with the provisions
of the Plan or the Trust shall be conclusive and binding upon all persons affected by it. There shall be no appeal of any ruling by the Benefit Committee which is within its authority, except as provided in Section 9.10 below. When making a
determination or a calculation, the Benefit Committee is entitled to rely on information supplied by the Employer, Trustee, Investment Managers, insurance institutions, accountants and other professionals including legal counsel for the Company.

 9.10. Claims Procedure. Each person entitled to benefits under the Plan (the “Applicant”) must submit a written claim
for benefits to the Benefit Committee. If a claim for benefits by the Applicant is denied, in whole or in part, the Benefit Committee shall furnish the 

  
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Applicant within 90 days after receipt of such claim (or within 180 days after receipt if special circumstances require an extension of time and written notice of the extension is given to the
Applicant before the commencement of the extension) a written notice which specifies the reason for the denial, refers to the pertinent provisions of the Plan on which the denial is based, describes any additional material or information necessary
for properly completing the claim and explains why such material or information is necessary, and explains the claim review procedures of this Section 9.10. Such notice will further describe that the Applicant has a right to bring a civil
action under Section 502 of ERISA if his claim is denied after an appeal and review. Any Applicant whose claim is denied under the provisions described above may request a review of the denied claim by written request to the Benefit Committee
within 60 days after receiving notice of the denial. In connection with such request, the Applicant or his authorized representative may review pertinent documents, submit issues and comments in writing. If such a request is made, the Benefit
Committee shall make a full and fair review of the denial of the claim and shall make a decision not later than 60 days after receipt of the request, unless special circumstances (such as the need to hold a hearing) require an extension of time, in
which case a decision shall be made as soon as possible but not later than 120 days after receipt of the request for review, and written notice of the extension shall be given to the Applicant before the commencement of the extension. The decision
on review shall be in writing and shall include specific reasons for the decision and specific references to the pertinent provisions of the Plan on which the decision is based. Such notice will further describe that the Applicant has a right to
bring a civil action under Section 502 of ERISA if his claim is denied after an appeal and review. No person entitled to benefits under the Plan shall have any right to seek review of a denial of benefits, or to bring any action to enforce a
claim for benefits, in any court prior to his filing a claim for benefits and exhausting all of his rights under this Section 9.10, or more than 180 days after receiving the decision on review of his claim. Although not required to do so, an
Applicant may choose to state the reason or reasons he believes he is entitled to benefits, and may choose to submit written evidence, during the initial claim process or review of claim denial process. However, failure to state any such reason or
submit such evidence during the initial claim process or review of claim denial process, or by written notice to the Benefit Committee within 60 days of the date of the decision on the review of the claim denial, shall permanently bar the Applicant,
and his successors in interest, from raising such reason or submitting such evidence in any forum at any later date. An Applicant whose claim is denied initially or on review is entitled to receive, on request and free of charge, reasonable access
to, and copies of, all documents, records, and other information relevant to such claim for benefits. 
 9.11. Investments in Company
Common Stock. The Benefit Committee, or an Investment Manager selected by the Benefit Committee, is responsible for directing the Trustee with respect to investments of Plan assets in Company Common Stock. In connection with such investments,
the Benefit Committee (or such Investment Manager) has the authority to cause the Trustee to exercise or sell in the open market any options, rights or warrants which entitle the Plan to subscribe to or purchase shares of Company Common Stock.
Notwithstanding the foregoing, all certificates for shares of Company Common Stock held on behalf of the Plan shall be in the custody of the Trustee and shall be held in the name of the Trustee or a nominee of the Trustee. Prior to any distribution
of Plan assets in the form of Company Common Stock pursuant to Section 10.6 or any other provision of the Plan, the Benefit Committee shall cause such Common Stock held by the Trust, to the extent not registered under the Securities Act of
1933, to be registered to the extent required under said Act. 

  
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 ARTICLE X 

AMENDMENT, TERMINATION OR PLAN MERGER 

10.1. Amendments. 
  

	 	(a)	Power to Amend. The Company will have the right at any time to amend in whole or in part any or all of the provisions of the Plan except as expressly set forth below: 

 

	 	(i)	no amendment will increase the duties or liabilities of the Trustee without its written consent; 

  

	 	(ii)	no amendment will have the effect of vesting in any Employer any interest in any funds, securities or other property subject to the terms of the Plan and Trust, except as permitted by Section 9.10;

  

	 	(iii)	no amendment will authorize or permit at any time any part of the corpus or income of the Trust Fund to be used for or diverted to purposes other than for the purposes specified in the Plan; and 

 

	 	(iv)	no amendment will reduce a Participant’s Account Balance, or the vested portion thereof, subject to Section 10.1(c). 

The Company’s authority to amend the Plan has been delegated to the Benefit Committee to the extent provided in
Section 10.1(d). The authority to amend the Plan in any respect (whether or not such amendment is within the authority delegated to the Benefit Committee) may also be exercised by the Board of Directors or any other person to whom the Board
delegates such authority. 
  

	 	(b)	Effect of Amendment. If a person is not an Eligible Employee on or after the effective date of any amendment to the Plan, the amendment will be deemed as having no effect on the amount of such person’s
benefits unless the amendment specifically provides otherwise. 

  

	 	(c)	Restriction on Amendment. Except as otherwise permitted by Code Section 411 or regulations or other administrative guidance issued thereunder, 

 

	 	(i)	no amendment to the Plan shall reduce a Participant’s Account Balance as of the effective date of the amendment. 

  

	 	(ii)	any amendment that affects the determination of the vested portion of a Participant’s Account Balance shall apply to a Participant who the date that is sixty days after the effective date of the amendment has
completed at least three Years of Vesting Service only if the effect of the amendment is to increase the vested portion of the Participant’s Account Balance (including the portion accrued after the effective date of the amendment). The
preceding language concerning an amendment to the Plan’s vesting schedule will also apply when a Plan with different requirements for vesting is merged into the Plan. 

  
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	 	(iii)	the Plan will not be amended so as to eliminate or reduce an early retirement benefit or a retirement-type subsidy, or eliminate an optional form of payment, with respect to a
Participant’s Account Balance as of the effective date of the Amendment. The foregoing limitations do not apply to the portion of a Participant’s Account Balance accruing after the date of the amendment. 

 

	 	(d)	Authority of Benefit Committee. The Benefit Committee has been delegated the authority of the Company to adopt any amendments to the Plan as the Benefit Committee may determine to be necessary or appropriate,
except that no amendment shall be made to any Plan without approval of the Board of Directors unless the Benefit Committee determines that such amendment will not significantly change the overall level of benefits provided by such Plan;
significantly change the requirements for eligibility for participation in the Plan; or add any material new benefit that would significantly increase the cost of the Plan. In illustration but not limitation of the foregoing, the Benefit Committee
is authorized to adopt any amendment to a Plan that it determines to be: 

  

	 	(i)	an amendment that provides for the Plan to be adopted by any business entity acquired by the Company, including providing any special rules applicable to the employees of such business entity; 

 

	 	(ii)	an amendment that the Benefit Committee determines to be of an administrative, ministerial or technical nature only; 

  

	 	(iii)	an amendment that the Benefit Committee determines to be necessary or appropriate to carry out any amendment approved by, or other resolution adopted by, the Board; 

 

	 	(iv)	an amendment that the Benefit Committee determines to be necessary or appropriate to comply with any applicable law, including without limitation any amendment required by the Internal Revenue Service as a condition to
the issuance of a favorable determination letter with respect to the Plan, or necessary to conform the terms of the Plan to established administrative practices or procedures; or 

 

	 	(v)	an amendment that the Benefit Committee determines to be necessary or appropriate to clarify or to resolve any inconsistency or ambiguity in the terms of the Plan. 

The adoption by the Benefit Committee of any amendment to the Plan shall constitute conclusive evidence that the Benefit Committee has
determined such amendment to be authorized under the terms of the foregoing resolution, which determination shall be conclusive and binding on all employees, participants, beneficiaries and other persons claiming any benefit under the Plan. 

  
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 10.2. Plan Termination. The Plan will terminate as to all Employers on the earlier of the
date the Plan is terminated by the Company with respect to all Employers or the earliest date on which one of the events described in subsections (a) through (d) below has occurred with respect to all Employers. The Plan will terminate
with respect to an individual Employer on the first to occur of the following dates: 
  

	 	(a)	Any date that the Plan is terminated with respect to an individual Employer by action of that Employer, provided that the Company and the Trustee have been given prior written notice of such termination and provided
that the Company does not elect to continue the Plan as it applies to such Employer. 

  

	 	(b)	Any date that the Employer is judicially declared bankrupt or insolvent unless the Company elects to continue the Plan as it applies to such Employer. 

 

	 	(c)	Any date an Employer completely discontinues its contributions under the Plan unless the Company elects to continue such contributions. 

 

	 	(d)	Any date the Employer is dissolved, merged, consolidated or reorganized or the date on which the assets of the Employer are completely or substantially sold, unless arrangements have been made whereby the Plan will be
continued by the Company or the other Employers or by a successor to the Employer or purchaser of its assets under Section 10.3. 

10.3. Continuation by a Successor or Purchaser. The Plan and the Trust shall not terminate with respect to an Employer in the event of
dissolution, merger, consolidation or reorganization of such Employer or sale by such Employer of its entire assets or substantially all of its assets if arrangements are made in writing among the Employer, the Company and any successor to the
Employer or purchaser of all or substantially all of its assets whereby such successor or purchaser will continue the Plan and the Trust. If such arrangements are made, such successor or purchaser shall be substituted for the Employer under the Plan
and the Trust. 
 10.4. Plan Merger or Consolidation. The Company may cause the Plan or the Trust or both to be merged or
consolidated with, or may transfer the assets or liabilities under the Plan to, any other qualified plan or from any other qualified plan, provided that the documents and other arrangements regarding such merger, consolidation or transfer provide
safeguards which would cause each Participant in the Plan, if the Plan terminated, to receive a benefit in the event of a termination immediately after such merger, consolidation or transfer which is equal to or greater than the benefit the
Participant would have been entitled to receive if the Plan had terminated immediately prior to such merger, consolidation or transfer. 

10.5. Notice to Participants of Amendments, Terminations or Plan Mergers. Participants shall be notified by the Company within a
reasonable time following any significant amendment, termination, Plan merger or consolidation. The Benefit Committee, in its sole discretion, shall determine whether an amendment is “significant” for purposes of the preceding sentence.

 10.6. Vesting and Distribution on Termination. There shall be no Employer contributions (including Pay Deferral Contributions)
after the date the Plan terminates. 

  
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However, the Trust shall remain in existence, and all of the provisions of the Plan (other than the provisions relating to contributions) which in the sole opinion of the Trustee are necessary,
shall remain in full force and effect until all the assets of the Plan are distributed in accordance with the terms of the Plan and the Trust. The benefits of each Participant affected by a termination or partial termination will be fully vested and
will be payable to such Participant in a lump sum as soon as practicable, unless other arrangements are previously made in accordance with Article VII. Notwithstanding the foregoing, (a) if the Plan assets to be distributed to Participants in
accordance with this Section 10.6 include Company Common Stock, prior to such distribution the Company shall cooperate with the Benefit Committee to cause all such Company Common Stock, to the extent not registered under the Securities Act of
1933, to be registered to the extent required under said Act, and (b) in the case of a partial termination, any benefits attributable to cash dividends pending investment in Company Common Stock in accordance with Section 7 of Supplement
No. 1 at the time of the partial termination shall become payable to such Participants following such investment in Company Common Stock. 

ARTICLE XI 

GENERAL PROVISIONS 
 11.1.
No Employment Guarantee. The establishment of the Plan, any modification thereof, the creation of any fund or Account, or the payment of any benefits shall not be construed as giving to any Participant or other person any legal or equitable
right against the Employers, the Benefit Committee, the Trustee or any Plan representative except as herein provided. Under no circumstances shall the terms of employment with the Employer of any Participant be modified or in any way affected
hereby. The maintenance of this Plan shall not constitute a contract of employment with the Employer. Participation in the Plan will not give any Participant a right to be retained as an Employee of any Employer. 

11.2. Nonalienation of Plan Benefits. The rights or interests of any Participant or any Beneficiary to any benefits or future payments
hereunder shall not be subject to attachment or garnishment or other legal proceeding or process by any creditor of any such Participant or Beneficiary nor shall any such Participant or Beneficiary have any right to alienate, anticipate, commute,
pledge, attach, encumber or assign any of the benefits or rights which he may expect to receive, contingently or otherwise under the Plan except as may be required by applicable federal law, by Section 8.2, or to comply with a “Qualified
Domestic Relations Order” (as defined in Code Section 414(p)). The Benefit Committee shall establish written procedures consistent with Code Section 414(p) and ERISA Section 206(d)(3) to determine the qualified status of any
domestic relations order, which procedures may provide that a Participant’s vested Account may be distributed to an alternate payee prior the Participant’s termination of employment. 

11.3. Action by an Employer. Action required or permitted to be taken by an Employer may be taken by action of the board of directors
of that Employer or by a person or committee of persons authorized to act by said board. The Company’s powers may be exercised by the Board of Directors or a person or committee of persons authorized to act by the Board of Directors or by the
Company’s chief executive officer or his delegate. 

  
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 11.4. Applicable Law. The Plan and Trust shall be construed in accordance with the
provisions of ERISA and other applicable federal laws. To the extent not inconsistent with such laws, this Plan shall be construed in accordance with the laws of Illinois. 

11.5. Participant Litigation. In any action or proceeding regarding the Plan assets or any property constituting a portion or all
thereof or regarding the administration of the Plan, Employees or former employees of the Employers or their Beneficiaries or any other persons having or claiming to have an interest in this Plan shall not be necessary parties and shall not be
entitled to any notice or process. Any final judgment which is not appealed or appealable and may be entered in any such action or proceeding shall be binding and conclusive on the parties hereto and all persons having or claiming to have any
interest in this Plan. To the extent permitted by law, if a legal action is begun against the Employers, the Benefit Committee or the Trustee by or on behalf of any person and such action results adversely to such person or if a legal action arises
because of conflicting claims to a Participant’s or other person’s benefits, the costs to the Employers, the Benefit Committee or the Trustee of defending the action will be charged to the sums, if any, which were involved in the action or
were payable to the Participant or other person concerned. To the extent permitted by applicable law, acceptance of participation in this Plan shall constitute a release of the Employers, the Benefit Committee, the Trustee and their agents from any
and all liability and obligation not involving willful misconduct or gross neglect. 
 11.6. Participant and Beneficiary Duties. Each
person entitled to benefits under the Plan shall furnish the Benefit Committee with all appropriate documents, evidence, data or information which the Benefit Committee considers necessary or desirable in administering the Plan. 

11.7. Individual Account Statements. At least once each quarter, or at such other intervals as may be required by ERISA, the Benefit
Committee will issue to each Participant an Account Balance statement. 
 11.8. Gender and Number. Words denoting the masculine
gender shall include the feminine and neuter genders and the singular shall include the plural and the plural shall include the singular wherever required by the context. 

11.9. Adequacy of Evidence. Evidence which is required of anyone under this Plan shall be executed or presented by proper individuals
or parties and may be in the form of certificates, affidavits, documents or other information which the Benefit Committee, the Trustee, the Employer or other persons acting on such evidence consider pertinent and reliable. 

11.10. Notice to Participants and Beneficiaries. A notice mailed to a Participant or Beneficiary at his last address filed with the
Benefit Committee will be binding on the Participant or Beneficiary for all purposes of the Plan. 
 11.11. Waiver of Notice. To the
extent permitted by applicable law, any notice under this Plan may be wholly or partially waived by the person entitled to notice. 

  
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 11.12. Successors. This Plan and the Trust will be binding on all persons entitled to
benefits hereunder and their respective heirs and legal representatives, and on the Benefit Committee, the Trustee and their successors. 

11.13. Severability. If any provision of the Plan is held illegal or invalid for any reason, such illegal or invalid provision shall
not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal or invalid provisions had never been contained in the Plan. 

11.14. Nonreversion. Except as provided below, the Employers have no right, title or interest in the assets of the Plan or in the Trust
Fund and no portion of the Trust Fund or the assets of the Plan or interest therein shall at any time revert or be repaid to the Employers. Notwithstanding the preceding sentence, the following Employer contributions or Participant contributions may
be returned to the Employer or the Participant, as the case may be: 
  

	 	(a)	The Employer contributions which cannot be credited to a Participant’s Account because of the limitations of Sections 4.3 or 4.4 may be returned to the Employer. 

 

	 	(b)	All Employer contributions are conditioned upon their deductibility under Code Section 404, and any contributions shall be returned to the applicable Employer or Employers to the extent such contributions are
determined to be nondeductible. Employer contributions and Participant contributions which are made as a result of a mistake of fact may be returned to the Employer or the Participant making those contributions. Employer contributions may only be
repaid under this subsection within 12 months after the date the error or nondeductibility is discovered by the Employer. 

11.15. Qualification of Plan and Trust. The Trust and the Plan taken together are intended to qualify under Section 401(a) so as
to be tax-exempt under Code Section 501(a), as amended. Each of the Trust and the Plan shall also be deemed to be mutually incorporated by reference and to implement and form a part of each other such document. Unless and until advised to the
contrary, the Benefit Committee, the Trustee, any Investment Managers, any insurance institutions and persons dealing with them shall be entitled to assume that the Trust and this Plan are so qualified and tax-exempt. 

11.16. Certain Indemnification. To the extent permitted by applicable law and to the extent that he is not indemnified or saved
harmless under any liability insurance contracts, any present or former Benefit Committee member and any officer, Employee or director of any Employer or its subsidiaries or affiliates shall be indemnified and saved harmless by the Employers from
and against any and all liabilities or allegations of liability, joint or several to which he may be subjected by reason of any act done or omitted to be done in good faith in the administration and operation of the Plan and Trust (and for the acts
and omissions of his agents or co-fiduciaries), including all expenses reasonably incurred in the defense of any action, suit or proceeding (including reasonable attorneys’ fees and reasonable costs of settlement) in the event that the
Employers fail to provide such defense after having been requested to do so. 

  
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 11.17. Voice Response Unit Deemed Written Election or Consent. Where the written election
or consent of a Participant, Spouse, Beneficiary, or alternate payee is required pursuant to the terms of the Plan and/or applicable law, electronic telephone entries made by any such individual via the Company’s automated “voice response
unit” system shall constitute such written election or consent for purposes of the Code and U.S. Treasury regulations to the extent permitted by law. 

11.18. Source of Benefits. All benefits payable under the Plan will be paid or provided for solely from the Trust, and the
participating Employers assume no liability or responsibility therefor. 
 11.19. Reduction for Overpayment. The Benefit Committee
will, whenever it determines that a person has received benefit payments under the Plan in excess of the amount to which the person is entitled under the terms of the Plan, make reasonable attempts to collect such overpayment from the person. If the
person to whom such overpayments were made does not, within a reasonable time, make the requested repayment to the Benefit Committee, and if the overpayment was due to an error by the Plan that the Participant would have no reasonable way of knowing
was an error, the overpayment will be considered as an advance payment of benefits and the Benefit Committee will direct the Trustee to reduce future benefits until the overpayment has been recouped. Nothing contained herein shall be construed to
limit the authority of the Benefit Committee to recover any overpayment by any method otherwise available at law or equity. Any payment made to a person in error shall be considered a separate fund held by such person in trust for the benefit of the
Plan. 
 11.20. No Duplication of Benefits. There shall be no duplication of benefits with respect to benefits provided under the
Plan and the Prior Plan. 
 ARTICLE XII 

SPECIAL TOP-HEAVY RULES 

12.1. Application. Notwithstanding any provisions of the Plan to the contrary, the provisions of this Article XII shall apply and be
effective for any Plan Year for which the Plan shall be determined to be a “Top-Heavy Plan” as provided and defined herein. 

12.2. Special Terms. For purposes of this Article XII, the following terms shall have the following meanings: 

 

	 	(a)	“Aggregate Benefit” means the sum of: 

  

	 	(i)	 The present value of the accrued benefit under each and all defined benefit plans in the Aggregation Group determined on each plan’s individual
Determination Date as if there were a Termination of Employment on the most recent date the plan is valued by an actuary for purposes of computing plan costs under Code Section 412 within the 12-month period ending on the Determination Date of
each such plan, but with respect to the first plan year of any such plan determined by taking into account the estimated accrued benefit as of the Determination Date; provided that the

  
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actuarial assumptions to be applied for purposes of this subparagraph (i) shall be the same assumptions as those applied for purposes of determining the actuarial equivalents of optional
benefits under the particular plan, except that the interest rate assumption shall be 5%; 

  

	 	(ii)	The present value of the accrued benefit (i.e., account balances) under each and all defined contribution plans in the Aggregation Group, valued as of the valuation date coinciding with or immediately preceding the
Determination Date of each such plan, including (A) contributions made after the valuation date but on or prior to the Determination Date, (B) with respect to the first plan year of any plan, any contribution made subsequent to the
Determination Date but allocable as of any date in the first plan year or (C) with respect to any defined contribution plan subject to Code Section 412, any contribution made after the Determination Date that is allocable as of a date on
or prior to the Determination Date; and 

  

	 	(iii)	The sum of each and all amounts distributed (other than a rollover or plan-to-plan transfer) from any Aggregation Group Plan, plus a rollover or plan-to-plan transfer initiated by the Employee and made to a plan which
is not an Aggregation Group Plan during the one-year period ending on the Determination Date, provided such amounts are not already included in the present value of the accrued benefits as of the valuation date coincident with or immediately
preceding the Determination Date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the case of a
distribution made for reason other than separation from service, death, or disability, this provision shall be applied by substituting “five-year period” for “one-year period.” The accrued
benefits of any individual who has not performed services for an Employer during the one-year period ending on the Determination Date shall not be taken into account. 

The Aggregate Benefit shall not include the value of any rollover or
plan-to-plan transfer to an Aggregation Group Plan, the contribution or transfer of which was initiated by a Participant, was from a plan which was not an Aggregation
Group Plan and was made after December 31, 1983, nor shall the Aggregate Benefit include the value of employee contributions which are deductible pursuant to Code Section 219. 

 

	 	(b)	“Aggregation Group” means the Plan and any plan (including a plan that has terminated) which is described in Code Section 401(a), is an annuity contract described in Code Section 403(a), is a
simplified employee pension described in Code Section 408(k) or is a simple retirement account described in Code Section 408(p) maintained or adopted by an Employer or a Commonly Controlled Entity of the Employer in the Current Plan Year
or one of the four preceding Plan Years which is either a “Required Aggregation Group” or a “Permissive Aggregation Group.” 

  
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	 	(i)	A “Required Aggregation Group” means all Aggregation Group Plans (A) in which a Key Employee participates or (B) which enable any Aggregation Group Plan in which a Key Employee participates to
satisfy the requirements of Code Sections 401(a)(4) or 410; 

  

	 	(ii)	A “Permissive Aggregation Group” means all Aggregation Group Plans included in the Required Aggregation Group, plus one or more other Aggregation Group Plans as designated by the Benefit Committee in its sole
discretion, which satisfy the requirements of Code Sections 401(a)(4) and 410 when considered with the other component plans of the Required Aggregation Group. 

  

	 	(c)	“Aggregation Group Plan” means the Plan and each other plan in the Aggregation Group. 

  

	 	(d)	“Current Plan Year” means (i) with respect to the Plan, the Plan Year in which the Determination Date occurs, and (ii) with respect to each other Aggregation Group Plan, the plan year of such other
plan in which occurs the Determination Date of such other plan. 

  

	 	(e)	“Determination Date” means (i) with respect to the Plan and its Plan Year, the last day of the preceding Plan Year, or (ii) with respect to any other Aggregation Group Plan in any calendar year
during which the Plan is not the only component plan of an Aggregation Group, the determination date of each plan in such Aggregation Group to occur during the calendar year as determined under the provisions of each such plan. 

 

	 	(f)	“Former Key Employee” means an Employee (including a terminated Employee) who is not a Key Employee in the Current Plan Year nor during the four preceding Plan Years but who was a Key Employee at any time
prior to the four preceding Plan Years. 

  

	 	(g)	“Key Employee” means any Employee or former Employee (including any deceased Employee) who at any time during the Plan Year that includes the Determination Date is: 

 

	 	(i)	An officer of an Employer or a Commonly Controlled Entity of an Employer whose total Compensation from the Employer and the Commonly Controlled Entity during the Plan Year is greater than $130,000 (as adjusted under
Code Section 416(i)(1) for Plan Years beginning after December 31, 2002); provided, however, that no more than the lesser of (A) 50 Employees, or (B) the greater of (1) three Employees or (2) ten percent (rounded to the
next whole integer) of the greatest number of Employees during the Current Plan Year will be considered as officers for this purpose. Such officers considered will be those with the greatest annual compensation as an officer during the Plan Year;

  
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	 	(ii)	A person who owns more than 5% of the value of the outstanding stock of an Employer or of any Commonly Controlled Entity of the Employer or more than 5% of the total combined voting power of all stock of a participating
Employer or of any Commonly Controlled Entity of the Employer (considered separately); or 

  

	 	(iii)	A person who owns more than one percent of the value of the outstanding stock of a participating Employer or of any Commonly Controlled Entity of the Employer or more than one percent of the total combined voting power
of all stock of a participating Employer or of any Commonly Controlled Entity of the Employer (considered separately) and whose total annual compensation from a participating Employer and an Employer is in excess of $150,000. 

For the purpose of this Section, compensation means compensation within the meaning of Code Section 415(c)(3). The rules of Code Sections
416(i)(1)(B) and (C) shall be applied for purposes of determining an Employee’s ownership interest in an Employer or a Commonly Controlled Entity of an Employer for purposes of subparagraphs (ii) and (iii) above. For purposes of
this subsection (g), ‘value’ means fair market value. A Beneficiary (who would not otherwise be considered a Key Employee) of a deceased Key Employee shall be deemed to be a Key Employee in substitution for such Key Employee. 

 

	 	(h)	“Top-Heavy Plan” means the Plan with respect to any Plan Year if the Aggregate Benefit of all Key Employees or the Beneficiaries of Key Employees determined on the Determination Date is an amount in excess of
60% of the Aggregate Benefit of all persons who are Employees within the Current Plan Year, excluding Former Key Employees, plus the Aggregate Benefit of persons who have been Employees (but are not Former Key Employees) within the four preceding
Plan Years but who are not Employees in the Current Plan Year. With respect to any calendar year during which the Plan is not the only Aggregation Group Plan, the ratio determined under the preceding sentence shall be computed based on the sum of
the Aggregate Benefits of each Aggregation Group Plan totaled as of the last Determination Date of any Aggregation Group Plan to occur during the calendar year. 

12.3. Vested Percentage. For any Plan Year that the Plan is a Top-Heavy Plan, the
non-forfeitable percentage of the Employer Matching Account and the Employer Non-Matching Contribution Account of any person who is an Employee for such Plan Year shall
not be less than the amount determined under the following vesting schedule: 
  

					
	 Years of Vesting Service
	  	Vested Percentage	 
	 Less than 1 year
	  	 	0	% 
	 1 year but less than 2 years
	  	 	20	% 
	 2 years but less than 3 years
	  	 	40	% 
	 3 years but less than 4 years
	  	 	60	% 
	 4 years but less than 5 years
	  	 	80	% 
	 5 or more years
	  	 	100	% 

  
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 12.4. Minimum Contribution. For any Plan Year that the Plan shall be a Top-Heavy Plan,
each Participant who is (a) an Eligible Employee but who is neither a Key Employee nor a Former Key Employee and (b) who is an Employee on the last day of the Plan Year regardless of how many Hours of Service he earned during the Plan Year
shall have allocated to his Employer Matching Account the sum of Employer Matching Contributions in an amount equal to not less than the lesser of 3% of such Participant’s Compensation, or an amount which is the same ratio or percentage of
Employer Matching Contributions to such Compensation for the Plan Year as for the Key Employee who has the highest such ratio or percentage for the Plan Year. The amount of Employer Matching Contributions required to be allocated under this Section
for any Plan Year shall be reduced by the amount of Employer contributions (including Employer Matching Contributions) and Forfeitures allocated on behalf of the Participant under any other defined contribution plan in the Aggregation Group for the
Plan Year. For purposes of satisfying the minimum benefit requirements of Code Section 416(c)(1) and the Plan, in determining Years of Service, any Service with an Employer shall be disregarded to the extent that such Service occurs during a
Plan Year when the Plan benefits (within the meaning of Code Section 410(b)) no Key Employee or former Key Employee. 
 12.5.
Termination of Top-Heavy Status. If the Plan has been determined to be a Top-Heavy Plan for one or more Plan Years and thereafter ceases to be a Top-Heavy Plan, the provisions of this Article XII shall
cease to apply to such Plan effective as of the Determination Date on which the Plan is not a Top-Heavy Plan. 
 ARTICLE XIII

 ADOPTION AND WITHDRAWAL FROM PLAN 

13.1. Procedure for Adoption. Any Employer and certain unrelated companies (as provided in Section 13.3) may adopt the Plan for
the benefit of their Employees as of a date specified. No such adoption shall be effective until such adoption has been approved by the Benefit Committee. Notwithstanding any term or provision of the Plan to the contrary (including, but not limited
to, terms and conditions concerning Vesting Service, Eligibility Service, Compensation and amount of retirement benefits), the terms and provisions as may be imposed with respect to such Employer Employers and their Employees in an applicable
supplement or appendix to the Plan shall govern. Any Employer who adopts the Plan in accordance with this Section or Section 13.3 agrees to be bound by all the terms, provisions, conditions and limitations of the Plan and the accompanying Trust
Agreement which are pertinent to any entity defined as an “Employer” in the Plan with respect to its Eligible Employees under the Plan. Such Employer further agrees that the Benefit Committee shall act for the Employer and its Eligible
Employees under the provisions of the Plan. Such Employer further agrees to furnish from time to time such information with reference to its Eligible Employees as may be required by the Benefit Committee. 

  
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 13.2. Procedure for Withdrawal. Any Employer (other than the Company) may, with the
consent of the Company, and subject to such conditions as may be imposed by the Company, terminate its adoption of the Plan. Upon discontinuance of an Employer’s participation in the Plan, the Trustee shall cause a determination to be made of
the equitable part of the Plan assets held on account of Participants of the withdrawing Employer and their Beneficiaries. The Benefit Committee shall direct the Trustee to transfer assets representing such equitable part to a separate fund for the
plan of the withdrawing Employer. Such withdrawing Employer may thereafter exercise, in respect of such separate fund, all the rights and powers reserved to the Company with respect to Plan assets. The plan of the withdrawing Employer shall, until
amended by the withdrawing Employer, continue with the same terms as the Plan herein, except that with respect to the separate plan of the withdrawing Employer the words “Employer,” “Employers,” and “Company” shall
thereafter be considered to refer only to the withdrawing Employer. Any discontinuance of participation by an Employer shall be effected in such manner that each Participant or Beneficiary would (if the Plan and the plan of the withdrawing Employer
then terminated) receive a benefit immediately after such discontinuance of participation which is equal to or greater than the benefit he or she would have been entitled to receive immediately before such discontinuance of participation if the Plan
had then terminated. No transfer of assets pursuant to this Section shall be effected until such statements with respect thereto, if any, required by ERISA to be filed in advance thereof have been filed. 

13.3. Adoption of Plan by Unrelated Employers. The Company may authorize companies that are not Commonly Controlled Entities with
respect to the Company to adopt the Plan. Such authorization may extend to an individual company or to a group of related companies. Any such company that is authorized to adopt the Plan for the benefit of its employees shall do so in accordance
with Section 13.1. For purposes of such adoption and for purposes of its participation in the Plan, any such company shall be deemed to be an “Employer” hereunder and shall be subject to all terms of the Plan applicable to an
Employer. 
 [Signature appears on next page] 

* * * 

  
 - 67 - 

 IN WITNESS WHEREOF, the Benefit Committee has caused this restatement of the Plan to be executed
on the 4 day of May, 2015. 
  

			
	BAXALTA INCORPORATED BENEFIT COMMITTEE
		
	By:		 /s/ Salvatore Dadouche

			Salvatore Dadouche
			Benefit Committee Member

  
 - 68 - 

 APPENDIX NO. 1 

TO 
 BAXALTA INCORPORATED
AND SUBSIDIARIES 
 INCENTIVE INVESTMENT PLAN 

(Effective May 1, 2015) 
 Excluded
Divisions. 
 None. 

  
 - 69 - 

 APPENDIX NO. 2 

TO 
 BAXALTA INCORPORATED
AND SUBSIDIARIES 
 INCENTIVE INVESTMENT PLAN 

(Effective May 1, 2015) 
 Profit
Sharing Accounts. 
  

	1.	The Baxter Plan. 

  

	2.	The American Plan. 

  

	3.	The Clintec 401(k) Savings Plan. 

  

	4.	The PSICOR, Inc. Employee Stock Ownership Plan. 

  

	5.	The PSICOR, Inc. Retirement Savings Plan. 

  

	6.	The Nextran Employees Savings Plan. 

  

	7.	The MDD 401(k) Plan. 

  

	8.	The North American Vaccine, Inc. Retirement and Savings 401(k) Plan. 

 After-Tax Accounts. 

 

	1.	The Baxter Plan (pre-1987). 

  

	2.	The American Plan (pre-1987). 

  

	3.	The PSICOR, Inc. Retirement Savings Plan (pre-1987 and post-1986). 

  

	4.	The BOC Group, Inc. Savings Investment Plan (pre-1987 and post-1986). 

  
 - 70 - 

 SUPPLEMENT NO. 1 

TO 
 BAXALTA INCORPORATED
AND SUBSIDIARIES 
 INCENTIVE INVESTMENT PLAN 

(Effective May 1, 2015) 

THE ESOP 
 The ESOP
portion of the Plan is designed to be invested exclusively in shares of Baxalta Incorporated common stock (except as required for liquidity purposes), which are “employer securities” within the meaning of Code Section 409(l)
(“Company Common Stock”). This Supplement to the Plan shall be known as the ESOP Fund (the “ESOP”). No new funds may be invested in the Baxalta Common Stock Fund (known as the “ESOP Fund”). 

1. ESOP Portion of the Plan. The Company intends that the Plan and the ESOP together shall constitute a single plan under ERISA and the
Code. Accordingly, the provisions set forth in the other sections of the Plan shall apply to the ESOP in the same manner as those provisions apply to the remaining portions of the Plan, except to the extent that those provisions are by their terms
inapplicable to the ESOP, or to the extent that they are inconsistent with the specific provisions set forth below in this Supplement. Except as provided in this Supplement, the ESOP shall not affect any beneficiary designations or any other
applicable agreements, elections, or consents that Participants, former Participants, spouses, alternate payees or Beneficiaries validly executed under the terms of the Plan without regard to the ESOP; and such designations, agreements, elections,
and consents shall apply under the ESOP in the same manner as they apply under the Plan. The ESOP, as set forth in this Supplement, is intended to meet the requirements of an employee stock ownership plan, as defined in Code Section 4975(e)(7)
and the accompanying regulations, and Section 407(d)(6) of ERISA. 
 2. Investments in Company Common Stock. The portion of a
Participant’s accounts invested in the Baxalta Common Stock Fund shall be known as the “ESOP Fund.” For this purpose it is intended that the ESOP be considered an “eligible individual account plan” which explicitly provides
for the acquisition and holding of “qualifying employer securities” (as those terms are defined in Sections 407(d)(3) and 407(d)(5) of ERISA), and that the Trustee shall invest 100% of the ESOP portion in Company Common Stock, except that
the Trustee may hold a portion of the ESOP Fund in cash or cash equivalents to meet liquidity needs for distribution and while pending investment in Company Common Stock. Company Common Stock may be acquired by the Trustee through purchases on the
open market, private purchases, purchases from the Employers (including purchases from the Company of treasury shares or authorized but unissued shares), contributions in kind by the Company, or otherwise. The Trustee in its discretion may hold a
portion of the ESOP Fund in cash or cash equivalents to meet liquidity needs for distribution and while pending investment in Company Common Stock. 

3. Additional Accounting Rules for Company Common Stock. Consistent with the provisions of Article VI , (including provisions regarding
the payment of expenses of the 

  
 - 71 - 

 
Investment Funds), the following additional rules apply with respect to Company Common Stock in the ESOP Fund: 

(a) As of each valuation date, uncredited cash dividends attributable to Company Common Stock previously allocated to a
Participant’s account in the ESOP Fund shall be credited to his or her account in such Fund. 
 (b) As of each valuation
date, uncredited whole and fractional shares of Company Common Stock resulting from stock dividends or splits attributable to Company Common Stock previously allocated to a Participant’s account in the ESOP Fund shall be credited to his or her
account in such Fund. 
 (c) Amounts required to be transferred from an investment fund to satisfy benefit payments and
transfers to effectuate investment elections in accordance with Section 6.5 shall not include dividends subject to the election described in Section 5 of this Supplement. 

(d) If, and for so long as, shares of Company Common Stock held in the ESOP Fund cease to be readily tradable on an established
securities market, all valuations of such shares will be made by an independent appraiser designated by the Benefit Committee. 
 4.
Voting of Company Common Stock. The Trustee shall vote the shares of Company Common Stock held in the ESOP in the manner set forth in Section 6.5(d)(ii) of the Plan. 

5. Dividends Paid on Company Common Stock. Unless otherwise determined by the Board or its delegate and subject to the limitations and
procedures established by the Benefit Committee, at the election of Participants, former Participants, alternate payees and Beneficiaries, 100 percent of cash dividends paid with respect to Company Common Stock credited to their accounts as of the
record date of such dividend payment will be paid to the Trustee and reinvested in Company Common Stock or will be paid in cash either directly to such persons or to the Trustee and, within 90 days following the close of the Plan Year in which the
dividend is paid, shall be distributed to such persons. A Participant, former Participant, alternate payee or Beneficiary shall be deemed to elect to have the cash dividends automatically reinvested in Company Common Stock, unless he or she files a
timely election to have all or a portion of the cash dividends paid to such person. 
 (a) The Benefit Committee shall cause
notice to each eligible person that sets forth the right of such person to make an irrevocable election and the procedures for making such election. Such notice shall be provided to new Participants or Beneficiaries within a reasonable period of
time commencing either before or after the person becomes a Participant in the Plan or a Beneficiary under the Plan, but in no event later than a dividend payment date with respect to those dividends, and for Participants, former Participants,
alternate payees and Beneficiaries with account balances under the ESOP portion of the Plan, within a reasonable period of time after the date of the adoption of this Supplement. Once made, a person’s election is irrevocable and will continue
from year to year until changed by the person in accordance with procedures established by the Benefit Committee, as amended from time to time, except that a person must have a reasonable opportunity to change his or her election at least annually.
A person’s 

  
 - 72 - 

 
election shall be made in accordance with procedures established by the Benefit Committee and shall become irrevocable at the time specified in such procedures, but in no event later than the
close of the Plan Year during which such dividend are paid. If there is a change in the terms of the Plan governing the manner in which dividends are paid or distributed pursuant to this Section, then the Benefit Committee shall notify the affected
person of the new terms, and such person must be given a reasonable opportunity to make new elections under the new terms prior to the date on which the first dividend subject to the new terms or conditions is paid or distributed. 

(b) At the direction of the Benefit Committee, the Trustee shall retain an agent to disburse payment of dividends. If directed
by the Benefit Committee, the Trustee shall provide that the dividend payments be made by the dividend disbursing agent (i) directly to Participants, former Participants, alternate payees and Beneficiaries, (ii) to the Company’s
payroll department, which shall serve, for this purpose, as agent for the Participants, former Participants, alternate payees and Beneficiaries, or (iii) to the Trustee who is hereby authorized to pay any dividend directly to Participants,
former Participants, alternate payees and Beneficiaries or to appoint the Company’s payroll department as disbursing agent for the Trustee. 

(c) Participants, former Participants, alternate payees and Beneficiaries shall be fully vested in and have a non-forfeitable
right to any cash dividends that are subject to the provisions of this Section 5, without regard to whether the persons are vested in the stock with respect to which the dividend is paid. 

(d) Section 5 of this Supplement is intended to satisfy the requirements of Code Section 404(k) and the application
of the provisions of this Section is conditioned upon such dividends constituting “applicable dividends” as that term is used in Code Section 404(k)(2)(A)(iii) and qualifying for a deduction for a taxable year of the Company in the
amount of the dividends that are subject to the election pursuant to this Section 6. 
 6. Dividends Not Subject to
Section 5. Any cash dividend paid with respect to Company Common Stock that is not credited to accounts under the ESOP as of the record date of such dividend payment, or is otherwise not subject to Section 5, shall be invested in
Company Common Stock, or otherwise held, applied or invested, in the manner provided elsewhere in the Plan. 
 7. Distribution of Company
Common Stock. 
 (a) General Rule. Upon a distribution of a Participant’s account, the Participant (or, if
applicable, the Participant’s Beneficiary) shall be entitled to receive a distribution of the Company Common Stock then credited to his or her account under the ESOP Fund at the same time and in the same manner as he or she receives a
distribution of the other portions of his or her account balances in accordance with the terms of the Plan. A Participant shall not be entitled to elect a time or method of distribution, or to designate a Beneficiary, with respect to such Company
Common Stock that is different from the time and method of distribution and Beneficiary that are applicable to the other portions of the Participant’s accounts. 

  
 - 73 - 

 (b) Cash-Outs. For purposes of determining, pursuant to Section 5,
whether a Participant’s account balances exceed $5,000 (or such other maximum amount as may be permitted by the Code for involuntary payments) for purposes of Section 7.5 of the Plan, the Participant’s ESOP Fund shall not be considered
separately, but shall be included with the other portions of his or her Participant accounts. 
 (c) Distributions in
Company Common Stock. All Company Common Stock held in a Participant’s Accounts shall be distributed in accordance with the provisions of Article VII, except that the Participant may elect to demand a distribution of his or her accounts
under the ESOP Fund in the form of Company Common Stock. 
 (d) Put Option. In accordance with Code Sections
409(h)(4), (5) and (6), if Company Common Stock ceases to be readily tradable on an established market, then any Participant who otherwise is entitled to a total distribution from the Plan shall have the right (hereinafter referred to as the
“Put Option”) to require that the Company Common Stock credited to his or her accounts shall be repurchased by the Company under a fair valuation formula. The Put Option shall only be exercisable during the sixty-day (60-day) period immediately following the date of distribution, and if the Put Option is not exercised within such sixty-day (60-day) period, it can be exercised for an additional sixty (60) days in the
following plan year. 
 (i) The amount paid for the Company Common Stock pursuant to the exercise of a Put Option as part of
a total distribution shall be paid in substantially equal periodic payments (not less frequently than annually) over a period beginning not later than thirty (30) days after the request for total distribution is made and not exceeding five
(5) years. There shall be adequate security provided and reasonable interest paid on an unpaid balance due under this subparagraph. 

(ii) If the Company is required to repurchase Company Shares as part of an installment distribution, the amount to be paid for
the Company Shares will be paid not later than thirty (30) days after the exercise of the Put Option. 
 8. Diversification
Rights. It is the intent of the Company that the fact that the Participant has the right, in accordance with Section 6.5 of the Plan, to direct how his or her account balances shall be invested, shall satisfy the diversification requirements of
Code Section 401(a)(28). Accordingly, a Participant who has attained age 55 and has completed ten years of participation in the ESOP portion of the Plan shall be entitled to have all or any portion of his or her account in the ESOP Fund and any
earnings attributable thereto invested in any Investment Fund other than the ESOP Fund, as provided in Section 6.5 of the Plan. 
 9.
Nonterminable Rights. Except as otherwise provided in Section 8 of this Supplement, no shares of Company Common Stock in the ESOP Fund held or distributed by the Trustee may be subject to a put, call, or other option or to a buy-sell or similar arrangement. The provisions of this Section shall continue to be applicable to Company Common Stock even if the ESOP Fund ceases to be an employee stock ownership plan within the meaning of Code
Section 4975(e)(7). 

  
 - 74 - 

 FIRST AMENDMENT TO THE 

BAXALTA INCORPORATED AND SUBSIDIARIES 

INCENTIVE INVESTMENT PLAN 

(Amended and Restated as of May 1, 2015) 

Pursuant to Section 10.1 of the Baxalta Incorporated and Subsidiaries Incentive Investment Plan, as amended and restated effective as of
May 1, 2015 (the “Plan”), the Plan is hereby amended, effective as of May 1, 2015, as follows: 
 10. Section 5.7 is amended in its
entirety to read as follows: 
 13.4. “5.7 Rollover Contributions. On such forms and in such manner as prescribed by the Benefit
Committee, an Eligible Employee may elect to roll over to the Plan amounts credited to his account in an eligible retirement plan (as defined in Code Section 402(c)(8)(B)), other than a rollover of after-tax contributions; provided that the
Trustee may accept rollover amounts on behalf of a Participant only to the extent such amounts constitute “eligible rollover distributions” (as defined in Code Section 402(c)(4)). A Participant who has ceased to be an Employee may
only elect to roll over to the Plan an amount credited on his behalf to the Baxalta Incorporated and Subsidiaries Pension Plan and only to the extent such amount constitutes an “eligible rollover distribution” (as provided above).
“Rollover Contributions” will be credited to a Rollover Account maintained for the Participant pursuant to Section 6.1(e) as soon as administratively practicable after such contributions are remitted to the Benefit Committee. No
rollover election will become effective unless the Participant properly selects the Plan investment fund or funds to which the Rollover Contribution is to be allocated (in the manner described in Section 6.5). A Participant who has previously
made an investment election applicable to his Pay Deferral Contributions must apply the same election to his Rollover Contributions and any election to the contrary shall be disregarded.” 

11. Section 7.6(c) is amended in its entirety to read as follows: 

“(c) Partial Single Sum Form of Payment. A Participant or his Beneficiaries, as applicable, may elect to have less
than 100% of the Participant’s Accounts paid in a single sum. The hierarchy for distributions made pursuant to this subsection shall be the hierarchy applicable to installment distributions provided in subsection (b) above.” 

IN WITNESS WHEREOF, this First Amendment is adopted this 27 day of May, 2015. 

 

			
	BAXALTA INCORPORATED BENEFIT COMMITTEE
		
	By:		 /s/ Salvatore Dadouche

			Salvatore Dadouche
			Benefit Committee Member

  
 - 75 -Exhibit 10.1 - Wyndham Purchase Agreement

EXHIBIT 10.1

AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE ("Agreement") made this 13th day of May, 2015 by and between 14 SYLVAN REALTY L.L.C., a limited liability company organized under the laws of the State of New Jersey, having an address c/o Mack-Cali Realty Corporation, 343 Thornall Street, Edison, New Jersey 08837 ("Seller") and GRIFFIN CAPITAL CORPORATION, a corporation organized under the laws of the State of California, having its main office at Griffin Capital Plaza, 1520 E. Grand Avenue, El Segundo, California 90245 ("Purchaser").
In consideration of the mutual promises, covenants, and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:
ARTICLE I
DEFINITIONS
Section 1    Definitions.  For purposes of this Agreement, the following capitalized terms have the meanings set forth in this Section 1.1:
"Affiliate" means, with respect to any person or entity, any other person or entity that controls, is controlled by or is under common control with the first such person or entity. As used in this definition, "control" means the ability to control and direct the day-to-day operations and affairs of such person or entity. 
"Assignment" has the meaning ascribed to such term in Section 10.3(b) and shall be in the form attached hereto as Exhibit A.
"Authorities" means the various federal, state and local governmental and quasi-governmental bodies or agencies having jurisdiction over the Real Property and Improvements, or any portion thereof.
"Broker" has the meaning ascribed to such term in Section 16.1.
"Business Day" means any day other than a Saturday, Sunday or a day on which national banking associations are authorized or required to close.
"Certificate as to Foreign Status" has the meaning ascribed to such term in Section 10.3(d) and shall be in the form attached as Exhibit B.
"Certifying Person" has the meaning ascribed to such term in Section 4.3(a).
"Closing" means the consummation of the purchase and sale of the Property contemplated by this Agreement, as provided for in Article X.
"Closing Date" means the date on which the Closing of the transaction contemplated hereby actually occurs. 
"Closing Statement" has the meaning ascribed to such term in Section 10.4(a).
"Closing Surviving Obligations" means the rights, liabilities and obligations set forth in Sections 3.2, 5.3, 5.4, 7.1(g), 8.1 (subject to Section 8.3), 8.2, 8.3, 10.4, 10.6, 11.1, 11.2, 12.1, Article XIV, 16.1, 18.2 and 18.8, and any other provisions which pursuant to their terms survives the Closing hereunder.
"Code" has the meaning ascribed to such term in Section 4.3.
"Deed" has the meaning ascribed to such term in Section 10.3(a).
"Division" has the meaning ascribed to such term in Section 18.14(a). 
"Documents" has the meaning ascribed to such term in Section 5.2(a).
"Earnest Money Deposit" has the meaning ascribed to such term in Section 4.1.
"Effective Date" means the date on which this Agreement has been executed and delivered by both Seller and Purchaser. 
"Environmental Laws" means each and every federal, state, county and municipal statute, ordinance, rule, regulation, code, order, requirement, directive, binding written interpretation and binding written policy pertaining to Hazardous Substances issued by any Authorities and in effect as of the date of this Agreement with respect to or which otherwise pertains to or affects the Real Property or the Improvements, or any portion thereof, the use, ownership, occupancy or operation of the Real Property or the Improvements, or any portion thereof, or Purchaser, and as the same have been amended, modified or supplemented from time to time prior to the Effective Date, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Hazardous Substances Transportation Act (49 U.S.C. § 1802 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as amended by the Hazardous and Solid Wastes Amendments of 1984, the Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Clean Water Act (33 U.S.C. § 1321 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Solid Waste Disposal Act (42 U.S.C. 

1

§ 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. § 11001 et seq.), the Radon Gas and Indoor Air Quality Research Act of 1986 (42 U.S.C. § 7401 et seq.), the National Environmental Policy Act (42 U.S.C. § 4321 et seq.), the Superfund Amendment Reauthorization Act of 1986 (42 U.S.C. § 9601 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) (collectively, the "Environmental Statutes"), and any and all rules and regulations which have become effective prior to the date of this Agreement under any and all of the Environmental Statutes.
"Escrow Agent" means Chicago Title Insurance Company having an office at 725 South Figueroa St., Suite 200, Los Angeles, CA  90017 Attn: Amy Hiraheta. 
"Existing Survey" means Seller's existing survey of the Real Property entitled, "Final Asbuilt", dated January 29, 2013 and last revised January 16, 2015, prepared by Louis J. Weber & Associates, Inc. 
"Evaluation Period" has the meaning ascribed to such term in Section 5.1.
"Governmental Regulations" means all statutes, ordinances, rules and regulations of the Authorities applicable to Seller or the use or operation of the Real Property or the Improvements or any portion thereof.
"Hazardous Substances" means (a) asbestos, radon gas and urea formaldehyde foam insulation, (b) any solid, liquid, gaseous or thermal contaminant, including smoke vapor, soot, fumes, acids, alkalis, chemicals, petroleum products or byproducts, polychlorinated biphenyls, phosphates, lead or other heavy metals and chlorine, (c) any solid or liquid waste (including, without limitation, hazardous waste), hazardous air pollutant, hazardous substance, hazardous chemical substance and mixture, toxic substance, pollutant, pollution, regulated substance and contaminant, and (d) any other chemical, material or substance, the use or presence of which, or exposure to the use or presence of which, is prohibited, limited or regulated by any Environmental Laws.
"Improvements" means all buildings, structures, fixtures and any other improvements on the Real Property.
"Lease" means that certain Lease Agreement, between Seller, as lessor, and Wyndham Worldwide Operations, Inc., as lessee ("Tenant"), dated August 5, 2011 (the "Lease Agreement"), as guaranteed pursuant to a certain Guaranty of Lease from Wyndham Worldwide Corporation, as guarantor ("Guarantor"), dated August 5, 2011, and as amended by a certain Commencement Date Agreement between Seller and Tenant, dated March 26, 2013, and a certain First Amendment to Lease between Seller and Tenant, dated February 28, 2014, and as to which Lease Agreement a certain Memorandum of Lease between Seller and Tenant, dated October 20, 2011, was recorded on October 25, 2011 in the Morris County Clerk’s Office in Book 21890, Page 1343, and as to which Seller and Tenant executed a certain Memorandum of Lease Termination, dated October 20, 2011. 
"Leasing Commission Agreement" means that certain brokerage commission agreement entered into between Parsippany Campus Realty Associates L.L.C. ("PCRA") and Wyndham Vacation Resorts, Inc. (the "Leasing Broker") on February 20, 2007, as amended by letter agreement between Leasing Broker, PCRA and Seller, dated August 5, 2011, and further amended by letter agreement between Leasing Broker and Seller, dated March 26, 2013.
 "Licensee Parties" has the meaning ascribed to such term in Section 5.1.
"Licenses and Permits" means, collectively, all of Seller's right, title and interest, to the extent assignable, in and to licenses, permits, certificates of occupancy, approvals and entitlements now or hereafter issued, approved or granted by the Authorities in connection solely with the Real Property and the Improvements, together with all renewals and modifications thereof, but expressly reserving unto Seller or its affiliates all licenses, permits, approvals and entitlements to the extent applicable to any adjoining real property and improvements or any other real property and improvements in the office park in which the Real Property and Improvements are situated other than the Real Property and Improvements, as to which Real Property and Improvements the Seller and its affiliates reserve no licenses, permits, approvals and entitlements other than pursuant to any documents recorded in the land records of Morris County.
"Permitted Outside Parties" has the meaning ascribed to such term in Section 5.2(b).
"Property" has the meaning ascribed to such term in Section 2.1.
"Purchase Price" has the meaning ascribed to such term in Section 3.1.
"Purchaser's Affiliates" means any past, present or future: (i) shareholder, partner, member, manager or owner of Purchaser; (ii) entity in which Purchaser or any past, present or future shareholder, partner, member, manager or owner of Purchaser has or had an interest; (iii) entity that, directly or indirectly, controls, is controlled by or is under common control with Purchaser and (iv) the heirs, executors, administrators, personal or legal representatives, successors and assigns of any or all of the foregoing.  
"Purchaser's Information" has the meaning ascribed to such term in Section 5.3(c).
"Real Property" means that certain real property commonly known as 14 Sylvan Way, in the Township of Parsippany-Troy Hills (the "Township"), County of Morris, and State of New Jersey, and identified as Lot 1.13 in Block 202 on the Tax Maps of the Township, and more fully described on Exhibit C annexed hereto and made a part hereof, together with all of Seller’s right, 

2

title and interest, if any, in and to the appurtenances pertaining thereto, including but not limited to Seller’s right, title and interest in and to the adjacent street, alleys and right of ways, and any easement rights, air rights, subsurface development rights  and water rights.
"Scheduled Closing Date" means the later of (i) ten (10) Business Days after the expiration of the Evaluation Period, or (ii) June 9, 2015 (or such earlier or later date to which Purchaser and Seller may hereafter agree in writing).  
"Seller's Affiliates" means any past, present or future: (i) shareholder, partner, member, manager or owner of Seller; (ii) entity in which Seller or any past, present or future shareholder, partner, member, manager or owner of Seller has or had an interest; (iii) entity that, directly or indirectly, controls, is controlled by or is under common control with Seller and (iv) the heirs, executors, administrators, personal or legal representatives, successors and assigns of any or all of the foregoing.
"Significant Portion" means, for purposes of the casualty provisions set forth in Article XI hereof, loss or damage caused by fire or other casualty to the Real Property and the Improvements or a portion thereof, which is uninsured (other than deductibles) or would entitle the Tenant to terminate the Lease or permanently abate any Rental pursuant to the terms thereof.
"SNDA" has the meaning ascribed to such term in Section 7.2. 
"Strict Representations" means only the representations and warranties made by Seller in clauses (a),(b),(c),(f), (g), (i), (k) and (l) of Section 8.1.
"Tenant" has the meaning ascribed to such term in Section 1.1 under the definition of "Lease" or its successors and assigns.
"Termination Surviving Obligations" means the rights, liabilities and obligations set forth in Sections 5.2, 5.3, 5.4, 12.1, Articles XIII and XIV, 16.1, 17.1, 18.2 and 18.8, and any other provisions which pursuant to their terms survive any termination of this Agreement.
"Title Defects" has the meaning ascribed to such term in Section 6.2(a).
"To Seller's Knowledge", or "Knowledge of Seller", or similar use of the word "Knowledge" as it relates to Seller means the present actual (as opposed to constructive or imputed) knowledge solely of (i) James Corrigan, Vice President of Property Management for Mack-Cali Realty Corporation, and (ii) Ricardo Cardoso, Vice President of Investments for Mack-Cali Realty Corporation, without any independent investigation or inquiry whatsoever.  
Section 1.2    References: Exhibits and Schedules.  Except as otherwise specifically indicated, all references in this Agreement to Articles or Sections refer to Articles or Sections of this Agreement, and all references to Exhibits or Schedules refer to Exhibits or Schedules attached hereto, all of which Exhibits and Schedules are incorporated into, and made a part of, this Agreement by reference. The words "herein," "hereof," "hereinafter" and words and phrases of similar import refer to this Agreement as a whole and not to any particular Section or Article.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
Section 2.1    Agreement.  Seller hereby agrees to sell, convey and assign to Purchaser, and Purchaser hereby agrees to purchase and accept from Seller, on the Closing Date and subject to the terms and conditions of this Agreement, all of the following (collectively, the "Property"):
(a)    the Real Property;
(b)    the Improvements;
(c)    all of Seller's right, title and interest as lessor in and to the Lease;
(d)    to the extent assignable, the Licenses and Permits; and
(e)    all of Seller's right, title and interest, to the extent assignable or transferable, in and to all other intangible rights, titles, interests, privileges and appurtenances owned by Seller and related to or used exclusively in connection with the ownership, use or operation of the Real Property and/or the Improvements including but not limited to any assignable warranties with respect to the Improvements ("Warranties").
No personal property or service contracts are included in this sale.  
Section 2.2     Indivisible Economic Package.  Purchaser has no right to purchase, and Seller has no obligation to sell, less than all of the Property, it being the express agreement and understanding of Purchaser and Seller that, as a material inducement to Seller and Purchaser to enter into this Agreement, Purchaser has agreed to purchase, and Seller has agreed to sell, all of the Property, subject to and in accordance with the terms and conditions hereof.

3

ARTICLE III
CONSIDERATION
Section 3.1    Purchase Price.  The purchase price for the Property (the "Purchase Price") shall be Eighty-one Million Four Hundred Thousand Dollars ($81,400,000.00) in lawful currency of the United States of America, payable as provided in Section 3.3.  
Section 3.2    Assumption of Obligations.  As additional consideration for the purchase and sale of the Property, at Closing Purchaser will assume all of the covenants and obligations of Seller pursuant to the Lease, Leasing Commission Agreement, and Licenses and Permits, as more fully set forth in this Agreement.    
Section 3.3    Method of Payment of Purchase Price.  No later than 12:00 noon Pacific Time on the Closing Date, Purchaser shall pay the Purchase Price (less the Earnest Money Deposit), together with all other costs and amounts to be paid by Purchaser at the Closing pursuant to the terms of this Agreement ("Purchaser's Costs"), by Federal Reserve wire transfer of immediately available funds to the account of Escrow Agent.  Escrow Agent, following written authorization by the parties at Closing, which shall be given prior to 1:00 p.m. Pacific Time on the Closing Date, shall (i) pay to Seller by Federal Reserve wire transfer of immediately available funds to an account designated by Seller, the Purchase Price, less any costs or other amounts to be paid by Seller at Closing pursuant to the terms of this Agreement, (ii) pay to the appropriate payees, out of the proceeds of Closing payable to Seller, all costs and amounts to be paid by Seller at Closing pursuant to the terms of this Agreement, and (iii) pay Purchaser's Costs to the appropriate payees at Closing pursuant to the terms of this Agreement.
ARTICLE IV
EARNEST MONEY DEPOSIT
AND ESCROW INSTRUCTIONS
Section 4.1    The Earnest Money Deposit.  Within five (5) Business Days after the Effective Date, Purchaser shall deposit with the Escrow Agent, by Federal Reserve wire transfer of immediately available funds, the sum of One Million Dollars ($1,000,000.00) as an earnest money deposit on account of the Purchase Price (the "Earnest Money Deposit").  TIME IS OF THE ESSENCE with respect to the deposit of the Earnest Money Deposit.
Section 4.2    Escrow Instructions.  The Earnest Money Deposit shall be held in escrow by the Escrow Agent in an interest-bearing account, in accordance with the provisions of Article XVII.  If, prior to the expiration of the Evaluation Period, Purchaser elects to waive its right to allow this Agreement to automatically terminate at the end of the Evaluation Period, in accordance with Section 5.3(c), then the Earnest Money Deposit and the interest earned thereon shall become non-refundable to Purchaser, except in certain limited circumstances expressly set forth elsewhere in this Agreement.  In the event Purchaser allows this Agreement to automatically terminate at the expiration of the Evaluation Period in accordance with Section 5.3(c), the Earnest Money Deposit, together with all interest earned thereon, shall be refunded to Purchaser.
Section 4.3    Designation of Certifying Person.  In order to assure compliance with the requirements of Section 6045 of the Internal Revenue Code of 1986, as amended (the "Code"), and any related reporting requirements of the Code, the parties hereto agree as follows:
(a)    Provided the Escrow Agent shall execute a statement in writing (in form and substance reasonably acceptable to the parties hereunder) pursuant to which it agrees to assume all responsibilities for information reporting required under Section 6045(e) of the Code, Seller and Purchaser shall designate the Escrow Agent as the person to be responsible for all information reporting under Section 6045(e) of the Code (the "Certifying Person").  If the Escrow Agent refuses to execute a statement pursuant to which it agrees to be the Certifying Person, Seller and Purchaser shall agree to appoint another third party as the Certifying Person.
(b)    Seller and Purchaser each hereby agree:
(i)to provide to the Certifying Person all information and certifications regarding such party, as reasonably requested by the Certifying Person or otherwise required to be provided by a party to the transaction described herein under Section 6045 of the Code; and
(ii)to provide to the Certifying Person such party's taxpayer identification number and a statement (on Internal Revenue Service Form W-9 or an acceptable substitute form, or on any other form the applicable current or future Code sections and regulations might require and/or any form requested by the Certifying Person), signed under penalties of perjury, stating that the taxpayer identification number supplied by such party to the Certifying Person is correct.
ARTICLE V
INSPECTION OF PROPERTY
Section 5.1    Evaluation Period.  For a period ending at 4:00 p.m. Pacific Time on the thirtieth (30th) day after the Effective Date (the "Evaluation Period"), Purchaser and its authorized agents and representatives (for purposes of this Article V, 

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the "Licensee Parties") shall have the right to perform inspections of the Property, subject, however, to, and in accordance with, the terms and conditions of this Article V and the rights of Tenant under the Lease.  Purchaser shall not enter upon the Property without first (i) notifying Seller in writing of the date and time of its intended entry, the purpose for which such entry is desired, and the consultants, if any, who shall make such entry, and (ii) receiving from Seller its written consent to allow such entry, which consent shall not be unreasonably withheld, conditioned or delayed.  Upon receipt of such notice, Seller shall promptly communicate with Tenant in order to obtain Tenant’s consent to such entry to the extent required under the Lease and to otherwise coordinate such entry with Tenant and to satisfy landlord’s prior notice obligations and any other preconditions to such entry as may be contained in the Lease.  Purchaser shall not communicate with or contact Tenant or Guarantor unless a representative of Seller shall be included in the communication and/or contact.  Purchaser shall not communicate with any of the Authorities without the prior written consent of Seller, which will not be unreasonably withheld, conditioned or delayed.  Notwithstanding anything to the contrary contained herein, no physical testing or sampling shall be conducted upon the Real Property without Seller's specific prior written consent, which will not be unreasonably withheld, conditioned or delayed.  Purchaser will provide to Seller notice of the intention of Purchaser or the other Licensee Parties to conduct such physical sampling or testing at least three (3) Business Days prior to such intended sampling or testing, which notice shall set forth the testing or sampling contemplated to be made.  At Seller's option, Seller and/or its consultants may be present for any such testing or sampling and may require that such testing or sampling be done during normal business hours. TIME IS OF THE ESSENCE with respect to the provisions of this Section 5.1.
Section 5.2    Document Review.
(a)    Prior to the Effective Date, Purchaser has had the opportunity to review the Lease as posted in Broker’s on-line data room (the "Data Room").  In addition, during the Evaluation Period, Purchaser and the Licensee Parties shall have the right to review and inspect, at Purchaser’s sole cost and expense, all of the following which, to Seller’s Knowledge, are in Seller’s possession or control (collectively, the "Documents"): the Lease, all existing environmental reports and studies of the Real Property (which Purchaser shall have the right to have updated at Purchaser’s sole cost and expense), real estate tax bills, together with assessments (special or otherwise), ad valorem and personal property tax bills covering the period of Seller’s ownership of the Property; engineering reports and studies; the Leasing Commission Agreement; and the Licenses and Permits.  The Documents shall be available through the Data Room or for inspection (and copying) at Seller’s offices.  Purchaser shall not have the right to review or inspect materials not directly related to the leasing, maintenance and/or management of the Property, including, without limitation,  Seller's internal memoranda, financial projections, budgets, appraisals, proposals for work not actually undertaken, accounting and tax records and similar proprietary, elective or confidential information. 
(b)    Purchaser acknowledges that any and all of the Documents may be proprietary and confidential in nature and are being provided to Purchaser solely to assist Purchaser in determining the desirability of purchasing the Property.  Subject only to the provisions of Article XII, Purchaser agrees not to disclose the contents of the Documents or any of the provisions, terms or conditions contained therein to any party outside of Purchaser’s organization other than its attorneys, partners, accountants, Licensee Parties or lenders (collectively, for purposes of this Section 5.2(b), the "Permitted Outside Parties").  Purchaser further agrees that within its organization, or as to the Permitted Outside Parties, the Documents will be disclosed and exhibited only to those persons within Purchaser’s organization or within the Permitted Outside Parties who are involved in the determination of the desirability of Purchaser's acquisition of the Property.  Purchaser agrees not to divulge the contents of such Documents and other information except in strict accordance with the confidentiality standards set forth in this Section 5.2 and Article XII.  In permitting Purchaser and the Permitted Outside Parties to review the Documents and other information to assist Purchaser, Seller has not waived any privilege or claim of confidentiality with respect thereto, and no third party benefits or relationships of any kind, either express or implied, have been offered, intended or created by Seller, and any such claims are expressly rejected by Seller and waived by Purchaser and the Permitted Outside Parties, for whom, by its execution of this Agreement, Purchaser is acting as an agent with regard to such waiver.
(c)    Purchaser acknowledges that some of the Documents may have been prepared by third parties and may have been prepared prior to Seller’s ownership of the Property. PURCHASER HEREBY ACKNOWLEDGES THAT EXCEPT AS MAY BE EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT OR ANY OF THE CLOSING DOCUMENTS, SELLER HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS OR THE SOURCES THEREOF.  EXCEPT AS MAY BE EXPRESSLY SET FORTH ELSEWHERE IN THIS AGREEMENT OR ANY OF THE CLOSING DOCUMENTS, SELLER HAS NOT UNDERTAKEN ANY INDEPENDENT INVESTIGATION AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS AND IS PROVIDING THE DOCUMENTS SOLELY AS AN ACCOMMODATION TO PURCHASER.  
Section 5.3    Entry and Inspection Obligations; Termination of Agreement.
(a)    Purchaser agrees that in inspecting or examining the Property, Purchaser and the other Licensee Parties will not breach the Lease or unreasonably interfere with the use and occupancy of the Property by Tenant; damage any part of the Property or the property of Tenant; injure or otherwise cause bodily harm to Seller or Tenant or any of their respective agents,  consultants and employees, or to any other person or entity; permit any liens to attach to the Real Property by reason of the exercise of 

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Purchaser’s rights under this Article V; or reveal or disclose any information obtained concerning the Property and the Documents to anyone outside Purchaser’s organization, except in accordance with the confidentiality standards set forth in Section 5.2(b) and Article XII.  Purchaser will (i) maintain commercial general liability (occurrence) insurance on terms and in amounts reasonably satisfactory to Seller, and Workers’ Compensation insurance in statutory limits for its employees (if any), and, if Purchaser or any Licensee Party performs any physical inspection or sampling at the Real Property in accordance with Section 5.1, then Purchaser or such Licensee Party shall maintain errors and omissions insurance and contractor’s pollution liability insurance on terms and in amounts reasonably acceptable to Seller, and, in the case of the commercial general liability insurance and the errors and omissions insurance, insuring Seller, Mack-Cali Realty, L.P., Mack-Cali Realty Corporation, Tenant, Guarantor, and such other parties as Seller shall reasonably request as additional insureds, covering any accident or event arising in connection with the presence of Purchaser or the other Licensee Parties on the Real Property or Improvements, and deliver evidence of insurance verifying such coverage to Seller prior to entry upon the Real Property or Improvements.  Purchaser further agrees that in inspecting or examining the Property, Purchaser shall (i) promptly pay when due the costs of all inspections, examinations, testing and sampling done with regard to the Property; (ii) cause any inspection, examination, testing or sampling to be conducted in accordance with standards customarily employed in the industry and in compliance with all Governmental Regulations; (iii) upon Seller's written request, furnish to Seller copies of any studies, reports or test results received by Purchaser regarding the Property; and (v) restore the Real Property and Improvements as near as possible to the condition in which the same were found before any such examination, testing or sampling was undertaken.
(b)    Purchaser hereby indemnifies, defends and holds Seller, Tenant and Guarantor and their respective partners, members, agents, directors, officers, employees, successors and assigns, harmless from and against any and all liens, claims, causes of action, damages, liabilities, demands, suits, and obligations to third parties, together with all losses, penalties, costs and expenses relating to any of the foregoing (including but not limited to court costs and reasonable attorneys’ fees) (collectively, "Losses"), to the extent arising out of any inspections, investigations, examinations, sampling or tests conducted by Purchaser or any of the Licensee Parties with respect to the Property or any violation of the provisions of this Section 5.3, but excluding any Losses arising from the discovery of pre-existing conditions.  
(c)    In the event that Purchaser determines, after its inspection of the Documents and Real Property and Improvements, that it does not want to proceed with the transaction as set forth in this Agreement, for any reason or no reason, Purchaser shall have the right to allow this Agreement to automatically terminate at the expiration of the Evaluation Period.  Unless Purchaser provides written notice to Seller and Escrow Agent prior to the expiration of the Evaluation Period, WITH TIME BEING OF THE ESSENCE WITH RESPECT THERETO, that Purchaser is waiving its right to allow this Agreement to terminate pursuant to this Section 5.3(c), this Agreement shall automatically terminate at the end of the Evaluation Period.  In the event Purchaser allows this Agreement to terminate in accordance with this Section 5.3(c), or if this Agreement is terminated in accordance with any other provision of this Agreement that expressly provides Purchaser with the right to do so, Purchaser shall receive a prompt refund of the Earnest Money Deposit, together with all interest which has accrued thereon, and except with respect to the Termination Surviving Obligations, this Agreement shall be null and void and the parties shall have no further obligations to each other under this Agreement.  In the event this Agreement terminates for any reason, Purchaser shall promptly return to Seller all copies Purchaser has made of the Documents and, upon written request from Seller, Purchaser shall promptly deliver to Seller copies of any studies, reports or test results regarding any part of the Property obtained by Purchaser in connection with Purchaser’s inspection of the Property (collectively, "Purchaser’s Information").  
Section 5.4    Sale "As Is".  THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT HAS BEEN NEGOTIATED BETWEEN SELLER AND PURCHASER. THIS AGREEMENT REFLECTS THE MUTUAL AGREEMENT OF SELLER AND PURCHASER, AND PURCHASER HAS THE RIGHT TO CONDUCT ITS OWN INDEPENDENT EXAMINATION OF THE PROPERTY. EXCEPT FOR THE MATTERS EXPRESSLY REPRESENTED IN THIS AGREEMENT OR IN ANY OF THE CLOSING DOCUMENTS, PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ANY OF SELLER'S AGENTS OR REPRESENTATIVES, AND PURCHASER HEREBY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE.  ALL OF THE FOLLOWING PROVISIONS OF THIS SECTION 5.4 ARE LIMITED BY AND SUBJECT TO ANY REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY OF THE CLOSING DOCUMENTS.
SELLER SPECIFICALLY DISCLAIMS, AND NEITHER SELLER NOR ANY OF SELLER’S AFFILIATES NOR ANY OTHER PERSON IS MAKING, ANY REPRESENTATION, WARRANTY OR ASSURANCE WHATSOEVER TO PURCHASER, AND NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EITHER EXPRESS OR IMPLIED, ARE MADE BY SELLER OR RELIED UPON BY PURCHASER WITH RESPECT TO THE STATUS OF TITLE TO OR THE MAINTENANCE, REPAIR, CONDITION, DESIGN OR MARKETABILITY OF THE PROPERTY, OR ANY PORTION THEREOF, INCLUDING BUT NOT LIMITED TO (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR 

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SAMPLES OF MATERIALS, (d) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (e) ANY CLAIM BY PURCHASER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO THE IMPROVEMENTS, (f) THE FINANCIAL CONDITION OR PROSPECTS OF THE PROPERTY AND (g) THE COMPLIANCE OR LACK THEREOF OF THE REAL PROPERTY OR THE IMPROVEMENTS WITH GOVERNMENTAL REGULATIONS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL LAWS, NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED, IT BEING THE EXPRESS INTENTION OF SELLER AND PURCHASER THAT, EXCEPT AS MAY BE EXPRESSLY SET FORTH TO THE CONTRARY ELSEWHERE IN THIS AGREEMENT, THE PROPERTY WILL BE CONVEYED AND TRANSFERRED TO PURCHASER IN ITS PRESENT CONDITION AND STATE OF REPAIR, "AS IS" AND "WHERE IS," WITH ALL FAULTS.  PURCHASER REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER OF REAL ESTATE, AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF PURCHASER'S CONSULTANTS IN PURCHASING THE PROPERTY.  PURCHASER HAS BEEN GIVEN A SUFFICIENT OPPORTUNITY HEREIN TO CONDUCT AND HAS CONDUCTED OR WILL CONDUCT SUCH INSPECTIONS, INVESTIGATIONS AND OTHER INDEPENDENT EXAMINATIONS OF THE PROPERTY AND RELATED MATTERS AS PURCHASER DEEMS NECESSARY, INCLUDING BUT NOT LIMITED TO THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND WILL RELY UPON SAME AND NOT UPON ANY STATEMENTS OF SELLER (EXCLUDING THE LIMITED MATTERS EXPRESSLY REPRESENTED BY SELLER IN SECTION 8.1 HEREOF OR IN THE CLOSING DOCUMENTS) NOR OF ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, MEMBER OR ATTORNEY OF SELLER. PURCHASER ACKNOWLEDGES THAT ALL INFORMATION OBTAINED BY PURCHASER WAS OBTAINED FROM A VARIETY OF SOURCES, AND SELLER WILL NOT BE DEEMED TO HAVE REPRESENTED OR WARRANTED THE COMPLETENESS, TRUTH OR ACCURACY OF ANY OF THE DOCUMENTS OR OTHER SUCH INFORMATION HERETOFORE OR HEREAFTER FURNISHED TO PURCHASER (EXCLUDING ANY SUCH MATTERS THAT MAY BE EXPRESSLY REPRESENTED BY SELLER IN SECTION 8.1 HEREOF OR IN THE CLOSING DOCUMENTS).  UPON CLOSING, PURCHASER WILL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INSPECTIONS AND INVESTIGATIONS. PURCHASER ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, SELLER WILL SELL AND CONVEY TO PURCHASER, AND PURCHASER WILL ACCEPT THE PROPERTY, "AS IS, WHERE IS," WITH ALL FAULTS. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS COLLATERAL TO OR AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY EMPLOYEE, REAL ESTATE BROKER, AGENT, OR OTHER PERSON OR ENTITY, UNLESS THE SAME ARE SPECIFICALLY SET FORTH IN THIS AGREEMENT OR INCORPORATED HEREIN BY REFERENCE. PURCHASER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE "AS IS, WHERE IS" NATURE OF THIS SALE AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED WITH THE PROPERTY.  PURCHASER, WITH PURCHASER’S COUNSEL, HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT AND UNDERSTANDS THEIR SIGNIFICANCE AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH HEREIN ARE AN INTEGRAL PART OF THIS AGREEMENT, AND THAT SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO PURCHASER FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS AGREEMENT.
IF PURCHASER GIVES NOTICE THAT PURCHASER IS WAIVING ITS RIGHT TO ALLOW THIS AGREEEMENT TO TERMINATE PURSUANT TO SECTION 5.3(c) HEREOF, THEN PURCHASER AND PURCHASER’S AFFILIATES HEREBY FURTHER COVENANT AND AGREE NOT TO SUE SELLER AND SELLER’S AFFILIATES AND RELEASE SELLER AND SELLER’S AFFILIATES OF AND FROM AND WAIVE ANY CLAIM OR CAUSE OF ACTION, INCLUDING WITHOUT LIMITATION ANY STRICT LIABILITY CLAIM OR CAUSE OF ACTION, THAT PURCHASER OR PURCHASER’S AFFILIATES MAY HAVE AGAINST SELLER OR SELLER’S AFFILIATES UNDER ANY ENVIRONMENTAL LAW, NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED, RELATING TO ENVIRONMENTAL MATTERS OR ENVIRONMENTAL CONDITIONS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY AT OR PRIOR TO THE TIME OF THE EXPIRATION OF THE EVALUATION PERIOD, INCLUDING,WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT, OR BY VIRTUE OF ANY COMMON LAW RIGHT, NOW EXISTING OR HEREAFTER CREATED, RELATED TO ENVIRONMENTAL CONDITIONS OR ENVIRONMENTAL MATTERS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY.   IF PURCHASER CLOSES THIS TRANSACTION, THEN PURCHASER AND PURCHASER’S AFFILIATES HEREBY FURTHER COVENANT AND AGREE NOT TO SUE SELLER AND SELLER’S AFFILIATES AND RELEASE SELLER AND SELLER’S AFFILIATES OF AND FROM AND WAIVE ANY CLAIM OR CAUSE OF ACTION, INCLUDING 

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WITHOUT LIMITATION ANY STRICT LIABILITY CLAIM OR CAUSE OF ACTION, THAT PURCHASER OR PURCHASER’S AFFILIATES MAY HAVE AGAINST SELLER OR SELLER’S AFFILIATES UNDER ANY ENVIRONMENTAL LAW, NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED, RELATING TO ENVIRONMENTAL MATTERS OR ENVIRONMENTAL CONDITIONS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT, OR BY VIRTUE OF ANY COMMON LAW RIGHT, NOW EXISTING OR HEREAFTER CREATED, RELATED TO ENVIRONMENTAL CONDITIONS OR ENVIRONMENTAL MATTERS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY.  THE TERMS AND CONDITIONS OF THIS SECTION 5.4 WILL EXPRESSLY SURVIVE ANY SUBSEQUENT TERMINATION OF THIS AGREEMENT OR THE CLOSING, AS THE CASE MAY BE, AND WILL NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND ARE HEREBY DEEMED INCORPORATED INTO THE DEED AS FULLY AS IF SET FORTH AT LENGTH THEREIN.
Section 5.5    Tenant Interview.  After the Effective Date of this Agreement, Seller shall use commercially reasonable efforts to arrange an interview, to occur no later than three (3) days prior to the expiration of the Evaluation Period, between the Purchaser and a representative(s) of the Tenant with specific knowledge of the operations of the Tenant at the Property and the strategic importance of the location to the overall operations of the Tenant. Seller shall have a right to have a representative present during any and all Tenant interviews.  In the event that Seller is unable to arrange a Tenant interview by the deadline set forth above, and  Purchaser does not allow this Agreement to automatically terminate pursuant to Section 5.3(c) above, then Seller shall be deemed to have satisfied its obligation in this Section 5.5.
ARTICLE VI
TITLE MATTERS
Section 6.1    Survey.  Purchaser acknowledges receipt of the Existing Survey.  Any modification, update or recertification of the Existing Survey shall be at Purchaser’s election and sole cost and expense.  
Section 6.2    Title Review.
(a)    Not later than that date which is three (3) Business Days prior to the expiration of the Evaluation Period (the "Title Objection Date"), Purchaser may provide Seller with a copy of a title insurance commitment (the "Title Commitment") issued by Escrow Agent and an updated survey of the Real Property and Improvements, together with a written notice objecting to any exceptions, encumbrances or other matters set forth in the Title Commitment or on the updated survey (any such defects, encumbrances or other matters to which Purchaser objects in writing prior to the Title Objection Date are called herein "Title Defects").  (For the avoidance of doubt, all matters shown on the Existing Survey are conclusively deemed to be acceptable to Purchaser.) In the event Seller does not receive written notice of any Title Defects by the Title Objection Date, TIME BEING OF THE ESSENCE, then Purchaser will be deemed to have accepted the exceptions to title set forth on the Title Commitment and all matters set forth on the updated survey as permitted exceptions ("Permitted Exceptions").  In addition, Purchaser agrees that, at Closing, title to the Property shall be subject to a certain Amendment to Amended and Restated Cross-Easement Agreement, between Seller and The GC Net Lease (Parsippany) Investors, LLC, with respect to a certain Amended and Restated Cross-Easement Agreement, dated February 28, 2014, and recorded in the Somerset County Clerk’s Office on March 11, 2014 in Book 22503, Page 1144 (the "Cross-Easement Agreement"), such Amendment to be in the form annexed hereto and made a part hereof as Exhibit F (the "Cross-Easement Amendment"). 
(b)    After the Title Objection Date, if the Escrow Agent raises any new exception to title to the Real Property, Purchaser’s counsel shall have five (5) Business Days after he or she receives notice of such exception (the "New Objection Date") to provide Seller with written notice if Purchaser objects to such new exception, in which event such new exception shall constitute a Title Defect and the Scheduled Closing Date shall be extended as necessary to afford Seller and Purchaser the consideration and response periods contemplated by Section 6.3(a) and as otherwise contemplated therein.  In the event Seller does not receive notice of such new exception by the New Objection Date, TIME BEING OF THE ESSENCE, Purchaser will be deemed to have accepted the new exception as a Permitted Exception. 
(c)    All taxes, water rates or charges, sewer rents and assessments, plus interest and penalties thereon, which on the Closing Date are liens against the Real Property and which Seller is obligated to pay and discharge will be credited against the Purchase Price (subject to the provision for apportionment of taxes, water rates and sewer rents herein contained) and shall not be deemed a Title Defect.  In addition, inasmuch as the payment of such items is the Tenant’s responsibility, and such items constitute additional rent under the Lease, after the Closing such sums shall be treated as Delinquent Rental pursuant to Section 10.4 below.  If on the Closing Date there shall be security interests filed against the Real Property, such items shall not be Title Defects if (i) the personal property covered by such security interests is no longer in or on the Real Property, (ii) such personal property is owned or leased by the Tenant, or (iii) the security interest was filed more than five (5) year prior to the Closing Date and was not renewed.

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(d)    If on the Closing Date the Real Property shall be affected by any lien which Seller has elected to attempt to remove or is otherwise obligated to remove pursuant to the express provisions of this Agreement, then Seller shall not be required to discharge or satisfy the same of record provided that Escrow Agent either omits the lien as an exception from the Title Commitment or insures against collection thereof from out of the Real Property, and a credit is given to Purchaser for the recording charges for a satisfaction or discharge of such lien.
(e)    No franchise, transfer, inheritance, income, corporate or other tax open, levied or imposed against Seller or any former owner of the Property, that may be a lien against the Property on the Closing Date, shall be an objection to title if the Escrow Agent insures against collection thereof from or out of the Real Property and/or the Improvements, and provided further that Seller deposits with the Escrow Agent a sum of money or a parental guaranty reasonably sufficient to secure a release of the Property from the lien thereof.  If a search of title discloses judgments, bankruptcies, or other returns against other persons having names the same as or similar to that of Seller, Seller will deliver to Purchaser an affidavit stating that such judgments, bankruptcies or other returns do not apply to Seller, and such search results shall not be deemed Title Defects.
Section 6.3    Title Defect.
(a)    In the event Seller receives notice of any Title Defect within the time periods required under Section 6.2 above ("Title Defect Notice"), Seller shall notify Purchaser within ten (10) days after receiving the Title Defect Notice whether Seller will attempt to remove the Title Defect, in which event the Scheduled Closing Date shall be extended to the extent reasonably necessary for up to thirty (30) days.  If Seller (i) fails to so notify Purchaser within such ten (10) day period that it elects to attempt to remove the Title Defect, (ii) notifies Purchaser within such period that it will not attempt to remove such title Defect, or (iii) having elected to attempt to do so, Seller is unable to effect such cure within the thirty (30) day extension period set forth above, then Purchaser shall have the right, by written notice given to Seller within five (5) days after receiving Seller’s notice of its election not to remove the Title Defects (or, if no such notice is given, within five (5) days after the expiration of the ten (10) day period in which Seller had the right to elect to attempt to remove the Title Defects), or, if applicable, within five (5) days after the expiration of the thirty (30) day extension period, to (x) waive the Title Defect and close title in accordance with the provisions of this Agreement on the Scheduled Closing Date (if the Scheduled Closing Date is then being extended pursuant to this Section 6.3, then the extension shall end, and the Scheduled Closing Date shall occur, on the fifth (5th) Business Day after giving written notice of such waiver to Seller), or (y) terminate this Agreement, in which case Purchaser shall receive a prompt refund of the Earnest Money Deposit, together with all interest which has accrued thereon, and except with respect to the Termination Surviving Obligations, this Agreement shall be null and void and the parties shall have no further obligations to each other under this Agreement.  If Purchaser fails to elect to terminate this Agreement by notice given to Seller within such five (5) day period, then Purchaser shall be deemed to have waived such Title Defect, and Purchaser shall close title in accordance with the provisions of this Agreement on the Scheduled Closing Date (if the Scheduled Closing Date is then being extended pursuant to this Section 6.3, then the extension shall end, and the Scheduled Closing Date shall occur, on the fifth (5th) Business Day after the expiration of such five (5) day period).
(b)    Notwithstanding any provision of this Article VI to the contrary, Seller shall be obligated to cure exceptions to title to the Property, in the manner described above, relating to liens and security interests securing any financings of Seller, and any mechanic’s liens resulting from work at the Property commissioned by Seller or a Seller Affiliate; provided, however, that any such mechanic’s lien may be cured by bonding in accordance with New Jersey law.
ARTICLE VII
INTERIM OPERATING COVENANTS AND ESTOPPELS
Section 7.1    Interim Operating Covenants.
(a)    From the Effective Date until Closing, Seller shall continue to perform its obligations and enforce its rights and Tenant’s obligations under the Lease in the ordinary course of Seller’s business and substantially in accordance with Seller’s past and present practice.
(b)    From the Effective Date until the Closing, Seller shall not take any of the following actions without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned prior to the expiration of the Evaluation Period, and, thereafter, in Purchaser’s sole and absolute discretion, and which consent shall be deemed granted in the event that Purchaser fails to respond to a written request for its consent within ten (10) Business Days:  (i) make or permit to be made any material alterations to or upon the Property; provided, however, Purchaser’s consent shall not be required for repairs or other work if the repairs or other work are of an emergency nature, or are required by law, or are permitted to be made by Tenant or required to be made by Seller under the Lease; provided, however, that in any of such events, Seller shall notify Purchaser of such work as soon as practicable; (ii) enter into any contracts for the provision of services and/or supplies to the Property which are not terminable without premium or penalty by Purchaser upon no more than thirty (30) days’ prior written notice; (iii) enter into any leases, licenses, or other occupancy agreements with respect to the Property or any part thereof, or extend (except pursuant to a provision of the Lease), terminate or cancel (except in the event of a Tenant default), or otherwise amend the Lease (except pursuant to a provision of the Lease that specifically contemplates or requires such amendment and except for a certain Second 

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Amendment to the Lease in the form annexed hereto and made a part hereof as Exhibit I; the "Second Amendment"); (iv) remove or permit the removal from the Property of any fixtures, mechanical equipment, or any other item included in the Property except when (a) replaced with items of equal or greater quality, or (b) permitted to be removed by Tenant under the Lease (provided, however, that Seller shall not be in default of this Agreement if Tenant removes any such item in violation of the Lease, as long as Seller uses commercially reasonable efforts to enforce the Lease against Tenant, but such violation shall constitute the failure of a condition precedent to Closing); or (v) grant any easements or title encumbrances that will affect the Property or any portion thereof after the Closing Date.
(c)    Seller agrees that from the date of this Agreement to the Closing Date, Seller shall: (i) at its expense, continue to perform in all material respects its obligations as landlord under the Lease; (ii) not mortgage any part of the Property; (iii) not make any commitment or incur any liability to any labor union, through negotiations or otherwise with respect to the Property, except in connection with emergency repairs or other emergency work.
(d)    Seller agrees that from the date of this Agreement until the earlier of (i) the Closing or (ii) July 19, 2015, Seller shall maintain in full force and effect an all-risk casualty insurance policy for the Property and all improvements thereon, in substantially the same form as currently maintained.  
(e)    Promptly after receipt, Seller shall provide Purchaser with true and complete copies of any written notices that Seller receives from any Authorities with respect to (i) any special assessments or proposed increases in the valuation of the Property; (ii) any condemnation or eminent domain proceedings affecting the Property or any portion thereof; or (iii) any material violation of any environmental law or any zoning, health, fire, safety or other law, regulation or code applicable to the Property.  In addition, Seller shall deliver or cause to be delivered to Purchaser, promptly upon the giving or receipt thereof by Seller, true and complete copies of any written notices of default or potential default or other material issue given or received by Seller under the Lease.
(f)    Seller will advise Purchaser promptly of any suit, action, arbitration, or legal or other proceeding or governmental investigation which is instituted after the Effective Date and which concerns or affects Seller or the Property, other than any such matters (such as slip and fall and similar claims) that are covered by Seller’s insurance.
(g)    If, prior to the expiration of the Evaluation Period, Purchaser has given written notice to Seller that Purchaser is waiving its right to allow this Agreement to terminate pursuant to Section 5.3(c) hereof, then promptly thereafter Seller shall commence and diligently follow any process that is required by any material and/or service provider that, to Seller’s Knowledge, has provided an assignable Warranty to Seller that is in Seller’s possession or control, to obtain such provider’s written consent to the assignment of such Warranty to Purchaser; provided, however, that Seller shall not be required to complete the process until  after the Closing, as long as it is completed within 120 days after the Closing.  The obligations of Seller under this Section 7.1(g) shall survive the Closing.  To the extent that any work on the roof is required as a pre-condition to receiving the Warranty provider’s approval of the transfer of the Warranty, then Seller shall cause such work to be promptly completed at either its own expense, the expense of the provider of the roof Warranty, and/or the expense of Tenant (to the extent that the cost of such work is Tenant’s liability under the Lease); provided that to the extent that such cost is Tenant’s liability under the Lease, and the work is not completed or the bills therefor received until after the Closing, then Purchaser shall bill Tenant for such cost within ten (10) Business Days after Purchaser receives an invoice for such costs from Seller, and Purchaser shall remit payment of such costs to Seller within ten (10) Business Days after it receives payment from Tenant.
Section 7.2    Estoppels and SNDA.  (a) It will be a condition precedent to Closing that Seller obtain (i) from Tenant an executed estoppel certificate in the form, or limited to the substance, prescribed by the Lease (the "Estoppel Certificate"), and (ii) from the office park maintenance association (the "Association") that has jurisdiction over the Real Property and Improvements pursuant to a recorded Declaration, an executed estoppel certificate in form and substance reasonably satisfactory to Purchaser (the "Association Estoppel").  If, on or before twenty-five days prior to the Scheduled Closing Date, Seller has been unable to obtain the Purchaser’s Estoppel as defined in Section 7.2(b) below, then Seller shall use commercially reasonable efforts (which, for the avoidance of doubt, do not include the obligation to pay any amounts, incur any obligations or liabilities or initiate any legal action) to have Tenant execute the Estoppel Certificate.  Seller shall not be in default of its obligations hereunder if Tenant fails to deliver the Estoppel Certificate or the Association fails to deliver the Association Estoppel, or the Tenant or Association delivers an estoppel certificate which is not in accordance with this Agreement, but such failure shall constitute the failure of a condition precedent to Purchaser’s obligation to complete the purchase of the Property.  In such event, Purchaser shall receive a prompt refund of the Earnest Money Deposit, together with all interest which has accrued thereon, and except with respect to the Termination Surviving Obligations, this Agreement shall be null and void and the parties shall have no further obligations to each other under this Agreement. 
(b)    Within five (5) Business Days after the Effective Date, Seller shall request that (i) Tenant execute and deliver an estoppel certificate in the form attached hereto as Exhibit G (the "Purchaser’s Estoppel"), and (ii) Guarantor execute and deliver a guarantor estoppel certificate in the form attached hereto as Exhibit J (the "Guarantor Estoppel").  Additionally, if requested by Purchaser prior to the end of the Evaluation Period, Seller shall request that Tenant execute and deliver a subordination, 

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non-disturbance and attornment agreement in the form attached hereto as Exhibit H (the "SNDA").  Seller shall use commercially reasonable efforts (which, for the avoidance of doubt, do not include the obligation to pay any amounts, incur any obligations or liabilities or initiate any legal action) to have Tenant execute the Purchaser’s Estoppel and (if requested) SNDA and have Guarantor execute the Guarantor Estoppel; provided, however, the Scheduled Closing Date shall not be delayed, and Purchaser’s obligations to close title shall not be affected, by Tenant’s failure to execute and deliver the Purchaser’s Estoppel or SNDA and/ or Guarantor’s failure to execute and deliver the Guarantor Estoppel.  If Tenant executes and delivers the Purchaser’s Estoppel, it shall be deemed to constitute the satisfaction of the condition precedent that Seller deliver the Estoppel Certificate described in Section 7.2(a) above.  
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.1    Seller’s Representations and Warranties. Subject to the limitations set forth below in this Section 8.1 and in Section 8.3 of this Agreement, the following constitute the sole representations and warranties of Seller to Purchaser, which representations and warranties shall be true and accurate in all material respects as of the Effective Date and the expiration of the Evaluation Period and, solely with respect to the Strict Representations, as of the Scheduled Closing Date:
(a)    Status. Seller is a limited liability company, duly organized and validly existing under the laws of the State of New Jersey.
(b)    Authority. Seller possesses all requisite power and authority, and has taken all actions required by its organizational documents and applicable law, has obtained all necessary consents, to execute and deliver this Agreement and will, by Closing, have taken all actions required by its organizational documents and the law applicable to such documents to consummate the transactions contemplated by this Agreement. This Agreement and the Seller’s Closing Documents (hereinafter defined) are, or will be when executed and delivered by Seller, legally binding on, and enforceable against, Seller, in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, receivership and other similar laws affecting the rights and remedies of creditors generally and by general principles of equity.  
(c)    Non-Contravention.  The execution and delivery of this Agreement by Seller and the consummation by Seller of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or Authority or conflict with, result in a breach of, or constitute a default under the organizational documents of Seller, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Seller is a party or by which it is bound.
(d)    Suits and Proceedings.  To Seller’s Knowledge, there are no legal actions, suits or similar proceedings pending and served, or threatened in writing against Seller or the Property which (i) are not adequately covered by existing insurance and (ii) if adversely determined, would have a material adverse effect on (x) the continued operation of the Property as currently operated, (y) Seller’s ability to consummate the transactions contemplated hereby, or (iii) the value of the Property.
(e)    Environmental Reports.  The copies of the environmental reports and studies that Seller shall make available to Purchaser and/or its consultants for review pursuant to Section 5.2 above constitute all of the environmental reports and studies that Seller has in its possession or control with respect to the Real Property.  Seller makes no representation or warranty, however, as to the accuracy or completeness of the content of such reports or studies or as to whether Purchaser has the legal right to rely on such reports or studies.
(f)     Leasing Commission Agreements.  A true, correct and complete copy of the Leasing Commission Agreement has been made available to Purchaser and shall continue to be available to Purchaser for review pursuant to Section 5.2 of this Agreement.  The Leasing Commission Agreement constitutes the only brokerage agreement in effect with respect to the Lease.  
(g)    Non-Foreign Entity.  Seller is not a "foreign person" or "foreign corporation" as those terms are defined in the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
(h)    Tenant and Lease; Bus Service Agreement.  The Tenant is the only tenant of the Property.  To Seller’s Knowledge: (i) the Lease constitutes all of the agreements between Seller and the Tenant or Guarantor with respect to the Tenant’s use and occupancy of the Property, and (ii) Seller has made available to Purchaser, and will make available to Purchaser in accordance with Section 5.2, a true, accurate and complete copy of the Lease for review and copying by Purchaser.  In addition to the Lease, the Real Property is affected by a certain Bus Service & Bus Stop/Bus Shelter License between Tenant, as licensor, and New Jersey Transit Corporation, as licensee, dated December 17, 2012.
(i)    Service Contracts.  Seller is not a party to any service contract that might affect the Real Property after the Closing.
(j)    Anti-Terrorism. Neither Seller, nor any member of Seller nor any of their respective officers, directors, or members is named by any Executive Order of the United States Treasury Department as a terrorist, a "Specially Designated National and Blocked Person," or any other banned or blocked person, entity, nation or transaction pursuant to any law, order, rule 

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or regulation that is enforced or administered by the Office of Foreign Assets Control (collectively, an "Identified Terrorist".)  Seller is not engaging in this transaction on the behalf of any Identified Terrorist.
(k)      Knowledge. James Corrigan, Vice President of Property Management for Mack-Cali Realty Corporation and Ricardo Cardoso, Vice President of Investments for Mack-Cali Realty Corporation, are the primary Seller representatives having direct knowledge of the operation and condition of the Property and the facts and circumstances with respect to which the representations and warranties are made in this Agreement. 
(l)    Consents. No consent, waiver, approval or authorization is required from any person or entity (that has not already been obtained) in connection with the execution and delivery of this Agreement by Seller or the performance by Seller of the transactions contemplated hereby.
(m)    ISRA. Seller has no Knowledge that the Real Property has been used to refine, produce, store, handle, transfer or process any Hazardous Substances, except as disclosed in the Environmental Reports or as permitted under the Lease and except as customarily occurs in connection with the construction, use and operation of commercial office buildings and associated improvements.     The term "Environmental Reports" means the reports and studies referenced in clause (e) of Section 8.1.
(n)    Bankruptcy. No bankruptcy, insolvency, reorganization or similar action or proceeding, whether voluntary or involuntary, is pending, or, to Seller’s knowledge, has been threatened in writing, against Seller.
(o)    Condemnation.  Seller has received no written notice from any governmental authority of any pending or contemplated condemnation affecting the Property.
(p)     Taxes and Assessments.  Seller has not filed, and has not retained anyone to file, an appeal of the real property tax assessments against the Property.
(q)    Cost-Sharing Agreements. To Seller’s Knowledge, there exist no unrecorded cost-sharing agreements burdening either Seller or the Property that will survive the Closing (other than the Cross-Easement Agreement as amended by the Cross-Easement Amendment). 
If, before the expiration of the Evaluation Period, Seller acquires Knowledge of any fact or condition which constitutes a material change in any of the representations and warranties set forth in Section 8.1, Seller shall (a) promptly notify Purchaser in writing of such fact or condition, and (b) have the right to cure such fact or condition before the Closing, and the existence of such fact or condition shall not be a ground for Purchaser terminating this Agreement, provided that (i) Seller, promptly, after discovering the fact or condition, assures Purchaser in writing that Seller is capable of curing, and intends to cure, such fact or condition prior to the Closing and (ii) Seller acts diligently to cure the fact or condition and completes such cure prior to the Scheduled Closing Date.  Subject to Seller’s right to cure as set forth in the preceding sentence, provided a material change in any representation or warranty is not the result of the willful breach of this Agreement by Seller and does not relate to a Strict Representation, Purchaser’s exclusive remedy upon being advised of any material change in the representations and warranties shall be the termination of this Agreement.  If Purchaser desires to terminate this Agreement due to a material change in any representation or warranty, Purchaser shall notify Seller within five (5) Business Days after receipt of a notice from Seller advising of any such change, whereupon, the Earnest Money Deposit shall be returned to Purchaser and, except as expressly provided herein, this Agreement and all rights and obligations of the respective parties hereunder shall be null and void.   For the avoidance of doubt, Purchaser shall have no right to terminate this Agreement on account of (and Seller shall have no liability in connection with) any change in a representation or warranty occurring after the expiration of the Evaluation Period, unless the change relates to a Strict Representation or is caused by a willful breach of this Agreement by Seller.
Section 8.2    Purchaser’s Representations and Warranties.  Purchaser represents and warrants to Seller the following:
(a)    Status. Purchaser is a duly organized and validly existing corporation under the laws of the State of California.
(b)    Authority. The execution and delivery of this Agreement and the performance of Purchaser’s obligations hereunder have been duly authorized by all necessary action on the part of Purchaser and this Agreement constitutes the legal, valid and binding obligation of Purchaser.
(c)    Non-Contravention.  The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated hereby will not violate any judgment, order, injunction, decree, regulation or ruling of any court or Authority or conflict with, result in a breach of or constitute a default under the organizational documents of Purchaser, any note or other evidence of indebtedness, any mortgage, deed of trust or indenture, or any lease or other material agreement or instrument to which Purchaser is a party or by which it is bound.

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(d)    Consents. No consent, waiver, approval or authorization is required from any person or entity (that has not already been obtained) in connection with the execution and delivery of this Agreement by Purchaser or the performance by Purchaser of the transactions contemplated hereby.
(e)    Anti-Terrorism. Neither Purchaser, nor any officer, director, shareholder, partner, investor or member of Purchaser is an Identified Terrorist.  Purchaser is not engaging in this transaction on the behalf of, either directly or indirectly, any Identified Terrorist.
Section 8.3    Survival of Representations, Warranties and Covenants.  The representations and warranties of Seller set forth in Section 8.1 or elsewhere in this Agreement will survive the Closing for a period of nine (9) months, after which time they will merge into the Deed.  Purchaser will not have any right to bring any action against Seller as a result of any breach of such representations or warranties unless and until the aggregate amount of all liabilities and losses arising out of all such breaches exceeds One Hundred Thousand Dollars ($100,000) (the "Minimum Threshold"); provided, however, if the Minimum Threshold is reached, then Seller’s liability shall revert back and cover the first dollar of such liabilities and losses and shall not be limited to only the excess of such liabilities and losses above the Minimum Threshold.  In addition, in no event will Seller's liability for all such breaches exceed, in the aggregate, the sum of Two Million Dollars ($2,000,000).  Seller shall have no liability with respect to any of Seller's representations or warranties herein if, prior to the Closing, Purchaser obtains actual knowledge (from whatever source, including, without limitation, as a result of Purchaser's due diligence tests, investigations and inspections of the Property, the Tenant’s estoppel certificate, or written disclosure by Seller or Seller's agents and employees) that any of Seller's representations or warranties herein are inaccurate, and Purchaser nevertheless consummates the transaction contemplated by this Agreement.  Except as set forth in the final sentence of this Section 8.3, Purchaser shall conclusively be deemed to have actual knowledge that a representation or warranty was inaccurate if  (i) Purchaser or any of its directors, officers, employees, agents, consultants or representatives had actual knowledge that the representation or warranty was inaccurate, incomplete or misleading, or had actual knowledge of any information or fact which would render the representation or warranty inaccurate, incomplete or misleading, or (ii) this Agreement, any Exhibit or any Documents made available through the Data Room in accordance with Section 5.2, or any studies, tests, analysis, investigations or reports prepared by or for Purchaser, its employees, agents, attorneys, accountants, investors or other representatives contains information which is inconsistent with a representation or warranty.  The Closing Surviving Obligations and the Termination Surviving Obligations will survive Closing without limitation unless a specified period is otherwise provided in this Agreement.  All other covenants and agreements made or undertaken by Seller under this Agreement, unless otherwise specifically provided herein, will not survive the Closing but will be merged into the Deed and other Closing documents delivered at the Closing.  Notwithstanding anything to the contrary contained in this Section 8.3, as to the content of Documents made available to Purchaser through the Data Room, Purchaser shall not be deemed to have actual knowledge thereof nor that a representation or warranty of Seller made herein is inaccurate to the extent that such content is contradictory to a representation or warranty of Seller set forth in this Agreement and Seller had Knowledge of such inaccuracy.  
ARTICLE IX
CONDITIONS PRECEDENT TO CLOSING
Section 9.1    Conditions Precedent to Obligation of Purchaser. The obligation of Purchaser to consummate the transaction hereunder shall be subject to the fulfillment on or before the Closing Date of all of the following conditions, any or all of which may be waived by Purchaser in its sole discretion:
(a)    Seller shall have delivered to Purchaser all of the items required to be delivered to Purchaser pursuant to the terms of this Agreement, including but not limited to, those provided for in Section 10.3.
(b)    Seller shall have delivered (i) the Estoppel Certificate or Purchaser’s Estoppel and (ii) the Association Estoppel to Purchaser.  In the event that this condition precedent to Closing is not satisfied on or before the Scheduled Closing Date, then Seller shall have the right to postpone the Closing for up to fourteen (14) days to enable Seller to attempt to satisfy this condition precedent. 
(c)    Seller and Tenant shall have executed and delivered the Second Amendment, and Seller shall have delivered, in accordance with the requirements of the Second Amendment, the original unrecorded Memorandum of Lease Termination, dated as of October 20, 2011 by and between Seller and Tenant and pertaining the Lease.
(d)    Seller shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Seller as of the Closing Date.  
Section 9.2    Conditions Precedent to Obligation to Seller. The obligation of Seller to consummate the transaction hereunder shall be subject to the fulfillment on or before the date of Closing (or as otherwise provided) of all of the following conditions, any or all of which may be waived by Seller in it sole discretion:
(a)    Seller shall have received the Purchase Price as adjusted pursuant to, and payable in the manner provided for, in this Agreement.

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(b)    Purchaser shall have delivered to Seller all of the items required to be delivered to Seller pursuant to the terms of this Agreement, including but not limited to, those provided for in Section 10.2.
(c)    Purchaser shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Purchaser as of the Closing Date.
ARTICLE X
CLOSING
Section 10.1    Closing. The consummation of the transaction contemplated by this Agreement by delivery of documents and payments of money shall take place at 12:00 noon Pacific Time on the Scheduled Closing Date at the offices of Escrow Agent.  Seller and Purchaser each hereby agrees to reasonably cooperate to conduct the closing by overnight courier through an escrow arrangement with Escrow Agent.  At Closing, the events set forth in this Article X will occur, it being understood that the performance or tender of performance of all matters set forth in this Article X are mutually concurrent conditions which may be waived by the party for whose benefit they are intended.  The acceptance of the Deed by Purchaser shall be deemed to be full performance and discharge of each and every agreement and obligation on the part of Seller to be performed hereunder unless otherwise specifically provided herein or in the Closing Documents.
Section 10.2    Purchaser’s Closing Obligations. On the Closing Date, Purchaser, at its sole cost and expense, will deliver the following items to Seller (through Escrow Agent) at Closing as provided herein:
(a)    The Purchase Price, after all adjustments are made as herein provided, by Federal Reserve wire transfer of immediately available funds, in accordance with the timing and other requirements of Section 3.3;
(b)    Two counterpart originals of the Assignment, duly executed by Purchaser;
(c)    Evidence reasonably satisfactory to Escrow Agent that the person executing the Assignment on behalf of Purchaser has full right, power and authority to do so;
(d)    A counterpart of the Closing Statement, duly executed by Purchaser (a copy of which will be binding on Purchaser if delivered electronically to Seller and Escrow Agent at Closing); 
(e)    Such other documents as may be reasonably necessary or appropriate to effect the consummation of the transaction which is the subject of this Agreement.
Section 10.3    Seller's Closing Obligations.  At the Closing, Seller will deliver to Purchaser (through Escrow Agent) the following documents:
(a)    A bargain and sale deed with covenants against the grantor’s acts (the "Deed"), duly executed and acknowledged by Seller, conveying to Purchaser the Real Property and the Improvements subject only to the Permitted Exceptions and Cross-Easement Amendment;
(b)    Two counterpart originals of an assignment and assumption of Seller’s interest in the Lease, the Leasing Commission Agreement, the Licenses and Permits and any assignable Warranties, in the form attached hereto as Exhibit A (the "Assignment"), duly executed by Seller.  
(c)    Evidence reasonably satisfactory to Escrow Agent that the person executing the documents delivered by Seller pursuant to this Section 10.3 on behalf of Seller has full right, power, and authority to do so;
(d)    A certificate in the form attached hereto as Exhibit B ("Certificate as to Foreign Status") certifying that Seller is not a "foreign person" as defined in Section 1445 of the Internal Revenue Code of 1986, as amended;
(e)    To the extent that originals are in Seller’s possession or control, a counterpart original of the Lease, the Second Amendment, and the Leasing Commission Agreement, and original Licenses and Permits and Warranties, or, to the extent that originals of any of the foregoing items are not in Seller’s possession or control, a certified true copy of the Lease and the Leasing Commission Agreement, and copies of the Licenses and Permits and Warranties; 
(f)    A counterpart of the Closing Statement, duly executed by Seller (a copy of which will be binding if delivered electronically to Purchaser and Escrow Agent at Closing); 
(g)    A letter from Seller to Tenant requesting that future rent under the Lease be paid to Purchaser;
(h)    An executed affidavit of title in the form of Exhibit E; 
(i)    The (i) Estoppel Certificate or Purchaser’s Estoppel and (ii) the Association Estoppel; 
(j)    To the extent in Seller's possession, all keys, codes and other security devices for the Property;

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(k)    To the extent in Seller's possession, copies of any and all operations manuals relating to equipment serving the Property; and
(l)    Such other documents as may be reasonably necessary or appropriate to effect the consummation of the transaction which is the subject of this Agreement.
Section 10.4    Prorations.
(a)    Seller and Purchaser agree to adjust, as of 11:59 p.m. on the day preceding the Closing Date (the "Proration Time"), the following (collectively, the "Proration Items"):
(i)    Rents, in accordance with Section 10.4(b) below.
(ii)    In the event that there shall be any expenses attributable to the operation, maintenance or ownership of the Property that are not paid directly by the Tenant under the Lease ("Other Proration Items"), then Seller will be responsible for the amounts thereof relating to the period up to and including the Closing Date, and Purchaser will be responsible for the amounts thereof relating to the period after the Closing Date.  Accordingly, to the extent that Seller prepaid for any Other Proration Items that are attributable to the period after the Closing Date, Seller will receive a credit therefor at Closing.  Conversely, at Closing, to the extent that Seller has not yet paid for any Other Proration Items that are attributable to the period on or prior to the Closing Date, then Purchaser shall receive a credit for such Other Proration Items and shall pay such expenses when due, or, if past-due at Closing, within seven (7) days after Closing. 
Seller will be charged and credited for the amounts of all of the Proration Items relating to the period up to and including the Proration Time, and Purchaser will be charged and credited for all of the Proration Items relating to the period after the Proration Time.  The estimated Closing prorations shall be set forth on a preliminary closing statement to be prepared by Seller and submitted to Purchaser prior to the Closing Date (the "Closing Statement").  The Closing Statement, once agreed upon, shall be signed by Purchaser and Seller.  The prorations shall be paid at Closing by Purchaser to Seller (if the prorations result in a net credit to Seller) or by Seller to Purchaser (if the prorations result in a net credit to Purchaser) by increasing or reducing the cash to be delivered by Purchaser in payment of the Purchase Price at the Closing.  If the actual amounts of the Proration Items are not known as of the Closing Date, the prorations will be made at Closing on the basis of the best evidence then available; thereafter, when actual figures are received, re-prorations will be made on the basis of the actual figures, and a final cash settlement will be made between Seller and Purchaser.  No prorations will be made in relation to insurance premiums, and Seller's insurance policies will not be assigned to Purchaser.  The provisions of this Section 10.4(a) will survive the Closing for twelve (12) months.
(b)    Purchaser will receive a credit on the Closing Statement for the prorated amount (as of the Proration Time) of all Rental (as defined below in this paragraph) previously paid to or collected by Seller and attributable to any period following the Proration Time.  After the Closing, Seller will cause to be paid or turned over to Purchaser all Rental, if any, received by Seller after Closing and attributable to any period following the Proration Time.  "Rental" as used herein includes fixed monthly rentals, additional rentals, percentage rentals, escalation rentals (which include building operation and maintenance costs and expenses and real estate taxes as provided for under the Lease, to the extent the same exceeds any expense stop specified in the Lease), retroactive rentals, all administrative charges, utility charges, tenant or real property or office park association dues, and other sums and charges payable by the Tenant under the Lease.  Rental is "Delinquent" when it was due prior to the Closing Date, and payment thereof has not been made on or before the Proration Time.  Delinquent Rental will not be prorated.  Purchaser agrees to use good faith collection procedures with respect to the collection of any Delinquent Rental, but Purchaser will have no liability for the failure to collect any such amounts and will not be required to pursue legal action to enforce collection of any such amounts owed to Seller by the Tenant.  Seller reserves the right to pursue a collection action against the Tenant for Delinquent Rental; provided, however, in no event may Seller seek to terminate the Lease or Tenant’s occupancy thereunder or threaten to do so.  All sums collected by Purchaser from and after Closing from the Tenant will be applied first to amounts due from the Tenant for the month of Closing, then to current amounts due subsequent to Closing, then to amounts owed by the Tenant to Seller.  Purchaser and Seller shall promptly remit to the other any sums received by either party that are due to the other pursuant to this Section 10.4(b).  
Section 10.5    Costs of Title Company and Closing Costs. Costs incurred in connection with this transaction will be allocated as follows:
(a)    Seller shall pay (i) Seller’s attorney’s fees; (ii) one-half (1/2) of any escrow fees payable to the Escrow Agent; (iii) the cost to prepare and record discharges of any encumbrances that Seller is removing pursuant to the terms of this Agreement; (iv) one-half of any costs incurred in connection with the transfer of the Warranties; and (v) all realty transfer fees and taxes other than the "Mansion Tax" described in Section 10.5(b)(vii) below, which shall be paid by Purchaser.
(b)    Purchaser shall pay (i) Purchaser’s attorney's fees; (ii) the cost of recording the Deed to the Real Property and any other documents, other than the cost to record discharges of any encumbrances that Seller is removing pursuant to the terms of this Agreement; (iii) the cost of all title searches and title insurance premiums; (iv) one-half (1/2) of any escrow fees payable to the Escrow Agent; (v) the cost of any updated survey that Purchaser elects to obtain;  (vi) one-half of any costs incurred in 

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connection with the transfer of the Warranties; and (vii) the realty transfer tax payable by purchasers of property and known in New Jersey as the "Mansion Tax".  
(c)    Any other costs and expenses of Closing not provided for in this Section 10.5 shall be allocated between Purchaser and Seller in accordance with the custom in the area in which the Property is located. 
Section 10.6    Like-Kind Exchange.  Purchaser hereby acknowledges that Seller may now or hereafter desire to enter into a partially or completely nontaxable exchange (a "Section 1031 Exchange") involving the Property (and/or any one or more of the properties comprising the Property) under Section 1031 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder.  In connection therewith, and notwithstanding anything herein to the contrary, Purchaser shall cooperate with Seller and shall take, and consent to Seller taking, any action in furtherance of effectuating a Section 1031 Exchange (including, without limitation, any action undertaken pursuant to Revenue Procedure 2000-37, 2000-40 IRB, as may hereafter be amended or revised (the "Revenue Procedure")), including, without limitation, (a) permitting Seller or an "exchange accommodation titleholder" (within the meaning of the Revenue Procedure) ("EAT") to assign, or cause the assignment of, this Agreement and all of Seller’s rights hereunder with respect to any or all of the Property to a "qualified intermediary" (as defined in Treasury Regulations Section 1.1031(k)-1(g)(4)(iii)) (a "QI"); (b) permitting Seller to assign this Agreement and all of Seller’s rights and obligations hereunder with respect to any or all of the Property and/or to convey, transfer or sell any or all of the Property, to (i) an EAT; (ii) any one or more limited liability companies ("LLCs") that are wholly-owned by an EAT; or (iii) any one or more LLCs that are wholly-owned by Seller and/or any Affiliate of Seller and to thereafter permit Seller to assign its interest in such one or more LLCs to an EAT; and (c) pursuant to the terms of this Agreement, having any or all of the Property conveyed by an EAT or any one or more of the LLCs referred to in (b)(ii) or (b)(iii) above, and allowing for the consideration therefor to be paid by an EAT, any such LLC or a QI; provided, however, that Purchaser shall not be required to delay the Closing or incur additional expense; and provided further that Seller shall provide whatever safeguards are reasonably requested by Purchaser, and not inconsistent with Seller’s desire to effectuate a Section 1031 Exchange involving any of the Property, to ensure that all of Seller’s obligations under this Agreement shall be satisfied in accordance with the terms thereof.
ARTICLE XI
CONDEMNATION AND CASUALTY
Section 11.1    Casualty.  If, prior to the Closing Date, all or a Significant Portion of the Real Property and Improvements is destroyed or damaged by fire or other casualty, then Purchaser shall have the right to terminate this Agreement upon notice to Seller within fifteen (15) days after such damage or destruction (time being of the essence with respect to such notice).  If this Agreement is so terminated, the Earnest Money Deposit and all interest accrued thereon will be returned to Purchaser and thereafter neither Seller nor Purchaser will have any further rights or obligations to the other hereunder except with respect to the Termination Surviving Obligations.  If less than a Significant Portion of the Real Property and Improvements is destroyed or damaged as aforesaid or a Significant Portion of the Real Property and Improvements is destroyed or damaged and Purchaser does not elect to terminate this Agreement, the parties will proceed to Closing pursuant to the terms hereof without abatement of the Purchase Price, and Seller’s insurance proceeds shall be disbursed and applied for the benefit of Purchaser in accordance with the terms and conditions of the Lease, which obligation shall survive Closing; provided, however, that, at Closing, Purchaser shall receive a credit against the Purchase Price in the amount of any deductible under Seller’s insurance policy.  
Section 11.2    Condemnation of Property.  In the event that a condemnation or eminent domain proceeding is commenced against the Property or any part thereof, and it results in the Lease being terminated pursuant to the terms thereof, then this Agreement shall automatically terminate.  If this Agreement is so terminated, the Earnest Money Deposit and all interest accrued thereon will be returned to Purchaser and thereafter neither Seller nor Purchaser will have any further rights or obligations to the other hereunder except with respect to the Termination Surviving Obligations.  If the Lease is not so terminated, the parties will proceed to Closing pursuant to the terms hereof without abatement of the Purchase Price, except that the Seller shall assign and/or pay over or credit to Purchaser at Closing all right, title and interest of Seller in and to any net compensation paid or to be paid to the owner of the Property as a result of such condemnation.  
ARTICLE XII
CONFIDENTIALITY
Section 12.1    Confidentiality. Seller and Purchaser each expressly acknowledge and agree that the transactions contemplated by this Agreement and the terms, conditions, and negotiations concerning the same will be held in the strictest confidence by each of them and, except as otherwise set forth in Section 5.2(b), will not be disclosed by either of them except to their respective legal counsel, accountants, consultants, officers, directors,  and except and only to the extent that such disclosure may be necessary for their respective performances hereunder.  Purchaser further acknowledges and agrees that, unless and until the Closing occurs, all information obtained by Purchaser in connection with the Property will not be disclosed by Purchaser to any third persons without the prior written consent of Seller.  Nothing contained in this Article XII will preclude or limit either party to this Agreement from disclosing or accessing any information otherwise deemed confidential under this Article XII in response to lawful process or subpoena or other valid or enforceable order of a court of competent jurisdiction or any filings with 

16

governmental authorities, such as the Securities and Exchange Commission, required by reason of the transactions provided for herein or otherwise required pursuant to an opinion of counsel.  In addition, prior to, at or after Closing, any release to the public of information with respect to the sale contemplated herein or any matters set forth in this Agreement will be made only in a form approved by Purchaser and Seller and their respective counsel, which approval shall not be unreasonably withheld or delayed.  The provisions of this Article XII will survive the Closing or any termination of this Agreement.
ARTICLE XIII
REMEDIES
Section 13.1    Default by Seller.  In the event the Closing and the transactions contemplated hereby do not occur as herein provided by reason of any default of Seller, Purchaser may, as Purchaser’s sole and exclusive remedy, elect by notice to Seller within ten (10) Business Days following the Scheduled Closing Date, any of the following: (a) terminate this Agreement, in which event Seller will reimburse Purchaser’s actual, reasonable out-of-pocket transaction costs up to $75,000.00 and Purchaser will receive from the Escrow Agent the Earnest Money Deposit, together with all interest accrued thereon, whereupon Seller and Purchaser will have no further rights or obligations under this Agreement, except with respect to the Termination Surviving Obligations; or (b) seek to enforce specific performance of Seller’s obligation to convey the Property to Purchaser in accordance with the terms and conditions of this Agreement (it being understood and agreed that the remedy of specific performance shall not be available to enforce other obligations of Seller hereunder); or (c) to proceed to Closing in accordance with the terms and conditions of this Agreement.  Notwithstanding the forgoing, if Purchaser elects to terminate this Agreement pursuant to clause (a) above, or is deemed to have so terminated this Agreement, on account of Seller voluntarily having transferred title to the Real Property to a third party in willful violation of this Agreement and thereby rendering specific performance unobtainable, then Purchaser shall have the right to seek, in addition to the $75,000.00 of out-of-pocket transaction costs, any actual direct damages (which, for the avoidance of doubt, shall include the amount by which the sales price to such third party exceeds the Purchase Price hereunder, but shall exclude consequential damages) to which Purchaser is entitled at law, provided that the aggregate amount of such transaction costs and damages shall not exceed an amount equal to the Earnest Money Deposit.  Purchaser expressly waives its rights to seek damages in the event of Seller’s default hereunder, except as expressly set forth in the preceding sentence.  Purchaser shall be deemed to have elected to terminate this Agreement pursuant to clause (a) above if Purchaser fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Property is located on or before sixty (60) days following the Scheduled Closing Date.  Notwithstanding the foregoing, nothing contained in this Section 13.1 will limit Purchaser's remedies at law, in equity or as herein provided in pursuing remedies for a breach by Seller of any of the Termination Surviving Obligations or Closing Surviving Obligations. 
Section 13.2    Default by Purchaser.  In the event the Closing and the consummation of the transactions contemplated herein do not occur as provided herein by reason of any default of Purchaser, Purchaser and Seller agree it would be impractical and extremely difficult to prove the damages which Seller may suffer.  Purchaser and Seller hereby agree that (a) an amount equal to the Earnest Money Deposit, together with all interest accrued thereon, is a reasonable estimate of the total net detriment Seller would suffer in the event Purchaser defaults and fails to complete the purchase of the Property, and (b) such amount will be the full, agreed and liquidated damages for Purchaser’s default and failure to complete the purchase of the Property, and will be Seller’s sole and exclusive remedy (whether at law or in equity) for any default of Purchaser resulting in the failure of consummation of the Closing, whereupon this Agreement will terminate and Seller and Purchaser will have no further rights or obligations hereunder, except with respect to the Termination Surviving Obligations.  The payment of such amount as liquidated damages is not intended as a forfeiture or penalty but is intended to constitute liquidated damages to Seller. Notwithstanding the foregoing, nothing contained herein will limit Seller’s remedies at law, in equity, or as herein provided in the event of a breach by Purchaser of any of the Termination Surviving Obligations or Closing Surviving Obligations.
ARTICLE XIV
NOTICES
Section 14.1    Notices.
(a)    All notices or other communications required or permitted hereunder shall be in writing, and shall be given by any nationally recognized overnight delivery service with proof of delivery, or electronic mailing of a ".pdf" copy thereof, provided that a copy thereof also be delivered by nationally recognized overnight delivery service to the extent such notice is given by electronic mail, sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee will have designated by written notice sent in accordance herewith. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement will be as follows:

17

	
			
	If to Purchaser:
	Griffin Capital Corporation
Griffin Capital Plaza
1520 E. Grand Avenue
El Segundo, CA 90245
Attention: Robert Corry
Tel: (310) 469-6100
Email: rcorry@griffincapital.com

	 

	 

	 

	
			
	With a copy to:
	Dickstein Shapiro LLP
1825 Eye Street NW
Washington, DC  20006-5403
Attention: Jason R. Eig, Esq.
Tel.: (202) 420-5008    
E-Mail: EigJ@dicksteinshapiro.com

	 

	 

	 

	
			
	and to:
	Mary Higgins, Esq. 
General Counsel 
Griffin Capital 
790 Estate Drive, Suite 180 
Deerfield, IL 60015 
Email: mhiggins@griffincapital.com

	 

	 

	 

	
			
	With a copy to: 
	14 Sylvan Realty L.L.C.
c/o Mack-Cali Realty Corporation
343 Thornall Street
Edison, New Jersey 08837-2206
with separate notices to the attention of:
Mr. Mitchell E. Hersh
Tel.: (732) 590-1040     
E-Mail: mhersh@mack-cali.com

and
Gary T. Wagner, Esq.
Tel.: (732) 590-1516    
E-Mail: gwagner@mack-cali.com

	 

	 

	 

	 

	
			
	If to Escrow Agent:
	Chicago Title Insurance Company
Amy D. Hiraheta, Vice President, Sr. Escrow Officer & 
Sr. National Coordinator, National Projects Division
725 South Figueroa St., Suite 200
Los Angeles, CA  90017
(213) 488-4373 Direct
amy.hiraheta@ctt.com

	 

	 

	 

Notwithstanding the obligation to send a copy of notices given by electronic mail by overnight mail, notices given by electronic mail shall be deemed received and effective upon the day of transmission (provided transmission occurs on a Business Day prior to 7:00 p.m. in the time zone of the recipient). Notices given by overnight delivery service as aforesaid shall be deemed received and effective on the first Business Day following such dispatch.  Notices may be given by counsel for the parties described above, and such notices shall be deemed given by said party, for all purposes hereunder.
ARTICLE XV
ASSIGNMENT 
Section 15.1     Assignment: Binding Effect.  Except in accordance with this Section 15.1, Purchaser will not have the right to assign this Agreement.  After the expiration of the Evaluation Period, Purchaser shall have the right to assign this Agreement, without Seller's consent or approval, to a single purpose entity that is owned by an operating partnership whose general partner is a Real Estate Investment Trust ("REIT"), provided that the day-to-day operations and affairs of such REIT are controlled and directed by Purchaser as sponsor of the REIT; and provided further that (a) written notice of the proposed assignment (including the name of the assignee) is delivered to Seller not less than five (5) Business Days prior to the Scheduled Closing Date, (b) an originally executed assignment and assumption agreement, in form reasonably satisfactory to Seller, is delivered to Seller and Escrow Agent prior to Closing pursuant to which the assignee assumes all obligations and liabilities of Purchaser under this Agreement, and (c)  Purchaser shall remain primarily liable hereunder as a principal (and not a guarantor or surety) for all obligations and liabilities arising or accruing through the completion of the Closing, including, without limitation, the payment of the Purchase 

18

Price to Seller and the performance of the other conditions precedent to Seller’s obligation to consummate the Closing; provided, however, if the Closing occurs and the Purchaser has complied with all of its obligations hereunder through the Closing, the Purchaser (but not its assignee) shall be relieved of all obligations of Purchaser arising under this Agreement before, on and after such Closing.   Purchaser shall be permitted to assign this Agreement without Seller's consent or approval to a yet to be formed Delaware limited liability company to be named "Griffin (Parsippany 14) Essential Asset REIT II, LLC, a Delaware limited liability company"; provided that (i) such entity is a single purpose entity that is owned by an operating partnership whose general partner is a REIT, (ii) the day-to-day operations and affairs of such REIT are controlled and directed by Purchaser as sponsor of the REIT, and (iii) Purchaser complies with the other requirements set forth above in clauses (a) through (c) of this Section 15.1.
ARTICLE XVI
BROKERAGE
Section 16.1    Brokers.  Seller has retained Holliday Fenoglio Fowler, L.P. ("Broker") in connection with this sale of the Property.  If the Closing occurs, Seller agrees to pay Broker a brokerage commission pursuant to a separate agreement by and between Seller and Broker.  Seller shall indemnify, defend and hold Purchaser harmless from and against any and all loss, cost, damage, liability or expense, including reasonable attorneys’ fees, which Purchaser may sustain, incur or be exposed to by reason of a claim for a fee or commission resulting from any other such claim made through or under Seller or Seller’s breach of this obligation.  Purchaser represents that it has not dealt with any brokers, finders or salesmen in connection with this transaction other than Broker, and agrees to indemnify, defend and hold Seller harmless from and against any and all loss, cost, damage, liability or expense, including reasonable attorneys’ fees, which Seller may sustain, incur or be exposed to by reason of a claim for a fee or commission resulting from this representation being untrue or inaccurate in any material respect.  The provisions of this Article XVI will survive the Closing or termination of this Agreement.
ARTICLE XVII
ESCROW AGENT
Section 17.1    Escrow.
(a)    Escrow Agent will hold the Earnest Money Deposit in escrow in an interest-bearing account of the type generally used by Escrow Agent for the holding of escrow funds until the earlier of (i) the Closing, or (ii) the termination of this Agreement in accordance with any right hereunder. In the event that prior to the expiration of the Evaluation Period, Purchaser elects to waive its right to allow this Agreement to automatically terminate at the end of the Evaluation Period as set forth in Section 5.3(c), the Earnest Money Deposit shall be non-refundable to Purchaser except in certain limited circumstances expressly set forth elsewhere in this Agreement, but shall be credited against the Purchase Price at the Closing.  All interest earned on the Earnest Money Deposit shall be paid to and be for the benefit of Purchaser unless the Earnest Money Deposit is paid to Seller as liquidated damages pursuant to this Agreement.  In the event this Agreement is allowed by Purchaser to automatically terminate at the expiration of the Evaluation Period, the Earnest Money Deposit and all interest accrued thereon will be returned by the Escrow Agent to Purchaser, without Seller having any right to dispute such return.  In the event the Closing occurs, the Earnest Money Deposit will be released to Seller, and Purchaser shall receive all of the interest earned on the Earnest Money Deposit.  In all other instances, Escrow Agent shall not release the Earnest Money Deposit to either party until Escrow Agent has been requested by Seller or Purchaser to release the Earnest Money Deposit and has given the other party five (5) Business Days to dispute, or consent to, the release of the Earnest Money Deposit.  Purchaser represents that its tax identification number, for purposes of reporting the interest earnings, is 95-4599958.  
(b)    Escrow Agent shall not be liable to any party for any act or omission, except for bad faith, gross negligence or willful breach or misconduct, and the parties agree to indemnify Escrow Agent and hold Escrow Agent harmless from any and all other claims, damages, losses or expenses arising in connection herewith.  The parties acknowledge that Escrow Agent is acting solely as stakeholder for their mutual convenience.  In the event Escrow Agent receives written notice of a dispute between the parties with respect to the Earnest Money Deposit and the interest earned thereon (the "Escrowed Funds"), Escrow Agent shall not be bound to release and deliver the Escrowed Funds to either party but may either (i) continue to hold the Escrowed Funds until otherwise directed in a writing signed by all parties hereto or (ii) deposit the Escrowed Funds with the clerk of any court of competent jurisdiction.  Upon such deposit, Escrow Agent will be released from all duties and responsibilities hereunder.  Escrow Agent shall have the right to consult with separate counsel of its own choosing (if it deems such consultation advisable) and shall not be liable for any action taken, suffered or omitted by it in accordance with the advice of such counsel.
(c)    Escrow Agent shall not be required to defend any legal proceeding which may be instituted against it with respect to the Escrowed Funds, the Property or the subject matter of this Agreement unless requested to do so by Purchaser or Seller and is indemnified to its satisfaction against the cost and expense of such defense.  Escrow Agent shall not be required to institute legal proceedings of any kind and shall have no responsibility for the genuineness or validity of any document or other item deposited with it or the collectability of any check delivered in connection with this Agreement.  Escrow Agent shall be fully protected in acting in accordance with any written instructions given to it hereunder and believed by it to have been signed by the proper parties.

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ARTICLE XVIII
MISCELLANEOUS
Section 18.1    Waivers.  No waiver of any breach of any covenant or provisions contained herein will be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision contained herein.  No extension of time for performance of any obligation or act will be deemed an extension of the time for performance of any other obligation or act.
Section 18.2    Recovery of Certain Fees.  In the event a party hereto files any action or suit against another party hereto by reason of any breach of any of the covenants, agreements or provisions contained in this Agreement, then in that event the prevailing party will be entitled to have and recover certain fees from the other party including all reasonable attorneys’ fees and costs resulting therefrom. For purposes of this Agreement, the term "attorneys’ fees" or "attorneys’ fees and costs" shall mean the reasonable and actual fees and expenses of counsel to the parties hereto, which may include printing, photocopying, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals and other persons not admitted to the bar but performing services under the supervision of an attorney, and the costs and fees incurred in connection with the enforcement or collection of any judgment obtained in any such proceeding.  The provisions of this Section 18.2 shall survive the entry of any judgment, and shall not merge, or be deemed to have merged, into any judgment.
Section 18.3    Construction.  Headings at the beginning of each Article and Section are solely for the convenience of the parties and are not a part of this Agreement.  Whenever required by the context of this Agreement, the singular will include the plural and the masculine will include the feminine and vice versa.  This Agreement will not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the same.  All exhibits and schedules referred to in this Agreement are attached and incorporated by this reference, and any capitalized term used in any exhibit or schedule which is not defined in such exhibit or schedule will have the meaning attributable to such term in the body of this Agreement.  In the event the date on which Purchaser or Seller is required to take any action under the terms of this Agreement is not a Business Day, the action will be taken on the next succeeding Business Day.
Section 18.4    Counterparts; Delivery.  This Agreement may be executed in multiple counterparts, each of which, when assembled to include an original (or electronic) signature for each party contemplated to sign this Agreement, will constitute a complete and fully executed original.  All such fully executed counterparts will collectively constitute a single agreement.  This Agreement shall also be binding on Purchaser and Seller if signed and delivered electronically by each party.
Section 18.5    Severability.  If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of law or public policy, all of the other conditions and provisions of this Agreement will nevertheless remain in full force and effect, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to either party.  Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to reflect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
Section 18.6    Entire Agreement.  This Agreement is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof, and supersedes all prior understandings with respect thereto.  This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument, signed by the party to be charged or by its agent duly authorized in writing, or as otherwise expressly permitted herein.
Section 18.7    Governing Law.  THIS AGREEMENT WILL BE CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.   
Section 18.8    No Recording.  The parties hereto agree that neither this Agreement nor any affidavit or memorandum concerning it will be recorded and any recording of this Agreement or any such affidavit or memorandum by Purchaser will be deemed a default by Purchaser hereunder.
Section 18.9    Further Actions. The parties agree to execute such instructions to the Title Company and such other instruments and to do such further acts as may be reasonably necessary to carry out the provisions of this Agreement.
Section 18.10    Exhibits.  The following sets forth a list of Exhibits to the Agreement:
Exhibit A -    Assignment 
Exhibit B -    Certificate as to Foreign Status.
Exhibit C -    Legal Description
Exhibit D -    Bulk Sales Escrow Agreement

20

Exhibit E -    Affidavit of Title
Exhibit F -    Cross-Easement Amendment
Exhibit G -        Purchaser's Estoppel
Exhibit H -     Form of SNDA
Exhibit I -     Second Amendment to Lease
Exhibit J -    Guarantor Estoppel
                            
Section 18.11    No Partnership.  Notwithstanding anything to the contrary contained herein, this Agreement shall not be deemed or construed to make the parties hereto partners or joint venturers, it being the intention of the parties to merely create the relationship of Seller and Purchaser with respect to the Property to be conveyed as contemplated hereby.
Section 18.12    Limitations on Benefits.  It is the explicit intention of Purchaser and Seller that no person or entity other than Purchaser, Seller and their permitted successors and assigns is or shall be entitled to bring any action to enforce any provision of this Agreement against any of the parties hereto, and the covenants, undertakings and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, Purchaser, Seller or their respective successors and assigns as permitted hereunder.  Nothing contained in this Agreement shall under any circumstances whatsoever be deemed or construed, or be interpreted, as making any third party a beneficiary of any term or provision of this Agreement or any instrument or document delivered pursuant hereto, and Purchaser and Seller expressly reject any such intent, construction or interpretation of this Agreement.
Section 18.13    Discharge of Obligations. The acceptance of the Deed by Purchaser shall be deemed to be a full performance and discharge of every representation and warranty made by Seller herein and every agreement and obligation on the part of Seller to be performed pursuant to the provisions of this Agreement, except those which are herein specifically stated to survive the Closing or are contained in the Closing Documents.
Section 18.14    Bulk Sales.  Subject to the terms hereof, Purchaser shall deliver a Notification of Sale, Transfer, or Assignment in Bulk (Form C-9600), together with a fully executed copy of this Agreement (the "Tax Notification") to Seller and to the New Jersey Division of Taxation (the "Division"), each by registered or certified mail or overnight delivery so that such Tax Notification is received by Seller and the Division not less than twenty (20) days prior to the Scheduled Closing Date (it being understood that the Closing shall not be delayed in connection with Purchaser’s failure to deliver the Tax Notification).  Seller shall have the right, but not the obligation, to prepare and deliver to the Division the Asset Transfer Tax Declaration (the "TTD") in the form prescribed by the Division.  Promptly after written request by Purchaser, Seller shall provide all information reasonably requested by Purchaser and not otherwise available to Purchaser to enable Purchaser to complete the Tax Notification.  If, at any time prior to Closing, the Division informs Purchaser in writing that a possible claim (the "Claim") for taxes imposed or to be imposed on Seller ("Taxes") exists and the amount thereof (the "Deficiency"), then Purchaser shall promptly notify Seller of the amount of the Deficiency and provide Seller with copies of any notices received from the Division in connection therewith.  Notwithstanding anything to the contrary contained herein, Seller shall have the right to negotiate with the Division regarding the Claim and the Deficiency; provided, however, that Closing shall not be delayed as a result thereof.  If prior to Closing, the Division notifies Purchaser of a Claim and Deficiency, then at Closing Purchaser shall withhold a portion of the Purchase Price equal to the amount of the Deficiency (as the same may be modified pursuant to any revised Claim delivered to Seller or Purchaser by the Division), which amount so withheld shall be placed in an escrow account (the "Tax Escrow"), which Tax Escrow shall be held pursuant to an escrow agreement in the form annexed hereto as Exhibit D.  The escrow agent shall be the Escrow Agent ("Tax Escrow Agent").   If, after Closing, the Division or Seller requests that Purchaser pay all or any portion of the Deficiency on behalf of Seller, then Purchaser shall direct Tax Escrow Agent to, and Tax Escrow Agent shall (subject to the terms of the escrow agreement), release to the Division such amount from the Tax Escrow.  If the Division notifies Purchaser or Seller (a copy of such notice received by Seller only shall be delivered by Seller to Purchaser and Tax Escrow Agent prior to the release of funds from the Tax Escrow pursuant to this sentence) that the Deficiency has been fully paid or that Purchaser has no further liability for the Deficiency, then Purchaser shall direct the Tax Escrow Agent to, and Tax Escrow Agent shall, promptly release such difference to Seller (subject to the terms of the escrow agreement).    
Section 18.15    3-14 Audit.  Seller shall provide to Purchaser, at Purchaser's expense, copies of, or shall provide Purchaser access to, such operating statements with respect to the Property as may be reasonably requested by Purchaser, and in the possession or control of Seller, or its property manager or accountants, to enable Purchaser (or its affiliates) to prepare a property level review ("Operating Statements").  Such information shall include, if available, an income statement and balance sheet data for the Property for a period beginning January 1 of the year prior to closing the acquisition through Closing, if available. Without limiting the generality of the foregoing, (i) Purchaser or its designated independent accountant (Ernst and Young or any successor accounting firm) may review Seller's Operating Statements of the Property, at Purchaser's expense, and Seller shall provide such 

21

documentation, if in Seller’s possession, as Purchaser or its accountant may reasonably request in order to perform such review (provided that in each instance where Purchaser may need to access any consolidated records of Seller, Seller shall not be required to provide any consolidated records other than in redacted form sufficient for the accountant to verify information contained in the financial statements of the Property); provided, however, that the foregoing obligations of Seller shall be limited to providing such information and documentation as may be in the possession of, or reasonably obtainable by, Seller, at no cost to Seller, and in the format that Seller has maintained such records (and further subject to tenant confidentiality requirements and the limitations regarding verifications in consolidated records described above), and further, in no event shall Seller be required to deliver to Purchaser, or allow Purchaser access to, any information that Seller deems privileged or proprietary.  Furthermore, any information or documentation provided by Seller to Purchaser pursuant to this Agreement or otherwise shall be delivered without any representations or warranties, including without limitation any representations or warranties as to accuracy or completeness thereof.  Purchaser shall reimburse Seller on demand for all costs and expenses incurred by Seller in performing its obligations under this Section 18.15, and such reimbursement obligation shall survive the termination of this Agreement. 
[Remainder of Page Intentionally Left Blank]

22

	
		
	PURCHASER:

	GRIFFIN CAPITAL CORPORATION

	 

	By:
	/s/ Robert Corry

	Name: 
	Robert Corry

	Title: 
	Vice President - Managing Director, Acquisitions

	
				
	SELLER:

	14 SYLVAN REALTY L.L.C.

	 

	By:
	Mack-Cali Realty L.P., its Sole Member

	 
	By:
	Mack-Cali Realty Corporation, its General Partner

	 
	 
	By:
	/s/ Mitchell E. Hersh

	 
	 
	 
	President and Chief Executive Officer

JOINDER:

Mack-Cali Realty, L.P., a Delaware limited partnership, is executing this Agreement for the sole purpose of unconditionally guarantying to Purchaser Seller’s liabilities and obligations for any untruth, inaccuracy or breach of Seller’s representations and warranties under Section 8.1 of this Agreement as same may be amended pursuant to the re-certification of same delivered at Closing pursuant to Section 10.3(i), but subject to the limitations contained in Section 8.3.

	
			
	MACK-CALI REALTY, L.P.

	 

	By: 
	Mack-Cali Realty Corporation, its general partner

	 
	By: 
	/s/ Mitchell E. Hersh

	 
	 
	Mitchell E. Hersh

	 
	 
	President and Chief Executive Officer

23

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