Exhibit 10.3


 


IRONWOOD PHARMACEUTICALS, INC.


 


AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN


 


1.                                      Purpose


 


The purpose of this Amended and Restated 2005 Stock Incentive Plan (the
“Plan”) of Ironwood Pharmaceuticals, Inc., a Delaware  corporation
(the “Company”), is to advance the interests of the Company’s stockholders by
enhancing the Company’s ability to attract, retain and motivate persons who are
expected to make important contributions to the Company and by providing such
persons with equity ownership opportunities and performance-based incentives
that are intended to align their interests with those of the Company’s
stockholders.  Except where the context
otherwise requires, the term “Company” shall include any of the Company’s
present or future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder (the “Code”) and any other
business venture (including, without limitation, joint venture or limited
liability company) in which the Company has a controlling interest, as
determined by the Board of Directors of the Company (the “Board”).


 


2.                                      Eligibility


 


All of the Company’s employees, officers, directors, consultants and
advisors are eligible to receive options, restricted stock, restricted stock
units and other stock-based awards (each, an “Award”) under the Plan.  Each person who receives an Award under the
Plan is deemed a “Participant”.


 


3.                                      Administration and Delegation


 


(a)                                 Administration by Board of Directors. 
The Plan will be administered by the Board.  The Board shall have authority to grant
Awards and to adopt, amend and repeal such administrative rules, guidelines and
practices relating to the Plan as it shall deem advisable.  The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency.  All decisions by the Board shall be made in
the Board’s sole discretion and shall be final and binding on all persons
having or claiming any interest in the Plan or in any Award.  No director or person acting pursuant to the
authority delegated by the Board shall be liable for any action or
determination relating to or under the Plan made in good faith.


 


(b)                                 Appointment of Committees. 
To the extent permitted by applicable law, the Board may delegate any or
all of its powers under the Plan to one or more committees or subcommittees of
the Board (a “Committee”).  All
references in the Plan to the “Board” shall mean the Board or a Committee of
the Board to the extent that the Board’s powers or authority under the Plan
have been delegated to such Committee.


 

















 


4.                                      Stock Available for Awards. 
Subject to adjustment under Section 8, Awards may be made under the
Plan for up to 11,500,000 shares of common stock, $.001 par value per share, of
the Company (the “Common Stock”).  If any
Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part (including as the result of
shares of Common Stock subject to such Award being repurchased by the Company
at the original issuance price pursuant to a contractual repurchase right) or
results in any Common Stock not being issued, the unused Common Stock covered
by such Award shall again be available for the grant of Awards under the
Plan.  Further, shares of Common Stock
tendered to the Company by a Participant to exercise an Award shall be added to
the number of shares of Common Stock available for the grant of Awards under
the Plan.  However, in the case of
Incentive Stock Options (as hereinafter defined), the foregoing provisions
shall be subject to any limitations under the Code.  Shares issued under the Plan may consist in
whole or in part of authorized but unissued shares or treasury shares.  At no time while there is any Option (as
defined below) outstanding and held by a Participant who was a resident of the
State of California on the date of grant of such Option, shall the total number
of shares of Common Stock issuable upon exercise of all outstanding options and
the total number of shares provided for under any stock bonus or similar plan
of the Company exceed the applicable percentage as calculated in accordance
with the conditions and exclusions of Section 260.140.45 of the California
Code of Regulations (the “California Regulations”), based on the shares of the
Company which are outstanding at the time the calculation is made.  For the avoidance of doubt, after the Company
has registered securities under the Securities Exchange Act of 1934, as
amended, no Awards for shares of the Company’s Series B Common Stock may
be granted under the Plan.


 


5.                                      Stock Options


 


(a)                                 General.  The Board may
grant options to purchase Common Stock (each, an “Option”), and determine the
number of shares of Common Stock to be covered by each Option, whether the
Option covers Series A Common Stock or Series B Common Stock, the
exercise price of each Option and the conditions and limitations applicable to
the exercise of each Option, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.  An Option which is not intended to be an
Incentive Stock Option (as hereinafter defined) shall be designated a “Nonstatutory
Stock Option”.


 


(b)                                 Incentive Stock Options. 
An Option that the Board intends to be an “incentive stock option” as
defined in Section 422 of the Code (an “Incentive Stock Option”) shall
only be granted to employees of the Company, any of the Company’s present or
future parent or subsidiary corporations as defined in Sections 424(e) or (f) of
the Code, and any other entities the employees of which are eligible to receive
Incentive Stock Options under the Code, and shall be subject to and shall be
construed consistently with the requirements of Section 422 of the
Code.  The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) that is intended to be an Incentive Stock Option is not an Incentive
Stock Option or for any action taken by the Board pursuant to Section 9(f),
including without limitation the conversion of an Incentive Stock Option to a
Nonstatutory Stock Option.


 


(c)                                  Exercise Price. 
The Board shall establish the exercise price of each Option and specify
such exercise price in the applicable option agreement.


 


2

















 


(d)                                 Duration of Options. 
Each Option shall be exercisable at such times and subject to such terms
and conditions as the Board may specify in the applicable option agreement.


 


(e)                                  Exercise of Option. 
Options may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of notice
(including electronic notice) approved by the Board together with payment in
full as specified in Section 5(f) for the number of shares for which
the Option is exercised.  Shares of
Common Stock subject to the Option will be delivered by the Company following
exercise either as soon as practicable or, subject to such conditions as the
Board shall specify, on a deferred basis (with the Company’s obligation to be
evidenced by an instrument providing for future delivery of the deferred shares
at the time or times specified by the Board).


 


(f)                                   Payment Upon Exercise. 
Common Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows:


 


(1)                                 in cash or by check, payable to the order
of the Company;


 


(2)                                 except as the Board may otherwise provide
in an option agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax
withholding or (ii) delivery by the Participant to the Company of a copy
of irrevocable and unconditional instructions to a creditworthy broker to
deliver promptly to the Company cash or a check sufficient to pay the exercise
price and any required tax withholding;


 


(3)                                 when a series of the Common Stock is
registered under the Exchange Act, by delivery of shares of Common Stock owned
by the Participant valued at their fair market value as determined by (or in a
manner approved by) the Board (“Fair Market Value”), provided (i) such
method of payment is then permitted under applicable law, (ii) such Common
Stock, if acquired directly from the Company, was owned by the Participant for
such minimum period of time, if any, as may be established by the Board in its
discretion and (iii) such Common Stock is not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements;


 


(4)                                 to the extent permitted by applicable law
and by the Board, by (i) delivery of a promissory note of the Participant
to the Company on terms determined by the Board, or (ii) payment of such
other lawful consideration as the Board may determine; or


 


(5)                                 by any combination of the above permitted
forms of payment.


 


(g)                                  Substitute Options. 
In connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock of an entity,
the Board may grant Options in substitution for any options or other stock or
stock-based awards granted by such entity or an affiliate thereof.  Substitute Options may be granted on such
terms as the Board deems appropriate in the circumstances, notwithstanding any
limitations on Options contained in the other sections of this Section 5
or in Section 2.  Substitute Options
shall not count against the overall share limit set forth in Section 4(a),
except as may be required by reason of Section 422 and related provisions
of the Code.


 


3

















 


6.                                      Restricted Stock; Restricted Stock Units


 


(a)                                 General.  The Board may
grant Awards entitling recipients to acquire shares of Common Stock (“Restricted
Stock”), subject to the right of the Company to repurchase all or part of such
shares at their issue price or other stated or formula price (or to require
forfeiture of such shares if issued at no cost) from the recipient in the event
that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award. 
Instead of granting Awards for Restricted Stock, the Board may grant
Awards entitling the recipient to receive shares of Common Stock to be
delivered at the time such shares of Common Stock vest (“Restricted Stock Units”)
(Restricted Stock and Restricted Stock Units are each referred to herein as a “Restricted
Stock Award”).


 


(b)                                 Terms and Conditions. 
The Board shall determine the terms and conditions of a Restricted Stock
Award, including the conditions for repurchase (or forfeiture) and the issue
price, if any.


 


(c)                                  Stock Certificates. 
Any stock certificates issued in respect of a Restricted Stock Award
shall be registered in the name of the Participant and, unless otherwise
determined by the Board, deposited by the Participant, together with a stock power
endorsed in blank, with the Company (or its designee).  At the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or if
the Participant has died, to the beneficiary designated, in a manner determined
by the Board, by a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participant’s death (the “Designated
Beneficiary”).  In the absence of an effective
designation by a Participant, “Designated Beneficiary” shall mean the
Participant’s estate.


 


7.                                      Other Stock-Based Awards


 


Other Awards of shares of Common Stock, and other Awards that are
valued in whole or in part by reference to, or are otherwise based on, shares
of Common Stock or other property, may be granted hereunder to Participants (“Other
Stock Unit Awards”), including without limitation stock appreciation rights and
Awards entitling recipients to receive shares of Common Stock to be delivered
in the future.  Such Other Stock Unit
Awards shall also be available as a form of payment in the settlement of other
Awards granted under the Plan or as payment in lieu of compensation to which a
Participant is otherwise entitled.  Other
Stock Unit Awards may be paid in shares of Common Stock or cash, as the Board
shall determine.  Subject to the
provisions of the Plan, the Board shall determine the conditions of each Other
Stock Unit Award, including any purchase price applicable thereto.


 


8.                                      Adjustments for Changes in Common Stock
and Certain Other Events


 


(a)                                 Changes in Capitalization. 
In the event of any stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of shares, spin-off
or other similar change in capitalization or event, or any distribution to
holders of Common Stock other than an ordinary cash dividend, (i) the
number and class of securities available under this Plan, (ii) the number
and class of securities and exercise price per share of each outstanding 


 


4

















 


Option,
(iii) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (iv) the terms of each other outstanding Award
shall be appropriately adjusted by the Company (or substituted Awards may be
made, if applicable) to the extent determined by the Board.


 


(b)                                 Reorganization Events


 


(1)                                 Definition.  A “Reorganization
Event” shall mean:  (a) any merger
or consolidation of the Company with or into another entity as a result of
which all of the Common Stock of the Company is converted into or exchanged for
the right to receive cash, securities or other property or is cancelled, (b) any
exchange of all of the Common Stock of the Company for cash, securities or other
property pursuant to a share exchange transaction or (c) any liquidation
or dissolution of the Company.


 


(2)                                 Consequences of a Reorganization Event on
Awards Other than Restricted Stock Awards.  In connection
with a Reorganization Event, the Board shall take any one or more of the
following actions as to all or any outstanding Awards on such terms as the
Board determines:  (i) provide that
Awards shall be assumed, or substantially equivalent Awards shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to a Participant, provide that the
Participant’s unexercised Options or other unexercised Awards shall become
exercisable in full and will terminate immediately prior to the consummation of
such Reorganization Event unless exercised by the Participant within a
specified period following the date of such notice, (iii) provide that
outstanding Awards shall become realizable or deliverable, or restrictions
applicable to an Award shall lapse, in whole or in part prior to or upon such
Reorganization Event, (iv) in the event of a Reorganization Event under
the terms of which holders of Common Stock will receive upon consummation
thereof a cash payment for each share surrendered in the Reorganization Event
(the “Acquisition Price”), make or provide for a cash payment to a Participant
equal to (A) the Acquisition Price times the number of shares of Common
Stock subject to the Participant’s Options or other Awards (to the extent the
exercise price does not exceed the Acquisition Price) minus (B) the
aggregate exercise price of all such outstanding Options or other Awards, in
exchange for the termination of such Options or other Awards, (v) provide
that, in connection with a liquidation or dissolution of the Company, Awards
shall convert into the right to receive liquidation proceeds (if applicable,
net of the exercise price thereof) and (vi) any combination of the
foregoing.


 


For purposes of clause (i) above, an Option shall
be considered assumed if, following consummation of the Reorganization Event,
the Option confers the right to purchase, for each share of Common Stock
subject to the Option immediately prior to the consummation of the
Reorganization Event, the consideration (whether cash, securities or other
property) received as a result of the Reorganization Event by holders of Common
Stock for each share of Common Stock held immediately prior to the consummation
of the Reorganization Event (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Reorganization Event is not solely
common stock of the acquiring or succeeding corporation (or an affiliate
thereof), the Company may, with the consent of the acquiring or succeeding
corporation, provide for the consideration to be received upon the exercise of
Options to consist solely of common stock of the acquiring or succeeding corporation


 


5

















 


(or an affiliate thereof) equivalent value (as
determined by the Board) to the per share consideration received by holders of
outstanding shares of Common Stock as a result of the Reorganization Event.  Notwithstanding the foregoing, for purposes
of clause (i) above, in the event of a merger or consolidation of the
Company (a) effected to reincorporate the Company outside of Delaware or (b) with
or into a wholly-owned subsidiary of the Company (each of (a) and (b), an “Excluded
Event”), an Option shall be considered assumed if following consummation of the
Excluded Event, the Option confers the right to purchase, for each share of the
series of Common Stock subject to the Option immediately prior to the
consummation of the Reorganization Event, the consideration (whether cash,
securities or other property) received as a result of the Excluded Event by
holders of such series of Common Stock for each share of such series of Common
Stock held immediately prior to the consummation of the Excluded Event (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares of such series of
Common Stock); provided, however, that if the consideration received as a
result of the Excluded Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the consideration
to be received upon the exercise of Options to consist solely of common stock
of the acquiring or succeeding corporation (or an affiliate thereof) equivalent
value (as determined by the Board) to the per share consideration received by
holders of outstanding shares of the applicable series of Common Stock as a
result of the Excluded Event.


 


To the extent all or any portion of an Option becomes
exercisable solely as a result of clause (ii) above, the Board may provide
that upon exercise of such Option the Participant shall receive shares subject
to a right of repurchase by the Company or its successor at the Option exercise
price; such repurchase right (x) shall lapse at the same rate as the
Option would have become exercisable under its terms and (y) shall not
apply to any shares subject to the Option that were exercisable under its terms
without regard to clause (ii) above.


 


(3)                                 Consequences of a Reorganization Event on
Restricted Stock Awards.  Upon the occurrence of a
Reorganization Event other than a liquidation or dissolution of the Company,
the repurchase and other rights of the Company under each outstanding
Restricted Stock Award shall inure to the benefit of the Company’s successor
and shall apply to the cash, securities or other property which the Common
Stock was converted into or exchanged for pursuant to such Reorganization Event
in the same manner and to the same extent as they applied to the Common Stock
subject to such Restricted Stock Award. 
Upon the occurrence of a Reorganization Event involving the liquidation
or dissolution of the Company, except to the extent specifically provided to
the contrary in the instrument evidencing any Restricted Stock Award or any
other agreement between a Participant and the Company, all restrictions and conditions
on all Restricted Stock Awards then outstanding shall automatically be deemed
terminated or satisfied.


 


9.                                      General Provisions Applicable to Awards


 


(a)                                 Transferability of Awards. 
Except as the Board may otherwise determine or provide in an Award, Awards
shall not be sold, assigned, transferred, pledged or otherwise encumbered by
the person to whom they are granted, either voluntarily or by operation of law,
except by will or the laws of descent and distribution or, other than in the
case of an Incentive 


 


6

















 


Stock
Option, pursuant to a qualified domestic relations order, and, during the life
of the Participant, shall be exercisable only by the Participant.  References to a Participant, to the extent relevant
in the context, shall include references to authorized transferees.


 


(b)                                 Documentation. 
Each Award shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. 
Each Award may contain terms and conditions in addition to those set
forth in the Plan.


 


(c)                                  Board Discretion. 
Except as otherwise provided by the Plan, each Award may be made alone
or in addition or in relation to any other Award.  The terms of each Award need not be
identical, and the Board need not treat Participants uniformly.


 


(d)                                 Termination of Status. 
The Board shall determine the effect on an Award of the disability,
death, retirement, authorized leave of absence or other change in the
employment or other status of a Participant and the extent to which, and the
period during which, the Participant, or the Participant’s legal
representative, conservator, guardian or Designated Beneficiary, may exercise
rights under the Award.


 


(e)                                  Withholding. 
Each Participant shall pay to the Company, or make provision
satisfactory to the Company for payment of, any taxes required by law to be
withheld in connection with an Award to such Participant.  Except as the Board may otherwise provide in
an Award, for so long as a series of the Common Stock is registered under the
Exchange Act, Participants may satisfy such tax obligations in whole or in part
by delivery of shares of Common Stock, including shares retained from the Award
creating the tax obligation, valued at their Fair Market Value; provided,
however, except as otherwise provided by the Board, that the total tax
withholding where stock is being used to satisfy such tax obligations cannot
exceed the Company’s minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income).  Shares surrendered to satisfy
tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled
vesting or other similar requirements. 
The Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to a Participant.


 


(f)                                   Amendment of Award. 
The Board may amend, modify or terminate any outstanding Award,
including but not limited to, substituting therefor another Award of the same
or a different type, changing the date of exercise or realization, and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant’s consent to such action shall be required unless the
Board determines that the action, taking into account any related action, would
not materially and adversely affect the Participant.


 


(g)                                  Conditions on Delivery of Stock. 
The Company will not be obligated to deliver any shares of Common Stock
pursuant to the Plan or to remove restrictions from shares previously delivered
under the Plan until (i) all conditions of the Award have been met or
removed to the satisfaction of the Company, (ii) in the opinion of the
Company’s counsel, all other legal matters in connection with the issuance and
delivery of such shares have been satisfied, including any applicable
securities laws and any applicable stock exchange or stock market rules and
regulations, and (iii) the Participant has executed and delivered to the
Company 


 


7

















 


such
representations or agreements as the Company may consider appropriate to
satisfy the requirements of any applicable laws, rules or regulations.


 


(h)                                 Acceleration. 
The Board may at any time provide that any Award shall become
immediately exercisable in full or in part, free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.


 


10.                               Miscellaneous


 


(a)                                 No Right To Employment or Other Status. 
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to
continued employment or any other relationship with the Company.  The Company expressly reserves the right at
any time to dismiss or otherwise terminate its relationship with a Participant
free from any liability or claim under the Plan, except as expressly provided
in the applicable Award.


 


(b)                                 No Rights As Stockholder. 
Subject to the provisions of the applicable Award, no Participant or
Designated Beneficiary shall have any rights as a stockholder with respect to
any shares of Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares. 
Notwithstanding the foregoing, in the event the Company effects a split
of the series of Common Stock covered by the Award by means of a stock dividend
and the exercise price of and the number of shares subject to such Option are
adjusted as of the date of the distribution of the dividend (rather than as of
the record date for such dividend), then an optionee who exercises an Option
between the record date and the distribution date for such stock dividend shall
be entitled to receive, on the distribution date, the stock dividend with
respect to the shares of Common Stock acquired upon such Option exercise,
notwithstanding the fact that such shares were not outstanding as of the close
of business on the record date for such stock dividend.


 


(c)                                  Effective Date and Term of Plan. 
The Plan shall become effective on the date on which it is adopted by
the Board.  No Awards shall be granted
under the Plan after the completion of 10 years from the earlier of (i) the
date on which the Plan was adopted by the Board or (ii) the date the Plan
was approved by the Company’s stockholders, but Awards previously granted may
extend beyond that date.


 


(d)                                 Amendment of Plan. 
The Board may amend, suspend or terminate the Plan or any portion
thereof at any time.


 


(e)                                  Authorization of Sub-Plans. 
The Board may from time to time establish one or more sub-plans under
the Plan for purposes of satisfying applicable blue sky, securities or tax laws
of various jurisdictions.  The Board
shall establish such sub-plans by adopting supplements to this Plan containing (i) such
limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not
otherwise inconsistent with the Plan as the Board shall deem necessary or desirable.  All supplements adopted by the Board shall be
deemed to be part of the Plan, but each supplement shall apply only to
Participants within the affected jurisdiction and the Company shall not be
required to 


 


8

















 


provide
copies of any supplement to Participants in any jurisdiction which is not the
subject of such supplement.


 


(f)                                   Compliance with Code Section 409A. 
No Award shall provide for deferral of compensation that does not comply
with Section 409A of the Code, unless the Board, at the time of grant,
specifically provides that the Award is not intended to comply with Section 409A
of the Code.


 


(g)                                  Governing Law. 
The provisions of the Plan and all Awards made hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, excluding choice-of-law principles of the law of such state that
would require the application of the laws of a jurisdiction other than such
state.


 


9














 


IRONWOOD PHARMACEUTICALS, INC.


 


2005 STOCK INCENTIVE PLAN


 


CALIFORNIA SUPPLEMENT


 


Pursuant to Section 10(e) of the Plan, the Board has adopted
this supplement for purposes of satisfying the requirements of Section 25102(o) of
the California Law:


 


Any Awards granted under the Plan to a Participant who is a resident of
the State of California on the date of grant (a “California Participant”) shall
be subject to the following additional limitations, terms and conditions:


 


1.                                       Additional Limitations on Options.


 


(a)                                  Minimum Vesting Rate. 
Except in the case of Options granted to California Participants who are
officers, directors, managers, consultants or advisors of the Company or its
affiliates (which Options may become exercisable at whatever rate is determined
by the Board), Options granted to California Participants shall become
exercisable at a rate of no less than 20% per year over five years from the
date of grant; provided, that, such Options may be subject to
such reasonable forfeiture conditions as the Board may choose to impose and
which are not inconsistent with Section 260.140.41 of the California
Regulations.


 


(b)                                 Minimum Exercise Price. 
The exercise price of Options granted to California Participants may not
be less than 85% of the Fair Market Value of the applicable series of Common
Stock on the date of grant in the case of a Nonstatutory Stock Option or less
than 100% of the Fair Market Value of the applicable series of Common Stock on
the date of grant in the case of an Incentive Stock Option; provided, however,
that if the California Participant is a person who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporations, the exercise price shall be
not less than 110% of the Fair Market Value of the applicable series of Common
Stock on the date of grant.


 


(c)                                  Maximum Duration of Options. 
No Options granted to California Participants will be granted for a term
in excess of 10 years.


 


(d)                                 Minimum Exercise Period Following
Termination.  Unless a California Participant’s employment
is terminated for cause (as defined in any contract of employment between the
Company and such Participant, or if none, in the instrument evidencing the
grant of such Participant’s Option), in the event of termination of employment
of such Participant, he or she shall have the right to exercise an Option, to
the extent that he or she was otherwise entitled to exercise such Option on the
date employment terminated, as follows: (i) at least six months from the
date of termination, if termination was caused by such Participant’s death or “permanent
and total disability” (within the meaning of Section 22(e)(3) of the
Code) and (ii) at least 30 days from the date of termination, if termination
was caused other than by such Participant’s death or “permanent and total
disability” (within the meaning of Section 22(e)(3) of the Code).


 


1

















 


(e)                                  Limitation on Repurchase Rights. 
If an Option granted to a California Participant gives the Company the
right to repurchase shares of Common Stock issued pursuant to the Plan upon
termination of employment of such Participant, the terms of such repurchase
right must comply with Section 260.140.41(k) of the California
Regulations.


 


2.                                       Additional Limitations for Restricted
Stock Awards.


 


(a)                                  Minimum Purchase Price. 
The purchase price for a Restricted Stock Award granted to a California
Participant shall be not less than 85% of the Fair Market Value of the applicable
series of Common Stock at the time such Participant is granted the right to
purchase shares under the Plan or at the time the purchase is consummated; provided,
however, that if such Participant is a person who owns stock possessing
more than 10% of the total combined voting power or value of all classes of
stock of the Company or its parent or subsidiary corporations, the purchase
price shall be not less than 100% of the Fair Market Value of the applicable
series of Common Stock at the time such Participant is granted the right to
purchase shares under the Plan or at the time the purchase is consummated.


 


(b)                                 Limitation of Repurchase Rights. 
If a Restricted Stock Award granted to a California Participant gives
the Company the right to repurchase shares of Common Stock issued pursuant to
the Plan upon termination of employment of such Participant, the terms of such
repurchase right must comply with Section 260.140.42(h) of the
California Regulations.


 


3.                                       Additional Limitations for Other
Stock-Based Awards.  The terms of all Awards granted to a
California Participant under Section 7 of the Plan shall comply, to the
extent applicable, with Section 260.140.41 or Section 260.140.42 of
the California Regulations.


 


4.                                       Additional Requirement to Provide
Information to California Participants.  The Company
shall provide to each California Participant and to each California Participant
who acquires Common Stock pursuant to the Plan, not less frequently than
annually, copies of annual financial statements (which need not be
audited).  The Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.


 


5.                                       Additional Limitations on Timing of
Awards.  No Award granted to a California Participant
shall become exercisable, vested or realizable, as applicable to such Award,
unless the Plan has been approved by a majority of the Company’s stockholders
within 12 months before or after the date the Plan was adopted by the Board.


 


6.                                       Additional Limitations Relating to
Definition of Fair Market Value.  For purposes
of Section 1(b) and 2(a) of this supplement, “Fair Market Value”
shall be determined in a manner not inconsistent with Section 260.140.50
of the California Regulations.


 


7.                                       Additional Restriction Regarding
Recapitalizations, Stock Splits, Etc.  For purposes
of Section 8 of the Plan, in the event of a stock split, reverse stock
split, stock dividend, recapitalization, combination, reclassification or other
distribution of the Company’s securities, the number of securities allocated to
each California Participant must be adjusted proportionately and without the
receipt by the Company of any consideration from any California Participant.


 


2

















 


ATTACHMENT I


 


IRONWOOD PHARMACEUTICALS, INC.


 


Incentive Stock Option Agreement


Granted under
Amended and Restated 2005  Stock
Incentive Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                           ,
200      (the “Grant
Date”) to                           ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2005 Stock Incentive Plan (the “Plan”), a total of                         
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                      per Share, with a vesting commencement date of                               
(the “Vesting Commencement Date”). 
Unless earlier terminated, this option shall expire on                               (the “Final Exercise Date”).


 


It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)                                  This option will become exercisable (“vest”)
as to 25% of the original number of Shares on the first  anniversary
of the Vesting Commencement Date and as to an additional 2.08333% of the
original number of Shares at the end of each successive  one-month  period following the first anniversary of the Vesting
Commencement Date until the fourth anniversary of the Vesting Commencement
Date.  The shares subject to the portion
of this option that are not yet exercisable are referred to herein as “Unvested
Shares” and the shares subject to the portion of this option that have become
exercisable are referred to herein as “Vested Shares”.


 


The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all shares
for which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.


 


(b)                                 Early Exercise. 
Notwithstanding the vesting schedule set forth in paragraph (a), the
Participant may elect to exercise this option as to the Unvested Shares (in
addition to the Vested Shares) if simultaneously with such exercise the
Participant enters into Stock Restriction Agreement with the Company in the
form attached hereto as Exhibit A (the “Stock Restriction Agreement”).  The Stock Restriction Agreement provides that
the Unvested Shares shall be


 


ATTACHMENT I


 

















 


subject to a right of repurchase (the “Purchase Option”)
in favor of the Company in the event that the Participant ceases to be an
employee of the Company, as that term is defined in the Plan.


 


3.                                       Exercise of Option.


 


(a)                                  Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)                                 Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)                                  Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be exercisable only to the extent
that the Participant was entitled to exercise this option on the date of such
cessation.  Notwithstanding the
foregoing, if the Participant, prior to the Final Exercise Date, violates the
non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Participant from the Company describing  such violation.


 


(d)                                 Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.


 


(e)                                  Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination
shall be conclusive.  The Participant
shall be considered to have been


 


ATTACHMENT I


 

















 


discharged
for “Cause” if the Company determines, within 30 days after the Participant’s
resignation, that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of
Repurchase.


 


(a)                                  Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)                                 The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.


 


ATTACHMENT I


 

















 


8.                                       Disqualifying Disposition.


 


If the Participant disposes of Shares acquired upon exercise of this
option within two years from the Grant Date or one year after such Shares were
acquired pursuant to exercise of this option, the Participant shall notify the
Company in writing of such disposition.


 


9.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


10.                                 Participant’s Acknowledgements.


 


By acceptance of this option, the Participant agrees to the terms and
conditions hereof and acknowledges receipt of a copy of the Plan.


 


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter Hecht

  
	
   

  	
   

  	
  Chief Executive
  Officer

  



 


 


Addendum A


NOTICE OF STOCK OPTION EXERCISE


 


 


Exhibit A


IRONWOOD PHARMACEUTICALS, INC.


Stock Restriction Agreement


 


Exhibit A to
Stock Restriction Agreement


IRONWOOD PHARMACEUTICALS, INC.


Joint Escrow Instructions


 


Exhibit B to
Stock Restriction Agreement


STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE


 


ATTACHMENT I


 

















 


ATTACHMENT
II


 


IRONWOOD PHARMACEUTICALS, INC.


 


Incentive Stock Option Agreement


Granted under
Amended and Restated 2005  Stock
Incentive Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                           ,
200      (the “Grant
Date”) to                           ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2005 Stock Incentive Plan (the “Plan”), a total of                         
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                      per Share, with a vesting commencement date of                               
(the “Vesting Commencement Date”). 
Unless earlier terminated, this option shall expire on                               (the “Final Exercise Date”).


 


It is intended that the option evidenced by this agreement shall be an
incentive stock option as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”).  Except as otherwise indicated by the context,
the term “Participant”, as used in this option, shall be deemed to include any
person who acquires the right to exercise this option validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)                                  This option will become exercisable (“vest”)
as to as to 1.25% of the original number of Shares on each monthly anniversary
of the Vesting Commencement Date for the first 36 months, and as to 4.5833% of
the original number of Shares as of each subsequent monthly anniversary of the
Vesting Commencement Date until fully vested. 
The shares subject to the portion of this option that are not yet
exercisable are referred to herein as “Unvested Shares”, and the shares subject
to the portion of this option that have become exercisable are referred to
herein as “Vested Shares”.


 


The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan.


 


(b)                                 Early Exercise. 
Notwithstanding the vesting schedule set forth in paragraph (a), the
Participant may elect to exercise this option as to the Unvested Shares (in
addition to the Vested Shares) if simultaneously with such exercise the
Participant enters into Stock Restriction Agreement with the Company in the
form attached hereto as Exhibit A (the “Stock Restriction Agreement”).  The Stock Restriction Agreement provides that
the Unvested Shares shall be


 


ATTACHMENT II


 

















 


subject to a right of repurchase (the “Purchase Option”)
in favor of the Company in the event that the Participant ceases to be an
employee of the Company, as that term is defined in the Plan.


 


3.                                       Exercise of Option.


 


(a)                                  Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)                                 Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)                                  Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be exercisable only to the extent
that the Participant was entitled to exercise this option on the date of such
cessation.  Notwithstanding the
foregoing, if the Participant, prior to the Final Exercise Date, violates the
non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Participant from the Company describing  such violation.


 


(d)                                 Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.


 


(e)                                  Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination
shall be conclusive.  The Participant
shall be considered to have been


 


ATTACHMENT II


 

















 


discharged
for “Cause” if the Company determines, within 30 days after the Participant’s
resignation, that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of
Repurchase.


 


(a)                                  Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)                                 The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.


 


ATTACHMENT II


 

















 


8.                                       Disqualifying Disposition.


 


If the Participant disposes of Shares acquired upon exercise of this
option within two years from the Grant Date or one year after such Shares were
acquired pursuant to exercise of this option, the Participant shall notify the
Company in writing of such disposition.


 


9.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


10.                                 Participant’s Acknowledgements.


 


By acceptance of this option, the Participant agrees to the terms and
conditions hereof and acknowledges receipt of a copy of the Plan.


 


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter Hecht

  
	
   

  	
   

  	
  Chief Executive
  Officer

  



 


 


Addendum A


NOTICE OF STOCK OPTION EXERCISE


 


 


Exhibit A


IRONWOOD PHARMACEUTICALS, INC.


Stock Restriction Agreement


 


Exhibit A to
Stock Restriction Agreement


IRONWOOD PHARMACEUTICALS, INC.


Joint Escrow Instructions


 


Exhibit B to
Stock Restriction Agreement


STOCK ASSIGNMENT SEPARATE
FROM CERTIFICATE


 


ATTACHMENT II


 














 


ATTACHMENT
III


 


IRONWOOD PHARMACEUTICALS, INC.


 


Nonstatutory Stock Option Agreement


Granted under
Amended and Restated 2005  Stock
Incentive Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on February 12, 2009  (the “Grant Date”) to                           ,
an employee of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2005 Stock Incentive Plan (the “Plan”), a total of                         
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $4.89  per Share, with a vesting commencement date of January 1,
2009 (the “Vesting Commencement Date”). 
Unless earlier terminated, this option shall expire on December 31,
2018  (the “Final Exercise Date”).


 


It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the “Code”).  Except as otherwise
indicated by the context, the term “Participant”, as used in this option, shall
be deemed to include any person who acquires the right to exercise this option
validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)                                  This option will become exercisable (“vest”)
as to as to 1.25% of the original number of Shares on each monthly anniversary
of the Vesting Commencement Date for the first 36 months, and as to 4.5833% of
the original number of Shares as of each subsequent monthly anniversary of the
Vesting Commencement Date until fully vested. 
The shares subject to the portion of this option that are not yet
exercisable are referred to herein as “Unvested Shares”, and the shares subject
to the portion of this option that have become exercisable are referred to
herein as “Vested Shares”.


 


The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan.


 


(b)                                 Early Exercise. 
Notwithstanding the vesting schedule set forth in paragraph (a), the
Participant may elect to exercise this option as to the Unvested Shares (in
addition to the Vested Shares) if simultaneously with such exercise the
Participant enters into Stock Restriction Agreement with the Company in the
form attached hereto as Exhibit A (the “Stock Restriction Agreement”).  The Stock Restriction Agreement provides that
the Unvested Shares shall be


 


ATTACHMENT III


 

















 


subject to a right of repurchase (the “Purchase Option”)
in favor of the Company in the event that the Participant ceases to be an
employee of the Company, as that term is defined in the Plan.


 


3.                                       Exercise of Option.


 


(a)                                  Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)                                 Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)                                  Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be exercisable only to the extent
that the Participant was entitled to exercise this option on the date of such
cessation.  Notwithstanding the
foregoing, if the Participant, prior to the Final Exercise Date, violates the
non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Participant from the Company describing  such violation.


 


(d)                                 Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.


 


(e)                                  Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Company, which determination shall be
conclusive.  The Participant shall be
considered to have been


 


ATTACHMENT III


 

















 


discharged
for “Cause” if the Company determines, within 30 days after the Participant’s
resignation, that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of
Repurchase.


 


(a)                                  Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)                                 The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.


 


8.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


ATTACHMENT III


 

















 


9.                                       Participant’s Acknowledgements.


 


By
acceptance of this option, the Participant agrees to the terms and conditions
hereof and acknowledges receipt of a copy of the Plan.


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter M. Hecht

  
	
   

  	
   

  	
  Chief Executive
  Officer

  



 


 


Addendum A


NOTICE OF STOCK OPTION EXERCISE


 


 


Exhibit A


IRONWOOD PHARMACEUTICALS, INC.


Stock Restriction Agreement


 


Exhibit A to
Stock Restriction Agreement


IRONWOOD PHARMACEUTICALS, INC.


Joint Escrow Instructions


 


Exhibit B to
Stock Restriction Agreement


STOCK ASSIGNMENT SEPARATE FROM
CERTIFICATE


 


ATTACHMENT III


 

















 


ATTACHMENT
IV


 


IRONWOOD PHARMACEUTICALS, INC.


 


Nonstatutory Stock Option Agreement


Granted under
Amended and Restated 2005  Stock
Incentive Plan


 


1.                                       Grant of Option.


 


This agreement evidences the grant by Ironwood Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), on                           ,
200      (the “Grant
Date”) to                           ,
a consultant of the Company (the “Participant”), of an option to purchase, in
whole or in part, on the terms provided herein and in the Company’s Amended and
Restated 2005 Stock Incentive Plan (the “Plan”), a total of                         
shares (the “Shares”) of Series B Common Stock, $.001  par
value per share, of the Company (“Series B Common Stock”) at $                      per Share, with a vesting commencement date of                               
(the “Vesting Commencement Date”). 
Unless earlier terminated, this option shall expire on                               (the “Final Exercise Date”).


 


It is intended that the option evidenced by this agreement shall not be
an incentive stock option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, and any regulations promulgated thereunder
(the “Code”).  Except as otherwise
indicated by the context, the term “Participant”, as used in this option, shall
be deemed to include any person who acquires the right to exercise this option
validly under its terms.


 


2.                                       Vesting Schedule.


 


(a)                                  This option will become exercisable (“vest”)
as to:  [insert vesting schedule].  The shares subject to the portion of this
option that are not yet exercisable are referred to herein as “Unvested Shares”
and the shares subject to the portion of this option that have become
exercisable are referred to herein as “Vested Shares”.


 


The right of exercise shall be cumulative so that to the extent the
option is not exercised in any period to the maximum extent permissible it
shall continue to be exercisable, in whole or in part, with respect to all
shares for which it is vested until the earlier of the Final Exercise Date or
the termination of this option under Section 3 hereof or the Plan.


 


(b)                                 Early Exercise. 
Notwithstanding the vesting schedule set forth in paragraph (a), the
Participant may elect to exercise this option as to the Unvested Shares (in
addition to the Vested Shares) if simultaneously with such exercise the
Participant enters into Stock Restriction Agreement with the Company in the
form attached hereto as Exhibit A (the “Stock Restriction Agreement”).  The Stock Restriction Agreement provides that
the Unvested Shares shall be


 


ATTACHMENT IV


 

















 


subject to a right of repurchase (the “Purchase Option”)
in favor of the Company in the event that the Participant ceases to be a
consultant of the Company.


 


3.                                       Exercise of Option.


 


(a)                                  Form of Exercise. 
Each election to exercise this option shall be in writing in the form
attached hereto as Addendum A, signed by the Participant, and received
by the Company at its principal office, accompanied by this agreement, and
payment in full in the manner provided in the Plan.  The Participant may purchase less than the
number of shares covered hereby, provided that no partial exercise of this
option may be for any fractional share or for fewer than ten whole shares.


 


(b)                                 Continuous Relationship with the Company
Required.  Except as otherwise provided in this Section 3,
this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an
employee or officer of, or consultant or advisor to, the Company or any parent
or subsidiary of the Company as defined in Section 424(e) or (f) of
the Code (an “Eligible Participant”).


 


(c)                                  Termination of Relationship with the
Company.  If the Participant ceases to be an Eligible
Participant for any reason, then, except as provided in paragraphs (d) and
(e) below, the right to exercise this option shall terminate  three months after such cessation (but in no event after
the Final Exercise Date), provided that this option shall be exercisable only to the extent
that the Participant was entitled to exercise this option on the date of such
cessation.  Notwithstanding the
foregoing, if the Participant, prior to the Final Exercise Date, violates the
non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Participant and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Participant from the Company describing  such violation.


 


(d)                                 Exercise Period Upon Death or Disability. 
If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as
specified in paragraph (e) below, this option shall be exercisable, within
the period of one year following the date of death or disability of the
Participant, by the Participant (or in the case of death by an authorized
transferee), provided that this option shall be exercisable only to the extent
that this option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this option shall not be
exercisable after the Final Exercise Date.


 


(e)                                  Discharge for Cause. 
If the Participant, prior to the Final Exercise Date, is discharged by
the Company for “cause” (as defined below), the right to exercise this option
shall terminate immediately upon the effective date of such discharge.  “Cause” shall mean willful misconduct by the
Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the
Participant and the Company), as determined by the Company, which determination
shall be conclusive.  The Participant shall
be considered to have been


 


ATTACHMENT IV


 

















 


discharged
for “Cause” if the Company determines, within 30 days after the Participant’s
resignation, that discharge for cause was warranted.


 


4.                                       Right of First Refusal/Right of
Repurchase.


 


(a)                                  Any shares that are received upon
exercise of this option are subject to any right of first refusal that may be
described in the Company’s bylaws in effect at such time as the Company elects
to exercise its right.  The Company’s
right of first refusal shall expire on the date of the closing of the first
registration of  a public offering of
equity securities of the Company under Section 12 of the Exchange Act of
1934, as amended.  In addition, to the
extent provided in the Company’s bylaws as amended from time to time, the
Company shall have the right to repurchase all or any part of the shares
received pursuant to the exercise of this option.


 


(b)                                 The Company shall not be required (a) to
transfer on its books any of the Shares which shall have been sold or
transferred in violation of any of the provisions set forth in this Section 4,
or (b) to treat as owner of such Shares or to pay dividends to any
transferee to whom any such Shares shall have been sold or transferred.


 


5.                                       Agreement in Connection with Public
Offering.


 


The Participant agrees, in connection with the initial
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by the Participant
(other than those shares included in the offering) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company’s securities for a period of 180 days from the
effective date of such registration statement, and (ii) to execute any
agreement reflecting clause (i) above as may be requested by the Company
or the managing underwriters at the time of such offering.


 


6.                                       Withholding.


 


No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.


 


7.                                       Nontransferability of Option.


 


This option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the
Participant.


 


8.                                       Provisions of the Plan.


 


This option is subject to the provisions of the Plan,
a copy of which is furnished to the Participant with this option.


 


ATTACHMENT IV


 

















 


9.                                       Participant’s Acknowledgements.


 


By
acceptance of this option, the Participant agrees to the terms and conditions
hereof and acknowledges receipt of a copy of the Plan.


 


 


IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer.  This option shall take effect as a sealed
instrument.


 


	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter
  Hecht

  
	
   

  	
   

  	
  Chief
  Executive Officer

  



 


ATTACHMENT IV


 














 


Addendum A


 


NOTICE OF STOCK OPTION EXERCISE


 


	
  Date:

  	
   

  	
   

  



 


Ironwood Pharmaceuticals, Inc.


320 Bent Street


Cambridge, MA  02141


 


Attention:  Secretary


 


Dear Sir or Madam:


 


I am
the holder of                         
 Stock Option granted to me under the
Ironwood Pharmaceuticals, Inc. (the “Company”) Amended and Restated 2005
Stock Incentive Plan on                             
for the purchase of                              shares
of Series B Common Stock of the Company at a purchase price of $                            
per share.


 


I
hereby exercise my option to purchase                              
shares of Series B Common Stock (the “Shares”), for which I have enclosed                              
in the amount of                           .  Please register my stock certificate as
follows:


 


	
  Name(s):

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Social Security No.:

  	
   

  



 


I
represent, warrant and covenant as follows:


 


1.             I
am purchasing the Shares for my own account for investment only, and not with a
view to, or for sale in connection with, any distribution of the Shares in
violation of the Securities Act of 1933 (the “Securities Act”), or any rule or
regulation under the Securities Act.


 


2.             I
have had such opportunity as I have deemed adequate to obtain from
representatives of the Company such information as is necessary to permit me to
evaluate the merits and risks of my investment in the Company.


 


ATTACHMENT IV


 

















 


3.             I
have sufficient experience in business, financial and investment matters to be
able to evaluate the risks involved in the purchase of the Shares and to make
an informed investment decision with respect to such purchase.


 


4.             I
can afford a complete loss of the value of the Shares and am able to bear the
economic risk of holding such Shares for an indefinite period.


 


5.             I
understand that (i) the Shares have not been registered under the
Securities Act and are “restricted securities” within the meaning of Rule 144
under the Securities Act, (ii) the Shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered under the
Securities Act or an exemption from registration is then available; (iii) in
any event, the exemption from registration under Rule 144 will not be
available for at least six months and even then will not be available unless a
public market then exists for the applicable series of Common Stock of the
Company, adequate information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are complied with; and (iv) there
is now no registration statement on file with the Securities and Exchange
Commission with respect to any stock of the Company and the Company has no
obligation or current intention to register the Shares under the Securities
Act.


 


Very truly yours,


 


 


	
   

  	
   

  
	
  (Signature)

  	
   

  



 


ATTACHMENT IV


 

















 


Exhibit A


 


 


IRONWOOD PHARMACEUTICALS, INC.


 


Restriction Stock
Agreement


 


AGREEMENT
made this            
day of                  ,
20    , between Ironwood Pharmaceuticals, Inc., a
Delaware  corporation (the “Company”), and                                       
(the “Participant”).


 


For
valuable consideration, receipt of which is acknowledged, the parties hereto
agree as follows:


 


1.             Purchase of Shares.


 


The
Company shall issue and sell to the Participant, and the Participant shall purchase
from the Company, subject to the terms and conditions set forth in this
Agreement and in the Company’s Amended and Restated 2005 Stock Incentive Plan
(the “Plan”),           shares
(the “Shares”) of Series B Common Stock, $.001 par value, of the Company (“Series B
Common Stock”), at a purchase price of $         
per share.  The aggregate purchase price
for the Shares shall be paid by the Participant by check payable to the order
of the Company or such other method as may be acceptable to the Company.  Upon receipt by the Company of payment for
the Shares, the Company shall issue to the Participant one or more certificates
in the name of the Participant for that number of Shares purchased by the
Participant.  The Participant agrees that
the Shares shall be subject to the purchase options set forth in
Sections 2 and 5 of this Agreement and the restrictions on transfer set
forth in Section 4 of this Agreement.


 


2.             Purchase Option.


 


(a)           In the event that the Participant ceases
to be employed by the Company for any reason or no reason, with or without
cause, prior to                     ,
20      , the Company shall have the right and
option (the “Purchase Option”) to purchase from the Participant, for a sum of $           
per share (the “Option Price”), some or all of the Unvested Shares (as defined
below).


 


“Unvested
Shares” means the total number of Shares multiplied by the Applicable
Percentage at the time the Purchase Option becomes exercisable by the
Company.  The “Applicable Percentage”
shall be                                                                                                                                                                         .(1)


 


(b)           For purposes of this Agreement,
employment with the Company shall include employment with a parent or
subsidiary of the Company.


 






(1)    The Applicable Percentage must be the same
as the vesting schedule in Section 2 of the underlying option.


 


ATTACHMENT IV


 





















 


3.             Exercise of Purchase Option and Closing.


 


(a)           The Company may exercise the Purchase
Option by delivering or mailing to the Participant (or his estate), within 60
days after the termination of the employment of the Participant with the
Company, a written notice of exercise of the Purchase Option.  Such notice shall specify the number of
Shares to be purchased.  If and to the
extent the Purchase Option is not so exercised by the giving of such a notice
within such 60-day period, the Purchase Option shall automatically expire and
terminate effective upon the expiration of such 60-day period.


 


(b)           Within 10 days after delivery to the
Participant of the Company’s notice of the exercise of the Purchase Option
pursuant to subsection (a) above, the Participant (or his estate)
shall, pursuant to the provisions of the Joint Escrow Instructions referred to
in Section 7 below, tender to the Company at its principal offices the
certificate or certificates representing the Shares which the Company has
elected to purchase in accordance with the terms of this Agreement, duly
endorsed in blank or with duly endorsed stock powers attached thereto, all in
form suitable for the transfer of such Shares to the Company.  Promptly following its receipt of such
certificate or certificates, the Company shall pay to the Participant the
aggregate Option Price for such Shares (provided that any delay in making such
payment shall not invalidate the Company’s exercise of the Purchase Option with
respect to such Shares).


 


(c)           After the time at which any Shares are
required to be delivered to the Company for transfer to the Company pursuant to
subsection (b) above, the Company shall not pay any dividend to the
Participant on account of such Shares or permit the Participant to exercise any
of the privileges or rights of a stockholder with respect to such Shares, but
shall, in so far as permitted by law, treat the Company as the owner of such
Shares.


 


(d)           The Option Price may be payable, at the
option of the Company, in cancellation of all or a portion of any outstanding
indebtedness of the Participant to the Company or in cash (by check) or both.


 


(e)           The Company shall not purchase any
fraction of a Share upon exercise of the Purchase Option, and any fraction of a
Share resulting from a computation made pursuant to Section 2 of this
Agreement shall be rounded to the nearest whole Share (with any one-half Share
being rounded upward).


 


(f)            The Company may assign its Purchase
Option to one or more persons or entities.


 


4.             Restrictions on Transfer.


 


(a)           The Participant shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively “transfer”) any Shares, or any interest therein, that
are subject to the Purchase Option, except that the Participant may transfer
such Shares (i) to or for the benefit of any spouse, children, parents,
uncles, aunts, siblings, grandchildren and any other relatives approved by the
Board of Directors (collectively, “Approved Relatives”) or to a trust
established solely for the benefit of the Participant and/or Approved
Relatives, provided that such Shares shall remain subject to this
Agreement (including without limitation the restrictions on transfer set forth
in this Section 4, the Purchase Option and the right of first refusal set
forth in Section 5) and such permitted transferee shall, as a condition


 


ATTACHMENT IV


 

















 


to
such transfer, deliver to the Company a written instrument confirming that such
transferee shall be bound by all of the terms and conditions of this Agreement
or (ii) as part of the sale of all or substantially all of the shares of
capital stock of the Company (including pursuant to a merger or consolidation),
provided that, in accordance with the Plan, the securities or other
property received by the Participant in connection with such transaction shall
remain subject to this Agreement.


 


(b)           The Participant shall not transfer any
Shares, or any interest therein, that are no longer subject to the Purchase
Option, except in accordance with Section 5 below.


 


5.             Right of First Refusal.


 


(a)           Any shares that
are purchased pursuant to this Agreement are subject to any right of first
refusal that may be described in the Company’s by-laws in effect at such time
as the Company elects to exercise its right. 
The Company’s right of first refusal shall expire on the date of the
closing of the first registration of a public offering of equity securities
under Section 12 of the Exchange Act of 1934, as amended.  In addition, to the extent provided in the
Company’s by-laws as amended from time to time, the Company shall have the
right to repurchase all or any part of the shares purchased pursuant to this
agreement.


 


6.             Effect of Prohibited Transfer.


 


The
Company shall not be required (a) to transfer on its books any of the
Shares which have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such
Shares or to pay dividends to any transferee to whom any such Shares shall have
been sold or transferred.


 


7.             Agreement in Connection with Public Offering.


 


The
Participant agrees, in connection with the initial underwritten public offering
of the Company’s securities pursuant to a registration statement under the
Securities Act, (i) not to sell, make short sale of, loan, grant any
options for the purchase of, or otherwise dispose of any shares of Common Stock
of the Company held by the Participant (other than those shares included in the
offering) without the prior written consent of the Company or the underwriters
managing such initial underwritten public offering of the Company’s securities
for a period of 180 days from the effective date of such registration
statement, and (ii) to execute any agreement reflecting clause (i) above
as may be requested by the Company or the managing underwriters at the time of
such offering.


 


8.             Escrow.


 


The
Participant shall, upon the execution of this Agreement, execute Joint Escrow
Instructions in the form attached to this Agreement as Exhibit A.  The Joint Escrow Instructions shall be
delivered to the Secretary of the Company, as escrow agent thereunder.  The Participant shall deliver to such escrow
agent a stock assignment duly endorsed in blank, in the form attached to this
Agreement as Exhibit B, and hereby instructs the Company to deliver
to such escrow agent, on behalf of the Participant, the certificate(s) evidencing
the Shares issued hereunder.  Such


 


ATTACHMENT IV


 

















 


materials
shall be held by such escrow agent pursuant to the terms of such Joint Escrow
Instructions.


 


9.             Restrictive Legends.


 


All
certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:


 


“The shares of stock
represented by this certificate are subject to restrictions on transfer and an
option to purchase set forth in a certain Stock Restriction Agreement between
the corporation and the registered owner of these shares (or his predecessor in
interest), and such Agreement is available for inspection without charge at the
office of the Secretary of the corporation.”


 


“The shares represented
by this certificate have not been registered under the Securities Act of 1933,
as amended, and may not be sold, transferred or otherwise disposed of in the
absence of an effective registration statement under such Act or an opinion of
counsel satisfactory to the corporation to the effect that such registration is
not required.”


 


10.           Adjustments for Stock Splits, Stock Dividends, etc.


 


If
from time to time during the term of the Purchase Option there is any stock
split, stock dividend, stock distribution or other reclassification of the
Common Stock of the Company, any and all new, substituted or additional securities
to which the Participant is entitled by reason of his/her ownership of the
Shares shall be immediately subject to the Purchase Option, the restrictions on
transfer and other provisions of this Agreement 
in the same manner and to the same extent as the Shares, and the Option
Price shall be appropriately adjusted.


 


11.           Provisions of the Plan.


 


(a)           This Agreement is subject to the
provisions of the Plan, a copy of which is furnished to the Participant with
this Agreement.


 


(b)           As provided in the Plan, upon the
occurrence of a Reorganization Event (as defined in the Plan), the repurchase
and other rights of the Company hereunder shall inure to the benefit of the
Company’s successor and shall apply to the cash, securities or other property
which the Shares were converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent as they applied
to the Shares under this Agreement.  If,
in connection with a Reorganization Event, a portion of the cash, securities
and/or other property received upon the conversion or exchange of the Shares is
to be placed into escrow to secure indemnification or similar obligations, the
mix between the vested and unvested portion of such cash, securities and/or
other property that is placed into escrow shall be the same as the mix between
the vested and unvested portion of such cash, securities and/or other property
that is not subject to escrow.


 


ATTACHMENT IV


 

















 


12.           Investment Representations.


 


The
Participant represents, warrants and covenants as follows:


 


(a)           The Participant is purchasing the Shares
for his own account for investment only, and not with a view to, or for sale in
connection with, any distribution of the Shares in violation of the Securities
Act, or any rule or regulation under the Securities Act.


 


(b)           The Participant has had such opportunity
as he has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit him to evaluate the merits and risks of
his investment in the Company.


 


(c)           The Participant has sufficient experience
in business, financial and investment matters to be able to evaluate the risks
involved in the purchase of the Shares and to make an informed investment
decision with respect to such purchase.


 


(d)           The Participant can afford a complete
loss of the value of the Shares and is able to bear the economic risk of
holding such Shares for an indefinite period.


 


(e)           The Participant understands that (i) the
Shares have not been registered under the Securities Act and are “restricted
securities” within the meaning of Rule 144 under the Securities Act; (ii) the
Shares cannot be sold, transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an exemption from registration
is then available; (iii) in any event, the exemption from registration
under Rule 144 will not be available for at least six months and even then
will not be available unless a public market then exists for the applicable
series of Common Stock of the Company, adequate information concerning the
Company is then available to the public, and other terms and conditions of Rule 144
are complied with; and (iv) there is now no registration statement on file
with the Securities and Exchange Commission with respect to any stock of the
Company and the Company has no obligation or current intention to register the
Shares under the Securities Act.


 


13.           Withholding Taxes; Section 83(b) Election.


 


(a)           The Participant acknowledges and agrees
that the Company has the right to deduct from payments of any kind otherwise
due to the Participant any federal, state or local taxes of any kind required
by law to be withheld with respect to the purchase of the Shares by the
Participant or the lapse of the Purchase Option.


 


(b)           The Participant has reviewed with the
Participant’s own tax advisors the federal, state, local and foreign tax
consequences of this investment and the transactions contemplated by this
Agreement.  The Participant is relying
solely on such advisors and not on any statements or representations of the
Company or any of its agents.  The
Participant understands that the Participant (and not the Company) shall be
responsible for the Participant’s own tax liability that may arise as a result
of this investment or the transactions contemplated by this Agreement.  The Participant understands that it may be
beneficial in many circumstances to elect to be taxed at the time the Shares
are purchased rather than when and as the Company’s Purchase Option expires by
filing an election under Section 83(b) of the Code with the I.R.S.
within 30 days from the date of purchase.


 


ATTACHMENT IV


 

















 


THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE
PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE
ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON THE PARTICIPANT’S BEHALF.


 


14.           Miscellaneous.


 


(a)           No Rights to Employment. 
The Participant acknowledges and agrees that the vesting of the Shares
pursuant to Section 2 hereof is earned only by continuing service as [a consultant/
an employee at the will] of the Company (not through the act of being hired or
purchasing shares hereunder).  The
Participant further acknowledges and agrees that the transactions contemplated
hereunder and the vesting schedule set forth herein do not constitute an
express or implied promise of continued engagement as an employee or consultant
for the vesting period, for any period, or at all.


 


(b)           Severability. 
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.


 


(c)           Waiver.  Any provision
for the benefit of the Company contained in this Agreement may be waived,
either generally or in any particular instance, by the Board of Directors of
the Company.


 


(d)           Binding Effect. 
This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Sections 4 and 5 of this Agreement.


 


(e)           Notice.   All notices
required or permitted hereunder shall be in writing and deemed effectively
given upon personal delivery or five days after deposit in the United States
Post Office, by registered or certified mail, postage prepaid, addressed to the
other party hereto at the address shown beneath his or its respective signature
to this Agreement, or at such other address or addresses as either party shall
designate to the other in accordance with this Section 12(e).


 


(f)            Pronouns.  Whenever the
context may require, any pronouns used in this Agreement shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural, and vice versa.


 


(g)           Entire Agreement. 
This Agreement and the Plan constitute the entire agreement between the
parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.


 


(h)           Amendment.  This
Agreement may be amended or modified only by a written instrument executed by
both the Company and the Participant.


 


ATTACHMENT IV


 

















 


(i)            Governing Law. 
This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws of the State of Delaware without regard to
any applicable conflicts of laws.


 


(j)            Participant’s Acknowledgments. 
The Participant acknowledges that he or she: (i) has read this
Agreement; (ii) has been represented in the preparation, negotiation, and
execution of this Agreement by legal counsel of the Participant’s own choice or
has voluntarily declined to seek such counsel; (iii) understands the terms
and consequences of this Agreement; (iv) is fully aware of the legal and
binding effect of this Agreement; and (v) understands that the law firm of
Hale and Dorr LLP, is acting as counsel to the Company in connection with the
transactions contemplated by the Agreement, and is not acting as counsel for
the Participant.


 


IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.


 


 


	
   

  	
  IRONWOOD PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter M. Hecht

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  320 Bent Street

  
	
   

  	
   

  	
  Cambridge, MA 02141

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
					



 


ATTACHMENT IV


 














 


Exhibit A to
Stock Restriction Agreement


 


IRONWOOD PHARMACEUTICALS, INC.


 


Joint Escrow
Instructions


 


	
   

  	
  Date:

  	
   

  	
   

  



 


Secretary


Ironwood Pharmaceuticals, Inc.


320 Bent Street


Cambridge, MA  02141


 


Dear Sir:


 


As
Escrow Agent for Ironwood Pharmaceuticals, Inc., a Delaware corporation,
and its successors in interest under the Restricted Stock Agreement (the “Agreement”)
of even date herewith, to which a copy of these Joint Escrow Instructions is
attached (the “Company”), and the undersigned person (“Holder”), you are hereby
authorized and directed to hold the documents delivered to you pursuant to the
terms of the Agreement in accordance with the following instructions:


 


1.             Appointment.  Holder irrevocably authorizes the Company to
deposit with you any certificates evidencing Shares (as defined in the
Agreement) to be held by you hereunder and any additions and substitutions to
said Shares.  For purposes of these Joint
Escrow Instructions, “Shares” shall be deemed to include any additional or
substitute property.  Holder does hereby
irrevocably constitute and appoint you as his attorney-in-fact and agent for
the term of this escrow to execute with respect to such Shares all documents
necessary or appropriate to make such Shares negotiable and to complete any
transaction herein contemplated.  Subject
to the provisions of this paragraph 1 and the terms of the Agreement,
Holder shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.


 


2.             Closing of Purchase.


 


(a)           Upon any purchase by the Company of the
Shares pursuant to the Agreement, the Company shall give to Holder and you a
written notice specifying the purchase price for the Shares, as determined
pursuant to the Agreement, and the time for a closing hereunder (the “Closing”)
at the principal office of the Company. 
Holder and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the terms
of said notice.


 


(b)           At the Closing, you are directed (a) to
date the stock assignment form or forms necessary for the transfer of the
Shares, (b) to fill in on such form or forms the number of Shares 


 


ATTACHMENT IV


 

















 


being
transferred, and (c) to deliver same, together with the certificate or
certificates evidencing the Shares to be transferred, to the Company against
the simultaneous delivery to you of the purchase price for the Shares being
purchased pursuant to the Agreement.


 


3.             Withdrawal.  The Holder shall have the right to withdraw
from this escrow any Shares as to which the Purchase Option (as defined in the
Agreement) has terminated or expired.


 


4.             Duties of Escrow Agent.


 


(a)           Your duties hereunder may be altered,
amended, modified or revoked only by a writing signed by all of the parties
hereto.


 


(b)           You shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed by you to be genuine and to have been signed or presented
by the proper party or parties.  You
shall not be personally liable for any act you may do or omit to do hereunder
as Escrow Agent or as attorney-in-fact of Holder while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.


 


(c)           You are hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or Company, excepting only orders or process of courts of law, and
are hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court.  In case you obey
or comply with any such order, judgment or decree of any court, you shall not
be liable to any of the parties hereto or to any other person, firm or Company
by reason of such compliance, notwithstanding any such order, judgment or
decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.


 


(d)           You shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.


 


(e)           You shall be entitled to employ such
legal counsel and other experts as you may deem necessary properly to advise
you in connection with your obligations hereunder and may rely upon the advice
of such counsel.


 


(f)            Your rights and responsibilities as
Escrow Agent hereunder shall terminate if (i) you cease to be Secretary of
the Company or (ii) you resign by written notice to each party.  In the event of a termination under
clause (i), your successor as Secretary shall become Escrow Agent
hereunder; in the event of a termination under clause (ii), the Company
shall appoint a successor Escrow Agent hereunder.


 


(g)           If you reasonably require other or
further instruments in connection with these Joint Escrow Instructions or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.


 


ATTACHMENT IV


 

















 


(h)           It is understood and agreed that should
any dispute arise with respect to the delivery and/or ownership or right of
possession of the securities held by you hereunder, you are authorized and
directed to retain in your possession without liability to anyone all or any
part of said securities until such dispute shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree
or judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.


 


(i)            These Joint Escrow Instructions set forth
your sole duties with respect to any and all matters pertinent hereto and no
implied duties or obligations shall be read into these Joint Escrow
Instructions against you.


 


(j)            The Company shall indemnify you and hold
you harmless against any and all damages, losses, liabilities, costs, and
expenses, including attorneys’ fees and disbursements, for anything done or
omitted to be done by you as Escrow Agent in connection with this Agreement or
the performance of your duties hereunder, except such as shall result from your
gross negligence or willful misconduct.


 


5.             Notice.  Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States Post Office, by registered or
certified mail with postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days’ advance written notice to each
of the other parties hereto.


 




	
  COMPANY:

  	
   

  	
  Secretary

  Ironwood Pharmaceuticals, Inc.

  320 Bent Street

  Cambridge, MA 02141

  
	
   

  	
   

  	
   

  
	
  HOLDER:

  	
   

  	
  Notices to Holder shall
  be sent to the address set forth below Holder’s signature below.

  
	
   

  	
   

  	
   

  
	
  ESCROW AGENT:

  	
   

  	
  Secretary

  Ironwood Pharmaceuticals, Inc.

  320 Bent Street

  Cambridge, MA 02141

  






 


ATTACHMENT IV


 





















 


6.             Miscellaneous.


 


(a)           By signing these Joint Escrow
Instructions, you become a party hereto only for the purpose of said Joint
Escrow Instructions, and you do not become a party to the Agreement.


 


(b)           This instrument shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.


 


 


	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Peter M. Hecht

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  320 Bent Street

  
	
   

  	
   

  	
  Cambridge, MA 02141

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ESCROW AGENT:

  
	
   

  	
   

  
	
   

  	
  IRONWOOD
  PHARMACEUTICALS, INC.

  
					



 


 


	
   

  	
   

  
	
  Michael J. Higgins

  	
   

  
	
  Secretary

  	
   

  



 


ATTACHMENT IV


 

















 


Exhibit B to Stock Restriction Agreement


 


STOCK ASSIGNMENT SEPARATE
FROM CERTIFICATE


 


FOR
VALUE RECEIVED,  I,                                       ,
hereby sell, assign and transfer unto Ironwood Pharmaceuticals, Inc. (the “Company”)                                          
(                )
shares of the Series B Common Stock, $0.001 par value per share, of the
Company  standing in my name on the books
of said Company represented by Certificate(s) Number                       
herewith, and do hereby irrevocably constitute and appoint the Company’s
Secretary as transfer agent to transfer said stock on the books of the Company
with full power of substitution in the premises.


 


	
   

  	
  Dated:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  



 


IN
PRESENCE OF


 


 


	
   

  	
   

  
	
  (Witness)

  	
   

  



 


 


NOTICE:
The signature(s) to this assignment must correspond with the name as
written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever and must be guaranteed by a
commercial bank, trust company or member firm of the Boston, New York or Midwest
Stock Exchange.


 


ATTACHMENT IV