Exhibit 10.1

 

TRANSITION SERVICES AGREEMENT

 

by and between

 

IRONWOOD PHARMACEUTICALS, INC.

 

and

 

CYCLERION THERAPEUTICS, INC.

 

Dated as of April 1, 2019

 

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TRANSITION SERVICES AGREEMENT

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

Article I DEFINITIONS AND INTERPRETATION

1

 

 

 

Section 1.1.

General

1

 

 

 

Section 1.2.

Interpretation

2

 

 

 

Article II SERVICES

3

 

 

 

Section 2.1.

General

3

 

 

 

Section 2.2.

Standard for Services

3

 

 

 

Section 2.3.

Protection of Ironwood Information Systems

4

 

 

 

Section 2.4.

Transitional Nature of the Services; Changes

4

 

 

 

Section 2.5.

Omitted Services

5

 

 

 

Section 2.6.

Additional Services

5

 

 

 

Section 2.7.

Use of Third Parties

6

 

 

 

Section 2.8.

Cooperation

6

 

 

 

Section 2.9.

Location of Services Provided; Access

6

 

 

 

Section 2.10.

Performance

6

 

 

 

Section 2.11.

Intellectual Property

7

 

 

 

Article III FEES AND PAYMENT

7

 

 

 

Section 3.1.

Fees

7

 

 

 

Section 3.2.

Expense

8

 

 

 

Section 3.3.

Quarterly Statements

8

 

 

 

Section 3.4.

Invoice

8

 

 

 

Section 3.5.

Late Payments

8

 

 

 

Section 3.6.

Taxes

9

 

 

 

Section 3.7.

No Right to Set-Off

9

 

 

 

Article IV SERVICE MANAGEMENT

9

 

 

 

Section 4.1.

Service Managers

9

 

 

 

Section 4.2.

Service Coordinators

9

 

 

 

Article V SUB-CONTRACTING; THIRD PARTY AGREEMENTS

10

 

 

 

Section 5.1.

Sub-Contractors

10

 

 

 

Section 5.2.

Third Party Agreements

10

 

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Section 5.3.

Consents

10

 

 

Article VI TERM AND TERMINATION AND EFFECTS OF TERMINATION

11

 

 

 

Section 6.1.

Termination

11

 

 

 

Section 6.2.

Termination for Breach

11

 

 

 

Section 6.3.

Early Termination of a Service

11

 

 

 

Section 6.4.

Termination Upon Insolvency

12

 

 

 

Section 6.5.

Accrued Rights

12

 

 

 

Section 6.6.

Effect of Termination

12

 

 

 

Article VII DISPUTE RESOLUTION

12

 

 

 

Section 7.1.

Negotiation

12

 

 

 

Section 7.2.

Arbitration

13

 

 

 

Section 7.3.

Continuity

13

 

 

 

Article VIII LIMITATION OF LIABILITY; INDEMNIFICATION

13

 

 

 

Section 8.1.

Limited Liability

13

 

 

 

Section 8.2.

Services Provided “As-Is”

14

 

 

 

Section 8.3.

Indemnification

14

 

 

 

Article IX INSURANCE MATTERS

15

 

 

 

Section 9.1.

Insurance

15

 

 

 

Article X CONFIDENTIALITY

15

 

 

 

Section 10.1.

Confidentiality

15

 

 

 

Article XI MISCELLANEOUS

15

 

 

 

Section 11.1.

Complete Agreement; Construction

15

 

 

 

Section 11.2.

Transaction Agreements

15

 

 

 

Section 11.3.

Counterparts

15

 

 

 

Section 11.4.

Notices

15

 

 

 

Section 11.5.

Waivers

16

 

 

 

Section 11.6.

Force Majeure

16

 

 

 

Section 11.7.

Assignment

17

 

 

 

Section 11.8.

Successors and Assigns

17

 

 

 

Section 11.9.

Third Party Beneficiaries

17

 

 

 

Section 11.10.

Titles and Headings

17

 

 

 

Section 11.11.

Exhibits and Schedules

18

 

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Section 11.12.

Governing Law

18

 

 

 

Section 11.13.

Severability

18

 

 

 

Section 11.14.

Interpretation

18

 

 

 

Section 11.15.

No Duplication

18

 

 

 

Section 11.16.

No Waiver

18

 

 

 

Section 11.17.

Independent Contractor Status

19

 

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List of Exhibits and Schedules

 

Schedule I

 

Ironwood Services and Fees

Exhibit A

 

Initial Service Managers

Exhibit B

 

Migration Plan

Exhibit C

 

IT Acceptable Use Policy

Exhibit D

 

Quarterly Statement

 

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TRANSITION SERVICES AGREEMENT

 

This TRANSITION SERVICES AGREEMENT (this “Agreement”), dated as of April 1, 2019
(the “Effective Date”), is entered into by and between Ironwood
Pharmaceuticals, Inc. (“Ironwood”), a Delaware corporation, and Cyclerion
Therapeutics, Inc. (“Cyclerion”), a Massachusetts corporation.  “Party” or
“Parties” means Ironwood or Cyclerion, individually or collectively, as the case
may be.

 

W I T N E S S E T H:

 

WHEREAS, in conjunction with a Separation Agreement between Ironwood and
Cyclerion of even date hereof (the “Separation Agreement”), Cyclerion desires to
obtain certain transition services from Ironwood, and Ironwood is willing to
provide such services to Cyclerion on the terms and conditions set forth in this
Agreement; and

 

WHEREAS, the Parties acknowledge that the efficient and effective transition of
Services (as defined below) under this Agreement in a manner that permits the
successful operations of each Party following the Effective Date is a priority
to the shareholders of each Party.

 

NOW, THEREFORE, in consideration of the foregoing and the respective warranties,
covenants and agreements hereinafter set forth, and intending to be legally
bound hereby, the Parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.1.                                 General.  Capitalized terms not
defined in this Agreement have the meanings assigned to them in the Separation
Agreement.  As used herein, the following terms have the following meanings:

 

(1)                                 “Additional Service” shall have the meaning
set forth in Section 2.6.

 

(2)                                 “Force Majeure” shall have the meaning set
forth in Section 11.6.

 

(3)                                 “FTE Rate” means the amount to be paid per
full-time equivalent of Service Provider under this Agreement on an annual
basis. The FTE Rate as of the Effective Date will be three hundred and fifteen
thousand dollars ($315,000), as such rate may be amended from time to time by
the mutual written consent of the Parties.  The FTE Rate for a full-time
equivalent for a calendar month shall equal one-twelfth (1/12th) of the
foregoing annual rate and the FTE Rate for a full-time equivalent for a calendar
quarter shall equal one-fourth (1/4th) of the foregoing annual rate.  For
clarity, the FTE Rate shall not include any Expenses.

 

(4)                                 “Internal Costs” shall mean, for any
Services conducted during a given period of time during the Term, (a) the FTE
Rate plus eight percent (8%) of such FTE Rate multiplied by the number of
full-time equivalents of Service Provider performing such Services in accordance
with this Agreement during such period of time plus (b) any other costs directly
related to the provision of such Services during such period of time under this
Agreement, as

 

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agreed upon between the Parties in writing.  For the avoidance of
doubt, Internal Costs do not include Third Party Costs or Expenses.

 

(5)                                 “Migration Plan” shall have the meaning set
forth in Section 2.12.

 

(6)                                 “Omitted Service” shall have the meaning set
forth in Section 2.5.

 

(7)                                 “One-Time Costs” shall have the meaning set
forth in Section 3.1.

 

(8)                                 “Service Provider” means, as the context may
require, Ironwood or, if not Ironwood, the Person providing the Services on
behalf of Ironwood, including any of its Affiliates (it being agreed and
understood that, for purposes of this Agreement, Ironwood shall cause each such
Person to comply with the provisions of this Agreement applicable to such Person
in such Person’s capacity as a “Service Provider”).

 

(9)                                 “Services” means (a) all of the services to
be provided by or on behalf of a Service Provider under this Agreement described
on Schedule I hereto, as such Schedule may be updated and supplemented from time
to time in accordance with the provisions of this Agreement, (b) any Omitted
Services and (c) any Additional Services.  “Service” means each such service.

 

(10)                          “Term” means the period commencing on the date
hereof and ending, subject to Section 6.1, upon the expiration of all Services
set forth in Schedule I.

 

(11)                          “Third Party” means any person or entity other
than Ironwood, Cyclerion or their Affiliates.

 

(12)                          “Third Party Costs” means the price paid by
Ironwood or its Affiliates to a Third Party (not in its capacity as a Service
Provider) for all applicable Services provided by such Third Party to Ironwood
or its Affiliates that are directly allocable to the provision of Services
hereunder.  For clarity, there shall be no mark-up added to Third Party Costs
under this Agreement, unless such mark-up was actually paid by Ironwood or its
Affiliates to a Third Party.

 

Section 1.2.                                 Interpretation.  Except where the
context otherwise requires, the singular will include the plural, the plural
will include the singular, the use of any gender will be applicable to all
genders, and the word “or” means “and/or.” References to a number of days,
unless otherwise specified, means calendar days.  The captions of this Agreement
are for convenience of reference only and do not define, describe, extend or
limit the scope or intent of any provision contained in this Agreement.  The
terms “including,” “include,” or “includes” are not intended to limit generality
of any description preceding such term.  The language of this Agreement will be
deemed to be the language mutually chosen by the Parties, and no rule of strict
construction will be applied against either Party.  Unless otherwise expressly
specified, references to Ironwood include Ironwood’s Affiliates, and references
to Cyclerion include Cyclerion’s Affiliates.

 

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ARTICLE II

 

SERVICES

 

Section 2.1.                                 General.  During the Term, subject
to Section 2.2, Ironwood shall (and shall cause each Service Provider providing
Services to) provide to Cyclerion and, to the extent directed by Cyclerion, its
Affiliates, the Services, in each case subject to the terms and conditions set
forth herein.  Notwithstanding anything to the contrary herein, a Service
Provider shall not be required to perform or cause to be performed any of the
Services for the benefit of any Person other than Cyclerion and its Affiliates. 
The Parties agree to negotiate in good faith any proposed changes to the
Services, including pricing related thereto, during the Term.  Such proposed
changes will become effective only upon mutual agreement of the Parties as
reflected in an addendum to Schedule I.  If there is any inconsistency between
the terms of Schedule I and the terms of this Agreement, the terms of this
Agreement will govern.  The Parties acknowledge and agree that the Services are
generally intended to facilitate the transactions contemplated by the Separation
Agreement, and, to the extent Services described in Schedule I are general in
nature, are solely intended to support the continued operation of the Cyclerion
Business and the Cyclerion Product Candidates.

 

Section 2.2.                                 Standard for Services.  Ironwood
shall use commercially reasonable efforts to provide, or cause to be provided,
to Cyclerion the Services in accordance with the terms and conditions of this
Agreement.  Ironwood shall provide, or cause to be provided, the Services in a
manner (i) in compliance in all material respects with all applicable Laws and
(ii) generally consistent with the provision of the Services during the twelve
(12) months immediately prior to the date hereof (the “Prior Period”); provided
that if a Service Provider has not previously provided a Service to another
Person, the Service Provider shall provide such Service in a manner generally
consistent with the provision of similar services provided to its Affiliates or
businesses.  To the extent a more specific standard of care is specified in
Schedule I with respect to any Service, a Service Provider shall use its
commercially reasonable efforts to comply with such more specific standard.  It
is the Parties’ shared objective to transition responsibility for the
performance of all Services from Service Provider to Cyclerion and its
Affiliates in a manner that minimizes, to the extent reasonably possible,
disruption to the business operations of Service Providers and their Affiliates
and the business operations of Cyclerion and its Affiliates.  Notwithstanding
any provision of this Agreement or the Separation Agreement to the contrary, no
Service Provider shall be required to (a) perform any Service in any manner that
violates or contravenes any restrictions imposed on the Service Provider by
applicable Law, (b) perform any Service in any manner that breaches or
contravenes any contractual obligations owed by the Service Provider to any
Third Party(ies) or (c) perform any Service to the extent that the conduct of
such would, in the good faith belief of Service Provider, infringe, violate or
misappropriate intellectual property rights of any Third Party.  Notwithstanding
any provision of this Agreement to the contrary, but without limiting a Service
Provider’s obligations under Section 2.1 or Section 2.2, in no event shall
Ironwood or any of its Affiliates be (i) obligated to make any specific
employment decisions in terms of hiring and terminating employees;
(ii) obligated to enter into retention agreements with employees or otherwise
provide any incentive beyond payment of regular salary and benefits;
(iii) prevented from transferring after the Effective Date any employees who
were supporting the Cyclerion Product Candidates as of the Effective Date to
support other products for Ironwood or its Affiliates or to assume other roles
with Ironwood or its Affiliates to the extent such employees are not

 

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required to provide Services; (iv) prevented from determining, in its sole
discretion, the individual employees or contractors who provide Services;
(v) obligated to purchase, lease or license any additional equipment or
software, except as specifically provided for in Schedule I; or (vi) obligated
to create or supply any documentation or information not currently existing or
reasonably available, except as specifically provided for in Schedule I.

 

Section 2.3.                                 Protection of Ironwood Information
Systems

 

(a)                                 In providing information technology Services
to Cyclerion, Ironwood shall have the right to implement reasonable processes
from time to time under which there will be no greater threat to Ironwood’s
information technology operating environment than would exist in the absence of
the provision of such Services.  Without limiting the foregoing, Cyclerion
shall, and shall cause each of its employees with access to Ironwood’s
information technology operating environment to, comply with the terms and
conditions of Ironwood’s IT Acceptable Use Policy set forth in Exhibit C
hereunder as may be amended from time to time upon written notice by Ironwood to
Cyclerion (such policy, the “IT Acceptable Use Policy”).

 

(b)                                 If, in connection with the provision of any
Services under this Agreement, it is reasonably necessary for Ironwood to
implement any information technology connections, firewalls or the like
(“Information System Additions”) specifically in connection with the provision
of such Services and that would not have otherwise been implemented in the
absence of the provision of the Services, the costs of implementing such
Information System Additions shall be borne by Cyclerion, unless specifically
provided otherwise in Schedule I hereto or otherwise agreed to in writing by
Ironwood.

 

Section 2.4.                                 Transitional Nature of the
Services; Changes.

 

(a)                                 Cyclerion understands that the Services
provided hereunder are transitional in nature and are furnished by the Service
Providers as an accommodation and for the purpose of facilitating the
transactions contemplated by the Separation Agreement.  Each of the Parties
agrees to cooperate in good faith and use, and shall cause its Affiliates to
use, commercially reasonable efforts to effect a smooth transition from the
Services as provided by the Service Provider to services performed by Cyclerion
or furnished by another party as soon as practically possible, but in no case
later than the expiration of the Term.  Cyclerion further understands that the
Service Providers are not in the business of providing Services to Third Parties
and shall not provide Services beyond the Term.

 

(b)                                 Cyclerion acknowledges and agrees that
Ironwood or its Affiliates may make changes from time to time in the manner of
performing the Services if Ironwood or its Affiliates (i) are making similar
changes in the performance of similar services for itself or their own
Affiliates or would have made in performing similar services for their own
Affiliates; and (ii) furnish to Cyclerion notice with respect to such changes,
and if applicable, substantially the same notice (in content and timing) as
Ironwood or its Affiliates shall furnish to their own Affiliates with respect to
such changes; and (iii) reasonably considers reasonable concerns of Cyclerion in
implementing any such changes.

 

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Section 2.5.                                 Omitted Services.  If, during the
sixty (60) day period immediately following the date of this Agreement, either
Party identifies a service that was provided in connection with the Cyclerion
Business (other than those services expressly excluded hereunder) during the
Prior Period, or which are reasonably anticipated as of the date hereof to be
necessary to continue to support the Cyclerion Business during the Term, but
such services were inadvertently omitted from the list of Services in Schedule I
hereto (each, to the extent included in the Services pursuant to this Section,
an “Omitted Service”) and notifies the other Party thereof, then the Parties
shall enter into good faith discussions as to whether such Omitted Service
should be added as a Service hereunder, taking into account considerations such
as whether the provision of such Service would be commercially reasonable from
Service Provider’s perspective and whether the Omitted Service can be obtained
from a provider other than the Service Provider at comparable or lower expense. 
If the Parties determine that an Omitted Service will be provided under this
Agreement, then the Parties shall cooperate to amend Schedule I to add such
Omitted Service as a Service, provided that, notwithstanding anything to the
contrary in this Agreement, Service Provider shall not be obligated to provide
any Omitted Service if it does not, in its reasonable judgment, have adequate
resources to provide such Omitted Service or if the provision of such Omitted
Service would significantly disrupt the operation of its business.  In the event
that the Parties agree that a Service Provider should provide any such Omitted
Service, the Parties shall execute amendments to Schedule I for such Omitted
Service that will set forth, among other things, (a) the time period during
which such Omitted Service will be provided, (b) a description of such Omitted
Service in reasonable detail, (c) primary points of contact for each of the
Parties with respect to the Service, (d) any Internal Costs or One-Time Costs
related to such Omitted Service and agreed upon by the Parties and (e) any
additional terms and conditions specific to such Omitted Service.  A Service
Provider’s obligations with respect to providing any such Omitted Service shall
become effective only upon mutual agreement of the Parties as reflected in an
amendment to Schedule I being duly executed and delivered by each Party. 
Notwithstanding the foregoing, the time period for any such Omitted Service will
expire not later than the expiration of the Term as calculated prior to the
addition of such Omitted Service unless the Parties mutually agree otherwise.

 

Section 2.6.                                 Additional Services.  The Parties
hereto acknowledge that Schedule I might not identify all of the Services that,
although not provided in connection with the Cyclerion Business during the Prior
Period, may be necessary or appropriate to effect the understanding set forth in
this Agreement.  Cyclerion may request such additional Services from a Service
Provider (each, to the extent included in the Services pursuant to this
Section 2.6, an “Additional Service”) in writing during the Term.  A Service
Provider shall consider any such request for Additional Services promptly and in
good faith, except to the extent such request is for Omitted Services (in which
case Section 2.5 shall govern) or for services intentionally not included by
mutual agreement of the Parties as part of the Services as of the Effective
Date.  In the event that the Parties agree that a Service Provider should
provide any such Additional Service, the Parties shall execute amendments for
such Additional Service to Schedule I that will set forth, among other things,
(a) the time period during which such Additional Service will be provided, (b) a
description of such Additional Service in reasonable detail, (c) primary points
of contact for each of the Parties with respect to the Service, (d) any Internal
Costs or One-Time Costs related to such Additional Service and agreed upon by
the Parties and (e) any additional terms and conditions specific to such
Additional Service.  A Service Provider’s obligations with respect to providing
any such Additional Service will become effective only upon mutual agreement of
the Parties as reflected

 

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in an amendment to Schedule I being duly executed and delivered by each Party. 
Notwithstanding the foregoing, the time period for any such Additional Service
will expire not later than the expiration of the Term as calculated prior to
addition of such Additional Service unless the Parties agree otherwise.

 

Section 2.7.                                 Use of Third Parties.  Cyclerion
understands that certain Services may be provided to it by a Service Provider
pursuant to agreements between the Service Provider and various Third Parties. 
To the extent not prohibited by a Third Party and with Cyclerion’s consent (not
to be unreasonably withheld, conditioned or delayed), the Service Provider shall
coordinate the provision of Services by the Third Party to Cyclerion, and
Cyclerion shall reasonably cooperate with any Third Party providing Services on
behalf of the Service Provider in order to facilitate the provision and receipt
of such Services.

 

Section 2.8.                                 Cooperation.  Cyclerion and its
Affiliates who are recipients of the Services shall reasonably cooperate with
each Service Provider in order to facilitate the provision and receipt of the
Services.  Cyclerion acknowledges that such Services are dependent on such
reasonable cooperation, and that its or its Affiliates’ failure to so cooperate,
if not reasonable, will relieve the Service Provider of its obligation to
provide the related Services to the extent such failure renders such provision
impractical or impossible.  Cyclerion and its Affiliates who are recipients of
the Services shall comply in all material respects with all applicable policies
and procedures of the Service Provider.

 

Section 2.9.                                 Location of Services Provided;
Access.  Each Service Provider shall provide the Services to Cyclerion from
locations of the Service Provider’s choice in its sole discretion unless
Services are required to be performed at a specific location identified in
Schedule I.  Certain key personnel of the Service Providers who are expected to
be utilized to perform Services may be required to travel to the offices of
Cyclerion or between Service Provider locations.  Each Party shall allow the
other Party and its Affiliates and Representatives reasonable access to the
facilities of such Party and its Affiliates that is necessary for each Service
Provider to provide Services or for Cyclerion and its Affiliates to receive the
Services in accordance with this Agreement, subject to applicable
confidentiality and non-use restrictions consistent with those set forth in this
Agreement.  Each Party agrees that all of its and its Affiliates’ employees
shall, and that it shall use commercially reasonable efforts to cause its
Representatives’ employees to, when on the property of the other Party or any of
its Affiliates, or when given access to any facilities, information, systems,
infrastructure or personnel of the other Party or any of its Affiliates, conform
to the policies and procedures of such other Party and any of its Affiliates, as
applicable, concerning health, safety, conduct and security which are made known
to the Party receiving such access from time to time.

 

Section 2.10.                          Performance.  Any Party may cause any of
its Subsidiaries to perform any or all of its obligations hereunder, and may
designate any of its Subsidiaries to receive any of its entitlements hereunder. 
Each of the Parties shall cause to be performed, and hereby guarantees the
performance of, all actions, agreements and obligations set herein to be
performed by any Subsidiary of such Party or by any entity that becomes a
Subsidiary of such Party at or after the Distribution Effective Time, in each
case to the extent such Subsidiary remains a Subsidiary of the applicable Party.

 

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Section 2.11.                          Intellectual Property.

 

(a)                                 Neither Party will gain, by virtue of this
Agreement, any rights of ownership or use of copyrights, patents, trade secrets,
trademarks, know-how or any other intellectual property rights (“Intellectual
Property Rights”) owned by the other Party or its Affiliates.  To the extent any
Intellectual Property Rights are developed by Ironwood or its Affiliates in the
course of the performance of the Services that relate exclusively to the
Cyclerion Product Candidates or Cyclerion Business (the “Cyclerion Intellectual
Property Rights”), all right, title and interest in and to any such Intellectual
Property Rights will be the sole and exclusive property of Cyclerion, and
Ironwood shall (and shall cause its Affiliates to) assign, and does hereby
assign, to Cyclerion all right, title and interest in and to any such Cyclerion
Intellectual Property Rights.  Except as expressly specified in the foregoing,
as between the Parties, all right, title and interest in any Intellectual
Property Rights developed by or on behalf of Ironwood in the course of providing
the Services will be owned by Ironwood.  To the extent that Ironwood performs
any Services through any Affiliate or subcontractor, Ironwood shall obligate
such Affiliate or such subcontractor to assign to Cyclerion all Cyclerion
Intellectual Property Rights, and Ironwood shall not utilize any such Affiliate
or subcontractor in the performance of such Services unless such Affiliate or
subcontractor is so obligated.

 

(b)                                 Solely for and with respect to the
performance of Services and other activities under this Agreement during the
Term, Cyclerion (on behalf of itself and its Affiliates) hereby grants to each
Service Provider a non-exclusive, royalty-free, non-transferable license and
right of reference, with the right to grant further licenses and rights of
reference, to all intellectual property, Regulatory Approvals, Regulatory
Submissions and records included within the Cyclerion Product Candidates that
are necessary to perform the Services solely to perform the Services and other
obligations of Ironwood or a Service Provider under this Agreement.

 

Section 2.12.                          Migration Plan.  The plan for the
migration of Services from Ironwood to Cyclerion is set forth in Exhibit B
hereunder (the “Migration Plan”).  During the Term, the Parties (i) shall use
commercially reasonable efforts to perform their respective obligations under
the Migration Plan and (ii) may mutually amend or supplement the Migration Plan.

 

ARTICLE III

 

FEES AND PAYMENT

 

Section 3.1.                                 Fees.  The fees payable hereunder
for Services (the “Fees”) will be equal to (i) the Service Provider’s Internal
Costs for such Services plus (ii) the Service Provider’s Third Party Costs for
such Services.  Cyclerion shall also pay the Service Provider for all of the
reasonable, documented one-time costs and expenses, if any, incurred by the
Service Provider in order to enable the Service Provider to provide and to
terminate Services as contemplated hereby, including costs for adapting the
Service Provider’s systems to be able to interface with Cyclerion’s systems for
provision of the Services, if reasonably required (the “One-Time Costs”);
provided, however that Ironwood shall not incur any One-Time Cost (on an
event-by-event basis) over five thousand dollars ($5,000)  that is not
specifically identified in Schedule I without Cyclerion’s prior written consent,
not to be unreasonably withheld, conditioned or delayed.  The Parties agree that
they have used reasonable good faith efforts to identify One-Time Costs in
excess of five thousand

 

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dollars ($5,000) on Schedule I as of the Effective Date and, in the event that
Cyclerion declines to consent to any One-Time Cost for a Service pursuant to
this Section 3.1, Service Provider shall not be required under this Agreement to
perform such Service to the extent such Service cannot be performed without
payment of such One-Time Cost.

 

Section 3.2.                                 Expense.  The Fees are exclusive of
expenses related to travel (including long-distance and local transportation,
accommodation and meal expenses and other incidental expenses) by the Service
Provider’s personnel or any subcontractor in connection with performing the
Services.  All of the costs and expenses described in this Section 3.2
(“Expenses”) will be charged by the Service Provider to the recipient of such
Service on a pass-through basis.  For the avoidance of doubt, the Expenses
described in this Section 3.2 will be consistent with the Service Provider’s
general approach with respect to such types of costs and expenses; provided,
that with respect to any Service, the recipient of such Service’s prior written
approval will be required to the extent that Expenses exceed fifteen percent
(15%) of the Fees paid and payable to the Service Provider for such Service in
any calendar quarter.  For clarity, there shall be no mark-up added to Expenses
under this Agreement, unless such mark-up was actually paid by the Service
Provider’s personnel or subcontractor.

 

Section 3.3.                                 Quarterly Statements.  Ironwood
will furnish Cyclerion with a preliminary statement six (6) Business Days after
the close of each calendar quarter and a final statement ten (10) Business Days
after the close of each calendar quarter, each such statement to be in the form
attached as Exhibit D (each, a “Quarterly Statement”), which Quarterly Statement
shall reflect Ironwood’s good faith estimate of, on a Service-by-Service basis:
(a) the Fees payable for the Services provided by the Service Provider to
Cyclerion for the preceding calendar quarter (itemized to reflect Internal Costs
and Third Party Costs), (b) any Expenses payable for the preceding calendar
quarter and (c) any One-Time Costs payable for the preceding calendar quarter,
in each case as incurred in accordance with this Agreement.

 

Section 3.4.                                 Invoice.  Not later than
twenty-five (25) days after the last day of each calendar quarter (or, if the
Term ends during a calendar quarter, the last day of the Term), Ironwood shall
provide to Cyclerion an invoice for the preceding calendar quarter, which will
list (a) the Services provided by the Service Provider to Cyclerion for the
preceding calendar quarter, (b) the Fees payable for such Services (and
reasonable documentation supporting such Fees, to the extent requested by
Cyclerion) for the preceding calendar quarter (itemized to reflect Internal
Costs and Third Party Costs) (c) any Expenses (and reasonable documentation
supporting such Expenses, to the extent requested by Cyclerion) for the
preceding calendar quarter and (d) any One-Time Costs (and reasonable
documentation supporting such costs and expenses, to the extent requested by
Cyclerion) for the preceding calendar quarter, in each case as incurred in
accordance with this Agreement.  Cyclerion shall pay the amount stated in such
invoices in full within thirty (30) days of the issuance of the invoices (or, if
such date is not a Business Day, then on the immediately succeeding Business
Day) to an account designated by Ironwood, except to the extent such amount is
the subject of a good faith dispute by Cyclerion as notified in writing to
Ironwood.

 

Section 3.5.                                 Late Payments.  Without prejudice
to the Service Provider’s other rights and remedies, where any sum remains
unpaid after the applicable due date, it will carry interest, which will accrue
daily, from the due date until the date of actual payment, at a rate based on
the prime rate listed in the Wall Street Journal (Bond Yields and Rates) on the
date such sum is due

 

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and payable plus two percent (2%).  Notwithstanding the preceding, if a Party
contests any amounts due hereunder in good faith and promptly notifies the other
Party of such dispute, interest will not accrue as to amounts being so contested
until and unless the dispute is resolved in the payee Party’s favor.

 

Section 3.6.                                 Taxes.  Cyclerion shall make all
payments to a Service Provider for any Service without deduction or withholding
for taxes including income tax withholding, Value Added Tax (“VAT”), duties,
sales tax or a similar tax except to the extent any such deduction or
withholding is required by the tax laws of any federal, state, provincial or
foreign government.  In the event a deduction or withholding for taxes is
applicable, Cyclerion shall submit such deduction or withholding for taxes to
the appropriate governmental authority and shall provide a tax certificate to
Service Provider.  In the event VAT or sales tax applies to the services
provided, a Service Provider shall invoice such tax to Cyclerion, as a
reimbursable expense, and a Service Provider shall remit such tax to the
relevant government authority.  Service Provider and Cyclerion shall mutually
cooperate to minimize any amount of tax assessed in respect of the performance
of Services hereunder or as a deduction or withholding of taxes, including
through the prompt completion and filing of any relevant tax forms with the
relevant tax authorities.

 

Section 3.7.                                 No Right to Set-Off.  Each Party
hereto acknowledges and agrees that it shall not be permitted to set-off any
amount owed by such Party pursuant to this Agreement against any amount or
obligation owed to such Party or an Affiliate hereunder or pursuant to the
Separation Agreement or any other Ancillary Agreement.

 

ARTICLE IV

 

SERVICE MANAGEMENT

 

Section 4.1.                                 Service Managers.  Ironwood and
Cyclerion shall each appoint an employee to have overall responsibility for
managing and coordinating the delivery of Services in accordance with this
Agreement (such employee, a “Service Manager”).  The initial Service Managers
will be identified on Exhibit A hereto or otherwise designated by each of the
Parties prior to the Distribution Effective Time, and may thereafter be replaced
from time to time upon written notice to the other Party.  Service Managers
shall consult and coordinate with one another regarding the provision of
Services hereunder.

 

Section 4.2.                                 Service Coordinators.  Each Party
has designated an employee or title as the principal point of contact for the
day-to-day implementation or monitoring of each Service as specified in Schedule
I (each, a “Service Coordinator”).  The Parties shall direct communications
relating to specific Services s to the applicable Service Coordinators.  The
Service Coordinators shall report to the applicable Service Manager from time to
time, as directed by the Service Manager.

 

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ARTICLE V

 

SUB-CONTRACTING; THIRD PARTY AGREEMENTS

 

Section 5.1.                                 Sub-Contractors.  Upon Cyclerion’s
consent, not to be unreasonably withheld, conditioned or delayed, a Service
Provider may delegate or sub-contract its duties under this Agreement to a
qualified Third Party, provided that, notwithstanding such delegation or
sub-contracting, the Service Provider will remain liable for the performance of
its duties hereunder and shall ensure and guaranty that any Services provided by
a subcontractor shall meet Service Provider’s obligations set forth in
Section 2.2(i) and (ii).  In the event any such consent is not granted, Service
Provider shall not have any liability resulting from any delay in providing any
such Service.  For the avoidance of doubt, Service Provider will not be liable
with respect to any agreement entered into directly by Cyclerion (or its
Affiliates) and a subcontractor, other than as mutually agreed in writing by the
Parties hereto.

 

Section 5.2.                                 Third Party Agreements.  Cyclerion
acknowledges that the Services that were provided through Third Parties prior to
the date hereof are subject to the terms and conditions of any applicable
agreements between the Service Provider and such Third Parties, and Cyclerion
agrees to comply with such terms and conditions to the extent applicable to
Cyclerion and necessary for purposes of receiving such Services by Cyclerion. 
For any Service to be delegated to a Third Party after the date hereof, and so
long as any such Service is provided solely to Cyclerion and not to a Service
Provider or any Affiliates of Service Provider, the Service Provider shall
provide Cyclerion with a copy of any agreement contemplated to be entered into
with such Third Party in relation to such Service and, as set forth in
Section 5.1, seek Cyclerion’s consent to such delegation, which consent may not
be unreasonably withheld, delayed or conditioned.

 

Section 5.3.                                 Consents.  Notwithstanding anything
to the contrary contained herein, each Service Provider shall use commercially
reasonable efforts to obtain all consents from vendors that are necessary in
order to provide any of the Services to Cyclerion under this Agreement;
provided, however, that a Service Provider will not be required to pay any
out-of-pocket fees to any vendor in order to obtain such consent, but will,
instead, request that Cyclerion pay such out-of-pocket fees.  In the event that
a Service Provider is unable to obtain any such consent, Ironwood’s sole
liability and obligation and Cyclerion’s sole remedy will be to require the
Parties hereto to work together to agree upon a commercially reasonable
alternative arrangement, which may include identification of alternate resources
and equivalent services from such alternative resources on commercially
reasonable terms.  Any costs specified in the second sentence of Section 3.1 and
any actual out-of-pocket fees levied on a Service Provider (a) in connection
with its efforts to obtain and implement such consents and (b) in connection
with the implementation of any such commercially reasonable alternative
arrangement, will be borne by Cyclerion.  For the avoidance of doubt, any costs
incurred by a Service Provider in connection with obtaining consents prior to
the Distribution Effective Time will be borne by Ironwood.

 

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ARTICLE VI

 

TERM AND TERMINATION AND EFFECTS OF TERMINATION

 

Section 6.1.                                 Termination.  Except as otherwise
provided herein or unless otherwise agreed in writing by the Parties hereto, a
Service Provider’s obligation to provide or procure, and Cyclerion’s obligation
to purchase, each Service shall cease as of the end of the term specified for
such Service in Schedule I hereto, and the Agreement will terminate in its
entirety at the end of the Term; provided that (a) this Agreement may be
extended, with respect to one or more Services, by mutual written agreement of
the Parties, consent to which extension shall be in each Party’s absolute
discretion, provided that such extension shall be limited to one period of up to
six (6)  months following the initial Term of the Service and (b) in the event
that a Service shall not have been transitioned to Cyclerion solely as a result
of a material breach by Ironwood of its obligations under the Migration Plan,
the term for such Service will be extended solely for such period as shall be
necessary for Ironwood to cure such material breach; provided that the breach is
curable with the use of commercially reasonable efforts and is not related to a
Service that could reasonably be obtained or performed by Cyclerion itself.

 

Section 6.2.                                 Termination for Breach.  In the
event that a Party hereto commits a material breach with respect to any of the
Services, the other Party may terminate this Agreement with respect to such
Service only, unless such breach is cured not later than thirty (30) days after
receipt by the breaching Party of written notice of such breach.

 

Section 6.3.                                 Early Termination of a Service. 
Subject to the restrictions set forth herein, if Cyclerion should wish to
terminate a Service (in whole, but not in part), Cyclerion shall provide written
notice to the Service Provider not later than forty-five (45) days prior to the
requested termination date for such Service; provided, however, that no such
notice of termination may be delivered to the Service Provider during the
forty-five (45) day period immediately following the date hereof. 
Notwithstanding the foregoing provisions, the Parties hereto acknowledge and
agree that, in certain instances, terminating certain Services may require time
periods longer than the forty-five (45) day period specified in this
Section 6.3.  In any such event, the Parties agree to negotiate in good faith a
longer period of time for any and all such transfers following the termination
notice.  Cyclerion will remain liable for any Fees or other amounts payable
hereunder in connection with the terminated Service(s) incurred prior to the
effective date of termination of such Service(s), including in the event that
such terminated Services contemplated a deliverable that was not provided due to
such early termination.  Cyclerion acknowledges and agrees that (a) Services
provided by Third Parties may be subject to term-limited licenses and contracts
between a Service Provider and applicable Third Parties (collectively, “Provider
Third Party Contracts”), (b) the renewal periods under the Provider Third Party
Contracts may be for fixed periods and (c) a Service Provider may not have the
right to renew certain Provider Third Party Contracts.  As a result, Cyclerion
agrees that (i) if Service Provider is required to extend any Provider Third
Party Contract in order to continue to provide any Service during the Term, then
Service Provider shall notify Cyclerion and, if Cyclerion informs Service
Provider within twenty (20) days of such notice that it wishes to continue to
receive such Service, then Cyclerion shall be required to pay Service Provider
the amount of any renewal fees or purchase commitments applicable to the
relevant Service for the full renewal period specified in the applicable
Provider Third Party Contract, regardless of whether the Term or Service
Provider’s provision of the

 

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relevant Service ends prior to the end of the relevant renewal period and (ii) a
Service Provider shall not be required to provide any Service to the extent it
is unable to renew any applicable Provider Third Party Contract or Cyclerion
either informs Service Provider that it does not wish to continue to receive
such Service under this Section 6.3 or does not respond to Service Provider’s
notice in the applicable 20-day period.

 

Section 6.4.                                 Termination Upon Insolvency. 
Either Party may terminate this Agreement immediately in the event the other
Party (a) becomes insolvent, (b) is generally unable to pay, or fails to pay,
its debts as they become due, (c) files, or has filed against it, a petition for
voluntary or involuntary bankruptcy or pursuant to any other insolvency Law,
(d) makes or seeks to make a general assignment for the benefit of its
creditors, or (e) applies for, or consents to, the appointment of a trustee,
receiver or custodian for a substantial part of its property or business.

 

Section 6.5.                                 Accrued Rights.  Termination or
expiration of this Agreement for any reason will be without prejudice to any
rights that have accrued to the benefit of a Party prior to such termination or
expiration.  Such termination or expiration will not relieve a Party from
obligations that are expressly indicated to survive the termination or
expiration of this Agreement.

 

Section 6.6.                                 Effect of Termination.  Not later
than thirty (30) days following the date it receives a final invoice from a
Service Provider following termination or expiration of any Services or this
Agreement, Cyclerion shall pay to the Service Provider all remaining monies due
to the Service Provider hereunder in respect of Services provided prior to such
termination or expiration except for any amounts then the subject of a good
faith dispute.  In addition, at the end of the Term, each Party hereto shall, at
the disclosing Party’s option, return or destroy the Confidential Information of
the disclosing Party.  In the event that the disclosing Party elects
destruction, the other Party shall furnish to the disclosing Party a written
certificate of destruction signed by an officer of the certifying Party.  Any
provision which by its nature should survive, including the provisions of this
Section 6.6 (Effect of Termination), Section 2.11 (Intellectual Property),
Article III (Fees and Payment), Article VIII (Limitation of Liability;
Indemnification), Article X (Preservation of Records; Access to Information;
Confidentiality; Privilege) and Article XI (Miscellaneous), shall survive the
termination of this Agreement.

 

ARTICLE VII

 

DISPUTE RESOLUTION

 

Section 7.1.                                 Negotiation.  A Party seeking
resolution of a controversy, dispute or action arising out of, in connection
with, or in relation to the interpretation, performance, nonperformance,
validity or breach of this Agreement or otherwise arising out of, or in any way
related to, this Agreement or the transactions contemplated hereby or thereby,
including any action based on contract, tort, statute or constitution
(collectively, “Disputes”) shall provide written notice of such Dispute to the
other Party, specifying the terms of such Dispute in reasonable detail (“Dispute
Notice”).  The appropriate executives of the Parties who have authority to
settle the Dispute (or such other individuals designated by the respective
executives) shall attempt to resolve the Dispute through good faith negotiation
for a reasonable period of time; provided, that such reasonable period shall
not, unless otherwise agreed by the Parties in writing, exceed fifteen (15) days
from the time of receipt by a Party of the Dispute Notice.  If the Dispute has
not been resolved

 

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within fifteen (15) days after receipt of the Dispute Notice, the respective
Chief Executive Officers or their respective designees (with full settlement
authority) of Ironwood and Cyclerion shall meet in person (or where necessary,
by phone) at a mutually acceptable time and, if applicable, place, and
thereafter as often as they reasonably deem necessary, to attempt in good faith
to resolve the Dispute.  Any contractual time period or deadline under this
Agreement to which such Dispute relates occurring after the Dispute Notice is
received shall not be deemed to have passed until such Dispute has been resolved
pursuant to this Article VII.

 

Section 7.2.                                 Arbitration.  Any Dispute that is
not resolved pursuant to Section 7.1 within thirty (30) days after receipt of a
Dispute Notice shall be resolved by final and binding arbitration pursuant to
the procedures set forth in Section 8.2 of the Separation Agreement.

 

Section 7.3.                                 Continuity of Service and
Performance.  Unless otherwise agreed in writing, the Parties shall continue to
provide service and honor all other commitments under this Agreement during the
course of a Dispute with respect to all matters not subject to such Dispute.

 

ARTICLE VIII

 

LIMITATION OF LIABILITY; INDEMNIFICATION

 

Section 8.1.                                 Limited Liability.

 

(a)                                 The aggregate Liabilities of Ironwood and
its Affiliates and Representatives, collectively, under this Agreement for any
act or failure to act in connection herewith (including the performance or
breach of this Agreement), or from the sale, delivery, provision or use of any
Services provided under or contemplated by this Agreement, whether in contract,
tort (including negligence and strict liability) or otherwise, at law or equity,
will not exceed the aggregate amount of the Internal Costs, Expenses and
One-Time Costs paid (and not previously paid back as a Liability hereunder) to
Ironwood (or its Affiliates) under this Agreement prior to the date on which
Service Provider’s action or inaction giving rise to the Liability arises or
occurs; provided that if such action or inaction occurs during the first year of
this Agreement, the aggregate Liabilities of Ironwood and its Affiliates and
Representatives related to such action or inaction will not exceed the aggregate
amount of the Internal Costs, Expenses and One-Time Costs actually paid and
payable (and not previously paid back as a Liability hereunder) in the first
twelve (12) months of this Agreement.

 

(b)                                 Notwithstanding anything to the contrary
contained in the Separation Agreement or this Agreement, a Service Provider will
not be liable to Cyclerion or any of its Affiliates or Representatives, whether
in contract, tort (including negligence and strict liability) or otherwise, at
law or equity, for any special, indirect, incidental, punitive or consequential
damages whatsoever (including lost profits or damages calculated on multiples of
earnings approaches), which in any way arise out of, relate to or are a
consequence of, the performance or nonperformance by the Service Provider
(including any Affiliates and Representatives of the Service Provider and any
unaffiliated third party providers, in each case, providing the applicable
Services) under this Agreement or the provision of, or failure to provide, any
Services under this Agreement, including with respect to loss of profits,
business interruptions or claims of customers.

 

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(c)                                  The limitations in this Section 8.1 will
not apply with respect to any Liability arising out of, relating to or in
connection with (i) any Third Party claim to the extent a Party has an
indemnification obligation to the other Party for such Liability under
Section 8.3(a) or Section 8.3(b), (ii) any breach of Article X or (iii) the
gross negligence, willful misconduct or fraud of or by the Party to be charged.

 

Section 8.2.                                 Services Provided “As-Is”.  EACH
SERVICE PROVIDER PROVIDES ANY AND ALL SERVICES ON AN “AS-IS” BASIS AND, EXCEPT
AS SET FORTH IN Section 2.2, MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE
SERVICES PROVIDED.  EACH SERVICE PROVIDER DISCLAIMS ALL IMPLIED
WARRANTIES, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, IN CONNECTION WITH THIS AGREEMENT.

 

Section 8.3.                                 Indemnification.

 

(a)                                 Subject to Section 8.1, Cyclerion hereby
agrees to indemnify, defend and hold harmless each Service Provider and its
Affiliates and Representatives from and against any and all Liabilities arising
from, relating to or in connection with (i) the use of any Services by such
Cyclerion or any of its Affiliates, Representatives or other Persons using such
Services or (ii) a material breach by Cyclerion or any of its Affiliates of any
covenant or agreement contained in this Agreement, except in each case to the
extent that such Liabilities arise out of, relate to or are a consequence of the
Service Provider’s or its Affiliates’ or Representatives’ gross negligence,
willful misconduct or fraud.

 

(b)                                 Subject to Section 8.1, Ironwood hereby
agrees to indemnify, defend and hold harmless Cyclerion and its Affiliates and
Representatives from and against any and all Liabilities arising from, relating
to or in connection with the (i) the gross negligence or willful misconduct of
Service Provider in connection with the provision of the Services or (ii) a
material breach by Service Provider of any covenant or agreement contained in
this Agreement, except in each case to the extent that such Liabilities arise
out of, relate to or are a consequence of Cyclerion’s gross negligence, willful
misconduct or fraud.

 

(c)                                  The Party seeking to be indemnified (the
“Indemnified Party”) shall provide prompt written notice of a Liability or
events likely to give rise to a Liability to the Party with the obligation to
indemnify (the “Indemnifying Party”) (in any event within sufficient time so as
not to prejudice the defense of such Claim).  The Indemnifying Party shall be
given the opportunity at all times to control the defense of the Claim, with the
cooperation and assistance of the Indemnified Party; provided, however, that the
Indemnifying Party shall not settle any claim for which it has an
indemnification obligation under this Section 8.3 with an admission of liability
or wrongdoing by the Indemnified Party without such Party’s prior written
consent.

 

(d)                                 Indemnification pursuant to this Section 8.3
represents the Parties’ sole and exclusive remedy under this Agreement, provided
that, if a Service Provider commits an error with respect to, incorrectly
performs or fails to perform any Service, at Cyclerion’s request, without
prejudice to any other rights or remedies Cyclerion may have, the Service
Provider shall use commercially reasonable efforts to correct such error,
re-perform such Service or perform such Service, as applicable, at no additional
cost to Cyclerion.  To the extent a Service Provider is unable

 

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to provide in its entirety a Service because of a partial delay which excuses
performance pursuant to Section 11.6, the Service Provider shall allocate such
resources and/or products as are then currently available to it and necessary
for the performance of such Service ratably between the Service Provider for its
own account and Cyclerion for the performance of such Services hereunder.

 

ARTICLE IX

 

INSURANCE MATTERS

 

Section 9.1.                                 Insurance.  Each Party hereto
shall, throughout the term of this Agreement, carry appropriate insurance with a
reputable insurance company covering property damage, business interruptions,
automobile and general liability insurance (including contractual liability) to
protect its own business and property interests; provided, that each Party shall
be permitted to reasonably self-insure against the liabilities specified in
Article VIII.

 

ARTICLE X

 

CONFIDENTIALITY

 

Section 10.1.                          Confidentiality.  The provisions of
ARTICLE VII of the Separation Agreement will apply to disclosures of information
made pursuant to this Agreement mutatis mutandis.

 

ARTICLE XI

 

MISCELLANEOUS

 

Section 11.1.                          Complete Agreement; Construction.  This
Agreement, including the Exhibits and Schedules, together with the Separation
Agreement and the other Ancillary Agreements, shall constitute the entire
agreement between the Parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments, course of dealings and
writings with respect to such subject matter.  In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.  In
the event and to the extent that there shall be a conflict between the
provisions of the Separation Agreement and the provisions of this Agreement, the
Separation Agreement shall control.

 

Section 11.2.                          Transaction Agreements.  Except as
expressly set forth herein, this Agreement is not intended to address, and
should not be interpreted to address, the matters specifically and expressly
covered by the other Transaction Agreements.

 

Section 11.3.                          Counterparts.  This Agreement may be
executed in one or more counterparts, all of which shall be considered one and
the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the Parties and delivered to each of
the Parties.

 

Section 11.4.                          Notices.  All notices, requests, claims,
demands and other communications under this Agreement shall be in English, shall
be in writing and shall be given or made (and shall

 

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be deemed to have been duly given or made upon receipt) by delivery in person,
by overnight courier service, by facsimile with receipt confirmed (followed by
delivery of an original via overnight courier service) or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
Parties at the following addresses (or at such other address for a Party as will
be specified in a notice given in accordance with this Section 11.4):

 

To Ironwood:

 

Ironwood Pharmaceuticals, Inc.
301 Binney Street
Cambridge, MA 02142
United States
Attn:  General Counsel
Phone:  617-621-7722
Fax:  617-588-0623

 

To Cyclerion:

 

Cyclerion Therapeutics, Inc.
301 Binney Street

Cambridge, MA 02142
Attn: Chief Financial Officer

Phone: 857-327-8778
Fax: 617-890-6595

 

Section 11.5.                          Waivers.  The delay or failure of either
Party to exercise or enforce any of its rights under this Agreement will not
constitute, or be deemed to be, a waiver of those rights, nor will any single or
partial exercise of any such rights preclude any other or further exercise
thereof or the exercise of any other right.  No waiver of any provision of this
Agreement will be effective unless it is in writing and signed by the Party
against which it is being enforced.

 

Section 11.6.                          Force Majeure.

 

(a)                                 Neither Party hereto will be liable for
delay in performance (other than the payment of money) of its obligations to the
extent caused by events which could not have been foreseen and are beyond the
reasonable control of the Party affected (an event of “Force Majeure”),
including (i) acts of God, the elements, epidemics, explosions, accidents,
landslides, lightning, earthquakes, fires, storms (including tornadoes and
hurricanes or tornado and hurricane warnings), sinkholes, floods or washouts;
(ii) labor shortage or trouble including strikes or injunctions (whether or not
within the reasonable control of such Party and provided that the settlement of
strikes and other labor disputes shall be entirely within the discretion of the
Party experiencing the difficulty); (iii) inability to obtain material,
equipment or transportation; (iv) national defense requirements, war, blockades,
insurrections, sabotage, terrorism, riots, arrests and restraints of the
government, either federal or state, civil or military (including any
governmental taking by eminent domain or otherwise); or (v) any changes in
applicable Law, regulation or rule or the enforcement thereof by any
governmental or regulatory agency having jurisdiction, that limits or prevents a
Party from performing its obligations hereunder or any notice from any such
agency of its intention

 

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to fine or penalize such Party or otherwise impede or limit such Party’s ability
to perform its obligations hereunder.

 

(b)                                 Each Service Provider shall endeavor to
provide to Cyclerion uninterrupted Services through the Term.  In the event,
however, that (i) the Service Provider is wholly or partially prevented from
providing a Service or Services either temporarily or permanently by reason of
any Force Majeure event, or (ii) the Service Provider, in the exercise of its
reasonable good faith judgment, deems it necessary to suspend delivery of a
Service hereunder for purposes of inspection, maintenance, repair, replacement
of equipment parts or structures, or similar activities consistent with past
practices, the Service Provider shall not be obligated to deliver the affected
part of such Service during such periods, and, in the case of the immediately
preceding clause (ii), the Service Provider shall cooperate with Cyclerion with
respect to the timing of such interruption.  Notices provided under this
Section 11.6 shall be provided to Cyclerion’s Service Manager (or other
executive designated in writing by Cyclerion in accordance with Article IV) and
may be provided in accordance with Article IV.

 

Section 11.7.                          Assignment.  Except as provided herein,
neither Party may assign any rights or delegate any obligations arising under
this Agreement, in whole or in part, directly or indirectly, without the prior
written consent of the other Party (such consent not to be unreasonably
withheld, conditioned or delayed), and any attempt to so assign any rights or
delegate any obligations arising under this Agreement without such consent will
be void.  Notwithstanding the foregoing, no such consent shall be required for
any such assignment or delegation (i) with respect to Ironwood, to a Subsidiary
of Ironwood (so long as such Subsidiary remains a Subsidiary of Ironwood),
(ii) with respect to Cyclerion, to a Subsidiary of Cyclerion (so long as such
Subsidiary remains a Subsidiary of Cyclerion) or (iii) to a bona fide Third
Party in connection with a merger, reorganization, consolidation or the sale of
all or substantially all the assets of a Party so long as the resulting,
surviving or transferee entity assumes all the obligations of the assigning
Party by operation of Law or pursuant to an agreement in form and substance
reasonably satisfactory to the non-assigning Party; provided, however, that in
the case of each of the preceding clauses (i) and (ii), no assignment permitted
by this Section 11.7 shall release the assigning Party from liability for the
full performance of its obligations under this Agreement.

 

Section 11.8.                          Successors and Assigns.  The provisions
of this Agreement and the obligations and rights hereunder shall be binding
upon, inure to the benefit of and be enforceable by (and against) the Parties
and their respective successors (whether by merger, acquisition of assets or
otherwise) and permitted assigns.

 

Section 11.9.                          Third Party Beneficiaries.  Except as
provided in Section 8.3 with respect to Persons entitled to claim
indemnification hereunder, this Agreement is solely for the benefit of the
Parties and shall not be deemed to confer upon any Person other than the Parties
any remedy, claim, liability, reimbursement, cause of Action or other right
beyond any that exist without reference to this Agreement.

 

Section 11.10.                   Titles and Headings.  Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.

 

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Section 11.11.                   Exhibits and Schedules.  The Exhibits and
Schedules will be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.

 

Section 11.12.                   Governing Law.  This Agreement will be governed
by, construed and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, U.S.A., without reference to principles of conflicts of laws.

 

Section 11.13.                   Severability.  In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.  The Parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

 

Section 11.14.                   Interpretation.  Interpretation of this
Agreement shall be governed by the following rules of construction: (a) words in
the singular shall be held to include the plural and vice versa, and words of
one gender shall be held to include the other gender as the context requires;
(b) references to the terms “Section,” “paragraph,” “clause,” “Exhibit” and
“Schedule” are references to the Sections, paragraphs, clauses, Exhibits and
Schedules of this Agreement unless otherwise specified; (c) the terms “hereof,”
“herein,” “hereby,” “hereto,” and derivative or similar words refer to this
entire Agreement, including the Schedules and Exhibits hereto; (d) references to
“$” shall mean U.S. dollars; (e) the word “including” and words of similar
import when used in this Agreement shall mean “including without limitation,”
unless otherwise specified; (f) the word “or” shall not be exclusive;
(g) references to “written” or “in writing” include in electronic form;
(h) unless the context requires otherwise, references to “party” shall mean
Ironwood or Cyclerion, as appropriate, and references to “parties” shall mean
Ironwood and Cyclerion; (i) provisions shall apply, when appropriate, to
successive events and transactions; (j) the table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement; (k) Ironwood and
Cyclerion have each participated in the negotiation and drafting of this
Agreement and if an ambiguity or question of interpretation should arise, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or burdening either party by
virtue of the authorship of any of the provisions in this Agreement or any
interim drafts of this Agreement; and (l) a reference to any Person includes
such Person’s successors and permitted assigns.

 

Section 11.15.                   No Duplication; No Double Recovery.  Nothing in
this Agreement, the Separation Agreement or any other Ancillary Agreement is
intended to confer to or impose upon any Party a duplicative right, entitlement,
obligation or recovery with respect to any matter arising out of the same facts
and circumstances.

 

Section 11.16.                   No Waiver.  No failure to exercise and no delay
in exercising, on the part of any Party, any right, remedy, power or privilege
hereunder shall operate as a waiver hereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.

 

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Section 11.17.                   Independent Contractor Status.  Each Service
Provider will be deemed to be an independent contractor to Cyclerion.  Nothing
contained in this Agreement will create or be deemed to create the relationship
of employer and employee between the Service Provider and Cyclerion.  The
relationship created between the Service Provider and Cyclerion pursuant to or
by this Agreement is not and will not be one of partnership or joint venture. 
No Party to this Agreement will, by reason hereof, be deemed to be a partner or
a joint venture of the other Party hereto in the conduct of their respective
businesses and/or the conduct of the activities contemplated by this Agreement. 
Except as specifically and explicitly provided in this Agreement, and subject to
and in accordance with the provisions hereof, no Party to this Agreement is now,
will become, or will be deemed to be an agent or representative of the other
Party.  Except as herein explicitly and specifically provided, neither Party
shall have any authority or authorization, of any nature whatsoever, to speak
for or bind the other Party to this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the day and year first above written.

 

 

IRONWOOD PHARMACEUTICALS, INC.

 

 

 

 

By:

/s/ Halley Gilbert

 

Name: Halley Gilbert

 

Title: Senior Vice President

 

 

 

CYCLERION THERAPEUTICS, INC.

 

 

 

 

By:

/s/ William Huyett

 

Name: William Huyett

 

Title: President

 

[Signature Page to Transition Services Agreement]

 

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